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These proposals were subject to informal consultation in the middle of this year and they received wide support from key stakeholders, including the devolved Administrations, the regional development agencies and the CBI. There was general support for delivery of the board’s remit at arm’s-length from central government. It was felt that an arm’s length relationship would provide a stronger focus and greater effectiveness in delivery and clearer accountabilities for performance. Stakeholders also believed that such a relationship would enhance the influence of the Technology Strategy Board across the Government.

Graham Spittle, the present chair of the Technology Strategy Board, has agreed to chair the new body. That will help to ensure that the successful work of the board is carried forward through the

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transition period. Mr Spittle has a tremendous record of driving innovation in business and I greatly appreciate the leadership that he has provided to the Technology Strategy Board in its current form.

All contracts, assets and liabilities to be transferred from the Department of Trade and Industry to the new Technology Strategy Board will occur under the terms of a further order made under the Science and Technology Act 1965, under the negative resolution procedure. I expect the new body to be formally inaugurated in the first half of the 2007-08 financial year. I beg to move.

Moved, That the draft order laid before the House on 23 November be approved. Second report from the Statutory Instruments Committee.—(Lord Truscott.)

Lord De Mauley: My Lords, I thank the Minister for introducing this order. We on the Opposition Benches welcome any action to stimulate innovation in business. However, we do have certain questions about this order.

First, can the Minister explain what the relationship will be between the Technology Strategy Board and the RDAs, the research councils and the equivalent EU bodies under the Seventh Framework Programme for research? How will he ensure avoidance of duplication? The Explanatory Memorandum states that the Government believe that the right way to build on the success of the TSB and to ensure that a programme of technology support continues to be delivered in an efficient and effective way is to create an executive arm’s-length body. It portentously states that its objects and approach will, however, be different from research councils created so far under the Science And Technology Act 1965. The first thing it then says, as if this is the most important thing, is that its primary location will be in Swindon. I hope that the Minister can assure your Lordships that this is not just jobs for the boys.

The regulatory impact assessment states that the costs of delivery will not exceed current costs of delivery within the DTI and quotes an annual figure of £178 million. I may have missed it, but I cannot see a reference to the initial costs of the merger and the establishment of the Technology Strategy Board. Can the Minister enlighten us?

I understand the assertion that the encouragement of experimentation in research can be undesirably frustrated by demands for justification of every cent of expenditure. On the other hand, there is a considerable danger that the remoteness of decision- making on spending from the ultimate provider of funds, the hard pressed taxpayer, can lead to insufficiently rigorous justification of such spending decisions. What safeguards are there to ensure that taxpayers’ money is not wasted?

Efficiency gains are stated in the regulatory impact assessment as being anticipated, but the basis on which such savings are expected, and the amount, is not given. Can the Minister enlighten us?

Under the heading “Risks”, and as part of the case for change, the RIA states that an advisory TSB does not optimise strategic focus. We have no way of judging the business case, so can the Minister expand on why the proposed structure will optimise strategic focus?

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The RIA states rather baldly that the creation of the TSB is expected to be positive both in terms of improved communications and joint working. We should hope that that is the case. It then gives a long list of categories of public sector stakeholders, followed by a single category of private sector stakeholder. I hope that that is not a demonstration of the Government’s priorities.

The RIA states that the proposal is expected to have a positive effect on small businesses pursuing innovative ideas. However, it gives no explanation of the basis for that statement. It appears to be there simply because of the requirement of the small firms impact test for such a statement. There was a suggestion by the Liberal Democrat spokesman in the other place that small businesses could be overlooked by a grant-awarding body manned exclusively by people with big business experience. I could not see from Hansard that the Minister there had responded to that point. Perhaps the noble Lord can do so.

The RIA goes on to state that the Government will monitor the impact of the measures presented. How will the Government do that and, in particular, how will they monitor the performance and success of the TSB itself?

The RIA states that the TSB will produce an annual report. That is a step in the right direction and we will want to look closely at it. Perhaps the Minister could confirm that it will be widely available. I look forward to his responses to my points.

Lord Roberts of Llandudno: My Lords, we on these Benches give our general support for the establishment of this board and we, too, look forward to that report, so that in a year or two we will be able to monitor it and, if any changes are needed, they might be introduced then. Otherwise, we support the order.

Lord Hunt of Chesterton: My Lords, I should first declare an interest: I am a professor at University College, London, and I am chairman of a small company. At University College we work with the insurance industry in the Lighthill Risk Network. One of the problems in dealing with industry and research that has been focused on more this year than normal is the extreme difficulty of industry obtaining data from UK research organisations. I am sure that noble Lords are familiar with the fact that in the United States, data from its research community are pretty well freely available. In the UK they are not, because guidance is given by Government to their research establishments to charge for their data. They often make it very difficult and there is no general data policy.

I am chairman of the Centre for Ecology and Hydrology and part of its remit from the Government is to ensure that it charges for the data that come from its establishment. I support that in the frame with which it is done but I believe there is considerable conflict and confusion in this area. If you really want UK research to get out to small industries, you have to change dramatically the whole structure in which data are made available. You will find in the world of the environment that it is absolutely normal for most

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people to give up trying to get data from the UK research community. You have to go to the United States or elsewhere. This is an extremely serious position.

A very welcome point about this document, which has been a progressive change by this Government and I understand is now welcomed by the Conservatives and the CBI, is the role of procurement by government agencies in helping industry. When I ran the Met Office, I was told by the then Government that it was not the job of a UK government agency to support small industry through procurement. That was something that they did in France, I was told. I am glad we now do this in the UK but is it possible for UK government agencies to procure new technology under EU rules or will it have to be done on a competitive basis across Europe? It was not at all clear from the statement to what extent it will be possible to focus these activities on UK small industry, as opposed to actually sponsoring research across the whole of Europe.

My last point, which involves the text of the document, is that one of the ways in which the Government can help small industries—that is beginning but much more could be done—is to publicise UK companies working for the UK Government. Many foreign organisations comment that where excellent work is being done by UK small businesses, the UK Government do very little to publicise it. We well know that the UK Government are very good at publicising the Shells, BPs, BAEs and Rolls-Royces of this world, but they are not very good at publicising the very small companies. My noble friend Lord Sainsbury once commented upon that point. I very much hope that you will encourage this and I look forward to some new initiatives and the wider use of the internet for that purpose.

Lord Truscott: My Lords, I thank the noble Lord, Lord Roberts, for his very welcome support for the TSB. I will have to write to the noble Lord, Lord Hunt of Chesterton, on his points on the data. But I can comment on the points that he raised on how the new TSB will work with organisations such as the European Institute of Technology and other European bodies: the TSB will certainly collaborate with the European Institute of Technology when this is established and the Technology Strategy Board will seek to collaborate with all bodies—international, national, regional or local—with an interest in promoting innovation in the UK.

The noble Lord, Lord De Mauley, mentioned collaboration—the relationship between RDAs, the TSB and so on—and the need to avoid duplication. The TSB will have a duty to collaborate with all these bodies but it will be tasked with having a special care to avoid duplication.

The noble Lord, Lord De Mauley, again raised the question of the move to Swindon and whether, in his words, this was “jobs for the boys”—and perhaps the girls as well. I could say a lot about Swindon but I will say that it was selected following a wide-ranging review of 14 possible locations against a set of

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objective criteria and specific sites proposed by the regional development agencies.

The criteria covered the local skills base, transport links for the board’s stakeholders and quality of life indicators. Swindon became the strongest candidate because of the following: its geographical situation, given that the body of stakeholders will be coming from government and business; the accommodation immediately available in Swindon, with back-office functions shared with the research councils; the proximity of those research councils; and the likelihood of more existing DTI London-based staff transferring and thus reducing relocation and redundancy costs. It was also felt that a move to Swindon would create benefits, including enhanced efficiency and service delivery, together with social and economic benefits for the surrounding area. So, generally, a move to Swindon was thought to be a very good idea.

I was asked about the nature of the relationship between the department and the Technology Strategy Board. Day-to-day decisions will be taken independently by the board. However, the board will be appointed by the Secretary of State and, under its charter, will be obliged to spend its money in accordance with any directions issued by the Secretary of State. The relationship between the board and the department will be set out in a management statement and financial memorandum, which will specify the detail of the department’s controls over the board.

I was also asked how much the change will cost and what the financial benefits will be. The costs associated with the delivery of the technology programme through the new TSB will not exceed the current costs of delivery arrangements within the DTI, based on a programme spend of £178 million per annum. However, we expect efficiency gains over time in respect of the administrative work that is presently outsourced. In addition, the new body is expected to result in improved effectiveness in delivery of the programme. It is true that transitional costs will be associated with setting up the TSB, but it is currently not possible to give precise costs for the transition process as the organisational design and business processes of the new body are not yet completed, and those will obviously impact on any reorganisation costs.

Again, I shall write to noble Lords to cover any points that I have not dealt with in regard to the Technology Strategy Board being an arm’s-length body. The current board is purely an advisory body. The idea behind that is that the new TSB will have an executive status. That will enable the future board to deliver functions currently carried out within the DTI, including taking over the delivery of the £178 million technology programme, which I mentioned. That includes grants for collaborative research and development and support for knowledge transfer networks.

On Question, Motion agreed to.

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Employment Act 2002 (Amendment of Schedules 3, 4 and 5) Order 2006

6.03 pm

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Truscott) rose to move, That the draft order laid before the House on 23 November be approved [Second Report from the Statutory Instruments Committee].

The noble Lord said: My Lords, noble Lords will recall that the Government introduced, in the Employment Act 2002, a framework designed to improve the way in which disputes between individual employees and their employers are resolved. The intention of the framework is to encourage disputes to be resolved through a better dialogue between employers and employees.

The Act provides that, in most cases, the parties should follow a three-step statutory procedure. First, the employer must set out the circumstances of the dismissal or disciplinary action, or the employee must set out the grievance, in writing. Secondly, both parties must meet to discuss the dismissal/disciplinary action or grievance. Thirdly, the employee may appeal against the employer’s decision if he or she is not content. If there is an appeal, certain steps must be followed.

A failure to follow the three-step procedure may have consequences for the party at fault, should the employer’s action or employee’s grievance then be the subject of a formal complaint to an employment tribunal. Where employers fail to follow the statutory procedures, a tribunal may increase the amount of any award to the employee. Any award may also be increased where it becomes evident, during the course of such proceedings, that employers have either failed to provide a written statement of particulars of employment or where it is incomplete or inaccurate. Failure by an employee to observe the procedures could result in the tribunal not hearing the complaint. In addition, in cases where the complaint is heard and the employee is successful, the resultant award may be decreased.

It is also important to note that the statutory procedures do not apply to all jurisdictions automatically. The statutory procedures and the requirement for the tribunal to consider the claimant’s written statement will apply only to any complaint under the jurisdictions listed in Schedules 3 to 5 to the Act. The order seeks to add three recently created jurisdictions to Schedules 3 to 5. Each jurisdiction is similar in nature and I therefore propose to highlight their broad similarities rather than discuss them separately. Under each jurisdiction, there is a requirement for the employer to consult, or in some circumstances to negotiate, with employees or their representatives. Each jurisdiction contains provisions protecting employees or representatives from detrimental treatment by their employer when exercising their bargaining or consultation rights. At present, the jurisdictions listed in the draft order are not subject to the statutory grievance procedures or the written statement penalty provisions because they are not included within Schedules 3 to 5 to the Act.

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Article 2 of the order will rectify that by listing those parts of the regulations that provide protection against detriment within Schedules 3 to 5 to the Act. This approach is consistent with the treatment of similar jurisdictions; for example, they already provide that employee representatives of a European co-operative society, who have suffered detriment, should follow the statutory grievance procedure.

We propose that this order will come into force on 6 April 2007. The Government are making the amendment now—more than four months in advance of that date—to ensure that businesses and employees have plenty of notice of the change. The DTI carried out a three-month consultation about the draft regulations between May and August this year. There were 12 responses, including representations from the CBI and TUC. A clear majority of respondents agreed with our proposals. They noted that this was a minor change that would not be burdensome. The order will ensure that the three jurisdictions will be treated in a consistent manner with similar jurisdictions. The amendment will therefore make things simpler for employers and employees alike. I beg to move.

Moved, That the draft order laid before the House on 23 November be approved [Second Report from the Statutory Instruments Committee].—(Lord Truscott.)

Lord De Mauley: My Lords, noble Lords will be relieved to hear, due to the lateness of the hour, that we welcome the order, which is intended to ensure that the dispute resolution framework set out in the Employment Act 2002 will apply to the three stated new areas. We welcome any measures that will encourage more employers to engage in information and consultation activity. We believe that voluntary measures like this one allow the flexibility which is so helpful in dispute resolution.

However, concerns with the overall cost of the statutory dispute resolution procedure have been raised with us by various business leaders. So we welcome the Government's decision to review the framework for settling dispute resolution, as set out in the Written Ministerial Statement last week. The Government admitted in that statement that,

To do that, they are reviewing the dispute resolution procedures 2004. That is welcome news, although the Institute of Directors and indeed the GMB, both of which had good reasons for saying so, suggested waiting to implement these regulations until after that review has been completed. Perhaps the Minister could expand on the Government’s reasons for going ahead.

The North Western Local Authorities' Employers' Organisation claims that it will take two hours for managers to understand the effects of this order, but the Government have dismissed that claim. Can the Minister assure us that the Government will provide information about the implementation of this order

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to businesses in language that is easy to understand? As I said at the outset, we welcome the order. I look forward to the Minister's responses to these few points.

Lord Roberts of Llandudno: My Lords, this must be a wonderful day for the Government, when the three parties of this Parliament all agree. On behalf of the Liberal Democrat Benches, I welcome the order.

Lord Truscott: My Lords, I am exceedingly grateful for the support and constructive comments of noble Lords this afternoon. I thank the noble Lord, Lord Roberts, and the noble Lord, Lord De Mauley. I shall deal with the couple of points raised by the noble Lord, Lord De Mauley, about the burden that some employers, particularly small businesses, may face. There will be initial costs associated with putting procedures in place for some firms. In the longer term,

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business stands to gain from the better management of disputes, timely settlement and a more efficient tribunal service.

Why should the Government not wait for the outcome of the review before making this amendment? It is necessary for the Government to make the amendment at this stage for two reasons. First, while the Government would not wish to prejudge the outcome of the review, it is highly likely that any replacement procedure or modified procedure would have to refer to the jurisdictions listed in the current schedules in one way or another. Secondly, any potential amendments to the statutory dispute resolution procedures resulting from the review are unlikely to be made for some time, which would create considerable delay. It therefore makes sense to make this amendment now.

On Question, Motion agreed to.

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