Employment Protection Act

HC Deb 16 November 1976 vol 919 cc1093-5

9. Mr. Michael McNair-Wilson

asked the Secretary of State for Employment what effect the Employment Protection Act has had on the unemployment situation.

Mr. Booth

The improvement in industrial relations which the Employment Protection Act is designed to produce should strengthen business confidence and our productive capacity and so enhance employment prospects in the long term. No measure of its short-term effects is yet available.

Mr. McNair-Wilson

Is the Secretary of State aware that many employers consider the Act to be a positive financial disincentive to take on more staff, particularly young people and school leavers? Can he say what consideration he has given to amending the Act in the light of experience when statistics are available?

Mr. Booth

It may help the hon. Gentleman in his dealings with employers if I tell him that my Department has estimated very carefully the cost of the Act when it is fully implemented, which stage we have not yet reached. All those estimates indicate that the cost to employers will be less than one-quarter of 1 per cent. of their wage bill. I find it very hard to believe that the Act can be regarded as any considerable financial disincentive to taking on employees. The vast improvement in industrial relations that has been achieved under the Act is something that all employers should welcome.

Mr. loan Evans

Does my right hon Friend realise that the Act has been greatly welcomed by trade unionists and by employees generally and that it is a major step forward in improving industrial relations?

Mr. Booth

Yes, I appreciate that, and I welcome my hon. Friend's statement. I should say that in enacting the Employment Protection Act the House was, for a great many of them, only putting into statutory form practices which many of them already pursued.

Mr. Brittan

Will the Secretary of State accept that the damage caused by the Act cannot be gauged by the cost to employers, who employ labour in spite of the terms of the Act, but is more accurately to be assessed by the effect on unemployment because employers will not take on workers as a result of the Act? If that is so, will the Secretary of State, when there is time to measure the effect of the Act, give his assessment not of the cost of the Act but of the effect on unemployment created by it?

Mr. Booth

I should be interested to know whether the proposition of the hon. Gentleman and his hon. Friend is that the Act should be repealed. It is our estimate, as I indicated to the House, that the cost of the Act is extremely small and that the advantages to be gained have already been recognised by a great many employers who are practising within the Act and, I believe, will continue to do so irrespective of the statutory requirements.

Mr. Prior

Is the right hon. Gentleman aware that there are parts of the Act that the Opposition believe are damaging to employment and, therefore, will need to be reviewed and changed? Why does not the right hon. Gentleman get on with that now?

Mr. Booth

I was being generous to the right hon. Gentleman and some of his hon. Friends in thinking that some of their comments about the Act during its passage through the House were matters on which they would revise their judgment when they saw the Act as a whole. That is obviously not the case, and we shall, therefore, listen with great interest to the right hon. Gentleman when he tells us which part of the Act should be repealed.