I am delighted to have a second opportunity to speak on the Bill's Third Reading, having been interrupted at 2.30 pm last Friday when, the nation will recall, I was saying how much the Opposition welcome the broad thrust of the legislation. When I mentioned that to a colleague this morning, he put me down by saying that since then the nation will doubtless have been holding its breath. I am glad to say that since then I have had a week off to write an extensive and detailed speech on the subject.
I should re-emphasise that the Bill has cross-party support. It was introduced in another place by the noble Lord Archer of Sandwell. It was debated with a great deal of reasoned argument and was amended to some degree. The Opposition would argue that further amendments could have been introduced at that time or, indeed, on Report or in Committee in this place. We shall argue during this morning's discussions that although the Bill is a flawed diamond, it is a diamond. I pay tribute to the hon. Member for Wentworth (Mr. Healey) for bringing the Bill before the House. He is to be congratulated on picking up and running with a measure which was extensively designed and consulted on by the previous Government.
Last week, the House heard an excellent speech by my hon. Friend the Member for Totnes (Mr. Steen), who summarised our general support for the Bill. We also heard excellent speeches from my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) and my hon. and learned Friend the Member for Harborough (Mr. Garnier), both of whom raised some concerns about the Bill, which we shall reiterate this morning. We shall do so not because anything can be done about them during the Bill's progress through Parliament, but because they might be taken into consideration by those who will have the onerous task of putting the Bill into operation—including the Advisory, Conciliation and Arbitration Service and others. This morning, we shall take the opportunity to raise one or two concerns about the way in which the Bill will operate.
I also pay tribute to the work of my right hon. and noble Friend Lord Lang, who drafted the Bill and consulted on it when he was President of the Board of Trade. I am glad that that excellent work has been recognised by the Government, who have taken up the Bill more or less word for word and brought it into play.
It is slightly regrettable that the Minister of State's support for the Bill, which he has gone to some length to voice over recent weeks, has not gone as far as allowing him to introduce the measure as a Government Bill. The Conservative Government did not have time to do that because the consultation period began in October and November 1996, and then, of course, the unfortunate event on 1 May prevented us from bringing the Bill before the House.
I remind the hon. Gentleman—and he may then recall—that there was an opportunity for the previous Government to introduce the Bill between the end of consultation on the draft Bill and the Queen's Speech on 23 October 1996.
There was indeed a short period between the end of consultation and the following Queen's Speech, although, now that Labour Members have the privilege of being in government after 18 years, they will know that draft legislation tends to be debated by the Ministerial Committee on Legislation in March or April, and that the Queen's Speech would have been drafted well in advance of the completion of consultation. None the less, the hon. Gentleman is right that, technically, the Conservative Government could have included the Bill in the Queen's Speech. It is certain, however, that the Queen's Speech in November was more than a year after the consultation, so the present Government could have included this worthwhile Bill in it, instead of some measures that we would argue were less desirable. Perhaps today is not the occasion to make cheap party political points across the Floor of the House. Broadly speaking, the Bill has the support of hon. Members on both sides of the House.
It is worth recording that the Conservative Government published a draft Bill in August or September 1996, and thereby introduced a useful new principle into the conduct of business. The publishing of draft Bills gives Back Benchers and the Opposition a good opportunity to consider the Bill properly before Second Reading. That is a first-class measure of the Conservative Government. I am very glad that the Labour Government have recognised the excellence of our idea and are running with it—although they are doing so slightly ungraciously, in claiming that the notion of draft Bills was their own. The Bill demonstrates that we thought of the notion and believed that it would be a good thing. Some thought that we ought not to publish draft Bills, so I am glad that the Labour Government are following our lead.
In order to get Friday morning going, it is worth reminding the House of the Bill's broad principles. The Bill amends the law relating to the settlement of individual employment rights disputes. Industrial tribunals will be renamed employment tribunals—a relatively harmless exercise, but to be welcomed because the term is rather more positive. We are talking about employment, a good thing, rather than the slight flavour of a bad thing associated with industrial tribunals.
The Bill permits new procedural rules to be introduced to streamline some tribunal procedures, and extends tribunals' jurisdiction. ACAS will be given power to draw up an arbitration scheme to settle unfair dismissal disputes, and the Secretary of State will be given power to extend that role to other areas of employment law if it becomes necessary or desirable.
The Bill amends the law relating to compromise and dismissal procedures agreements, and extends the powers of conciliation officers. It also introduces measures to encourage the use by employees and employers of internal appeal procedures in cases of dismissal, and makes provision for compensation in cases of unfair dismissal that involve disability discrimination.
The Bill has obtained the approval of ACAS, the Confederation of British Industry and the Institute of Directors. It must almost be unique in achieving the approval of all three organisations. It is unusual for campaigning bodies to be silent when legislation affecting their main business is on the brink of reaching the statute book. Normally, we would hear such bodies saying that a measure either goes too far or does not go far enough. The only exception to the silence has been mild approbation from time to time, when the subject has drifted into such organisations' field of vision.
Despite the silence, the Bill invests a significant amount of trust in the Government to adjust employment dispute procedures competently and fairly. Conservative Members very much hope that that trust is justified. I suspect that a huge quantity of change is about to occur in employment disputes, not least because of the minimum wage, economic and monetary union and the social chapter. All those factors will lead to a significant upturn in employment disputes. I hope that the Government will bring this new law into play in such disputes in a fair, sensible and just way, and that the trust that ACAS, the CBI, the IOD and others have put in them will prove well placed.
The House is naturally greatly in favour of the notion of industrial tribunals; they are an important and valuable way of settling employment disputes, and I hope that they can continue to be so. To date, about 1 million cases have been settled by industrial tribunals at about 300,000 hearings, which is a significant amount of help to many employees and employers alike.
One of the key points that we have raised since the publication of the draft Bill is that the industrial tribunal method of settling disputes should be easily accessible, informal, speedy and an inexpensive means of redress.
Is not there a case to be made, however, for an even more informal and even less expensive way of dealing with disputes: allowing for greater elimination of disputes before they reach tribunals? Will my hon. Friend comment on whether an opportunity has been missed in the Bill? I know that some aspects of clause 13 partially address the matter.
My hon. Friend is right; he touches on the main purpose of the Bill. The increase in the number of disputes over recent years and the clogging up of industrial tribunal procedures are precisely why the hon. Member for Wentworth introduced the Bill. He has tried to enable disputes to be settled more quickly and easily, and in a more accessible way. I shall in a moment make one or two mild criticisms of the Bill. Such changes would have made procedures even more accessible and speedy. My hon. Friend is right that the reason for the Bill is that the mechanisms have become slightly clogged up.
There is a backlog of cases, and delays have risen to unacceptable levels. The Green Paper recognised that case loads had more than doubled, from 34,697 in 1989–90 to 71,661 in 1993–94. As a result, only 54 per cent. of complaints in England and Wales were heard in 26 weeks during 1993–94. Improvements thereafter raised the percentage of complaints heard only to 76 per cent. in 1995–96. The net result is that people are waiting more than half a year for the settlement of their disputes, which can lead them to become rancorous and unpleasant in their own minds. Their disputes could be settled perfectly happily and the rancour removed if disputes were heard more quickly.
Since the Green Paper was published, the number of cases has risen further. In 1996–97, there were 88,910 cases, and the number is forecast to reach more than 109,000 a year by the beginning of the millennium. That would be unacceptable in the present industrial tribunal set-up, so the purpose of the Bill is to enable the case load to be more easily heard.
Does my hon. Friend agree that part of the problem, and the reason why the Bill has been introduced, is that there is too much legislation going through the House? As a result, more and more people will be entitled to their rights, which will put pressure on the system. In many ways, we are creating the problem.
Although I would happily agree with the general libertarian instincts of my hon. Friend's intervention, I am not certain that libertarianism extends as far as removing individuals' rights. The purpose of an industrial tribunal is to ensure that individual rights are carefully and sensibly heard. My hon. Friend, like me, is the greatest possible libertarian; I am sure that he would not want the Bill to interfere in any way with individuals' rights to lead their lives free of interference by central Government.
Rather contrary to what my hon. Friend said, I think that the reason why the case load has increased so significantly is the large increase in the number of discrimination cases, both racial and sexual. In 1993–94, discrimination cases amounted to only 8 per cent. of the total, but by 1995–96 that proportion had grown to 30 per cent.
To introduce a degree of political antipathy across the Chamber for a moment, I must warn that the political correctness in everything that the new Labour Government do may lead to an increase in discrimination cases. I shudder to think what would happen if, for example—
Order. May I assist the hon. Gentleman? The House recognises an important distinction between Second and Third Reading debates. Whereas a debate on Second Reading may roam far and wide over what should or should not appear in the legislation, and over its general background, a Third Reading debate is strictly confined to the contents of the Bill that has progressed that far through the House.
Order. I am sure that hon. Members will have done as I have, and read the wise words of the hon. Member for North Wiltshire (Mr. Gray) about the Bill last week.
I am grateful to you, Mr. Deputy Speaker, especially for your flattery in describing my words as wise. I shall accept your guidance and move on to the contents of the Bill rather than its general background.
In that context, I shall raise the Opposition's two or three reservations. Clearly, the details cannot be changed between now and Royal Assent, but our concerns may be taken into consideration by ACAS and others, or by the Government, when the Bill is being applied.
Two or three of those concerns were raised by Opposition Members last week, and it may be worth my reiterating them now. First, the burden of proof seems to be veering towards the employer's having to prove that the employee is guilty, rather than the other way round. The approach should be even-handed between employer and employee, and there should be no burden of proof on either side. The people sitting in judgment should be able to make their minds up without forcing the employer, to a greater degree than the employee, to provide proof.
Will my hon. Friend reflect on the consequences, if the Bill becomes an Act, of its interaction with the minimum wage legislation that the House has recently passed? That legislation reverses the burden of proof, and would mean that an industrial tribunal operating under the Bill before us would be obliged to regard an employer as guilty of having broken the minimum wage law if he simply failed to have access to records proving that he had not done so.
My hon. Friend is right. Having recently spent days and days on the National Minimum Wage Bill as it progressed through the House, he is far more of an expert on such matters than I could claim to be. He is right that the burden of proof is moving towards the employer, and that minimum wage cases will certainly bring extra pressure on industrial tribunals.
As I have already said, I hope that the Government will find ways of ensuring that the clogging up of industrial tribunals does not become worse.
On Second Reading last week, my hon. and learned Friend the Member for Harborough said:
the burden of proof is moving away from the person making the complaint to the person who is required to answer it".—[Official Report, 20 March 1998; Vol. 308, c. 1577.]
He was right. By raising that issue, he began to question the basis on which tribunals work. I should like to see tribunals work on the basis of facts, rather than making judgments on the basis of bias or assumptions.
There are several less important more technical amendments that we should have liked to be made, but sadly, the hon. Member for Wentworth has not accepted them. First, we are concerned about the meaning of the phrase "appropriate consent" in clause 4.
We are also worried about the provisions that allow two judges rather than three to sit. My background is in shipping in the City of London, where extensive use is made of commercial arbitration of disputes that often involve many millions of pounds. There would never be such an arbitration with only two arbitrators. We would always have three, both because there would then always be a majority on one side of the dispute or the other, and because three arbitrators can bring greater wisdom to bear on the problem. If justice is not only to be done but to be seen to be done in industrial tribunals, it is regrettable that the Bill would allow a tribunal with only two members, one of whom would be the chairman.
Equally, we regret the fact that the Bill has not taken up our suggestion in the consultation paper that, in addition to using ACAS, we should be allowed to use private arbitration. The City of London uses private arbitration extensively. Two or three experienced business people in the area of concern—in my case, shipping—are set in judgment, a case is put to them, and they use their wisdom and experience to come to a just decision.
There is no reason to presume that because arbitration is private, there is something wrong with it. It is also used extensively to sort out settlements in divorce cases these days. Therefore, it is regrettable that the Bill has intentionally removed the use of private arbitration from the gamut of weapons that tribunals can use. A Conservative Bill would have allowed both sides to agree to private arbitration, and we regret the fact that that possibility has gone.
Leaving aside those small lacunae and qualifications, the Opposition welcome the speeding up of the process. Employment disputes will now be heard and settled more quickly. We are also pleased that the hon. Member for Wentworth, and doubtless the Government behind him, have recognised the excellence of the work done by Lord Lang when he was President of the Board of Trade and have taken up the draft Bill that we proposed and on which we consulted.
I congratulate the hon. Member for Wentworth on his work. The Bill is good—by and large, with a few small exceptions—and we believe that it will help in the process of industrial disputes taken through industrial tribunals. We hope that the House will welcome it.
I pay tribute to the eloquence of my hon. Friend the Member for North Wiltshire (Mr. Gray) in speaking of the Bill as a whole. I shall confine my remarks to three specific clauses.
Clause 3 provides for an important extension of the number of occasions on which it will be possible for decisions to be taken by a chairman acting alone rather than by three people sitting together.
I have a constituency case under the existing industrial tribunal system, involving someone who has come to me to express his unhappiness with a decision taken under the existing provisions that already allow a chairman to act alone. That is why I am concerned about the great extension of the possibilities for one person to sit alone in judgment.
My constituent told me that there was a personal antipathy between him and the chairman, and that the chairman had refused to listen to the evidence appropriately and properly. He believed that that man was at the very beginning of his career as a chairman of industrial tribunals, and was not experienced enough to understand the proper workings of the law.
That is a matter which my constituent must pursue through various routes, including the law. None the less, it illustrates the potential dangers of a dramatic extension under clause 3 of the number of occasions on which a chairman acting alone can take decisions.
I welcome clause 11, which will bring about an important extension in people's rights. It will build on the existing provisions whereby the Secretary of State can act as a guarantor of statutory redundancy payments if an employer is insolvent, and extend them to cover situations in which there has been an agreement settling a dispute about such a statutory redundancy payment.
However, clause 11 flags up another issue that has been brought to me by a different constituent, who was awarded a statutory redundancy payment some years ago. He worked for a partnership. One of the members of that partnership has been declared insolvent, but the other has not. The guidance that my constituent has received from Government officials and lawyers is that, until both partners are declared insolvent, the provision whereby the Secretary of State can step in to deal with statutory redundancy payment is not triggered. That is unjust, because there is no question of the payment being received, although it is clearly due. I hope that if the House considers further amendments to this legislation at a later date, it will consider closing that loophole.
I welcome clause 13, which deals with the procedure for encouraging greater use of internal appeal procedures. That important matter enables me to raise a point expressed by an employer in Cumbria who is concerned about the way in which the tribunal process operates. That employer has built up a small business in the face of considerable economic adversity in some areas of south Cumbria over the past 10 years. Sadly, clause 13 does not sufficiently rebalance the effects of the existing legislation, and an appearance before an industrial tribunal presents a major difficulty for someone running a small business. For the two or three days on which that small business man had to make an appearance, staff had to be taken away from their normal functions—they were not serving customers or dealing with stock—and much of his senior management time was taken up preparing for the case.
It is all very well for Governments to encourage people to start small businesses, but it is difficult to find people who are appropriately skilled or trained to take over when employers have to appear before an industrial tribunal. Clause 13 begins to address the point raised by the employer who came to see me, but it does not go far enough. He complained that, if an employer is taken before a tribunal, the proceedings of the case are reported in the local and sometimes even national press, and the company's reputation—perhaps even the employer's personal reputation—is blackened. Even if the employer's case is subsequently upheld by the tribunal, the company's commercial reputation is greatly damaged.
Unfortunately, there is no equal sanction on the person making the complaint. He or she cannot lose. At best, the complainant will walk away with a substantial sum and, at worst, there will be no financial penalties whatever. The employer faces a different situation: at best, he will walk away with an unaltered financial position; at worst, his financial position and commercial reputation will be seriously impaired.
Clause 13 encourages greater use of internal appeals procedures, which must be good. However, the Bill does not begin to redress the essential imbalance in the justice process.
Uncharacteristically, my hon. Friend is not being entirely even-handed in this matter. We have all seen cases in recent months and years, in which employees have taken their employers to tribunals with cases based on serious allegations, such as sexual harassment, and the tribunals have clearly found that the employees had not given reliable evidence or had been telling lies. There should be a major sanction against employees taking cases to tribunals unjustifiably.
My hon. Friend is absolutely right. The issue that I was seeking to address, however, was that of costs. The Cumbrian employer who came to see me was concerned because the person making the complaint against him was receiving legal aid, incurred no costs whatever and was in a no-lose situation, whereas he felt that simply by being taken to the tribunal, he was a loser. His commercial reputation was damaged, as were the effectiveness and efficiency of his commercial operation.
That is why clause 13 is welcome. It is one of the main reasons why the Bill is appropriately receiving bipartisan support. However, I hope that when the House reflects on those issues both later today and in the future, it will realise that, even after the passage of the Bill, the position will remain imperfect.
I whole-heartedly endorse what my hon. Friend says about costs. It is a question not just of legal costs but of disruption costs. Any tribunal case causes disruption, particularly to a small business, whose key staff may be out for up to three days.
My hon. Friend is absolutely right. The House must deal with the issue of disruption costs. We now have a good system, which is reflected at the beginning of the Bill, of setting out a compliance cost assessment in every Bill that comes before the House.
It is now a matter of bipartisan consensus that there should be more small businesses, and we all recognise that they are the engine of growth and job creation in the economy. Clause 13 goes some way towards striking a balance—but does not go far enough—between effective and efficient enforcement of employee rights, and the rights of employers to go about their business and to create jobs for existing and future employees.
Although the Bill is a step in the right direction, we must go much further towards achieving real equity and justice and incentives to create jobs. I hope that the House will not fight shy of returning to that matter time and again until we have a system that meets the concerns that I have expressed and the problems that employees and employers in south Cumbria face. We need a system in which we can all feel a sense of pride and which will be an asset to our economy.
I, too, support the Bill, but wish to express some reservations. First, I should like to pay tribute to the work of all those who serve on employment tribunals. Perhaps I should declare an interest, because my mother-in-law has been on industrial tribunals for many years, and I can vouch for her skill in settling disputes of all kinds. I should also mention that I have a small business and am well aware of the burdens placed on small businesses that my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) mentioned.
While it is right that employees should be given good and strong legal protection, that must be balanced against the need to encourage small businesses to take risks in a difficult world and, in the process, to create jobs. Unless jobs are created, there will be no rights to go with them.
One of my concerns is that the Bill makes no clear distinction between the problems faced by small and large businesses, and does not consider the merits of placing a limit on the scale of awards against small businesses. The effect is that many small businesses, such as mine, have felt the need in recent years to take out specific insurance. Although it is not inexpensive, it is almost becoming due diligence for a small firm to take out such insurance because, without it, it faces the unquantifiable risk that a claim will be made that will not only disrupt the running of the business, as my hon. Friend the Member for North Shropshire (Mr. Paterson) mentioned, but, in extreme circumstances, might even lead to its closure if the scale of the award is severe enough.
In such circumstances, while the business might be able to pull through, public knowledge of such an award would have a catastrophic effect on the business. Therefore, the risk-award profile for a small business in coming to an industrial tribunal differs greatly from that of a large firm.
What are the terms of the insurance that a small business can take out? Typically, the small business would have to seek the advice of the insurers—before the insurer was prepared to back the business, it would have to be convinced that a proper internal procedure had been undertaken before a case came to an industrial tribunal. That means that when an insured small firm is considering an employee case, it would feel obliged to ring up the insurer for advice—the insurer would almost take the role of a personnel department. That could be a good thing; it may mean that small companies receive well-informed and conscientious advice, so that fewer disputes end up at a tribunal.
As the balance of rights between employer and employee is increasingly shifting to the employee, insurers feel that, to maintain reasonable premiums that are in the reach of small firms, they must offer excessively cautious advice. Employers who think that they have a good case for dismissing an employee will be told by their insurer that, if the matter goes to a tribunal, they may not be covered by the insurance. In many cases, the Bill's provisions on insurance will not apply to small firms. If the Bill does not take account of the needs of small firms, it will be yet another piece of well-intentioned legislation which, in fact, inhibits job creation.
Is not my hon. Friend's argument supported by the fact that, because employers find it easier to dismiss employees in the United States than in western Europe, there has, in the past 10 years, been much greater job creation in the United States than in western Europe?
On the excellent point made by my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins), does my hon. Friend the Member for Guildford (Mr. St. Aubyn) agree that in America micro-businesses—which are defined as businesses with fewer than five employees—have created a huge proportion of the new jobs?
My hon. Friends are very much to the point. As we have discovered over the past two decades, a deregulated labour market creates a bigger labour market. The danger is that legislation, however well intentioned, may reduce the number of jobs. The concern about the Bill is not so much that small firms will not want to risk increasing the number of their employees, but that their inability to sack an unsatisfactory employee will inhibit the growth of the business—there will be, if I may use the phrase, a double whammy.
Nevertheless, I urge hon. Members to support the Bill. It is a step in the right direction, although I do not believe that it goes far enough. Before long, the House will have to deal with the special requirements of small firms.
In considering the Bill, we must recognise that, in today's global market, it is vital that we protect the viability of our industrial and commercial base. The importance of an harmonious working environment to the quality and quantity of industrial output cannot be overstated. I believe that industrial tribunals have contributed enormously to that environment. They are impartial and independent of the Government, trade unions and employers.
As an employer, I know how important it is to have an easily accessible, informal, speedy and inexpensive means of adjudicating employment rights issues. Where possible, of course, parties should deal with disputes through in-house procedures. The advantages of that are not only the cost, but privacy and the enhancement of long-term employer-employee relationships.
That is not always possible, however, and, as my hon. Friend the Member for Guildford (Mr. St. Aubyn) pointed out, there are inherent problems in taking such a course. If the Bill streamlines the procedures of industrial tribunals and extends their jurisdiction, while encouraging the use of internal appeals procedures in cases of dismissal, I welcome and support it.
As my hon. Friends have said, many of the Bill's measures were originally proposed by the previous Government, who recognised that the delays caused by the case load of industrial tribunals have increased significantly in recent years—in some parts of the country, the backlog is unacceptable. It is time to deal with that problem. In many ways, the Bill is the product of lengthy consultation undertaken by Lord Lang when he was President of the Board of Trade. At the time, he could not have anticipated the additional work load that will inevitably be created as a result both of the United Kingdom becoming a signatory to the social chapter and of the new Government's legislative programme.
It matters not to me whether industrial tribunals are given another name. To call them "employment tribunals" may reflect the role that they now perform in dealing with employment rights disputes, rather than cases in which employees fought levies imposed under the Industrial Training Act 1982. Interestingly, the biggest increase in tribunal work has been in cases involving race and sex discrimination, and equal pay issues.
The Bill would introduce far more important measures, which would do much to deal with the logjam. The proposal that a tribunal chairman may sit with only one other member must ensure that a conflict of personality between the chairman and the person before him is overcome, as my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) said.
I concur with my hon. Friend the Member for North Wiltshire (Mr. Gray) in the belief that it is a pity that the Conservative proposal for the use of private arbitrators has been rejected. There are some excellent private arbitrators, and I do not believe that it is necessary for the Advisory, Conciliation and Arbitration Service to have a monopoly in resolving disputes.
I regret that the Government do not share my enthusiasm, and that of my hon. Friends, for private enterprise. Other measures proposed in a Green Paper issued in 1996 would also have been helpful. One must question why the Government do not support proposals to allow tribunals to dismiss a case during a substantive hearing if it becomes clear that the case will fail. One must also question why they do not allow the tribunal to award costs if a party has rejected a reasonable offer of settlement. The advantages of such positive measures would be less cost, the reduction of stress on employers and employees—which is of paramount importance—and the fact that petty cases would not burden the industrial tribunals system. Moreover, such proposals would enable intractable cases to be heard and dealt with more speedily.
Perhaps the most important measure in the Bill is the one that relates to the alternative means of settling disputes. Under the Bill, parties in unfair dismissal disputes will be able to opt for independent, binding arbitration, which is currently limited to collective disputes. Parties must be encouraged to consider how to settle disputes—tribunals cannot be the only option. Both sides should benefit from arbitration. If it is quicker, cheaper, more private and more informal than a tribunal hearing, it must be a valid option.
Does my hon. Friend agree that it would be if the Bill contained a provision under which a tribunal could refuse to hear a case unless the firm's internal procedures had been exhausted?
Order. I say, for the benefit of the hon. Member for New Forest, West (Mr. Swayne), that when hon. Members want to intervene, they must rise in their place.
I agree with my hon. Friend. I am aware that concerns have been expressed about arbitration. Two parallel systems of justice could emerge. One would be arbitration—private, with no right of appeal—and the other public tribunals governed by a body of law and with the right of appeal. A situation could emerge in which no one would choose arbitration without the right of appeal against perverse decisions.
I broadly welcome the Bill, because the employment rights that it offers would at least go some way to alleviate some problems of employment law and the problems that we now face when we employ people. However, some of my concerns have not been dealt with, and I strongly advocate flexible arrangements to deal with the challenging future in employment.
I did not intend to speak on the Bill, but, having listened to the debate, I feel it necessary to make a small contribution and to declare an interest as an employer with a small convenience store in Swansea, which has been in the family since the 1920s. Three generations of my family have owned the store, and, since I became a Member of Parliament in 1992, my sister has taken charge of the day-to-day running. We employ eight people. In the 1960s, when my father and grandfather ran the store as a family concern—
I am grateful, Mr. Deputy Speaker. I was merely trying to explain that I am an employer. We mainly employ part-timers and there is a large throughput of staff, some of whom come for only six or nine months, while others have been employed for more than 14 years and would be covered by unfair dismissal procedures. In the main, we have been extremely lucky in the people we have employed. However, we are a family business, not professionals, and the people we employ do not go through the stringent interview procedures that one might find in a larger business. Therefore, I am considering the prospect of a small family firm being taken to a tribunal, because of the Bill, by someone who claims to have been unfairly dismissed, although the firm thought the dismissal fair.
Our business is typical, and there are thousands of small convenience stores and small businesses. Many operate on the margins and would normally be one-man bands, but have taken on one or two people to help. My hon. Friend the Member for Mid-Dorset and North Poole (Mr. Fraser) mentioned the stress for employees, but employers also face enormous stress. When we take people on, we worry that we might be taking on future problems and costs over and above those that we have already accrued by employing them. Obviously, we want to establish a procedure that will be fair to everyone. If employees who were unfairly dismissed could not seek redress from a tribunal it would be wrong, as employers could be become tyrannical and dismiss people without good cause. There has to be a procedure whereby employees are protected.
Does my hon. Friend agree that clause 13, which encourages the use of internal appeals as the first stage, is an important element in what he advocates, which is the chance for employees and employers to resolve disputes without recourse to a tribunal? Does he further agree that, as many right hon. and hon. Members have said, the clause does not go far enough because we need to entrench the idea that the use of an internal appeals procedure should be expected before one goes down the expensive and difficult route of a tribunal?
I think that my hon. Friend the Member for New Forest, West (Mr. Swayne) referred to that. I hope that when difficulties arise between employers and employees they can be resolved amicably and reasonably, but that will not always be possible. For all sorts of personal reasons, perhaps, they may simply not be compatible—something they might not at first have realised. In small business, small rows break out, almost like family rows or rows between neighbours. One of the worst things that Members of Parliament have to contend with are disputes between neighbours, some of which are insoluble.
In a small firm, when a dispute breaks out between employer and employee, often it cannot be solved internally. If the small business is very small, no internal device or procedure will be available. In my business, none would be. As the owner, I would be called on to deal with a problem, but it might have arisen between my sister and an employee. I suppose that I would have to adjudicate, but it would be extremely difficult to take sides between an employee and my sister. How could I give a vote of no confidence in the person I have put in charge of running my business? I should hate to go home at Christmas if that happened.
It is interesting to hear the history of the Evans family. Might my hon. Friend not take a leaf out of the book of my hon. Friend the Member for Guildford (Mr. St. Aubyn) and get his mother-in-law to sort out such disputes?
I am in the happy, or unhappy, situation of not being able to draw on my mother-in-law to sort out my disputes. One needs someone who knows the business—someone who could be called on to give expert advice, but at reasonable cost. In the 1980s, my business made hardly any money. In some years, we made a loss and had to draw on the family to do extra hours, as we could not afford to pay overtime.
Insurance is a great thing and can save businesses extra money in the long run, but, as one lady told me this morning, a tremendous number of people do not even have home contents insurance; and it is not merely because they are taking a risk. In many cases, they cannot afford it—it can cost £200 or £300 a year. People running small family businesses in lean times will be tempted to cut costs. For example, their insurance might not cover internal disputes, but if a dispute arose and they sought legal advice, it would cost money. Either way, the small business loses and, in lean times, the employer has no choice.
Employers have to be properly represented, particularly as the employee has recourse to legal advice through legal aid. That seems unfair. While the business might not be making any money, I suspect that the owner would not be eligible to legal aid and would have to contest the case himself. It could come to a point where the employer was no longer concentrating on running his business, but thinking solely of the dispute, briefing himself, as busily as he could, as an amateur on the law and probably seeking advice from customers and business associates.
Does my hon. Friend agree that when there is a dispute between employer and employee in a small business, it is inevitably the employer who compromises himself to deal with the problem in the way he sees fit, which may not be the most appropriate to himself, simply to overcome the problem of an employee walking out or not doing the job properly? That is inherently unfair on the person running the business and putting in the time and money to ensure that other people are in gainful employment.
My hon. Friend is right. If I were confronted with such a problem I could not afford to go to court. There are no two ways about it: I would have to compromise and cave in all down the line. I would have to employ someone I do not want or trust because he had recourse to funding through the taxpayer—I would pay for him, but could not afford to pay for myself. The dispute would not be solved, but would fester for years. We must strike a balance.
The Bill goes some way to providing for disputes to be resolved internally—internal solutions should be exhausted before having recourse to law—but there must be protection for the employer. The balance has shifted too far one way for small businesses.
I am vice-chairman of the Small Business Bureau, so I have contacts with many small businesses, in which I have been interested since I was elected to the House. In the 1980s, dynamic small firms took on more people and helped the economy to grow. We must hope that they take on more people in the 1990s to achieve a booming and growing economy. We cannot rely as much on industries that employ 10,000 and 15,000 as we did in the past. British Aerospace operates in my constituency, and its personnel department has a procedure for sorting out internal disputes, but my business does not have a personnel department other than my sister, who is a one-man personnel department.
I am a director of the Small Business Bureau. Does my hon. Friend agree that the Government should discuss those issues with the SBB, because it leads the field in understanding employment rights in small businesses and is recognised across the country for that? Does he also agree that we should be worse off if the Government did not consult it?
I shall not address the point, other than to say that the Small Business Bureau considers employment protection as well as protection of employers.
Organisations such as the Small Business Bureau, the Federation of Small Businesses, the Institute of Directors and the Confederation of British Industry have small business departments because they recognise the importance of small businesses, want to strike the correct balance, and want employees to have the right protection. They do not want to shift the balance against employees.
I do not want the law to be altered in such a way that employers would be deterred from taking the risk of employing someone. The new deal involves taking on people who have been unemployed for more than six months. The Government are asking employers to have faith in them and in the unemployed, especially the young unemployed aged between 18 and 24 who have had difficulty getting jobs, and to take them on and keep them on.
We do not want people to be taken on for only six months, only to be foisted back on the unemployment register; that would be useless. We want them to be employed for more than six months, or for more than two years, which is the point at which employment rights protection comes in, to break the cycle.
We do not want businesses to be deterred from taking people on. We want small businesses to get involved in the new deal and to take people on with a subsidy of £60 a week, but they will be cautious if they think that employment disputes might involve thousands of pounds in compensation and legal costs.
I welcome the Bill and wish it well, but the Government should consider fresh measures that would protect employers and employees. Striking the right balance would ensure that small businesses could take on far more people.
The Bill enjoys cross-party support and there are a number of enthusiasts for it, but it contains defects. I wish to draw your attention, Mr. Deputy Speaker, to four of them.
First, the Bill does not require parties to a dispute to exhaust other avenues before going to the tribunal. Clause 13 allows the tribunal to reduce the award to the successful party if other avenues have not been exhausted.
Order. The hon. Gentleman may have heard what I said earlier. To stay in order during a Third Reading debate, hon. Members must refer to what is in the Bill, not what they would have liked to be in it. Such matters are dealt with on Second Reading. I want to hear only the hon. Gentleman's views on what is in the Bill.
I shall do my level best to keep within your strictures, Mr. Deputy Speaker.
I congratulate the hon. Member for Wentworth (Mr. Healey) on taking the Bill so far on behalf of Lord Archer of Sandwell. It is a great honour to take a private Member's Bill so far, and he is a tantalisingly short distance from achieving Third Reading.
The Bill has been discussed against a background of excellent industrial relations over the past few years and extraordinarily successful growth in employment in western Europe. As my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) said, perhaps only America has a better industrial relations scene.
I have been an employer and I am concerned about employers' attitude to tribunals. I do not want to rake over what I said on Second Reading, but it is vital that hon. Members understand that many employers do not think that taking a case to the tribunal is worth the candle. Many cases are resolved out of court or before the tribunal sits, often to the disadvantage of the company. I shall not discuss the cases that I discussed last week, but I have received a lot of comment on them. I echo strongly the remarks of my hon. Friend the Member for Westmorland and Lonsdale: employers are put off going to the tribunal for reasons other than legal costs. Tribunals began as a quick, cheap and easy way for lay members to resolve disputes. Sadly, lawyers have become more involved in recent years. My hon. and learned Friend the Member for Harborough (Mr. Garnier) is safely in China as a member of a parliamentary delegation, so I can be rude about lawyers, who are costly and are driving out the lay element in tribunals.
Lay members do not often contribute much to tribunals. Unions hire highly skilled lawyers to represent the plaintiff, and employers, if they go to the tribunal, are forced to take expensive legal advice. It is regrettable that we have gone a long way from the concept of lay people using common sense to sort out disputes quickly. The process has become horrendously lengthy since lawyers became involved and there are six-month delays, which are exactly what we do not want.
I strongly support the Bill's aim of speeding up the process and resolving disputes in a reasonable time, but I am worried that an even greater burden of proof will be placed on employers. That will also have a negative effect, because employers will be cynical and throw in the towel early. People will not want to take on labour, which was the point made by my hon. Friend the Member for Ribble Valley (Mr. Evans), a splendid small business man from Swansea, who spoke for thousands of small business people who want to take on labour.
Last week, I talked to a plumber in Ellesmere who would like to take on another employee, because he has the work, but he is put off by the legislation, the form filling and the honor—in a small town—of possibly having to dismiss and get into a legal tangle with someone whom he knows well. That is a real danger, and I hope that Ministers are listening carefully.
Some people think that insurance is the answer, but, even if small business could afford the insurance premiums, the problem is that insurance companies can start to dictate the employment rights offered. I say that as someone who has experience of fire insurance for business. The insurance people come in and dictate to the business people what has to be done before they are even allowed to pay the insurance premiums. What does my hon. Friend think about the dictates of the insurance companies on employment rights?
That is a most interesting intervention, because such behaviour by insurance companies would run counter to what we are all trying to achieve-the smoothest possible industrial relations with the minimum of interference from outside. It would be a most retrograde development if insurance companies could lay down the conditions on which an employee could be taken on. It would be yet another horrific psychological barrier to the plumber who has enough business to take on an assistant. As well as conforming to the legislation, the plumber would have to undertake not to infringe numerous insurance documents; that would be a worrying development.
I am concerned that, at Third Reading, the Bill still does not address the inconsistencies of tribunal decisions. It is bizarre, for instance, that holiday pay is a matter for industrial tribunals in Scotland but not in England. There is not an employee in the country who is not involved in discussions on holiday pay. That is only one of the flagrant and gross inconsistencies. I am concerned that the Bill, which is intended to speed matters up, may lead to even more inconsistencies in judgments. Nothing in the Bill provides for a review mechanism to ensure that judgments are kept on track. I could cite numerous other instances in which, because of the sheer number of cases, judgments are taking different directions in different parts of the country, according to the decisions of individual tribunals.
Does my hon. Friend agree that that problem is likely to be exacerbated by clause 3, which will increase the number of occasions on which a decision is taken by only one person, instead of three, which is more likely to balance out any individual idiosyncrasies? Judgments made by one person could be more arbitrary and subject to his or her personal characteristics or mood.
Thank you, Mr. Deputy Speaker. I shall be most careful in how I reply.
The Bill, in introducing decision making by individual chairmen, will exacerbate the problem that my hon. Friend the Member for Westmorland and Lonsdale mentions. Without a review mechanism, the House will soon have to revisit the question.
My final, short point is that, in my experience, we have very good industrial relations, but many people who serve on industrial tribunals are out of date. People might accuse me of agism—
I have no intention of casting aspersions on my hon. Friend's mother-in-law. However, many people on tribunals come from another age. They are elderly trade union officials nearing retirement, or ex-personnel managers, and they pick up £150 a day for their time. Not enough young people serve on tribunals who could bring their current experience to bear. [Interruption.] My hon. Friends may laugh, but I have no intention of attacking mothers-in-law or members of their generation who give their time. The Bill should contain provisions to attract younger people, with contemporary experience of how good our industrial relations now are.
With those reservations, I accept that the gist of the Bill is in the right direction and I congratulate the hon. Member for Wentworth on bringing it forward.
Last week, I had the honour and privilege of speaking from the Front Bench on the Bill. I thought that that was the highest honour I would achieve and that I could then relax and permanently retire to the Back Benches. Unfortunately, either because of the quality of my performance or because of a shortage of colleagues who were prepared to do a stint on a Friday, I find myself speaking from the Front Bench yet again. I hope that my hon. Friends and other hon. Members will bear with me for a second time for another modest contribution.
I am sure that Opposition Members entirely agree with the Government Whip.
The raison d'etre for Members of Parliament is to pass laws. We are law makers and that is the task that we are expected to perform. It is the main, if not the only, reason we are here. We are certainly well practised in the task. Since 1979, we have passed 220,000 pages of law—just short of a quarter of a million. We are clearly becoming more efficient at passing laws, because we have passed 112 volumes of statute law since 1945, compared with fewer than 300 volumes in the previous 235 years. We are speeding up making laws and we are passing more and more pages of law. Like a sausage machine, the procedure is becoming more automated and working faster and faster—with the possible exception of this Bill.
Do all those laws make things better? Do they make people's lives easier or more difficult? The Opposition support the Bill because we believe that it will make things better for people and because it has a deregulatory flavour. That deregulatory initiative was started by us when we were in government. The Bill's general thrust is to reduce bureaucracy in the resolution of disputes between employers and employees.
I am, as ever, grateful to my hon. Friend. Is my hon. Friend arguing that, when a measure is essentially deregulatory, it is likely to be beneficial to people, and that the converse applies—if regulation, intervention, bureaucracy or the activities of politicians or Governments are increased, the measure is likely not to be beneficial?
That was first intervention that I have taken from my right hon. Friend, and it was spot on; he is known always to hit the bull's-eye. Legislation should be passed to reduce bureaucracy and administrative delay and to make life more efficient, more constructive, easier and happier.
There is a major difference between the Government and us in theory, although it can be seen in practice as well. The Government and their supporters tend to believe that passing more laws will solve problems; our experience is that it creates more problems. Constituents ask for laws to solve one problem, but that often creates others.
We welcome the Bill because we believe that it will reduce pressure on employers and employees to seek the help of the courts or of what are to be called employment tribunals. It tries to divert disputes between employees and employers from formal regulatory measures to informal procedures in companies or at arbitration. That will reduce bureaucracy, rules and regulations and consequential problems. I therefore support the thrust of the comments of my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth).
All developed societies have grievance procedures. There has always been a remedy in law for when employee-employer relationships go wrong. Until just after the second world war, going to court was the way to do it. That was expensive, daunting and often disadvantageous to employees in seeking future employment and references.
I pay tribute to my hon. Friend the Member for North Wiltshire (Mr. Gray), who gave us a grand tour, with certain restrictions, on the issues that the Bill addresses. I am grateful to him for giving us his professional assessment of the effect of the Bill. I also pay tribute to my hon. Friend the Member for Mid-Dorset and North Poole (Mr. Fraser), who made some perceptive interjections, as did my hon. Friend the Member for New Forest, West (Mr. Swayne), whose speech was somewhat truncated.
Tribunals safeguard the rights of employees. Although the majority of employers are good, there will always be a minority who take advantage of their employees. There is a converse to that. We always talk about the rights of employees. We should talk about the rights and duties not only of employees but of employers; it works both ways. It is always presumed that the employee is disadvantaged. Having heard my hon. Friend the Member for Ribble Valley (Mr. Evans), I think that some employers may be disadvantaged. We must keep a balance in employment law by realising that it is not always the employer who is at fault.
Labour Members will be interested in these figures: in 1974, 14,750,000 working days were lost to strikes; in 1996, there were only 1,303,000. Collective relations have dramatically improved over those 22 years. There will always be problems between individual employees and employers. The increasing recognition of individual rights has increased the number of applications to industrial tribunals. I stress the word "rights", because it is not individual responsibilities but individual rights that have led to the 90,000 applications a year to industrial tribunals. There is no converse right for employers to go to industrial tribunals to complain about their employees. It is only one way, as if employees are the only ones who can be disadvantaged.
It was the growth in the number of applications and the ensuing backlog of cases that prompted our Government to examine the matter and to produce the broad and enlightened approach before the House. That is the right approach. I pay tribute to this Government for picking up the ball and running with it, and making one or two alterations to give it their own distinctive flavour. There are differences between today's Bill and the draft Bill published in 1996, such as the refusal to allow for private, independent arbitration. Instead, the scheme is wholly in the hands of the Government-run Advisory, Conciliation and Arbitration Service. The Government think that that will be an improvement; the Opposition think that the opportunity for private arbitration would have been better.
In its fundamental principles, this Bill is the same as the draft Bill published by the previous Government. Throughout history, we have seen invaders tearing down existing religious buildings, replacing them with their own places of worship on the same site and proudly proclaiming those as their temples and churches. So, too, has the Labour party, in conquering the electorate last May, proudly claimed this Bill as its own. In fact, it was largely we, the vanquished, who designed it. We pay tribute to the conqueror, but it would be nice if the conqueror would recognise in his winding-up speech that it is essentially our church.
The Bill is in three parts: it reforms the procedure of industrial tribunals, which will be known as employment tribunals; it legislates for an alternative methods of settling disputes between employer and employees; and it will ensure that internal appeal procedures are more widely used. It would not be appropriate to list all the clauses, as has been done before. We all know what they are. As there is other business, I do not want go through them in detail.
The Bill is largely based on proposals drawn up and sent for consultation by our Government. It will improve the methods by which grievances between employers and employees can be settled. We believe that the Bill could have been improved. My hon. Friend the Member for New Forest, West was to have explained how, and we look forward to hearing him on another occasion. We should have liked to maintain the freedom of choice for parties to go a private, independent arbitrator, but that aspect will be run by the public sector.
Conservative Members tabled several amendments that illustrated the quality of those Members. We were all greatly impressed today by the quality of their contributions. I have not often sat on the Front Bench; on the Back Benches one does not listen in the same way. The quality of their speeches, especially those of the newer Members, was first rate—that does not necessarily mean the more youthful Members, but it certainly applies to the newer ones.
That was clearly an interjection by a politician. I am grateful to my right hon. Friend.
We are disappointed that the Government did not feel able to improve the Bill in the way we suggested. As a dispassionate observer, I thought that certain amendments would have improved the Bill, particularly those concerning the burden of proof, which should be neutral. Perhaps an annexure or appendix could be added to the Bill to deal with some of the matters raised in unsuccessful amendments.
In my experience of the House, Bills discussed on the Floor of the House get shorter, while powers in them are dealt with by statutory instrument and by codes of conduct initiated elsewhere. Perhaps a code of conduct or method of practice could be attached to the Bill to deal with the content of certain amendments. For example, we sought to ensure that, where a case was decided by written evidence alone, there would be a greater safeguard to ensure that both sides had received independent and competent advice on the consequence of not giving oral evidence. In addition, we sought to provide a safeguard so that if a lay member of a tribunal failed to attend the tribunal at any stage, the hearing could go ahead even without permission from all parties. Could that be attached to the Bill?
The role played by legal officers was mentioned. The relevant Minister from the Department of Trade and Industry is not here today. There are so many Ministers that the Government can churn them out, but I am glad that the hon. Member for Lewisham, West (Mr. Dowd) is in his place. He may be aware that the Minister took seriously our concerns about arbitration and legal officers. Perhaps he could touch on that point when he winds up.
The House was sorry that we did not reach amendments Nos. 20, 21 and 23, to which my hon. Friends the Members for Westmorland and Lonsdale (Mr. Collins), for Eastbourne (Mr. Waterson), for New Forest, West and for North Shropshire (Mr. Paterson) referred. We must make it more attractive for an employee to settle within the company's disputes procedure.
Bearing in mind the fact that it costs nothing for an employee to go to an industrial tribunal, but it costs time and money for an employer to set up a case in a tribunal or in arbitration, the Bill should provide greater incentives for the employee and so encourage the deregulatory process. Is there a way to provide an increased incentive for the employee to use the company's own internal procedure?
Does my hon. Friend agree that where there is a requirement to exhaust internal procedures before a tribunal, that in itself gives significant impetus to the improvement and development of firms' own internal procedures?
Clearly, my hon. Friend is making up for the brevity of his speech, and the Government would do well to listen to him.
We like the Bill. You are changing the name from industrial to employment tribunals and you are trying to have a fast track.
Nothing gives me greater pleasure than addressing the Chair when you are in it, Mr. Deputy Speaker. I got carried away with the force of the argument and addressed it to the hon. Member for Lewisham, West, who looked as enthralled as I was.
The thrust of the Bill is to reduce bureaucracy and to speed up the process, and the process may be speeded up if there are more arbitration agreements and more employment tribunals. However, the best way to reduce the number of disputes coming into the arena is to encourage the procedures set up by the Bill. We want to encourage good industrial relations. If there was an incentive for an employee to do everything he could to settle his dispute within the company system—and if he were told that he might not get more money by going to arbitration or an employment tribunal—that would be welcome.
We do not want increasing conflicts procedures. We want a happier, reformed country where employees and employers work more happily together. The employee must be encouraged not to take his dispute to a public arena, paid for by legal aid or by his union, where the employer has to fork out so much money that he settles—a sort of blackmail.
Does the hon. Member for Lewisham, West have a device up his sleeve whereby some pressure could be put on employees to realise that they might not get the best deal by going to a tribunal? Perhaps awarding costs against unsuccessful employees might provide that pressure. We need a stick-and-carrot approach. Using the company's internal procedures may well be to the employee's financial advantage.
My hon. Friend will be aware of the recent Wentworth golf club spanking case, in which an employee—entirely incorrectly—accused her employer of pinning her against a filing cabinet and spanking her. The case went on for eight months at a tribunal, and damaged the interests of Wentworth golf club. In the end, it was proved that she only did it to bring pressure to bear on the golf club to improve her conditions of employment.
I do not know the details of this case as well as my hon. Friend does. I hope that the case has nothing to do with the hon. Member for Wentworth (Mr. Healey), who is sitting on the Government Benches. There are not many of these cases, but the media love them. They suggest that there must be an encouragement for employees and employers to settle their differences. The hon. Member for Lewisham, West is a man of experience and wisdom, and he may have some way of including this legitimate concern in the Bill.
My hon. Friend has knowledge of small business. Does he accept that most cases are settled internally and that only a small number require the expensive recourse to law and tribunals?
That is only partly correct, because 90,000 cases are still waiting, although I am sure that many differences are dealt with. This country has reached the stage where everybody talks about disputes and rights and we are becoming like the United States, where everybody complains. We have to be careful to ensure that our legislation does not encourage that.
That puts a very different complexion on the whole matter.
It is about time that I started to wind up my speech—[HON. MEMBERS: "Shame."] All good things come to an end. The relationship between an employer and an employee can be difficult. My hon. Friend the Member for Ribble Valley explained the difficulties affecting his small family-run business and all that goes on there with members of his family, full-timers and part-timers, and the various problems which arise—in fact, it might make a good soap opera. It is good to know that, in spite of all those difficulties, he has prospered, and we believe that his company will go from strength to strength, especially if he does not have too much to do with it.
In any civilised society, it is important that there is an effective system of hearing and satisfying grievances. The system of industrial tribunals has played and continues to play an extremely valuable role in protecting the rights of employees and allowing grievances to be heard and, where appropriate, redress to be given. None the less, the system is under great strain because of the sheer volume of applications, which are largely the product of the system's success. It is for that reason that the Conservatives support the broad thrust of the Bill, which originates from the draft Bill published under the previous Government.
We support the Bill because it seeks to make industrial tribunals more effective and to encourage more people to use arbitration as a less costly, less time-consuming and less confrontational approach towards resolving problems. To a certain extent, the Bill is reminiscent of the previous Government's approach to reconciliation in divorce cases. There is a certain irony in our legislating for a quicker, cheaper and less formal way to remove the burden from the system of tribunals, because they were introduced as a means of relieving the pressure on the courts. We hope that we shall not in future have to devise a system of removing the pressure on the system of voluntary arbitration.
I am glad to see the hon. Gentleman supports that approach. We have to ensure that, every few years, we do not have to pass more laws to deal with the laws we got wrong before.
There is an additional procedure outlined in the Bill, but we must avoid creating a problem similar to that which arises when a dual carriageway is built—the assumption then being that traffic will start to flow more easily. If I may digress for a moment, Mr. Deputy Speaker—I can see by your expression that it would be wise to do so for only a moment—in south Devon we keep straightening the roads and getting rid of the hedges; every time we do so, more cars go faster down the roads, so we build ever-larger car parks for those arriving at the end of their journey. If, in the Bill, we provide two or three ways of dealing with disputes, we are in danger of putting three times as much traffic down the routes. I would call it the "Devon road-straightening principle" and I ask the Government not to go down that route. It is expensive and it does not produce better results.
I am grateful to my hon. Friend for giving way in the middle of his superb review of the subject. I am afraid that he is right: when, in the last century, it was found that, for the uses of the ordinary consumer, the High Court was too complicated, the county court was introduced; then in the 20th century it was found that the county court was too complicated and the small claims court was introduced. Is there not always a tendency for such procedures to become hardened in the arteries? My hon. Friend's anxiety about the roads in Devon, when viewed in parallel with the history of those judicial systems, is all too plainly justified.
It is a delight to have a question from the Whip; he was on the Front Bench and suddenly disappeared, only to reappear two Benches back. More important, my hon. Friend is a lawyer of great distinction and is well known for his assiduous understanding of the legal process. To hear a former Minister and a Whip make a quality intervention like that is a delight for us all, and his question should make us all aware of the issue of how to prevent more people from going down a road, once it has been opened.
There is a difficult balance to be struck, because the Bill opens a way that we want to stop people from using. The only way to do that is by taking a stick-and-carrot approach and by telling people that, if they go down that route, there might be stick; but that, if they try to resolve the dispute within their own system, there is a carrot. That is an important principle and the fact that that is its purpose should be somehow attached to the Bill. I do not say that as an idle throwaway point.
No, certainly not. Currently in the pipeline are issues relating to parental leave, the working time directive, the minimum wage and a White Paper that might remove the two-year rule for eligibility to apply to a tribunal for wrongful dismissal. There will be an enormous amount of extra traffic, which is why we are a hostage to fortune. The Conservatives introduced the Bill as a deregulatory measure and the present Government may find that it is a good vehicle to enable them to handle not only matters arising as a result of their legislation, but those emerging from legislation from Europe. Although I have a neutral stance on Europe in terms of more rules and regulations—
I have quite a neutral stance on more rules and regulations, except those that impinge on our way of life and result in more and more bureaucracy, which, far from being good, means that more rules are needed to cope with the new bureaucracy, especially when it comes from Brussels.
Although one welcomes the Bill, there are all sorts of dangerous pitfalls lurking in the undergrowth. Conservative Members will watch closely the progress and the implementation of the Bill. We want to ensure that it is the fast track and the track envisaged by the previous Government, rather than merely an overspill for more and more grievance proceedings. We also want to ensure that the procedure remains informal and that it does not take on the legalistic characteristics of industrial tribunals.
As I near the end of this marathon—[HoN. MEMBERS: "Surely not."] I shall not be drawn. As I near the end, I should acknowledge that industrial tribunals do an essential job and play a vital role in maintaining good industrial relations, but there is a backlog and their work load will increase, thanks to the policies pursued by the Labour Government and, to some extent, the new legislation from Europe. The Government must evaluate the implementation of the new system to ensure that it provides the promised improvements. Conservative Members earnestly hope that it does deliver those improvements, and we want to see the legislation on the statute book as soon as possible. Finally, I am grateful to the House for giving me the opportunity to wind up for the official Opposition, the Conservative party, in this way.
I convey to the House the apologies of my hon. and very good Friend the Member for Makerfield (Mr. McCartney), the Minister of State, who, unfortunately, was called away on unavoidable business. Instead of delaying the Bill, we decided to proceed with it this morning, in the hope that we can give it the Third Reading that it richly merits—although there were moments during the speech by the hon. Member for Totnes (Mr. Steen) when I wondered whether that was likely to happen.
We have had several contributions by Conservative Members, principally by the hon. Members for North Wiltshire (Mr. Gray), for Westmorland and Lonsdale (Mr. Collins), for Guildford (Mr. St. Aubyn), for Mid-Dorset and North Poole (Mr. Fraser), for Ribble Valley (Mr. Evans), for North Shropshire (Mr. Paterson) and for Totnes. We also had a speech by the hon. Member for New Forest, West (Mr. Swayne), which contained one of the most meteoric ascents of the learning curve that we have witnessed in the House. It is also quite a shock to the Chair for the Chair to make a ruling of which people take notice.
Most hon. Members who spoke were principally concerned about the actual or potential threat that some of the provisions in the Bill might present to small businesses. There are always problems with small businesses, deriving from a structural problem. People tend to go into small business because they can do one thing very well. They then discover that they need to be able to do two, three, four or five other things before they can put the business in a condition to allow them to do what they do really well. Personnel management and financial control are among the skills that they need to master.
The purpose of the Bill is not to make the lives of small business people more difficult. To listen to the hon. Member for Ribble Valley on occasion, one would assume that no one was ever dismissed in this world without going to an industrial tribunal, yet, in a later intervention, he pointed out that the vast majority of dismissals or departures were perfectly reasonable and amicable, if not welcome, and that only a minority of cases attracted the attention of industrial tribunals.
However, it is obvious from Conservative Members' contributions that the current system is in urgent need of review, that it is grinding to a halt, that there are defects in the legislation under which it is administered and that a review of some kind is long overdue.
Echoed by other hon. Members, the hon. Member for North Wiltshire said that, sometimes, confronted with the logistical complexity of dealing with employment tribunals, people—especially employers—prefer to concede a case than to defend it, although they might have a good case. That is a serious matter. One can give people rights, but if the procedures place an unbearable burden on them, so that it becomes practically impossible to enforce those rights, the rights are valueless. The Government are keenly aware that we need to give people the opportunity to enforce those rights. A large part of the Bill is designed to ensure that they can.
In essence, the Bill simplifies procedures, to give tribunals a greater range of discretion. It seeks to promote conciliation, so that there is no need to have recourse to tribunals.
The hon. Member for Totnes wanted at least a show of gratitude from us for the Bill's antecedents, and I willingly and unreservedly give it. The measure attracts widespread support, principally because most of its provisions are common sense. I just mention a couple of the reservations that were most frequently expressed by Conservative Members.
The hon. Member for Westmorland and Lonsdale expressed reservations about the chairman sitting alone, or with one other member. The Bill provides for the chairman to sit with one other member, but only when all the parties who are present or represented at the hearing agree to it. It is the conciliatory approach again—nothing will be forced on people. It is envisaged that that provision will be used only rarely, but, when it is used, it will facilitate swift resolution of cases and prevent unnecessary and costly delays, which is one of the principal purposes of the measure.
The hon. Member for North Wiltshire said that some amendments were accepted in the Lords, where the Bill was considered at length and in detail. In fact, the majority of the amendments tabled in the Lords were accepted and incorporated into the Bill.
Conservative Members generally said that the Bill was capable of improvement. I very much doubt whether there is a single piece of legislation that has ever passed through the House—or ever will—that could be held to be perfect in all elements, or which hon. Members from any part of the House could not see an opportunity to improve.
I am informed that some are better than others. I am sure that the hon. Gentleman was not referring to the legislation that set up the Child Support Agency.
Issues such as employment tribunals and all the matters relating to employment law need, perforce, to remain permanently under review. It will always be necessary to ensure that these things are working; that they are working in the way that Parliament wanted them to work; that they are working for the benefit of the people for whom they were designed.
One of the hallmarks of the present Government, which we have attempted to impress on the House since May 1997, is that we are not doctrinaire or dogmatic in that sense. Our philosophy is best encapsulated in the idea that what counts is what works. I hope that we shall be able to get the Bill speedily on to the statute book and into operation. Obviously, guidance will be provided as to interpretation and performance, but no Government Department simply sends a Bill out into the world with no regard as to what happens. The Bill will be constantly monitored to see whether it needs to be fine-tuned.
I take the point that the hon. Member for Totnes made: sometimes, one solves one problem and is left with a different problem to tackle. As a general proposition, as long as one's secondary problem is less than one's primary problem, at least one is making progress. I very much doubt whether there is a perfect solution in these matters, but they will remain under constant review.
The Minister may well be coming to this point, in which case perhaps he will forgive me for raising it. My hon. Friends and I suggested that we should give the employee an incentive not to use the new system. Might that be part of an appendix, an annexure or a working practice note attached to the Bill?
The hon. Gentleman mentioned that in the carrot-and-stick section of his speech. Provision already exists for costs to be awarded when a party acts frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in bringing, conducting, proceeding with or concluding proceedings, such as when the party is advised that they have no case, yet they insist on going ahead with it. The penalties already exist—the stick is already there.
However, the one thing that we were keen to do in the Bill, as is evidenced by clause 13, was to ensure that there are more informal ways of promoting solutions by the quickest possible route. We are equally convinced that people should obtain advice before agreeing to a determination on written evidence. Under the Bill, people do not surrender their rights by agreeing to a determination, but the Government would encourage people to ensure that they understand, and obtain the advice that they need, before proceeding.
In summary, the Bill was introduced at the other end of the building by Lord Archer of Sandwell.
As I suspect that this is the first time that the hon. Gentleman has appeared at the Dispatch Box, I should like to say on behalf of Conservative Members, how grateful we are for the courtesy and good grace with which he has responded to the debate, standing in for the Minister of State. The latter's loss is our gain, because at least we can understand the hon. Gentleman's response, which has not always been case with the Minister of State. We wish the hon. Gentleman all the best in the forthcoming reshuffle. I am sure that the competent way in which he has handled today's proceedings will not be lost on his party.
I am grateful for those kind remarks—although I am not sure whether they are accurate. My hon. Friend the Minister of State has a way of making people understand what he means, whether verbally or otherwise.
This measure was introduced in the other place by Lord Archer of Sandwell. We are grateful for the opportunity that it presents to discuss these important matters. The Bill was picked up by my hon. Friend the Member for Wentworth (Mr. Healey), who has been pursuing me in my normal capacity, to which I shall return later this afternoon, to ensure that the Bill makes every progress. There was considerable debate on the legislation in the other place. During 10 hours of debate, 89 amendments were submitted, of which about 50 were accepted.
The legislation puts right several defects in current law. For example, jurisdiction of the employment appeal tribunals to hear appeals in cases of breach of contract was removed inadvertently by consolidation legislation introduced by the previous Government. There is now a huge backlog of such cases and, unless this legislation makes early progress, they will have to go to the High Court for determination—and I am sure that everyone accepts that that is not a sensible way to deal with those matters.
The Report and Third Reading debates have taken longer than perhaps many hon. Members anticipated, but the time has not been wasted. We have rehearsed several important arguments and identified the germs of a quite reasonable debate that should take place on a range of other issues, including the plight of small business and the role of the courts. However, I must admit that I am always slightly skeptical—to put it mildly—when lawyers tell me that there are too many laws and too many courts.
I sincerely hope that the House will make progress with the measure and give it a Third Reading. I hope that all hon. Members will support the provisions as a positive contribution to the efficient and effective performance of employment tribunals, not simply for the benefit of public administration but, more particularly, for the rights of those who will benefit from them.
With the leave of the House, I rise to wind up the debate on Third Reading. I am pleased—not to mention rather relieved—to reach this point in proceedings. I welcome the contributions made this morning, in particular that of the hon. Member for Totnes (Mr. Steen). He made the most of his reappearance on the Front Bench, and I enjoyed his speech almost as much as his colleagues did. I also welcome the appearance of the Lord Commissioner, my hon. Friend the Member for Lewisham, West (Mr. Dowd). He is often on the Front Bench on a Friday morning, so it was nice that he was given a speaking part today.
The support that many hon. Members have offered the Bill this morning suggests that we should see it safely through its Third Reading later today. I believe that it will become the first private Member's Bill to reach the statute book in this Parliament. As the promoter of the Bill in the House, I am proud to have played a small part in that process. I pay particular tribute to my right hon. Friend Lord Archer of Sandwell, who has done the lion's share of the work in steering the Bill safely through to this stage. He led the Bill through the other place with painstaking care, skill and, at times, patience. He led it through 10 hours of debate and 86 amendments, 49 of which were accepted. Their lordships set out to make a good Bill better, and they succeeded. The measure has received wide-ranging support from the Trades Union Congress, the Confederation of British Industry, the Institute of Directors and the National Association of Citizens Advice Bureaux. There was detailed pre-parliamentary consultation on the Bill, which has now received lengthy legislative scrutiny.
I shall now attempt to deal with some of the specific points raised in the debate this morning. I shall start with the hon. Member for North Wiltshire (Mr. Gray).
I endorse his comment—I am sure that the view is also shared by my colleagues—that tribunals are an important and valuable way of settling employment disputes. The hon. Member for North Shropshire (Mr. Paterson) expressed concern about the composition of tribunals. Earlier this month, the Minister of State announced a freeze on new appointments to industrial tribunals. There is wide on-going consultation about how we may broaden the composition of tribunals. If the hon. Gentleman wants to inject fresh and youthful vigour into tribunals, I suggest that he submits his views as part of the consultation process. I am certain that the Minister will welcome his ideas about that process.
The hon. Gentleman obviously does not read the same newspapers and magazines as I do. If he did, he would have seen that the press release was picked up quite widely. If he would like to have details of the consultees to the process, I am sure that the Minister will be pleased to provide that list.
The more substantial point about burden of proof cropped up this time last week on Report, and was referred to by the hon. Members for Totnes and for North Wiltshire. The hon. and learned Member for Harborough (Mr. Garnier) articulated a misconception that was picked up by some other Conservative Members. Clause 6 does nothing to change the burden of proof at industrial tribunals. The Bill is not a part of what Conservative Members have described as the relentless change in the balance of the burden of proof within the industrial tribunal system. Clause 6 simply restates the present legal position. Clause 6(3)—which is probably attracting all the attention—for the purposes of clarity, restates the Trade Union and Labour Relations (Consolidation) Act 1992, which is in turn a restatement of the Trade Union Act 1984, which the previous Conservative Government introduced 14 years ago.
Another important misconception is connected with the burden of proof, which the hon. Members for Westmorland and Lonsdale (Mr. Collins) and for North Wiltshire perpetuated this morning. The burden of proof may be better described as the responsibility for proof. It does not presume or imply any judgment of guilt before the hearing: it is simply a question of which party is in the best position to provide the information that the tribunal requires in order to settle a dispute over facts.
The hon. Gentleman will recall that, when I addressed that point by way of intervention, I referred to the interlink between this legislation and the National Minimum Wage Bill, which the House passed recently. That legislation is relevant to this Bill. Under that legislation, if the employer does not provide evidence that an employee has been paid the minimum wage, an offence is automatically deemed to have been committed. It does not matter whether the records have been destroyed by a fire, the millennium computer bug, or whatever. Therefore, I fear that the hon. Gentleman is slightly wrong. I accept what he says about this legislation, but he must recognise that it links with other legislation already passed by Parliament.
We are discussing the Bill as it stands on Third Reading, so I shall not be tempted into an argument about the National Minimum Wage Bill. This legislation plays no part in the assertion that there has been a systematic change in the burden of proof.
Another substatial point raised by the hon. Member for North Wiltshire related to private arbitration, a point picked up by the hon. Member for Mid-Dorset and North Poole (Mr. Fraser), who I am glad to see is back in the Chamber. The Bill does not prevent an employer and an employee from going to private arbitration under their own auspices. If they choose to do so, that is fine, but the Government are not convinced that where individuals choose to take arbitration, they should relinquish their statutory rights to take the case to tribunal other than when they use arbitration overseen and quality-assured by ACAS.
We are dealing with fundamental rights. Losing one's job is one of the worst things that can happen to a person. Giving up one's right to have one's case heard by a tribunal should not be taken lightly. If one gives up that right in favour of an alternative form of dispute resolution, it is important that sufficient safeguards are built in. That is what the Bill does. Freelance private arbitration could not do that.
Does the hon. Gentleman accept that if the great ogre of the industrial tribunal remains behind the case, there is little point in private arbitration? If the private arbitration goes against either the employer or the employee, either side can have recourse to an industrial tribunal.
That is entirely a matter for the parties concerned. The Bill seeks to encourage people to use arbitration as an alternative to the industrial tribunal hearing, and, to do that, we want to make sure that the arbitration is properly founded and overseen by ACAS.
I should like to make two further specific points—I am getting signs that I should wind up, but these are important points that have not been properly answered and require a response. First, on the question of the chairman sitting alone, the hon. Member for Westmorland and Lonsdale painted a picture of a dramatic extension of that provision under clause 3. The impact of the Bill will be only a limited extension of the practice of the chairman sitting alone. That will occur when the case covers technical jurisdictions, such as the right to statutory redundancy payment. If a case hinges on a point of law rather than on disputed facts, there is a strong argument that a tribunal chairman sitting alone is competent to do so.
The hon. Gentleman raised the concern directly from a constituent that there may be a personality problem between a tribunal chairman and a plaintiff. Safeguards are already built into the Employment Rights Act 1996. In deciding whether to sit alone and hear a case, the first point that the chairman must take into account is the view of the parties involved.
In the case to which the hon. Gentleman refers, which was brought to me by a constituent, the personality clash was not identified before the constituent was asked whether he was happy for the chairman to sit alone. It emerged afterwards. In the course of the proceedings, it became clear that the chairman and my constituent could not discuss matters rationally, as my constituent described it. The hon. Gentleman will acknowledge that, under the Bill, as under existing legislation, once the plaintiff has conceded that the chairman can sit alone or with one other, he cannot subsequently retract that if, during the hearing of evidence, he regrets that decision. That is why we must be careful not to extend the provisions more than would be sensible.
The hon. Gentleman again makes the point that he made earlier.
I move on to the comments on clause 13. The Bill is designed to encourage the greater use of internal appeal procedures. Listening to Opposition Members, I believe that it is clear that they do not appreciate that the operation of internal appeal procedures requires persuasion on both sides. Such procedures do not exist in many companies at present, and the Bill will help the process of establishing them. The purpose is to encourage—not to compel—people to use those procedures.
The hon. Member for Westmorland and Lonsdale, I think, was concerned that the balance of penalty was out of kilter under clause 13. The penalty paid by the employee and the employer is identical. There is the possibility of two weeks' salary being added to or deducted from the compensation awarded, if the internal appeal procedures are not pursued. If anything, that is a more punitive sanction for the employee than for the employer in most cases.
I must press on, as both sides of the House are keen for me to make progress.
The Bill brings modest rather than radical reform to employment tribunals. It makes a good service even better.
I am grateful to the hon. Gentleman. I raised a point in debate that has not been answered by the hon. Member for Lewisham, West (Mr. Dowd) or by the hon. Gentleman. It related to the concept that, for small and possibly also medium-sized firms, there should be cap on the amount for which they might be liable in an individual case. I was referring to the amendment proposed in clause 14, to section 117(6) of the Employment Rights Act 1996, and the possibility that a cap could be imposed in the same clause. Will the hon. Gentleman please answer that point?
That is beyond the scope of the Bill. I suggest that the hon. Gentleman should make representations to the Minister of State, who is preparing a White Paper on fairness at work, which could well cover such issues. That would be the appropriate context in which to raise the matter.
Since they were set up by the Industrial Training Act 1964, tribunals have had their jurisdictions and their work load increased year by year. They now have jurisdiction to deal with 60 separate employment matters such as protection from discrimination on grounds of sex, race or disability, prohibition of involvement in running employment agencies, and the right to time off for public duties. Tribunals deal with almost 90,000 applications each year, a total set to rise to 109,000 by 2000.
The Bill is timely. It will help the employment Tribunal Service to gear up to deal with the delays that remain in the system, despite the best efforts of tribunal staff and members, and it will help the service to gear up to deal with the jurisdictions in prospect, which the hon. Member for Totnes mentioned, under the national minimum wage, the working time directive, the equalisation of rights of part-timers and legislation that will flow from the parental leave directive.
The Bill has three purposes. The first is to remove unnecessary inflexibilities in the system for dealing with disputes, by streamlining the tribunal procedures. The second is to encourage more disputes to be settled voluntarily or with the help of a third party, by promoting greater use of internal company procedures, by extending the role of the conciliation officer to cover redundancy payment claims, and by allowing employment experts other than lawyers to give advice on compromise agreements—a measure which the hon. Member for North Shropshire will no doubt welcome.
The third purpose of the Bill is to offer a less formal alternative method of resolving unfair dismissal disputes, which were half the total cases disposed of by tribunals in 1995–96.
I am grateful to the hon. Gentleman. I am sure that he would like to hear what I am about to say. On behalf of my hon. Friends, I thank him for the way in which he has conducted himself in this matter, for the way in which he has presented the Bill to Parliament, and for the good will and time that he has given to discussing with us various problems that we have had with the Bill. I wish it well.
I welcome the hon. Gentleman's remarks, although I feel that I am under pressure from both sides.
In conclusion, I know from my working experience before entering the House—and it has been confirmed since, with my constituency case work—that the changes in the Bill are needed, to maintain the established purpose of tribunals in the modern era. Although, strictly speaking, we are discussing a private Member's Bill, it is a good example of the Government's general approach to the reform of employment matters, by first seeking consensus, and then seeking progress through partnership with employers, unions and other experts with an interest in the issue. I therefore look for the same breadth of support for the Bill in the House today as it has outside.
Question put and agreed to.
Bill accordingly read the Third time, and passed, with an amendment.