Commons Sitting of 16 February 1979

Preamble
The House met at Eleven o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORDERS OF THE DAY

  EMPLOYMENT OPPORTUNITIES (SMALL BUSINESSES) BILL
  Order for Second Reading read.
  Mr. John H. Osborn: On a point of order, Mr. Speaker. Is it not regrettable that the Government have not offered a statement about the complete breakdown in public services? As the Leader of the House is here, can I, through you, Mr. Speaker, ask him to make a statement today on the breakdown of public services, in the Midlands particularly, and specifically in Sheffield and South Yorkshire?
  Mr. Speaker: The hon. Gentleman will know that unless I have a request for a statement I cannot call on the Minister to make it, and I have had no such request.
  11.6 a.m.
  Mr. Michael Grylls: I beg to move, That the Bill be now read a Second time.
  It gives me great pleasure to move the Second Reading of the Bill in the names of myself and my hon. Friends. It is always a privilege for a Back Bencher to introduce a Bill, particularly one such as this which is, I hope, designed to give constructive help to hundreds of thousands, if not millions, of those who, sadly, are presently unemployed.
  To set the pattern for our consideration of the Bill, I put it to the House that this is a constructive attempt to offer a part, though not a total, solution to the difficult problem of unemployment. About a year ago my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) introduced a Private Member's Bill which was also designed to assist small
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  businesses and encourage them to employ more people. That was a good Bill and a good attempt, but the situation in the country—I think that my hon. Friend the Member for Hallam will agree —has not improved very much. There has been a marginal improvement in the number of unemployed, from 1·54 million to 1·45 million. Though that is important for those who have obtained employment, it is only a fiddling improvement.
  What has happened? If one looks back over the year—and I do not necessarily put this only at the feet of the Government—what has the House done about the situation? We have had innumerable debates about the industrial situation and unemployment and the usual party political to-ing and fro-ing, but little has been done, and certainly little has been achieved. It almost seems as if we are impotent and unable to grasp the problem, perhaps because of party political battles. That is sad. Above all, it is sad for those who are unemployed.
  A total of £500 million has been spent in the last year on various employment measures. The Minister of State, Department of Employment, who is on the Front Bench today, has been responsible for many of these measures. I do not criticise him for them, but I do not think that they have been very effective and the figures tend to support that view. Genuine attempts have been made to help, but there have been few constructive ideas designed to aim at the core of the matter. In a way, I feel that the House as a whole has been at a loss to know how to deal with the situation.
  The right hon. Member for Bristol, South-East (Mr. Benn) made an interesting comment in one of his moments of great frankness and openness. He said that what we lacked in Government was entrepreneurial ability. Which Government anywhere in the world ever had entrepreneurial ability? That is a sort of contradiction in terms. Entrepreneurial ability is a totally different matter and, for heaven's sake, Governments are not meant to have it. The right hon. Member was quite right in that instance—Governments do not have it. Therefore, by definition, attempts to make water flow uphill —if that is the right way of putting it—are bound to fail in the end.

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  Let me mention job creation schemes. Again, I grant that the Government had the best intentions in the world, but in a sense the type of job created by these schemes is totally irrelevant to the employment that a person will have in later life. In my own constituency, under the job creation scheme, people have been trying to tidy up the Basingstoke canal, which runs through part of my constituency and ends up in the constituency of my hon. Friend the Member for Basingstoke (Mr. Mitchell). It is a worthy aim because the canal is absolutely filthy and disgusting where it has not been cleared, but the clearing of a canal is not a proper job for school leavers. It is a palliative rather than a solution. All too often these job creation schemes are wealth-consuming rather than wealth-creating. I hope that the Government will take this point on board. We want to ensure that we create jobs that will really create wealth for everyone in the country.
  There is also the small firms employment subsidy, under which £20 a week is paid for six months. This scheme was introduced not very long ago, but it has not been a great help. Again, it is an artificial aid. It is as though one propped up one's house with bits of wood on the outside rather than built the walls soundly. I suggest that the only way in which we shall deal with unemployment is to build the walls of employment soundly rather than to try to prop them up with these sorts of measures.
  In recent years, I have criticised the amount of money that has been spent under the Industry Act. Money has been poured into projects. Ironically, although these capital projects are important—and that is where most of the aid has gone—they are designed to create less employment, not more, simply because they are capital-intensive. Therefore, they do not provide the jobs that we all want. There has been massive support for British Leyland and British shipbuilders. It can be argued that all this support is worth while and necessary. Today is not the time to argue that yet again. But all this support is directed at industries which inevitably will see their employment run down. We know that British Leyland is committed to reducing its work force by 10,000 and British Shipbuilders by 12,000. These big industries will all be demanned
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  whether under a Labour or a Conservative Government. The money that is going into them is for capital projects, as a result of which fewer jobs will be available. Thousands of millions of pounds of taxpayers' money have been poured out in this way.
  The same can be said of the public sector and of employees in local authority services such as the hospitals, where there is so much trouble at the moment. The inevitability of paying these people more will mean that there will be fewer jobs. That may be the right thing to do. I am not arguing that; all I am saying is that in these areas new jobs will not be created. I do not believe that this should be a matter for contention today.
  In a sense, the Government are frustrated. They see this money being poured out and the jobs not being created. What I believe we should do is to consider a positive approach in order to help. We should ask ourselves "If these areas do not provide the jobs, who will?" In his excellent winding-up speech last week, my hon. Friend the Member for Oswestry (Mr. Biffen) drew attention to this. That was a marvellous trailer for today. He drew attention to the fact that the small and medium-size businesses would provide the jobs. If we all agree about that, we are talking only about methods.
  We must concern ourselves with the acorns that will grow into oaks in future and about the entrepreneurs to which the right hon. Member for Bristol, South-East referred. We must help the men of ideas and those with ambition to set up their own businesses. I should like to refer to one particular company with which I came into contact the other day. It is engaged in a topical industry—word processing. That is perhaps new to most hon. Members. One of the leading firms in word processing is not one of the giants, although some of the big companies are involved, but a small company in Dorking called Data Recall Ltd. That has had immense success in developing word processing equipment and is selling it all over the country in the face of great competition from Canada and the United States. That is a typical firm upon which we should focus. The scope of the small firms is well known and is enormous.

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  When my hon. Friend the Member for Hallam introduced his Bill he gave some statistics about small businesses, some of which came from Sir John Bolton's famous report on small businesses of a few years ago. I pay tribute to Sir John for the work that he did and for the attention that he gave to small businesses. He happens to be a constituent of mine, so I pay an extra special tribute to him. He is a very distinguished and good man. He said that there were 1·25 million small firms and that 6 million people were employed in the small business sector—25 per cent. of our work force. There are 70,000 firms in manufacturing industry alone, employing 200 or fewer people. Therefore, there is immense scope here if we accept that this is the area that will expand.
  I must ask who in the Government is responsible for the small firms. We are told that it is the Chancellor of the Duchy of Lancaster. I am disappointed that he is not with us this morning, because a lot of what we shall talk about will be matters on which he advises the Government. I told the right hon. Gentleman that I would refer to him. Had he been present I would have made this point. When the minimum lending rate went up the other day, what advice did the Government receive from the right hon. Gentleman about the effect that this astronomical interest rate would have on the future, or even the existence, of small businesses? The Chancellor of the Duchy of Lancaster knows very well what the effect will be. Did he advise the Government about this? Did the Government deliberately ignore it and accept the damage that it would do to the small business sector?
  Even the Prime Minister has recognised the value of small businesses. At Harrogate, on 24 January 1977, he said:
  "We must be more careful than we have been with small businesses".
  The Prime Minister recognised that two years ago. Why does he now do such a damaging thing as raising the MLR?
  I believe that the Government have been told about the effect on small businesses which some existing legislation has had. Small business organisations all over the country have been saying to the Chancellor of the Duchy that parts of the Employment Protection Act give rise to restriction and frustration. I know that
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  Labour Members do not accept that as a truism, but they should give more weight to that point of view because the evidence from all over the country is very strong indeed. I believe that the Government should look at this again. They cannot ignore it.
  When unfair dismissal was first introduced into legislation—incidentally, in the 1972 Conservative Act, repeated in the 1975 Act—it was never intended that it should be a disincentive to the creation of new jobs. Such an intention would have been idiotic. I believe that the Conservative Government then and the Labour Government now must have said to themselves "This is a humanitarian thing to do". But they must have realised that if it had a disincentive effect on the creation of new jobs it needed to be looked at again. I hope that the Minister of State will accept that. No legislation can last for ever without being changed in the light of circumstances. There is overwhelming evidence of that. Incidentally, that evidence has been sent to the Chancellor of the Duchy by most of the small business organisations.
  As to the six-month unfair dismissal rule, only too often this is too short a time for the late developer. In a sense, it is the same argument as comprehensive schools versus secondary modern schools. There was a lot of truth in the claim that often the late developer at a secondary modern school could not get to the top. That is how the comprehensive argument developed. If that is a good enough argument for comprehensives, it must also be true in this instance, because surely the late developer in a job may not have acquired his full skills by the time the six months are up. After all, employment is perhaps the most important thing of all. For the young school leaver, that is very important. I believe, therefore, that there is a need for a longer probationary time for the new worker to acquire new skills and therefore to convince his employer that he should be kept on as a permanent employee. That forms part of my Bill. Hon. Members will see that at the end of the Bill there is reference to probation.
  Then there arises the question of the one-off export order. Again, I think that the House will know the facts about this. So often this applies to small firms. I had evidence the other day of a skilled firm

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  in Liverpool whose business it was to produce billiard tables. I think that it had fewer than 15 employees, but they had this great skill and the firm got an order from the United States to supply billiard tables all over the United States. It was a fantastic order.
  That company said to itself "What can we do? It will take quite a long time to build all these billiard tables. It cannot be done within six months. It will probably take two or three years. If we commit ourselves to doubling our work force, we do not know that we shall get a repeat order like that." The firm cannot be certain, so what does it say to itself? My evidence is that that company will, sadly, say to itself—as will many others—"I wonder whether we dare accept that order." That is a desperately damaging thing for Britain.
  Similar arguments are put when small firms want to expand. In support of this, I want to cite evidence. A firm in Gloucester is supplying parts for the motor car industry. Two years ago it was offered a contract worth £250,000 which ran for five years. It would have meant a 25 per cent. expansion of the work force. The firm felt that it could not take on that contract because it would tend to risk losing more by not getting a follow-up order and having to keep on all the staff at the end of the contract than it would make out of the business that it could have got.
  I cite another case. If we come here and say that there is evidence that this sort of thing is happening, it is right that the hon. Member for Perry Barr should want evidence about it, and it is right that I should give it. I quote from a letter that I have received:
  "I have, frankly, been advising my clients since its inception to avoid taking on one more member of staff than they absolutely need to."
  That is the result of part of the Employment Protection Act.
  There is more evidence:
  "The above Act has created the situation that we are now forced to run busines activities with the very minimum of staff, and we ourselves will turn down export business rather than create job positions for the cossetted unemployed."
  Another firm writes:
  "We could, immediately, give work to an additional minimum of seven adults."
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  I could continue in that vein, but I shall not weary the House with more evidence. The House as a whole must give due weight to the evidence and to the experience of hon. Members. Undoubtedly the evidence exists. Very few people take the trouble to write, so one must assume that this situation is quite widespread. The object of the Bill is to try to do something about it.
  Mr. Ernest G. Perry: I should like to correct the hon. Member on one point. He mentioned the words "Perry Barr". I should not particularly like to be connected with those two words. I represent Battersea, South.
  Mr. Grylls: I apologise to the hon. Member for Battersea, South (Mr. Perry). It was a slip. The hon. Member is a good friend of mine and I should hate to impose any slur on his character. Incidentally, I hope that talk of a "bar" will not empty the Chamber quickly.
  A Government report on this subject was discussed in the House quite recently. It was an ORC survey by the Department of Employment of 301 firms. I know that it is said that 301 firms is not a great number. It is not great when compared with 800,000. If the Minister of State says that 301 is not a very big sample I shall agree with him, but I challenge him to provide a bigger one. If he really doubts that what I am saying is true and thinks that 301 firms in that survey are not enough, let him have another survey. I would not mind the Government spending money on that, because it would be money well spent.
  The survey showed that 24 per cent. of those firms which answered—one in four —said that they would take on more employees but for the provisions of the unfair dismissal legislation. That is quite a number of firms. If one pluses that up into the 800,000 firms—nearly 1 million —throughout the country, one realises that it means that jobs are lurking for a lot of people. That is the point. There are potential jobs. The House cannot ignore that that is the case because of the present legislation. If the Government really desire to tackle unemployment, I beg them to look very carefully at this measure today.
  My object in bringing forward the Bill —it might surprise my hon. Friends when I say this—is not, perhaps, specifically

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  so much to help smaller businesses, although I hope that it will do that, as to try to help to relieve unemployment. The two things go hand in glove. I am not seeking to give a bonanza or a handout to small business men. They do not want that from me or from anyone else. They do not operate like that. They are independent chaps. However, they want the possibility of expanding and taking cm more people. Therefore, my target is the unemployed.
  It has been said by one or two cynics that the Rent Act became the "Prevention of Tenancies Act." There is a real danger that the Employment Protection Act will become the "Prevention of Employment Act" if it is not given greater flexibility. That is what we are debating.
  I beg the Government and their supporters not to take a dogmatic, blind approach to this measure. It is not a party political measure. It is a measure from a Bank Bench Member to try to help with the problem. If the Government look at the matter dogmatically and do not offer to help, when people go around the country saying that the Labour Party has become the natural party of unemployment it will be hard for Labour Members to refute that. Not only do the figures exist, but when we offer the Government a constructive way out of the problem they do not take the hand that we hold out to them. If people go around saying that the Labour Party has become the un-Labour Party, that jibe will stick, unless the Government take this type of opportunity to do something about it.
  I do not particularly want that sort of jibe to stick. It would be no pleasure for me to say that. The Government have a very simple solution, which is to prove me wrong and to prove it to be wrong that the Labour Party is the natural party of unemployment, by doing something about the Bill before us.
  I am ever realistic politically and party politically. I accept that the Employment Protection Act, as far as the present Parliament is concerned, is a tablet of stone. We shall not succeed, even if we want to do so—I am not necessarily saying that we do—in changing the Act. I accept that the House of Commons has voted during the present Parliament in support of the Act. Quite obviously it will remain on the statute book at least for the
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  present Parliament, although we cannot be certain about the future.
  I do not aim to change the Employment Protection Act. Again, that might surprise my hon. Friends. I do not aim to touch the normal contract of employment. I appreciate that it has been approved by Parliament as a whole and that that is the present law. What I hope and intend to do, with the support of the House, is to offer an additional type of employment to help us out of this problem.
  As hon. Members will see in the Bill, I have called it a "temporary employment contract". I could best describe this, in a shorthand way, as a stepping stone to normal full, regular, permanent employment. I hope that it can become a stepping stone to that. The Bill is drafted so that it cannot become permanent temporary employment. In the Employment Protection (Consolidation) Act, we have a separate form of employment. In section 142 it is perfectly proper to have exceptions. If one is employed on a contract for two years or more, one is exempted from the provisions of unfair dismissal. The Bill offers an additional measure at a shorter stage for temporary employment. It is giving fresh hope to the unemployed.
  By offering temporary employment, it is possible to create an alternative to the dole queue. That should not be shrugged off lightly. Statistics mean nothing, and I am concerned with figures. The Government must not be complacent about unemployment. I want to unlock the thwarted opportunities for new jobs that exist in the smaller business sector, to create a new type of contract and to preserve the security of employment under the Employment Protection Act. But it would also help the unemployed by removing the disincentive to the creation of new jobs.
  This is in no way an anti-union measure. The union rights under the Employment Protection Act are protected in the Bill. Union activities are fully preserved.
  I have had wide consultation, advice and support from the National Association of Chambers of Trade, the Union of Independent Companies, the Association of Small Businesses, the

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  National Association of the Self-Employed, which represents many small traders, the CBI small firms council and Mr. Meakins, and the small business bureau of the Conservative Party, of which my hon. Friend the Member for Basingstoke was a founder. Its director, Mr. Lace, has given me an enormous amount of help. I especially thank Mr. Noel Picarda Kemp, who I hope will be the new Member for Lewisham, West after the next election. I say this not only out of courtesy but to persuade the Minister that there has been support from a wide range of organisations concerned with small- and medium-sized businesses all over the country. I hope that when the Minister replies he will comment on the reaction that the Government have had from these organisations. As drafted, the Bill does not absolutely satisfy any organisation but they all say that it will help. It will be useful if it helps them offer these jobs.
  The Bill is designed to slot into the Employment Protection (Consolidation) Act 1978 as clause 64(a). That Act is a consolidation of the Trade Union and Labour Relations Act and the Employment Protection Act.
  The Bill deals first with a temporary employment contract. It should be absolutely clear to the man who is applying for a job that it is a temporary employment contract and not a full one. It has a specific time attached to it, and the applicant will know where he stands. He then has two choices. First, he can accept the job for the period stated. He may consider that after the period stated he will be asked to stay and will be given a normal contract. But if he does not want to take the job he has two alternatives. He either remains on the dole or waits and tries to find a job under a normal employment contract.
  The Minister of State, Department of Employment (Mr. Harold Walker): I may have misheard. What is the applicant's first alternative if he does not want to take on the temporary contract?
  Mr. Grylls: The alternative is to stay on the dole. The applicant is not being dragooned into anything.
  Clause 1(1)(a) limits the application of the Bill to firms with fewer than 200 employees. Clause 1(1)(b) states that an
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  applicant must be informed in writing before he starts that the employment is temporary. Clause 1(2) limits the maximum amount of time to 104 weeks—two years.
  It is difficult to define small businesses in a way that is acceptable to everyone. The definition in the Bill is probably not acceptable to many hon. Members. Clause 1(9) states that:
  "'small business' means:
  a sole trader (not being a body corporate) … an undertaking carried on by a sole proprietor (not being a body corporate) or, partnership none of the partners of which is a body corporate, or
  a company within the meaning of the Companies Act … not having its shares quoted on the Stock Exchange at least 75 per cent. of whose shares are in the legal and beneficial ownership of those … engaged in the day to day management …."
  In other words, we want to help the smaller businesses where the owner works in the business. The Bill is not designed to help the absentee business man. The definition of small business has been carefully drawn to include workers' co-operatives, which should gladden the heart of the hon. Member for Keighley (Mr. Cryer). It is a comprehensive definition.
  The limiting definition of small businesses to those with not more than 200 employees could be argued. Many would say that the figure should be smaller. But to limit it to a maximum of 50 employees would create difficulties. I am not trying so much to help the small businesses themselves as employment within those businesses. The more we restrict them in size, the more we restrict the possibility of these temporary employment jobs. That was the dilemma in which we found ourselves. The normal definition of "smaller business", apart from the definition in clause 1(9) on the structure of the company, would be those with fewer than 200 employees, and because we want to try to help with the maximum number of jobs I did not want to restrict the Bill too much. I am open to argument on this point in Committee, but I commend the 200 figure to the Minister of State because that is used by him in the small firms employment subsidy, so there is some precedent for it. However, I emphasise that I am not particularly wedded to this and am prepared to look at it again in Committee.

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  Clause 1(1)(b) provides that the fact that the employment is temporary must be written—I think that I have covered that point. Clause 1(2) says that the length of the contarct is a maximum of 104 weeks, or whenever it is notified that it will end, if it is sooner. Clause 1(3) refers to inadmissible reasons, and that, in a nutshell, covers the question of trade union activities. The unfair dismissal provisions will be lifted for jobs under this definition of temporary employment, except in relation to trade union activities. If an employer tries to dismiss someone for carrying out his legitimate trade union activities under the consolidation Act he could immediately be proceeded against for unfair dismissal. All the structure of the Employment Protection Act remains unsullied.
  Clause 1(4)(a) says that there must be a written statement of the anticipated length and nature of the employment. The length of the employment speaks for itself. The nature of the employment is particularly designed to help someone who needs to get a special skill and in a sense refers to the probationary aspect of the Bill.
  Clause 1(4)(b) is important. In drawing up this Bill I felt that some people would say that temporary employment may not be that attractive. It is true that the strict unfair dismissal provisions will be removed for this contract. Therefore, to help the employee in this situation I have proposed increasing the period of notice. The Bill refers to
  "(i) not less than one week where the period of such continuous employment is less than 26 weeks and,
  (ii) not less than 2 weeks where the period of such continuous employment is more than 26 weeks."
  In other words, from six months to one year, under this type of employment contract, there will be a two-week period of notice. That will be helpful because it is more than people have under normal employment terms. It is a bonus of one week.
  We can ignore clause 1 (4)(c). It should not be in the Bill anyway and I propose that it be taken out in Committee. It simply refers to pregnancy, but it would not apply in any event because one only receives these benefits if one has been continuously employed for two years.
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  Clause 1(5) is an important part of the Bill. It asks the Secretary of State to lay new regulations and it gives detailed guidance to him as to how these regulations should be laid. It is designed to discourage what a lot of people have called "time wasting" of key people who have to appear in person before tribunals. It allows people to submit written evidence and allows a tribunal to ask them for further details. If that does not succeed in resolving the problem, the tribunal can decide to have an oral hearing if it is not satisfied.
  Paragraph (iv) of subsection (5)(b) refers to the question of costs. If unnecessary expense has been incurred by either party against the other, the tribunal may award costs. Let us take the example of an employee who has an eight-month temporary employment contract and leaves after six months. Suppose that he suddenly walks out on the job and leaves, on a building site, a very expensive piece of machinery, which had cost a lot of money to hire. The employer, with some justification, might say that the man had acted unreasonably. Although the employee might get some compensation for dismissal, the employer could claim a certain amount against the employee for loss of work.
  Subsection (7) preserves the role of the conciliation officer in all aspects of the Bill. The conciliation officer has an important role—he can help the employee prepare his evidence for a tribunal hearing. Subsection (8) again refers to maternity benefits, and that can be taken out as well.
  That is the Bill. Anyone who is worried about the definition of "smaller businesses" should not concern himself too much. That can be worked out in Committee. Here we have a new type of contract, a new opening to help the unemployed. All the rights under the existing contract and under the Employment Protection Act are fully preserved, as are all the rights of trade union activities.
  I beg the House with all the passion I can command to accept this Bill. It is a constructive measure to provide a stepping stone from the dole queue to full employment. I hope that the House takes it in this light and accepts that it is a constructive alternative to abandoning the

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  unemployed and washing our hands of them. We cannot do that. We should be ashamed to go back to our constituents, throw our hands up in the air and claim that we cannot do anything about the problem because 1·5 million unemployed are too big a difficulty for us to deal with. We must do something other than attempting to make water run uphill by providing grants which will not make any meaningful contribution to the solution of our problem.
  This is a new solution. I ask the Minister to consider it in that light. By all means, before the Committee stage, have consultations with the Chancellor of the Duchy of Lancaster, who has responsibility for the small business sector. Let him consult all the organisations concerned and see whether he gets the same response as I had. If any changes are needed, let us make them in Committee. But let us accept the principle that here we are trying to do something to help.
  I hope that the House will feel that the Bill is worthy of all-party support. We do not want too much of a party dogfight over it. If we are united we will not have wasted our Friday today; we will have done something that will give positive help to the unemployed, and that will be something of which the House can be proud.
  11.50 a.m.
  Mr. William Hamilton: The hon. Member for Surrey, North-West (Mr. Grylls) made some rather extravagant claims about his Bill. I agree that whatever steps we can take to reduce unemployment should be taken and examined as far as possible without any kind of party bias. The hon. Member claimed that the Bill would create prospects for "hundreds of thousands, if not millions" of people. I think that that is stretching things a bit too far.
  In terms of unfair dismissal the Bill seeks to restrict the rights of workers in small firms compared with those in large firms. I hope that I am not being unfair in saying that. Under the Bill, the worker in the small firm will be treated less generously than the worker in the large firm. I disagree with that, for a start.
  The worker in a small firm rightly expects the same kind of protection as the worker in a large firm. I see no reason
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  why, because a man works for a firm with 200 or fewer employees, he should be treated less generously than workers elsewhere.
  Mr. Grylls: The normal contract of employment for an employee in a firm as defined in this Bill, or in any other firm, is precisely the same. We are trying to open up a special extra window to people who are at present unemployed. A person with a normal contract of employment will be in the same position, whether in a small or large firm. We are trying to provide an extra opportunity for those joining small businesses.
  Mr. Hamilton: That view is not shared by hon. Members on the Government Benches. Any intelligent worker looking at this Bill would be bound to come to the conclusion that in the matter of unfair dismissal he is to be treated less generously than the worker in the larger firm.
  My hon. Friend the Member for Keighley (Mr. Cryer) will go into some detail about the financial and other assistance provided to small firms by the present Government. I think that he will prove that the assistance that we give to small firms in those respects is probably more generous than anywhere else in Western Europe.
  Mr. Emlyn Hooson: No.
  Mr. Hamilton: This will be spelt out by my hon. Friend the Member for Keighley, who has been a Minister in the relevant Department and knows what he is talking about. He will explain exactly what is involved. It is far more important for the welfare, prosperity and future prospects of small firms than this Bill.
  Mr. Hooson: How does the hon. Member account for the fact that there is such a large proportion of small businesses in places such as West Germany?
  Mr. Hamilton: If the hon. and learned Member will contain himself, I shall deal with these matters. The reason is not the generosity, or lack of generosity, of financial inducements and other assistance provided by the central Government. There are other reasons.
  The hon. Member for Surrey, North-West said that there was overwhelming evidence that small firms in particular are discouraged from taking on extra

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  workers because of the employment protection legislation. In the new town of Glenrothes, in Fife, more than 150 firms have been set up since 1950. They are all light engineering and manufacturing firms. The industrial relations are superb. There has not been a major strike for 25 years. This is extremely important. The small firm is of crucial importance to the country's economy.
  There is no question that party politics are involved in this matter. The Tory Party is trying to flog this for party political reasons. When the charge was made that the employment protection legislation was preventing small firms from taking on extra workers, I went out of my way to ask as many firms in Glenrothes as I could whether that was true. Only one firm said that that was the reason for not taking on additional labour.
  That is confirmed in the report produced by the Scottish Development Agency last week—"Small manufacturing firms in Scotland: a survey of their problems and needs". That report defines a small firm as one with fewer than 200 workers. Such firms represent 93 per cent. of manufacturing firms in Scotland. They account for about one-third of all jobs in Scottish industry and nearly one-quarter of industrial output. Therefore, it is extremely important for the national United Kingdom economy, as well as for the Scottish economy, to do everything possible to encourage those firms to prosper and expand.
  The SDA commissioned the survey in autumn 1977. The introduction of the report states:
  "It shows a small business sector which is both stable and developing."
  There is no room for complacency there; on the other hand, there is no room for defeatism. The report explains that out of some 8,350 small manufacturing firms, a 10 per cent. sample was selected for interview and analysis. Questionnaires were sent out to these firms to ascertain precisely what their various problems and needs were.
  The tables in the report indicate clearly that the types of help needed do not involve legislative reform of the kind suggested by the hon. Member for Surrey, North-West. About three-quarters of the firms
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  indicated that they needed help but that they needed that help in finance, administration and marketing. They wanted advice on financial legislation and help with accounting records. In marketing and production, for instance, two out of five of the small firms needed help in interpreting the volume of building and planning regulations and with selling their products, especially when they were exporting them.
  The firms made complaints about the form-filling that is necessary if they seek to enter export markets. The Government have been tackling that problem by reducing the number of forms with which firms have to wrestle.
  The recurring problems found by the SDA included cash flow and the slow settlement of accounts, particularly by big business people. Small firms have a constant problem in securing payment of bills by the big firms which are using their services. They also complain about what they call Government and local authority red tape. I suppose that we are all afflicted by that. They also naturally complain about the recession. The unemployment problem will not be resolved by the kind of legislation that we have before us. It will be resolved in the long term by our getting out of the world recession from which we are all suffering.
  Most important, firms complained about the lack of skilled labour. Here again I refer to my own constituency experience. Time and time again small firms have said that they could take on more labour if they could find two or three more welders, two or three more electricians, and so on. This is a great problem that needs to be dealt with.
  The industrial relations aspect was a fairly minor problem. I have indicated that in my constituency there is very little of an industrial relations problem. The SDA report indicates that about two-thirds of all the small firms in Scotland expect to expand their activities over the next five years, so there is no question of their being browbeaten and declining.
  Within the various industries, 92 per cent. and 88 per cent, respectively of chemical and electrical engineering firms expected to expand over the next five

  1459
  years. That is a considerable number. The report says:
  "It augurs well for the economy of the small firm sector in Scotland that the main reasons for this expression of optimism are based on the firms' investment plans for new plant and machinery, for product diversification, market growth and development of exports."
  I say those things to emphasise that the hon. Gentleman, in making the extravagant claim that there is overwhelming evidence that the main thing stopping small firms from taking on extra labour is the employment protection legislation—
  Mr. Grylls: All the associations representing the small and medium-sized businesses have said off their own bat that there is strong evidence—if one calls it "strong" rather than "overwhelming", I do not mind. The hon. Gentleman cannot shrug that off. That may not be so in his constituency, but the associations whose job it is to represent their members all say that there is evidence.
  Mr. Hamilton: They do not all say that. The hon. Gentleman is retracting a little from what he said at the beginning of his speech. He talked about hundreds of thousands, if not millions, of jobs being created by the kind of provisions that he proposes. That is absolute nonsense. There is no firm, objective evidence anywhere that this is a general problem throughout the United Kingdom.
  I turn to one or two particular aspects of the Bill. Other hon. Members will no doubt deal with other matters, but I want to refer to the part of the Bill that deals with industrial tribunals. The matter has been raised for blatantly party political purposes over the past six or 12 months by various Opposition Members in various ways. I have no objection. I would be the last person in the world to object to party politics in this House. Friday is as good a day as any for trotting out one's hobbyhorses, but one should not pretend that one is not doing that.
  On industrial tribunals, the Bill says that the parties must provide sufficient written particulars, and that only on those written details will the tribunal
  1460
  take the case. Those particulars will be required from the worker
  "after consulting with a conciliation officer"
  I have talked to some workers in my constituency who have been unfairly dismissed, as they thought. I shall not be too unkind to them, but I must say that if they were asked to put down in great detail in writing their case for going to an industrial tribunal they would be hard put to do it. Therefore, the Bill would place such workers at an immediate disadvantage. Many workers that I know personally would object to such a restriction.
  The tribunals can require further, written particulars in addition to the original details, and can call people to an oral hearing only if they cannot come to a decision on the basis of the written particulars. In other words, if they are not satisfied that there is a bona fide written case, the fundamental right to be heard will be denied to the worker. That would be an indefensible restriction on the right of the worker.
  The Opposition have aften argued in the past year or so that trivial cases are brought to tribunals, at great cost. I think that the hon. Gentleman commented on the cost of going to a tribunal, particularly the cost to the employer in time and money. But under existing legislation the tribunal can award costs against any party who has unreasonably put any other party to unnecessary expense. Therefore, anyone presenting a frivolous case to a tribunal can be punished by costs being awarded against him.
  Under the Bill, a case could be dismissed on written evidence alone. I think that that is unheard of anywhere in existing law. When somebody appears before a court or tribunal, it is an elementary right that he should be heard before his case is dealt with in any way. For it to be dismissed on written evidence alone is staggering.
  I have referred to the worker who might find it difficult to express his case in written form. I do not want to be too unkind to employers either, but there are some very plausible rascals among them. The employers are not all angels. I put it no higher than that. Generally speaking, under the provision requiring written details they will be placed at an unfair

  1461
  advantage compared with the worker contesting the case.
  The tribunals at present try to sort out those cases which appear to be genuine from those which are not. It is a very difficult judgment. There is a grey area. It is not always cut and dried whether a case is frivolous, vexatious, or whatever. Without the hearing of evidence it is very difficult to be certain that the right judgment is being made, and under these proposals a tribunal can make a decision purely on written evidence.
  Again, I turn to my own experience. In virtually all these cases, the blame is seldom all on one side. There is the worker who has been less than perfect but, on the other side, there have been bloody-minded employers. I repeat that it is a difficult judgment to make. Hon Members on the Opposition Benches may argue that this proves their contention that a lot of these cases are frivolous or that a worker often has no case at all, but let us look at the figures in this context.
  At least two-thirds of all cases heard to date have gone in the employer's favour. Indeed, it has been a complaint on these Benches that tribunals have leant over backwards in order to come down in favour of the employer rather than the employee. But, be that as it may, there is no ground for seriously supposing that the tribunals are biased one way or the other. All I say is that in cases such as these the worker has the right to be heard, and only that will convince him that he is getting any kind of fair deal at all.
  Mr. Richard Page: The argument is not so much about whether one side or another is getting a fair deal. One of the principal arguments is that it costs an employer so much to go to the tribunal. The employee must be given a fair crack of the whip—no one is trying to take that right way—but it is becoming cheaper now for the employer to say to the employee "Do not take me to the tribunal. You know that I do not think you have a case, but here is £200 or £300—please go away, because it will cost me a lot more otherwise". That is the problem facing employers today.
  Mr. Hamilton: I do not know whether the hon. Gentleman is making a specific or a general case. I assert that there is no evidence that that is generally so.
  1462
  It is no good hon. Members shaking their heads. The truth is that there is no firm evidence anywhere in any kind of objective assessment.
  Mr. Page: I can give the hon. Gentleman specific cases.
  Mr. Hamilton: I know that hon. Members can give me specific cases, but time and again the Government and others have asked for general evidence nationwide, and there just is not any.
  Miss Janet Fookes: Would the hon. Gentleman expect there to be hard evidence when what is suggested is a private deal behind the scenes, which never comes to the tribunal?
  Mr. Hamilton: That precisely underlines what I am saying. Each of us can present particular cases, but there is no general evidence that the present system is destroying job creation in small firms or anything else.
  Mr. Ivan Lawrence: I remind the hon. Gentleman of the occasion when the Government instituted an inquiry to see whether they could get general evidence. I refer here to the Policy Studies Institute report. That report was founded upon companies employing between 50 and 5,000. So even the effort to try to gather evidence excluded the mass of small businesses about which we are complaining.
  Mr. Hamilton: Again, that underlines what I am saying. It seems that we are extraordinarily backward. We can make specific claims from our own experience but we cannot make a general case that there is an abuse which is preventing small firms from taking on new workers, which is what the hon. Member for Surrey, North-West argued in defence of his Bill.
  The other claim is that there is an enormous problem here, creating great expense for employers. In this context, let us consider the total number of cases that have come before tribunals throughout the United Kingdom. I take these figures from the central offices of industrial tribunals for England and Wales and for Scotland, and again I remind the House of the many thousands of small firms which exist throughout the United Kingdom.

  1463
  I take, first, the number of unfair dismissal cases. In 1976 the figure was 37,869. In 1978 it was almost the same —37,387. Next, I take the total of all cases. In 1976 it was 47,673, and in 1978 it was substantially less, at 43,321.
  Therefore, even supposing that they are suffering as hon. Members have argued, it is nonsense to argue that there is an enormous burden spread throughout all the hundreds of thousands of small firms. To argue that is grossly to exaggerate.
  I quote now from an article which appeared in Lloyds Bank Review in July 1978. It was an article precisely about small firms written by Peter Johnson, who, I believe, is a lecturer at Durham university. It was headed:
  "Policies towards Small Firms: Time for Caution?"
  This is what that lecturer said in his perfectly objective article:
  "Contrary to the popular view, the small firm in manufacturing was not declining in real terms, at least in the early 1970s. We simply do not know what has happened since. In spite of the very considerable effort made by the Bolton committee"—
  the most recent authoritative report that we have on these matters—
  "at the beginning of the decade, we are still largely unable to interpret confidently the data that we do have."
  This is Mr. Johnson's conclusion:
  "There is a strong case, therefore, for a further detailed statistical study of this sector … The small firm sector covers firms with widely different ages, potentials and problems. The heterogeneity of this sector—which is probably its greatest strength—must act to restrain the introduction of blanket 'small firm policies'. Furthermore, the idea that most, or indeed all, small firms are innovatory and potential challengers to large firms does not conform to reality … Perhaps the most effective channel for stimulating new firm formation and assisting the small firm (if this is what is needed) is through the tax system. The April 1978 Budget measures have gone some way towards improving the operating environment for small firms …"
  That is the gist of our argument. It is not against the Bill but against the extravagant claims that have been made for it.
  I guess that my hon. Friend the Minister of State will argue against the Bill because it will not do very much to alleviate the problem that we are all concerned to alleviate, the problem of unemployment. But to pretend—if this is the
  1464
  best that the Tory Party can do as a panacea for solving the unemployment problem—[HON. MEMBERS: "What would the Government side do?"] The Government's record is not bad.
  I see present on the Benches opposite the hon. Member for Sheffield, Hallam (Mr. Osborn), who has been in the European Parliament along with me. He knows very well that every country in the European Community faces precisely the same problem. Indeed, the countries of the EEC look to us to see what we are doing to help resolve that problem. The hon. Gentleman knows that as well as I do. To pretend that this Bill does more than scratch the surface of the unemployment problem is an absurdity. I shall not oppose the Bill, but I do not think that it is any great step towards a solution of the problem. It has many defects, which workers in some firms will not like.
  12.20 p.m.
  Mr. Emlyn Hooson: On behalf of the Liberal Party, I want to express support for the Bill whose Second Reading was moved by the hon. Member for Surrey, North-West (Mr. Grylls) and to congratulate him on his luck in the ballot and selection of subject. He has been unlucky, in that the weather has kept away many hon. Members. The fact that there are only about 20 in the Chamber does not mean that there is no interest in the Bill.
  I want to deal with the reasons why I am in favour of the Bill and also to refer incidentally to some of the points made by the hon. Member for Fife, Central (Mr. Hamilton). I do not need any reports or surveys to know why I am broadly in support of the Bill. I have talked to sensible and decent employers in my constituency. I rely on their judgment. Although they do not say that the Employment Protection Act is the exclusive, or even the most important, reason why there is lack of confidence in the small business sector, they put it forward as an important reason.
  We should shed our illusions in this country. We have a rate of unemployment which would have horrified members of all parties 10 years ago. It is horrifying that 1·5 million people are unemployed. The prospects for relieving that unemployment are even more horrifying when one considers the measures that

  1465
  have been threatened publicly by the Chancellor of the Exchequer. Whoever is in power in the next few years will be faced with greater unemployment. It is salutary to consider what would have happened to our country without the discovery of North Sea oil. We have done badly enough with it. What on earth would we have done without it?
  It is no use suggesting that surveys do not bear out what I am saying. It is a matter of common sense. Any rational man looking at the prospects of greater employment in the public sector and large industry in the next three or four years would say that those prospects were bleak indeed. The most promising sector of the community to which we can look for growth is small industry.
  Small industries employing less than 200 people represent about one-quarter of the productive industry of this country. But productive industry represents a decreasing proportion of those in employment. This can be compared to starting off with a great hull of a ship and a small superstructure and seeing, over the years, the superstructure become larger and the hull smaller. Nowadays, productive industry is supported by an enormous superstructure. To see that, one has only to compare relative figures for Japan, West Germany, the United States and Britain in terms of creative and productive industry and everything that depends on it. The proportions are entirely wrong.
  The hon. Member for Fife, Central boasted of the measures that the Government have taken. These were largely achieved under the influence of the Lib-Lab pact. A good deal was done in the 1978 Budget to improve the economic and financial climate for small industry. That does not mean that the climate is right for entrepreneurial effort. It is not. A business man in my constituency, often dealing with contracts over nine or 10 months, told me that he was considering whether to take on a particular contract. He would have required half a dozen additional staff and the work would take not less than six months, and probably 10 months. He had refused the contract. It was not worth the worry and the trouble associated with the Employment Protection Act.
  1466
  It is all very well having theoretical views on this matter, but the same considerations do not apply to large and small businesses. Shortly after I became the Member of Parliament for my constituency in 1962, I received a letter from a young business man. His name was Bernard Ashley, and he had just started his business in a disused railway station at Carno, in my constituency, and also at a small factory which later developed at Machynlleth. That firm grew. It is now Laura Ashley, probably one of the great success stories of this country. It employs hundreds of people in my constituency. The company pays far more than union rates and is regarded as a good firm by its employees. Many of its directors started at the bottom, moving into the business from agriculture.
  If the Employment Protection Act had existed when the company was on a financial knife edge, totally different considerations would have applied. It has distressed me—I have expressed this point to Bernard Ashley on a number of occasions—that the company has developed so much abroad in recent years, not only in Oswestry and Shrewsbury and such nearby foreign climes but in Holland and all over the world. He tells me that some of these countries make him feel that he is wanted. The climate is different.
  The trouble is that over the last 30 years this country has taken to bureaucracy like a duck to water. Our whole approach is wrong. We are too much concerned with petrified industry and established industry. We do not pay enough attention to encouraging people to be entrepreneurs. I do not believe that the Bill in itself will be the answer. There is no such thing as "the answer". There are only parts of the answer. This measure would be an important part.
  If the passing of the Bill resulted in 50,000 more jobs in the country, it would be worth passing. We should get this issue into perspective. What hope does the hon. Member for Fife, Central hold out for the 1·5 million unemployed? There are virtually no employment prospects for them in the foreseeable future. I have a new town in my constituency at Newtown. It is a good example of the mixed economy. A Government agency is building factories, encouraging young

  1467
  entrepreneurs and getting them off the ground by providing factories rent-free for two years. This enables people to use their own capital to develop their businesses. I am told that it is especially dicey for small businesses in the first year or two. Different considerations apply when they have built up the capital and turnover and they need not worry about the Employment Protection Act.
  I think that the least the Government can do is not to oppose the Bill. It should go to Committee. Some matters need more detailed consideration. The Committee should consider whether the limitation of 200 employees is right or whether the figure should be higher or lower. It should examine whether the time of 104 weeks is right. Last year, a Bill suggested 52 weeks. I believe that this matter should be considered in greater detail.
  The Committee should also study the tribunal point. It is all very well for the hon. Member for Fife, Central to state that this is a provision which will enable all decisions to be stated in writing. The Bill does not say so. He has not read the Bill properly. If the tribunal does not think that the matter can be justly dealt with on the basis of written evidence, it is entitled to ask for an oral hearing. I remind the hon. Member for Fife, Central that in public inquiries and planning appeals it is possible for one side to elect to give oral evidence and for others to produce written submissions. There is no reason why that should not be done.
  I am told that the tribunal procedure is tending to become more and more bureaucratic. Employers find that appearing at a tribunal costs an enormous amount. There are employers who pay up in wholly undeserving cases rather than incur costs. I am not saying that there are not equal injustices on the other side. It would not be a bad thing for the House to appoint a Committee to consider the matter anew and to decide what changes are needed.
  The Bill deserves a Second Reading.
  12.32 p.m.
  Mr. John H. Osborn: First, I congratulate my hon. Friend the Member for Surrey, North-West (Mr. Grylls) on his good fortune in the ballot. Secondly, I congratulate him on the sub-
  1468
  ject that he has chosen and his use of the title Employment Opportunities (Small Businesses). It is a more positive approach than I was able to achieve last year. I congratulate him on the way in which he has tackled the task and on the manner in which he introduced the Bill to the House.
  The wider debate is about wealth creation, how to make hard work effective and the rewards for hard work fully justified. On 24 February 1978 the Minister of State heard me present the case for the Small Businesses (Protection of Employment) (Amendment) Bill. Already today we have had a legal discussion between the promoter of the Bill and the hon. Member for Fife, Central (Mr. Hamilton) on what tribunals should and should not do. The Minister of State indicated—my hon. Friend the Member for Basingstoke (Mr. Mitchell) and I had been to tribunals and we had learnt of the work of the chairmen—that there would be streamlining. The purpose of this Bill is, and the purpose of my Bill was, to give legislative teeth to that streamlining.
  I hope that the Minister of State will be more positive and constructive than he was a year ago. The very week that the hon. Gentleman was unable to support my Bill, the Chancellor of the Duchy of Lancaster, in a Labour Party broadcast, expressed the concern of the Labour Party for small businesses. That contrast indicates that concern has diminished with the course of time. It seems that the House is back in the same situation as in February 1978. Since then, in Sheffield especially and South Yorkshire in general, immense concern has been shown by the Sheffield industrial advisory committee, involving industrial leaders and Members of Parliament, about the problems of employing young people. The most important objectives are to let young people have a job and to encourage small employers to take them on so that there is work for them to do immediately they leave school. Industrial legislation has not helped to bring that about in our major cities.
  Since February 1978 we have had a major collapse of confidence in the economy. That has brought about a need for a helpful Bill of this type. The Government have set up their small business centres, sometimes referred to as the small business advice bureaux. My

  1469
  hon. Friend the Member for Basingstoke has set up the Conservative Small Business Bureau. The bureaux have been an immense magnet and have helped those in small businesses to survive.
  Since last year I have had the opportunity of meeting many groups of small business men, including members of chambers of trade, to learn of their problems. The Minister of State should know that their problems have not diminished in the past 12 months, but have increased.
  Hon. Members have referred to cash flow problems and other difficulties, but a significant problem is the growth of the corporate State, namely, nationalised industries, municipalised activities and the growth of health and social services, let alone the growth of bureaucracy in larger private companies.
  I have travelled the world a bit, and I shall talk about Japan. Twenty, 30 and 40 years ago it was the custom of British management, if it wanted to carry out an activity, to set up a department to do it or to set up a separate company within a company rather than seriously to consider the possibility of subcontracting the work to others and small businesses. I have spoken in the House about the days 25 years ago when I was a manager of a small precision casting foundry. At that time I had to give my attention to cash and capital. The problem was whether I should set up my own machine shop to machine the castings or whether to subcontract the work to outside machinists.
  The great argument in the foundry industry is whether a foundry should have its own machine shop or not. The argument in the engineering industry is whether an engineering company should have its own foundry The arguments are of managerial significance rather than any other.
  I turn to my experience in Japan some years ago. I visited the Nippon steelworks. It is a unit that produces about 10 million tons a year. There are three blast furnaces that are capable of producing nearly half the steel that Britain produces. The productivity at the Nippon works is 1,600 tons of steel per man per year. The best companies in Europe, for example, Taranto in Italy, Dunkirk in France, Appleby Frodingham at Scunthorpe or Dorman Long in Middlesbrough, produce between 250 tons and 400 tons per man per year. The average
  1470
  in Britain is still slightly below 100 tons per man per year. Productivity figures have been discussed in the European Parliament with Commissioner Davignon, as the hon. Member for Fife, Central knows only too well.
  I discovered the extent to which the figures for Japan were misleading. It seems that half the labour force is subcontracted. There are the self-employed and those who run their own small businesses. There are many small businesses that consist of a working head and two or three partners. These businesses are engaged in maintenance, the painting of buildings, cleaning services, the maintenance of rolling mills, electrical maintenance and the provision of transport.
  An interesting dialogue that has even been raised with the Parliamentary and Scientific Committee and the relevant Select Committee is the extent to which large companies in Japan are able to use small subcontractors and encourage small businesses. I have discussed that approach with purchasing officers and the Institute of Purchasing and Supply. It is a trend that should be considered in this country.
  In yesterday's edition of The Daily Telegraph there appeared an article by its health correspondent. It said:
  "The number of hospital cooks, porters, laundry staff, domestics, telephonists and others was so large that problems of management at the NHS had become 'insuperable', a health expert said yesterday. It was time for this work force to be 'denationalised', maintained Dr. David Skidmore, lecturer in surgery at Manchester University and prospective candidate for Stockport, South.
  "'Hordes of administrators are having to wrestle with labour relations problems.'
  "'If Conservative principles were put into practice private contractors would be allowed to tender for contracts to clean hospitals, provide catering and portering services,'"—
  Mr. William Hamilton: Hear, hear.
  Mr. Osborn: The hon. Gentleman says "Hear, hear". Industry, the Government and the next Government must consider the best way of providing those services so that satisfaction is given to providing the services, which they are not gaining in the public service at present. This is where the Bill will help private enterprise move into this stagnant public sector. People who wish to provide a service will be better rewarded for carrying it out.

  1471
  You, Mr. Deputy Speaker, were not present when I asked Mr. Speaker for a statement by the Government on the perhaps deliberate action by NUPE, COHSE, the General and Municipal Workers' Union and the TGWU, as a result of their concern for the lower-paid workers, whether in schools, or catering, or working as caretakers, and especially on the failure of workpeople throughout the country to plough, salt and grit roads. If the Minister cares to comment on that problem, fair enough. If not, I shall regret that after 48 hours the Government are not in a position to make a statement on that matter.
  Would not the nation be better off if free enterprise operated as contractors to the municipal bodies to a much greater extent than happens today? Obviously, it is appropriate to cite the difficulties in removing snow. If people were encouraged to take on this contracting work, that would release a dynamic force which has so far been lacking in our society. I am glad that that aspect will be examined.
  My hon. Friend has produced an effective Bill. He has rephrased and worked on the clauses that I produced. The idea that temporary employment may provide greater flexibility is all-important at present and I hope that the idea will be accepted by the Government. Naturally, it is right to secure employment opportunities and security in employment for all. However, when unemployment has reached the present rate, and as it is diffifult to provide people with employment, is it not worth while giving the Government a second chance to accept the Bill and ensure that it goes to Committee?
  I especially look forward to learning the views of the Minister on clause 1(5). The hon. and learned Member for Montgomery (Mr. Hooson) pointed out the cost incurred by small business men when attending tribunals. They have enough bureaucracy to deal with in the shape of forms and VAT. They have cash flow problems. I have visited tribunals attended by business people who, although they could ill afford the time and money, were obliged to attend, to stand up for their beliefs.
  I shall not dwell on the other aspects of Government legislation, which perhaps put the boot on the other foot, such as the
  1472
  closed shop, the trade unions or the labour relations legislation. That is another point.
  The chamber of trade is perhaps one of the best professional backers of small businesses in the commercial world. I refer to the Sheffield chamber of trade, which has produced documents for its members and held seminars, all of which outlined the need for a more flexible tribunal procedure. The chamber was attracted, when considering procedure, by the informal and successful machinery that operates in the Health Service for the redress of complaints against doctors, dentists, chemists and opticians. The chamber of trade emphasised that there should be a method of sifting out hopeless claims in advance of a tribunal hearing. That principle has been restated since my Bill was presented last year. A seminar on this matter was held in June. Slightly over six months ago, the average award was from £400 to £700. The highest awards may be of the order of £13,000. Such awards present difficult problems to small businesses.
  I hope that the Minister will say exactly what he could do to use law to streamline the tribunal processes. There is no question of the parties not attending an oral hearing if they wish to do so, as was implied by the hon. Member for Fife, Central. That is mentioned in the Bill. Therefore, the Bill gives a further lifebelt to the Government. Unemployment is high. There are constructive alternatives. Therefore, I hope that the Minister of State will be more forthcoming.
  Finally, reference was made to the position of small businesses in the European Economic Community. Small businesses are all-important Small business activity seems statistically to be 40 per cent. greater in Germany than in the United Kingdom. That percentage of small business activity provides stability and flexibility in society, which is lacking to a too great extent in this country.
  I am glad that the hon. Member for Fife, Central referred to what is going on in the European Parliament. At least the European Parliament unanimously supports the promotion of small businesses. I hope that this Parliament in the House of Commons will do likewise today and give the Bill a Second Reading.
  12.46 p.m.
  Mr. Bob Cryer: I shall be brief as following this there is another Bill, which seeks to exclude people who commit acts of violence from public houses, which many hon. Members, myself included, wish to support.
  The hon. Member for Sheffield, Hallam (Mr. Osborn) raised the entertaining prospect of flogging off to private enterprise various aspects of public enterprise. He will be interested to learn that I lived and was a councillor in a town where a Conservative-controlled council did just that. It sold off the maintenance of council houses to two small firms. It was a period which that council would probably prefer to forget. That is why I like to remind its members of that time. The maintenance of council houses was of a rock bottom standard. The contractors sought to avoid their obligations in every conceivable way. There was general distress and concern at the inefficiency of the scrutiny exercised by the council. When local government reorganisation took place, a Conservative-controlled larger authority replaced those firms—one had gone bankrupt, anyway—by a direct works department.
  The notion put forward that this private enterprise Valhalla will result in glorious efficiency is, at least in one demonstration, shown to be totally wrong. The local councillors involved, who have the same political philosophy as the Opposition, recognise that.
  Mr. John H. Osborn: The hon. Gentleman's reply to my comment illustrates the problem. In the article mentioned there was reference to the Birmingham and Cambridge hospitals. My point was that people from other countries had found a way of getting a supplier-contractor relationship to work effectively. Japan is one of those countries. I urge that its example be examined.
  Mr. Cryer: I know that the Opposition want to knock the National Health Service. They are producing a series of posters—no doubt with Saatchi and Saatchi employees lined up—showing that the National Health Service is not so good. If the Opposition are really concerned about public expenditure cuts, they cannot grumble about the position of the National Health Service.
  1474
  In Keighley there is a fine health service because we have a relatively new hospital. I recognise that the standard varies over the country. However, the solution posed by the hon. Gentleman is not connected with reality.
  We must recognise that the Government—and previous Labour Governments —have been concerned with the small firms sector. The Bolton Commission report was mentioned. A previous Labour Government established that Commission to examine the small firms sector. I do not think there is any argument that the report is the most important document to provide information and a point of reference for an examination of the small firms sector. A Labour Government started that examination. Arising from the report, a previous Conservative Government made some implementations. We have followed those. An examination of the Bill should be carried out against the background of what has been done for small businesses so far.
  The hon. and learned Member for Montgomery (Mr. Hooson) mentioned the relative position of small firms in this country compared with those on the Continent, in countries such as Germany and France. The number of small firms in this country depends on several factors, and legislation is one of the minor factors involved. The Government's position is not one of discouraging small firms. It is one of the most continually encouraging factors for small firms.
  Conservative Members never mention the general tendency of competition to compete, and the winners in a race will try to buy up and close down competitors. That is not terribly strange or unknown. The large companies get together because they want to stay in existence, having a natural instinct to survive, and so we find that the chairman of the Conservative Party was involved not in a competitive position but in an illegal price-fixing ring. That is the sort of position that we find among the large firms. They naturally want to try to close down small firms that they see as possible competitors.
  It is not always the case, however. I recall that when I was at the Department of Industry a couple of large firms were the subject of a Sunday Times piece about how they intended to encourage small firms. At that time the Department received letters from

  1475
  small firms saying that the writers wished that the two large firms would give better terms of trade, would not press them for payment so hard, and would pay their own bills much more rapidly. The writers said that this would help their small firms far more than glossy publicity efforts about seconding executives for a short time to assist small firms.
  I have no doubt that family firms have many virtues. They are known among the community, where they have an understanding and knowledge of their employees. But family businesses are not always the rosy concerns that they are pictured to be. They sometimes decide not to continue in existence because they have made a pile of money. The families concerned sometimes decide that occupying a farm in Sussex or in the North Riding is a better occupation than engaging in base industry or base commerce. I well recall an occasion when a firm was closing down in Yorkshire, and two branches of the same family had reported each other to the police for making obscene telephone calls about their factory, which was employing 40 people. The argument there was simply whether the factory should continue. That is another reality with which we have to cope.
  It is also true that sometimes in the past local authorities have not given proper care and attention to the preservation of small firms because of development plans that have been well received by the architectural juornals but have not taken account of the needs of people living and working within the town centre. In 1977, the Department of the Environment, not before time, sent out a circular drawing attention to the fact that people want to live and work in a town centre.
  As a nation we seem, unfortunately, to take about 10 years to accept an idea and perhaps another 10 years to recognise errors that have taken place. I do not suppose that today many local authorities could be found to be building tower blocks, but it took a long time for this sort of error to be understood and recognised. In just the same sort of way, during the 1960s many local authorities became totally besotted by redevelopment and forgot that old-established and decent family firms were often being pushed to
  1476
  one side. Often they were forced to go three or four miles out into the countryside. They did not like this; neither did their employees, who found town centre employment very useful.
  The hon. Member for Surrey, North-West (Mr. Grylls) mentioned unemployment, a subject which concerns us all very deeply. We recognise that unemployment is too high, but it is hardly for a Conservative Member to come to this House and talk about unemployment, and claim that large organisations will diminish the number of jobs, when the Conservatives voted against such rescues as those of British Leyland and Chrysler. The rescue of those two companies also saved about 10,000 small firms, each employing fewer than 200 people and providing services or goods to the two giant companies. The closure of even the volume car production of British Leyland, and the closure of Chrysler, would have caused ripples throughout the length and breadth of this country. Mine is not a car-producing constituency, but it produces components and supplies machinery, such as grinders, to the car industry. Those two large organisations were rescued because, among other reasons, it was thought necessary to preserve employment in small firms. I hope that Conservative Members wil bear in mind that such rescue actions have consequences for the retention and development of small firms.
  Conservative Members are always shy about mentioning that small firms have tax allowances on investment in plant and machinery. I have no doubt that in the debate there will be some mention of lack of initiative, the sapping of private enterprise, the entrepreneurial spirit, and so on, but the fact is that we give the most generous tax allowances in the whole of Western Europe for investment in plant and machinery. The allowance is 100 per cent.
  In the Government's current expenditure White Paper, in one of the tables there is listed for the current year an allowance of £4·3 billion in lost tax revenue. That is for tax allowances on investment in plant and machinery and for stock appreciation relief. Small incorporated firms get that allowance to the same extent as large firms, and there is no differentiation against them in any way. Indeed, there is differentiation in their

  1477
  favour, because they get a preferential rate of corporation tax at 42 per cent. This has recently been increased to a total of £85,000, when tapering marginal relief has been taken into account. There is an incentive there, and it is against this sort of background that we have to assess whether there is any reality in the claims put forward by the Opposition that the Bill will somehow galvanise the small firms sector into taking on a great many people.
  In addition to the tax allowances that I have mentioned, there have been several industry schemes under section 8 of the Industry Act 1972. That Act was introduced by a Conservative Government. Some of those schemes were tailored specifically for small firms. There is, for example, the clothing industry scheme, where the grant aid was brought down to as low a level as £10,000 per scheme, which meant support of the order of £2,500. In the case of the ferrous foundries scheme, there was a majority of applications from small firms employing fewer than 200 people under the definition put forward by Bolton. The wool textile industry scheme, which has been extremely successful, applies to an industry that has in it many of the sorts of firms that we are talking about—that is, small, mainly family firms, which employ 200 people or less.
  There is also the small firms employment subsidy. That is a direct incentive provided by the Department of Employment so that firms may employ people from the employment register. The hon. Member made great play about taking people off the unemployment register, but the Bill does not lay that down as a condition. The small firms employment subsidy is designed to do precisely that. Manufacturing firms in intermediate areas, development areas and special development areas, employing fewer than 200 people, can receive a subsidy of £20 a week for 26 weeks. That scheme was the subject of very careful scrutiny, and there was a pilot scheme in the special development areas.
  The Government have also introduced capital transfer tax concessions. I well remember coming to this hallowed place one evening when the hon. Member for Blaby (Mr. Lawson)—I think it was the hon. Member, but I cannot be sure—was saying that CTT meant the beginning
  1478
  of a Marxist State and the end of family life in this country as we know it. Conservative Members will recognise that that is the classic type of exaggeration that sometimes occurs, but the position was a little short of that.
  Capital transfer tax has been tailored for small firms. There is now a 50 per cent. allowance on the valuation of business for CTT purposes; there is a £50,000 exemption from tax for a man and wife, for example, in a small family business. One of the great advantages is that a spouse is not liable to tax, as happened with the old estate duty on the death of a spouse. This enables a small family business to keep going far more preferentially than under the old estate duty, whose effects could be very onerous, although I appreciate that Conservative Members felt concerned because they could no longer arrange a convenient death.
  Mr. Graham Page: The hon. Gentleman will realise that when CTT was first presented by a Labour Government in a statute, it would have killed a small family business in two generations. Therefore, that statute needed tailoring. The present position is beneficial to the small business, but as that statute first stood it would have killed them.
  Mr. Cryer: That is a matter for debate. That is the right hon. Gentleman's opinion. The fact is that it was a completely new tax and did not measure up to the sweeping assertions made by the Conservative Opposition.
  It is true that representations were made and, because the Government are reasonable in many aspects—my disagreement was not over small firms; it related to other matters—they received representations and alterations were subsequently made. That is not a matter that is widely publicised by Tory Members.
  We have also introduced small firms information centres. Indeed, we extended them, because they were introduced by a Conservative Government. We have also introduced a small firms counselling service, which has been widely successful and has been extended nationwide. We have a collaborative scheme under which grants of £5,000 can be given for feasibility studies to be held on the subject of co-operation. This can be done on the basis of employment, so that a group of

  1479
  small firms can get together and keep employment records. Therefore, their position on the Employment Protection Act is very much simplified. This can also be carried out in regard to health and safety at work, so that standards can be applied fairly by, for example, the employment of a common safety inspector on behalf of a group of small firms.
  We have introduced the market entry guarantee scheme, which provides 50 per cent. loans with repayment as a levy on sales into the new market. That is self-financing and helps small firms significantly in exports. We have provided a large number of nursery units, which cost more than standard factories. We are aware that if factory units stand empty the Opposition will raise criticisms and claim that it is all a waste of public money. However, the Government took the decision to encourage small firms, and there has been a good take-up of units. Although nursery units are available only in intermediate and special development areas, I believe that in a number of cases local authorities have followed the example set. Rent-free accommodation for periods of two years to five years is a financial inducement to small firms.
  The recent tax concessions have included the right for sole traders to set off three years' losses against the last three years of income—a practical financial inducement to small firms to get off the ground as sole traders.
  The Welsh and Scottish Development Agencies give valuable assistance to small firms. There is no equivalent in the United Kingdom as a whole. The Council for Small Industries in Rural Areas performs a very good job, and the Labour Government have given it more money. We have given more financial encouragement of a practical sort, and I believe that there should be a COSIRA equivalent for urban areas. This has been done to some degree by the Welsh and Scottish Development Agencies, but it is not done by the National Enterprise Board in any significant way.
  The WDA and SDA have taken over the functions of COSIRA in any case. It would be a useful development to plug that gap with development of the NEB or some similar organisation. Therefore, there has been a considerable background
  1480
  of encouragement and support, and I was pleased to play my part in developing and devolving policies to improve the atmosphere in small firms.
  One bone of contention by the Opposition in the last few years has been the Employment Protection Act. I think that it is important that employees should have a degree of protection from, say, unfair dismissal. It is a galling and dramatic experience for a person to be dismissed unfairly. Indeed, one of the firms that I mentioned earlier is taking over part of the contract from the old Keighley corporation, which has subsequently made a number of people redundant.
  The difficulties faced by such people have to be discussed to be realised. The fact that holiday pay was not handed over until the night before one of the staff was about to go on holiday with his family caused enormous difficulty for that family. An ordinary working-class family does not have the money to go on holiday without drawing holiday pay. This may seem trivial, but the fact is that people in the ordinary carrying out of their lives can be placed in jeopardy by the thoughtless or indeed malevolent action of an employer.
  It is important that an employee is treated with reasonable fairness, but I must emphasise that the Employment Protection Act does not give this country the standards that apply, for example, in France. In post-war years France has not had a Labour Government; by and large, it has had Right-wing Governments. Yet in France an employee cannot be dismissed for economic reasons without the approval of the Minister for Employment. I visited a small firm in Paris employing 15 staff making cinematograph apparatus. That firm reduced its business to 10 employees, but it had to go to the Ministry to obtain permission to dismiss those five people. That was accepted and understood. It was regarded as a great barrier to employment.
  In addition, there is in France an appeal system for unfair dismissal as opposed to dismissal for economic reasons. It is worth pointing out that the comparison between employment in this country and that in other EEC countries is sometimes worse in this country, even with the existence of the Employment Protection Act.

  1481
  If this Bill were enacted it would create two classes of citizen. That is not fair on small businesses. There are some small business organisations that take the view that because they face difficulties, various steps should be taken. They always take that view, and their wants vary enormously. Different small business organisations put forward different points of view about the effect of a Government policy, but the fact is that if this Bill were enacted there would be one set of values for people working in businesses employing fewer than 200 and another set of values for businesses employing more than 200 people. That is unfair.
  Many small businesses are good employers. Some are not very good at all, but many are good employers and have a sense of responsibility. Why should they have the reputation of putting up with inferior standards of employment because other worse employers are trying to seek lower standards and have caught the attention of some small representative business organisation? Such action erodes the virtues claimed for small businesses—namely, that such firms, because of their size, understand their employees better, have better working relationships and are careful about the position of their employees because they care for them. That is the argument put forward, but if one takes away those rights, their reputation would inevitably be diminished.
  Surely, six months—the probationary period allowed under the Employment Protection Act—should be long enough to assess an employee, bearing in mind that small firms are supposed to know their employees better and more intimately because the employee knows who the boss is. In theory, one cannot get lost amongst 200 employees as easily as one can amongst 2,000 or 20,000, where one becomes just a number. During that period of six months, the employee of a large firm may not even be visited, or have an interview so that his work can be assessed by the personnel department. The boss will not have been seen by the employee because he is usually in a carpeted office in a glass palace maybe 100 miles away.
  In a small firm the employee does see the boss. That is one of the virtues of a small firm, and it is a real virtue about which I am not quibbling. I should have
  1482
  thought the six months' period was more easily and better applied by the small firm than the large firm.
  In my view, the Bill would drive a significant wedge, if not a coach and horses, through the Employment Protection Act. For example, what does "temporary" mean? Clause 1 only requires notification by an employer to an employee. Does that mean that an employer can make a unilateral declaration to an employee? If so, that is a fine recipe for harmony. It is more a recipe for industrial strife, and one hopes that small firms manage to avoid industrial strife.
  What about associated companies making up the definition of 200 employees? Again, this is a definition that is loose, and potentially open to abuse. Unscrupulous employers could get round the Employment Protection Act, and we must recognise that there are unscrupulous employers. When legislation is passed, there are those who do not want to apply it in the spirit intended by the legislators but for their own benefit. If there is a loophole they will find it.
  I ask the hon. Members who have put this legislation forward, would they have lower standards of health and safety at work in small firms? I assume the answer would be "No". Some small firms have suggested that that should be the case. It is only a very small number, I am happy to say. They said it to me when I was at the Department of Industry.
  Of course, if a man in a small firm has his hand cut off, or loses an eye or whatever, it is no consolation for him to be told that in a small firm it is much comfier and cosier than in a big firm. That is a loss, and the standard of safety and the avoidance of accidents should be strived for in exactly the same way in all firms, whether they be large, medium or small.
  Why should we have, as it were, different standards of welfare and moral concern? I imagine that if a man is dismissed unfairly by a small family firm, it is as big a blow for him as if he had been dismissed unfairly by British Leyland. Indeed, the likelihood is that if one is dismissed from British Leyland one would be lost among gigantic numbers, whereas dismissal would be much more catastrophic in a small family firm which is carrying on its business within a small

  1483
  community. So why should not the employee in a small firm have the same redress and rights as the employee in the firm employing 200-plus? Physical and mental welfare is just as important for employees in a small firm, and I should certainly not wish to see the Bill get on to the statute book.
  When making various visits I have always made the point that there should be some sort of insurance provision for small firms. I do not say this with any accuracy, but, as I recall, the premium was around £8 per head for employees in firms that employed less than 25 people. That gave comprehensive cover, advice and payment of costs in any subsequent unfair dismissal hearing before an industrial tribunal.
  That £8 per head is an actuarial assessment of the risk involved. If one compares it with, say, the price of insuring a van or a car for the use of the firm—which would not be carped at, because there is a risk and it should be covered —one sees that the £8 per head is infinitesimally smaller and is an assessment of the reality of the likelihood of going to a tribunal. As my hon. Friend the Member for Fife, Central (Mr. Hamilton) pointed out, unfair dismissal claims have slightly declined. I make no enormous claims about this, but merely say that they have slightly declined. They may increase slightly, but they generally stay at about the same level, and 60 per cent. of those claims come from firms with less than 250 employees.
  The Bill would, in effect, deny such rights to a significant sector of the population. The median claim is, I understand, around £350. I understand the argument about time and attendance at a tribunal, but if a dismissal is claimed as unfair it is only reasonable that the matter should be investigated. In my view, the tribunal should certainly not have the right to dismiss a claim on the basis of written evidence alone.
  The complaint which sometimes occurs about legal costs and the amount of time involved arises largely from the employers. They are the people who can afford a solicitor to represent them. The employees rarely employ a solicitor, because they cannot afford to do so. Tribunals are intended to be reasonably
  1484
  informal. They are not courts. They are informal hearings. The continual representation of one side by a solicitor tends to make the tribunal a much more legalised and formal hearing. It tends to take more time and gives a greater sense of formality to it, which was not intended. That movement towards more legalised tribunals does not come from the employees but from the employers.
  Over the past two or three years, when I was at the Department of Industry, I discussed many issues with small firms. Some of them expressed a degree of concern about the Employment Protection Act. I suppose that I have talked to more small firms throughout the length and breadth of the country than most other Members of the House. Many of these small firms express an understanding of their obligations. I do not claim any scientific evidence for this. I merely say that when I visited these firms I talked to them and asked about the effects of the Employment Protection Act and other legislation. Many firms were much more concerned about forms than they were about the Employment Protection Act. It is to be hoped that the Government are doing something about that by instituting some sort of checking mechanism in each Department. It is very difficult to do anything about the EEC forms that we face, but at least we are making representations.
  Small firms have started and been successful during the period of this Labour Government. The capable and intelligent managements of those firms see a gap in the market and are prepared to organise resources to fill that gap. They recognise the obligations to employees.
  By and large, they do not seek exemption from those obligations, because they recognise that if they are to grow they must accept greater obligations such as employing more people and having a greater turnover.
  Quite recently I had the pleasure of opening a firm in Leeds—Airedale Air Conditioning Ltd.—which, as it happens, was started in 1974, coincidentally with the advent of a Labour Government. That firm started with six employees in a back room at Batley, now employs over 80 people and is expanding rapidly. That firm has found the Labour Government's legislation no disincentive. It is not unique by any means. We should like

  1485
  to see more firms expanding. The biggest benefit to unemployment would not be the sort of legislation proposed in this Bill, which is grossly exaggerated in its claims, but would be an improvement in the general level of economic activity and some serious attempt at quota control to redress the balance of the £2½ billion deficit that we currently have with the EEC. If we had greater quota control, we would have greater leverage to ensure that we gave more assistance to the underdeveloped countries.
  That is what we should do with regard to our unemployment situation. That is where the improvement comes. We must continue giving the sort of financial support that I have outlined to small companies, because they tend to be labour-intensive, and to medium and large companies.
  When hon. Members talk about reducing unemployment, I think that their main task is not to get Bills such as this through, but to persuade the right hon. Member for Leeds, North-East (Sir K. Joseph) to get off the hook that he is on at the moment, which is savagely to cut public expenditure, particularly expenditure on aid for industry.
  I was somewhat shaken when the owner of a small firm which I visited told me "I hope that we do not have another Conservative Government. We moved to a development area and were on investment grants, but when the Heath Government came to power we were threatened and nearly went down because of the cutting of public expenditure by that Government." It is worth remembering that that Government held exactly the same philosophy as the right hon. Member for Leeds, North-East—to cut public expenditure and all industrial assistance, and let private enterprise stand on its own feet. Yet within two years that Administration was forced to consider support for industry, because that is essential if jobs are to be retained.
  That is what the task of Conservative Members is. I fear that they will be unsuccessful. In this election year, that is one of the things that I shall be pointing out, because whatever Conservatives say about small businesses, their proposed cuts will mean lengthening dole queues. Their first task is not to produce Bills such as this but to change their policies, before they have even a ghost of a chance
  1486
  of convincing anyone that they really care about unemployment.
  Mr. Deputy Speaker(Sir Myer Galpern): I recognise and make allowance for the experience of the hon. Member for Keighley (Mr. Cryer) in the Department of Industry, but the Chair cannot possibly accommodate all those hon. Members who wish to take part if speeches last for 35 minutes. If they do, only two or three other hon. Members will be able to participate before the debate is concluded. Therefore, I appeal to hon. Members to help each other by making their contributions as brief as possible.
  1.22 p.m.
  Mr. David Price: I shall certainly follow your advice, Mr. Deputy Speaker. This is a Bill relating to small businesses, and I was about to observe that I would make a small speech. Nevertheless, I should like to take just enough time to congratulate my hon. Friend the Member for Surrey, North-West (Mr. Grylls) on his initiative in introducing the Bill.
  With respect to both the hon. Member for Keighley (Mr. Cryer) and the hon. Member for Fife, Central (Mr. Hamilton), they know this House well enough to realise that a Private Member cannot attempt to introduce a Bill of major importance if he wants to have any hope of getting it on to the statute book. I am afraid that the "Grand Nationals" of national policy are not open to private Members. I believe that my hon. Friend has chosen well and is trying to do a modest tote double of helping employment and small businesses. If my hon. Friend succeeds in both those aims, even in quite a modest way, his Bill will have been well worth while.
  I take as my text words that I hope will appeal to Labour Members. I should like to quote from paragraph 16 of what has become known as the "concordat" between the Government and the TUC. If hon. Members do not like that word, I merely use the phrase "the text". In paragraph 16 we read:
  "We recognise and share the anxieties about employment prospects in the next few years. It is far easier "—
  mark these words—
  "to identify areas where jobs will be lost than those where new job opportunities will be created".

  1487
  I agree. That is a profound observation. I need not remind the House that the present level of unemployment is unacceptable. At 1,460,000, it represents 6·1 per cent. of the working population. We must also take into account the fact that most of our major manufacturing industries are working well below capacity. That is true not only of the United Kingdom but of Europe and of nearly all the OECD countries. I need only mention steelmaking, shipbuilding, shipping, oil refining, petrochemicals, textiles and clothing manufacture to make my point.
  Even if there is a small upturn in the economy, I believe that these major industries are unlikely to need more labour. Indeed, the problem with them is often whether they must shed more labour before they are fully efficient. There is a good deal of evidence to show that even if the whole of British manufacturing industry reached the level of productivity of the best plant in each particular industry there would still be a lot of overmanning. Therefore, it is not an unreasonable conclusion that in the immediate future we cannot look hopefully for an increase in employment from the major manufacturing units. As I have said, those that are expanding will be balanced by those that will have to reduce labour.
  Therefore, where does one look? Obviously, the hon. Member for Keighley was right; it would be splendid if we could get an upturn in the Western economy. But we have been, and still are, going through very difficult years, which started in 1972 with the action of the OPEC countries in relation to oil. Therefore, we have a much lower rate of growth in the Western world than we were used to in the 1950s and 1960s.
  I shall not detain the House by quoting figures, but unfortunately, even within the lower growth rate figures of Western Europe, the United Kingdom has experienced virtually no growth at all. We must, therefore, look very hard to see whether we can encourage any growth at all. It is not a question of being selective but of casting our bread on the waters and trying to see whether we can stimulate growth anywhere in the economy. I suggest that a good area
  1488
  is among the small businesses of this country.
  I am not saying that we should be exclusive or that we should look uniquely to small businesses. All I am suggesting is that we should encourage small businesses more. It is quite likely that we can encourage a bit here and a bit there, but in heavy chemical manufacture, of which I can speak with some experience, expansion goes forward in big leaps. It is a sort of ratchet effect.
  We must accept that the United Kingdom, and probably the whole of the Western world, is likely to experience relatively low rates of economic growth compared with what we were used to in the 1950s and 1960s. Within this context it continues to remain necessary to continue increasing our productivity. Again I come back to the text of the concordat. I draw the attention of the House to paragraph 19, with which I agree, which states:
  "One fundamental factor is the need to increase productivity—of both capital and labour. Our international trade performance depends on producing the right goods at the right price at the right time."
  We would all say "Hear, hear" to that. In those circumstances, the small business can often be more efficient than the big one, because it has lower overheads, is more adroit and can meet its market opportunities more quickly. Indeed, it seems to me that sometimes we have had one or two lumbering brontosaurs around our industrial landscape. Unfortunately, they have had to remain brontosaurs because their extinction would be politically too painful. Therefore, there has been every incentive to keep them going.
  There is more and more evidence to suggest that, in the world of industrial relations—this is the key to our future problems—small really is beautiful. I intervened during the Prime Minister's statement the other day, and he indicated that there was general agreement with the line that I was taking. For those reasons, we should do everything that we can to encourage small firms.
  This Bill, modest though it is, does a little something to help along that line. Unlike the view that was taken 10 or 20 years ago, the newer technologies give greater opportunities for small firms. I think particularly of microelectronics. If

  1489
  we had time, I would be happy to develop my thoughts and to share some knowledge and experience with the House. However, so that more hon. Members may participate in the debate, I merely make the point—I hope that the Minister of State will accept it from me, because I could quote a lot of Government statistics in favour of the view—that micorelectronics offer an opportunity for almost a cottage industry.
  A generation ago, as the computer revolution came through, it seemed all to be running the way of the bigger and bigger organisation. Now, I think that we can go right the way round and start with literally a small cottage industry again. It is a modern form of cottage industry, but a cottage industry nevertheless. Therefore, certainly in microelectronics, one may reasonably talk about the great phrase "acorns to oak trees". We should do everything that we can to promote this.
  I give just one figure to prove my point. In the time that the present Government have been in power, the price of a microcomputer has dropped tenfold, in the same time as the cost of posting a letter by first-class mail has risen from 3½p to 9p and the price of an average family car from £2,000 to £5,000. A four-function pocket calculator has dropped in price front £50 to £5.
  This shows the opportunities not only in terms of small businesses but in terms of efficiency that microelectronics offer.
  Finally, what the Bill is about is trying to remove just one or two of the frustrations of the small business man. I would never suggest that of the many regulations imposed on the small business man—as they are imposed on the remainder of business—any particular one is oppressive. It is not. But it is the cumulative effect that counts. That is the point which some Labour Members do not quite take on board. The danger is not so much of death by a thousand cuts as a general stifling, a general frustration, by a thousand regulations. Some of my more malevolently minded friends in business have referred to it as the piranha fish syndrome. I think that that may be putting it a little strongly.
  I very much hope that the House will give this modest Bill a Second Reading.
  1490
  There are points, which have been mentioned, which could be cleared up in Committee. I believe that the House must consider very carefully before refusing to give a Second Reading to a Bill which may do something to help both small businesses and employment—it need not be put more strongly than that—because I see little immediate opportunity for improvement in either business activity or employment.
  Let no hon. Member scorn the small business. As that very perceptive and very wise man, G. K. Chesterton, once observed:
  "Some men never feel small, but those are the few men who are."
  1.33 p.m.
  Mr. Ernest G. Perry: As one who is always prepared to take the advice of the Chair, Mr. Speaker, I do not intend to speak for very long on this subject. One of the reasons for that is that I am a great supporter of the Bill that is to come before the House following this Bill. I believe that if we neglected that Bill, we would not do justice to people in licensed premises.
  I congratulate the hon. Member for Surrey, North-West (Mr. Grylls) on introducing the Bill, if only because it has given us time to debate the matter and to point out the problems of small businesses. The hon. Member is to be congratulated on choosing this subject for his Bill.
  As regards the question of what constitutes a small business, the figure of 200 employees has been mentioned. However, to someone who has five employees, 200 is an enormous number. From my experience, in the insurance business, of meeting the owners of small businesses of, perhaps, five people or so—the owner, his wife, a son working in the business, and perhaps three or four others—I have found that the problems that they face have to be seen before one realises what they involve.
  I well recall calling upon many small firms and contracting their insurance business for them. Among the most important things about which they were concerned was finding the wages on a Thursday or Friday and worrying whether there was to be a redevelopment order in relation to their premises.

  1491
  With small businesses, one finds all the way along that the small entrepreneur who is making something for someone else says that his greatest difficulty is in trying to collect his accounts from firms that are much bigger. I am sure that the hon. Member for Surrey, North-West is aware of all these problems. To keep one's head and shoulders above water when one is a small business man is a most difficult task.
  I have come across small business people who literally, every Thursday, were running around between different clients trying to collect cheques in order to be able to pay out wages the next day—although, otherwise, they could have spent their time in much more useful ways. In this case, the offenders are not other small businesses but the big business people who will often keep the small people waiting for three months or even six months for their money. Often the result is that many small businesses go under because of the lack of heart or feeling on the part of many big businesses when it comes to paying their bills.
  I have met this problem many times. When I have called on some small business men, they have said "I cannot pay the premium for my third party indemnity this week because I am waiting for an account to be setled by a big firm." This is the strain which is suffered by many of them.
  If these business men manage to survive after being in business for a few years it is because of their own efforts. They have no rolls of fat on which to fall back, as have many big firms. From week to week, they have to rely on collecting in money to pay wages, to keep themselves going and to buy materials in order to carry on their business. That is one of the worst problems.
  The other problem is redevelopment. A small business man may be lucky, and have a railway arch or two elsewhere on a lease of 21 years. If he does not have that, and is making some product in a fair-sized shop, and then a big entrepreneur buys up the whole freehold of the lot and wants to develop it, the small man is faced with the problem of finding somewhere else to carry on his trade or occupation.
  1492
  I came across an example of this in Eastbourne recently. I happen to know something about Eastbourne. I am quite sure that the hon. Member for Eastbourne (Mr. Gow) will not mind my mentioning this. He was present in the Chamber earlier. In Eastbourne a huge business and shop estate is being built. I believe that it is being developed by Arndale. I have had a look around there. I have visited a large "do-it-yourself" shop there. It used to be run by a man and his wife and family, with two or three employees. Together with other small businesses, this has now disappeared. There were at least five good businesses there, employing between five and 10 people each. All these had to move and find somewhere else because the place was to be redeveloped.
  One of the problems of redevelopment is that the small entrepreneur, the man making some small part for another firm, for instance, has to find somewhere else, perhaps within one month, to carry out his industrial operations. Invariably, what happens is that he has to take a place for which he has to pay perhaps five times as much rent as he paid previously. That is one of the reasons why, to some extent, I supported a recent Bill which dealt with some aspects of property and the proposition that it should cover business premises.
  Many small business men are suffering from the problem of redevelopment and the lack of cash brought about by bigger firms not paying their bills when they should pay them. Figures have been mentioned this morning. I have in my hand a large brief, which I could go through, but we must deal with practicalities and people engaged in these matters. The Department can produce many figures, but until one visits small firms and ascertains the exact problems, the figures are cold turkey. One does not know the problems that these people are suffering, and I support the Bill if only to bring them to light.
  In the past, in Wandsworth we have suffered from redevelopment, with large areas lying waste. The last Labour council took advantage of the Government schemes to provide small factories for small business men. There was a rush for these factories by small builders, electricians, electrical contractors, do-it-yourself firms, and so on. Today they are

  1493
  going concerns. There has been a change of political complexion in the council but I hope that it will continue this development.
  We must bring to the forefront the problems of small business men employing between five and 200 people, although I am more concerned with firms employing up to 50 people. We must nurture these very small firms, so that they can employ more people. Companies such as ICI and Leyland will not be the saviours of unemployment. The saviours will be the small business men—the entrepreneurs with first-class ideas to put into practice.
  1.42 p.m.
  Miss Janet Fookes: The speech of the hon. Member for Battersea, South (Mr. Perry) could almost have come from this side of the House, but he may not take that as a compliment. I support my hon. Friend the Member for Surrey, North-West (Mr. Grylls) on the Bill. He has done a great service.
  I accept the principles of the Employment Protection Act. A Conservative Government first introduced the main provisions under the old Industrial Relations Act 1971, but we are concerned with the unwelcome and unintended side effects of the provisions. The Bill seeks to deal with these. It not only tries to help employers but seeks to help the potential employees. The employment provisions are a deterrent to firms taking on more labour.
  Two surveys that I have looked at bear this out. The Conservative Party's Small Business Bureau survey showed that this was a significant factor and a major deterrent to 78 per cent. of the firms covered. It could be argued that this is a biased survey and too closely linked with the Conservative Party. But the Engineering Employers Federation survey was carried out at about the same time last summer. It was a significant factor in restricting employment for 19 per cent. of all companies covered, but as the companies grew smaller the percentage increased. For companies with 200 or fewer employees the figure went up to 21 per cent., and for 50 or fewer employees it was 26 per cent.
  Surveys present dry statistics, and I should prefer to use my knowledge of firms in my area. There is no question
  1494
  but that they are worried about the impact of the employment protection provisions. They are wary of taking on extra staff, and the temporary contract provisions would tip the balance towards employing rather than not employing.
  In my area of the West Country small firms predominate, and the impact will be greater. A census in Devon in 1975 showed that 76 per cent. of firms had fewer than 10 workers. So they are very small firms. That excluded agriculture, forestry, fishing and the holiday trade. I shall not speak for Cornwall, which has its own distinctive views, but the figures would be much the same.
  The hon. Member for Fife, Central (Mr. Hamilton) made much of the fact that there were other and perhaps more important difficulties facing small firms. That is the case, but the important factor is the multiplicity of problems that face them. I was once told by a psychiatrist that a nervous breakdown is caused by worry on several fronts at once. He said that a human being could take one major trouble or worry but not several from all directions. I believe that that is also true of the firm, which is essentially people facing problems. We should not underestimate the importance of this side of the worries facing small businesses.
  One must also examine this from the point of view of the individuals who may or may not be employed by a small firm. There is strong evidence that employers, naturally enough, are becoming more choosey about whom they employ. They are not prepared to take risks, in case the person turns out to be unsatisfactory and they may be faced with the difficulties of the unfair dismissal provisions. The Department of Employment Gazette of June 1978 states:
  "it was apparent that to them"—
  that is, the employers—
  "employment protection legislation meant unfair dismissal provisions. These, managers explained, had made them more selective in recruitment. They now had to be certain before taking anyone on that he was suitable for the job. In consequence—recruitment and selection took longer, were more difficult and were more costly."
  Mr. Tony Durant: Does my hon. Friend agree that that is a deterrent to firms taking on young people?
  Miss Fookes: My hon. Friend has taken the words out of my mouth. Young

  1495
  people lack experience. They have never proved themselves, and they need guidance. The employer does not like to take the risk if there is an older person available. But this is tough on a youngster going out into the world for the first time. There is also the problem of people who are physically handicapped. In my constituency there is a blind audio-typist. He is breaking his heart because, despite every effort, he is unable to find employment. These provisions make his position worse.
  Then there is a group at the bottom of the pile, the ex-offenders. I have been involved in the Expenditure Committee inquiries over the past year or so on those in prison and those coming out. The people who help them say that it has never been more difficult to get employment for ex-offenders. It has never been easy, but it is worse now. These are some of the unintended effects of the Act which the Bill seeks to ameliorate.
  I turn briefly to the provisions of the Bill. My hon. Friend the Member for Surrey, North-West suggests 104 weeks as a maximum time for a temporary employment contract. That seems rather a long time for a temporary arrangement. Perhaps there are good reasons for it, but I would have thought that a year was sufficient. Perhaps we could leave that point for Committee.
  Unlike the hon. Member for Fife, Central, I welcome the amended arrangements for hearings of industrial tribunals. I think that it is sensible that attempts should be put forward in writing first. I think it is rather strange for the hon. Member to say that workers would find it difficult to put things in writing. That is a great indictment of our education system. It also overlooks the position of trade unions. Trade unions could help employees to state their cases. I would not accept that the fact that something had to be put in writing beforehand was an adequate argument against it. It is also wise to have the possibility of costs being awarded against those who bring cases frivolously and vexatiously. This is a general principle of our law. If there can be considerable streamlining of worker tribunals, that will do much to lessen the fears of employers who are often very worried about having to go to an industrial tribunal.
  1496
  I know that other hon. Members are anxious to speak, so I shall not develop my argument further. I warmly support this moderate and constructive Bill and hope that it goes through all its stages.
  1.54 p.m.
  Mr. Geoffrey Dodsworth: I welcome the opportunity to congratulate my hon. Friend the Member for Surrey, North-West (Mr. Grylls) on introducing this excellent and constructive proposal. It is commendable in many ways. It is often difficult for hon. Members adequately to reflect the general expressions of feelings of business people to those who are concerned with government, parliamentary and executive affairs.
  I spent the first 20 years of my working life in a small business and in my earlier years before that I was connected with a small business. There is the question of attitude and philosophy of business people. They wish to get on with their own affairs in an untrammelled way and without unnecessary and unsought interference.
  This Bill presents a more positive approach to the problem of job creation and employment. It will unleash a whole new area of activity, and as such it will be welcomed by the business community. Individuals in that community often have great difficulty in knowing the purpose of the Government and of legislation. There are many worthwhile, enterprising organisations with chairmen and heads who are seeking to reflect a particular point of view, but generally there is a feeling that politics is represented by the VAT inspector, the inspector of taxes or some undesirable form of local government control which seems to discourage enterprise.
  The hon. Member for Keighley (Mr. Cryer) referred to the role of family businesses. Those in family businesses are a particularly coherent group of people who have served the country well. Their objectives could be summed up as those put forward by the hon. Member for Battersea, South (Mr. Perry) and they could be encapsulated in that one word "survival". This is a critical issue. They often live on a knife edge. Any small wind can affect their survival. Their commitment to their activity should be understood by hon. Members of this House. We have hon. Members with this sort of

  1497
  commitment to objectives which are not always absolutely defined, and which may be inherited.
  I belong to that ever-widening circle of people who lived over a shop. I spent the first 20 years of my life living over a shop and I took part in its business activities. As a child, I frequently heard about "The Business", and I wondered what this strange animal was. It seemed to dominate the lives of members of our family. Everything we had was on the basis of whether it was compatible with the interests of the business. In those days we were very concerned with surviving. It was during the slump and my family business had a lot of red figures on its books. Survival was the key issue. To me the business was a dragon which took away part of my life and my family's activities.
  I emphasise this because it helps me to communicate the anger felt by business people. They give everything they have in terms of time, money, possessions and well-being. We hear about the gold mine at the end of the street, but that gold mine means working 18 hours a day for several days and then having a half-day of only 12 hours. The rate of pay which these people receive would be entirely unacceptable in any negotiated settlement being contemplated at present. They have a belief in what they are doing which goes beyond financial consideration. It is a belief in something which is a way of life to them.
  This Bill will help those people. It is not a question of looking at unemployment as a temporary phenomenon. We face real difficulties in this area, and the Bill seeks to unleash a new area of activity. Anything that is a portent of damage or doom is of concern to the private business man. If he takes on additional people and a project fails, his lifetime's activities may be lost, because he is called upon to make payments which he cannot meet. That is the reality of the knife edge on which such business men live. It is a chill fact.
  When my father came home from the 1918 war he and his father set up a business. They had a bicycle, a paint bucket and a brush. That was the beginning of that business. I used to talk to my father about the philosophy of making money. I am a casualty of a
  1498
  family business. As a result of that I entered politics. I am proud to be a Member of the House. That was a fortune to me, and it proves that one can sometimes benefit from casualty.
  My father used to say "If there is anything which is of value in a business enterprise, it is the creation of employment—it is the well-being that you are able to share with the people who work with you."
  In those days we often referred to "black Friday". My father was a cheerful and happy man, but he had a long face on certain Fridays. His business was seasonal and it was sometimes necessary for men to be laid off. He regarded that as the blackest business activity.
  Thousands of people in business take that view. Most business men have great integrity and are really concerned about their employees. It is highly reprehensible for people to depict employers as mean-minded, narrow people who have no interest in the people whom they employ. Their interest is deeper and more sincere than perhaps it is in many other walks of life. I work in a large enterprise and I am aware of the different strains involved.
  It has been suggested that the Bill might reduce protection for some people, but there is a category that has less protection. A woman who is over 60 or a man who is over 65 is not protected by the unfair dismissal procedures. That means that there is an acceptance of the broad principle which my hon. Friend the Member for Surrey, North-West is enhancing elegantly.
  I should have liked to say more about the difficulties, the vague nature of present legislation and the qualification elements of a person of retirement age. That is a source of employment of which we should make more use. There are worthwhile employment opportunities for people who are beyond retirement age. I hope that the Bill will increase employment in that direction.
  2.5 p.m.
  Mr. Tony Durant: I shall take very little time, because many of us wish to support the next Bill on the Order Paper, which we feel is important. It is right that we should keep our remarks as short as possible. I am sorry

  1499
  that some Labour Members took so long at the beginning of the debate.
  The hon. Member for Battersea, South (Mr. Perry) spoke briefly and to the point. I agreed with every word that he said. He highlighted the fact that small businesses have a collection of problems.
  I declare an interest, in that I am still a small business man who employs about 20 people. I am closely involved. When people talk to me about the problems of small businesses and interference, I am appalled by the collection of new interferences.
  I was shocked to receive a letter that relates to our recent industrial problems. The letter was from a major firm in my area to one of its suppliers. I do not wish to name the two companies, because I do not wish to damage their relationship. The letter was from the materials manager. It stated:
  "We are given to understand that the TGWU are about to launch a national concerted campaign designed to force non unionised transport drivers into becoming members of any trade union affiliated to the TUC.
  The purpose of this letter is to ascertain what your Company's reaction would be if our unions … supported such a campaign and insisted on all drivers delivering or collecting from our factory being trade union members.
  You will understand that we are not attempting to recruit members for the trade union but merely to establish the degree of the problem that would face us if this TU policy were implemented."
  That was written to a company employing 10 people. It is something of a public scandal that this company is expected to recruit its one driver to membership of the TGWU if it wishes to deliver to a company down the road. This is one of the pricks that we are talking about. The effect of the lorry drivers' strike on small businesses has yet to be felt.
  I turn to the question of filling in forms. I have a form which was sent to a sub-Post Office which employs two chaps. It is a long form, on which the recipient is asked to break down the receipts from groceries and provisions, fresh fruit and vegetables, fresh milk and cream, novelties, souvenirs, gifts and so on. There are 39 questions. If those two people spend their time filling in such forms, they will have to give up the business. Why should they bother? Why should they not go and work for somebody else? This is
  1500
  the effect that interference—bureaucratic, legislative and trade union interference—is having upon small businesses.
  One of my constituents is a tool-grinder, who employs one man and is involved in highly technical work. I know him well and visit him regularly. Every time I see him he says "I have work only for about two or three months ahead. That is about as much as I can expect. If I had more protection, I should take on somebody to help me when there is a rush." That is the type of man that my hon. Friend the Member for Surrey, North-West is trying to help.
  My constituent knows those people that he could take on, but the work might last for six or nine months and he dare not risk taking on the staff. He therefore refuses the work rather than expand his business. He stays in his little shed down by the Thames, ready to expand but believing that he should not do so because of the Act. He mentions the matter regularly, so no one should tell me that it happens once or twice and is a minor problem. It is very much in his mind.
  The Bill is designed to help the small man. He runs the risks and provides the service to our society. The Bill is a small measure to help in that.
  2.10 p.m.
  Mr. John Wakeham: I, too, support the Bill. I congratulate my hon. Friend the Member for Surrey, North-West (Mr. Grylls) on the work he did in preparation for introducing it, the way in which he presented it, and the amount of consultation that he conducted with the many different bodies that take an interest in the matter. I am concerned about the significant number of small employers who want to take on extra staff and are deterred by the present amount of bureaucracy, particularly under the Employment Protection Act.
  I want to mention another aspect of the Bill to show why I support it for an entirely separate reason. Running parallel with the difficulty experienced by many small employers in taking on additional employees has been a growth in the number of self-employed people. In my business and political life I have done everything possible—I shall continue to do so—to encourage the growth in the numbers of the self-employed and their

  1501
  prosperity. Nothing will do more to revive our economic fortunes than a growth in the number of self-employed.
  Mr. David Mitchell: Is my hon. Friend aware that the Property Services Agency, the Government building agency, forbids contractors to employ self-employed people on its contracts?
  Mr. Wakeham: That is an interesting point, but as I wish to be as brief as possible I shall not discuss the PSA, although it has given me one or two constituency problems.
  Encouraging growth in the numbers of the self-employed should be an important part of the economic policies of any Government, certainly of the next Conservative Government. I believe that becoming self-employed results in both benefits and responsibilities, but I do not want to see people being forced into becoming self-employed because their employers or customers—depending on what relationship they end up with—believe that that is the only way in which they can use their labour, because of the bureaucracy, the weight of regulations, the difficulties resulting from the Employment Protection Act, the problems that arise from national insurance, and the different treatment for taxation purposes. One of the major problems has been the reluctance of employers to take on staff when they can offer work to people as self-employed.
  I believe that passing the Bill would help to redress the balance and would help to lessen the difficulties of employers. We might then be able to deal with another problem that must be dealt with in association with the Bill, which is to try to clarify exactly what is and is not a self-employed person.
  I recently asked some questions on this very subject and received answers from the Department of Health and Social Security and the Treasury. Their answers were not particularly helpful, although I accept that they were factually correct. I was told that under present regulations everything depended on the facts of each case. One answer was seen by some—certainly by the authorities of the House —to be more significant than I had thought. The answer of 5 February has recently been circulated to all hon. Members because it was believed to give them
  1502
  guidance on the question whether their secretaries might be self-employed or employed. As I have said, that depends on the facts of the case, which are largely the circumstances determined between the two parties when they enter into the contract.
  Now I come to my important point. The Department of Health and Social Security is rightly inquiring into cases where it believes that "self-employed" people are not properly self-employed. In many instances this depends on the precise way in which the two parties made their original agreement. As a result of those inquiries, the Department reclassified some self-employed people, with the result that many people who thought that they were dealing with a self-employed contractor are having to pay employer's national insurance for someone they had no idea was an employee.
  I believe that the Bill will do a considerable amount of good. It also gives us an opportunity to deal with the definition of "self-employed". As I have said, we want to encourage a growth in the numbers of self-employed and remove the bureaucracy that has indicated to some people that they should be treated as self-employed when they have no wish to be and nobody else wishes them to be.
  2.17 p.m.
  Mr. John Biffen: I realise that the House will wish to give attention to the Licensed Premises (Exclusion of Certain Persons) Bill, and therefore I shall be as brief as possible. But it is wholly appropriate for me to congratulate my hon. Friend the Member for Surrey, North-West (Mr. Grylls) on his good fortune in securing a place in the ballot for Private Members' legislation, the subject he has chosen for his Bill, and the comprehensive way in which he presented it. I am also delighted to see that the sponsorship of the Bill includes the hon. Member for Cardigan (Mr. Howells) and that, therefore, it has support which goes beyond the Conservative Party.
  The speech of the hon. and learned Member for Montgomery (Mr. Hooson) was eloquent testimony to the way in which small businesses have developed in his constituency. He mentioned, in particular, Laura Ashley, and I am only too happy to confirm from my own experience what he said. His reflections on the state

  1503
  of the small business community in Montgomeryshire almost exactly parallel the position in Shropshire.
  The Bill has the aim of helping small businesses in the context of employment. A good deal of our discussion has been about the general problems of small businesses—my hon Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) spoke of the wider problems—but it is largely by the criterion of employment that the Bill should be judged. We on the Conservative Benches were encouraged to hear the hon. Member for Battersea, South (Mr. Perry) endorse the Bill specifically because he believed that it would help in relieving unemployment.
  Nevertheless, there are, without doubt, some anxieties—they were touched on by my hon. Friend the Member for Surrey, North-West when introducing it —lest the Bill be thought to impinge upon any delicate area of industrial relations. But, as my hon. Friend the Member for Plymouth, Drake (Miss Fookes) rightly reminded the House, the employment protection legislation in its initial form was part of the Industrial Relations Act 1971, and I do not believe that there is a danger that the Bill will run into any industrial relations difficulties, not least because it is the smaller firms sector which has a very good record in industrial relations.
  In this context I turn to the Department of Employment Gazette of February 1976, which reported the annual average, based on the years 1971–1973, of working days lost per 1,000 employees in relation also to plant size. The annual average was 2,046 for plants employing 1,000 and more, but merely 155 for plants employing between 100 and 199.
  We have more recent evidence from a study carried out by the Scottish Development Agency, which was referred to by the hon. Member for Fife, Central (Mr. Hamilton). That survey concluded:
  "Industrial relations particularly among the smallest companies, present few problems, although recruitment of trained staff is a major difficulty."
  The technique which my hon. Friend has suggested in his Bill for improving employment prospects is the temporary
  1504
  or probationary employment formula. My hon. Friend explained those terms, saying that he was open-minded about whether the temporary or probationary contract of employment should apply to companies with 200 and fewer employees. That is a matter which can be considered by the Committee which, I hope, will follow Second Reading today.
  Inevitably, I suppose, one is in the difficulty of trying to demonstrate what is the compelling nature of the evidence to require legislation. The hon. Member for Fife, Central was particularly scathing, and, I thought, unrealistic, about how one could produce evidence. Certainly, as regards producing evidence of those who settle rather than go to arbitration, no statistics will ever collect that, just as no statistic ever collects tax evasion and no statistic ever collects moonlighting.
  The truth is that what we are dealing with in this whole problem is a part of the submerged economy. This has been difficult and will become increasingly difficult for those in Government, since as inflation takes an increasing toll so wilt people more and more contract out of the statistical economy and into the cash economy. Here lies a difficulty, and it is, as I say, a difficulty for those in Governmet in trying to formulate policy because they will always find their evidence defective to the extent that that which they wish to see is simply not revealing itself to be recorded.
  There is no doubt that anecdotally almost every Member will say to the House "I am certain that a relaxation of the Employment Protection Act would help small firms to take on additional employees", and we have all the evidence and the representations made on the presentation of the Bill from the Association of Independent Businesses, the National Federation of Self-Employed, the Union of Independent Companies and the CBI smaller businesses council, all of which believe that this is something which could be of material help.
  In effect, that approach is one which says "Cannot you liberalise the economy a little? Cannot you relax, and cannot you de-regulate?" That is not a dogmatic or theological approach, but it is an approach to which one is very sensitive in any discussions with the small business section of the community.

  1505
  I do not for a moment begrudge the hon. Member for Keighley (Mr. Cryer) making his argument that the Government's case can be shown in their contribution to small businesses through the amount of money they had spent under section 8 of the Industry Act or the small firms employment subsidy. But there is a real distinction here between those who do not want more public funds which have to be paid for out of taxation and those who say that the alternative is to roll back the carpet of controls.
  I fear that between the hon. Member for Keighley and myself there is a gulf fixed. I have a suspicion that it is fixed also between the hon. Gentleman and his hon. Friend the Member for Battersea, South. The hon. Member for Battersea, South does not rise vigorously to deny that suggestion, and I must say that, on the whole, in this debate I would sooner be batting alongside the hon. Member for Battersea, South.
  Of course, there has been some controversy over the Bill, but I believe that it has none the less received a wide, understanding and friendly reception. Perhaps the only remaining matter of contention is whether it is a modest or an ambitious project. My hon. Friend the Member for Surrey, North-West introduced it in a thoughtful and elaborate fashion, but the care and detail with which he presented it should in no way be taken to imply that he was making exaggerated claims on its behalf. The only person to make an exaggerated claim on its behalf was my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn), since he said that it would be a lifebelt to the Government. There is no such thing as a lifebelt for this Government, and certainly this Bill does not provide one.
  In my view, therefore—I agree here with my hon. Friend the Member for Eastleigh (Mr. Price)—it is a modest Bill, and we should be wise to make a modest step in giving it a Second Reading. It would be a measured and constructive gesture in the herculean task of providing more employment.
  2.26 p.m.
  The Minister of State, Department of Employment(Mr. Harold Walker): It might be appropriate if, at this stage, I express the Government's view on the
  1506
  Bill. I shall seek to do so with a brevity comparable to that shown by the hon. Member for Oswestry (Mr. Biffen), out of regard for the hopes of certain hon. Members on both sides that another Bill will be reached for discussion.
  In introducing his Bill, the hon. Member for Surrey, North-West (Mr. Grylls) reminded us that we have been here before. As he said, it is almost exactly a year since we had before us a similar measure presented by his hon. Friend the Member for Sheffield, Hallam (Mr. Osborn). The Bill last year was about unfair dismissal legislation and industrial tribunal procedures. This Bill, unlike last year's, is intended to make a specific exemption for small firms.
  Last year, I advised the House to oppose the Bill introduced by the hon. Member for Hallam because we thought that it was neither necessary nor just. I must tell the House that I take the same view of the present Bill. We are opposed to it for the same reasons. Contrary to what is said in the long title and the suggestions made by hon. Members on the Opposition Benches, we do not believe that the Bill will lead to more employment opportunities. We believe that it might well pave the way to injustice for many people and could encourage a return of the kind of employment practice which I thought and hoped the House had sought to abolish.
  As the promoter explained, the Bill contains two main provisions. First, it provides that employers with not more than 200 employees may designate employees as temporary for up to two years, and during that period those employees will be deprived of the right to complain of unfair dismissal. Secondly, it provides that industrial tribunals may decide cases on written particulars alone.
  Moreover, those provisions, if enacted, could not be changed by statutory instrument, as is provided in our present legislation. The Bill would thus remove the flexibility which we have now and could be changed only by further primary legislation. If the House were, as I put it, sufficiently lacking in wisdom to support these proposals, I should have to point out that those aims could be achieved by methods other than primary legislation, but I believe that both aims are unworkable and, as I said, unjust.

  1507
  Before I set out my arguments, I shall say a few words about some of the comments made during the debate. It is common ground on both sides of the House—I do not imply any lack of sincerity in any hon. Member—that unemployment is unacceptably high and that we should do whatever we can to reduce it. It is also common ground that we are all anxious to encourage the creation and growth of small businesses and to try to ensure that they flourish.
  The hon. Member for Surrey, North-West, who presented the Bill, ended his speech in a rather different style from that in which he began, by saying that we must not abandon the unemployed. We all agree with him on that. He said that we must do all that we can to help the unemployed. That contrasted oddly with and contradicted his casting of cold water on the Government's special measures. He was cynical towards them. I must tell him and the House that about 500,000 people have been kept in employment or provided with jobs because of the special employment measures. Unemployment, bad as it is, would have been even worse had we not had those measures.
  I was surprised to hear the hon. Gentleman's criticisms of the Industry Act and what he described as the disincentive effects of legislation. My hon. Friend the Member for Keighley (Mr. Cryer), in a powerful speech, said more than I intend to say about the beneficial effects of the Industry Act. Hon. Members on the Conservative Benches would do well to recall the circumstances in which the Industry Act 1972 was introduced. The Act marked a fundamental reversal and a U-turn in that Government's approach to employment and the problems of the day, compelled by the rescue of Rolls-Royce.
  The hon. Gentleman suggested that his view was shared by the overwhelming majority of managers. I want to deal later with the extent of his consultation. He did trot out, if he will forgive the expression, a list of organisations with which he had had consultations. It would be interesting to know whether he had spoken to the British Institute of Management, which has views about the employment protection legislation and
  1508
  particularly the unfair dismissal provisions.
  Hon. Members have addressed themselves to the problem of unemployment and the assumption that the Bill will enable small businesses to make a contribution to a significant diminution of unemployment. It must seem odd and contradictory to many people that the idea of giving employers greater freedom to dismiss people will add to the number of jobs available and to the number of employment opportunities. It is nonsense to suggest that the Employment Protection Act is a significant cause, if a cause at all, of unemployment, and that giving employers the power to sack people, or greater freedom to sack people, will significantly diminish unemployment. If that were true, one would be bound to ask why other countries in Western Europe and North America have unemployment rates comparable to ours, though presumably they are not encumbered with an Employment Protection Act. One has to recognise what my hon. Friend the Member for Keighley said. Notwithstanding the doubts and reservations expressed about the extent of our employment safeguards, they compare unfavourably in many respects with those in other countries.
  Mr. Grylls: I want to help the hon. Gentleman so that he does not have to knock down his argument later. He says that the Bill gives power for people to be sacked. He must know that that is not true. Nothing in my speech suggested that. A temporary employment contract may cover an export order involving 15 months' work. If this is clearly stated in the contract, those who come off the dole to take up that job, albeit for 15 months, do have employment that would not otherwise have been available. Of course, we must hope that it will lead to permanent employment, but half a loaf is better than none.
  Nothing is proposed in the regulations under my Bill to say that a claimant at a tribunal cannot appear in person. I am not saying that. I am merely saying that, in the first instance, it can be done by written submission. If someone wants to appear in person, nothing is intended to stop that. If the Bill is badly drafted, we shall look at an amendment to tighten up the wording.
  Mr. Walker: I can perhaps return to the hon. Gentleman's second point later in my speech. I want to deal with the first point. The hon. Gentleman has put his finger on a widespread misunderstanding about unfair dismissal provisions and legislation. There is nothing to prevent an employer at any time from dismissing an employee provided that he does it properly and has just cause for doing so. We are talking only about unfair dismissal. The safeguards are against unfair dismissal. They are not safeguards that make every employee secure in his job for all time in spite of the circumstances and in spite of the employer having proper grounds to dismiss him. Where the employer has proper grounds and proceeds in a proper way, there is nothing to stop him dismissing the individual. In the circumstances which the hon. Gentleman described, where a contract has to run for a specified period and, at the end of which there is no employment for people who have been engaged in that work, those would be proper circumstances in which the employer would have the right to dismiss.
  I have heard no evidence in this debate that if the Bill is enacted it will produce a single extra job. I know the argument that it will perhaps provide a different climate of confidence for small employers. My hon. Friend the Member for Keighley relieved me of what might otherwise have been the heavy burden of recalling what the Government have done to help small firms. My hon. Friend gave an impressive chronicle based on his own direct and recent experience as the Minister responsible for small firms in the Department of Industry. In the light of his remarks, it seems that the Government have done infinitely more to help small firms and employment generally than the Bill before the House could ever achieve.
  I should like to deal with consultation and the views of employers, including small employers, about the existing legislation. The hon. Member for Surrey, North-West listed the CBI among those he had consulted.
  Mr. Grylls: Yes, the small firms council of the CBI.
  Mr. Walker: It might have been helpful if the hon. Gentleman had been able to indicate the outcome of his consulta-
  1510
  tions with the CBI. The small firms council of the CBI may have said that it saw benefit in the Bill, but I wonder whether the CBI shares that view. I do not recall that the hon. Gentleman made any reference to consulting the TUC or trade unions. Did he consult any representative trade unionists or trade unions? I understand that he did not seek the views of the presidents of the tribunals. I understand that both bodies have great apprehensions about his proposals.
  I should like to turn to the point made by the hon. Member for Burton (Mr. Lawrence), who flourished the PSI study before the House. That study is only of firms employing 50 or more people. It would have been fair if he had also pointed out that we conducted a survey of small firms through the Opinion Research Centre, although it may have been alluded to elsewhere in the debate. The results of the Opinion Research Centre survey were given in a press notice by my Department in August 1978. Only 2 per cent. of employers with fewer than 50 employees named employment legislation when asked for the main difficulties which they face in running their businesses. Only 7 per cent. mentioned it when asked whether any Government measures had caused difficulties.
  When asked directly later in the interview whether they would have taken on more employees but for the legislation, it is true that 24 per cent. said that they would. However, over 75 per cent. of the firms had earlier not claimed any particular piece of legislation to be troublesome. That was when they were presented with a specific list that included unfair dismissal. That suggests that many employers claim that employment legislation has inhibited recruitment only when the idea is planted in their minds.
  I referred earlier to the British Institute of Management. Its view is that the reaction of employers is not as critical as has been suggested. The institute recently carried out a process of consultation among its members on the legislation. The response suggests that it is generally accepted. Specific reference was made to unfair dismissal in the institute's report. It stated:
  "This is generally regarded as reasonable although managers consider that the unfair dismissal provisions relating to closed shops need amendment. Otherwise management would not

  1511
  wish to see any changes in the unfair dismissal provisions."
  That is the view of the managers in the membership of the institute.
  Mr. David Mitchell: What proportion of members of the BIM run small businesses? Nearly all of those who run small businesses are working proprietors and not professional managers.
  Mr. Walker: I do not wish to misrepresent the hon. Member for Surrey, North-West, but I recall that he suggested that the views of management were overwhelmingly in accord with the case that he was putting to the House. That is my understanding of the hon. Gentleman's remarks. I thought it fair to reflect in the debate the views of professional management.
  During the debate we have heard a good deal about unemployment and the problems of small businesses. Indeed, we had the life history of one hon. Gentleman. We have heard little about the Bill. Before turning to its provisions, I take up one comment made by the hon. Member for Oswestry, who reminded us that it was the Conservative Party, in its Industrial Relations Act, which first introduced unfair dismissal provisions. I do not want to quibble with him, but my memory goes back a little further. I recall that such provisions were first presented to the House in a Bill that did not receive a Second Reading—namely, the Bill introduced by my right hon. Friend the Member for Blackburn (Mrs. Castle) when she was Secretary of State for Employment and Productivity.
  The incoming Conservative Government picked up almost word for word the provisions in my right hon. Friend's Bill. They made one or two changes, and these became an integral part of the Industrial Relations Act. That measure had a qualifying employment period of two years for presenting a case to a tribunal for dismissal. In another place, Earl Jelicoe, in introducing the Industrial Relations Bill as it then was for the Conservative Government, promised that the period would be reduced to 52 weeks. In that respect at least there is a reneging on what was considered to be a most reactionary approach to industrial relations. That is something that must be borne in mind.
  1512
  I turn to some of the provisions in the Bill. Some of my criticisms may be dismissed as drafting arguments that may be clarified in Committee. However, it is fair to mention these matters as they indicate what I consider to be a slipshod approach. It is a better drafted Bill than the measure that the hon. Member for Hallam put before the House last year. The passages relating to maternity provisions were declared by the hon. Member for Surrey, North-West to be misconceived and ill founded. The hon. Gentleman may prefer to withdraw them. They are superfluous. The fact that they are in the Bill is an indication of the limited thinking that went into the preparation of the Bill.
  There is a proposal to expose to the definition of temporary employment firms employing 200 employees or fewer. The hon. Member for Surrey, North-West owes it to us to explain exactly what he means. How would that proposal apply to associated companies? Does he mean one place of employment? The proposal is wide open to many interpretations. It may be said that it can be clarified in Committee. That is not so, because it is fundamental to the Bill and to the argument advanced by my hon. Friend the Member for Keighley. My hon. Friend argued that by accepting the proposal we should be creating two classes of employment and that firms employing fewer than 200 would be employing second-class employees.
  Mr. Grylls: Section 142 of the 1978 Act makes it perfectly clear that those with contracts for longer than two years are exempted. Miners and dockers are also exempted. It is clear that there are already different classes of employee. There are good reasons for that. Is there any good reason for not having the proposal that is contained in the Bill?
  Mr. Walker: I am glad that the hon. Gentleman refers again to section 142. I think that he is wrong in his interpretation of the provisions in that section. I did not want to make reference to the section in an intervention but as he has referred to it again I must draw to his attention what the section states. It provides that the unfair dismissal provisions of section 54 do not apply to dismissal from employment under a contract for

  1513
  a fixed term of two years or more where the dismissal consists only of the expiry of that term without its being renewed. In other words, when somebody has entered into a contract for a fixed term that is in excess of two years, that person cannot complain when the contract has expired and he consequently becomes unemployed. It is an entirely different matter. The section makes it clear that that is a proper form of dismissal
  Mr. Graham Page: It creates another class of employee.
  Mr. Walker: The right hon. Gentleman, who has not participated in the debate so far, may wish to elaborate on that later.
  Mr. Graham Page: I have been in the Chamber listening to almost every speech. I went away for half an hour for lunch. Apart from that, I have listened to the debate throughout. The most ridiculously illogical statement that the Minister of State has made is that the Bill will create two classes of employee. He knows perfectly well that the Employment Protection Act does that already.
  Mr. Walker: If the right hon. Gentleman wishes to advance that argument and wishes to elaborate on it, no doubt he will seek to catch the eye of the Chair.
  Whatever the hon. Member for Surrey, North-West may say, the Bill provides that a person seeking employment in a firm employing 200 people or fewer will be confronted with the likelihood that he will be required to accept a contract that will deprive him of the statutory entitlements that have been conferred on him by Parliament.
  Mr. David Mitchell rose—
  Mr. Walker: I ask the hon. Gentleman to be patient. I am dealing with one of the arguments advanced by the hon. Member for Surrey, North-West. The position that I have described would confront an applicant for employment and possibly an existing employee. If Parliament eventually decided to enact the Bill, that provision would become operative within one month. I note that the hon. Gentleman nods in assent. It is conceivable that many who are already in employment would fall within the scope of that provision if they had not completed two years' employment.
  Mr. Grylls: The Bill will apply retrospectively to nobody. The Minister should do his homework and read the Bill properly. The Bill will apply only to temporary employment contracts freely signed by employees. There will be no retrospection. The Minister knows that.
  Mr. Walker: If the hon. Gentleman had been patient, he would have heard me take up precisely that point.
  Mr. David Mitchell rose—
  Mr. Walker: No. I am replying to the intervention of the hon. Member for Surrey, North-West. Before I have completed my reply, the hon. Member for Basingstoke (Mr. Mitchell) wishes to intervene. If he will be patient for a short while, I promise that I shall allow him to intervene.
  It is no good the hon. Member for Surrey, North-West saying that when the employer confronts an employee with a choice of accepting a contract providing for the first two years of his employment to be treated as purely temporary, that person has two options before him. One of the options is not to accept and therefore to go on the dole. Alternatively, the applicant, if he does not want to sign, may also go on the dole. That is Hobson's choice. It is like the freedom of everybody to dine at the Hilton or not. However, it does not go even as far as that. The person who rejects the employment because he is not prepared to accept a temporary contract for the first two years will almost certainly disqualify himself from entitlement to unemployment benefit. He will have refused what has been conceded. It is no use members of the Opposition shaking their heads. I sought departmental advice on this matter. That is the considered view of responsible officers in the Government.
  Mr. David Mitchell: I have been listening to the Minister's argument with great interest. He spoke of depriving an employee of rights conferred by Parliament. In the light of what he said, would he like to comment on the document which deals with the method used by the British Steel Corporation in Wales, by which it gives a 25-week contract only? That enables the Corporation to get round the legislation and deprive its employees of rights conferred by Act of Parliament. Will the Minister comment on that?
  Mr. Walker: I am not sure that that is relevant. I am not sure that we are comparing like with like. The mere fact of having entered into such a contract does not deprive the employee of the right conferred by Parliament. This is not strictly temporary employment, as the contract suggests. It is permanent employment that will be broken up into a succession of six-monthly contracts. That is what the hon. Gentleman says. He assumes that in that way the employer will evade the requirements of the Employment Protection Act. Not so. No matter what is in the contract, almost certainly if the employee continued to be in employment, or if there were an interval of one week between the successive employments, he would still—
  Mr. David Mitchell Mr. David Mitchell indicated dissent.
  Mr. Walker: It is no good the hon. Gentleman shaking his head. I sought the advice of Government Law Officers on this matter. If the hon. Gentleman thinks that his knowledge of these matters is superior to that of the Government Law Officers, he is entitled to his opinion. However, he should not seek to mislead the House.
  Mr. David Mitchell: Does the Minister suggest that the nationalised steel industry did not take the advice of its legal advisers? Does he suggest that it was not able to pay for adequate legal advice? Certainly it has lost enough money to be able to pay for anything.
  Mr. Walker: I do not know that the legal advisers of the British Steel Corporation have ever told the managers of the Corporation that that device would exempt them from any obligation under the Employment Protection Act. That is purely hypothetical. I do not know that the hon. Gentleman produced any further evidence to suggest that the legal advisers of the British Steel Corporation have said that. I suggest that the Opposition are misleading themselves.
  This issue has been before the House previously. I replied to the hon. Gentleman in similar terms to those that I have just used.
  Mr. Graham Page: I should like to go back to the point where the Minister said that the Bill would apply to existing employees. Clause 1(1)(a) says:
  "at the date the employment began".
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  Clause 1(1)(b) says:
  "written notice is given on or before that date".
  It could not apply to existing employees. It could apply only at the time that the employment begins.
  Mr. Walker: I am prepared to accept the right hon. Gentleman's point. However, I do not think that the matter is as simple as he suggested.
  I now turn to clause 1(5). The hon. Member for Surrey, North-West said that subsection (5) asked the Secretary of State to lay down new regulations. He seemed to suggest that the Bill would confer discretion on the Secretary of State in this matter. It does not. Throughout, it is mandatory.
  Mr. Grylls Mr. Grylls indicated assent.
  Mr. Walker: I am glad that the hon. Gentleman confirmed that. There is a world of difference between asking the Secretary of State and the House instructing him. The hon. Gentleman seeks to impose a mandatory instruction on the Secretary of State. The Bill says that
  "The Secretary of State shall, within one month of this section coming into force"
  make regulations that shall be deemed to be made under section 128 and shall include certain provisions. It goes on to list the matters that must be covered in the regulations, including a provision that in submissions made in the proceedings before the industrial tribunal, in the case of an employee, there shall be consultation with the conciliation officer. I am sure the hon. Gentleman does not mean that.
  Under the Bill, unless in every case the employee consults the conciliation officer, in the event of his subsequently succeeding in proceedings before the tribunal it will be open to the employer to claim grounds for appeal, on a point of law, to the employment appear tribunal that the employee has not fulfilled all the statutory obligations laid upon him. That would be a statutory obligation upon the employee.
  The hon. Gentleman did not elaborate on what the purpose would be. One assumes that the employee, or exemployee—as he might be a dismissed person—would be required to seek the advice of the conciliation officer, as distinct from the present position where the

  1517
  conciliation officer has an obligation to consult both parties. That could occur only for the purpose of the conciliation officer being required to give advice to one side in the dispute. The hon. Gentleman did not make that clear.
  I now turn to deal with a point raised by the hon. Member for Plymouth, Drake (Miss Fookes). She said that she did not believe that there were workers who did not know how to make a statement in writing. Perhaps the hon. Lady had in mind that the conciliation officer might give assistance there. The hon. Member for Surrey, North-West nods. Many employers would be doubtful, as I am sure ACAS would be, about imposing that obligation on the conciliation officer. It would prejudice the neutrality of ACAS if we gave the conciliation officer, a servant of ACAS, a duty to help a potential applicant to the tribunal. I hope that if she has not already done so the hon. Lady will visit a tribunal. I do not say that in an offensive way. Such a visit is a salutary lesson. I hope that those hon. Gentlemen who have spoken in the debate will see an industrial tribunal at work. They will then see some of the difficulties facing ordinary, decent, honest people who have been dismissed and find themselves not only with problems in expressing themselves in writing but in speaking before the tribunals.
  In the two cases to which I listened at Ebury Bridge Road, the applicants were immigrants who found it very difficult to express themselves. I am sure that they would have found it much more difficult to express themselves in writing. I believe that that would tilt the scale of justice very considerably against them and that it would be unfair to ask ordinary working people, some of them immigrants with little knowledge of our language, to explain their case in writing. The employers, especially the large companies, may well have skilled resources available to them.
  Miss Fookes: I suggested in my speech, when referring to this question, that it would always be possible for an applicant who was a member of a union to call for the help of his trade union. I thought that that was a useful way in which trade unions could help applicants.
  Mr. Walker: I understand the hon. Lady's point and I believe that she is trying to be constructive and helpful, but there is at least one recent judgment which is causing me a great deal of anxiety. The clear implications of it are that a trade union official, a shop steward, can be held liable in law and can expose himself to civil action for wrongly advising one of his members. If the same legal principle applied in the instance to which the hon. Lady referred, the trade union officer or shop steward concerned could likewise be held responsible for the loss of what might otherwise have been a succesful application.
  I remind the hon. Lady that, much as I regret it, probably about half of the work force is not unionised. What she has suggested would not be of much help to those who are not unionised and who may well be the kinds of people to whom I was referring earlier as having great difficulty in expressing themselves adequately.
  The hon. Member for Hallam made a point that has been made more than once in the debate. Indeed, it was the hon. Member for Surrey, North-West who said that there was no question of the applicant being denied a hearing. That may be his intention, but that is not what the Bill says. He might seek to put it right at a later stage if the House decides to give the Bill a Second Reading. The Bill refers in clause 1(5) to provision for
  "enabling the tribunal if, but only if, they are not satisfied that they can come to a decision on the face of the said particulars to call the parties to an oral hearing for them".
  I query the insertion of the words "if, but only if". Had that been merely a bit of sloppy draftsmanship it could be put right, but my feeling is that the insertion must have been deliberate, and the effect of it is to do precisely what the hon. Member for Surrey, North-West says he does not want the Bill to do. The words "if, but only if" deny the right of the applicant to demand a hearing. It would not only empower the tribunal to make a decision but would impose upon it the statutory obligation to make a decision in the absence of the applicant. The hon. Gentleman may want to say that this was not his intention and that he would like the opportunity to redraft the paragraph.
  Mr. Grylls: Subsection 5(a) is quite different, because it enables the tribunal to take the initiative, if it is not satisfied on the written particulars as a method of resolving the dispute, of calling for an oral hearing. There is nothing in the proposed regulations that in any way excludes a claimant from having an oral hearing. An immigrant who is not good at writing may prefer to have an oral hearing. It can certainly be done. If it is necessary to polish up the drafting in Committee, that can be done, but there is no intention in the Bill to exclude the claimant from having an oral hearing.
  Mr. Walker: The House will make its own judgment. I do not think that the hon. Gentleman is really challenging my interpretation of the words as drafted, which is that the tribunal will not have the unfettered discretion which presumably he wants it to have. Let us accept that it is his intention that it shall be entirely at the discretion of the tribunal and that it shall have the freedom, if it thinks it appropriate, to choose either to make a decision or to give the applicant a hearing. The hon. Gentleman says that there is no intention anyway of denying to anyone who wants a hearing the chance to appear in person before the tribunal. I am glad to have the hon. Gentleman's assurance, not only because to do otherwise would be a denial of natural justice but because it accords closely with existing practice.
  In the light of the views expressed in the debate a year ago, I introduced towards the end of last year some modifications to the tribunal procedures. They included a change that required the applicant to submit more information in advance of the hearing than had been the case previously. We also empowered the tribunals to ask for further written information if they thought it appropriate. At present the tribunals are empowered to sift through the information and to advise an applicant in advance if they think that his case is ill founded or that it has no chance of succeeding. If, not withstanding their advice, the applicant says "I still demand justice" in the form of the right to appear before the tribunal, he will have that right. If that is what the hon. Gentleman suggests, the Bill's provisions are superfluous.
  1520
  There is another matter which the House should not overlook. If the wording of the Bill were enacted, it would amount to a denial of natural justice and also there would be no appeal to a higher court, except on a point of law. The only appeal from a tribunal is to the employment appeals tribunal on a point of law.
  I apologise for continuing with my remarks for very much longer than I had originally intended, but there are two other points to be considered. One criticism of tribunals in the past—I am glad that it has not been expressed today—relates to the so-called legalism of the industrial tribunal. There has been an increasing tendency for parties before such tribunals—and usually it is the respondent who takes this course—to use lawyers. This adds to the cost and the time element and points to the necessity to employ lawyers. The more one has to use lawyers, the more one gets away from the informality that one seeks. This procedure is set out in clause 1 (5) and can only add to that legalism. I refer, for example to the requirement to submit matters in writing—which will have the effect that the meaning of certain provisions will be brought into question. Therefore, there will be a feeling of caution in submitting written application.
  I am anxious that we should provide a judicial system in this sphere which is not only informal and inexpensive for the applicant but which should not be over-burdensome in its administrative apparatus. What the Bill proposes could only add to administrative burdens and, indeed, to the bureaucracy of the tribunal system.
  I know that I have spoken for rather longer than I intended, and I shall bring my remarks to a close. I have never denied that legislation passed to deal with labour relations has done anything other than add to the burden on employers. Of course it has. It has been a pretty heavy burden in a short period of time. This was inevitable because many of these requirements were long overdue if we wanted to change the industrial relations climate. However, at the same time we cannot overlook the need to try to provide a proper balance between a clear recognition that we should not overburden

  1521
  employers and, on the other hand, the feeling that we should not deny fair play and justice to working people.
  We are not insensitive to the criticisms that have been made—some of them, I think, unfounded—about the tribunal system generally and the way in which it has worked in unfair dismissal cases. The presidents of the tribunals have discussed with me the fact that they have been looking very carefully at the criticisms to see which are well founded. They are as anxious as anyone else to see the system working effectively and efficiently. They have given very much thought to ways in which the procedures of tribunals can be refined and improved and they have put suggestions to me. We shall consider those suggestions very carefully.
  We know that small employers have had familiarisation problems. We tried to respond by producing a further—I think very useful—guide for employers about the individual's employment rights. My Department is at present working on a guide on the unfair dismissal provisions aimed specifically at the small employer.
  I believe that the proposals before the House are part of a wider, more sustained and orchestrated attack by the Conservative Party on industrial tribunals. I am sometimes appalled at the way in which Opposition Members cast aside their inhibitions about attacking industrial tribunals in a way that they would never dream of doing with any other judicial body. The tribunals have members drawn from both sides of industry. Nearly all the decisions are unanimous.
  Mr. David Mitchell: Where?
  Mr. Walker: The hon. Member for Basingstoke knows as well as any hon. Member in the House that the tribunals consist of a legally qualified chairman, one representative of employers and one representative of employees. I am astonished that my remark that the tribunals have members drawn from both sides of industry should be greeted by that kind of reaction. I believe that the tribunals do an excellent job in very difficult circumstances.
  As on so many previous occasions when the Conservatives have attacked the tribunals and the unfair dismissal provisions, there has in the course of the debate, been hardly a shred of compassion
  1522
  or concern for the people for whom the tribunals are provided to deal with unfair dismissal functions. There has been hardly a word of consideration for the dismissed workman or workwoman.
  Mr. Richard Page: should like to know what the Minister's compassion is for the 1½ million unemployed in this country. That is what we are trying to do—to give people a job.
  Mr. Walker: do not know whether the hon. Gentleman was here when I opened my remarks, when I said that I thought it was common ground in the House that we were all concerned about the unacceptable level of unemployment. We all share the belief that we should do whatever is possible to diminish the number of unemployed. However, not one hon. Member has produced a shred of evidence that the measure before the House will in any way add to employment or create one more job. Indeed, a great many people will find it difficult to understand how the passing of a measure that enables an employer to dismiss people more easily, to sack people, will help against unemployment. That will strike many as wholly contradictory.
  Once again I am struck by the lack of concern of Conservative Members for those who may well have been arbitrarily sacked by an employer who, when he sat at the point of dismissal, acted as judge and jury in his own case. No concern has been expressed that when the dismissal occurs there ought to be equity, that the workman at the point of dismissal should have someone speaking on his behalf.
  The Conservative Opposition seem incapable of realising that an applicant to a tribunal who has been unfairly dismissed is, in effect, appealing against what is, all too often, an arbitrary and unilateral judgment that has already been made against him or her by an employer. That is a judgment that can have the most serious consequences for the worker and his family, imposing hardship, perhaps wrecking his career prospects and stigmatising him in the eyes of a prospective employer—to say nothing of the shattering effect that that might have on that individual's morale and self-respect.
  On my reading of the Bill, it would seem that the Opposition are seeking to

  1523
  deny the right to nearly half of the work force of the country to proceed with an appeal against such an experience.
  Several Hon. Members rose—
  Mr. Walker: No, I shall not give way. I am informed that there is plenty of time for further speeches. I have given way very frequently, and I intend to conclude my remarks by pointing out that what the Opposition are seeking to do is to deny a right that Parliament has conferred. They are seeking to deny that right to nearly 40 per cent. of working people who are employed by firms employing 200 people or fewer. So much for the Opposition's remarks about the Government having diminished the opportunity for small firms to flourish, when nearly half of the work force is employed by firms which come within the hon. Gentleman's definition.
  I believe that the Bill has been dropped on this House out of the entrails of Conservative Central Office. That is where it ought to be shoved back, and I ask the House to reject it.
  Mr. A. W. Stallard: On a point of order, Mr. Deputy Speaker. While not wishing to detract from the importance of the Bill we are now discussing—in fact, I may have contributed had I had the chance—I should like to seek your guidance. Following yesterday's mass lobby, many of us got the impression that there would be no attempt to delay discussion on the Licensed Premises (Exclusion of Certain Persons) Bill, which is the next business. In fact, I got the impression that there would be some measure of co-operation because of the widespread support for that Bill. Can I ask you, Mr. Deputy Speaker, for an assurance that even though the debate will be truncated, we shall not be prevented from giving that Bill its Second Reading? In order to safeguard that position, may I now move "That the Question be now put" in respect of this Bill?
  Mr. Deputy Speaker: The Standing Orders of the House confer certain duties, obligations and powers on the occupant of the Chair. However, the one that the hon. Gentleman has requested me to exercise is not one of them. I am not
  1524
  prepared to accept a motion for the closure.
  Before I call the next speaker, I should say that hon. Members may have noticed that the digital clocks are again performing erratically. Therefore, with the permission of the House, I shall ask the Serjeant at Arms to have them switched off.
  3.17 p.m.
  Mr. Colin Shepherd: I am grateful to have caught the eye of the Chair at this late hour on what is a very important subject. I first declare an interest in that I am an employee of a company which would fall within the scope of the Bill. In fact, I derive a certain part of my income from my activities in that company. At the same time, I believe that it gives me first-hand knowledge of the thinking and the psychology that lies behind the Bill.
  Having said that, I express my anguish at the negative, complacent and condescending attitude of the Minister. He adopted a total "know-all" approach. I should like him to reconsider his approach to the employment question. After all, he is supposed to be the Minister of State for Employment, not unemployment. Will he carefully bear that in mind before he condemns out of hand a valuable contribution to the whole question of unemployment?
  I must ask one question of the Minister. Has he ever been unemployed?
  Mr. Ian Gow: He will be soon.
  Mr. Shepherd: That is a hope which can be expressed, but I personally do not wish to be vindictive.
  Mr. Harold Walker: Since the hon. Gentleman asked me, my father endured unemployment for a significant part of the 1930s. Therefore, I know about unemployment at first hand in that regard. Even more, I suffered unemployment myself, because I was sacked by an employer—one of the major companies of this country—for trade union activities. I was blacklisted and had to leave my home in Lancashire to find employment in London. Therefore, I think that I speak from somewhat closer first-hand knowledge than do the hon. Gentleman and some of his colleagues.
  Mr. Shepherd: I am grateful to the Minister for enlightening us. That possibly gives us some background as to the reason for his Pavlovian reaction under certain circumstances.
  I, too, have been unemployed. I have also been in the situation of not being able to get a job. I had to tramp the streets of Montreal, where there was no back-up of social security and unemployment benefit, wondering where next week's rent would come from. Therefore, I am very anxious that we should not dismiss out of hand a constructive attempt to develop an additional avenue of employment which the Bill brings before the House. We should not forget that this is an additional avenue of employment.
  Why is it necessary to have such an additional avenue? The Employment Protection Acts have the effect of putting a sort of Fort Knox complex on the question of employment. The attitude seems to be that if a man has a job he has it like a gold brick, and the chances are that if he keeps his nose clean—even if, unlike a gold brick, his value drops—he stands a chance of retaining that job.
  That is fine for those who have the jobs. But those who do not have the jobs are standing outside Fort Knox looking in. I am anxious to open another door into Fort Knox, which would provide individuals with an opportunity of proving themselves.
  I went around the streets in Montreal asking employers to give me a job. They said "What experience have you got?" I said "None. I want a job to get experience." It was the old Catch 22 situation, which has been explored in this House many times. Eventually I got a job, and I was very relieved. To some extent I was indebted to the person who gave me that chance.
  Let employers have the confidence of being able to offer a job on a limited contract. "Probationary" was the term mentioned by my hon. Friend the Member for Oswestry (Mr. Biffen). It is the temporary, additional element that is needed, so that the chap has a chance to prove himself. The chances are that if the chap is taken on, does a good job and is integrated into the team—be it a small team in a small business or a team in one of the size of that with which I am connected, about 170 employees—if he contributes and
  1526
  pulls and is part of it, the employer himself will not want to release him at the end of his contract, and he will be offered a full-time contract.
  It may be said that this matter is taken care of adequately within the six months. But that is not so. The personalities of people acting in the smaller environment do not necessarily come to fruition in terms of the judgment of their fellow men and of how people get on with them until some substantial period after the six months. The Bill raises this most important point. We need to extend for this class of business the opportunity to provide this opening for people to come in and take part constructively.
  The additional side of this matter is that in his remarks the Minister said that people do not understand the Employment Protection Acts and that they can be dismissed for normal causes. I cannot remember the Minister's exact words, but he indicated that it was not widely understood among employers how the Acts worked. I think that it is widely understood, but employers are very much concerned that they may fall foul of one of the myriad provisions of the Acts and thereby land themselves in a tribunal. Therefore, their natural reaction is to say "Do I actually need to replace Joe Bloggs when he retires?" I think that the Minister will agree that what has been happening is that when retirement or natural wastage has been taking place, the employer generally has said "Can I make a process change, an organisational change? Do I actually need to replace this person?" Very often, the answer has been "No."
  That has had two effects. One effect is that someone who could have had a job does not have one. The other effect is that the organisation is, perhaps, that much more efficient. On the one hand, it is disappointing; on the other hand, I think that it is laudable that the work should be made that much more efficient, with no excess manpower. However, this is a negative approach for a company to adopt, because a company should be looking to see how it can grow and develop, and should be looking for new people and new talent the whole time.
  The Bill provides an avenue by which an employer can have a little more confidence in looking about him to see what

  1527
  is on the market. That is most important. Let the Minister reappraise his attitude to this part of the Bill. As I have said, there are advantages to both sides. There are advantages to management, in that it would have an additional dimension to its thinking as to how it tackles a specific problem. An export order has been mentioned. Computerisation is another example. There may be design problems and design change problems, and additional difficulties that sometimes need short-term help.
  There are advantages to employees. This little bit of confidence that is given opens up new avenues of experience for them. At present there are expensive programmes which have been partially beneficial. There are the work experience programme and the small firms employment subsidy. This assistance costs taxpayers' money, which must be earned by the wealth-creating sector. But the move suggested in the Bill involves no taxpayers' money. It offers to the employee or potential employee the chance of getting his foot in the door and proving himself.
  I mentioned the Pavlovian reaction by the Minister. He seems to feel that the tribunals have been under attack. I have listened to every speech with great interest and I have not heard an attack on the tribunals, although there may have been an attack indirectly by the Minister. I pay tribute to the work done. The Bill attempts to overcome the specific point raised by smaller enterprises, which is the time and resources spent in dealing with tribunals. It is not time wasted, but it is detrimental to the enterprise. A company is involved in training activities of all its staff, and its employees are away long enough without being away for a day or two awaiting a tribunal.
  If the option in the Bill is not correctly drafted, there will be an opportunity in Committee to get it right. But the option is valuable and should not be dismissed out of hand as the Minister tried to do. The Minister has the massive resources of the Department of Employment and can consider constructive amendments to satisfy the broad principles of the Bill. If that is done in Committee, it will be a valuable contribution to the whole question of employment. I hope that the House gives the Bill a Second Reading.
  3.27 pm
  Mr. Ivan Lawrence: This is another example of the Government being so blinded by party political mythology that they are incapable of seeing what is good for the nation. Furthermore, we have heard that the Minister had an unfortunate experience that has left him with a chip on his shoulder, which hardly enables him to make an objective decision on the matter in issue in the debate.
  I congratulate my hon. Friend the Member for Surrey, North-West (Mr. Grylls) on bringing forward the Bill, which makes a significant contribution. It hardly lies in the mouth of the Minister, who has been so arrogant in his speech, to pretend that nothing can be done through this Bill when he has been one of those who has presided over 1½ million unemployed. One would think that he had been a success in his period in office. I cannot understand how anyone who genuinely wants to provide more jobs can possibly oppose the Bill. There is a massive amount of evidence that the Employment Protection Act, and especially its unfair dismissal provisions, has caused harm to the availability of jobs. Either hon. Members are out of touch and should look to better contacts with business men in their constituencies or they are deliberately deluding themselves when they say to the contrary.
  A report on people at work was produced by the all-party Social Services and Employment Sub-Committee of the Expenditure Committee of this House, of which I am a member. I draw the Minister's attention to paragraph 193:
  "A number of witnesses considered that the Employment Protection Act deters employers, particularly small firms, from taking on staff."
  Quoting a witness, it said:
  "There is a great fear that the Employment Protection Act on occasions stops the small man taking on extra labour at a time when there is a small boom and he does not know how long it is going to be. This, on occasions, restricts the recruitment of labour, I am certain, although I agree with the protection clauses that are necessary."
  The all-party Committee, some of its members hardly friendly to the Conservative Party in this or any other regard, went on to say:
  "Our formal evidence suggested that a number of employers are deterred from taking on extra staff as the result of a mixture of fact

  1529
  and hearsay about the consequences of the employment protection legislation. We also had numerous complaints in off-the-record conversations about the deterrent effects of the Employment Protection Act. Representatives of the Institute of Careers Officers added; 'it is certainly the belief of Careers Officers that smaller employers in particular are now less inclined to take those who cannot show a proved record of employment or in the case of older married women that they are of that sort of maturity. The young person I think is at a disadvantage because of this legislation'."
  That was the evidence received by the Select Committee. That is the sort of thing that the Select Committee put into its report. The evidence is now massive. The Minister cannot say that there is none.
  One of the Minister's objections was that this Bill would make the unfair dismissal situation worse. On reflection, he will see that it is much better to employ people who may run the risk of unfair dismissal than not to employ them at all. That is the view that the unemployed would take. There is also some considerable value in giving someone a temporary job and giving him the opportunity to show that he is worthy of full employment.
  The Minister reiterated that there is no evidence that the Employment Protection Act has diminished employment. But there is evidence in the very report of the Policy Studies Institute, on which the Minister relies, and the Opinion Research Centre poll, which between them cover the broad range of small businesses. The sum total of those two reports shows that one-quarter of small businesses say that they are adversely affected by the Act. I remind the Secretary of State that one-quarter of the number of small businesses is 200,000. If each one of them was to take on one more employee, the Secretary of State would achieve as much in the reduction of unemployment as he claims to have achieved by all his special employment provisions. Therefore, this is a matter of the greatest moment. I beseech the Government to think again about their objections to the Bill. To argue that there is no evidence is plain silly. Apart from flying in the face of their own statistics, they are showing a complete misunderstanding of what actually happens.
  What actually happens is that the Employment Protection Act is the last
  1530
  straw that breaks the camel's back. I read what the president of the Burton-on-Trent chamber of commerce has said:
  "From the employer's point of view, the amount of Governmental legislation is truly horrendous and has probably done harm greater than anyone not closely connected to the administration of it can fully appreciate. It is not just the Employment Protection Act, now commonly referred to as the Employment Prohibition Act, but dozens of other large and small Governmental rules and regulations most of which were ironically passed by the Government of the day under what they considered to be a genuine sense of social conscience for the benefit of some section of the community."
  What actually happens is that managers of firms that were manufacturing and employing a lot of employees have become so fed up with all this legislation that they have gone into the import business, where they only employ a small number of people.
  Therefore, the Government's objections are really fatuous. The hon. Member for Fife, Central (Mr. Hamilton) put his finger on his side of the House's real objection to the Bill. He accused us of pressing this Bill for party political reasons. Even if that were true, is the hon. Member saying that something which is good for the nation should not be supported merely because the Tories are pressing for it? If that is the argument, it would not be supported by the l½ million people who are unemployed and who will be voting at the next election. If it is a good measure, it should be introduced regardless of which side presses for it.
  I fear that the truth is that the only objection to the Bill which has any strength—and it has strength only for Labour Members—is the party political objection. The Labour Party cannot overcome its own mythology: that the employer in a small business is a boss, that he is involved in private enterprise—which the Labour Party hates—and that small businesses do not encourage unions. The unions are the paymasters of the Labour Party and the view is that the strength of the unions should be extended —and that means wiping out the small business sector which does not unionise.
  The Secretary of State's policy of attacking small businesses and the spirit behind the Bill is extremely shortsighted. The public opinion polls give the Conservatives a lead of 20 per cent. I see on the tapes that the cost of living is

  1531
  rising. That will drive up unemployment. Whatever chances the Labour Party may have at the next election will be diminished considerably if it continues to hound the 800,000 small business men in Britain. The Labour Party could gain support by showing some understanding of the problems that face not only the small business men but the 1½ million unemployed.
  I plead with the Secretary of State, for the first time in his career, to show some courage and to put aside his party political bias. I plead with him to think for the first time genuinely of the good of the country and to recognise that his most important problem is the unemployed. By thinking of the unemployed, he will inevitably be driven to support the Bill. I beseech him to think again about those matters.
  3.37 p.m.
  Mr. Richard Page: I support the Bill. I congratulate my hon. Friend the Member for Surrey, North-West (Mr. Grylls) on devising such an ingenious way of possibly persuading the Labour Party to accept a degree of real help for the unemployed without too much damaging the sacred Employment Protection Act. That Act has been referred to as a tablet of stone and Fort Knox. Labour Members defend it with an enthusiasm which has little intelligence behind it.
  Bluntly, the Bill will remove any inhibition to providing employment. Everybody has sympathy with the aims of the Employment Protection Act, but it is relevant only if it aids employment and does not hinder it. In the narrow aspect dealt with by the Bill, that Act does inhibit employment.
  The Bill is being introduced on a nonparty basis. When a person is unemployed, it does not matter in which party he believes. The Conservative Party wants to increase employment.
  When I was a candidate, 1,000 people in my constituency were unemployed. Now that I am a Member and there is a Labour Government, 2,000 people in my constituency are unemployed. I gain no pleasure from that. I want those people to be employed. Therefore, I support any measure that will bring about
  1532
  employment to my constituents and the rest of the country. The Bill is aimed at the smaller business. The Employment Protection Act affects the area where the smaller business man is employed.
  The hon. Member for Fife, Central (Mr. Hamilton) claimed that there was no proof that the Act had inhibited employment. I should like to give at least a crude evaluation of the statistics to show that it does inhibit employment. A recent survey of 800 firms showed that more than 80 per cent. believed that the Act inhibited employment. The organisation that carried out the survey is specifically directed toward the smaller business.
  The Department of Employment produced its own figures through the Opinion Research Centre. If we take the main difficulty to which that survey referred, we see that it came up with 2 per cent. But when it asked a specific question it came up with 24 per cent. to 25 per cent. The survey was of only 300 firms. I accept that there are "Lies, damned lies and statistics", but however one likes to deal with the figures one can extrapolate them into the country and see that there could be more than 100,000 firms that believe that the Act is having an inhibiting effect upon employment.
  That is the worst end of the scale. At the best end of the scale 80 per cent. of the companies believe that there is an inhibiting effect on employment. Therefore, the answer will lie somewhere in the middle, and that affects the employment prospects of hundreds of thousands of people.
  Let us look at the matter in the context of the whole smaller business scene. It is now fashionable to support the smaller business. A few months ago the hon. Member for Rochdale (Mr. Smith), who unfortunately is not present, declared that he was a small business man. It is interesting to see the Labour Party, which is doctrinally committed to the destruction of wealth, bleating for the smaller business. I have no doubt that it will continue to espouse the smaller business cause until the election. It is one of the more amusing sights of Parliament.
  In essence, we see a series of efforts by the Labour Party to woo the smaller business man, not for what he believes in and stands for, or because he happens to be the basis on which this country was

  1533
  founded, but because 6 million people are employed in smaller businesses, and Labour wants their vote to bail it out at the next election. It does not care tuppence for the smaller business man and the self-employed.
  I would have loved to speak more and more about the problems facing the smaller business, but unfortunately the debate must finish at four o'clock. I could go on until 10 o'clock speaking of all the problems, of how money is taken and wasted through various aspects of nationalisation and so on.
  Mr. Deputy Speaker: I advise the hon. Gentleman to do the portion of his speech from four o'clock until 10 o'clock in his own home.
  Mr. Page: I should like to re-emphasise to the House and particularly to Labour Members—
  Mr. Robert Rhodes James: There are only two here.
  Mr. Page: —that we have 1½ million unemployed. There are several hundred thousand people in job creation projects. The demanning that has taken place in the nationalised industries has gone to excessive numbers. We have only to look at the figures coming through the system now to see that a terrible crop of unemployment will hit the country within the next six to nine months.
  It worries me that the Government are not prepared to give an inch from their doctrinal party view for the benefit of our unemployed. They take their party view right down the line. For my part, I am a pragmatist on employment. I am in favour of whatever will give employment on the right constructive basis so that it will develop and grow.
  Our debate on Tuesday about industry exposed the failings of our present system, with the direction of money into our industries. It is a sad fact that practically every time since the Second World War when they have come into Government and taken control the Socialists have successfully managed to double the number of unemployed—true friends indeed of the British working man and woman.
  Surely, it must now be realised that we have come to the end of the road in trying to solve our problems through redis-
  1534
  tributive taxation. Now, at the end of a 13-year period, our national output has risen by only one-quarter whereas public expenditure has risen by over two-thirds. We must go back to the smaller businesses, to the free enterprise society, to give ourselves the better conditions of life and, in turn, the better hospitals, the better education system and the better social services which the country needs. We must encourage the self-employed, the small business and the entrepreneur, because we want their money coming into our gross national product.
  I shall not go into what is happening in the EEC, save to say that its smaller business sectors are far more successful than is ours. As has been said, it needs only each smaller business to double its activities and take on one more person—there are 1¼ million companies in this country —for the unemployment problem under a Socialist Government to disappear. We shall then be on the way to productivity and success. The productive hands of the real workers of this country are tied by the strands of many layers of legislation. My hon. Friend's Bill is a means of slackening one of those strands. I hope that the House will lay aside party differences and support it.
  3.47 p.m.
  Mr. David Mitchell: We should all be grateful to my hon. Friend the Member for Surrey, North-West (Mr. Grylls) for having introduced a Bill which can do something to help in the problems of small businesses which want to grow, which want to take on more labour, but which are prevented from so doing by the employment protection legislation.
  My hon. Friend has recognised that small businesses are the key to jobs. Regrettably, the Minister of State has not done so in the same way. They are the key to jobs for this reason. In the business world there is a life cycle rather like the human life cycle. Firms grow old, grow tired and eventually die, and their place should be taken by the young, thrusting and vigorous. Inevitably in that business cycle of ageing, death and replacement, there is unemployment as firms die, and if there are barriers to the birth and growth of new businesses to take their place, there will be a constantly rising level of unemployment, just as we have seen during the life of the present Government.

  1535
  I curse unemployment not just for the social consequences which create such understandable anxiety for those involved but for its economic consequences. Unemployment means that we have people not producing and resources not being created in a country which is desperately short of the resources that it needs. In my constituency, for example, there is a major district general hospital desperate for more resources, desperate for the opportunity to open more beds and be able to deal with many more than merely emergencies. More resources are required, yet nationally fewer resources are being created through the present pattern of growing unemployment.
  The Government's record on unemployment is deplorable. I shall not describe the Minister as the Minister for Unemployment and say that he is unemployable, but I am surprised and amazed at the degree of satisfaction which appears to come out of his Department too often and the failure to recognise that the doubling of unemployment in so short a time will not be forgiven by the people of this country. I do not suggest that it is a case of hard hearts. It is more a case of soft hearts and soft heads to go with them. They wring their hands but they do not do anything which will actually help.
  The central problem is that the Government dislike unemployment but that they dislike employers more. They want investment but they dislike and mistrust investors. They want a dynamic economy but they destroy the whole basis of it with their high taxation policies.
  My hon. Friend the Member for Surrey, North-West has brought in a modest Bill which can do something to help in this area. All we have heard has been a most cynical reception from the Government Benches and no indication that they will allow the measure to go through to the Committee stage. The Minister said that no evidence had been produced in the debate to show that the Employment Protection Act was losing jobs. My hon. Friends have referred to the evidence of the Minister's own inquiries. But the massive resources of the Government covered only 300 firms. Even the voluntary Small Business Bureau, of which I am chairman, has conducted a
  1536
  survey of over 800 firms. The firms questioned were clear that the Employment Protection Act had had a significant result. The question asked was "How significant is the Employment Protection Act to your business in terms of jobs now and your plans for the next couple of years?" The answers were: of no significance, 3.25 per cent.; of marginal significance, 14 per cent.; a significant factor, 38 per cent.; and a major deterrent to more jobs, 40·87 per cent.
  Those figures not only support the evidence of the Minister's own inquiries but reaffirm it over a much wider sample. It was more than double the size of the Minister's own sample. How on earth can the Minister come to the Dispatch Box and say that there is no evidence that the Employment Protection Act is losing jobs?
  We on this side of the House recognise the need for civilised procedures to deal with the problems of unfair dismissal. In the old days, there was no means of redress in the event of unfair dismissal other than strike action by one's workmates to get oneself justice. There should be some civilised procedure for redress. It was put into the Industrial Relations Act 1971 by the Conservative Government. We need a civilised alternative to strike action. The Minister was trying—
  Mr. Harold Walker: I only want to take up the point that the hon. Gentleman is labouring about the credibility of a survey based on a relatively small sample, as he described it. Is he suggesting that public opinion polls on political and other issues based on a sample of 2,000 out of an electorate of 39 million have no credibility?
  Mr. Mitchell: I suggest that a survey based on 2,000 firms has considerably more credibility than one based on 300. I suggest that the survey that I have in my hand based on about 800 firms has a great deal more credibility than the survey of 300 to which the Minister referred.
  Mr. Nicholas Winterton: Is it not true that far too few Labour Members have any experience of smaller businesses and very few of them have ever had to meet a wages bill at the end of the week? Therefore, their understanding

  1537
  of running a company is extremely limited.
  Mr. Mitchell: We all agree that the Act is not working in the way that Parliament intended. For example, if a person becomes unemployed he goes to the labour exchange to sign on for the dole. The first question that he is asked is whether he properly and fairly lost his job. If a person has been properly and fairly dismissed, there is at risk the first few weeks of unemployment benefit. Therefore, the applicant immediately says "Of course I was unfairly dismissed". That enables him to collect his dole money.
  When those questions have been dealt with, the person is handed a form to make a claim for unfair dismissal. He discovers that it does not cost him a bean. The Secretary of State has put the matter extremely succinctly. He referred to a jackpot. I use his exact words. He said:
  "usually where a rare jackpot of circumstances have come up on the industrial relations fruit machine the median award for unfair dismissal is … ".
  That is the truth. It is a fruit machine. However, there is the big difference that when I want to play a fruit machine I have to put in money, but if someone is properly and fairly dismissed he can play the fruit machine of the tribunal without putting up any money. He has the opportunity of receiving anything up to £11,000-odd. That might be the result if he was employed by a small business that had not understood the small print of the Act and had gone the wrong side of the legislation.
  The internal bureaucracy of a large firm will ensure that it does not go the wrong side of the Act. It may even be easier for a large business to dismiss employees than it was before the Act appeared on the statute book. However, small firms do not have large internal bureaucracies. They may have gone the wrong side of the line. When they dismiss employees, they may find that because they have failed to comply with the procedures the right hon. Gentleman's jackpot has been won and they have to pay thousands of pounds.
  The existence of that risk or threat is why so many small employers are not taking on new workers when they could, when they should and when it is in the national interest that they should do so. For that reason my hon. Friend is right to introduce the Bill and to give the House the opportunity to do something practical to help those who are unemployed. At the same time, the Bill will help the small business sector to grow and to create the jobs that we all want and which the small firms sector has the ability to produce.
  Mr. Grylls Mr. Grylls rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the Bill be now read a Second time:—
  The House divided: Ayes 159, Noes 37.

  Division No. 81]

  AYES

  [3.58p.m.

  Adley, Robert

  Clark, William (Croydon S)

  Goodhew, Victor

  Aitken, Jonathan

  Cockcroft, John

  Grant, Anthony (Harrow C)

  Alison, Michael

  Cope, John

  Grey, Hamish

  Amery, Rt Hon Julian

  Costain, A. P.

  Griffiths, Eldon

  Arnold, Tom

  Dodsworth, Geoffrey

  Grist, Ian

  Atkins, Rt Hon H. (Spelthorne)

  Douglas-Hamilton, Lord James

  Grylls, Michael

  Baker, Kenneth

  Drayson, Burnaby

  Hamilton, Archibald (Epsom & Ewell)

  Banks, Robert

  Durant, Tony

  Hamilton, Michael (Salisbury)

  Bell, Ronald

  Dykes, Hugh

  Hampson, Dr Keith

  Bendall, Vivian

  Emery, Peter

  Hannam, John

  Bennett, Sir Frederic (Torbay)

  Eyre, Reginald

  Haselhurst, Alan

  Bennett, Dr Reginald (Fareham)

  Farr, John

  Hastings, Stephen

  Benyon, W.

  Fell, Anthony

  Hawkins, Paul

  Berry, Hon Anthony

  Fisher, Sir Nigel

  Hayhoe, Barney

  Biffen, John

  Fookes, Miss Janet

  Higgins, Terence L.

  Biggs-Davison, John

  Forman, Nigel

  Hodgson, Robin

  Bowden, A. (Brighton, Kemptown)

  Fowler, Norman (Sutton C'f'd)

  Hooson, Emlyn

  Braine, Sir Bernard

  Fox, Marcus

  Howe, Rt Hon Sir Geoffrey

  Britten, Leon

  Fraser, Rt Hon H. (Stafford & St)

  Howell, David (Guildford)

  Brooke, Hon Peter

  Freud, Clement

  Hunt, David (Wirral)

  Brotherton, Michael

  Fry, Peter

  Hunt, John (Ravensbourne)

  Bryan, Sir Paul

  Galbraith, Hon T. G. D.

  Hutchison, Michael Clark

  Budgen, Nick

  Glyn, Dr Alan

  James, David

  Burden, F.A.

  Godber, Rt Hon Joseph

  Jessel, Toby

  Carlisle, Mark

  Goodhart, Philip

  Johnson Smith, G. (E Grinstead)

  Jopling, Michael

  Normanton, Tom

  Spicer, Michael (S Worcester)

  Kershaw, Anthony

  Onslow, Cranley

  Stainton, Keith

  Kitson, Sir Timothy

  Osborn, John

  Stanbrook, Ivor

  Knox, David

  Page, John (Harrow West)

  Stanley, John

  Lamont, Norman

  Page, Rt Hon R. Graham (Crosby)

  Stewart, Ian (Hitchin)

  Langford-Holt, Sir John

  Parkinson, Cecil

  Stradling Thomas, J.

  Lawrence, Ivan

  Percival, Ian

  Taylor, R. (Croydon NW)

  Le Marchant, Spencer

  Price, David (Eastleigh)

  Tebbit, Norman

  Lester, Jim (Beeston)

  Pym, Rt Hon Francis

  Temple-Morris, Peter

  Lewis, Kenneth (Rutland)

  Raison, Timothy

  Thomas, Rt Hon P. (Hendon S)

  Luce, Richard

  Rathbone, Tim

  Thorpe, Rt Hon Jeremy (N Devon)

  Macfarlane, Neil

  Rees-Davies, W. R.

  Townsend, Cyril D.

  MacGregor, John

  Renton, Rt Hon Sir D. (Hunts)

  Trotter, Neville

  Macmillan, Rt Hon M. (Farnham)

  Renton, Tim (Mid-Sussex)

  Vaughan, Dr Gerard

  McNair-Wilson, M. (Newbury)

  Rhodes James, R.

  Viggers, Peter

  Marshall, Michael (Arundel)

  Rhys Williams, Sir Brandon

  Wakeham, John

  Marten, Neil

  Ridley, Hon Nicholas

  Walker, Rt Hon P. (Worcester)

  Mates, Michael

  Rldsdale, Julian

  Wall, Patrick

  Mather, Carol

  Rodgers, Sir John (Sevenoaks)

  Walters, Dennis

  Maxwell-Hyslop, Robin

  Rossi, Hugh (Hornsey)

  Weatherill, Bernard

  Mayhew, Patrick

  Rost, Peter (SE Derbyshire)

  Wells, John

  Miscampbell, Norman

  Sainsbury, Tim

  Whitney, Raymond

  Mitchell, David (Basingstoke)

  Scott, Nicholas

  Winterton, Nicholas

  Moate, Roger

  Shaw, Giles (Pudsey)

  Wood, Rt Hon Richard

  More, Jasper (Ludlow)

  Shelton, William (Streatham)

  Young, Sir G. (Ealing, Acton)

  Morrison, Hon Charles (Devizes)

  Shepherd, Colin

  Morrison, Hon Peter (Chester)

  Shersby, Michael

  TELLERS FOR THE AYES:

  Nelson, Anthony

  Sinclair, Sir Geogre

  Mr. Richard Page and

  Neubert, Michael

  Smith, Timothy John (Ashfield)

  Mr. Ian Gow.

  Newton, Tony

  NOES

  Armstrong, Ernest

  Graham, Ted

  Stallard, A. W.

  Atkinson, Norman (H'gey, Tott'ham)

  Grant, John (Islington C)

  Stewart, Rt Hon M. (Fulham)

  Barnett, Guy (Greenwich)

  Hamilton, W. W. (Central Fife)

  Summerskill, Hon Dr Shirley

  Booth, Rt Hon Albert

  Heffer, Eric S.

  Tilley, John

  Brown, Ronald (Hackney S)

  Horam, John

  Walker, Harold (Doncaster)

  Cocks, Rt Hon Michael (Bristol S)

  Janner, Greville

  Ward, Michael

  Cox, Thomas (Tooting)

  Kaufman, Rt Hon Gerald

  Williams, Rt Hon Alan (Swansea W)

  Davis, Clinton (Hackney C)

  Kerr, Russell

  Williams, Alan Lee (Hornch'ch)

  Deakins, Eric

  McCartney, Hugh

  Wrigglesworth, Ian

  Dormand, J. D.

  Marks, Kenneth

  English, Michael

  Molloy, William

  TELLERS FOR THE NOES:

  Ennals, Rt Hon David

  Ogden, Eric

  Mr. Alf Bates and

  Fraser, John (Lambeth, N'w'd)

  Parker, John

  Mr. James Tinn.

  Golding, John

  Price, C. (Lewisham W)

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

LICENSED PREMISES (EXCLUSION OF CERTAIN PERSONS) BILL
Read a Second time.
Bill committed to a Committee of the whole House.—[Mr. Anthony Grant.]
Committee upon Friday next.

CUSTOMS AND EXCISE AND INLAND REVENUE APPEAL TRIBUNALS BILL
Order for Second Reading read.
Hon. Members: Object.
Mr. Deputy Speaker (Sir Myer Galpern): What day? No day named.

NATIONAL INSURANCE (INDUSTRIAL INJURIES) (AMENDMENT) BILL
Order for Second Reading read.
Hon. Members: Object.
Mr. Deputy Speaker: What day? No day named.

REPRESENTATION OF THE PEOPLE (ARMED FORCES) BILL [Lords]
Order for Second Reading read.
Hon. Members: Object.
Second Reading deferred till Friday 9 March.

PICKETING BILL
Order for Second Reading read.
Hon. Members: Object.
Second Reading deferred till Friday next.

CHILDREN AND YOUNG PERSONS ACT 1969 (AMENDMENT) BILL
Order read for resuming adjourned debate on Second Reading [9 February].
Hon. Members: Object.
Mr. Deputy Speaker: What day? No day named.

HERITAGE AID BILL
Order for Second Reading read.
Hon. Members: Object.
Second Reading deferred till Friday next.

HOMEWORKERS (PROTECTION) BILL
Order for Second Reading read.
Hon. Members: Object.
Second Reading deferred till Friday next.

PUBLIC BODIES (APPOINTMENTS) BILL
Order for Second Reading read.
Hon. Members: Object.
Second Reading deferred till Friday next.

WORKERS' FREEDOM BILL
Order for Second Reading read.
Hon. Members: Object.
Second Reading deferred till Friday next.

CONFIRMATION TO SMALL ESTATES (SCOTLAND) BILL
Read a Second time.
Bill committed to a Committee of the whole House—[Mr. Michael Clark Hutchison.]
Committee upon Friday next.

SECONDARY PICKETING (ABOLITION) BILL
Order for Second Reading read.
Hon. Members: Object.
Mr. Deputy Speaker: What day? No day named.

STATUTORY INSTRUMENTS, &c
Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c).

EXPORT GUARANTEES
That the draft Export Guarantees (Extension of Period) Order 1979, which was laid before this House on 26th January, be approved.—[Mr. Thomas Cox.]
Question agreed to.

HOUSING, RATES AND EMPLOYMENT (LAMBETH)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thomas Cox.]
4.14 p.m.
Mr. William Shelton: I am grateful for the opportunity of having this Adjournment debate to raise a matter of some concern in the area of Lambeth in which lies my constituency. I shall refer particularly to the housing policy in Lambeth and its effect on rates, house prices, unemployment and homelessness. I shall then urge on the Government what action I think might be taken to improve the situation at least in the medium term, though nothing can be done this year.
I shall describe, very briefly, the current situation that pertains in the borough. During the council elections in May of last year I put a question to the Prime Minister. I asked him whether he was aware of the Left-wing extremists standing as members of the official Labour Party in the borough of Lambeth. I told him that the then Labour leader of Lambeth had described the situation, if the result was satisfactory for that group of Left-wing extremists, as a Marxist dictatorship. I do not know whether or not there is a Marxist dictatorship in the borough, but what I do know is that we have a rogue council in that borough.

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In an article in the Evening Standard, a statement was made that
"the People's Republic of Lambeth have effectively declared UDI."
As a result of the borough elections last year, we have had a victory for "entryism", by which I mean Left-wing extremists who adopt the guise of Labour Party candidates and win power through the Labour Party.
Indeed, the leader of Lambeth council, Ted Knight, was, I understand, expelled from the Labour Party for about 10 years and was a full-time working member of the Socialist Labour League, which is now known as the Workers' Revolutionary Party. On London Weekend Television recently he was asked if his views have changed since those days and he said, I understand:
"My views have not changed. The Labour Party's views have changed."
It was a victory, last year, for damaging Left-wing dogma and for the profligate spending of ratepayers' money and a defeat for prudence and good sense for those who live in the borough of Lambeth. It is a salutary warning of what might happen to Britain if Left-wing extremists in the Labour group were as successful in Westminster as they have been, unhappily, in Lambeth.
It is to the housing policies of the present Lambeth council that I wish to refer, and especially its policy of municipalisation. I should also like to point out where the Government could intervene in the future. My understanding is that Lambeth plan to spend about £60 million on housing acquisition over the next five years. The great majority of that housing will need renovation and it could perhaps be estimated that another £20 million will go on this cause over the next five years, bringing the total to £80 million.
This money will, of course, come from the Government, but part of the interest and the debt charges will fall on the people of Lambeth. At 10 per cent., we are then talking about the sum of some £8 million per year.
This extraordinary plan to nationalise houses in Lambeth has already had certain results. House prices have been rising in the borough in an extraordinary
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way. A local estate agent was quoted in the local paper as having said:
"The council is putting in cash offers for almost every vacant property coming on to the market and squeezing out ordinary buyers. They seem to be backed by unlimited funds."
It was brought to my attention that a block of flats bought by a property company last year for £120,000 was sold to Lambeth council four months later for £170,000. It showed little prudence in the Council's management when it gave a profit of £50,000 over four months in an area which obviously it must know well.
In addition, marauding bands of people are moving into Croydon, Wandsworth and other boroughs, buying up for Lambeth properties in those neighbouring boroughs. It is a new sort of imperialism, as we have seen in Cuba, whose troops were sent into Africa or South America to spread the revolution. I ask the Minister to tell us at what time and on what date, and by what legislation, boroughs were in fact given powers so to do, because it must be a given power. I have been unable to find by what power the borough council can buy up properties outside its own territory without the agreement of the borough in which it is buying it.
Incidentally, Lambeth has spent £60,000 on a promotional campaign advertising its wish to buy up properties. As a result—according to figures produced by the Halifax Building Society—from 1 July 1978 to 1 October 1978, average house prices in the whole of London rose by £1,698, from £20,899 to £22,597, whereas in the Streatham area the rise in the same period was £3,500, from £21,600 to £25,100. These are average prices of properties in respect of which a mortgage was applied for to the Halifax Building Society.
On course, this was a consequence of the profligate buying of private property by the council. The result in human terms is much more damaging. It makes it much more difficult for young married people to buy their first home when they are bidding against a council which uses ratepayers' money. The disturbing and distressing case of a Mr. and Mrs. Wilson was reported in the local newspapers. They decided to buy a maisonette,

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applied to Lambeth council for a mortgage, and sent their fee. Two months later, the fee was returned without any explanation, and at that time without an apology. On inquiry they found that the council itself was buying the maisonette that they had agreed to buy.
The results in respect of unemployment are much more difficult to quantify but they are also very disturbing. As the Minister knows, Lambeth has an unemployment problem. I understand that there are 10 unemployed people for every job. That is not satisfactory. Half of those unemployed are under 30, and half are coloured. The difficulty is that there is a mismatch of skills in the borough. Most of the unemployed are unskilled, and there is an acute shortage of skilled workers.
Indeed, the Lambeth council housing investment programme stated that between 1971—when the Conservative council left office—and 1975 the borough lost 27 per cent. of its total of skilled workers. We know that it is the skilled workers who want to buy their own homes. It is the potential small employer who wishes to buy his own home. It is the wealth creators who wish to buy their own homes. All these people will find greater difficulty as the result of the environment that has been created by the policies of Lambeth council.
As The Economist said a few weeks ago:
"Tracts of London risk becoming homogenous Council fiefdoms. It is insanity providing more accommodation for the unskilled, where job opportunities are declining …"
Therefore, it is not only a rogue council; if The Economist is right, its policies verge on insanity.
The consequences of these policies also fall on costs and efficiency. The council officers with whom I have had dealings are extremely efficient, courteous, excellent men and women who do their job well. But because of their political masters, they are unable to assimilate the vast influx of new properties that are pouring in on them. Part of the consequence is that Lambeth council is gaining a reputation as an extraordinarily bad landlord.
In answer to a question on 13th December, it was stated that 2,650 empty homes in Lambeth were owned by Lam-
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beth council. That is 9 per cent. of the housing revenue account's stock. It is the equal highest percentage of empty homes owned by any of the 32 London boroughs.
It may be argued that Lambeth has more special problems than all the other London boroughs, but I draw the attention of the Minister to Wandsworth, which is next door. Wandsworth is very similar, demographically, with many of the same problems. It has only 4 per cent. —not 9 per cent.—of housing stock empty, and only 1,050 as compared with Lambeth's 2,650. This must be an indictment of the management of the Lambeth housing policy, because of the influx of homes it has coming in through its municipalisation programme. Yet the council admits that it has a waiting list of 13,000 families.
When people come to me desperate for a house and give me lists and lists of empty houses, houses that have been empty for one year or two years—I could take the Minister and show him a council flat that has been empty for four years —I find it extremely difficult to explain this to my constituents.
Again, as regards council rents unpaid, Lambeth has the second worst record of all the 32 London boroughs—9 per cent. The rent owing is over £1 million. Last year it rose to £1·7 million. It represents 9 per cent. of total rents payable. Wandsworth's figure was £700,000 two years ago. Wandsworth lies ninth as opposed to Lambeth's second place. I would add that Wandsworth is a Conservative-controlled council now.
As for repair expenditure, Lambeth's figure is the highest of all the boroughs. In supervision and management costs, it is the third highest of all the boroughs. Repairs are slow. I am afraid that the council is indeed a thoroughly bad landlord. As municipalisation advances, the situation can only get worse and worse. The geographical spread of the houses that the council is buying, for instance, in other boroughs, as I have mentioned, must bring extraordinarily difficult problems of housing management and repairs. The council's teams will have to travel much further than good housing management would call upon them to do. The lack of standardisation in property will raise increasing problems for them.

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Therefore, the council is piling problem upon problem by pursuing this policy.
As a result, we have the rates problem. We know that the right hon. Gentleman the Secretary of State for the Environment expressed the hope that rate increases would remain within single percentage figure this year. Lambeth has an intended rate rise of 37½ per cent. In that figure, I understand, there is only 5 per cent. reserve for a settlement with the public employees. If one adds another 10 per cent., one is probably talking about something like a 45 per cent. increase. I understand that Councillor Knight is quoted in the Evening Standard as saying that this is inevitable in inner London boroughs, which will face the same problems. I draw the Minister's attention to Wandsworth, next door, a Conservative-controlled council, where the rate increase is provisioned at between 3 per cent. and 4 per cent. If there is a high settlement with the public employees, it might rise to about 10 per cent. or 11 per cent.—about one-third of that of Lambeth.
I saw in the newspapers yesterday that the Inner London Education Authority is pegging its rates and that the GLC's rise is about 11 per cent. or 12 per cent. Indeed, Lambeth council has said that it needs 28 per cent. just to maintain its existing services. How it can possibly say that when the rate of inflation has been 7 per cent., 8 per cent., or 9 per cent., I do not know. Again, it must be profligate spending. The council has not helped the situation by freezing council rents, although the average council rents are the lowest of all those of any council in London, bar two. It is a cynical political move to create a fiefdom to vote Labour at the expense and cost of the mass of ratepayers.
Such rate increases as I have been talking about bankrupt or drive out businesses and shops, discourage new employment and seriously burden those in the community least able. We know that whilst there is provision for supplementary benefits and for rent and rate rebates, many people who desperately need them do not take advantage of them, through pride or through ignorance. Therefore, this burden must fall on these people. Indeed, a petition was launched a week or so ago. I do not know how many people
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have signed it now, but within three days it had gathered 6,000 signatures, and in the High Road people were queuing 20 to 30 deep in order to put their names to it. It will be presented on 21 March, which is the final day for the rate decision.
A meeting of ratepayers proposed for next week or the week after has had to be moved to one of the largest halls in the area because the audience will be so large.
The situation is all the more bitter because the Lambeth councillors have just voted themselves a pay rise. They are including party meetings as eligible for pay. The Tories on Lambeth council voted against this, as did a splinter group of Labour councillors. The Tory-controlled Wandsworth council next door rejected the proposal outright and has frozen pay. This is a warning to the country that if Left-wing extremists in the guise of Labour Party supporters gain in Westminster as they have in Lambeth the whole country could suffer as Lambeth is suffering.
Now what can be done? There will be council elections in 1982. There is a by-election on 8 March, when the voters will doubtless show their feelings. Public indignation may have an effect within a year, but I urge the Government to see whether they can take powers to treat block 1 of the housing investment programme differently. The housing investment programme consists of bids that local councils put in to central Government. It is divided into three blocks. The first is for new house building, slum clearance, improvements to local authority dwellings and municipalisation. Lambeth applied for £61 million and was awarded £47 million. Blocks 2 and 3 are for similar projects of smaller amounts. Lambeth had a shortfall of £13 million. I understand that it has said that, come what may, it will not reduce its municipalisation programme. I understand that it is taking money from block 2, extending tolerances and anticipating from next year. In reply to its application for the programme, the Department of the Environment wrote that
"If the amounts for block 1 and 2 are less than seems necessary, the council is asked not to alter its new building programme nor its conversion and rehabilitation programmes."
Lambeth has not followed the advice given by the Department and has altered those programmes. If it is spending £14½

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million on municipalisation in the first year, that must be so.
I urge the Government to take powers in future to determine block 1 applications in detail, percentage by percentage, and not as a total. If the Government are lending such great sums of money, they should have more control over the way in which the money is spent. Block 1 is far too indeterminate. The Government should see how this can be done in the future. There should be a percentage on each item in the block 1 application. I hope that the Government will take heed and the country be warned by what is happening in Lambeth.
4.33 p.m.
The Under-Secretary of State for the Environment (Mr. Guy Barnett): The hon. Member for Streatham (Mr. Shelton) used a number of epithets to describe the present leadership of the Lambeth borough council, including "Left-wing extremists". He used the word "revolution". He described its policy as nationalising housing, which is a misnomer. But I propose to make no comment on that.
I listened carefully to what the hon. Member said. He drew attention to some aspects of the housing policy of the Lambeth borough council, but he did not paint the whole picture. That is surprising, as he represents one of the constituencies there. He should know that the borough has some of the worst housing problems in London, if not in the country. My Department's estimates show a total of some 105,000 households living in 95,000 occupied dwellings. Of those households, at least 15,000 are sharing accommodation, often in overcrowded dwellings. Over 22,000 are either lacking or do not have exclusive use of one or more basic amenities such as hot water supply or inside toilet. Many, such as the elderly and families with young children, are living in accommodation which is quite unsuitable for their needs.
Despite large-scale redevelopment programmes, almost half of the housing stock in the borough is still more than 60 years old, with the accompanying problems of poor layout, lack of facilities and disrepair. Many of the older estates in the northern part of the borough are cramped and congested. There are serious prob-
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lems of homelessness and squatting. This formidable concentration of bad housing conditions is aggravated by other social and economic disadvantages such as low incomes, unemployment, especially amongst young people, inadequate social facilities, and a poor urban environment. I hope that I do not have to emphasise too strongly the severity of these inner city problems in Lambeth. They should be as well known to the hon. Member and members of his party as they are on this side of the House.
Considerable progress has already been made in dealing with these problems. Since the 1967 house condition survey established their full extent in the borough, the statutory housing authorities and other housing agencies have carried out major programmes of new development, and rehabilitation of estates and individual houses. In addition, the past four years have seen a major expansion in the area improvement programme and the promotion of improvements in the private sector.
Further positive action is required. Lambeth council has made a very strong case, both in direct discussions with the Department on the housing investment programme and through the inner city partnership, for a favourable allocation of resources to enable it to undertake such action. The council has drawn attention to the continuing problems of shortage of suitable rented accommodation, the substantial requirement for extensive improvement and renewal of the housing stock, the need to reduce densities and improve the environment, and the concentration of these and other facets of social and economic stress in the northern part of the borough.
The council has reiterated, in discussions with the Department, that if it is to improve housing conditions and make Lambeth an attractive place in which to live and work, it must tackle vigorously the problems of congestion and urban decay which are evident. It has drawn up a housing strategy which is intended at least to maintain the impetus of current programmes and to arrest any decline in housing standards in the borough. It is the council's belief that the essential part of this strategy must be directed towards the acquisition of houses for immediate occupation by residents moving out of

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areas of housing stress, and the improvement of housing and environmental conditions on its inner city estates.
My Department has discussed Lambeth's housing strategy with the council's representatives as part of discussions held with local authorities countrywide on their housing investment programmes. We have recognised the severity of the housing problems in the borough and the need for effective action to deal with them. This has been reflected in a capital spending allocation of £56·5 million in the coming year.
I hope that I make it clear that we are determined to support the efforts of the authtorities participating in the Lambeth inner city partnership to tackle the economic and social problems in the borough, in which appropriate housing policies must play a crucial role. However, the hon. Member has referred to some very specific aspects of the local situation.
Mr. John Tilley: Before my hon. Friend leaves the general issue of housing, may I ask whether he agrees that Lambeth council is carrying out precisely the housing aspect of the Government's inner city programme that has been supported by both Front Benches? Does he agree that, if the Government are to respond any further to the situation in Lambeth, in order to maintain the excellent housing policies and reduce the rate rise they should give more Government money rather than less, as the hon. Member for Streatham (Mr. Shelton) has suggested?
Mr. Barnett: I agree with my hon. Friend. The needs of this borough are such that one would dearly like to give it more than at present. But my hon. Friend will appreciate the difficulties involved.
There was one rather disturbing aspect in the speech of the hon. Member for Streatham. He asked me to interfere with the housing policies of a local authority. One of the policies that we have been anxious to pursue as a Government is not to interfere more than we need with the housing policies of local authorities, whether they happen to be Conservative or Labour-controlled.
The hon. Member will appreciate that it is not for me to justify the detailed
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policies or financial decisions of Lambeth council. That is a matter for the elected members of the council. The new system of housing investment programmes which this Government have introduced has been designed to give housing authorities considerable freedom to develop policies which they consider are appropriate to the local situation within the bounds of overall cash limits.
My Department is, of course, concerned to ensure that housing strategies are formulated which have regard to national policies, to the availability of national resources and to the most cost-effective use of those resources. But once allocations are settled housing authorities should be free to go ahead with the minimum of intervention by central Government. The housing investment programme system should thus increase local discretion by putting greater responsibility on the local authorities themselves for deciding on the right balance of policies.
Authorities have been asked to look at a range of policy alternatives in preparing their housing programmes and to review the social and financial aspects, including revenue implications, of those alternatives. They have also been asked to take industrial requirements into account in preparing housing policies, particularly in inner city areas where economic decline and the resulting loss of jobs has been a major cause of the problems found there. I have no reason to doubt that these matters have been fully considered by Lambeth council in coming to decisions on its housing strategy and expenditure programmes.
We recognise that if the particular problems of inner city areas such as Lambeth are to be tackled effectively, more resources must be channelled into them. The Government have stated their intention in the consultation document on housing policy that housing investment programmes and subsidy arrangements should ensure that inner areas with severe housing problems have a higher priority in the allocation of capital resources and that existing tenants and ratepayers do not have to bear a disproportionate share of the high costs of essential housing investment.
I have also referred to Lambeth's favourable housing expenditure allocation for the year, the greater part of which is

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directly supported by Exchequer grant aid. Lambeth is already receiving substantial assistance from central Government under the 1977 construction package and the expanded urban programme for projects contributing directly to the improvement of social and economic conditions in the borough.
Our intention in expanding the urban programme, with its 75 per cent. rate of grant, was to provide partnership and programme authorities such as Lambeth with specific and significant aid to relieve them of the cost of undertaking projects beneficial to the inner city areas. The Government are determined that the London partnership authorities have the resources, whether under the urban programme or housing investment programme, to enable them to launch a sustained attack on their problems.
We recognise, however, that there may be concern over the effects that additional expenditure may have on the rates, even though we consider that it is only right and proper for the authorities concerned, and therefore the local community, to continue to meet a proportion, albeit a relatively small one, of the costs of such initiatives. I shall be discussing this further with the London partnership boroughs. Although a final decision has yet to be taken by the council, the rate increases projected for next year are substantial. It is fair to say that Lambeth's rate increases in recent years have been modest, and its domestic rate poundage
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in the current year is well below the national average for England and Wales.
The borough has done very well out of the 1979–80 rate support grant settlement. Lambeth's needs element entitlement will increase by about £2·9 million in real terms, equivalent to a 5·2p rate. This is the second highest increase in England and Wales. This is in line with the Government's policy that the rate support grant distribution formula should be used to shift the distribution of the settlement in favour of those areas, mainly in the major conurbations, which have the most pressing economic and social problems.
I should also make the point that we have made substantial resources available for mortgage lending in Lambeth under the housing investment programme and building society support scheme. Owneroccupation—contrary to what the hon. Member suggested—has been steadily increasing in the borough and there seems no reason to believe why this trend should not continue. But, of course, the answers to Lambeth's housing problems do not only lie within the borough itself.
The Question having been proposed after Four o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjorned at sixteen minutes to Five o'clock.