EMPLOYMENT RELATIONS BILL
9 February 1999
I rise to oppose the Bill, but I assure the hon. Members for Barnsley, West and Penistone (Mr. Clapham) and for Sunderland, North (Mr. Etherington) that I do so neither because of an inveterate hatred of trade unionism, nor to support the class system, which I do not think exists in this day and age.
It is clear to me that there would never have been the improvements in employee conditions and welfare without the growth of the trade union movement at the turn of the century. It is also clear that the shift away from worker exploitation to caring capitalism has come about mainly because of the work of the trade union movement at the end of the 19th century and the beginning of the 20th century.
The problem with the Bill is that it reflects the nature of the House of Commons. The House is increasingly made up of individuals who, before coming here, were never involved in wealth creation. Being a student of the economy is no substitute for working in the economy. As an economics graduate, I can certainly attest to that. I have to tell those hon. Members who were first politics graduates then worked for a think-tank--an increasing number, I am sad to say--that they are even further removed from the real world.
I wanted to take part in this debate because I started an electronics manufacturing company 12 years before I came to the House. By the time I left that company- [Interruption.] I do not know why the hon. Member for Falmouth and Camborne (Ms Atherton) is laughing, because I am talking about keeping people employed in jobs. Her constituents will not find it amusing when unemployment increases in her area. I am participating in the debate because I want people to stay employed.
By the time I left that company, we had customers in 48 countries around the globe. That involved motivating and caring for our staff and, from time to time, negotiating with trade unions. I speak not from a brief prepared by others, but from experience.
To my mind, the Bill is well-intentioned, like so many Labour Members. However, like so many Labour Members, it is also hopelessly naive. Far from protecting employees, it will destroy their job prospects. It will work against those seeking jobs in the future--new deal or no new deal. Like much of the Government's legislation, it will take time for its ill effects to be experienced. That is why it is so dangerous. That was recognised by the Prime Minister, who said as much to the party faithful in Manchester a few days ago when he warned them of a tough time ahead.
The House of Commons Library has calculated that the Government have already added £40,200 million to the social and tax bill over the life of this Parliament. Often, that has been at the expense of small businesses. The latest such move has been the introduction of a tax to pay for the new Food Standards Agency. Lord Sainsbury will have to pay the same flat-rate food poll tax for the shops he owns as little corner shops in villages in my constituency and that of the hon. Member for Falmouth and Camborne will have to pay. The same applies to the legislation before us. The Bill will hit small firms with as few as 21 employees, and it will hit the unemployed.
At a time when the Government, quite rightly, want to get the long-term unemployed back to work, why are they reducing the qualifying period for unfair dismissal from two years to one year? They compound the mistake by increasing the maximum limit on awards for unfair dismissal from £12,000 to £50,000. I realise that to the Secretary of State, those figures are but a drop in the ocean, but let me tell him and the Minister that a £50,000 fine creates a major dent in the cash flow of a small company. It is even more likely to force the company into liquidation. What price jobs then?
Do the Government not realise that this measure will present a major disincentive to employing new people? Do they not realise that no employer will want to recruit the long-term unemployed if he faces a potential £50,000 fine if he gets it wrong? If he employs someone who makes a mistake, is it not more likely that he will sack the employee before the 12 months are up rather than give him a second chance? This measure, further compounded by the effects of clause 3(1)(b), will result in few employers taking on long-term unemployed people unless they come with the highest of references, which is unlikely under the circumstances.
The chairman of the Federation of Small Businesses has said:
"Small firms are now being over-regulated to such a degree that it is too costly and too risky to employ staff. The provisions of the Employment Relations Bill will place them under further pressure."
The Government have yet to learn the lesson preached by Abraham Lincoln: "You cannot make a poor man rich by making a rich man poor". This legislation will merely succeed in keeping the poor man poor.
What about enforced trade union recognition? I believe that there are many advantages in negotiating with a single, responsible trade union rather than with individual groups of employees. That is true partnership. Partnership, like marriage, cannot be imposed on an unwilling partner: both must willingly consent. That is probably why I never got married. The Bill is not about partnership: it is not a basis for trust or for any working relationship.
Even the new Labour convert, Adair Turner, Director General of the CBI, wrote in the Financial Times:
"Good employee relations should be built on trust and this is not best fostered if collective bargaining has been imposed on an employer by a trade union. Collective bargaining can work where it has two willing partners, but not where there is only one. No real improvements in industrial relations occurred the last time we had compulsion in the 1970s and indeed the legislation proved to be unworkable."
Those are his words, not mine.
The Engineering Employers Federation believes that the legislation will create the climate for increased industrial action, and the Institute of Directors expressed similar reservations.
The new Labour Government and the current Secretary of State in particular believe in wealth creation. They do not want to return to the bad old days of the 1970s and before, yet the Bill creates the climate for just that. Far from heralding a new epoch, it merely turns the clock back. I hope that Rupert Murdoch, who bought The Times when it was bankrupt, moved it from Fleet street, broke the luddite print unions and created a new era of newspaper production at Wapping, is aware of what the Government are doing. Had the Bill been an Act back in the 1980s, The Times would still be bankrupt and Wapping would remain an area of dereliction.
The Secretary of State rightly believes that wealth creation is more important than wealth redistribution. Unfortunately, he does not know how to create wealth and refuses to take advice from those who do. If the Secretary of State had run a company, large or small, instead of lecturing in law at Newcastle poly for 15 years before coming here, he would not be introducing the Bill.
Everywhere one looks in the Bill, there is a further burden of paperwork. Records must be kept on training, on leave, on ballots and so forth, and just to twist the knife still further, when trade union ballots are held, 50 per cent. of the cost must be borne by the employer.
Those measures are damaging enough for large companies, but why cripple small firms at birth--why not exempt small companies employing fewer than 50 employees? The Confederation of British Industry, the British Chambers of Commerce, the Federation of Small Businesses and the Institute of Directors have all asked the Secretary of State to raise the threshold. Why will he not listen? What analysis has his Department made on the percentage on-costs of the measure on an average business employing 20 people? Has such an impact analysis been prepared?
The other worrying aspect of the Bill is its dependence on future regulation and, as my hon. Friends have said, omission of detail. The Bill is equivalent to a blank cheque. No finance director in his right mind would issue a blank cheque to a supplier, yet the Secretary of State is asking the House of Commons to give him just that.
Clause 22 provides no details as to how the Central Arbitration Committee will work. Who will be its members exactly? What will be its relationship with ACAS? The proposed new section 263A of the Trade Union and Labour Relations (Consolidation) Act 1992 says that the chairman of the committee shall appoint a panel or panels. How many panels will there be? Is this just another employment scheme for Tony's cronies? If so, it will be little compensation for those who do not find jobs or lose jobs as a result of the legislation.
Even the provisions for parental leave are left to regulations, so Parliament will not have the opportunity to scrutinise or amend an important part of the Bill. There are many unanswered questions. How old will the child be when parental leave is available? Will evidential proof be required, involving more paperwork? Will notice be required?
All that uncertainty creates instability in an industrial climate that is already volatile and weak. When the Secretary of State meets BMW's new chairman, Joachim Milberg, to discuss Government aid to help modernise Longbridge, will he tell him of the legislation now going through Parliament? Does he think that Mr. Milberg will be impressed? One of the reasons why BMW bought into Britain was to avoid the draconian employment legislation that has already brought stagnation to the German car industry. Will the Secretary of State tell Mr. Milberg that the Government have compromised their commitment to full employment in Britain for the sake of Labour's commitment to Europe?
So, there we have it--a Bill with sufficient detail to frighten all the employer organisations. What frightens me, however, is what the Bill does not say. Without Margaret Thatcher's reforms in the 1980s, I would not have been able to build up my company which, directly and indirectly, employed more than 1,000 British people who might otherwise have been on the dole. The Bill does not build on that; it turns the clock back. It makes a nonsense of the new deal. Yet the plodding herd opposite will be expected to drift into the Aye Lobby tonight like so many cows being called to the milking parlour--and with about as much thought.
No doubt when the Minister is questioned about the Bill in future, he will get a pager message and say in defence, as others have done in defence of other Bills: "This Bill had the overwhelming support of Parliament."
God help this Parliament and God help those in future who will seek fulfilment through being employed.
