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Lord Tebbit: I am grateful, as always, to the noble Lord who has responded to my amendments in a most excellent and constructive way in so far as he is able to do so. I think I must be getting naive in my old age because I had not realised from reading the press release that this was not new money. I suspect that it was not the intention that those who read the press release should realise that it was not new money. It is just another little bit carved off the DTI's money which has already been allocated to this matter. It has either been taken from some other programme or it is money that the department had spare. In my day at the DTI we did not have spare money. We were rather parsimonious. However, that is another matter.

Lord McIntosh of Haringey: I remind the noble Lord that during the first two years of the Labour Government--or, as he would describe it, the New Labour Government--we have operated under the revenue budgets inherited from the previous

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government. If there is anything to spare, it has come from the allocation that the previous government provided.

Lord Tebbit: I accept entirely the tribute which the noble Lord pays to the generosity of funding on the part of the previous administration. However, although the global sums are the same, the purposes for which they are used may not be. However, we shall not argue one way or the other about the odd £5 million in what is a quite substantial budget.

The noble Lord may have misunderstood my remarks about partnerships. They were not particularly directed to partnerships in the sense in which they are referred to in this section of the legislation. I can see that there is a case for both sides of industry--if we may use that expression--coming together and coming together with outside bodies (possibly academic and research bodies) to carry out work in this area to see whether we can increase the efficiency of the use of labour in British industry. I spoke in a rather more general manner, in what one might call a Second Reading manner. It was certainly not my intention--nor do I believe it would be the effect of the amendments--to disqualify employers as such from participating in the scheme. It is organisations of employers--not Joe Bloggs Engineering Limited--such as the Engineering Employers Federation that I wanted to cut out. I may differ slightly from the noble Lord in that I regard those collectives of employers as being the equivalent of the collectives of employees; that is, the trades unions. We may differ slightly as regards how we look at these matters. However, I shall read carefully in the Official Report what the Minister said before deciding whether to bring back these amendments at Report stage. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 291 to 293 not moved.]

Clause 26 agreed to.

Clause 27 agreed to.

10 p.m.

Schedule 7 [Employment Agencies]:

Baroness Miller of Hendon moved Amendment No. 294:

Page 86, line 11, at end insert--
("Provided that regulations made under this section shall only be made with the purpose of protecting employees' rights and not otherwise to interfere with the commercial relationship between such agencies or businesses and employers."")

The noble Baroness said: The amendment deals with a matter of considerable importance. It seeks to limit the extent of the regulations that the Government are considering making to govern employment agencies business. The amendment was drafted before the publication of the Green Paper, The Regulation of the Private Recruitment Industry. The draft regulations now revealed are possibly worse than was previously rumoured. If carried into effect, they will tear the heart out of the industry and will damage it beyond the possibility of continuing as a viable operation. This

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possibly will come as no surprise and will not be regretted by many on the Benches opposite. As long ago as 1983 the Labour Party published an election manifesto which was so left wing that it was described by the right honourable Member for Manchester Gorton, a senior member of the party, as "the longest suicide note in history." That suicide note said:

    "We will take urgent steps to abolish private employment agencies". Those urgent steps were high on the list of priorities had the electorate been so misguided as to return the Labour Party to power.

What was the reason for that manifesto objective? Unashamedly, it was,

    "to ensure that the Manpower Services Commission developed a national job centre network". That would have been nationalisation through the back door. In that case it would have been nationalisation without compensation. I hope--no doubt the Minister will reassure us--that new Labour has foresworn that ambition. I am prepared to assume that it has simply not understood the destructive nature of its proposals.

If it claims that it does not know, it is not for want of being warned by the industry and my honourable friends in the other place, even in advance of the draft regulations. It is difficult, if not impossible, in practice to amend regulations after they are laid before Parliament, even under the positive resolution procedure. It is therefore essential that Parliament draws a demarcation line limiting the parameters of those regulations before the government's views become absolutely set in concrete.

There are three major areas where the industry has major concerns that the regulations the Government propose would be totally destructive to the industry. At the same time the regulations will do nothing to improve the employment prospects of those employed directly by agencies or who normally expect to obtain work through them. On the contrary. They will also do nothing to help employers to find temporary or permanent staff. On the contrary.

I accept that some of the Government's proposals are for increased clarity, promotion of flexibility in the labour market, protection of employment agencies' clients, the curbing of payment abuses and the safeguarding of clients' money. To those objectives the Opposition obviously subscribe. I have also had a letter from one of the leading employment agencies in the country assuring me that not only does it support the general direction of these objectives but that it and the majority of the industry already voluntarily meet the standards the Government are seeking.

As I said, there are three major areas in the draft regulations which cause the industry major concern. The first concern relates to the process of what is called "Temp to permanent", where a temporary worker gets on so well with the hiring firm that it offers him or her a permanent job. Agency contracts provide that in such circumstances it should be paid the usual finder's commission for introducing new staff. The Government's argument against this is that some employers do not like paying the commission. Who does

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like paying bills? But without this right to be paid for temporary staff who move to permanent status, the employers would poach the temps for nothing. Approximately 50 per cent of temporary workers find permanent work through temporary employment. That is why the proposed regulation on its own would be very destructive for the industry. The high percentage of temporary workers who find permanent jobs makes nonsense of the argument that it somehow puts temporary workers at some disadvantage in the labour market. If it did, there would not be so many of them converting to full-time employment. Again I say, on the contrary.

The second destructive proposal in the draft regulations is that the production of time-sheets by the worker as a condition of the worker being paid is, in future, to be prohibited. This is unnecessary nannying. In my time I have employed dozens of temps. At the end of the week they produce a time-sheet to confirm that they have attended from, say, nine to five on five days. How else will the agency know what to pay the temp, who is usually paid on an hourly basis? How will the agency refute an argument from an employer that the temp did not show up until 10 a.m., or went home early, or did not come in at all? In what way is a timesheet any different from the clocking-in system used in many factories? The prohibition of this common-or-garden device used throughout industry will leave the agencies open to abuse and fraud and is equally destructive of the viability of their industry.

The third major problem that the Government are causing the industry, for the benefit of no one except, in this case, possibly the Treasury, is a complicated one. Draft Regulation 7 requires agencies to supply temporary workers only as a contractor, not as an agency. There may be some advantage in doing that, so as to make sure that the agency takes responsibility for the health and safety of the temporary workers that it supplies. But the regulation will also have an uncalled-for effect. It means that the agency would have to charge VAT on the whole of the sum billed to the employer instead of only on its commission. The wages of the worker are of course exempt from VAT.

Many employers will not be affected by the requirement as they will offset the VAT against their own liability. However, there are many VAT-exempt organisations which rely on temporary workers: schools, hospitals and some charities. This additional cost to tax-exempt organisations inevitably means that they will employ fewer temps and reduce job opportunities to many people who need to work as temps or part-time for a variety of personal reasons. The protection of temporary workers as regards health and safety can be achieved by a more carefully drafted and specifically targeted regulation stating explicitly what is meant.

I am sorry to have burdened the Committee with points that might have been made when the regulations become final. They may yet need to be repeated. However, I believe that these problems need to be nipped in the bud now, before it is too late and the Secretary of State's mind becomes set, notwithstanding the consultation.

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I referred to my understanding of the standards that the Government are trying to achieve--strangely, not by what should have been a Bill on its own, but by the regulations authorised by another Bill. In reaching those standards, what the Government must not do is over-regulate.

As recently as 3rd June, the Secretary of State, in a speech to the British Chambers of Commerce, recognised that the burden of regulation falls most heavily on small business. Not all employment agencies are small, but many of them are. The Secretary of State admitted that there had been a tendency to introduce overly detailed and prescriptive regulations which were often far from user friendly. He also said that Whitehall had paid too little attention to the cumulative effect and burden of regulation. I agree with the Secretary of State in all of those remarks. This is not a political point. Every government have been guilty in this respect, and every Secretary of State has promised to do something about it--usually without any success at all. I wish the present Secretary of State luck.

To help him in that objective, I have proposed an amendment that will ensure that in producing his regulations under the present Act he does not, by over-regulation, do incalculable damage to an important industry which provides a vital service to employers and workers alike. I beg to move.

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