Clause 22 - Employment Tribunals

Employment Bill – in a Public Bill Committee on 11th December 2001.

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Amendment moved [this day]: No. 16, in page 32, line 27, at end add—

''(3) After that section there is inserted—

'13B Charges for Applications to Employment Tribunals

Employment Tribunal procedure regulations may include provision for authorising an employment tribunal to charge a fee payable by an applicant upon lodging an application with the tribunal, in such amount as the regulations shall provide.' ''—[Mr. Hammond.]

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry) 4:30 pm, 11th December 2001

Welcome to the Chair, Mr. Amess. It is a pleasure to serve under you in a Committee.

We had begun to debate amendment No. 16, which would insert a proposal to charge employment tribunal applicants. The Government originally floated the provision as a key part of tribunal reform, but subsequently dropped it. Rather than waiting to view all the responses to their proposals—the closing date for responses was 8 October—they panicked. In early September, the Secretary of State and the Prime Minister were due to address the Trades Union Congress annual meeting. The Prime Minister avoided that event due to the tragic events of 11 September, but the Secretary of State did not. At that point, the Government coincidentally announced that, in response to consultation, they were withdrawing the proposal to charge. They did not wait for the full completion of the consultative procedure.

Members of the Committee can draw their own conclusions about the pressures that may have been placed on Government to arrive at that decision. It is not true, as the parliamentary Labour party brief says—I am not a subscriber to the PLP but it is often a useful source of information—

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

Just because we have lost someone, that does not mean we want to swap.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I am flattered that the Minister would be prepared to swap me for the hon. Member for Shrewsbury and Atcham (Mr. Marsden), but I am not sure that I would accept that transaction.

The PLP brief poses a series of questions and answers—a simple form that Government Back Benchers can understand. It asks:

''Q—Why did the Government drop charging on employment tribunals from the Bill?

A—There was a strong consensus against charging from both employer and employee representatives during the consultation period.''

The Government did not complete the consultation process before they dropped charging. There was not a ''strong consensus'' against charging among employer and employee representatives. Employer representatives welcomed the original Government announcement that they would introduce charging. That seemed sensible, and the Minister said:

''Charging a modest amount would bring a faster and more customer-focused service and also raise funding for improvements in the tribunal and conciliation process. At least a quarter of all tribunal applications which come from those who are on benefits or in genuine need will be exempt from any charges. These people will still have access to justice.''

The decision to drop charging was somewhat surprising, and produced a fair degree of ridicule, even in the generally pro-Government press. On 5 September, The Guardian said:

''Tony Blair has sanctioned his first political retreat since the election by bowing to union opposition and dropping plans to impose charges on applicants to employment tribunals . . . The climbdown is understood to have been made by the industry secretary, Patricia Hewitt, with the prime minister's personal agreement in the past few days.''

It goes on rather enlighteningly to say:

''The issue was threatening to engulf Mr. Blair and Ms Hewitt who are due to speak at the TUC conference in Brighton next week.''

The Government were willing to back down on a proposal that they had strongly defended and previously had said was predicted to save British business as much as £70 million in litigation costs. They were prepared to do that before hearing everything that people had to say during the consultation process. That is an additional stealth tax of £70 million imposed on British business by the Government.

The amendment seeks to put back in the Bill not a requirement to introduce charging, but a power for the Minister to do so if his original instincts were right and if the other measures in the Bill, largely welcome though they are, do not manage to slow down the seemingly inexorable rise in tribunal applications. What targets has the Minister set on that? If he does not meet them he will need additional means at his disposal. The amendment offers him just such an additional means. It is not a silly or extreme idea, but one that the Minister himself has strongly defended and which the Government originally put forward as a key part of their proposals.

The Opposition suspect that the proposal to introduce charging has not been dropped because of any flaw in the logic or because it is unworkable, but simply because of pressure from one interest group and because it provided the potential for serious embarrassment to the Prime Minister at a time when he wanted to generate harmonious relations with the TUC and hoped to have a successful appearance at the TUC conference. That is not the best way of delivering good legislation and good government. I hope that the Minister will have the good grace to tell us that he does not have an objection in principle to charging and that he would welcome the inclusion of this provision in the Bill, so that if all else fails—I know that it is not now his first choice—he has this additional weapon to draw upon in his armoury.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Where in the Confederation of British Industry brief on the Bill is it suggested that charging would be a good idea?

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I hope that the hon. Gentleman will not fall into the trap of thinking that the CBI is the only organisation representing business. Let me remind him again of what I quoted from the PLP brief. It said:

''There was a strong consensus against charging from both employer and employee representatives''.

I have not spoken to any employer representative who felt strongly that the charging scheme was a bad idea. I concede that the CBI is fairly neutral on the issue of charging. Other employer representative organisations, such as the Federation of Small Businesses and the Engineering Employers Federation, which the hon. Gentleman himself cited this morning, are in favour of charging. They both strongly support the Government's original proposals and are deeply disappointed that the Minister retreated from them.

This is an unfavourable move in what is a delicately balanced package of measures that meet the agendas of both trades unions and employees, and employers. The symmetry and balance has been disrupted by the U-turn, as the BBC News website described it.

I am conscious of the need to make serious progress in this afternoon's sitting, so I will not make further remarks on amendment No. 16 until I have heard what the Minister and other Committee members have to say.

Photo of George Osborne George Osborne Conservative, Tatton

Thank you for calling me, Mr. Amess, and I am delighted to serve under your chairmanship.

My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) spoke well on the extraordinary Government U-turn that we have seen in the past few weeks. I do not think that he mentioned that the charging regime was one of only two provisions that were highlighted in the press notice that accompanied the ''Routes to Resolution'' consultation paper. The other was the measure for companies to have an in-house dispute resolution procedure, which the Committee will discuss later. As my hon. Friend reminded the Committee, the Minister, so proud was he of the charging regime, said that the regime would provide a faster and more customer-focused service. That begs the question: is he now introducing a system that is slower and less customer focused?

We must ask ourselves why the regime is not in the Bill. As my hon. Friend suggested, there are all sorts of tell-tale signs. The charging regime generated huge opposition from the trade unions and, as my hon. Friend pointed out, it was an extraordinary coincidence that the measure was dropped just a few days before the Secretary of State and the Prime Minister were to go to the TUC conference. For me, that was a coincidence too far. Some 49 Labour Members signed an early-day motion opposing the charging regime. I must confess that I have not done my homework, and I am not clear whether Labour Committee members were among them.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I am happy to enlighten my hon. Friend and tell him that six Committee members signed that early-day motion.

Photo of George Osborne George Osborne Conservative, Tatton

I am looking forward to those six Members explaining why they were so hostile to the charging regime and how they successfully brought pressure to bear on the Government. The fact is that the move is an embarrassing U-turn and a typical example of new Labour talking tough but backing down when the pressure comes. Will the Minister explain how a tribunal system without the charging regime will not be slower and less customer focused than one with the regime?

Photo of Norman Lamb Norman Lamb Shadow Spokesperson (International Development), Liberal Democrat Spokesperson (International Development)

Thank you, Mr. Amess, and welcome.

The Liberal Democrats do not support the amendment. It would deter applicants, particularly those who are left in difficult circumstances following dismissal. I appreciate that the amendment would give the Minister only the discretion to introduce a charging system, but such a move would disadvantage those applicants who are in the most difficult financial circumstances. I find it interesting that the Conservative party wants to go beyond what the CBI sees as important in the Bill. Charging was not even mentioned in the briefing that I had with the CBI. I appreciate that it is not the only employers' organisation that has an interest in the matter, but I have not been overwhelmed by demands from other organisations to introduce the charging mechanism. The Bill already includes measures to deter tribunal applications by introducing procedures for in-house resolution of disputes, which is a valuable advance and should be welcomed by all. However, it would be a retrograde step to impose a charge and impede people who have not been able to resolve their dispute internally with their employer, and we would not support it.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West 4:45 pm, 11th December 2001

I welcome this part of the Bill, or rather the absence of the measure, as I should say to the hon. Member for Runnymede and Weybridge. The Bill's aim is to prevent premature applications to employment tribunals and to encourage employees to sort out their differences with their employers in the workplace. As a society, we should not try to put a price on access to justice in a regime where, except for the famous 242 cases about which we keep hearing, costs are not recoverable. That differentiates employment tribunals from, say, the civil courts. We should therefore try to encourage resolution of disputes at the workplace, which is the aim of schedule 2. However, if such a resolution is not possible, tribunal applications should be facilitated.

We keep hearing about the inexorable rise of tribunal applications, which is happening for the reasons that I outlined on Second Reading. However, we must also bear in mind that in the past few years we have had one of the lowest strike rates in the European Union. That is partly because disputes are resolved in different arenas, whether in the workplace or at a tribunal.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I understand the hon. Gentleman's view. I presume that he held it before and would have argued against the Government had they kept the provision for charging. My amendment seeks to tease from the Minister what happened between the publication of the consultation document and his strong statements in favour of a charging regime, and 5 September. A half completed consultation process is not an appropriate basis on which to withdraw a proposal that Ministers so publicly and strongly supported.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

Happily, I do not face the dilemma of what I would do if the provision were in the Bill, and I am convinced that it will not be. It would be a retrograde step. The Government consulted—[Interruption.] If the hon. Member for Runnymede and Weybridge will let me finish, I was going to say that perhaps the consultation process should have been finished. However, when the overwhelming response to that process is that it is a bad idea to introduce charging, as it would be a tax on access to justice, I have no difficulty with the Government withdrawing the provision. The amendment would reintroduce that power to the Bill, which is a bad idea, because Governments of whatever colour are liable to use such powers. It would lead to more problems in the workplace and could lead to more strikes, and that would be a retrograde step.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

I am pleased to serve under your chairmanship this afternoon, Mr. Amess.

The hon. Member for Wolverhampton, South-West (Rob Marris) is overstating the case when he says that the provision would be a tax on access to justice. Even if the charge were to be implemented, it would only be a small amount of £10, £20 or £30. Certainly, those sorts of figures were discussed in the past. During the earlier consultation, the CBI welcomed them in its press release, which stated that the charges were ''not unreasonable'' and were

''already quite normal in other areas of the court system.''

It is incorrect to say that the charges are unprecedented.

Hon. Members would understandably be concerned if the poorest people were prohibited from access to justice, but as the Minister pointed out earlier in the year:

''At least a quarter of all tribunal applications which come from those who are on benefits or in genuine need will be exempt from any charges. These people will still have access to justice.''

I do not believe that the original intention was to tax that access to justice. The question that taxes Opposition Members is why it was dropped prematurely.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

It is a delight to serve under your chairmanship again, Mr. Amess.

The Government oppose the amendment. I note that it contains the word ''may'' instead of ''shall''. I understand the reason for that, but it is ironic, given other amendments that we have considered. We proposed a charge in our consultation document, to which there was a considerable reaction—more than 200 well considered responses. The weight of opinion, including that of employers' organisations, was overwhelmingly against the idea.

It was argued that an application fee would be seen as a tax on justice; it would bite not on applicants with weak cases, but on those who were short of money; and it would deter settlements shortly before the hearing, which are common and might even lead to employers defending more cases rather than less. That response was made to a consultation document in May 1988, when a previous Government suggested charging for employment tribunals, so they dropped the idea. We have been round this course before.

Photo of George Osborne George Osborne Conservative, Tatton

Does the Minister agree that charging a modest amount would create a faster and more customer-focused service, as he previously said?

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

No. I am pointing out what a previous Government concluded, following consultation on the same issue at the end of the 1980s. They did not raise the issue of charging again. That Government believed that charging would improve the service at employment tribunals, so they suggested it in a consultation document. However, when they considered the response, they dropped the idea, which was at the height of Thatcherism. We are doing exactly the same.

The hon. Member for Runnymede and Weybridge made a curious argument. The record will show that he said that all employers' organisations welcomed charging. Five minutes later, however, he said that the CBI was neutral on the issue. We are now the party of business and employees; the Conservative party seems to be the party of the Institute of Directors. The CBI was neutral because it sees admissibility as a far bigger issue. The need for grievance and discipline procedures in the workplace is also relevant.

The idea of charging was never about reducing applications to employment tribunals; it would have provided a funding stream, as we made clear at the time. Many employers objected to the arrangement because of the fee. In the absence of a figure, we slotted into the regulatory impact assessment at the back of the consultation document the figure of £50 to get into the system, and the applicant and respondent would have paid £150 if they came out of the conciliation process and went to a full-blown employment tribunal. Many employers objected to the second part.

The Newspaper Society, which represents the regional newspaper industry, said:

''The reduction of misconceived applications is paramount but not at the expense of employees with justified claims but little ability to pay.''

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

No disrespect to the Newspaper Society, but the Minister seems to be dredging the bottom of the barrel to find an employers' organisation that spoke out in that way.

For the record, all the employers' organisations to which I spoke were favourable to the idea of charging. Indeed, the CBI was favourable to the idea when it was the Government's pet scheme. When they decided not to go with the charging regime, the CBI adopted a more neutral tone, but there is no inconsistency. All employers' organisations to which I spoke were, without exception, favourable to charging and certainly when that was the Government's favoured scheme.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

Governments go through consultation processes and change their minds. The Conservative Government did precisely that on the same issue. Furthermore, not all employers' organisations supported the measure.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

The Conservative Government, unlike this Government, completed their consultation process in 1988 before they made a decision.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

The hon. Gentleman has a touching faith in the speculation of The Guardian newspaper. We announced the outcome of our consultation in exactly the same way that the previous Government did in 1988.

The hon. Member for Tatton (Mr. Osborne) asks why we changed our mind. There were several reasons, one of which was the overwhelming response from those organisations that had the most experience in dealing with applicants. They said that there would be a significant deterrent effect on low-paid workers, particularly if the monetary value of the claim was small. Citizens advice bureaux strongly opposed the proposal. Even with the discretionary exemptions that were proposed in ''Routes to Resolution'', the proposed fees would inevitably deter would-be applicants with well-founded cases.

As the hon. Member for Hertford and Stortford (Mr. Prisk) mentioned, we said that there would be exemptions. We wished to mirror the civil courts; it would be strange to introduce a system for employment tribunals that was different from that in the civil courts. On further deliberation, we realised that the exemptions that apply in the civil courts are much more complex. They are based on calculations of disposable income that take into account payments to the Child Support Agency, school fees and so on.

We would have had to allow full or partial exemptions to a much greater degree than expected—about 60 per cent.—and we would have had to set up a bureaucracy to collect fees that previously had not been charged. As that would have cost almost as much as the proceeds from a modest fee, we would have had to charge a completely prohibitive fee.

People who have the greatest experience of dealing with applicants presented strong moral arguments, and there was a practical problem with respect to the point that the hon. Member for Hereford and Stortford rightly raised.

Photo of Judy Mallaber Judy Mallaber Labour, Amber Valley

Does my hon. Friend share my bewilderment that the hon. Members for Runnymede and Weybridge and for Tatton made absolutely no mention of the problems that face a vulnerable individual who is experiencing difficulties at work? Furthermore, they seem to be less interested in the practical issues arising from the consultation process and in allowing the Minister to listen to valid arguments than in point scoring.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

I agree with my hon. Friend. However, to be fair, the hon. Member for Hereford and Stortford raised the point about people on low incomes.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

I am sorry. The hon. Gentleman is the Member for Hertford and Stortford. The lighting is bad, and I do not have my glasses.

The important consideration is about people on low incomes who have genuine claims that they wish to take to an employment tribunal. We decided, as did the previous Conservative Government, that fees would be a tax on justice.

Would a charge deter applicants from taking cases forward? It probably would not deter vexatious cases, which are the ones that we are concerned about. However, it would affect applicants with genuine cases who thought that the expenditure was too great. After consultation and reflection, we decided not to take that route. People who understand employment tribunals argue that fees do not deter vexatious cases but that other measures should be pursued, such as admissibility. Therefore, the amendment does not deserve support.

The hon. Member for Runnymede and Weybridge asked for our estimate of the reduced number of cases; the Bill will reduce the number of cases by between 30,000 and 40,000 a year, the vast majority of which will come as a result of having workplace procedures. In 62 per cent. of all employment tribunal cases not a word is exchanged between the respondent and the applicant until they get to an employment tribunal.

The previous Government concluded that charging was not the solution, and we agree. We do not believe in introducing a measure in this way, giving us a power on the Committee Corridor to implement something so important. Of course, Governments can never say never about what may happen in future, but if we are to return to the issue, as the previous Government rightly did, there should be a full debate on legislation, not a discussion on regulations. I urge the Committee to oppose the amendment.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry) 5:00 pm, 11th December 2001

The Minister has advanced some fascinating arguments and given an eloquent exposition of the case for primary legislation, which Opposition Members broadly support. The Minister talked about what the previous Government did, but he was actually referring to what the previous Government but two did in 1988, when the world was a different, and in some respects, happier place. We cannot draw too many conclusions from what happened 13 or 14 years ago.

The Minister's response to the amendment was a well-argued, coherent argument against charging. However, he did not explain why he and his colleagues whole-heartedly supported charging when they published their consultation document on 20 July. With the exception of citing responses to the consultation, the Minister did not give a coherent reason for changing his position between 20 July and 5 September. He said that the Government reached a conclusion after the consultation, but they did not. In case there is any ambiguity—the Minister referred to it earlier—let us be clear about the dates. I invite the Minister to shoot me down if I am wrong.

On 20 July, the Department of Trade and Industry published ''Routes to Resolution'' and invited responses, the closing date for which was 8 October. It is conventional to wait until a consultation exercise is complete and the responses have been received before drawing conclusions. On 5 September, the Government announced—or leaked—that they had abandoned the proposed charging regime. They did so not because of a change of heart but because of pressure that had been applied to them. I quote from The Guardian on Wednesday 5 September, which stated:

''The Government is already facing a revolt over the future of public services, and Ministers felt they could not continue fighting wars on so many different fronts. Furious trade union sponsored Labour MPs were also promising to inflict a damaging defeat over the fees in the Commons.''

I suspect that they include members of this Committee who signed early-day motion. 260, without recording their interest in doing so. The Government abandoned their favoured charging scheme not because of the results of their consultation, which had not been completed at that stage, or for a principle, or moral reason, as the Minister would have us believe, but because the squeeze was put on them by the trade union movement, by trade union-sponsored Labour MPs. The Government abandoned a scheme that the Department decided was workable and appropriate simply because, in the grand scheme of things, with a punch-up going on with the trade unions about public services, the Prime Minister did not want a war on two fronts, having no doubt been attentive to history.

The Minister did not advance any logical or coherent argument against having the power in the Bill. He could not say, ''I object to it because it is a morally offensive power for a Government to have,'' because he proposed to give the Secretary of State such a power, and spoke eloquently in support of it a few months ago. He did not tell the Committee what he proposes to do if the estimated reduction in case load does not occur. He has seen the briefing and he will not be surprised that some legal experts think the Bill will not reduce tribunal case loads, as the Government hope.

The Minister did not tell the Committee how he will replace the revenue stream that he hoped to raise from a charge in order to strengthen the tribunal system and make it work better by being better resourced. The Minister failed to respond in two respects. First, he failed satisfactorily to explain the Government's change of heart, although he worked valiantly within the constraints in which he finds himself. It is apparent that an old-fashioned, strong arm on the Government from the union lobby forced them to drop a measure that they had proposed and that the employers' side of industry found broadly acceptable.

Secondly, the Minister did not say why it would not be appropriate to accept the amendment, if only as a reserve power if his other proposals fail to deliver the result that he anticipates.

I am not persuaded by the Minister's argument and unless he has anything else to say, I shall urge my hon. Friends to vote for the amendment.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

The hon. Gentleman is not listening. He made no reference to the point about exemption. He quoted newspaper articles—there were interesting pieces in the Financial Times and in The Guardian—but not Government announcements.

The hon. Gentleman asked how we will replace the revenue stream, but I have to ask what revenue stream he means. If we are mirroring the civil courts, and no one suggested that it would be wrong to do so in relation to exemptions, there is no revenue stream. By the time a bureaucracy is set up to deal with partial and complete exemptions the money coming in with 60 per cent. exemptions just does not provide a revenue stream. The hon. Gentleman did not address that practical matter.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

No, I will not give way because the hon. Gentleman is going to press the amendment to a vote. He asked whether it was worth putting his proposal on the statute book in case other measures fail, but if they did, it would fail too. We oppose the amendment because charging will not deter applications, and certainly will not deter vexatious applications, for the deterrence of which we have other measures. If it would deter genuine applications, it is wrong in principle and we should not agree to it. If it is intended to provide a funding stream—it would not, for the reasons that I have set out—what would the mechanism be?

We shall later debate funding for the Advisory, Conciliation and Arbitration Service later, and the Lord Chancellor's Department is conducting a review and the Department of Trade Industry is taking an initiative to consider appropriate funding for the employment tribunal system. The amendment would not press any buttons that would bring about the desired outcomes. If the hon. Gentleman forces a vote on the amendment, I urge the Committee to oppose it.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I am somewhat puzzled, as the Minister may be when he reads the report of our debate. He asks, ''What revenue stream?'' I was referring to the revenue stream to which he had referred a few minutes ago. He said that the purpose of proposing charges was not to deter applications but to generate a revenue stream. Those were the Minister's own words in support of the Government's original proposal to include a charging regime.

Photo of George Osborne George Osborne Conservative, Tatton

Is the hon. Gentleman aware that the press notice that announced the publication of the consultation document listed as one of the key proposals

''a new modest charging regime for use of the employment tribunal system to reduce the cost burden on the taxpayer''?

Presumably the Government calculated a cost burden on the taxpayer, which would be reduced.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

The Minister seems to vary his argument. When I ask about applications, he says that the original idea was to generate a revenue stream, not to deter applications. Five minutes later, when I ask about a replacement revenue stream, he tells me that charging was not intended to generate a revenue stream.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

The consultation period began on a basis of 25 per cent. exemptions. We calculated that if we mirrored the civil courts, around 25 per cent. of applications would be exempt. During the consultation period, paying closer attention to how a complicated civil courts procedure would work in practice—[Interruption.] The whole purpose of consultation is to consider such issues in detail. That produced a system of 60 per cent. exemptions and a bureaucracy to deal with partial exemptions as well. We dealt with consultation in exactly the same way that the previous Government dealt with it on the same issue, and came to the same conclusion.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I think that we are being invited to believe that in response to the consultation document, someone sent the Government a calculator—or an abacus—and they did their sums again and found out that they got them wrong. The Minister mentioned those who would be exempt from charges. He addressed that point when he said that at least a quarter of all tribunal applications that come from those who are on benefits or in genuine need will be exempt from any charges, and that those people will still have access to justice.

The Minister asked about the announcement. It is slightly disingenuous of him to deny with a straight face that there was a Government announcement, and to say that, a few days before the TUC conference, The Guardian merely reported well-placed sources. The Minister is not denying that by 5 September, a decision to abandon charging had been taken. The fact that an announcement was not made says more about how the Government operate than about the decisions.

John Edmonds, the general secretary of the General, Municipal, Boilermakers and Allied Trades Union, said on 5 September:

''If this U-turn is true it is something we would warmly welcome. But again you have to question why the government is using smoke and mirrors. If they are going to drop the idea of charging why on earth don't they have the courage to come out and say it?''

Even now, the Minister seeks to obfuscate the point at which the decision was taken and to hide behind the fact that the method of announcement—as is so often the case—was a leak to the friendly media, rather than an announcement to Parliament.

Rob Marris rose—

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

If the hon. Gentleman will forgive me, I am approaching my conclusion.

We will not find common ground, and I will have to press the matter to a Division. I urge my hon. Friends to support the amendment. It would give the Government additional powers, providing an additional weapon. Otherwise, the Bill's good objectives will not achieved because of a substantive U-turn by the Government in the face of pressure from their trade union paymasters.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 12.

Division number 1 Adults Abused in Childhood — Clause 22 - Employment Tribunals

Aye: 5 MPs

No: 12 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry) 5:15 pm, 11th December 2001

My notes, rather optimistically, start: ''The clause, as amended''. As it turns out, the clause, as unamended, together with what the Minister has said, set out the Government's intentions. I have certainly learned quite a bit about precisely how the Government intend to take matters forward but I do not know whether anything will happen that will make a real difference.

We have heard from various hon. Members and from the Minister about the award of costs. In the past year, around 250 awards of costs were made from 218,000 cases. Unless the Government intend, through the regulations, to ensure that the measures in clause 22 have considerably wider bite than their predecessor measures in section 13 of the Employment Tribunals Act 1996, they will have no meaningful impact on the system.

Two important are principles at stake. First, access to justice must not be denied to people. I recognise and respect the points that various hon. Members have made, particularly in relation to the charging regime and the fear of being subject to a costs order. That must be balanced by the principle of responsibility: no one can enjoy access to the justice system without responsibility for their own conduct. The system cannot be a free ticket lottery that one enters with the hope of a big win and no downside. Fear that that concept is creeping into the national psyche probably lies at the heart of some of the Minister's concerns about the way that the system is working. The no win, no fee culture in which if anything happens one can always get compensation from someone is generally unhelpful and unproductive. I am sure that the Minister would seek to discourage that.

We shall discuss later amendments on that matter, but the point is germane to clause 22. Will the introduction of the conciliation process in clause 24 change the geometry and create a set of different ground rules by changing the concept of what is reasonable behaviour when a case comes out of the conciliation process? Will the advice of a conciliation officer be critical in determining whether behaviour is subsequently deemed to be reasonable or unreasonable? Whether the clause will work and whether it will be widely seen as reasonable and effective will depend largely on that question and how the regulations deal with it. Before we agree that the clause stand part of the Bill, will the Minister tell the Committee what percentage of cases he anticipates will receive an award of costs? Will the percentage go up, or will it stay the same? What amounts of money are likely to be involved? What assumption have the Government made in their regulatory impact assessment? Without those figures, it is difficult to understand what the Government expect to happen once the regulations are published.

I have another question for the Minister, which I have not framed in an amendment but would like to float past him. I do not claim authorship: an external group that has provided me with some briefing suggested it. Would it be sensible to require tribunals to give their reasons for awarding or not awarding costs in individual cases, so that minds would focus on the process required to decide whether a particular case merited an award of costs? Does the Minister expect such an award against a representative, or disallowance of a representative's costs, to be a rare or regular occurrence? What percentage of cases has the Government's impact assessment assumed will be subject to such a procedure? How often does the Minister expect compensation for preparation time to be awarded? I ask the Minister those questions now, because once we see the regulations, we will want to put them in the context of what he has told us that he expects to achieve.

What will be the likely impact of the Leggatt review of tribunal procedure on the tribunal system in general, and on the legal aspects of the assessment and award of costs in particular? Does he anticipate that we will have to revisit the issue, and is it possible that we will have to unravel the procedures once the conclusions of the Leggatt review have been fully digested?

Will the Minister tell us more about the financing of the tribunal system? What subvention from the taxpayer is expected on commencement, and can we expect additional funding to support the tribunal and conciliation services?

It is important to see clause 22 in context, because it is only part of a system that has good and bad points for all participants. We undermine that balance at our peril because, although there is substantial consensus on the clause, that consensus critically depends on the balance being maintained. In my discussions with employer representatives and organisations, it was not generally appreciated, as the Minister said before lunch, that awards of costs or expenses under the new regime would be limited to the few cases deemed vexatious or unreasonable. Unless the regulations broaden the concept of what is unreasonable to take account of the conciliation process so that costs are awardable in significantly more cases, many people who supported the proposals will find that they have misunderstood the Government's intentions.

During our break this afternoon, I re-read some of the briefing material that I received from employer organisations. It was apparent that they welcomed some of the new provisions, but only because they anticipated broader use of the power to award costs than the Minister has described today. Already, what appeared to be consensus on the provisions is being eroded.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

We have had a good debate. The misunderstanding between the hon. Member for Runnymede and Weybridge and me has not extended to the organisations that he mentioned. The Government have been clear that cost awards will be made on the same basis as they are now. We have not attempted to interfere with that, and it would have been difficult to do so with such wide-ranging cost awards. The judiciary said that the term ''frivolous behaviour'' should be replaced by ''misconceived'', and we did that in July. We increased the penalty that an employment tribunal can impose, from £500 to £10,000, and the deposit that must be put down. All that was aimed at preventing vexatious, misconceived cases.

Photo of Philip Hammond Philip Hammond Shadow Spokesperson (Trade and Industry)

I understand the Minister's comments, but in referring to the power to award costs, the Engineering Employers Federation, which is much beloved by the hon. Member for Wolverhampton, South-West, said:

''For example, increased powers to award costs may not be exercised . . . How will the Government persuade the Employment Tribunals to take a more active role and use their more extensive powers?''

The Minister is telling us that there will not be more extensive powers or an increased power to award costs. Clearly, that employers' organisation based its response to the Bill on a misconception of the Government's proposals.

Photo of Alan Johnson Alan Johnson Minister of State (Employment Relations, Industry & the Regions)

The EEF is a marvellous organisation. I had dinner with its representatives only the other night, and we discussed all the issues. It accepted, as the Committee has so far with the amendments that we have debated, that it is right to make cost awards against representatives who act unreasonably and that they should not be able to take the money from their clients. We have accepted that people should be awarded costs for preparation of a case, even if they have not taken legal representation into an employment tribunal.

Those are sensible measures that, with the increase in the deposit and the £10,000 penalty limit, will deter weak and vexatious cases. We have no desire to extend the definition. Indeed, during our consultation, no one argued that we should, for the reasons given by the hon. Member for Runnymede and Weybridge. He is a decent man—[Hon. Members: ''Hear, hear.''] That's about as good as it gets. He said, rightly, that we must strike a balance. The potential costs should not deter people who believe that they have a justified case or grievance from going to employment tribunals.

There are many other measures. We are talking about striking out weak cases at pre-hearings, which we shall discuss under other aspects of the Bill. Taken together, all those are sound, sensible and practical ways to proceed.

The hon. Gentleman asks what difference they will make. That is difficult to calculate. We say in the regulatory impact assessment that the measures in clause 22 will probably prevent up to 500 such cases from being brought. That is quite significant compared with the number of vexatious cases. The clause has not been designed to make employers feel that employees with relevant and arguable cases will not bother bringing them because they are so concerned about the cost award that may be made against them. We are not in that ball game, as we have emphasised repeatedly.

Hon. Members have raised interesting and helpful points about the provisions, and I am grateful for their contributions. When we draw up regulations, we shall see what can be learned from the experience of civil courts, where such procedures exist. I hope that Members are reassured that neither the intention nor the effect of the clause is to deter workers from using the employment tribunals system to seek redress if their rights have been infringed.

The Government have a responsibility to ensure that rights are enforceable and that the justice system is accessible and fair to all parties. We must minimise the potential for abuse and ensure that wronged parties are properly compensated for their loss if the system has been abused. That last point is particularly relevant to the clause At the same time, we have a responsibility to the taxpayer to provide an efficient employment tribunals system. Along with other measures, the clause will help to achieve that end.

The hon. Gentleman asked about funding mechanisms. They are an important element of the matters being considered by the employment tribunal system taskforce under the chairmanship of Janet Gaymer. Judge Prophet, the president of employment tribunals in England and Wales, and Colin Milne, the president of the employment tribunals service in Scotland, are also members of that august body.

The hon. Gentleman asked what difference the Leggatt review would make. It did not warn against changes to the cost rules. Leggatt considered full cost recovery and the loser paying the winner's costs. The review is of the whole tribunal system, not just employment tribunals. We do not think that anything that emerges from Leggatt will necessitate any speedy changes to the regulations that will be produced in due course; we think that these measures stand alone. For all those reasons and others, I commend the clause to the Committee.

Question put and agreed to.

Clause 22 ordered to stand part of the Bill.