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Lord Tebbit: My Lords, I apologise for interrupting the Minister. However, on reading the Bill, I was not quite certain about a few aspects in this respect. As the Minister has rightly said, this provision will make it more possible, for example, for women to be at work because of the extra rights. Do those extra rights apply also to the nanny who is looking after the child of the woman who is at work?

Lord Simon of Highbury: No, my Lords. The rights of nannies are covered under that part of the Bill which I have already mentioned which sets out the changes in employment agency terms and the status of nannies in those circumstances, I give way to the noble Lord again.

Lord Tebbit: My Lords, with great respect to the Minister, I am not talking about an agency nanny. I have in mind a nanny who is employed full-time by the lady at work and who perhaps becomes pregnant or sees that there is some domestic crisis involved in her work. Does that nanny have the benefit of those rights as well as her employer?

Lord Simon of Highbury: My Lords, I believe that it depends entirely on the status of the nanny's contract. That is one of the issues we shall have to debate during the course of the proceedings on the Bill. Nevertheless, I take note of the noble Lord's question.

The new rights will include: a minimum of 18 weeks' maternity leave for all women in line with statutory maternity pay; the right to extended maternity leave of up to 40 weeks for women after one year's service, rather than two, as at present; three months' parental leave for mothers and fathers, including adoptive parents; guaranteed job back--or its equivalent--at the end of parental leave; clarification of the status of employment contracts during periods of family leave; time off to deal with family emergencies; and protection from victimisation for exercising any of these rights. My

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department will ensure that there is full and thorough consultation with employer and worker organisations on the draft regulations.

Much has been said about the costs of the Bill. That is an important question. In drafting the Bill, we have taken great care to avoid imposing unnecessary burdens on business. But we should be clear about the costs and benefits.

The Bill gives statutory backing to rights which many workers already enjoy. By doing so, it gives greater certainty to the majority of workers and enhanced protection to those who do not currently enjoy these rights. It will make it easier for employees with family and other domestic commitments to continue to contribute productively in the workplace, making use of their training and experience.

Employers and society at large will benefit enormously from greater participation in the labour market, reduced staff turnover and a climate of greater commitment and trust in the workplace. Against that, our departmental economists estimate that, across the whole of British business, the Bill will cost some £60 million a year, mainly due to the new parental leave rights and the wider entitlement to additional maternity leave. On top of that, there will be some £1.7 million a year in one-off costs, mainly for the new recognition procedures. So the cost is about 5p a week per employee.

The Bill will not, as has been suggested in certain elements of the media, damage employment. If employers accept these measures and the spirit which underlies them, they will get more out of their employees. More productive businesses mean better paid, safer jobs, and, incidentally, higher tax revenues and sounder public finances.

In conclusion, the Bill is something to which the Government are wholeheartedly committed. There is now widespread recognition of the need for updating the existing framework of employment legislation to take account of new developments in working practices and the needs of a modern economy. Therefore, it is important that we get this piece of vital legislation right. We greatly respect the experience which some noble Lords have had in the field of industrial relations. The Government look forward to their contribution to this debate. I commend the Bill to the House.

Moved, That the Bill be now read a second time.--(Lord Simon of Highbury.)

3.27 p.m.

Baroness Miller of Hendon: My Lords, I should like, first, to thank the Minister for his explanation of this important Bill in his normal, very careful manner. I shall look forward to debating with him the points where we will most certainly take issue with the Government as the Bill progresses through your Lordships' House.

It is not difficult to see why the title of the Bill, the Employment Relations Bill, changed from the White Paper on which it is based--entitled, Fairness at Work--because, when you examine the provisions in the

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Bill, there is nothing in it which is fair to employers. There is also certainly nothing fair to those employees who simply want to get on with their jobs without industrial unrest caused by trade unions seeking to reassert themselves in a way that they have not been able to do for the past 15 years or so. Indeed, there is nothing fair to those employers and employees alike who, together, want to get on with keeping going the businesses in which they are both interested, rather than being sunk by the stream of socialist theory which is making Europe increasingly uncompetitive--

Noble Lords: Oh!

Baroness Miller of Hendon: My Lords, noble Lords opposite may well laugh, but the truth is that our unemployment record has been very much better than that of many countries in Europe, with, as I said, their socialist policies.

In his speech in the other place on Second Reading of the Bill, the Secretary of State for Trade and Industry spoke about,

    "measures for partnership based on rights matched by responsibilities".--[Official Report, Commons, 9/2/99; col. 130.] I invite noble Lords to look at all 38 clauses and eight schedules on all of the 94 pages of the Bill and show me one responsibility imposed either on employees or on the trade unions which this Bill can foist on the majority of employees by the wishes of a minority.

As to the so-called partnership, I believe there is just one item. I shall refer to Clause 26. The Minister referred to it, but he put an entirely different complexion on it to that which I shall put on it, based on what the clause actually says. To paraphrase, it permits the Secretary of State to provide money, taxpayers' money, on any terms that he thinks fit, including gift or loan, for the purpose of encouraging and helping employers and their representatives, and employees' and their representatives, in order to improve the way they work together, whatever that may mean.

The words "their representatives" are code words for trade unions. The clause is nothing less than a licence for the Government to hand out taxpayers' money to the trade unions, on the pretext that they are encouraging improvements in industrial relations. What can the employers expect in return? Perhaps a lollipop, in the form of a grant towards a day's outing to the seaside for the employees of one of the Prime Minister's industrialist chums.

In the other place the Government could offer no explanation of how the clause would operate, despite the fact that they were asked. The Under-Secretary of State for Small Firms, Trade and Industry claimed that the reason was, first, that it would be constraining and, secondly, that they were consulting the key parties. I must advise the noble Lord the Minister that the clause will need a great deal of attention when it reaches the Committee.

Even the present Title of the Bill, "Employment Relations", is misleading, because the Bill resembles a relationship based on a shotgun marriage. The Bill does nothing to foster good relations between employers and

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employees. Rather, it revives the old Labour environment of "them and us" that pervaded until the reform of the unions that took place in the 1980s:

    "steps were needed to correct the worst of trade union excesses".--[Official Report, Commons, 9/2/99; col. 130.] Those are not my words, but are a direct quotation of what the Secretary of State admitted within the first two minutes of his speech on the Second Reading in the other place. At last there is an admission that the bitter rearguard action that the party opposite fought on every single trade union reform measure was mistaken, and this is just another Conservative policy that New Labour has now adopted.

The first and major problem that the Bill causes is the disruption and expense that will be inflicted on small businesses. It will make them less competitive in the market alongside the major industrial concerns. I am not talking about the very small business with fewer than 21 employees, which is exempted from one of the worst excesses in the Bill--compulsory union recognition--although the fact is that in the next 10 years most new jobs will be created in companies with fewer than 21 employees. No, I am talking about all small businesses: ones that are struggling to start up; ones that are struggling to keep going, especially in the retail trades in the face of the mammoth out-of-town shopping parks; and small manufacturing businesses struggling to compete with the multinationals.

The Secretary of State regaled the other place with the story of what he described as a leading supermarket chain which has introduced maternity leave, paternity leave, child-care leave, adoption leave, shift-swap and bereavement leave. Despite all of this, the Minister says that the company is enjoying all sorts of commercial benefits. Needless to say, the chain is Asda, chaired by my honourable friend the Member for Tunbridge Wells. I trust that noble Lords opposite will as a reward patronise those shops instead of the Co-op, to which the Secretary of State was unable to give such a plug. I hope that the noble Lord, Lord Sainsbury, will not mind my having made that comment.

Just as there is no such thing as a free lunch, there is no such thing as a free social benefit. The fact is that all of the major supermarkets, not just Asda, can indulge in such generosity to their staff because probably all they have to do is to add an unnoticed penny on, say, a bag of sugar or forgo their profit on bottles of tomato ketchup for a couple of weeks. The same probably applies equally to the large department stores, DIY stores and the other chain stores and the suppliers of services in near-monopoly conditions.

The trouble is that this Government--and, I admit, perhaps all governments--fail to recognise that there is a vast difference between Sainsbury's and the Coronation Street corner shop. Only a few weeks ago the Prime Minister in a speech in Bristol complained to businessmen that many of the regulations coming out of Brussels were out of date and should be reviewed, and yet here are the Government piling on new ones in the Bill.

The Government are not just putting in new regulations, but, as my honourable friend the Member for Daventry pointed out in Committee in the other place, are

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going above and beyond even what the EC directives demand. This is gold-plating the directives as part of their pay off to the unions.

Before I turn to some of the specific matters in the Bill, I have one other general observation: once again the Government have produced a half-baked piece of legislation. It is an enabling Bill, a mere skeleton, with the details to be filled in by statutory instrument, rather like the ministerial decrees that pass for law-making in Russia. For, make no mistake, statutory instruments are no substitute for an Act of Parliament, which receives the scrutiny of the two Houses on three separate occasions, whereas a statutory instrument is considered only once and cannot be amended: take it or leave it. Parliament has to accept the bad provisions or throw the good ones out with them.

This is just another example of the present Government's marginalising Parliament and stealthily removing as many of its functions as possible. We have already seen the mess that the Government got into over the national minimum wage, because of the cases of au pairs, and the working time directive over the position of paper boys.

If that is not bad enough, in the Bill before us the Government have taken large matters of substance out of the body of the text and buried them in the schedules, all printed, as my honourable friend the Member for Daventry pointed out, in smaller print. A classic case in point arises under Clause 8, the substance of which is to be found in Part II of Schedule 4, 63 pages further on. It provides for time off for what are called "domestic incidents". The problem is that even the schedule does not define what is a domestic incident. That is to be left to the Secretary of State to announce when he gets round to it.

The Government have been in office for two years and have conducted 10 months of consultation, yet they cannot tell us what they mean by this provision. Perhaps the noble Lord the Minister will when he replies to this Second Reading debate at least give your Lordships an idea of the sort of events that might be regarded as "domestic incidents"--not a final list, but at least tell us what the Government currently have in mind. The Minister in the other place admitted that he could not offer a definition.

That is no basis for asking Parliament for permission to make statutory regulations that could cost employers tens of millions of pounds a year. If we are given some inkling, then when we reach the Committee stage at least we shall have an idea of what we and, more important, the Minister are talking about--that is assuming, of course, that the Government themselves know.

I suggest that in formulating their shopping list of domestic incidents the Government pay heed to the excellent advertising slogan of the Legal & General Assurance Company, and not make a drama out of a crisis.

Although the Bill is euphemistically described as the "Employment Relations Bill", what kind of relationship can there be if, when an employee asks for half a day off, he and his employer have to consult Part II of Schedule 4, containing a page and a half of gobbledegook? Part II is to be found on pages 67 and 68. Then one has to plough through four pages of consequential amendments to other

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Acts in Part III. That is without our having seen a single syllable of the regulations which the Secretary of State is to unveil at some unspecified time in the future. I was very pleased to hear from the noble Lord the Minister that he was very hopeful that Members on this side of the House would have sight of those regulations before the Committee stage.

Of course, I have a certain sympathy with the Secretary of State over this. I have held my present brief a great deal longer than he has. He is the third Secretary of State in the short life of this Government. The first was moved after the first reshuffle, presumably without her department having worked out what a domestic crisis is. The second honourably felt obliged to resign, following a domestic crisis of his own about his house, without having produced his own minimum ideas on the subject. Now we find Secretary of State No. 3 having to come to Parliament to ask for all sorts of blank cheques in this Bill, because, having been dropped in at the deep end, he has had to use his legislative slot, by doing something, however ill-prepared. Act first and think about it later!

Another example is Clause 27, which is just five words long. It states:

    "Schedule 7 shall have effect". What does Schedule 7 say? It states that the Secretary of State can make regulations that can control employment agencies by restricting the services they perform, the way they do it and what they can charge: not the slightest indication of what the Government have in mind or why they think that these rigid regulations are needed. We shall expect the Minister to give us the courtesy of a full explanation of this clause before he asks this House to pass it.

Backtracking just a little, I should like to refer to Clause 1 on collective bargaining recognition. That is a coy euphemism for foisting compulsory trade recognition on unwilling employers and a possible unwilling majority of the workforce. It is contained in 40 pages of the unindexed Schedule 1: roughly one-half of the Bill if you take into account that the print is especially small.

That schedule was a mere 25 pages long when it was published in the other place, which seems to suggest that this Bill, which is to redeem one of the Labour Party's many IOUs to the unions, is making law on the hoof. It is now 40 pages long. It also explains why so much of it is to be the subject of secondary legislation. That is because the Government do not know how the Bill will work in practice or do not want Parliament to know until they have been given a blank cheque.

What a confusing mish-mash Schedule 1 is. Paragraph 6 of the schedule explains how to calculate the number of employees:

    "(a) take the number of workers employed in each of the 13 weeks (including workers not employed for the whole of the week);

    "(b) aggregate the 13 numbers;

    "(c) divide the aggregate by 13". All that is missing is the instruction to take away the number you first thought of!

On the subject of union recognition, the department has kindly (on page 7 of the Explanatory Notes) produced a diagram with arrows pointing in all different

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directions. It is perhaps significant that the general direction of the arrows is downward. The chart resembles a cross between a demented game of snakes and ladders and a design by Heath Robinson. Having studied it carefully, I must confess I am none the wiser; and neither will be the employers and employees of a small business which is misguided enough to give work to 22 people, and which will then be affected by the provisions.

No doubt experts in the trade unions, and the lawyers employed by the larger companies will manage the paragraph, but I can see plenty of work for lawyers and a vastly expanded quango, the Central Arbitration Committee, which seems to be the son of ACAS. I wonder what ACAS thinks of its new child.

I shall not dwell further on this clause and schedule at the present moment. They occupy, as I have pointed out, over one-third of the Bill and we shall need to examine their provisions in some detail at the next stage.

We will also need to examine the provisions about maternity and paternity leave. Apart from the extra burden of expense that they place on an employer of whatever size, they are particularly harmful to smaller businesses. Not only has the employer to keep open the employee's job, possibly through a series of pregnancies--these things happen--but if the absence goes on for long enough, the ability to dispose of the locum because of the length of her or his supposedly temporary employment is lost.

Once again the Secretary of State demands the powers to make regulations as to the length of such maternity or paternity leave. In a process of what I consider to be disinformation, the Government have told us that the length is increased to 18 weeks. I do not think that that is correct, because what will be the new Section 71(3)(a) of the Employment Rights Act 1996 provides that the regulations shall secure that,

    "no ordinary maternity leave period is less than 18 weeks". So, the Secretary of State could make it 20 weeks, 26 weeks or whatever the unions demand; and that is even without the extensions that the Secretary of State can arbitrarily order under what will be new Section 73 of the 1996 Act. The same applies to parental leave, including when it may be taken. What about by the time the child reaches the age of 18?

Some of these arbitrary and far-reaching powers must be restricted, even before the regulations get the cursory examination that parliamentary procedures permit.

At the end of his Second Reading speech in the other place, the Secretary of State gave a catalogue of almost 13 million people whom he claims will benefit from the provisions of this Act. This is a figure arrived at by double and even treble-counting that even the Secretary of State's right honourable friend the Chancellor of the Exchequer might have hesitated from trying.

What the figures do not show is how many jobs will be lost by firms being driven out of business, or not even starting up because of the airy-fairy devices of dreamland socialist economics provided for in this Bill.

What these figures do not show is how many of the 6.5 million part-timers (who the Secretary of State claims will be protected from his idea of exploitation)

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will not get a job at all, because if it is as expensive to employ a part-timer as a full-timer, many employers may well decide to employ a full-timer. So much for helping mothers on benefit get out of the poverty trap!

The Secretary of State also made extravagant claims about the so-called benefits of this Bill. He said:

    "it is a balanced package with a clear emphasis on partnership, not confrontation; fairness and trust, not insecurity and maltreatment; and rights coupled with responsibilities".--[Official Report, Commons, 9/2/99; col. 141.] That stream of cliches and platitudes could have been taken straight from the "Old Comrades' Book of Speeches".

The fact is that we believe that employers and employees should be left free to settle relationships between themselves, including, if that is what the employee desires, his union, but without outside complicated regulation from the Government--a government who reached the apogee of the nanny state by publishing earlier last month a pamphlet on how to employ a nanny.

What we do not want is to copy the German laws and regulations, which result in it having twice the unemployment rate of the UK. One of the reasons for BMW's heavy investment in the UK, according to its chairman, is that we do not have the legislation which is causing it and Mercedes Benz the trouble that is making them export so many of their jobs. Sony is transferring production from Germany to South Wales precisely because of Germany's oppressive and restrictive labour laws. They can just as easily transfer them back again.

What the Government have done, and are steadily continuing to do, is to push up the cost of employing people. The minimum wage, as the Deputy Prime Minister admitted, is going to cost jobs, as we shall soon see. The working time directive and all the additional costs that this Bill is going to involve will add to industry's burden.

British Steel recently warned:

    "The rate of job losses will accelerate given the extremely difficult trading conditions ... it is imperative that the Government should do nothing to add to our costs and to undermine our competitiveness". I fear that that is a plea falling on deaf ears; and a rude awakening for those industrialists who were lulled into a sense of false security by the siren song of the Labour Party just prior to the last election when its spin doctors assured them that they were "business friendly".

In April 1997 the Chancellor of the Exchequer (then the Shadow Chancellor) said:

    "we will not impose burdensome relations on business because we understand that successful businesses must bring costs down".

On 25th November 1998, before his abrupt departure from the office of Secretary of State for Trade and Industry, the right honourable Member for Hartlepool told the other place:

    "we have no intention of introducing any legislation that presents a burden on business and reduces the competitiveness of British firms".--[Official Report, Commons, 25/11/98; col. 214.] Well, we all know what "we have no intention " means in government-speak; it means "not this week".

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This Bill is designed to increase employment rights and will unquestionably raise costs and reduce competitiveness, and will fall particularly hard on small and medium-sized businesses.

In his speech on the Second Reading in the other place, the Secretary of State announced that,

    "There will not be a continuous drip, drip of employment legislation throughout this Parliament".--[Official Report, Commons 9/2/99; col. 134.] Thank goodness for that, because we have had more than enough already, and we have yet to be subjected to the regulations under this Bill, which are themselves legislation.

The Secretary of State then went on to say (also at col. 134):

    "We have no plans to bring forward further measures ... for the remainder of this Parliament"-- again the coded phrase, "We have no plans". Well, so long as that is that for this Parliament, then there is some hope that the damage caused by the Government's legislation to date may be limited, because I and my colleagues on this side of the House will do our very best to ensure that there is no second term during which the Labour Party can re-infect the country with what our competitors derisively called "the British disease", which the last Conservative government decisively cured.

3.50 p.m.

Lord Razzall: My Lords, it will come as no surprise to the Minister and your Lordships that the Liberal Democrats broadly support the principles and purpose of this modest Bill. We support the increase in the rights of the individual enshrined in certain clauses of the Bill. We support the general principles of the improvements in collective rights and the family-friendly policies contained in it.

Having listened to the noble Baroness, Lady Miller, I stress that we regard this as a modest Bill. To those of us on this side of your Lordships' House it does not appear to have a great deal to do with socialism, red in tooth and claw Kremlin policies, the British disease or any of the other phrases which the noble Baroness used to warn us as regards all the pillars of government policy concerning the national minimum wage and the working time directive. It is a modest Bill in the sense that it simply brings best commercial practice into our legislative framework, as the noble Baroness recognised. As regards the position of the current chairman of Asda, that is likely to be the company which people will choose. That company is obviously an example of the best commercial practice. Whether it is able to pass on the cost to the unwitting consumer will be a matter for the Monopolies and Mergers Commission to consider in its review of the pricing of supermarkets.

It is also a modest Bill in the sense that it brings this country into line with our European competitors almost all of whom had much more successful economies over the 20 to 25-year period when most of them were run by right-wing governments. That is contrary to the idea that they were mostly Left-wing and imposing socialism

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from Europe. Almost all the European countries which had protection for the workforce, as set out in this Bill, had been run by Right-wing parties for the past 15 to 20 years. I dissociate this Opposition party from the remarks made by the Conservative Party.

However, that is not to say that we regard the Bill as perfect. We shall need to probe a number of its provisions. As the Minister indicated, the Bill was preceded by the White Paper Fairness at Work. There was inevitable publicity and debate in the public arena as regards the rights of trades unions and their recognition. As the Bill passes through this House I do not believe that we shall wish on this side to intrude in Labour Party private grief concerning the 40 per cent mechanisms. All the evidence was touched on by the Minister; namely, that such issues are best resolved by voluntary agreement. Under the previous Tory government when similar provisions were in place, I believe that ACAS indicated quite strongly at the time that the formal rules of recognition did not work and that almost all disputes of that kind had to be resolved by voluntary agreement. We hope that the complex schedule in the Bill will be put on to the back burner of most industrial disputes and that voluntary recognition and agreement will be the norm. If it is not, then no legislation will solve the problems.

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