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Lord Tebbit: Although I agree with much of what my noble friend said, I hope that she will not at this time press these amendments to a Division. If we could hold back the process just a little, it would be enormously helpful. It was announced in the recent Honours List that Sir Dennis Stevenson would become a life Peer. As I understand it, he will probably sit on the Government Benches. He will be a most useful ally to my noble friend in dealing with matters concerning employment agencies, as he will probably know more about the subject than any other Member of the House. It would be helpful to await his wisdom.

Lord Simon of Highbury: My Lords, I am delighted to hear that preview of yet another star being recruited to our Benches. That is very good news for all of us. More power to their elbow, say I. However, I cannot agree that the noble Baroness's amendment will leave us in a good position to look at this important question. I follow much more the view of the noble Lord, Lord Tebbit, that it would be wise, not merely to hear from a further good mind on the subject than those already available in this place, but to take time for the consultations. They will attempt to distinguish, in examining this case, between good and bad regulation. The noble Baroness is often inclined to regard regulation as a burden on small industry, as if we can make regulation go away. We cannot. What we must do is ensure that it is good and effective for the purposes that government choose.

What the amendment seeks to do in its one-sidedness is to limit the scope of the Government to make very important changes to modernise and improve the regulatory framework governing the private recruitment

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industry, which is a very important one. We have set out our proposals in the consultation document and shall consider the results of that very carefully.

But the amendment that has been tabled provides that regulations made under Section 5 of the Employment Agencies Act,

    "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". It is very important that we import certain wider safeguards into the relationship. Those who look for temporary employees, for example doctors or lorry drivers, have the right to know that the bureau supplying them has checked their qualifications. That is part of the commercial relationship which would not be covered by this amendment. Certainly, that is one matter that the regulatory process should examine and ensure.

If we use this regulatory process it also allows us to improve some very bad practices that have grown up in the 22 or 23 years during which the current law governing employment agencies has remained unchanged. Certainly, the market-place during that time has changed in many ways due to measures, some good and some bad, implemented by the previous government. There is a requirement for change; one cannot say that the market is static.

I shall not go through a whole list of these matters because that is what the consultation is about, but I wish to deal briefly with the term "temp to perm" fees so that there is no misunderstanding. As the noble Baroness said, these are the fees that the hirer must pay to a bureau if he decides to take on a temporary worker permanently rather than continue to hire him through the bureau. Clearly, it is the case that these fees are being used to deter hirers from engaging permanently the temporary staff supplied to them. Whatever statistics the noble Baroness quotes, we want to convert more people from temporary to permanent employment if possible, assuming that is their wish.

Some in the industry admit that they use "temp to perm" fees to stall that process. The existing measures to ensure that workers are not prevented from working for other employers are being undermined by terms in the contract issued to hirers which provide for huge transfer fees to be paid in those circumstances. What we are looking at in draft regulation 8 in the consultation document is not a proposal to control the level of fees but to restrict the circumstances in which fees may be charged so that they are not used to restrict workers' ability to take jobs. After all, in a well functioning labour market employers and work-seekers require to be able to contract with whom they choose. Draft regulation 8 provides that "temp to perm" fees should be limited to cases where workers are subject to a current contract with the bureau under which the latter undertakes to find work for those workers.

The proposals allow the bureau to protect its legitimate interests while ensuring that "temp to perm" charges are not used to limit labour market flexibility or act against the interests of workers and hirers. I submit that that will basically enhance flexibility in the labour market, which is one of the matters that the Benches

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opposite--certainly the noble Lord, Lord Tebbit--always tell us that we must do. We must have more flexible labour markets, as we tell our European colleagues all the time. The regulation seeks to create greater fluidity in the market-place. I believe that the amendment moved by the noble Baroness would stop that. That is why I wanted to make that point very strongly.

I turn briefly to Amendments Nos. 295 and 296. I do not wish to ignore the points made on VAT, which I am sure that the Treasury will be looking at carefully, as will the employers. Nor do I wish to duck the issue of timesheets. But those are matters on which I am sure we shall obtain good answers from industry in due course. There is no need to give the final answers at this stage.

As regards the two amendments, my right honourable friend the Secretary of State for Trade and Industry, during Report Stage of the Bill in another place, said, in response to an Opposition amendment, that he would consider making regulations under the Employment Agencies Act 1973 subject to the affirmative resolution procedure.

Members of this House will know that the Select Committee on Delegated Powers and Deregulation recommended that this should be done. The Government indicated in their response to the committee's report that it concurred with its recommendation. Amendment No. 295 before the Committee this evening takes forward that commitment and makes regulations under Sections 5 and 6 of the 1973 Act subject to the affirmative procedure.

Amendment No. 296 alters Section 13(7)(i) of the 1973 Act. A lacuna in the wording of that section provides that orders cannot be made to exempt particular bodies in respect of part only of their activities. If they are exempted they must be exempted entirely. That was subject to comment by the Joint Committee on Statutory Instruments in 1984. The purpose of this amendment is to allow orders which will, for example, enable membership societies to be exempted in so far as they provide services to their members, but to remain subject to the legislation as regards services provided to non-members. I commend Amendments Nos. 295 and 296 to the Committee. I urge the noble Baroness to consider flexibility in the labour market and to withdraw her Amendment No. 294. I hope that that concludes dealing with employment agencies for the moment.

10.15 p.m.

Lord Tebbit: Perhaps I may intervene again very briefly. The Minister has left me rather less happy than I might have been. Over the years I have frequently used temporary staff from employment agencies. Wearing that hat I have found pretty unpleasant the charges which I have listed made for persons supplied as temps. However, if I put on a different hat, which I wore at one time during my involvement with an employment agency, it seems clear to me that temporary staff are an asset of the agency. To say that they are unable to charge when they lose such an asset and the revenue stream attached to it, having found an employee for an employer, seems a little hard.

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I appreciate, as the Minister said, that it does not apply where the agency guaranteed work on a full-time basis. But in all reason the burden on agencies, particularly some of the smaller ones, would virtually put them out of business. It is not an easy matter. As an employer of agency staff from time to time I believe that some of the agencies make an excessively high barrier. I understand that the Government would not wish to regulate the size of the fee but making it impossible for an agency, particularly a small one, to charge a fee of that kind would result in the elimination of a number of small agencies. It would probably not unduly damage the Manpowers of this world, but I believe that small specialist agencies would be extremely hurt. I hope that the Minister will look again at what he has said and reconsider it.

Lord Simon of Highbury: My Lords, the appropriate answer at this stage is that I have no doubt that the position which the noble Lord has made clear to us will also be made clear by the agencies as we go through the consultation process. We have already made the points that I have tried to make this evening. They are contained in the draft regulations about which we are consulting. I am sure that this point will reappear. I take note of what has been said. We shall consider it seriously as we go along as it is a good and clear point.

Baroness Miller of Hendon: My Lords, the Minister is always extremely courteous when he replies to me, as indeed are both the noble Lords, Lord McIntosh and Lord Sainsbury. They have all treated my amendments with great courtesy, which I very much appreciate. However, notwithstanding that, and even notwithstanding the earlier intervention by my noble friend Lord Tebbit, for whom I have the highest regard especially in the whole area of industrial relations, I must point out that I have been lobbied extremely hard by the employment agencies. For the three reasons that I have given, they have told me that this provision will put them out of business. I am concerned to ensure that that does not happen. Only as recently as yesterday morning, I was asked to table an amendment to delete the whole of Schedule 7. That is how strongly the employment agencies felt about this. Noble Lords opposite will understand that I am not taking this view lightly.

The Minister referred to losing flexibility in the job market. I do not think that that would be the result of my amendment. It states that the regulations shall be made only with the purpose of protecting employees' rights. It does not state anything else. Over half of temporary workers take up full-time employment. The Government's provisions would tear the heart out of the whole business of supplying temporary staff. In those circumstances and despite the great courtesy shown it to me by all the Ministers opposite, I feel that I must test the opinion of the Committee.

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10.21 p.m.

On Question, Whether the said amendment (No. 294) shall be agreed to?

Their Lordships divided: Contents, 28; Not-Contents, 51.

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