SMALL FIRMS

HC Deb 27 March 1995 vol 257 cc697-736

'(1) It shall be the duty of the Secretary of State to have regard to the needs of employers who have fewer than 20 employees and to take such practical steps as he deems appropriate to enable them to meet their obligations under this Act.

(2) The Secretary of State may make regulations specifying the circumstances under which adjustments may be considered reasonable for employers who have fewer than 20 employees'.—[Sir John Hannam]

Brought up, and read the First time.

3.37 am

Sir John Hannam (Exeter)

I beg to move, That the clause be read a Second time.

Madam Speaker

With this, it will be convenient to discuss also the following: New clause 16—Small firms (No. 2)—

`(1) It shall be the duty of the Secretary of State to have regard to the needs of employers who have fewer than 20 employees and to make such financial provision by way of grants or loans as he deems appropriate to enable them to meet their obligations under this Act. (2) The Secretary of State may by regulations specify the circumstances under which adjustments will be considered reasonable for employers who have fewer than 20 employees, and such regulations may specify appropriate periods within which such adjustments shall be made. (3) Regulations under this section may make different provisions for different circumstances and different sizes of employer and specify different periods within which different adjustments shall be made; and regulations made under this section may be varied by subsequent regulations.'.

Amendment No. 7, in clause 7, page 5, leave out lines 10 to 14.

Government amendment No. 122.

Sir John Hannam

As we embark on this important Report stage of the Disability Discrimination Bill and on this debate on the small firms exemption, it is right for me to offer my congratulations to the Government on bringing forward this anti-discrimination legislation. After many years of campaigning for acceptance by the Government of the need for such a measure, I feel that, since the consultation paper last July, we have seen real progress in strengthening and widening the proposals that were then put forward.

I pay tribute to the personal endeavours of my hon. Friend the Minister for Social Security and Disabled People. I hope that further progress will be made on Report and in the other place, so that disabled people will feel that a comprehensive piece of anti-discrimination legislation has been put in place. I am confident that that will happen.

Clause 7 exempts firms that employ fewer than 20 people from its provisions. That means that, unless the Bill is amended, small firms will be able to discriminate legally against disabled people. In fact, the Bill provides the power not only to reduce the number of employees but to increase that number by regulation. I hope that my hon. Friend the Minister will give me a clear assurance today that there will be no intention ever to use that power to increase the number to more than 20 employees—and that, in fact, the reverse will be the case.

I understand the reactions of small firms' organisations, which genuinely fear the impact of extra regulations and, of course, the costs that could be involved. In my view, however, there is ample protection in clause 6, which allows for the reasonableness of an employer's adjustments to be determined with reference to cost.

The small firms sector is the fastest growing sector in the economy. It employs some 34 per cent. of the work force in some 60 per cent. of firms. It is also the area of employment which is most suited to disabled people, and where quite small adjustments may result in a work opportunity being created.

Mr. Alfred Morris (Manchester, Wythenshawe)

I am grateful to the hon. Member, whose work in this policy area is well known in all parts of the House of Commons. The hon. Member knows—indeed, no one knows better than him—that the organisations of and for disabled people, almost without exception, want the Bill to apply to employers of fewer than 25 people, just as much as it would apply to those who employ more than 25. Will the hon. Member give the House his indication of support for that proposition? The amendment goes some way, but, I think that he will agree, it is identical treatment that the organisations want.

Sir John Hannam

The right hon. Member was saying 25—I think that he meant 20 employees.

Mr. Morris

Merely a slip of the tongue.

Sir John Hannam

My keen objective is to see that figure brought down. I am still concerned and rather puzzled that we did not adopt the figure of 15, which was adopted in the American legislation. I want to develop that point.

On Second Reading, my hon. Friend the Minister, who took the trouble to visit the United States to see for himself how the Americans with Disabilities Act, was working, said: 'reasonable accommodation' … cost nothing in 43 per cent. of cases because it involved just moving the furniture around or doing something sensible and practical like introducing different working hours. He went on to say: A large proportion of other adjustments costs very little."— [Official Report, 24 January 1995; Vol. 253, c. 149.] We know from evidence in the United States that the cost implications for firms over there to achieve the removal of discrimination were in most cases very small.

It is interesting to note that, in its response to the Government's consultation document last year, the Confederation of British Industry, an employer organisation—although it represents mainly larger firms—voiced concern over the exclusion of small employers from employment rights. It argued for a phasing in of compliance requirements, and with it more support for small firms through schemes such as the access to work scheme, which the Government introduced and which is very welcome.

I should also like to point out that, in rural areas, small firms are the only possibility of employment for disabled people, especially in view of transport problems that they experience, which are as yet not included in the Bill. I hope to make progress on that front tomorrow when we address new clause 11.

Another quirk of the Bill is that franchises are counted as separate firms, which means that individual outlets of firms such as McDonalds, which employs fewer than 20 people in each of its individual outlets, would not be covered by the Bill's provisions, despite the enormous resources of such companies. McDonalds, incidentally, does a great deal for disablement causes.

An example of the sort of discrimination which may exist in a firm was given to me by the Royal National Institute for the Blind. The name of the girl involved was not given. She was told that she could not use her Braille equipment in work because it was considered too noisy. The Bill would make such an instruction unlawful if it was given by a company with more than 20 employees, but smaller firms will be given a free rein to discriminate in any way they wish. Many examples of such discrimination can be produced.

Surely we should create a fully accessible labour market, as possible. That would result in economic benefits as disabled people came off social security benefits and began to pay taxes. We know from talking to them that they always dream about doing that.

I hope that the Minister will recognise that this probing new clause has been tabled because his current proposals need to be adjusted to remove the possibility of the employee exemption figure being increased. I hope that he will say that he intends to bring us in line with, at least, the American figure of 15 employees at the earliest possible opportunity. On Second Reading my hon. Friend promised to review that employment level; I believe that that should be conducted at the earliest possible stage. Today, I hope that he will accept the principle behind the new clause, which would point us in that direction.

3.45 pm

Mr. Robin Corbett (Birmingham, Erdington)

I congratulate the hon. Member for Exeter (Sir J. Hannam) on tabling the new clause, although it does not go anywhere near far enough; nor is it likely to get there quickly enough. I understand, however, exactly why he has tabled it. If the Minister was minded to accept it, it would certainly get us marching in the right direction.

It was hard on Second Reading and in Committee, and it remains hard today, to understand why the Government are telling 96 in every 100 firms that it is perfectly legal to discriminate against people with disabilities who seek jobs or who are employed. The reason for the Government's stance was given in paragraph 3.10 of the White Paper, to which the Minister referred several times in our earlier considerations on the Bill. It states: It may be more difficult and burdensome for small firms without specialist personnel to get to grips with the new right and obtain the advice they need in particular cases I hope to demonstrate that that is no more than a shabby excuse.

Of course small firms have different problems from larger ones, and of course they have smaller resources, but the Government do not use that argument to exempt them from legislation dealing with discrimination on grounds of race or gender. They do not use that argument when it comes to the intricacies of income tax, VAT, national insurance, sick pay, health and safety and all the rest of it. Every employer is treated equally in such matters. It is only in the case of people with disabilities that the Government say, "Carry on discriminating."

The Government opposed the establishment of a disability rights commission, because they said that those needing help to enforce the limited rights conferred by the Bill should turn to citizens advice bureaux or other such agencies for assistance. Why cannot small firms do the same? If it is good enough for a would-be employee, seeking to enforce the rights conferred in the Bill, to be sent in the direction of the CAB, why is that not good enough for the would-be employer? A ready source of advice is available. The Minister is negotiating on its funding, and I believe that a meeting about that will be held on 29 March.

Things get even more curious in the Government's silly argument when we consider paragraph 3.5 of the White Paper, which states:

The majority of disabled people who want to work, need no, or only very modest, help. In Committee, the Minister reminded us that the "reasonable accommodation" employers are expected to make as a result of the Bill cost nothing in 43 out of every 100 cases in the United States—as the hon. Member for Exeter has already said—because it involved nothing more than moving furniture around or adjusting working hours. The Minister helpfully added that a large proportion of other adjustments cost very little.

There is another curiosity. We know that the Government will set financial limits on the cost of adjustments that an employer can reasonably be expected to make, perhaps based on rateable value to take rough account of company size.

What, then, is the problem? Having argued against a duty on every employer not to discriminate, the Government get pious. Paragraph 3.10 of the White Paper optimistically adds: organisations representing smaller employers will be among those consulted on the proposed code of practice, and small firms will be encouraged to follow it voluntarily. That is novel. After telling smaller employers that it is perfectly legal to discriminate against people with disabilities, the Government raise the fond hope that they will do voluntarily what they are not required to do by law. They truly are a Government who have been too long in the unreal world to know what goes on beyond those windows.

It is not as though the Government can claim that they have public opinion on their side. Of the 254 responses about whether small firms should be covered by that part of the Bill, 81 per cent. said they should, and only 17 per cent. said they should not. I immediately acknowledge that that was far from a scientific sample, because the number of responses about that issue was disappointingly small.

However, the missing opinion comes to us copper-bottomed. The Confederation of British Industry, even the illustrious Institute of Directors and the Employers' Forum on Disability, linking more than 100 top companies, say that it is wrong to have two categories of people in the world of work on the basis of drawing an arbitrary line.

That is not the end of it. One in every six people at work works in a small firm. In large parts of England, and more so in Wales, Scotland and Northern Ireland, small firms are the only employers. Indeed, in the inner-city areas of Birmingham, for example, small firms vastly outnumber larger ones.

It will not wash for the Government to say that the four in every 100 firms that do employ more than 20 people are the only ones that matter. It is the 96 in every 100, now excluded, that provide the main opportunities for jobs for people with different abilities.

If the Minister does not know that, I shall tell him: larger firms are becoming smaller, employing fewer people, and there are fewer of them. The growth in jobs, even though many are part-time, is taking place among small firms. Also, as the hon. Member for Exeter said, some apparently large firms, such as McDonald's Restaurants and many others, are to be treated as small ones because they are franchise operations.

I believe that the amendments must be regarded in a wider context. Under the Bill, disabled people are to lose what protection the present quota scheme provides—and that is precious little. Under the scheme, only 10 employers have ever been taken to court, and not a single prosecution has succeeded in the past 20 years.

The Government are also to do away with statutory registration of people with disabilities so that, under the Bill, some people who are now at work will have even those protections taken away from them, whatever the size of the firm they work with. Where is that supposed to leave the 8,654 people with disabilities working in the 95 Remploy factories? Their work force is almost wholly drawn from people who are registered, and identified as such, through jobcentres.

While we are at it, does the Minister know that the replacement for the priority suppliers scheme, which was of such assistance to Remploy and sheltered workshops run by local councils and others, is causing immense problems? The special contracts arrangements limit possible rebids for work to a contract ceiling of £147,000.

Does he know, for example, that the Ministry of Defence usually places orders for uniforms and protective clothing in parcels of about £2 million? Does he know that some of the 12 Remploy factories specialising in textiles are running out of work, and that one at Alfreton is due to close, while the Ministry of Defence has £10 million of unplaced contracts for uniforms hanging about as a result of the chaos in the change between the two schemes?

No one expects any firm, of whatever size, to meet unreasonable costs in employing people with disabilities. However, as the Employment Minister and his hon. Friend know full well, there is assistance available already through the access to work scheme and via PACTs—placement, assessment and counselling teams. As the Disability Alliance suggests, the national insurance holiday in the Jobseekers Bill could also be offered to employers in order to help to meet the cost of offering jobs to people with disabilities.

Perhaps the strongest argument against the discrimination that the Government want to retain for small firms is put by the Royal National Institute for the Blind, when it argues, quite properly, that new technology, especially in the widening field of information, will open up vast new job opportunities, many of which will be with small specialist firms. It is simply intolerable that people with different abilities, including the visually impaired, should be locked out of those opportunities.

I believe that the Government are making big fools of themselves over the exemption for small firms, which is no more than a bone-headed deregulation dogma by the Secretary of State for Employment. It is indefensible, and he and his Ministers know it. I hope that, tonight, enough hon. Members in the House will put equal treatment at work for all disabled people ahead of party labels.

Mr. Alan Howarth (Stratford-on-Avon)

I do not know how many people are employed in small businesses in this country. Various statistics have been cited, but the actual figure does not really matter. The point is that many people are employed in small firms, particularly in towns and villages in rural areas such as in south Warwickshire, which I represent. In the major economy, the trend towards downsizing, subcontracting and franchising makes it plain that we must regard small businesses as central to our economy. Small business constitutes the fastest growing sector in our economy.

The distinction that my hon. Friend the Member for Exeter (Sir J. Hannam) seeks to make between businesses employing fewer than 20 people and those employing 20 or more is an arbitrary one, which, in the end, does not stand up to scrutiny. I am not aware of any serious organisation representative of business which wants that distinction to be made. The Employers Forum on Disability, the Confederation of British Industry and the Institute of Directors certainly reject that proposal.

My hon. Friend and his colleagues in Government are correct to be concerned not to lay gratuitous or unnecessary burdens on business. However, it is a question of whose burdens matter. It is not only the burdens on business men that matter, but also those on disabled people. Disabled people carry enormous burdens, and it is our responsibility to do everything we can to lighten their burdens.

As my hon. Friend the Member for Exeter said, the Government's new clause 6 concerning reasonableness would provide ample security to small businesses and prevent them from suffering undue and genuinely burdensome responsibilities. Ironically, the Government's own proposals would involve somewhat burdensome responsibilities.

One can imagine that firms will move in and out of this legislative jurisdiction. On occasion, a business may employ 19 people and at other times it may employ 20 people. Is it helpful to require a firm to commute between two legislative regimes? I do not think it is. In any case, let us think less about imposing burdens on business and more about the contributions that people with impairments can, and desire to, make and of which we are depriving ourselves by allowing discrimination to be perpetuated.

My hon. Friend the Minister of State expressed concern that small firms would not have the specialist personnel functions or the expertise to cope with the requirement that they should not discriminate against disabled people. It does not require any expertise or administrative sophistication to do the decent thing and behave properly. That is all that we require of small businesses. If they need support and advice, the PACT teams will assist them.

The Government should continue and further develop the access to work scheme, which provides some financial subvention in reasonable circumstances to assist disabled people into employment. That policy benefits all firms, including small businesses. My hon. Friend's amendment moves at least some way in the right direction.

I ask my hon. Friend the Minister at least to remove the power in the Bill to raise the threshold above 20 employees. It is unimaginable that there could be any circumstances in which the Government would want to backtrack on the Bill's provisions. My hon. Friend the Member for Exeter (Sir J. Hannam) suggested reducing the number to 15, to match the practice in the United States of America. If the Minister will do that, will he make a further commitment to phase out the small business exemption altogether over time?

4 pm

Those are all compromises and halfway houses, but the right thing would be to abolish the distinction altogether. After all, the Bill is an affirmation of the values of our society. It would be extraordinary and deeply offensive to propose that it should be within the law for a business employing fewer than 20 people to discriminate on the grounds of race or gender. We should equally accept, in a clear-cut fashion, that it is entirely unacceptable for an employing organisation or any other to discriminate unjustifiably against people who are disabled. One's basic rights as a human being and citizen should not depend on who happens to be one's employer.

Mr. Harry Barnes (Derbyshire, North-East)

Far fewer people are covered by the Government's Bill, including those in employment, than would be covered by the Civil Rights (Disabled Persons) Bill. In the Government's measure, a whole list of exemptions and exclusions exclude four categories of persons. That would be true even if the argument for ending the distinction introduced by the 20-employee barrier was won.

The costs argument does not take account of the fact that some companies that employ fewer than 20 people are highly profitable, especially in a high-technology age in which the capital employed rather than the number of people may be the most important consideration. Often, companies that employ a large number of people are strapped for cash.

If there is to be a distinction—and I do not agree that there should be—it should not be in terms of the number of people employed. It may be argued that there is some rough and ready justice in terms of profitability and the ability to absorb the costs involved, although it is argued also that the costs could be minor. If a distinction is to be made, there could be an argument for making it elsewhere.

The worst thing about the existing distinction is the message that it sends to disabled people that 96 firms out of 100, and many areas of the country where only small firms operate, will be no-go areas, and that disabled people will have to rely entirely on the good will of small firms to employ them. That creates the wrong atmosphere in which to pass legislation that the Minister claims represents a significant step forward for disabled people.

In north-east Derbyshire, Remploy, based in Alfreton, is closing. It has offered one of the rare opportunities for employment in an area of pit closures. Small firms, with fewer than 20 employees, have been important providers of jobs in the area. What alternative jobs are there, now that the mines have closed, and with them, the firms that serviced them? Such firms often employed more than 20 people, so this legislation would have applied to them.

Disabled people working for Remploy now have to travel further afield, to the Mansfield area. Meanwhile, their other commercial opportunities are beginning to disappear. That is why serious consideration must be given to access to employment for disabled people.

It is when we come to franchises that the Government's cut-off-20 staff or fewer—is shown up for what it is. McDonald's, which employs masses of people around the world, manages to avoid these provisions by operating under franchises. That is another good reason for rejecting the Government's contentions.

The new clause offers an opening—not complete change. The only way to bring about complete change would be to introduce the principles of the Civil Rights (Disabled Persons) Bill and to get rid of the distinction, based on size, between firms. In other Government legislation, the factors to be taken into consideration—reasonableness, cost, organisational and other difficulties—are considered before the law case by case.

That is why this legislation is wrong. The new clause, like our other amendments, tries to make the best of a bad job. It is fairly limited; we do not ask that the numbers come down to 15, or that other factors be taken into account. We are simply nudging the Government towards consideration of such points. That is worth while in itself.

Hon. Members of all parties ought to support the amendments in this batch, which in effect open up the legislation. I hope that the Minister will at least admit that there is some possibility of change. He should remember, when it comes to definitions and the areas of employment to be covered, that there is massive support in this House for the principles in the Civil Rights (Disabled Persons) Bill, which has been supported and sponsored at various times by 10 political parties in the House, including the two Conservative parties.

It is time for the Government to face up to the situation, and not to hide themselves away, preventing proper discussion in Committee of the measures in the other Bill that should have been included in this one.

Mr. Wigley

I am glad of the opportunity to speak on this new clause, although it is really amendment No. 7 that appeals most to me—it would cut out the offending words altogether.

It is wrong to enshrine in law the unjustifiable principle that discrimination against disabled people in their place of work is acceptable if they work for companies with fewer than 20 employees. Passing the Bill unamended would lead to that position in law. It also leads to the position where more than half of employers in Wales will not be subject to the provisions that we are discussing. That is because more than half of them employ 20 or fewer people. That cannot be right.

The Government have tried to deal with the problem that small companies are sometimes unable to cope with all the responsibilities that are placed upon them and sometimes respond in an incorrect fashion. In some small companies, there may be lack of expertise in all directions.

The results of the survey undertaken by the Employers Forum on Disability reveal that even large companies that do not employ disabled people have a negative attitude towards disabled people. They believe that there are considerable problems in employing them. When a company gets into the habit of employing disabled people, however, whether it is a large or small company, it finds that the problems are massively overstated, and that it is possible to deal with those that arise.

The survey revealed that, at some stage, larger companies will find themselves employing disabled people. When that happens, they start to relate to how that process can be facilitated. They begin to understand how problems can be overcome. Their experience in dealing with one disabled employee will no doubt help them to develop suitable provisions for other disabled people.

It may not be possible to implement the process of facilitation in a small company. The likelihood is, therefore, that a small company that has not employed a disabled person will continue from year to year under the misapprehension that employing such a person causes immense difficulties. Enshrining rights to opt out in law creates a road block to stop us breaking through and encouraging small companies to employ more disabled people, which will lead to a greater willingness to employ them in future.

The hon. Member for Exeter (Sir J. Hannam) talked about the representations that we have received from the Royal National Institute for the Blind. I was impressed by a case it quoted involving a man from Scotland, who was dismissed after only three days of being appointed an assistant supervisor, despite stating his need for a large print package for his computer. His manager ignored his, the employee's, advice that the PACT team could offer assistance, and that necessary adaptations could be undertaken through access-to-work arrangements. That was an example of ignorance. The likelihood is that smaller companies will have that ignorance.

There may be some circumstances in which small companies will be unable to cope with massive changes that might be needed in extreme cases of disability. That situation is covered by other provisions in the Bill. Such changes would not be regarded under those provisions as reasonable. Required changes would have to fall within what is regarded as reasonable before they could be considered, whether a small or large company was involved.

The same approach should be adopted to companies of all sizes. If necessary, we could apply the test of reasonableness in a slightly different way to companies that are very small and do not have the resources to do what larger companies might be able to do. It would be better still if the Government could help by providing adequate financial resource where needed.

The opportunity for disabled people to express themselves and develop can he much greater within a small company than a large one. They may get the support they need in a small company. They may find that, in such a company, they are members of a small family of workers, who will bring them on in a way that is not always possible in the less personalised arrangements that exist in large companies.

A plethora of companies employ about 20 people. There are numerous companies of that sort in my constituency. Perhaps they will employ 20, 21 or 22 people this year, and perhaps 17 or 18 next year, or vice versa. In those terms, they will he going backwards and forwards. How can we justify a system in which a disabled person's rights under the law depend on the vagaries of the market and a company's response to them?

I also point out to the Minister the danger of less scrupulous companies. It may not be all that likely in this instance, but if we start to discriminate between companies on the basis of size, in other circumstances it might be tempting for a company to federalise itself or whatever—franchise has been used as an example—to avoid the requirements of the law. It is a bad law that says that there may not be discrimination in companies above a certain size, but that it would be allowed to exist in smaller companies.

I now deal with the attitude towards disabled people. I have a letter from the mother-in-law of someone in Cardiff who had suffered cancer while in the Royal Air Force but made a total recovery. He then tried to find work in civvy street. Despite the fact that he had recovered and had no problems whatever, he is unable to get work because,

in filling application forms, he's been completely truthful and honest and when he's told them all he doesn't even get an acknowledgment of his application. I'm sure you'll agree Mr. Wigley that this is prejudice and discrimination. That is the point. When someone with a disability applies to a small company for work, there will be the temptation not to give him or her an interview. Without that small company going through the process of meeting a disabled person and giving the interview, it will not be aware of the positive things that disabled workers can give to a company, and will be aware only of the prejudice and the negative aspect that goes with it.

4.15 pm

We are losing an opportunity to break down barriers. If we did away with the clause, we could indeed break down the barriers that that person in Cardiff was experiencing when applying to small companies for work. That is the challenge for the Government. I believe even that, even at this stage, the Government have it within their capability to say, "Yes, perhaps we have got it wrong. Even if we cannot change it on Report, we will look again in the other place to see whether the whole approach can be reconsidered." I hope that the Government will be willing to do that. I believe that the well-being of countless thousands of disabled workers depends on it.

Mr. Alfred Morris

The hon. Member for Stratford-on-Avon (Mr. Howarth), who has made a distinguished speech in this debate, won enormous respect for his constancy in support of the Civil Rights (Disabled Persons) Bill. That support made it crystal clear long before today that he is opposed to differentiating between firms that employ more or less than 20 employees. That is also the view of nearly all the organisations of and for disabled people.

Did the Government consult before today's debate Sir Peter Large for his view? It was Sir Peter Large whom I appointed, as then Minister in 1979, to chair the Committee on Restrictions Against Disabled People. That Committee recommended as long ago as 1982 that we should have legislation on the statute book to make it unlawful to discriminate unfairly against disabled people. The Minister must surely agree that Sir Peter Large, who has served so long and with such distinction the Disablement Income Group and, for an even longer period, the Joint Committee on Mobility for Disabled People, is well worth listening to on the subject of this debate.

Has the Minister consulted Rachel Hirst or Richard Wood, of the British Council of Organisations of Disabled People? They are in no doubt that it will make bad law to distinguish between firms that employ more and those that employ fewer than that number. Have the Government spoken to Professor Ian Bruce of the Royal National Institute for the Blind, or to Ann Robinson of Scope?

Not only they, but all the representatives of the major disability organisations have said over and over again that it would make discrimination in employment worse to distinguish between employers with fewer than 20 employers and those with more than 20.

We hear that view not only from distinguished representatives of disabled people—those to whom I have referred among many others—but from many employers who are strongly opposed to the drawing of any such distinction. The Employers Forum on Disability, much to its credit, has said that it is wrong. This is our opportunity to correct a part of the Bill that is resented and bitterly criticised throughout the disability world.

There is deep resentment of unfair discrimination in all its forms. There is also resentment about condescension towards disabled people and about patronising attitudes towards them. Is it not patronising to act as though the views of Sir Peter Large, Rachael Hirst, Richard Wood, Ian Bruce, Ann Robinson and other leading representatives of disabled people count for very little? It must be bad government not to listen to people who are experts in any policy area—and who is more expert about the effects of discrimination than those who suffer from it? We could have tackled the problem in 1982 by making discrimination unlawful on the basis of Sir Peter Large's report.

Yet, disturbingly, we are now introducing a very painful sort of new discrimination. The House of Commons accepts that there are groups in society that need protection if they are not to have their problems compounded by unmerited discrimination. If the Bill stays as it is, the House will be drawing a distinction between discrimination against women and ethnic minorities, as compared with discrimination against disabled people. If it is right for people who are black and from the ethnic minorities to have protection regardless of how many people their employer employs, it must be right to protect disabled people irrespective of the number of people a firm employs.

This is our first debate on the Report stage of the Bill. I appeal to Ministers to think carefully about the strong reservations that have been expressed from their side of the House, and to all the compelling points made by my hon. Friends, as well as by the hon. Member for Caernarfon (Mr. Wigley)—I regard him as an hon. Friend, too. I am sure that people who are not committed to any particular point of view will accept that their arguments were worthy of support by the House.

Let us start this Report stage in the right way by accepting the proposition that it is wrong and indefensible to distinguish between employers in the way proposed by the Government.

Ms Liz Lynne (Rochdale)

I should like to place on record my support for the new clause. Other people outside are beginning to call the Bill the "Disability Discrimination Justification Bill", and for good reasons. One of those reasons is the exemption for small firms. The Bill has more or less become an exemption charter. It is riddled with caveats, qualifications, exemptions and let-out clauses. The exemption for small firms is a stark example of that.

The exemption is wrong for three main reasons. First, there can be no degrees of equality. Someone is either equal or not equal. People are not more equal than others. That is why the small firms exemption is wrong. It is absurd and legally inept to have different rights for people, based only on how many people they work with.

Secondly, at a stroke, the exemption undermines the argument and necessity for the measure. Thirdly, the exemption is superfluous. The Bill's main exemption clause, which includes the words "reasonable accommodation", can cover all the things that the Government are worried about. If a small firm is suffering undue hardship and unreasonable costs, under "reasonable accommodation" it can claim that it is not liable That should meet everyone's concerns.

What evidence is there of those concerns? It is not coming from businesses. For instance, the Employers Forum on Disability supports the removal of the exemption. I agree that it is made up of larger companies, but, as other hon. Members have said, it includes firms like McDonald's, which have franchises. I cannot understand how a firm with such a large amount of money and such large resources can be exempted when it has franchises that employ fewer than 20 people.

Where is the evidence from other countries that the Government keep on putting forward? In the United States of America, thousands and thousands of small businesses and shops are benefiting from the disabled persons legislation that was passed there. One example is a small pizza delivery company employing between 15 and 20 employees in New York. It decided to install a minicom for its deaf customers. Its profits have risen enormously. Another example is an attorney's practice in Houston, again with 15 to 20 employees.

I cannot understand why the Government have gone for 20 and not 15. I would prefer them to go for 15 now, and then to reduce it to none. That is the compromise that the hon. Member for Stratford-on-Avon (Mr. Howarth) was talking about. I hope that the Government will accept that.

That small attorney's practice installed ramps, lifts, surfaces with bold colours and tactile variations for the blind. The word got around that it was disability-friendly. It had a totally untapped client group who wanted its services, and its profitability went up. All that happened because of compliance with—not avoidance of—the legislation.

That is the difference between the USA and this country. Before the legislation was enacted there, people were talking about the benefits. They did not talk, about its negative aspects. This Government, however, are concentrating on the negative aspects of compliance with the legislation. The USA talked up how businesses could benefit from the legislation.

The Government offer no incentives. Again, the USA offered incentives to small firms. The only thing that the Government are saying is that small firms can opt out if they have fewer than 20 employees. We want from the Government the positive approach that was taken in the United States, but we are not getting it.

There have even been cases in the United States of small firms employing fewer than 15 people which wanted to opt in because they could see the benefits of doing so. They introduced facilities within their companies to cater for disabled people.

The Bill sends out the wrong signals to people throughout Britain. More important, it sends out the wrong signals to disabled people. I repeat that the exemption is unnecessary. It is covered by the "reasonable accommodation" provision. I certainly hope that the Government will take that point into account. I support the new clause, and I hope that other hon. Members will do likewise.

4.30 pm

Mr. Roger Berry (Kingswood)

I suspect that this time last year no one would have thought that we would be here debating an exemption for small firms from a Disability Discrimination Bill introduced by the Government: certainly, 12 months ago no one said to me, "Hang on for 12 months and we shall have a Government Bill." No one suggested that the first debate on Report would be on whether small firms should be excluded. We did not expect that the campaign by organisations of and for disabled people such as the Rights Now campaign would be so successful in forcing the Government, first, to publish the consultation document and then to introduce a Bill of their own.

I speak as someone who is bitterly disappointed with most of the content of the Government's Bill. I do not disguise that fact, but there is a measure of success in today's debate—the very fact that the Government now recognise that legislation is required. A mere 12 months ago, they did not believe that we should legislate on discrimination against disabled people in employment or anywhere else. Twelve months ago they were not talking about rights for disabled people at work. Indeed, to talk about the need for rights and to talk the language of legislation to secure equal opportunities was to invite comments that one was obsessed with being politically correct, that one was out to bankrupt the economy or similarly foolish comments.

I have grave reservations about the Government's Bill, especially clause 7, but we must acknowledge the movement that has taken place. Although the principal tribute should be paid to organisations and individuals that have campaigned for the full civil rights Bill, I acknowledge that many members of the Government and other Conservative Members have consistently supported such legislation.

Yes, there has been movement; yes, the Government now finally talk the language of rights for disabled people; yes, the Government are finally saying that we should legislate to secure those rights; and, yes, there has been a shift. But we find some odd things in the Bill. We are debating the exemption for small firms. Why on earth should firms employing fewer than 20 employees be exempt from the employment provisions of the Bill? I am happy to give way if a Conservative Member would care to intervene and offer some reason for the exemption.

I note that so far in the debate no one has offered a reason why there should be exemptions. We have had a flood of speeches from hon. Members on both sides of the House who have said that to exempt small firms makes no sense whatever. I am awaiting a speech in which someone will say why there should be an exemption for small firms. I am more than happy to give way at this point if a Conservative Member would care to explain. Clearly, there is not enormous enthusiasm in the Chamber to do so.

Mr. Barnes

Perhaps there is some movement among Conservative Members. Perhaps their silence means that they are going through a process that leads them to realise that there is a point in the arguments that have been advanced in the House. After all, the Government made two adjustments to the Bill in Committee by making it apply to Northern Ireland and to property provisions. They now have a chance to say that there is some sense in the proposals before the House.

Mr. Berry

I am grateful to my hon. Friend for pointing out again that the Government have moved their position in relation to discrimination against disabled people. In Committee, there was movement—not a lot, but there was some—and today there may be further movement.

Mr. David Congdon (Croydon, North-East)

Will the hon. Gentleman cast his mind back to consideration of his Civil Rights (Disabled Persons) Bill in Committee last year? Will he remind me whether that Bill included a restriction on small firms before it was amended?

Mr. Berry

The hon. Gentleman is correct. The Bill, which I took over from my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris), included an exemption for small firms. [Interruption.] I have said that the hon. Gentleman was correct, but one of the first things that members of the Committee who supported the Bill did was to propose that there be no such exemption, and I moved that it be deleted. It seemed to the supporters of the Bill—and to most Members present—that there was no reason to exclude small firms.

Small firms are not excluded from the provisions of the Race Relations Act 1976 or the Sex Discrimination Act 1986. If they are not excluded from that anti-discrimination legislation, why should they be excluded from legislation that aims to outlaw discrimination against disabled people? Why should disabled people be treated as second-class citizens? Sponsors of the Civil Rights (Disabled Persons) Bill did not support the exemption for small firms precisely because they believe that disabled people should be treated equally.

The hon. Member for Croydon, North-West (Mr. Congdon) gives me the opportunity to refer to the Civil Rights (Disabled Persons) Bill. The Bill now being promoted by my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes) does not exclude small firms for the simple reason that if equal rights in employment are right and proper for women and for black people, they must also be right for disabled people. All organisations of and for disabled people are outraged at the suggestion that disabled people should be treated in a second-class manner in employment.

Mr. Barnes

Is not the purpose of Committee to examine measures and to propose amendments to consider the means by which improvements can be made? Debates in Committee are important, and the Civil Rights (Disabled Persons) Bill promoted by my hon. Friend the Member for Kingswood (Mr. Berry) was considerably improved by the time it was considered on Report. I picked up the amended measure to promote the current Civil Rights (Disabled Persons) Bill, and it would be valuable if we could debate its provisions on employment and other matters to see whether polishing and improvement are necessary.

Mr. Berry

Reference has been made on two occasions now to the Committee's discussions of my Civil Rights (Disabled Persons) Bill last year. In relation to that—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. The fact that reference has been made to that Bill does not mean that we should go down that route. The hon. Gentleman should return to the amendment.

4.45pm

Mr. Berry

Thank you, Mr. Deputy Speaker.

If the exclusion of small firms were so important, why did not the Government raise that point at any stage in our debates on the employment provisions of the Civil Rights (Disabled Persons) Bill last year? We had an extensive discussion on the use of legislation to outlaw discrimination in employment against disabled people, but not once—this is a matter of record and can be checked—did the then Minister express concern that small firms should be exempted.

I do not want to repeat important arguments made last year on the Civil Rights (Disabled Persons) Bill and it would be out of order for me to do so, but there is something strange about the Government now saying that we should exclude small firms from the employment provisions of this Bill when that proposal was not made in Standing Committee last year. I wonder why they are doing so. Could it be because of the outcome of the consultation exercise? One outcome of the Government killing off the Civil Rights (Disabled Persons) Bill last year was that they consulted on anti-discrimination legislation and focused on employment.

It is extremely important for us to recall what the Government said about the employment provisions of their plans at the time and to note the responses of those who were consulted. The Government state in paragraph 2.37 of their consultation paper: The Government proposes that a new right would apply to people who are or would be employees or apprentices and to people who contract personally to provide services. The right would apply to work at establishments in the United Kingdom. This would be consistent with the approach under race and sex discrimination. The small firms exemption is not consistent with that approach.

In paragraph 2.39, the Government continue: Research and experience indicate large organisations are more likely to have positive policies for employing disabled people and therefore should experience little difficulty in complying with the new right. Smaller firms could find it disproportionately difficult to consider and implement some of the adjustments that may be required under the new right. The argument seems to be that we need not worry about large firms because they are doing okay and research shows that they are more likely to have positive policies already—that is what the Government are saying.

The Government's consultation document makes an important point—that one should address legislation to small firms as well as larger firms. Finally, in paragraph 2.41, the Government offer not a firm recommendation but the comment: Views are sought on the exclusion of firms with fewer than 20 employees in line with the quota scheme. Most hon. Members will probably agree that the scheme is not a good precedent, so one can leave that comment aside.

The Government were offered views on the exclusion of firms with fewer than 20 employees. Right hon. and hon. Members who have studied the red book, "An Analysis of the Responses"—I always enjoy reading the Chancellor of the Exchequer's Red Book, but this book has become almost as interesting—will know that table 26 analyses what consultees said. Let us ask ourselves the question, "How many employers felt that it was really important that the Government's Bill excluded smaller firms?" Was it 5,000, 2,000, 500, 100, 50 or five?

One employer in the United Kingdom, when responding to a Government consultation document that asked, "How do you feel about excluding firms with fewer than 20 employees?" said that it did not like it. Most employers did not have much of a view on the subject—one employer amounts to 3 per cent. of those who responded.

If consultation exercises, spending taxpayers' money on such consultation documents and producing responses like that mean anything, how can the Government ignore the very obvious point that only one employer felt that it was necessary—

The Parliamentary Under-Secretary of State for Employment (Mr. James Paice)

If the hon. Gentleman is going to quote from the Red Book and that table, will he tell the House how many employers' organisations supported or opposed the exemption for small firms?

Mr. Berry

I am always happy to assist.

Mr. David Hanson (Delyn)

Will my hon. Friend give way?

Mr. Berry

I have just given way to the Minister and I will happily give way to my hon. Friend in a moment. I should have thought that the Minister might make such points in his speech, but he asked me a factual question and I have no problem in giving him the answer.

In table 26, six employers' associations wanted the exclusion of small firms and three did not—

Mr. Paice

Precisely.

Mr. Berry

Will the Minister allow me to finish reading from table 26? In answer to the question, "Should small firms be excluded?", six employers associations said yes, three said no and 30, the overwhelming majority, had no comment—precisely, Minister.

Mr. Corbett

I am sure that my hon. Friend heard me say that one should not set too much store by these figures, but perhaps he would like to remind the Minister of the fact that the organisations that speak for the majority of employers—the Confederation of British Industry, the Institute of Directors and the Employers' Forum on Disability—are all of one mind and believe that there should be no exemption for small firms.

Mr. Berry

My hon. Friend is correct. The Confederation of British Industry is on record as stating firmly that there should be no exemption for small firms, as is the Institute of Directors. I have grave reservations about the views of the IOD on disability matters generally, but as my hon. Friend said, it opposes a small firms exemption, as do the Employers Forum on Disability and the Law Society, which represents many small firms, as well as many other employers' organisations.

Since the Minister pressed me, it is a matter of fact that only six, or 15 per cent., of employers' associations supported the small firms exemption and I am grateful to him for enabling me to clarify that.

Reference has been made to the United States and the fact that the Americans with Disabilities Act provides an exemption, which stands at firms employing 15 or fewer people. It has been asked why if 15 is good enough for the United States, should we not accept the same figure. Reference has also been made to the Minister's visit to the United States, and I am sure that many other right hon. and hon. Members have visited the United States. I was there a fortnight ago and had several meetings with the principal architect of the Americans with Disabilities Act, the President's Committee on Employment of People with Disabilities, the Equal Employment Opportunities Commission and many others.

The point that is not made is that, in framing the Americans With Disabilities Act, supporters were trying to ensure similar anti-discrimination legislation for disabled people as that provided under the Civil Rights Act 1964 dealing with discrimination on the grounds of gender and race. The figure 15 is included in title 1 of the Americans with Disabilities Act for the simple reason that the terms "employer" and "employee" used in title 7 of the Civil Rights Act have been transferred lock, stock and barrel to title 1 of the Americans with Disabilities Act. The exclusion from the Americans with Disabilities Act of small firms that employ fewer than 15 workers exists simply because it was in the Civil Rights Act. Disability groups and organisations campaigning for equal rights for disabled people argued for equal treatment.

I see no logic in having a small firms exemption. Labour Members are not totally out of touch with what happens on the other side of the Atlantic. We know that the exemption exists in America because those who drafted the Americans with Disabilities Act were anxious to have the same provisions as existed in their civil rights legislation, which deals with discrimination on the grounds of gender and race, and they urged equal treatment on the American Congress. In opposing any small firms exemption, I argue for treatment for disabled people that is equal to the treatment provided in our other anti-discrimination legislation—no more and no less.

Unless the Bill is amended, we shall have the ludicrous position whereby small firms cannot legally discriminate on the grounds of race and gender—I am delighted about that—but can on the ground of disability. That lack of equal treatment is fundamentally unacceptable.

Had any Tory Members taken up my invitation to intervene and offer a reason for this provision, they might have said that small firms would experience difficulties with the costs of what the Bill calls "reasonable adjustments"—modifying the workplace to enable disabled people to take up employment opportunities—or what the Civil Rights (Disabled Persons) Bill calls "reasonable accommodations". As the hon. Member for Exeter (Sir J. Hannam) said at the beginning of the debate, clause 6 provides specific protection by deploying the concept of reasonableness.

The Government make it perfectly clear, and I agree with them, that the adjustments required at the workplace to enable disabled people to secure rights at work should be reasonable. They will specify in regulations what is "reasonable", just as they would in the case of the Civil Rights (Disabled Persons) Bill promoted by my hon. Friend the Member for Derbyshire, North-East. The hon. Member for Exeter is absolutely correct to say that the concept of "reasonable" in clause 6 provides all the protection for small firms that is necessary.

Mr. Wigley

Does the hon. Gentleman recall experience in the United States that, where "reasonable expenditure"—that was the term used—was undertaken to accommodate the needs of disabled people in their workplace, average costs amounted to $200 and, in 68 per cent. of instances, the total cost was less than $500? That is not an excessive burden on any company.

Mr. Berry

The hon. Gentleman is absolutely right. I have with me the latest publication of the Job Accommodation Network in the United States, published by the President's Committee on Employment of People with Disabilities, which, includes precisely the figure to which the hon. Gentleman referred. It says that 68 per cent.—more than two thirds—of all the adjustments and accommodations made under the Americans with Disabilities Act cost less than $500. Our exchange rate fluctuates, but let us assume that that is about £350.

The hon. Member for Exeter quoted the Minister's comments on Second Reading to emphasise the fact that the Minister had stressed that reasonable accommodation costs, in many cases, nothing and, in some cases, very little. Interestingly, the latest analysis of the cost of adjustments made in the United States as a result of the Americans with Disabilities Act showed that, in 18 per cent. of cases, no costs were incurred; in 68 per cent. of cases, costs of up to $500 were incurred; in 78 per cent. of cases, costs of up to $1,000 were incurred; in 86 per cent. of cases, costs of up to $2,000 were incurred; and only 5 per cent. of adjustments cost more than $5,000, or £3,000 to £4,000.

The story does not end there. Throughout this debate, not just today but in recent years, the hon. Member for Stratford-on-Avon (Mr. Howarth) has consistently said that there are not only costs but benefits. The Job Accommodation Network asked firms what were the benefits of making adjustments. The survey asked which of the following benefits did your company realise? These are the latest figures covering the past two years or so of operation of the Americans with Disabilities Act, and 52 per cent. of companies responded "yes" to

Allowed you to hire or retain a qualified employee". If an employee becomes disabled or suffers an impairment at work, and if the employer provides reasonable adjustments to enable the person to continue to work, the employer saves money on retraining and redundancy costs and retains a skilled worker. In answer to that first question in the survey, the majority of employers said that there were significant benefits in retaining a disabled person.

The benefits that employers typically mention, in addition to retaining qualified employees, are: saving on cost of training a new employee; saving on workers' compensation and other insurance costs and saving as a result of increasing the workers' productivity. Employers in the United States are now asked to put a dollar value on the benefits of providing reasonable accommodation or making reasonable adjustments.

I have the document before me and can make it available to the Minister, but his civil servants have frequently visited Washington and I am sure that it is already available to him. He will know that the current estimates of the Job Accommodation Network are that for every dollar spent on providing reasonable accommodation for disabled employees under the Americans with Disabilities Act, employers save $27; employers receive $27-worth of benefits. Before people go running away with the idea that providing reasonable accommodation only incurs costs and never confers benefits, they should take on board the evidence from the United States, which shows explicitly that costs are often very modest and benefits are often substantial.

Mr. Barnes

The example of Macdonalds in Britain has already been given. The Bill, inadequate though it may be, will apply to Macdonalds, which because of its provision of goods and services, will incur some costs. The costs, however, will be outweighed by the returns that my hon. Friend has mentioned. The Bill applies to companies in other matters, so why should we not say to Macdonalds that its employees should be provided with access to work? That extra cost, if any, would be very marginal.

5 pm

Mr. Berry

My hon. Friend is absolutely right. I have been partly surprised and partly angry about debates on the cost of legislation in recent months. The compliance cost assessment of the Civil Rights (Disabled Persons) Bill was simply fraudulent. More significantly, people have always looked at the costs and have ignored the benefits. To the best of my knowledge, the Government have not yet offered any estimate of the benefits of anti-discrimination legislation on, for example, employment. I would be happy to give way if any hon. Member would like to offer advice on the issue.

Indeed, a compliance cost assessment of the Government's Bill has been made but, to the best of my knowledge, no estimate has been made of its benefits. Nobody would produce a budget without looking at the benefits as well as the costs—not if they were producing it seriously. No employer would consider expenditure without looking at the benefit that that expenditure may confer. No economist would dream of looking at costs and excluding benefits.

It is extraordinary that we still face the ridiculous situation in which Conservative Members—if one eventually contributes to the debate—tell us that small firms have to be excluded because of the costs that the legislation would impose. I suspect that, yet again, there will be no acknowledgement of the importance of benefits. Why, I ask myself, have no estimates of benefits been prepared by the Government? Why has the Department of Employment confined itself simply to looking at the costs of anti-discrimination legislation and not its potential benefits?

It is absurd. We live in a society in which we happily throw away £30 billion keeping people out of work, instead of investing that money in jobs, which explains our culture. We never look at the benefits of creating employment; we only ever look at ways of trying to deny people jobs. It cannot be overstated that, if the Government were serious about this matter, they would be considering the benefits involved.

The small firms exclusion is supported not only on the grounds of the costs of adjustments implied by the Bill but it is also sometimes said that small firms cannot respond to complaints. The idea is that, even if somebody's complaint about discrimination was unfounded, the firm would have to make some response and, in extremis, it might end up at an industrial tribunal. It is sometimes argued—I am doing my best to try to identify arguments that others should be putting—that the very fact that complaints may be made imposes a burden on the small firm because it would have to respond to those complaints.

Under anti-discrimination legislation that seeks to deal with gender and race discrimination, we do not worry about the possibility of complaints. We do not say that small firms should not have to deal with complaints on the grounds of gender or racial discrimination, so why on earth should we use that excuse for disability? We do not exempt small firms from having to deal with a whole range of requirements, such as health and safety, building regulations and so on, so why should we select this area of discrimination for special concern?

As my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) said, a properly staffed and resourced commission with powers to investigate complaints—such as the commission in the United States—could deal with frivolous complaints quickly and protect small firms or, indeed, any large firm. It would be extraordinary to argue that small firms should be excluded from employment provisions because even though they are able to deal with complaints of discrimination on the grounds of gender and race, they cannot deal with complaints of discrimination on the grounds on disability.

In conclusion—[HON. MEMBERS: "Hear, hear."] I am faced with an interesting situation. I have been inviting Conservative Members to speak. The hon. Member for Croydon, North-East made an important point, with which I dealt and agreed. There was no dispute between us and, as a long-standing supporter of the Civil Rights (Disabled Persons) Bill, the hon. Gentleman knows that what I say is exactly correct. I have been trying to identify arguments that Conservative Members would deploy in support of the small firms exemption should they be minded to do so, but I have noted that, so far, not a single Conservative Member has been minded so to do. I have not heard any other arguments in favour of the small firms exclusion. I honestly believe that, briefly, I have dealt with the usual arguments that are deployed. I think that, equally briefly, I have pointed out that the arguments that are occasionally deployed in favour of a small firms exclusion are totally without foundation.

I have also pointed out—I hope that it is taken on board by the Minister—that those who have responded to the Government's invitation to comment on proposals have not been jumping up and down and saying, "Please can we exclude small firms?" Only employer one wanted a small firms exclusion and only 15 per cent. of employers' associations wanted it. The clear majority of firms do not want such an exclusion or, frankly, do not care one way or the other.

I very much hope that the Government have listened to the consultees who responded to the White Paper in the summer, I hope that they have listened to the debate on Second Reading, in Committee and again here today and I hope that they will acknowledge that equity demands that employment provisions should be essentially the same as those in the Sex Discrimination Act and the Race Relations Act. There is no small firms exclusion in those Acts and there should not be in this Bill.

The Bill's employment provisions would be unacceptable if a small firms exclusion were to be retained. Will the Government please indicate as quickly as possible that they are convinced by those arguments, will show further movement on the issue and will recognise what disabled people have a right to demand—no small firms exclusion?

Mr. David Congdon

I listened carefully to the arguments advanced by the hon. Member for Kingswood (Mr. Berry). He put his case well—I hope that that comment does not undermine his position in any way—and he was right to praise the Government for their response to the difficulties that he encountered last year when he introduced the Civil Rights (Disabled Persons) Bill. I did not think then that I would be speaking on Report on a Government Bill on disability discrimination, and I should like to thank the Minister for Social Security and Disabled People for all he has done to enable us to reach this stage.

It is partly for that reason that I do not want to be difficult about part II of the Bill. That is also why I intervened earlier on the hon. Member for Kingswood, because I genuinely could not remember exactly how we started out, many months ago, when we first discussed exemptions. Having asked that question, I now remember which way round the debate went in Committee.

To begin with, the Bill contained an exemption for small businesses. I was relatively happy about that because I think that certain aspects of small businesses are different from those of larger ones. I accept, of course, that we could debate the extent to which those differences are significant and the extent to which the Bill should take account of them.

I now recall, having had my memory jogged, that an amendment was moved early on in Committee to remove that exemption. I had some difficulty with that, because I was ambivalent about its removal. I am still somewhat ambivalent about that amendment to the Bill. I accept the logic of the argument that all firms should be included in the legislation, but it is important to consider carefully the needs of small businesses.

I would therefore like my hon. Friend the Minister to spell out in detail exactly why the Government believe that small firms should be granted an exemption. In particular, I should like to know why that decision was reached when, as the hon. Member for Kingswood has pointed out, businesses were hardly unanimous in opposition to their inclusion in the Bill. That is an important point to consider.

I noted Ministers' arguments that small firms should be excluded because they are not equipped to deal with complaints because they do not have personnel departments. I previously worked for a large company, and I am not sure about the truth of that argument. Large companies may have the apparatus and resources to deal with complaints, but that machinery is sometimes overly bureaucratic, and it can take a long time for a complaint to be dealt with.

At the other end of the spectrum, I am conscious that firms employing one or three employees do not have the resources to deal with any complaints. One can therefore construct an argument—I would not wish to push it too far—that an employee limit should be set at which certain firms should be exempt from the Bill. I am not suggesting that firms employing 20 employees should be exempt, but I certainly accept that certain circumstances should be taken into account when considering firms that employ one man, two men or two women and a dog.

The reasonableness test could counter that argument, because it is important to apply that test to any aspect of legislation. I accept that the Bill does that, but the new clause tabled by my hon. Friends and I, and other hon. Members, was designed to achieve even more than that provided by the routine reasonableness test in the Bill. It recognises that, notwithstanding that test, the Bill should be extended a bit further in relation to smaller firms. It would give the Secretary of State the power to specify what would be reasonable conduct by those firms. I should like the Minister to explain specifically why he feels unable to accept the new clause.

The new clause is important, because it was designed to try to break through the log jam that had been created by the argument that because small firms are different, they should therefore be exempt from the Bill. People recognise, however, that any cut-off is arbitrary. Some people have argued for a lower employee limit, but, as a compromise, I believe that small firms, especially those with just one, two or three employees, should be treated a little differently in recognition of their special circumstances. I hope that the Minister will consider that option.

I am pleased that Government amendment No. 122 removes any ambiguity about whether the exemption limit could be raised upwards. I know that assurances on that have been given before, but it is important to be unambiguous and to make it clear that the only change to the limit would be downwards.

5.15 pm

If the Minister feels unable to accept new clause 6, I urge him to give serious consideration to whether a commitment should be made as soon as possible—in the House or elsewhere—to lower the employee limit from 20. The danger is that the existing limit will be considered as set in tablets of stone. If my hon. Friend is wrong and we find that, in the light of experience, the Bill, once enacted, does not cause any particular problems for firms employing between 20 and 25 people, but causes problems to disabled people who want to work for firms employing between 15 and 20 people or 10 and 20 people, the limit should be lowered. That change would be based on practice rather than theory.

Surely the ultimate goal must be to ensure that all firms treat disabled people fairly when they seek employment. We may argue about the pace of change, but the goal must be to ensure that no employee, disabled or otherwise, is discriminated against when seeking employment.

Dr. Norman A. Godman (Greenock and Port Glasgow)

I must first thank you, Mr. Deputy Speaker, for giving instructions to pull the shades down against the glare of the sun.

I have some sympathy for what the hon. Member for Croydon, North-East (Mr. Congdon) said about companies which employ two or three people—be they one man, two women and a dog, or whatever. I accept that such firms may encounter difficulties in some circumstances.

New clause 16, which is grouped with new clause 6, is designed to end discrimination relating to all firms, large or small. We have a long history of Administrations who have sought to provide legislative exemptions for small firms. Today's debate reminds me of the Industrial Relations Act 1971, which sought to introduce labour law directly into industrial relations. That Act also provided an exemption for small firms. I thought that that was a mistake, just as I think that clause 7 is a dreadful mistake on the present Government's part.

The 1971 Act had some good parts to it, because it introduced disciplinary and grievance procedures, but those procedures should have been made available to those working in small firms as well. Similarly, it is utterly wrong to discriminate against employees of small firms.

As for employment opportunities for disabled citizens in small firms, medium or large ones, I am confident that the experience I have gained in my constituency is no different from that gained by other right hon. and hon. Members. Some of my local firms, large and small, have an excellent record on employing people with disabilities. One that always comes to mind is Lithgow Electronics, which, given its total work force, employs a large number of disabled people. Those people with disabilities are treated in exactly the same way as those fortunate enough not to suffer from disabilities. That company in my constituency provides us with a remarkable and heart-warming record in that regard.

There are also smaller companies in Inverclyde which are only too anxious to provide good terms of employment for their employees with disabilities. It is likely that such firms—whether in Inverclyde, elsewhere in Scotland, south of the border or in Northern Ireland—do not require the type of regulations that would be imposed of new clause 16 were introduced into the Bill.

However, in Inverclyde and elsewhere in Scotland, there are small firms and large firms which have an extremely poor record regarding the employment of people with disabilities. New clause 16 would provide many people with employment opportunities that are denied them now—with reasonable pay and good conditions of employment which do not treat people with disabilities as second-class employees, as has all too often been the case.

I appreciate that there may be some difficulties with new clause 16 for small companies, but they need only consider other small companies in their region with excellent industrial relations records to dispel some of their anxieties about the external checks and restraints which would be brought into small companies to defend the needs and interests of employees with disabilities.

Such employers need to he guided and, if possible, helped financially, to recruit, train and employ disabled people. It is important that those external checks and balances are introduced to defend the interests of employees of small companies because it can be exceedingly difficult for such employees in small firms to draw attention to their grievance if they believe that they are being unfairly treated by the employer. It is better that employees in those circumstances should be protected by what I have called elsewhere "external checks and balances" on the discrimination exercised by employers.

Small companies employing fewer than 20 people have little or no experience of trade union involvement and trade union representation of employees, so it is important that we introduce other measures by which such employees' interests may be defended.

If costs are an issue, as the hon. Member for Croydon, North-East seems to suggest, I echo what my hon. Friend the Member for Kingswood (Mr. Berry) said earlier: that issue can be considered in terms of the costs and benefits to employers of taking on people with disabilities. If there are problems of costs in respect of people with learning disabilities, cannot the Government and the European Union provide financial assistance to implement training programmes and introduce modifications to a company's premises and equipment?

Over the years, research has shown that people with learning disabilities can carry out many of the functions in a company which are performed by others with no disabilities. Given the right training, they can acquire a range of occupational skills. Such training may be more extensive than that needed to bring other employees to a defined benchmark, but, with the right training and with the right modifications to plant and equipment, it can be achieved. I wonder whether the Minister has taken advice about whether help can be obtained by such small firms by way of European structural funds.

Mr. Barnes

Is not the atmosphere of a small firm rather than a larger one often more suitable for a person with learning difficulties? A small group of people who link and work together, as one hopes happens in the best small firms, creates that important atmosphere. The small firm would seem especially appropriate for people with learning difficulties rather than the larger, perhaps more impersonal firm, which might be more difficult to handle. The assistance to which my hon. Friend refers is therefore justified.

Dr. Godman

That is an important argument. In small firms, others people can guide the person with disabilities, acting as protectors and mentors. The same may also happen in large firms in which relatively small teams of employees work together. Research has shown that it is not difficult to introduce a person who is physically impaired into such a team. However, my hon. Friend makes the important point that, in a small firm, other employees will willingly, indeed happily, look after someone with disabilities.

We all know that, when a person leaves the social security system for full-time employment, the person and their family benefit immediately and there is a self-evident benefit to the state. There are other benefits, too. When people with disabilities are employed in small or large firms, there is the psychological benefit of finding full-time employment; an immediate boost is given to a person's self-esteem. A person knows that he or she is part of the community in a much more comprehensive and more rounded way when in full-time employment.

We should not lose sight of the fact that there are benefits to an employer in taking on someone who has found it immensely difficult to find work in the past. Often people who are handicapped in one way or another become loyal, hard-working employees. Some employers do not deserve that type of loyalty, but that is another matter. In terms of costs and benefits, therefore, a small firm can indeed benefit from taking on people with learning difficulties or people who are physically impaired.

I visited a company in my constituency recently and spoke to a person who is physically handicapped, who has been confined for much of his life to a wheelchair. He said that, even though the terms and conditions of employment were not so good in that company—and by God, they are not, in comparison with those offered by many other local employers—the fact that he was in employment for the first time in about 15 years gave him enormous self-respect and lifted the burden from his family of having to care for someone who, I think, had been psychologically bruised by his constant rejections by local firms when seeking employment.

Now here he is, earning what I regard as a poor wage, but nevertheless he is out every morning, going to his job, he is highly regarded by his workmates and he is delighted to be in work. I believe that that example could be multiplied many thousands of times.

The small firms sector—which is very important in the west of Scotland and elsewhere—has a role to play. Some small firms in my constituency would not require the regulations that implementation of new clause 16 would impose, but I believe that others would need such regulations because they would seek to exploit disabled employees who were not members of a trade union.

I believe that the Government should certainly accept, if not new clause 16, then new clause 6, in order to defend rightly and properly the interests of those who are often unable to defend themselves. Disabled employees often do not have trade union representation and therefore cannot avail themselves of a formal collective bargaining system. The Government must accept that firms which employ fewer than 20 people should not be able to dodge the external checks and balances which protect the interests of those who, in many instances, are unable to defend themselves.

5.30 pm

Mr. Hanson

It has been a quite marvellous experience this afternoon. We have debated for some two hours the new clauses standing in the names of my hon. Friends, and hardly any voices have been raised against them. The hon. Members for Exeter (Sir J. Hannam), for Stratford-on-Avon (Mr. Howarth) and for Croydon, North-East (Mr. Congdon) have joined the hon. Members for Rochdale (Ms Lynne) and for Caernarfon (Mr. Wigley) and many of my hon. Friends in supporting amendments to the legislation that will ensure an end to discrimination in employment against disabled people.

It will come as no surprise to hon. Members to learn that I support new clause 16, which would remove the 20-employee limit and would assist firms with the undoubted difficulties that they may face in some circumstances. I attended Committee sittings for several weeks. To be honest, at the beginning of the Committee process I did not think that the Government would accept any amendments from the Labour party during consideration of the Disability Discrimination Bill. As it happens, the Government did not accept any amendments from the Labour party during consideration of the Bill, so perhaps I was justified in feeling jaundiced.

However, I came out of the Committee sittings feeling better than when I went in. I think that—I am sure that the Under-Secretary of State for Employment, the hon. Member for Cambridgeshire, South-East (Mr. Paice), will prove it in his winding-up speech—the Under-Secretary and the Minister for Social Security and Disabled People impressed all members of the Committee with their sense of fairness. I genuinely believe that they wish to end discrimination against disabled people, and tonight they will have the opportunity to do just that.

The Bill will not end discrimination against disabled people in employment. There is the potential for disabled people to be discriminated against if they work for firms that employ fewer than 20 individuals. That will create a two-tier source of discrimination, which flies in the face of the aims of all hon. Members who have spoken in the debate and of everyone who has responded, and who intends to respond, to the legislation as it progresses through the House.

The Bill's provisions are illogical. If I were the managing director of a firm that employed 21 people, I could not discriminate against disabled people on the ground of their disability. However, if I were the managing director of a company that employed 19 people, I could discriminate on that basis. Where is the logic in that?

Conservative Back Benchers who wish to speak in the debate may allude to the cost associated with employing disabled people. If I am the managing director of a company that employs 21 individuals, I must bear the cost associated with their employment. However, if my company employs 19 individuals, I can discriminate and choose not to bear that cost. We could dispute—as we have done today—whether there is a cost to be borne, but, if there is, the situation is totally illogical.

If there is a cost associated with employing disabled people—we would dispute that claim—why should a highly profitable company that employs 10 people discriminate against disabled people, when perhaps a company that does not make a profit but employs 25 people cannot? There is no logic in the Government's position to date.

If Government Members were to say that they proposed to amend the race relations legislation to include an exemption for small firms, that might justify the Government's position in this instance. If Government Members were to say that they intended to amend the Sex Discrimination Act 1976 to include an exemption for small firms, there might be some justification for the Government's current position. However, the Government will not do that. Under the Government's legislation, it will be legal to discriminate against disabled people if a company employs fewer than 20 people, although it is not able to discriminate on the basis of race or sex.

According to the current legislation, it will be legal for hon. Members to discriminate against those disabled people who might apply to work for them. We would not wish to sanction that sort of situation, but there could not be one law for those outside the House and another for hon. Members.

The Government's position takes no account of that well-known expression "downsizing". Many companies in my constituency have downsized considerably—notably, the steelworks at Shotton, which has downsized from 20,000 to 1,000 employees under a Tory Government. Some companies will employ fewer than 20 people for part of the year and more than that number at another time. According to the Government's current proposal, some companies will be able to discriminate against disabled people in January, but not in February, or perhaps in March, but not in April. There is no logic to that position. It is a person's right not to be discriminated against, and that inalienable right should be protected in every circumstance.

The small firms sector, which we have been examining in detail today, accounts for one in six workers in the United Kingdom. That figure is far higher in rural areas. Both Ministers represent, as I do in part, rural areas. The hon. Member for Caernarfon and I represent constituencies in Wales. Wales comprises large rural areas where most people are employed by firms with fewer than 20 employees. Therefore, many disabled people in Wales face potential discrimination in their place of employment.

The Bill will ensure that disabled people will not be able to apply for jobs in large areas of my constituency without the fear of discrimination. In the agriculture sector, a small, rurally based business may be the sole employer. Large firms may not be appropriate in that area.

My constituency covers a large part of the north Wales coast. The holiday resort of Prestatyn is in my constituency and it attracts many thousands of visitors each summer—I hope that many hon. Members will visit it this summer. Businesses in Prestatyn face the same difficulty as many others in rural and coastal areas of Wales: they have temporary and seasonal employment. Companies may employ fewer than 20 people for part of the year and at other times more than that number. As a consequence of the legislation, different laws will apply to the same companies depending on the time of year and on how many people choose to visit Prestatyn for their summer holidays. They cannot plan.

The Bill will impose burdens that my hon. Friends' measures would remove. Eighty-four per cent. of firms in Northern Ireland have fewer than 10 employees, so it is reasonable to assume that 90 per cent. of them have fewer than 20 employees. How will a disabled person be free from fear of discrimination when the Bill will make it legal to discriminate in 90 per cent. of cases in Northern Ireland? Small businesses are a fast-growing sector of the economy and we must encourage them. At the same time, we must ensure fairness and justice across the board.

My hon. Friend the Member for Kingswood (Mr. Berry) made great play of the various representations made. Only one company wrote in favour of the exemption and only six employer associations did so—hardly an avalanche. As my hon. Friend the Member for Birmingham, Erdington (Mr. Corbett) said, the consultation document may not be fulsome and detailed, but it shows strength of feeling. Individuals usually tell the Government when they are fearful of something, but they have not done so in this case. That has not been done either by the Confederation of British Industry, the Employers Forum on Disability or the Institute of Directors—God bless it. The institute stated: if the Government believe that disabled people should have the right, it should apply equally to all employees. What a marvellous organisation—and I never thought that I would say that. One down and a few more to go.

I never fail to be surprised by the strength of feeling evident among organisations in my constituency when they suspect that the House is acting against their interests. Licensed victuallers, newsagents and other small shopkeepers, chambers of commerce, chambers of trade and others are all employers or represent them and they often bang on my door about urgent issues—but they have not done so over the need for exemption. The Law Society and other organisations had the opportunity to make representations to hon. Members but did not do so.

I look forward to hearing the Under-Secretary's justification for retaining the exemption and legalising discrimination against disabled people in companies with fewer than 20 employees. The new clauses and the amendment will not bring any onslaught against small businesses. In Committee, the Under-Secretary said: The Government are trying to strike a balance between the desire to eliminate discrimination and the desire to ensure that over-burdensome regulations that might jeopardise small businesses' primary functions are not put on them."—[Official Report, Standing Committee E, 14 February 1995; c. 252.] Are the Government really worried about imposing burdensome regulations on small businesses? If the Under-Secretary is concerned, perhaps he will tell the House what would be the cost to small businesses if the exemption were lifted. How many small firms would go out of business? How many people would be made unemployed? What burden would be imposed in this instance that does not exist in respect of race relations or sex equality legislation?

I hope that the Government will be positive, end the exemption and give small businesses help from the Employment Service and other organisations in respect of good practice, to assist them to meet their obligations under the Bill as amended by the proposed measures. Scope, for which I worked for eight years prior to entering the House, suggested that a personnel pack should be produced, to inform firms how to comply. It could illustrate good and bad practices, provide information and give practical support.

Would it not be more positive for the House to abolish the exemption, say that it believes in ending discrimination in employment and acknowledge the value of a programme of help for small firms—rather than to allow companies to evade their responsibilities and to make disabled people face discrimination in their daily lives? I hope that the Under-Secretary will respond positively, and I look forward to his acceptance of the measures.

5.45 pm

Mr. Colin Pickthall (Lancashire, West)

The hon. Member for Exeter (Sir J. Hannam) and my hon. Friend the Member for Delyn (Mr. Hanson) mentioned the employment problems confronting disabled people living in rural areas. Several organisations pointed out that the 20-employee limit will dramatically affect such people. In Committee, the Under-Secretary responded to my questions about the difficulties confronting would-be disabled workers in agricultural areas, which may be more graphic than those facing disabled people in urban areas.

I must not touch on other clauses, but I shall place that matter in context. The much lower density of population in rural areas leads to greater isolation, less access to disabled groups and support groups of all kinds, and more remoteness from usually concentrated local authority services. The decimation of public transport in recent years also makes it harder for disabled people in rural areas to seek work. Their choice of school or college is limited by travelling distances and the lower density of such institutions. The Bill does not address any of those problems.

Changes in the nature of agricultural employment and practices have already massively reduced the number of people working in that industry. Most farms are little more than family employers. The encouragement of diversification in the countryside has introduced small firms, most of which have fewer than 20 employees.

The Bill will exclude most disabled people living in rural areas from the right to challenge discrimination in employment. We have no reason to suppose that a smaller proportion of rural residents than urban dwellers are disabled. In fact, given the dangerous nature of agricultural work, with tractor and machinery accidents, chemical accidents with substances such as organophosphates and the danger of using pesticides in greenhouses, it may be that country areas have a higher proportion of disabled people. Certainly the figure will be no lower.

The chief employment characteristic in horticulture is its seasonal nature, to which my hon. Friend the Member for Delyn referred in respect of seaside resorts such as Prestatyn—or, in Lancashire, those of Blackpool, Morecambe and Southport, which purports to be in Lancashire. Incidentally, Blackpool has the worst unemployment rate in Lancashire.

Such areas are also characterised by large numbers of part-time workers. In Committee, the Under-Secretary helpfully told us that the Bill made no distinction between part-time and full-time workers. That is to be welcomed. He also said that it would be the time when discrimination occurred that mattered, in terms of a challenge to a tribunal, not the time when an accumulation of incidents of discrimination provoked a disabled employee into making a challenge. That comment, too, was helpful and clarifying.

I am still very worried, however, about the practical oddities that will be created by the figure of 20. They were mentioned by the hon. Members for Stratford-on-Avon (Mr. Howarth) and for Caernarfon (Mr. Wigley). The latter pointed out that a business may employ more than 20 employees one year, but fewer employees the next. That sort of thing could happen quite often. Even more important, some firms change the number of their employees month by month, or even week by week. In horticulture, probably the largest source of employment in most of my constituency, for much of the year an employer will have only a handful of workers—four, five or six—but for several months of the year he will have well over 20, and perhaps as many as 60.

For the sake of argument, let us suppose that for half the year the employees will be covered by the Bill's discrimination provisions, but for the other half they will not; that, of course, includes any disabled person who happens to be one of the core of permanent employees. For half the year, a disabled person will have the right to challenge discrimination—not so for the other half.

This is an immensely difficult situation for employer and employee alike, and it lends itself to possible abuse by bad employers. I do not want to exaggerate, but there will be employers who use these circumstances to get around the Act.

Where would the criterion of reasonableness come into all this? Ironically, many occupations in horticulture lend themselves to workers with, say, mobility difficulties. Many groups from the horticultural industry, recently giving evidence to the Select Committee on Agriculture, strongly asked the Government to allow more foreign students into the United Kingdom to take up the extra work during the summer. That clearly shows the seasonal need for workers; at least some of the jobs could be taken up by disabled people living near the horticultural enterprises.

Every means of persuasion to get rural employers to engage disabled people who can do the jobs, and to treat them equally once they are in work, should be adopted—but the Bill does not set the requisite framework for that. The application of the rights of disabled people in firms with more than 20 employees to smaller employers would serve as a backstop in the process.

Obviously there are difficulties and imponderables that need sorting out. The CBI documents make some intelligent references to that fact, but a clear benchmark in law, coupled with help and guidance for small employers, could make an enormous difference to a significant number of disabled people in rural areas.

The Under-Secretary must also explain how he hopes to deal with the franchising problem mentioned by the hon. Member for Exeter, and with contracting out. The splintering of large firms into smaller firms, using these methods, may already be a way of getting around the legislation, and it will prove even handier for the purpose in future.

Areas such as mine face other problems, too. The town of Skelmersdale has been badly clobbered by two recessions in the past two decades. Agencies of all kinds—for instance, Lancashire Enterprises—have scurried to put up small industrial units, which usually can accommodate only between four and 10 workers. Hopes for the future of the town lie very much with these small firms, which occupy an ever greater part of its economy. It is quite possible that the exclusion of small firms under the 20 employees proposal will effectively exclude disabled people in Skelmersdale from the town's economic future, which the small firms are trying to build.

I cannot understand why the Under-Secretary might object to this group of amendments. I candidly admit that they are not measures that I would have chosen to table. New clause 6 states: It shall be the duty of the Secretary of State to have regard to the needs of employers"— "have regard" is rather woolly— and to take such practical steps as he deems appropriate". Again, it states:

The Secretary of State may make regulations specifying the circumstances under which adjustments may be considered reasonable for employers". The new clause is full of conditionals, qualifiers, maybes and perhapses. New clause 16(3) is in the same vein: Regulations under this section may make different provisions for different circumstances and different sizes of employer and specify different periods within which different adjustments shall be made; and regulations made under this section may be varied by subsequent regulations. What could be more accommodating than that wonderful sentence for any Minister wanting to please everyone and get away with murder?

Mr. Paice

I begin by dealing with an issue not directly related to the Bill but mentioned by at least two hon. Members—Remploy. The hon. Member for Birmingham, Erdington (Mr. Corbett) will know that clause 7, to which the new clauses relate, does not directly concern Remploy; but the decision to end the priority supplier scheme was taken only because of clear legal advice, since endorsed by the European Commission, that it contravened European legislation. The amount of £147,500 which the hon. Gentleman quoted is not a UK-derived figure; it is a European figure, and the figure put into the new special contracts arrangements reflects that.

Remploy is facing competitive pressures, especially in textiles. I do not think that it expects to win every contract for which it bids, but it is competing hard for MOD contracts, and we hope that it will win some. In the meantime, it is doing everything it can to diversify into the commercial retail clothing sector, where perhaps it will find greater scope.

Several Members referred to the benefits of employing disabled people. I hope that those who served on the Committee with me will take my word for it that I entirely recognise that disabled people have a vast amount of skill and expertise to offer the businesses which employ them now and which will, we hope, employ them in the future. Over the past few months, I have been excited by the number of places where I have seen disabled people working and fulfilling a useful role for themselves and their employer. Let no one be in any doubt that we recognise the benefits that derive from their employment.

6 pm

There are positive advantages for businesses in employing disabled people. Ultimately, we want employers to be willing to employ disabled people without any thought of legislation, and without knowing that they might have to employ them because otherwise they will be taken to a tribunal. We want employers to employ the disabled because they want to employ them, because they believe that they have something considerable to offer to their business.

If that is our long-term objective, I suggest that legislation must be couched in a way that has the support of employers, not their resistance. If their first approach is cynicism—doubts and resistance to legislation—the battle to change their hearts and minds and consequent behaviour will be that much harder.

Successive Governments have recognised that small businesses need special help to survive and prosper as well as protection from over-burdensome regulation. Hon. Members on both sides of the Chamber have said during the debate that small-scale employers do not necessarily have specialist staff easily available to them, staff who have knowledge of the more detailed aspects of employment law.

That was recognised by the Labour Government, who introduced the Sex Discrimination Act 1975. The approach of race and gender legislation is different, of course, from that of the Bill. The 1975 Act introduced a small-firm threshold of five. In recognition of the unique difficulties of small firms—for example, the extra costs of providing separate washing facilities and cloakrooms—the threshold had to be abolished through an EC ruling. The Labour Government's objective was notable, however.

The threshold was provided for in a relatively straightforward piece of anti-discrimination legislation to eliminate employment discrimination on the ground of sex. There are no ifs, buts or degrees. We all know that people are men or women. I understand that one or two have doubts about where they stand, but the majority know clearly where they are. Everyone understands that.

The Bill is far more complex than previous legislation. We have heard the argument that reasonable adjustment would cover the difficulties faced by small firms. I do not agree. I am not convinced that that is so. The small-scale employer, who is usually the owner of the business, will have many issues on his mind. It is unrealistic to expect him or her to know what might or might not be reasonable, to take advice or to follow case law as it develops, especially in the early years of an Act's implementation.

Recruitment of new staff in small businesses is often a rare event or infrequent. That means that employers of small businesses will be unable to learn quickly from experience. I suggest that the recruitment of new or extra staff would be even less frequent if small-scale employers had to spend ages before making each appointment genning themselves up on the latest employment legislation.

The point is amplified by the fact that such businesses have not hitherto had to deal with disability legislation. As we all know, small firms have been exempt from the quota legislation for about 50 years. It is a fact that, for those 50-odd years, no Government have attempted to change the threshold. Accordingly, the figure of 20 has not been plucked from the air. It reflects precisely current legislation.

Inevitably, new anti-discrimination legislation takes time to settle down. Practice needs to be established, and case law has to be developed from tribunal deliberations. It will be burden enough on large firms that have resources sufficient to enable them to cope. It will be much more difficult for small businesses without specialist knowledge to keep up with what is happening in the early years of implementation.

Mr. Wigley

The Minister is suggesting that, as time goes on and experience is garnered, it might become easier and more acceptable for small companies to live with either a lower threshold or to be brought in, as it were. Government amendment No. 122, which we are considering with the new clause, refers to 'a different number (not greater than 20) for the number for the time being specified there."' Will the Minister confirm that the number could be zero, and that that would be within the purview of the proposed legislation?

Mr. Paice

I ask the hon. Gentleman to bear with me. I shall talk about the amendment to which he has referred in my later remarks.

Several hon. Members on both sides of the Chamber have referred to the apparent lack of support from employers' organisations and other bodies for the exemption for small businesses that we propose. It is a novel event to hear Opposition Members—I think they had difficulty in swallowing it—putting forward the views of the Institute of Directors. I am glad, however, that they have recognised that the institute is usually worthy of note.

The hon. Member for Erdington referred to the Institute of Directors and the Confederation of British Industry as representing the top 100 companies.

Mr. Corbett

I did not.

Mr. Paice

The hon. Gentleman says that he did not.

Mr. Corbett

I referred to the forum.

Mr. Paice

All right, the Employers Forum on Disability.

Even so, the CBI, the institute and the forum are not renowned for representing businesses with fewer than 20 employees. Probably very few of the businesses they represent have fewer than 200 employees. They are not speaking on behalf of small businesses.

By contrast, the Federation of Small Businesses speaks specifically on behalf of small businesses. It has issued a statement, which reads: The Federation is particularly concerned with any amendments aimed at bringing all employers, irrespective of size, within the remit of the legislation. It urges Members to vote for the retention of the exemption rule for small employers with under 20 workers. Adding further burdens to this wealth-creating sector of the economy will seriously damage its potential for job creation. Those are the views of an organisation that clearly represents small businesses.

Mr. Alfred Morris

Will the Minister address the point about the artificiality of selecting the number 20? He as a Member represents employers with fewer than 20 employers and employers with more than 20. He is a great expert on horse racing. As the House knows, there are in the Newmarket part of his constituency people in that industry who employ fewer than 20, and others who employ more. Why create this fundamental difference, as it seems to many, between employers in the same industry?

Mr. Paice

With great respect to the right hon. Gentleman, whose commitment to the cause of the disabled is renowned, I do not think that he was in the Chamber a few moments ago when I specifically said that we have opted for 20 because that reflects the quota legislation. That was why we chose 20.

I shall continue with the thoughts of outside organisations. In the light of the remarks of the hon. Member for Kingswood (Mr. Berry), I shall read the comments of two organisations. One writes: The cost of adjustment could fall disproportionately upon smaller firms, especially in the early years of new legislation, before suitable premises and equipment become more generally available. The second quote reads: Small businesses face particular difficulties in interpreting guidance and advice from central and local government. They seldom have the personnel expertise available to a larger company, and each decision as to whether to introduce modifications to work practices or the premises must be weighed carefully against the impact on company viability. There is ample evidence that some organisations that represent small businesses clearly recognise the problems that small businesses face.

Mr. Berry

rose—

Mr. Paice

I shall give way once more, but then I must press on.

Mr. Berry

Will the Minister acknowledge that small firms made similar comments about the Sex Discrimination Act and the Race Relations Act? Will he please acknowledge that the lack of a personnel department in a small firm is as much a problem in abiding by those Acts as it would be in this case? Why on earth should disabled people yet again be treated as second-class citizens?

Mr. Paice

No. I would contend, as I tried to earlier, that it is not the same to compare directly the gender and race legislation with the proposed legislation, because of the complexity. The other pieces of legislation do not contain the concept of reasonable adjustment. They are much more simple, straightforward pieces of legislation, and are much easier for a small business man to grasp than the implications of the proposed legislation.

Mr. Wigley

What about the tax legislation?

Mr. Paice

The hon. Member for Caernarfon (Mr. Wigley), for whom I have immense respect from our long acquaintance with each other, says from a sedentary position, sotto voce, "What about the tax legislation?" to which the hon. Member for Erdington also referred. There are special arrangements for tax legislation—the VAT threshold, for example. [Interruption.] There is no exemption from tax. Perhaps many wish that they were exempt. The lower rate of income tax and VAT clearly recognises that small businesses deserve special judgment.

Having said everything that I have, I want to stress to the House, particularly to my hon. Friend the Member for Exeter (Sir J. Hannam), who moved the new clause, that of course we do not want small firms to discriminate against disabled people—any more than we want large firms to discriminate against them. Many small firms do employ disabled people. I can assure the House, as I have before, that we will encourage them to follow the new code of practice. To that end, they will be consulted in drawing up the code.

We have always emphasised that there are benefits in employing disabled people. We have always said that it is in an employer's interest to have access to the widest possible pool of talent, but we do not believe that it is possible to produce an accurate estimate of those benefits. So when the hon. Member for Kingswood challenged me on why we do not put the benefits on the equation, it is simply because we have not been able to find a way of financially measuring the benefits. We recognise that they are there and, as I have already said, we see considerable benefits in employing disabled people.

Several hon. Members referred to the Americans with Disabilities Act and its exemption for small firms. The figure was originally 25 when the Act was introduced, but it was subsequently reduced to 15. Unlike our Bill, that figure of 15 cannot be lowered further. Our Bill brings in the flexibility.

I listened with interest to the hon. Member for Rochdale (Ms Lynne), who referred to a pizza parlour—I assume that it was a small employer—and to the fact that it would need to install a minicom and so on for customers, saying what a wonderful company it was and how much new business it had gained. That is precisely what we propose in part III of the Bill—the goods, facilities and services aspect. She did not address a single comment on the pizza parlour as an employer, but spoke of the service that it was providing its customers. I can wholeheartedly go along with everything she said about the benefits to a businesses of being seen to welcome disabled people as customers.

Small firms are also eligible for help from the Employment Service and from our specialist advisers, as well, we hope, as becoming users of the disability symbol "Positive About Disabled People". Already, some 10 per cent. of symbol users are firms employing 24 or fewer employees.

6.15 pm

Much has been said this afternoon about figures. The hon. Member for Kingswood, of course, paraded his use of figures from the Red Book, of which he showed himself a master—at least of how to read it, if not how to interpret the figures—when the Bill was being considered in Committee.

Mr. Berry

Will the Minister give way?

Mr. Paice

Of course, I will happily give way.

Mr. Berry

Can the Minister give one example of where I have misinterpreted the figures in the Red Book? Just one example.

Mr. Paice

I was just about to do that.

The hon. Gentleman again paraded the fact that the majority of respondents, be they employers or employers' organisations, did not say that they were in favour of the exemption.

Mr. Berry

Correct.

Mr. Paice

I am grateful to the hon. Gentleman. He can clearly still read his book.

The fact is, as the hon. Gentleman said this afternoon, that the consultation document clearly set out the proposition that businesses employing fewer than 20 people would be exempt.

Another hon. Member—I have forgotten which one—said that he found it surprising that organisations are not usually backward in coming forward when they feel strongly about something—

Mr. Corbett

It was my hon. Friend the Member for Delyn (Mr. Hanson).

Mr. Paice

I apologise to the hon. Gentleman for not remembering him.

The fact remains that, when one starts off with a positive proposition and people do not respond to say that they do not like it, it is reasonable to assume that they are agnostic. If they felt clearly that the proposition that we were making was wrong, they would have said so. I am the first to recognise that they did not take the opportunity to say that they like it, but they did not say that they did not like it. [Interruption.]

It is no use hon. Members starting to suggest that perhaps the organisations did not bother to reply. They did reply to the overall consultation document, but chose not to express a view on this particular issue. Therefore, the least that one can conclude is that they did not have strong feelings one way or the another: otherwise, they would have so done. If that is the case, I come back to the point that twice as many employers' organisations supported the exclusion as opposed it. That was the point that the hon. Gentleman tried to ridicule when I intervened on him earlier.

Mr. Berry

Will the Minister acknowledge that the employers associations that supported the small firms exclusion amounted to 15 per cent. of respondents to that question?

Mr. Paice

We can all do the maths, but the fact is that the organisations that did not respond on that issue clearly did not feel strongly about it one way or the other.

Another aspect of the figures that has been used this afternoon is the fact that small firms play an increasing role in the labour market. Nevertheless, as drafted, the Bill covers some 83 per cent. of employees, or job opportunities. I must be straightforward and tell the House that, if the Government's amendment proposed tomorrow are passed, that figure will drop to 80 per cent., but it is in that bracket.

Mr. Alan Howarth

Will my hon. Friend accept that the other 20 per cent. really do matter equally as much? Will he further accept that, in Australia and New Zealand, which do not accept that it should be lawful for any firm of any size to discriminate unjustifiably against disabled people, it is not probable that firms will be driven out of business wholesale? Will he accept that there are some 6.5 million disabled people as against the very small number of unreconstructed organisations whose objections he is citing, and that it is for the Government to lead in that field?

Mr. Paice

I was going to come in a moment or two to some of my hon. Friend's specific comments. Of course I understand the points he made, and if he will allow me just a moment or two, I will respond to them all during the course of my remarks, which I need to pursue at this moment.

Rev. Martin Smyth (Belfast, South)

Will the Minister give way?

Mr. Paice

This must be the last time.

Rev. Martin Smyth

I appreciate the Minister giving way, and apologise for the fact that I was not here earlier for the debate, for reasons that the House will understand.

Does the Minister accept that, taking global figures, one may discover that 85 per cent. of the people are outside the small business area, but does he also accept that, in some areas, a higher number of people are looking for employment in the small business sector, and that they should be encouraged to do that?

Mr. Paice

Of course I accept the hon. Gentleman's apologies for not being here earlier. I am sure that all of us would have wished to be at the same funeral, where I assume he was, paying tribute to our former hon. Friend, the Member for North Down. I was about to address precisely the point that the hon. Gentleman raised.

I recognise, as the hon. Member for Lancashire, West (Mr. Pickthall) and my hon. Friend the Member for Exeter said, that there are many parts of the country where small businesses tend to be the norm. Of course, "small" in the normal context does not just mean employers with fewer than 20 employees. Since this subject was debated in Committee, I have thought through my constituency—which I like to think I know well. It is a fairly large rural constituency, but even there I can think of many, many employers who are certainly small, but in no way near being below the 20 limit.

Even with a threshold of 20, and even in rural areas, there will be considerable opportunities for disabled people in organisations that are covered by the Bill. However, even that presupposes that organisations with fewer than 20 employees will want to discriminate against disabled people. We do not want them to do so; we are not encouraging them to do so; we are simply saying that, at present, we do not believe that we should create legislation to require them not to do so, for all the reasons that I stated earlier.

We hope that small businesses will continue to grow, to prosper and to become a larger part of the economy. That is one reason why the Bill includes provision for the Secretary of State to raise or lower the threshold. I said in Committee that we would need mightily compelling evidence to increase the threshold above 20. I resisted an amendment that would have removed the upward power in case the threshold was moved to a figure that experience then proved to be too low.

Obviously, since the Committee stage, we have looked at the matter again, and I am pleased that we are able, through amendment No. 122, to deal with any concerns about a possible future move to a threshold higher than 20. The amendment inserts a maximum figure of 20 into the Bill. That was one of the points referred to specifically by my hon. Friends the Members for Stratford-on-Avon (Mr. Howarth) and for Exeter. I hope that I have satisfied them.

I pay particular tribute to my hon. Friend the Member for Exeter not only for moving new clause 6 so excellently, but for his sterling work for disabled people over many years—work matched by very few in this House. He rightly recognised the special position of small firms by proposing that, for those with fewer than 20 employees, the Government should make special provision to help them comply with the law. That presumably assumes that amendment No. 7 is passed, although that is not entirely essential.

I have explained to my hon. Friend and the House that we believe that the threshold is necessary anyway, not least because the action that he proposes in subsection (2) of his new clause would be highly unlikely to deal with the position of all small firms, from farms to factories, shops to offices, or any other organisation. We believe that the code of practice will be drawn widely enough to cover all types of businesses. As I have said already, we will encourage small firms to adopt it, and they will be consulted upon it.

New clause 16 was tabled by the Opposition, who have striven for flexibility, but I am afraid that they have achieved complexity. First, the new clause does not make it clear that the financial provision to which it refers would have to be provided through a scheme or similar arrangement that would need complicated rules in order to operate fairly and effectively. The new clause purports to make provision, but does not provide the means to do so.

Secondly, I do not believe that it would be sensible to attempt to set down in regulations every circumstance in which the wide range of possible adjustments could be considered reasonable for any given employee in any type of small firm—or, for that matter, that it is practicable or sensible for regulations to set deadlines by which particular adjustments must be made. The new clause appears to be an inflexible and bureaucratic approach.

It would be an administrative nightmare to introduce regulations as set out in subsection (3). The use of the word "different" five times in that subsection shows the complexity of the problem that hon. Members seem intent on creating. The permutations would be endless. The new clause would be most unwelcome to small firms, because they would not want to be confronted by such a degree of uncertainty. What we propose is much better and clearer—a clause that sets a clear threshold.

On several occasions today, hon. Members have referred to franchises. A franchise is a business arrangement between one business and another, under which one agrees to sell the goods or services of the other. A firm that takes on a franchise may or may not be a small firm in itself, but if it is small it will face the same difficulties that any other small firm will face, and it will be in no better position to cope with them than any other organisation that is not a franchise.

If it is a larger firm, even one operating at several locations—although we are talking not about locations, but about the firm itself—it will come within the framework of the Bill.

Mr. Wigley

When I intervened earlier, I pressed the Minister for an interpretation of whether "number" includes zero. In other words, by passing amendment No. 122, would that give the Government the facility, by order, to include all companies? It is important for the House to know that.

Mr. Paice

Yes.

Several hon. Members have referred—and I listened carefully—to concerns about the potential for uncertainty when a firm employs seasonal workers or people on fixed-term contracts, so the size of the work force moves up and down through the exemption threshold. The hon. Member for Caernarfon (Mr. Wigley) mentioned that, together with the hon. Members for Delyn (Mr. Hanson) and for Lancashire, West and some of my hon. Friends. I recognise that concern, and I shall consider whether action needs to be taken to clarify the position. It may require a new regulating power. I recognise that the concern is real and needs to be dealt with.

I think that I have dealt with most of the comments by hon. Members from both sides of the House. There are already a number of exceptions for small firms in legislation. The one point to which I have not referred was raised by the hon. Member for Erdington, who said that the cap that he envisaged the Government proposing on the financial costs of alterations would somehow help small businesses. I am afraid that he has misread our proposals. We are not proposing a cap on part II of the Bill; our cap refers to part III—the adaptation of premises for goods and services.

My hon. Friend the Member for Exeter and other hon. Members who have spoken feel extremely strongly about the issue, and I respect that, as does my hon. Friend the Minister of State. However, I hope that they realise that our intent to get rid of discrimination is just as strong as theirs. Our desire to see all firms acting properly towards disabled people is just as strong as theirs.

Therefore, I hope that my hon. Friend will not pursue his new clause. The Government want to eliminate discrimination against disabled people and to use legislation as a vehicle for ultimately changing attitudes. That is best achieved by a Bill that strikes the right balance between the needs of disabled people and the proper priorities of businesses to succeed. Too onerous a Bill would create resentment among the very people whose attitudes we are trying to change.

I have no doubt that, when the Bill is enacted and implemented, we will all learn from experience. That is why I am willing to give an undertaking to the House that we will table an amendment in another place that will require the Government to review the operation of this measure within five years and to give the House the opportunity to debate the issue.

In the light of my comments and the very genuine concern that I and my hon. Friend have to ensure that the Bill's objective is achieved, I hope that the House will reject the new clause.

6.30 pm

Sir John Hannam

The debate has been extremely useful, with a clear message coming from hon. Members who have participated. My hon. Friend the Minister has shown that he is trying to find a way through small firms' fears, and the desire of all hon. Members to avoid leaving a large number of small firms outside this important anti-discrimination legislation. I welcome Government amendment No. 122, which removes the power to increase the level of 20 employees. I hope that, as the Bill progresses, a commitment to reduce that figure of exclusion will be made even more strongly.

My new clause 6 is a probing amendment that does not go far enough to satisfy Opposition Members—who, I understand, want to vote for amendment No. 7, which removes the exclusion. Whatever happens tonight, the issue will return to the foreground of debate in the other place. I hope that the Government will consider all the arguments that have been advanced by hon. Members today, and that they will introduce further changes in the other place. However, I recognise the inadequacy of my new clause, and I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Mr. Tom Clarke (Monklands, West)

On a point of order, Mr. Deputy Speaker. The hon. Member for Exeter (Sir J. Hannam) misunderstood the views of Opposition Members. We were far from convinced by the Minister, and we ask that our new clause 16 be put to the House.