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Baroness Miller of Hendon: My Lords, I intervene in the debate on this amendment for only one reason. It is right and proper--I am sure the Minister will indulge me--that at the very earliest possible moment of the Report stage I should get something off my chest.

This Bill began in the other place, but it was then completely recast by the government amendments, so that the Bill that left there was totally different in form from the one that had started. The Bill which your Lordships have been asked to deal with was therefore the Employment Relations Bill Mark II. The Government extensively amended the Bill in Committee so that we now have Mark III. However, some 48 hours

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before this present stage, the Government tabled some 16 pages of amendments to Schedule 1 alone, plus about another dozen spread around the Bill. So what we are really being asked to consider is the Employment Relations Bill Mark IV.

I certainly accept that several of the amendments that the Government have introduced at this stage are to honour pledges made to the Opposition at earlier stages; and for that I most certainly thank the noble Lord. I also appreciate the courtesy of the Minister and his staff in sending me part of the material "hot off the press", as it were. But what this really shows is that the Government are once again legislating on the hoof. That means that they are churning out ill considered Bills which they have to amend as they progress through Parliament, or as with an amendment that the Government will certainly be introducing later today, a year after an Act has received Royal Assent and three months after it has come into effect.

Having got that off of my chest, I add that some of those belated amendments may need a little further amendment. I have not had very much time to look at them, so where I have something to say, I shall try to indicate that. It may be that we shall have to deal later with any reservations that I am left with.

With regard to Amendment No. 1 itself, we have no objection to this further clarification of the meaning of "collective bargaining".

Lord McIntosh of Haringey: My Lord, I thank the noble Baroness for the typically courteous way in which she rebukes me. As I think I said in Committee, there are three kinds of government amendment. First, there are those which respond to points made at an earlier stage by the Opposition or indeed by Government Back-Benchers. Secondly, there are those which are tidying up amendments--it is not a political matter; it happens under all governments. Thirdly, there are those which mark changes in policy.

I fully accept the noble Baroness's point that it is undesirable for the third type of amendment to be introduced at a late stage. I apologise for the fact that that happens in some cases. It will happen in amendments put down for consideration today. We try to keep those to a minimum but we do not always win.

I thank my noble friend Lord McCarthy for his recognition that Amendment No. 9 achieves the point he made in Committee. That was what we intended. I do not apologise for the fact that we are flexible and listen to debate. That is, after all, the purpose of a revising Chamber. I commend Amendment No. 1.

On Question, amendment agreed to.

4.30 p.m.

Baroness Miller of Hendon moved Amendment No. 2:

Page 18, line 42, leave out ("21") and insert ("50")

The noble Baroness said: In moving the amendment, I speak also to Amendments Nos. 2, 3 26, 27, 55 and 56. The amendments are identical. They propose to increase the definition of a small business which is

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exempt from the provisions of the Bill requiring compulsory union recognition from one with fewer than 21 employees to one with fewer than 50.

I make no apology for bringing back the amendment. I believe that it is of vital importance to the stability of small businesses. Small businesses are constantly praised by the Government, in particular the incumbents of the office of Secretary of State for Trade and Industry, of whom we are now on our third in just over two years. They acknowledge them as the potential engines of new enterprise and employment. Yet time after time their legislation ignores the difference between small businesses and large ones. Ever increasing administrative burdens are placed on them. I shall not take up your Lordships' time with a catalogue of those burdens because we are now debating another stumbling block being placed in their path--another disincentive to expansion for a small business which survives its dangerous first three years

The possibility imposed by the Act is that if the business has grown large enough to reach a small threshold in number of employees, it may then be faced with a demand for unionisation--a union which, if history is anything to follow, will want to alter the flexible working, multitasking and other processes of "mucking in" together which help those small business get off the ground.

Do not think that I decry the usefulness of unions in larger businesses. I believe that they are a useful tool, reducing the need for negotiating with individual employees and helping to smooth out problems when they arise. However, in the case of small businesses a union inevitably creates the atmosphere of "them" and "us" which does not happen when a handful of people work together. This is especially so when, in a business of the size the Government propose as the starting point, fewer than a dozen employees can impose their will on the other 10 who are probably working alongside them in the same building, if not in the same room.

When this amendment was discussed in another place, the Secretary of State agreed to take the power to alter the number from 21. Paragraph 6(6)(b) now gives him the powers to vary the number of workers. I optimistically assume this means that he concedes that it is possible for the Government to have got their numbers wrong and that the threshold of 21 may, as we predict, be just too low. On the other hand, the power may have been inserted merely to keep the Opposition quiet.

I am not happy to leave the matter in what I believe is an unsatisfactory state. This is especially so as the power to vary the number is so ambiguously worded that it means that the Secretary of State could reduce still further the figure of 21. Indeed, in his response to the debate on the amendment in Committee, the noble Lord, Lord McIntosh of Haringey said--ominously, in my opinion,

    "We acknowledge that it may have to vary in either direction. It could be too stringent or not stringent enough".--[Official Report, 7/6/99; col. 1174.]

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    In other words, having got their foot in the door with the figure of 21, the Government could reduce the figure to 11, five or even three. The Government have the power to vary the figure. There would seem no reason why they should not start at the more sensible and appropriate figure of 50. The reason I refer to an appropriate figure of 50 is because of the recommendation of the Commission of the European Union concerning the definition of small and medium-sized enterprises which was dated 3rd May 1996. I shall paraphrase it and quote from it. It recorded that as long ago as 1990 the Commission had proposed to limit the proliferation of definitions in use in the Community. In 1992 it proposed a threshold of 50 employees for a small business, and 250 for a medium-sized business. The 1996 report states:

    "Some programmes will fix very varied thresholds". That is what the Government are doing in this Bill. The report continues:

    "In a single market without internal frontiers, the treatment of enterprises must be set on a set of common rules". Of all the criteria used for defining a small business including the turnover, the report says that,

    "the number of employees is undoubtedly one of the most important and must be regarded as imperative". That is from the preamble. The formal recommendation in Article 1 paragraph 2 states that,

    "a 'small enterprise' is defined as an enterprise which has fewer than 50 employees". That should be clear enough to the Government.

Because I do not wish to be accused of selective quoting, I point out that the same paragraph includes modifications to ensure that businesses with a high annual turnover, or large balance sheet net worth, or those which are not independent, do not fall into that definition. We on this side of the Chamber would not object if the Government were to accept the Commission's recommendation for the purposes of this Bill but in return applied the modifications proposed in the same paragraph.

In Article 3 of the same document, the Commission undertook to adapt the statistics it produces for various purposes under size classes of one to nine, 10 to 49, and 50 to 249 employees--and then two other categories with which we are not concerned today. The Fourth Council Directive, No. 78/660/EEC, has been amended to incorporate the criteria proposed in the recommendation. It will be no use for the Minister to tell us that the figure of 21, which I described to the Committee as seemingly having "been plucked from the air", is not related to small businesses and was chosen for some other reason.

I remind noble Lords that in the preamble to the recommendation the Commission decried the use of varied thresholds for different purposes. Only a year ago, in June 1998, in the Late Payment of Debts (Interest) Act, a small company was defined as one with fewer than 50 employees. Perhaps the Minister will explain the Government's different approach in the two Acts. What does that say as regards consistency? I told the Committee that despite the Government's claim to have consulted widely over the provision, the IOD, the EEF and the Small Business Bureau are not content with

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that figure. The Government have to pay at least as much attention to them, and to the European Commission, as they do to the unions. The proposals seem to be in breach of the EC directive by which we are bound. I beg to move.

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