INDUSTRIAL INJURIES (INDEPENDENT CONTRACTORS) (Hansard, 12 March 1969)

§ Mr. Peter Archer (Rowley Regis and Tipton)
I beg to move, That leave be given to bring in a Bill to amend the law relating to the liability of main contractors for industrial injuries sustained by sub-contractors or the employees of sub-contractors. My Bill does not pretend to relate to any of the more dramatic issues which confront the nation, but to a limited number of families it may be of very real importance. It is a tribute to the tolerance and versatility of the House that such matters are from time to time considered sympathetically even if briefly.
The situation with which the Bill seeks to deal results in what to many families is a double tragedy. An industrial accident ends or gravely diminishes the earning capacity of the breadwinner and they then find themselves without any financial redress to mitigate the hardship. That is a situation which arises from the practice which is growing in certain industries of setting on labour not in the capacity of employees, but as self-employed contractors frequently as labour-only sub-contractors. They do the same work as if they were employees, but this arrangement is part of what has become the national pastime of giving artificial names to everyday situations to evade paying money to the Government.
Honest people who would not dream of "missing their turn in the local" regard it as legitimate to cast the burden of social expenditure upon other people's shoulders. If a workman is described as a sub-contractor the management evades liability for Selective Employment Tax, the combined National Insurance payments are lower, and the worker pays Income Tax under Schedule D instead of Schedule E, so that he pays 12 months in arrear. I do not suggest that every agreement between a principal and a sub-contractor is prompted by such motives, but this is the probable explanation of the recent fashion for this kind of arrangement.
Those concerned often fail to appreciate a further consequence. An employer is responsible to his employees for proper safety precautions and if he 1382 fails to take them and an employee is injured he can look to the employer for damages. Normally, the employer is insured against liability and if the Bill presented by my hon. Friend the Member for Consett (Mr. David Watkins) becomes law this will become compulsory.
Therefore, the employee will be compensated for his suffering and for the loss of his earning capacity. But if he is not an employee, but a sub-contractor, the main contractor is responsible only for a very limited range of precautions in a very limited range of situations. Outside those situations the sub-contractor must make his own provision. And if the subcontractor employs his own gang, it is he who is responsible for their safety. This is a situation which was pointed out by the Committee under the chairmanship of Professor Phelps Brown, which reported in July, 1968, on the Building and Construction Industries.
A number of very serious consequences follow. First, accidents happen which might have been prevented. I say this first, because I imagine that all of us would prefer safety to a claim for damages. There are today cripples who might have had their health and strength. There are widows who might have had their husbands. It would be quite unfair to suggest that every sub-contractor is careless of his own and his employees' safety, but some—too many—simply, cannot afford to provide safe equipment. That is why they are labour-only sub-contractors; and the main contractor has little inducement to concern himself with the matter.
Secondly, if an industrial accident does happen the sub-contractor may find that he has no financial remedy, except very limited benefits under the industrial injuries provisions, and the family's standard of life may be seriously affected.
Thirdly, an employee of a sub-contractor, if he is injured, may find that any redress he may have is simply against the head of the gang, who may have no money to satisfy a judgment. There have been cases of workers being misled by information from the main contractor about his insurance policy. I do not suggest for a moment that they were deliberately misled. I have no doubt that the main contractor was misled himself, but it is explained that there is a clause in the insurance policy stating that the main 1383 contractor is covered against liability to sub-contractors as though they were employees. So he is, but only against liability. If a claim is made under the policy, it is then pointed out, quite properly, that since he has incurred no liability the clause does not apply.
The Bill seeks to adopt the proposal in paragraph 441 of the Phelps Brown Report, though in a rather simpler form. The main contractor would become responsible for the safety of sub-contractors and their employees as though he were the employer. He would have no complaint, as he could easily cover himself against the risk by insurance, and no doubt he would bear his responsibility in mind when he made the contract, as an employer does when he negotiates the conditions of employment.
I appreciate that this rule may not be readily applicable to all industries. The Phelps Brown proposal related only to the building and construction industries. So for the maximum flexibility, the Bill proposes that it should apply only to any industry or operation specified by my right hon. Friend the Secretary of Stale for Employment and Productivity.
I will not delay the House further. If the House gives leave, and the Bill proceeds, the law will be modified by a limited measure which will help to avert some tragic accidents and which when accidents occur, will help to ensure that the inevitable suffering is mitigated so far as financial provision can do so.

§ Mr. Speaker
The Question is——

§ Sir Harmar Nicholls (Peterborough)
rose—

§ Mr. Speaker
Does the hon. Gentleman wish to oppose the Bill?

§ Sir Harmar Nicholls
Yes. Mr. Speaker.
I do not think that the House should give the hon. Member leave to bring in the Bill. I accept the morality behind the hon. Gentleman's argument. We can all have much real sympathy for the victims of the present situation where small contractors have not made proper provisions to cover any of their employees in case of accident, but I think that we should resist putting any more burdens 1384 on the main contractors. They are already overburdened with all sorts of Government restrictions and all sorts of charges which I will not take up the time of the House by disagreeing with or objecting to now.
However, we must put a stop to this process of adding burdens to contractors and making it almost impossible for them to know for what they will be tendering. We know that in many industries—the industries which I presume would be the ones the Minister would put on the register—the main contractor does not know who his sub-contractors are until he is well on with the contract. A tender is made on the basis of the quantities. The main contractor has a general idea of how the project will develop and he does not actually employ sub-contractors until he is well on with the job and has put in his tender.
If main contractors are to be made responsible for the omissions and difficulties of sub-contractors whom they do not even know when they enter into contracts, they may well have to put prices into their tenders over and above what they ought to because of the uncertainty of it all.
Although I think that some way should be found to meet the point made by the hon. Gentleman, I am certain that the Bill as he has described it to us would not be the right way. I believe that we should use every endeavour with contractors, who may well be subcontractors on bigger projects, to see that they have protected the legitimate and proper interests of their employees all down the line. I believe that to pass a Bill and put extra responsibilities on to main contractors is not the best way of doing it in the interests of the nation.
I will join the hon. Gentleman in any alternative way to try to meet the legitimate claims of employees of subcontracting firms, but I hope that the House will refuse to add one extra burden, albeit on the face of it a small one, on to main contractors, who are already facing many difficulties to remain competitive as it is.