‘(d) undertakes activities as a special member of the reserve forces (“Sponsored Reserves”).’.
The amendment and those in the next group are probing amendments similar to those raised in the debate on the previous group of amendments, which goes to the heart of how we not only get people to join the new Reserves but encourage employers to allow them to do so. The Government have rightly recognised the pressures on some small and medium-sized businesses. Those pressures will be alleviated by the payments referred to in the clause, which have not been available before, to support such companies. Section 84 of the 1996 Act gives the Secretary of State powers to make regulations to provide for payments by him to employers in respect of financial losses.
The amendment deals with sponsored Reserves. Increasingly, we have used sponsored Reserves to carry out tasks in theatre that we would not allow civilians to do. Legislation allows support tasks, mainly, to be carried out by trained professionals in theatre, and the air tanker contract, for example, included sponsored Reserves. Individuals do not need to be military personnel to carry out functions in operations that are not in harm’s way, but on occasion tasks necessitate it—for example, flying into combat zones or high-risk areas. Individuals and civilians can turn round and say, “No, I’m not going to fly today, because you are flying to Kandahar.” Sponsored Reservists have an obligation to do so. That has been useful in performing functions that need to be carried out by military personnel and functions that in peacetime are normally covered by civilians, but need to be carried out at times of risk. Certainly, it would be uneconomic for military personnel to carry out such tasks day to day—I gave the example of the air tanker contract. For example, flight attendants on personnel flights in peacetime do not need to be military personnel, although, having travelled on some of them, I think it might be helpful in controlling some individuals who are, quite rightly, relieved to be travelling home after a hard tour. It would be uneconomic and unnecessary to have military staff doing that. However, those going into harm’s way should be military personnel or sponsored Reserves. There is a debate about getting the balance right between sponsored Reserves and military personnel. We do not want to see military personnel taken out of the front-line theatre to perform functions that could be carried out by Reservists or sponsored Reserves.
The amendment asks whether special payments could be made to sponsored Reserves. I do not think it would cover contracts such as for the air tanker, which is obviously more familiar. There are smaller contracts, companies and individuals who provide services to the military under the sponsored Reserves scheme. Has thought gone into how to expand the idea of sponsored Reserves? Knowing where the front line is in conflicts is difficult now. We had a big debate about the air tanker contract. I know the arrangement is used effectively on the roll-on, roll-off ferry contract, where most of the time those ships are used for commercial activities. In times of crisis or need the sponsored Reserves who man them can be called upon as assets to be used in areas where it would be considered unacceptable to ask a civilian to operate.
As we see the development of this area, the purpose of the amendment is to understand and expand the role of the sponsored Reserves, and to see whether payments should be made to them.
The Bill proposes granting the Secretary of State a power, through regulations, to make payments to the employers of Reservists over and above those that may currently be made. The current scheme allows employers to recover costs incurred in covering the work of employees who are mobilised.
It might be helpful to the Committee to spell out in detail the current payments to employers. Some hon. Members on Second Reading wrongly thought that this proposal was for the only payment to employers, which is not the case. The costs that employers can currently claim in relation to mobilisation of an employee comprise what is known as the employer’s award, which is up to £110 a day, or approximately £40,000 a year. It essentially covers the replacement costs incurred by the employer, to the extent that they exceed the Reservist’s earnings. The replacement costs are currently limited to the pay of a replacement for the Reservist or, if appropriate, any overtime payments to existing employees and, if relevant, an increase in salary for an existing employee who has to cover the work undertaken by the Reservist.
In addition, there are certain non-recurring or one-off agency fees, such as advertising costs, excluding VAT which can be recovered by the employer. An employer can also claim the cost of retraining a Reservist on return to work, in the event that the business has moved on during their absence and such training is needed for the Reservist’s re-employment. There is no provision for additional administration costs or for the extra costs of training an external replacement for the Reservist or an existing colleague who is asked to do the Reservist’s work.
This capped amount is intended to represent the quantifiable extra costs, over and above a Reservist’s normal pay, of employing a temporary replacement. The employer is not, of course, paying the Reservist during their period of mobilisation, as they are paid directly by the Ministry of Defence. The employer incentive payments in the Bill are additional payments over and above the current claims that can be made for financial loss. Our intent is to target those payments at small and medium-sized businesses.
The new power for the Secretary of State is intended to allow him some flexibility in making regulations under the clause, for example, on which employers may receive a payment and which Reserve activities trigger entitlement to a payment. However, the current intention is that the regulations will authorise the making of payments only to employers in small and medium-sized enterprises whose Reservist employees are mobilised. The Secretary of State will be required to consult various bodies before making the regulations, including a body representing the interests of employers and the reserve forces and cadets associations.
I turn now to the specifics of the amendment. There was a proposal to include sponsored Reserves in the payments. The sponsored Reserves concept enables the Ministry of Defence to enter into a defence contract on condition that an agreed proportion of the contractor’s work force undertakes a Reserve liability. Those Reservists can be trained and called out to undertake the contracted task as members of the armed forces, as we mentioned in our earlier debate. As commercial contracts are in place between those employers and the Secretary of State in respect of the service of those Reservists as sponsored Reserves, we do not consider it appropriate to make additional payments to the contractors in relation to those services: in our view, that would be a misuse of taxpayers’ money because the contractors are already under contract to provide the service through the sponsored Reserves. On that basis, I encourage the hon. Member for North Durham to withdraw the amendment.
I am grateful to the Minister for his reply. As I said, the amendment was a probing one, designed to highlight the vital role that sponsored Reserves play in our defence capability. The debate has demonstrated not just the contribution that the sponsored Reserves make now but the one that they will make in future alongside existing Reservists under the new structure. I take on board his point about not wanting to make additional payments, and beg to ask leave to withdraw the amendment.
We now come to the second group of amendments to the clause. I expect that the debate on this group, along with that on the previous group, will have given us sufficient opportunity to discuss clause stand part, so I do not propose to have a separate clause stand part debate.
‘(5A) Regulations under this section may provide for variation in payment size on the basis of the recipient company, specifically including provision for larger payments to be provided to companies defined as “small” or “medium” under Sections 382 and 465 of the Companies Act 2006 or individuals who are self-employed.’.
‘(5A) Regulations under this section may only provide for payments to be made to employers which meet the definition of a “small” or “medium” sized company under sections 382 and 465 of the Companies Act 2006 or individuals who are self-employed.’.
Again, these are probing amendments, tabled to allow the Committee to debate the role of Reservists and the new role we are asking them to perform. They are also designed to raise the issue of recruitment and how we not only encourage individuals to join the Reserves but make sure that employers are not put off allowing staff to be members of the Reserves, especially as regards financial support.
We have already debated the difficulties that some small and medium-sized enterprises have in allowing people to be members of the current TA. Clearly, if we are to get the broad cross-section from society that we require—including barristers, to whom the hon. Member for Canterbury referred—we will need in some cases to make payments to support employers.
It is worth returning to the parliamentary question tabled by the hon. Member for Bournemouth East in February 2010, in order to show where current TA members come from. Fifteen per cent. come from large organisations employing 500-plus people, 17% come from medium-sized organisations of 50 to 499 and 17% come from small organisations of one to 49 employees. Self-employed people make up 5%. We already discussed the difficulties that self-employed individuals have in committing themselves. Unemployed people, including students, make up 42%, and the mobilised TA make up 4%.
This is the second time that the hon. Gentleman has read that list. It is a great shame that students and the unemployed have been put together. Some of us believe that recruiting people while they are unemployed does not necessarily make for long-term commitment. Students, on the other hand, are the backbone of the Australian Reserve and many of the best elements of the National Guard. For the record, when my former regiment, the Artists Rifles, went to war in 1914, more than half its ranks were composed of students, many of them from the Royal Society of Arts, and I believe that I am right in saying that it was the most decorated regiment in the Army, with eight Victoria Crosses.
I am grateful for that. [ Interruption. ] My colleague says, “Artists.” It shows the history of the TA. It came from the first world war, when groups came together to meet the national need at that time. As the hon. Gentleman rightly said, they made a great contribution not only in numbers but in terms of the action that they saw.
As part of my hon. Friend’s argument in favour of the amendments, he has given figures specific to the unemployed. However, it is not entirely clear how Jobcentre Plus would view unemployed potential Reservists going off for long periods, given the demands on them and the expectation that they turn up to sign on and apply for jobs on a regular basis.
My hon. Friend makes a good point. Perhaps the Minister can address it. Again, we want to encourage people to join the Reserves, but we make payments to employees but not the unemployed. My experience of the Department for Work and Pensions, both as a Minister and as a Member of Parliament, does not fill me with a great deal of hope for joined-up government in encouraging people to take up the initiatives. Will the Minister tell us what initiatives the MOD is taking with DWP to encourage people and show them that there is an opportunity not just to contribute to the Reserve forces but to engage in career development? With reference to some of the more restrictive new regulations requiring people to make job applications and turn up for interviews, will he assure the Committee that the DWP has taken it on board that if people are mobilised, that will be viewed as a productive attempt to make themselves more employable and a key contribution to the defence of their nation? It is an important point.
The figures demonstrate that we have a long way to go in increasing recruitment in some sectors. The Government’s top-level engagement with large companies is welcome. That will clearly produce a large number of recruits to Reserve forces. The type of people the forces will get from these large companies, which put a lot of training into individuals, will be good. Carillion must spend a fortune on employing and training people to get their skill sets right, and those people will be able to transfer into the TA.
My concern on smaller SMEs is not only that we encourage people to join, but that we give the impression to employers that the TA will not be a hindrance to their business. That is why we tabled amendment 50. I am also concerned about the variance of payments for small and medium-sized businesses. That £500 might seem a lot of money, but for some companies it might need to be more than that. It might be better if we target more money at some of these smaller businesses, rather than giving money to some businesses that possibly do not need it.
It is important that the Committee has a better understanding—I know that regulations will be produced on how the money will be allocated—of what the criteria will be, particularly on covering costs for smaller businesses. As the Minister has said, it is not a problem for the individual, because they will be getting paid when they are deployed. If we have a limited amount of cash, which we clearly have for the support of our Reserve forces, it is important that the money is directed to those businesses and enterprises that need it. We have to encourage smaller businesses to encourage their employees to be part of the Reserves, as well as encourage the individual, so that they do not see some hindrance to their ability to make an active contribution to the Reserves.
That brings me on to the issue with small and medium-sized businesses. The Federation of Small Businesses undertook a survey in 2012, and it does not make for good reading. I accept that it is a snapshot of the present situation and, obviously, with a lot more publicity of what is happening with the Reservists, along with the dynamic approach that the Minister and his fellow Ministers will take on selling the benefits of the Reserves to employers, it might change. The survey shows the task that the Government and the MOD have in persuading small businesses to employ Reservists. The report said:
“The majority of members (76%) would not consider being a reservist. 8% are currently or have previously been a reservist; 7% would consider becoming one.”
That 76% represents a large number of individuals. It goes on to say:
“7% of members currently or have previously employed a reservist while 38% would consider doing so in the future.”
That shows that we need to put some effort into this area.
I accept that we can make arguments to small businesses on how the Reserves are great for career development. I also accept that the extension of learning credits and other things will help both the individual and the employer, which will see that the individual is not only making a contribution to the defence of the country, but developing an extra skill set. The amount of effort made, however, will come down to finances.
The Government rightly listened to small businesses on the financial support proposals that were put forward, and I welcome that. One of the things that small businesses do well is innovate. Some of the skill sets that we want for the new Reserve forces will come from small and medium-sized enterprises. We have already touched on the issue of cyber. Most small computer companies—I cannot remember the figure off-hand; I should have looked it up—are one, two or three-people businesses. It is important that we attract those individuals and get them to come forward with their skills. According to the Federation of Small Businesses survey, the vast majority of small businesses have not heard of the MOD’s employer awareness work. The task that the MOD now faces is to ensure that employers know about the benefits of joining and the financial support that is in place.
Amendment 50 seeks to explore the Government’s thinking on the £500 payment when it comes to small and medium-sized enterprises. How did we get to that figure? Can it be changed to ensure that the money is directed towards those sectors? As has been said, the difference between “small” and “medium” can be quite large—“small” can mean up to 49 employees. Is that necessarily the correct way of directing the money? This is about targeting the assistance at the companies that need it, although I do not want to give the Minister the impression that we oppose the clause, which is a welcome move. However, it will take more than just money to encourage small and medium-sized businesses to employ Reservists; it will take a lot of effort from the MOD to ensure that they do not see it as a barrier to their businesses.
When we discussed changing the name of the Reserve, I asked the Minister to say whether he supported having a single event to mark the change. I would be grateful for the answer to that.
The hon. Member for North Durham raised some interesting issues about the make-up of the new Reserve force and whether it will come from a full spectrum of small to large businesses, but what will this larger force—this greater number of soldiers—actually do? We have not yet discussed that question in this Committee. Perhaps it is beyond the scope of the Defence Reform Bill. However, if it is not appropriate to discuss it here, I would ask the Minister for another opportunity to debate in more detail what the make-up of the new Reserve force will actually do.
We have discussed our involvement in Iraq and Afghanistan at length in our debates on the Bill. I would argue that the war fighting was completed quite quickly in both cases, but we fell foul of stabilisation, peacekeeping and nation-building. We did not succeed in those arenas. In my view, that will be no different from some of the challenges we will face in the future.
The hon. Gentleman mentioned one small aspect of the need to increase our cyber-security capability, which the Army does not necessarily have and which it would need to lean on the civilian sector to gain.
In relation to cyber, there might be advantages from using Reservists. As the hon. Gentleman and I know—I think we all do—technology changes so rapidly in that sector that the best people to deal with it might be those working on it on a day-to-day basis.
I absolutely agree, but that applies not only to cyber, but to the full range of capabilities. General Charles Krulak wrote a study about what he called the “three-block war”. In the late 1990s, he proposed that any infantry soldier needs to be able, on one block, to conduct warfare; on the second block, to conduct stabilisation or peacekeeping activities; and, on the third block, to conduct humanitarian tasks. Therefore, in comparison with the Regular soldier, the TA soldier or Reservist, in bringing their civilian skill sets to the fore, is better placed in the post-conflict world. That goes for cyber, as the hon. Gentleman says, but also for banking, which has been mentioned, setting up local councils to ensure accountability of the democratic process, engineering and every other aspect of civilian society.
That was missing in Afghanistan and Iraq. Our soldiers went in and removed the enemy very swiftly, but then there was a pause, while they looked over their shoulders, waiting for a wave of civilian capability to take over responsibility for building society in ways that the military is not trained for. I would argue that the military should take on a greater role during the window of opportunity that exists after the enemy is defeated and before it can regroup, while soldiers are seen as liberators, not occupiers. I therefore pose the question: what are the people we are looking to recruit from the wide spectrum of civilian forces actually expected to do? If they are expected to do more post-conflict work, we should recruit exactly such people. I am concerned that in simply saying, “Let’s increase the size of the Reserve,” we are not saying what we expect it to do. I urge the Minister to say when, if not today, we can have that important debate.
I will endeavour to respond to hon. Members’ comments. [ Interruption. ] As the hon. Member for North Durham chose to leave the Committee Room just as I rose to speak, I will address the points raised by other hon. Members first. I think that it is a first in this Committee for a Member to move an amendment and not be here to listen to the response. We could proceed more rapidly, but I am sufficiently friendly with him not to embarrass him further by seeking to move on.
I will start with the hon. Member for Plymouth, Moor View, who asked what the Ministry of Defence is doing, with the Department for Work and Pensions in particular, to encourage the unemployed to consider Reservist occupations, and about how that would fit in with their requirement to sign on for benefits. She makes a perfectly reasonable point. I do not have the answer to that here, but I shall write to her about it, because we are in discussion with the DWP precisely to ensure that those who receive benefits are not disadvantaged.
I thank the Minister, and I look forward to the response from him and the DWP. The title of the clause is “Payments to employers etc”—I assume that the “etc” means other partners or people who may be disadvantaged financially. Potentially, the DWP could be slightly disadvantaged financially, because it will have additional administrative costs if it is managing someone who may or may not go into the Reserves or be called up. Have there been discussions or any consideration given to how that element of working with the unemployed will be managed?
As I said, I intend to write to the hon. Lady about how we will work with the DWP. I have to say that using the word “etc” in a title gives rise to questions about what might be covered. I assume that it covers partnerships—other organisations that are employers, but are not necessarily businesses.
My hon. Friend the Member for Rugby asked about a charter mark for good employers who employ Reservists. The corporate covenant that has been established is the way in which a charter mark might be developed. He makes a good point, and I will ensure that the Under-Secretary of State for Defence, my hon. Friend the Member for Broxtowe (Anna Soubry), who is responsible for personnel and veterans and has responsibility for introducing the corporate covenant, takes it on board.
My hon. Friend the Member for Bournemouth East made the point that we should consider having a further debate on the whole scope of the use of our Reservists. I draw his attention to the White Paper—which I am clutching in front of me—which was debated on the Floor of the House in July and has a clear exposition of the intended use of Reservists. As we have discussed, and as my hon. Friend the Member for Canterbury described earlier, the intended use runs the gamut of activities that the Regulars undertake and will do so increasingly in conjunction either with individuals or with sub-units or formed units of the Reservists. I am sure that there will be opportunities for further debate in the House, whether through Backbench Business Committee debates or debates called by others. Indeed, as my hon. Friend will know, only last week a debate covered, in part, the role of the Reservists, and that was responded to by my right hon. Friend the Minister for the Armed Forces.
My hon. Friend the Member for Canterbury also asked whether we should mark the end of the use of the name “Territorial Army” in some way. During 2014, a large number of events will be held to recognise the centenary of the start of world war one. It might be appropriate to consider whether some of them should have an element specifically related to the name “Territorial Army” coming out of use. I shall raise that with my colleague the Under-Secretary of State for Defence, my hon. Friend the Member for South West Wiltshire (Dr Murrison), who is responsible for international security and strategy and who also has the Prime Minister’s special envoy status for the world war one commemorations. It is a good suggestion on the part of my hon. Friend the Member for Canterbury.
I think I said that I assumed that partnerships would be covered, so perhaps we are thinking along the same lines, but I will respond to the hon. Lady’s point about the DWP.
I am grateful to the hon. Member for North Durham for tabling the amendments that allowed us to have this debate. He referred to the survey undertaken by the Federation of Small Businesses as an illustration of why we need to raise awareness, particularly among small businesses, of the role of Reservists. He is right to refer to that survey. I congratulated Mike Cherry when he gave oral evidence to the Committee about having undertaken the survey, which I think is the first such survey undertaken. The hon. Gentleman referred to some of the survey’s conclusions and pointed out that 38% of respondents would consider employing Reservists and that 7% do. Taken together, a 45% positive response to employing Reservists is a strong indication of support for the position of Reservists in an employee base, even among small companies. I am perhaps more of a “glass half full” man than the hon. Gentleman, and I take that to be a positive endorsement of what we seek to do.
We may come on to what we are doing to raise awareness in the discussion on new clauses later today. However, the campaign that followed the launch of the White Paper in July was kicked off just over a month ago, on 16 September, to raise awareness of the new recruitment drive under the provisions we are discussing today. It is therefore early days, but we are absolutely aware that it is incumbent on the Ministry of Defence and all the armed forces—particularly the Army, whose target is the most challenging—to encourage all their units to play their part in raising awareness and recruitment.
Let me turn to amendments 50 and 51, which the hon. Gentleman said were probing amendments. It is important to discuss them briefly and explain why they are not necessary. In themselves, they seem to be alternatives, one for the other, depending on the size of the employer’s business. [Interruption.] The hon. Gentleman is confirming that. It is important to recognise that although all employers might feel an impact from the medium or long-term absence of staff, those with the fewest staff are most likely to be affected. As the hon. Gentleman acknowledged, we have listened to employers during the consultation on the Green Paper, and we seek to reflect their concerns in the regulations.
Amendment 50 would allow the regulations to provide for the sums payable to vary depending on the size of the employer’s business. In particular, it would allow larger payments to be made to small and medium-sized businesses and to employers who are self-employed. In our view, the effect that the amendment seeks to achieve is already achieved by proposed new section 84A, taken together with the amendments made to section 85(1) of the Reserve Forces Act 1996. They give the Secretary of State the flexibility to provide in the regulations so that the sums payable may vary depending on the size of the employer’s business. We therefore do not think that amendment 50 is necessary.
I will come to that in a moment, when I explain exactly which businesses will benefit. Before I do, let me cover amendment 51, which would limit the employers to whom payments may be made under the regulations. It would mean that payments could be made only to employers in small and medium-sized businesses and employers who are self-employed. The current intention is that the regulations will authorise the making of payments only to employers in small and medium-sized enterprises and not the self-employed. That is because larger companies are more likely to be able to absorb the costs and disruptions associated with absences from work for Reserve duties.
The problem with amendment 51 is that it would give the Secretary of State no flexibility to provide for payments to be made to other employers, should there be evidence to support doing so in due course. That flexibility is important. We have not included the self-employed, as the payment is to be made in recognition of the impact on employers. The self-employed Reservist has elected to become a Reservist and so has accepted the risk of being mobilised themselves. Were we to pay them, we would in effect be handing the self-employed Reservist an additional £500 a month, as a pay rise when mobilised. We do not believe that that is a good use of taxpayers’ money nor do we think it would be well received by Reservists who are not self-employed or by the Regulars.
What if the self-employed person had a business that he or she needed to continue? Obviously that would not be covered by wages, but such people might be trying to fulfil a contract that was halfway through when they were mobilised, for example. If they had to get in some resources to finish the contract, how would that be accommodated?
In those circumstances, a business that was continuing to fulfil its contract would do so by hiring in resources, which could be remunerated under the employer’s award, as though the business were employing the individuals. In such circumstances, self-employed people could continue to fulfil contracts by taking on an employee or a contractor to undertake the work for them, and thereby become eligible for the employer’s award.
We intend to keep the payments under review. If we need to make alterations and adjustments in future, we should have the flexibility to do so. A draft of the statutory instrument will not be available until the Bill enters the House of Lords. The public sector should be providing a lead on the employment of Reservists—for example, by providing special leave for training. However, it is not appropriate for one Department to pay another simply for following Government policy, so the measure will not apply to public sector employers.
Payments are already available to employers of Reservists to reimburse them for any defined costs arising by reason of their employee being called up for service, as discussed earlier. To answer the hon. Gentleman’s question, the intention is to provide in regulations for payments to be made to employers in small and medium-sized enterprises for each month that a Reservist employed by them is mobilised, with payments being made at the rate of £500 a month. For these purposes, our definition of an SME is a business employing fewer than 250 people and having an annual turnover of less than £25 million.
The current thinking is that the new payments should be aimed at SMEs, and the Government are committed to providing them with support in general. The Committee has heard about the importance of SMEs to both Government and Opposition Members. We appreciate that the burden of Reserve commitments can fall particularly hard on small businesses, especially if they have few employees. The Committee might recall that the Federation of Small Businesses welcomed the payments during the oral evidence session, while the Confederation of British Industry took a similar position in its written evidence to the Committee, to which the hon. Gentleman referred. I would say that this measure is yet another example of this Government listening to small employers, so I am pleased that he recognises that we have responded positively to the concerns of small business.
A draft of the regulations that will be made under proposed new section 84A of the 1996 Act will be available early in November and will contain detailed rules governing the making of payments. I am sorry that the draft regulations were not available for consideration in Committee, but I will ensure that they are sent to Members as soon as they are produced. On that basis, I encourage the hon. Gentleman to withdraw his amendment.
I thank the Minister, and I look forward to seeing the draft regulations. It will be important to get them right if we are to attract people from small and medium-sized businesses.
I am a little concerned that the upper figure is 250 people —that is a large company, certainly in my area. Once the regulations have been produced—for example, if they are available on Report—perhaps we can look at targeting the money more effectively at smaller employers. Getting the skill sets that we are looking for might mean paying more than £500 in some instances. For certain skills—I return to the issue of specialist cyber-skills and so on—that figure might not cover small companies employing two or three people. The flexibility in the regulations to pay more and attract certain skills sets—