REPORT ON IMPACT OF ACT (Hansard, 12 February 2002)

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

§ Mr. Deputy Speaker (Sir Alan Haselhurst)
With this it will be convenient to discuss the following: New clause 3—Assessment of costs to businesses— '(1) The Secretary of State shall, within one year of the coming into effect of this Act, prepare and publish an assessment of the average administrative costs per employee to businesses of complying with each of the requirements of this Act (2) The Secretary of State shall, by Regulations, provide for the average administrative cost per employee as determined by the assessment under (1) above to be reimbursed to employers from public funds.'.
New clause 4—Assessment of resources of the Advisory, Conciliation and Arbitration Service— '( ) Before making any order under section 55(2) of this Act relating to Parts 2 and 3, the Secretary of State shall prepare and publish an assessment of the additional resources likely to be required by the Advisory, Conciliation and Arbitration Service as a consequence of the coming into force of Parts 2 and 3.'.

§ Mr. Hammond
New clause 1 would require the Secretary of State to make regular assessments of the Act's ongoing impact on employers and public funds. 97 It also focuses attention on the distribution of costs and benefits between different groups, including between different groups of employees.
We believe that many of the Bill's provisions are positive, and we welcome them. However, it is disingenuous to pretend—or imply—that the measures do not have costs. Businesses will face costs in terms of potential job creation, given that the Bill will reduce flexibility in the labour force. In addition, the Bill will benefit some members of a work force, inevitably at the expense of others. It is therefore right and appropriate to require the Secretary of State to focus attention on such matters by preparing and publishing regular reports on the effect and outcome of the Bill in real life.
The Bill is wide ranging. The first part deals with paternity pay and leave and with adoption pay and leave, and extensions to rights of maternity leave. The second and third parts deal with tribunal reform and improving disciplinary and grievance procedures. The fourth part is a hotch-potch, dealing with everything else. I want to focus on the first part and clause 47, the new clause introduced by the Government in Committee that deals with the right to ask for flexible working terms for employees who have children below school age or, in certain specified circumstances, older children where a disability is involved. There is also a question in terms of cost impact relating to fixed-term work, but as we will debate that matter later, I shall avoid talking about it now.
We generally support the family friendly approach of the first part of the Bill, but, in most cases, we should see the benefits delivered not as benefits to employers—although when labour markets are tight, they may help employers recruit and retain staff—or as benefits to individual employees, but primarily as benefits to society as a whole.
It is unquestionable that anything we can do to strengthen families and support parents in the raising of children will have a significant benefit to society as a whole. We will have a better-educated and motivated work force, as well as a more stable social fabric. This is a social good from which we hope all of us will benefit in terms of less delinquency, better education, better-behaved children, less crime and less call on social services and social security to support damaged or collapsed families.
We support that, but it is important to recognise that this is a benefit to society, and that society should be prepared to pay for it. In some cases, the Bill appears to impose the costs of this benefit to society on one sector of society, namely businesses. Businesses have a finite capacity to absorb additional burdens. If they are damaged by the imposition of too great a burden, that will have a significant effect on society as a whole, as business becomes uncompetitive, the economy is unable to grow, jobs are not created and wealth does not expand.
In terms of the first part of the Bill, the direct costs will be met by society as a whole through the reimbursement by the Treasury of the costs of the direct payments for paternity and adoption leave and additional maternity leave, but the indirect costs on business will fall first on employers. Time off, sometimes for prolonged periods, will create problems, especially for small businesses. On Second Reading, we rehearsed the impact on a firm 98 employing three or four employees which finds that perhaps one or two of those employees at a time may be absent on statutory leave. Perhaps one of those employees will have a key skill that is essential to keeping the business going. The consequences could be significant if that employee were absent.
In practice, I have always believed that, in a small firm, a deal will be done with such an employee. Effectively, the employer will end up bribing the employee not to exercise his statutory rights. That is probably a sub-optimal outcome, but one can envisage situations in which it will not be practical for a small business with three or four employees to continue operating for a prolonged period in the absence of a critical employee with a real skill.
The real cost to a small business of losing a key employee is not, as the regulatory impact assessment suggests, the administrative costs of replacing him with someone else, or sharing out his work to others; it is the opportunities forgone.
In the real world of small business, the order not pursued or the customer not served will represent the costs involved in lost output, lost profitability and, perhaps at the extreme margin, lost viability for that small business, so part I will involve intangible costs. Flexible working imposes further burdens, and the compliance requirements for smaller employers involved in ensuring that they do not infringe all the obligations placed on them under the Bill will impose yet more burdens on small business.
Labour Members are fed up with hearing about burdens on business, but burdens on business have a real impact on all of us. The burdens that will be imposed under the Bill cannot be seen in isolation; they have to be seen in the context of a stream of regulations coming from the Government. Last year alone, the Government imposed more new regulations than in any previous year on record. Since 1997, business has had to come to grips with a raft of legislation that stems from the Government's signing up to the social chapter. Business has had to deal with the minimum wage and the working time directive, as well as the Government's determination to treat business as an extension of the welfare state apparatus and the working families tax credit, and there are more administrative burdens to come as business delivers more and more of the Government's in-work welfare programme.
Business is reeling under that onslaught. The manufacturing sector in particular is under huge pressure, struggling with very tight economic conditions and facing an over-valued exchange rate, or perhaps one should say an under-valued euro, and swingeing tax increases, some of which—for example, the climate change levy—are targeted precisely at the sector, manufacturing industry, least able to cope with them. However, many of our competitors appear to have finally got the message; they are edging away from inflexibility in labour markets and moving back to embrace the benefits of more flexible labour markets. We are moving in the opposite direction, increasing the inflexibility in our labour markets in a way that threatens the competitiveness of British business. That needs to concern us all, not merely those who run and operate businesses.

§ Rob Marris
I apologise to the House for the fact that, when I intervened earlier, I failed to say that I am member of the Transport and General Workers Union, that I 99 employ two people in my office and that my constituency Labour party received money from the TGWU before the election, as is recorded in the Register of Members' Interests.
Will the hon. Gentleman give the House three examples of regulations that he would get rid of? I am sure that he will be able to do so, because I asked that very question on Second Reading, approximately two months ago, so he has had plenty of time to prepare an answer. Which three regulations introduced by the Labour Government that he thinks are burdensome on business and not socially necessary should be got rid of?

§ Mr. Hammond
The hon. Gentleman's declaration of interest, which I did not quite catch, ranks as the verbal equivalent of small print, but I am sure that it will make interesting reading in Hansard tomorrow. I do not intend to get involved in going through all 4,600 regulations that the Government introduced last year, looking at their merits and demerits. The hon. Gentleman may be right to imply that I cannot recall all 4,600 of them off the top of my head.

§ Mr. Deputy Speaker
Order. I hope that the hon. Gentleman will not attempt to stretch his memory. Under new clause 1, we are discussing the Bill's impact, and he need not stray outside it.

§ Mr. Hammond
Thank you, Mr. Deputy Speaker. The point that I am trying to make is that the burdens that will be imposed under the Bill are, of course, incremental. I do not suggest that this Bill alone will be the downfall of British industry. That would be absurd, but the Bill has to be seen in the context of business—in particular, the manufacturing sector—facing extraordinary difficulties because a raft of new burdens, new taxes, new regulations and new legislation has been imposed on it since 1997. We are staring down a pipeline that contains a further vast array of legislation and regulations—which largely originate in Brussels—and that will descend on British business in the not-too-distant future. That is the last thing that business needs at this point in time.

§ Judy Mallaber (Amber Valley)
If the hon. Gentleman is able to talk only about the burdens imposed by this Bill, would he care to tell us which parts of the Bill, other than the provisions for union learning representatives, a proposal with which we know he disagrees, he would get rid of? Would he get rid of the paternity provisions and the adoption provisions? Will he let us know exactly which parts of the Bill he wishes to dispose of?

§ Mr. Hammond
The hon. Lady has perhaps missed the point of new clause 1. We must be honest with ourselves in recognising that all the good things in part I will impose costs on business. The next thing I was going to say was that I do not know exactly how damaging those costs will be to business. However, anybody who cares about our economy, growth, jobs and prosperity will want to ensure that we monitor carefully the impact of the legislation passed by the House. Regulatory impact assessments are prepared for Bills considered by the House. However, once we have passed them, off they go.
New clause 1 suggests that the Secretary of State should attempt to measure annually what the cost impact of the measures in this Bill has been, and continues to be, 100 on business. That would enable us to have an informed debate about the costs and benefits, and also about the incidence of those costs and benefits. It is not a question only of the costs imposed on businesses, but of the costs imposed on other employees in the workplace.
The Bill has a particular focus on dealing with employees who have young children. However, if we accept the premise that business has a limited capacity to absorb additional burdens and remain competitive, we are selecting one group of employees for favourable treatment against other groups of employees who believe that they have claims for similarly favourable treatment. Of course, parents of young children can make a strong argument for a right to ask for flexible working, and strong arguments can be made for granting paternity leave to help strengthen families at the time of a birth. However, other employees look after elderly relatives, and in many cases they spare the state a very expensive burden. We should also consider employees who look after adults with disabilities.
Many employers attempt to be even-handed and flexible in dealing with their employees and their requests for flexible working or periods for time off. The fear must be that if one group of employees is given an absolute statutory right to ask for flexible working and to have that application considered by an employer who has to provide reasoned arguments if he will not grant the request, the natural reaction of employers will be to resist granting such extra statutory rights to other employees who are not entitled to them under the law. Therefore, a cost will be imposed on other employees in the workplace because of the real benefits being extended to a particular group of employees.

§ Mr. Kevan Jones
Does the hon. Gentleman agree that there is also a benefit to business and industry if parents do not have to worry about having to get time off to look after young children? Productivity may increase. Companies that have invested in training and other matters and that allow women, in particular, to work flexibly could therefore retain them in the work force.

§ Mr. Hammond
The hon. Gentleman is absolutely right. In many cases, particularly in areas where the labour market is tight, employers will take the kind of measures that we are discussing entirely for reasons of self-interest. I do not disagree with that for a moment. I do, however, take issue with the suggestion that we should get into the business of Governments using legislation to force employers to do things because they are good for them. In general, the Government's record in second-guessing the best way to run a business is not top quartile. If courses of action are available to a business which a rational manager might take for himself, that should be left to education rather than legislation to determine. Frankly, I would not trust the Government to impose the best management course of action in legislation.

§ Mark Tami (Alyn and Deeside)
The hon. Gentleman talks about forcing employers to act. How does he square the re-authorisation of trade union membership with that?

§ Mr. Hammond
I am not sure that I follow the hon. Gentleman.

§ Mark Tami
I refer to check-off, which the previous Government forced employers to carry out every three years.

§ Mr. Hammond
rose—

§ Mr. Deputy Speaker
Order. I sense that the hon. Member for Runnymede and Weybridge (Mr. Hammond) is being led out of the confines of the new clause. It might be best if he does not pursue that argument.

§ Mr. Hammond
I am grateful for that ruling, Mr. Deputy Speaker. I shall plead ignorance in line with a sedentary comment from my hon. Friend the Member for Tatton (Mr. Osborne) who also thinks that Chekhov is a playwright.
It is not clear that the proposed measures will help UK business in the struggle to maintain productivity in the face of competition from overseas and the black economy, which we discussed in Committee. That touches on what the hon. Gentleman said. It is also worth remembering that every time we impose more legislative burdens on business, we widen the competitive advantage enjoyed by those who operate in the black economy and increase their ability to undercut responsible firms that abide by legislation, good or bad, that we introduce.
Costs that are borne by business will have to be absorbed in their total labour cost. The cost to a business of treating one employee will inevitably reduce what should be available to other employees as wages. Those employees who do not benefit from the costs that are imposed on business will be cross-subsidising their colleagues in the workplace. I am not suggesting that it is necessarily wrong to introduce such measures, many of which we welcome, but it is wrong to pretend that they do not have a cost to business, the economy and fellow employees. We have introduced new clause 1 to focus on that cost and to find a mechanism for regularly reviewing and assessing its level.
New clause 3 is supplementary to the purpose of new clause 1. It requires the Secretary of State to focus on the administrative cost to business of implementing the measures and to provide for reimbursement from public funds for that. Businesses are increasingly being asked to perform a role that was previously carried out by the state, especially in relation to administering the welfare state. The burdens are being imposed not just for the benefit of business itself but for the wider benefit of society, and they should be paid for by the public through taxation.
The Minister and the Secretary of State were keen to emphasise on Second Reading that small businesses at least will be reimbursed for 100 per cent. of their direct costs in dealing with maternity pay, paternity pay, adoption pay and so on. That is right, although it does not extend to all businesses. However, there is also a significant indirect cost to businesses. We do not know the size of the cost, but the best guide that we have is in the regulatory impact assessment. New clause 3 would provide a mechanism for regularly assessing that cost and arranging for it to be picked up by the public purse.
I understand that the Carter review of the cost to business of payroll compliance is under way. Perhaps the Minister will tell the House about the progress of that review, or perhaps it is a state secret that will be revealed by the Chancellor on Budget day. Many small businesses 102 place a great deal of hope on the outcome of the review. They hope it will lead to a recognition by the Government that as businesses are being asked to do more and more of the state's administrative work in relation to employees, their costs must be reimbursed. Businesses may well be an efficient means of delivering services because they are geared up to administering the work of the welfare state and delivering benefits to employees, but they must be reimbursed.
New clause 4 deals with the resourcing of the Advisory, Conciliation and Arbitration Service. The original scheme for tribunal reform considered by the Government was intended to generate revenue through a system of fees. Under pressure, the Government scrapped that system. Until this evening, I had thought that parts 2 and 3 were intended to reduce the work load of tribunals, so I was a little surprised to hear the Minister say he thought it likely—indeed, I think he said inevitable—that the work load would increase. That makes new clause 4 doubly important because it deals with the adequate resourcing of ACAS in fulfilling its responsibilities under the Bill.
It is apparent to everyone that if the Bill is successful in reducing the burden on tribunals by diverting cases away, an additional burden may fall on ACAS. We probed the Minister on this matter but did not get a satisfactory answer. The new clause would require the Secretary of State to undertake a formal assessment of the resourcing requirements of ACAS before implementing parts 2 and 3. One of the many matters on which Members on both sides of the House have agreed during the proceedings on the Bill is that ACAS has a vital role, and it is essential that it is properly resourced to perform that role.
In Committee, we merrily talked about conciliation officers being available for this, that and the other, but ACAS is already under great pressure. Whether the work load of tribunals increases or, with a greater number of cases being handled outside the tribunal system, substantially decreases, there is likely to be a significant increase in the demand for ACAS services. I hope that the Minister will enlighten us as to what his Department envisages for the future adequate resourcing of ACAS. How can we ensure that this will not be a half-baked measure and that parts 2 and 3 will not come into force without ACAS having been given sufficient resources to cope with the responsibility placed on it by the Bill?

§ Brian Cotter
The hon. Member for Runnymede and Weybridge (Mr. Hammond) may be surprised to find that the tent to which he referred is bigger than he thought because the Liberal Democrats support new clause 1. We agree that there should be an annual assessment of the impact of the Bill, which makes several changes to employment law. Although employees will benefit from new employment rights such as flexible working provision, we must recognise that those new rights will have an impact on businesses, which will have to comply with new regulations.
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Small businesses in particular will be affected. Before Second Reading, I met representatives of the Federation of Small Businesses who expressed the hope—perhaps it is a forlorn one, but we must take it on board—that small businesses would not be forced to take on the burden of too many more regulations and that any new regulations 103 that were introduced would be examined extremely carefully. That is why we Liberal Democrats strongly support the concept of examining regularly all sorts of regulations that affect business. In fact, we would support an annual horizontal impact assessment of all regulations. I cannot talk about that now as it would not be in order to do so in this debate, but it is something that should be done regularly.

§ Mr. Prisk
For my benefit, will the hon. Gentleman clarify what an annual horizontal assessment is?

§ Brian Cotter
It covers everything that confronts businesses—all sorts of regulations. However, I am not supposed to drift on to subjects that we are not debating; I chipped this one in quickly, but I had better move back to the clause. That regulations should be examined has long been a Liberal Democrat view—in fact, I think that my party was the first to make such a proposal.

§ Mr. Lloyd
Given that the purpose of the new clauses is to examine the costs arising from the Bill, will the hon. Gentleman estimate the cost to Government and other sources of the exercise he describes?

§ Brian Cotter
If the hon. Gentleman means the costs of the exercise of examining, I cannot estimate them. However, it is not unreasonable to suppose that they need not be excessive. We have regulatory impact assessments in respect of Bills, and even if the proposal in the new clause were to carry a cost, it would surely be repaid in terms of enabling us to see the legislation's impact and to address certain matters.

§ Mr. David Watts (St. Helens, North)
My hon. Friend the Member for Manchester, Central (Mr. Lloyd) was trying to identify the rationale prevailing among the Conservatives and Liberal Democrats. You seem to be arguing against an increase in bureaucracy, but at the same time you—

§ Deputy Speaker
Order. I am arguing against nothing.

§ Brian Cotter
Indeed, Mr. Deputy Speaker. That was well out of order. We are saying simply that we have long argued in favour of an annual assessment of the impact on the business community of all regulations and Bills.
I do not support the logic of the arguments of the hon. Member for Runnymede and Weybridge in respect of costs. Will he explain what sort of costs he believes should be removed once the assessment is complete? There are many reasons to carry out an assessment—for example, to see how regulations are implemented, how much red tape is added and how many requirements fall on small businesses.
We accept that costs will be associated with good regulations such as those covering maternity and paternity leave, which we strongly support. I do not decry those regulations, which are acceptable. Indeed, they are necessary to improve the workplace. However, when the Government implemented European regulations on part-time working, provisions that were two or three pages long in some countries ended up being 40 or 50 pages long in this country.

§ Helen Jones (Warrington, North)
I question the feasibility of what the hon. Gentleman is supporting. New 104 clause 1 would require an assessment of the impact of the legislation on employees of different descriptions. How will we collect that information? How will that be done, unless every employee completes a form stating whether he or she has children or a disabled relative, for example?

§ Brian Cotter
I support the argument that there must be assessment. Would the hon. Lady say that we should not assess the cost to business? Certainly not. Should we not assess how much red tape is unnecessary? I give credit to hon. Members on both sides of the House, because we are all considering how to examine Bills to determine what can be done away with and how we might say, "In practice, we do not need this rule, or that piece of paper." I am concerned that that process should be regularly undertaken.
Whether we accept costs depends on the Bill. I accept costs that relate to social requirements, including maternity and paternity leave, but there is laxity in the way in which Bills are introduced. Many regulations can be introduced after a Bill is enacted, for example.

§ Judy Mallaber
Taking up the intervention of my hon. Friend the Member for Warrington, North (Helen Jones) on the distribution of costs and benefits between employees of different descriptions, can the hon. Gentleman think of any way in which such assessments could be made without asking employers to be involved in collecting that information? Such involvement would clearly place another burden on them.

§ Brian Cotter
I have always supported the principle of examining Bills. Sampling procedures can be carried out to assess impacts. There are different ways of assessing different things. Specific details will turn on particular Bills and particular regulations. Are we calling into question impact assessments altogether? They must be carried out before a Bill is in place. One of my long-standing criticisms, along with my Liberal Democrat colleagues, is that such assessments have not been carried out adequately. We are arguing that the assessments should be undertaken adequately, regularly and on a continuing basis.

§ Mr. Hammond
Does the hon. Gentleman agree that it is alarming that Labour Members appear to be reluctant to accept an assessment of costs? It is a matter not of ruling out things because of costs, but of wanting to know what the costs are, so that we can behave rationally and understand what we are doing. It is appalling to think that we should work while blind.

§ Brian Cotter
I agree, although having said that there is a broad tent, I do not incorporate into that everything for which the hon. Gentleman stands, such as reluctance to introduce a minimum wage. However, I am not supposed to refer to that, so I had better press on.
I think that I have sufficiently addressed the issue. I ask the hon. Member for Runnymede and Weybridge to be more specific about the costs that concern him. What are the costs that he thinks could be cut? I accept the principle of assessing costs but I would like more detail, either now or later.

§ Mr. Hammond
I am grateful for the opportunity to intervene again. Contrary to what the hon. Gentleman said 105 earlier, we want to assess the costs not only of the things that we think are bad, but of those that we think are good. We want to assess all costs and benefits and their incidence so that we can make informed decisions. I cannot tell him whether the Bill contains proposals involving costs that are too great for the benefits that they will deliver unless and until there is assessment, which will allow proper and rational decisions to be made.

§ Brian Cotter
I think that I shall leave it at that for fear of being drawn into any suggestion that Liberal Democrats do not support maternity and paternity leave and other welcome and worthwhile proposals. We must regularly examine the impact of regulations and Bills on business. I am sure that the Minister will find it difficult to argue against that. I look forward to what he and other colleagues have to say.

§ Rob Marris
I shall principally address new clause 3. The hon. Member for Runnymede and Weybridge (Mr. Hammond) talked about flexibility in the labour market which, of course, we need. He also mentioned manufacturing, which is particularly important to me as a Member representing a west midlands constituency. He talked about benefits to society being imposed on business by some of the Bill's provisions. New clause 3, which he tabled, deals with working out average costs and reimbursing them to employers; that is contrary to my view of the way in which small business operates and, I suspect, to his views. The cost for small businesses of complying with administrative requirements is often higher than it is for bigger businesses yet, in the new clause, the hon. Gentleman simply wants an average cost to be reimbursed.
The hon. Gentleman assumes—I do not—that there is a cost; many of the Bill's provisions will benefit business. Thanks to the Labour Government, employment has gone up a great deal, and there are scarcities in the labour market. That can benefit business, as it means that it will not lose part of its trained work force. Is the hon. Gentleman seriously suggesting that, as a consequence of the new clause, we go into negative accounting? If there is a demonstrable benefit from the Bill's provisions—my hon. Friend the Member for North Durham (Mr. Jones) adverted to it—should business reimburse the state for having introduced them? I suspect that the hon. Member for Runnymede and Weybridge does not believe that it should.
Training is increasingly offered by the state, which is not to say that many businesses do not do a lot of training. In most cases, the Government do not seek to charge business directly for undergoing that training. In such things, there are trade-offs in any society; the new clause is therefore misconceived.

§ Mr. Hammond
Is the hon. Gentleman aware of the Carter review to which I referred earlier? Does he anticipate a gesture in response to that review, as proposed by the new clause? The state should recognise that in some cases significant costs previously borne by the state are transferred to business through business administration, particularly of in-work welfare schemes.

§ Rob Marris
I am not about to prejudge the outcome of the Carter review. We must consider the practicalities 106 of the way in which legislation operates, as I know the hon. Gentleman wishes to do. He talked about benefits being imposed on business; however, the flavour of his remarks was that, for example, he and his colleagues might wish to get rid of a swathe of health and safety legislation, which is massively beneficial to business and those who work in business. I hope that he will give an assurance that he and his party do not intend to do so. No doubt he will address that issue when he sums up.
The hon. Gentleman also mentioned favourable treatment for parents when he discussed flexible working. I am delighted that there is favourable treatment for parents; I say so as someone who, sadly, is not a parent, despite my best endeavours and those of my partner. Although I am not a parent, the next generation will look after me in my old age, assuming that I have the privilege of reaching an old age. I hope that my nephews and nieces are prepared to look after me as carers, if it comes to that. I salute the hon. Gentleman for suggesting that carers should be included in flexible working. I only wish that he had tabled an amendment to that effect; we could have debated it and heard the Minister's views.
Finally, on new clause 4. I hope that the Minister will give us an assurance that sufficient resources will be available to the Advisory, Conciliation and Arbitration Service to do any extra work that may be required under the Bill. I am not saying that the Bill will require extra work, but if it does, I hope that the Minister can give us that assurance.

§ Mr. Mark Field
It is a pleasure to follow the hon. Members for Wolverhampton, South-West (Rob Marris) and for Weston-super-Mare (Brian Cotter). I suspect that the tent will not be big enough to keep us all happy, but I hope that our debate will continue in an easy-going manner.
I want to address in particular new clause 1, to which my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) gave such a skilful introduction.
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I well understand what was said in relation to part 1. Although I did not serve on the Standing Committee, I have paid close attention to the Bill, which is clearly important. Behind it is a practical analysis of the modern world of work, and I fully appreciate that the family needs and responsibilities, especially of young employees, must be catered for. I should like to think, though, that many sensible and responsible employers have catered for them on a voluntary basis, without the need for legislative constraint. I recognise that the Minister will no doubt point out that some employers do not play the game and make life difficult for employees who find themselves in dire straits, for whatever reason.
My hon. Friend the Member for Runnymede and Weybridge hit the nail on the head. There is a great cost not just to businesses, but to fellow employees arising from many of the new rights that have been put in place. It is highly unfair, particularly in a tight employment 107 market and in a small business context, that people who by choice are not parents, for example, find an increasing burden placed on their shoulders.

§ Helen Jones
Can the hon. Gentleman enlighten me? In new clause 1(c)(iii), who are the "others", who are neither employers nor employees? How would he carry out an assessment of the costs and benefits of the Bill to them?

§ Mr. Field
There are external costs that will not be borne directly by either employers or employees, but which may be borne by a range of bodies. For example, to promote the Act it is likely that there will be a large amount of advertising via various Government Departments, which have been known to extol the virtues of their own legislation. That expense would be covered by sub-paragraph (iii).

§ Mr. Hammond
The hon. Member for Warrington, North (Helen Jones) does not seem satisfied with my hon. Friend's answer. The most obvious "others", neither employees nor employers, are surely the Government—the public purse.

§ Mr. Field
I hoped that that was the point that I was making. I thank my hon. Friend.
Earlier, the Minister proudly announced the support of the CBI. Central to the proposal set out in the new clause is the protection of small businesses. The CBI has supported in principle a number of pieces of legislation that have been introduced in the past five years. I hasten to add that the CBI was also supportive of much legislation passed over the previous 18 years. One of the reasons for that support is that larger businesses are well catered for. They have the infrastructure in place. They have large human resources or personnel departments.
That luxury is not available to many small and medium-sized enterprises. With 10 or 15 employees, they will often not have a dedicated HR department or a payroll department. That goes to the heart of the issue that my hon. Friend the Member for Hertford and Stortford (Mr. Frisk) has made his own—the Carter report and the incumbent expenses on the payroll that have been brought into play by recent legislation, rules and regulations. That is a great concern to many small businesses. If the Bill is enacted, there should be an early opportunity for a full assessment of the cost to small business resulting from the new rules and regulations.
My chief concern is that many of the proposals will provide a strong disincentive for smaller employers to increase their work force. That is especially true of small, vibrant organisations which, by the nature of their business, employ a lot of young employees. With 10 employees, say, all of whom are in their 20s or early 30s, there is a risk that two or three will be on paternity or maternity leave at any one time. The prospect of having to keep those jobs open for any length of time, especially when the economy may start to go through a more difficult phase, may result in such businesses deciding that they should not grow any larger. If rules and regulations provide a disincentive to businesses to employ more than, say, 12, 15 or 20 employees, those businesses may have to set up small subsidiaries that operated under a different umbrella in order to get round the rules. That would be an unhealthy state of affairs, but the provisions in the new clauses could alert us to this at an early stage.
108 In many of our constituencies, whether they be the heart of the City of London, which I represent, or some of those represented by Labour Members, the days of large-scale employers being able to offer many thousands of jobs are gone. The small and medium-sized enterprise sector is the real vehicle for employment growth in the years ahead.

§ Mr. George Osborne
It is welcome to have a chance to debate the important new clauses moved by my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond). They go to the heart of the Bill as regards the costs and benefits that it will impose on our society and our economy.
As hon. Members who served on the Committee will know, many parts of the Bill are uncontroversial. Widespread support was given to the extension of maternity rights, the creation of new paternity rights and, especially, the creation of new rights for adoptive parents. Conservative Members found themselves in the refreshing position of arguing for more rights for adoptive parents, which is a good sign. However, the Government must accept that those rights are not introduced without costs to society and to business. Indeed, the Government's regulatory impact assessment makes it clear that substantial costs are involved. Maternity leave will cost taxpayers £305 million and paternity leave and paternity pay will cost employers £64 million and taxpayers £63 million.
New clause 3 gives us the opportunity to debate where those costs should fall. Should they fall on employers, on employees or on society as a whole? If we as a society want stronger families and believe that it is right for parents to take time off to help to bring up their children, it is important that we give them a chance to do so. We should provide financial support, if necessary, or the chance to take a career break before returning to work. It is welcome that in recent years hon. Members of all parties have come to accept that.
Other parts of the Bill received less general support in Committee. Hon. Members have mentioned union learning representatives and the requirement on employers to give them paid leave. The Government predict a massive increase in the number of union learning representatives, from 3,000 at present to 22,387 in eight years' time—I am not sure how they managed to be so precise in predicting that figure. Many of those will be in the public sector. An illuminating fact that was mentioned in Committee was that the Department for Education and Skills has no union learning representatives.
The cost of the union learning representatives clauses will be considerable. The cost to employers of the clauses on fixed-term work could amount to £136 million. The Government estimate in the regulatory impact assessment that the huge new right—the duty to consider flexible working—will cost employers £286 million, possibly more. As I think that the Minister would freely admit, we are not sure whether that figure is remotely accurate, because the provision opens up a whole new area.

§ Judy Mallaber
The hon. Gentleman may be interested in my previous experience as an employer in a small organisation. By helping to rearrange someone's working hours, I saved the money that would have been spent on advertising to recruit a highly skilled employee and on training that person. Employers can cut costs in that way.

§ Mr. Osborne
I am happy to accept that flexible and part-time working, and helping employees to spend time 109 with their families, often help a company by improving relationships in the work force, and often ensure that someone who would otherwise leave a company for good comes back to work. We are flying blind, however, so far as the Bill is concerned. We do not know what impact it will have on society and on businesses. New clause 1 will at least give us a route map.

§ Mr. Simmonds
rose—

§ Mr. Hammond
rose—

§ Mr. Osborne
I shall give way first to my Back-Bench colleague.

§ Mr. Simmonds
Does my hon. Friend accept that we must consider not just the direct impact of the Bill but the administration that will ensue, particularly in small businesses that do not have personnel departments? That will be the real impact on the running of the business.

§ Mr. Osborne
My hon. Friend is right; real indirect costs arise from places being left vacant that are difficult to fill. Does my hon. Friend the Member for Runnymede and Weybridge wish to pursue his intervention?

§ Mr. Hammond
Is my hon. Friend surprised that, notwithstanding the lessons of history, hon. Members on the other side still apparently believe in the power of the statute to tell businesses what they should do in their own best interests? Does he not find that quite startling?

§ Mr. Osborne
My hon. Friend is right: that is indeed striking. One of the things that I would have expected the Labour party to learn from the supply-side reforms of the 1980s is that we cannot continue piling costs and legislation on businesses without having an effect on their competitiveness. When economists and historians look back on this period of history, they will judge those supply-side reforms to have laid the foundation for the strong economic growth that we have enjoyed for the last 10 years.
There is no real evidence of what impact the Bill will have on businesses and on society. Anyone who has read the regulatory impact assessment will know that it uses fantasy figures to try to calculate the possible costs and benefits to employers, which are almost impossible to calculate in advance. It would surely be much more sensible to ask businesses what the costs were likely to be. It has been suggested that that would represent an extra cost to businesses, but in my experience, small employers are only too happy to tell me what the costs of Government regulations have been for them. They have always been very happy to volunteer that information.
It clearly makes sense that we should have some idea of the cost of the employment legislation that we introduce.

§ Rob Marris
rose—

§ Mrs. Betty Williams (Conwy)
rose—

§ Mr. Osborne
I shall give way to my good friend, the hon. Member for Wolverhampton, South-West (Rob Marris).

§ Rob Marris
I am obliged. I think that I understood the hon. Gentleman to concede that, in certain circumstances, 110 businesses could save money through the measures in the Bill. My hon. Friend the Member for Amber Valley (Judy Mallaber) gave an example earlier in relation to advertisements and so on. Will the hon. Gentleman also concede that, if the new clause were added to the Bill and the ensuing investigations showed that a business was, overall, saving money through the measures, that money should be reimbursed to the Government? That seems to be the logic of what he is proposing.

§ Mr. Osborne
I thank the hon. Gentleman for making that point. Businesses are already paying through the nose to the Government because of the huge increases in business taxation that have been piled on over the last four years. Frankly, we cannot ask them to pay any more.

§ Mr. Prisk
I would like to review new clauses 1, 3 and 4 in the style of the Miss World contest, by taking them in reverse order.
I want to begin by looking at new clause 4. At the beginning of Second Reading and in subsequent claims and comments by the Secretary of State and the Minister, we heard proud—and, I think, genuine—claims about the potential for the Bill to improve the situation in the workplace. In a letter to all colleagues in the House, the Minister stated: The Bill will improve the way disputes are managed in the workplace. He went on to say that the Bill introduces a simple internal procedure and encourages both parties to use it. He also said: The Government is committed to … a modern and user-friendly public service, and well-informed users.
Those are all good and noble intentions that underpin the purpose of the Bill. The difficulty is that, no matter how hard I looked through the Bill, the explanatory notes and the subsequent regulatory impact assessment, I found nothing that specifically identified the resources required to achieve the aims set out in the Bill's preamble and by the Minister during his promotion of it.
5.45 pm
New clause 4 would enable an accurate assessment of the costs to ACAS, and thereby allow it to plan. That is particularly important in the light of the Minister's interesting comment that he foresees that the number of cases coming before employment tribunals will probably rise in years to come, despite many earlier statements to the contrary by him and his colleagues. It is right to bring that principle of assessment to the heart of a vital part of the Bill.
Although I do not want to overdo the cross-party consensus, I strongly support the request from the hon. Member for Wolverhampton, South-West (Rob Marris) that the Minister make it clear that resources will be forthcoming. New clause 4 would allow him to ensure that those resources are accurately identified and brought forward appropriately.
If I may, I shall discuss new clauses 1 and 3. On publication, the Bill was accompanied by an initial estimate of costs and benefits. I have in front of me the explanatory notes—all Members will doubtless have read them from cover to cover—which set out how the costs 111 and benefits will affect employers, the individuals concerned and taxpayers. I wish to focus on the costs to employers. In keeping with the initial regulatory impact assessment, the explanatory notes refer to a one-off cost to employers of £97 million, and an annual run-on cost of a further £272 million. On the basis of the initial estimates, we can therefore envisage a cost of £369 million in the first year and £272 million in the years following.
There is a flaw, however. Although I do not intend to be prejudicial about its content, this is not a complete Bill. It is an enabling Bill that is merely a framework. Throughout our deliberations in Committee, the Minister and his hon. Friends told us that the Bill will lead to many regulations, so the danger is that to rely on the initial regulatory impact assessment is to consider an incomplete Bill. To do so is like paying merely for the first and main courses in a restaurant without taking into account the pudding and the wine bill.
The difficulty is that regulations have not been tabled, so they cannot be costed. The £272 million is the beginning—the minimum. The danger is that, when those regulations are enacted, the House will be unable to consider and itemise the costs. As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) rightly said, those costs could well be substantial. That is my concern.
On the right to request flexible working, the Government produced in Committee, rather belatedly, a subsequent regulatory impact assessment, albeit that the Minister was open enough to point out that it is a partial assessment. I realise that members of the Standing Committee are probably worried that my enthusiasm for reading regulatory impact assessments might not be good for my long-term health, but I pursued the matter and went through the assessment in great detail.
It became apparent that the new clause on flexible working, which was introduced at the end of the Committee's deliberations, adds £38 million in the first year and a further £286 million every year thereafter. As the mathematicians present will understand, that is not merely a small increase in the original bill of £272 million. The increase resulting from introducing one extra clause more than doubles the original cost. The annual cost of this Bill was initially £272 million. It has now risen to £558 million—and, as I say, I fear that that is only the price of the dessert. Perhaps we have not yet considered the price of the wine and the petits fours.
My first reason for supporting new clause 1 is the need for a comprehensive assessment of all the costs. My second is that it rightly seeks to distinguish between different employers, and between different burdens borne by employers. Because the Secretary of State has reserved a number of powers, we do not yet know how they will impact on the various players. We therefore need an assessment that is comprehensive, and also distinguishes between different types of employer.
The creation of new rights, and the cost of administering them, will always pose fewer difficulties for larger employers. As my hon. Friends have pointed out, a large company with a human resources or personnel department will be able to deal with such matters. However, the Bill will impose a huge new set of burdens on small employers—not least the increased time that will have to be spent on ensuring that the business, perhaps a family firm, is sticking to the letter of the law.
112 To be fair, I must add that the Government have acknowledged in the explanatory notes and the regulatory impact assessment that the Bill will place a disproportionate burden on small employers. Notwithstanding Labour scepticism, I think that the burden will be experienced in two ways. First, there is the problem of time. The Bill contains 53 clauses and seven schedules, and heaven knows how many amendments will be made today. Small businesses will have to try to understand the rules—for instance, those governing the three-step process of dispute resolution. It will take time to understand, implement and verify each of those steps.
Many small firms are already struggling with the volume of paperwork with which they must deal. I am told by a number of small business organisations that the average small family firm must now spend up to 31 hours a month, the equivalent of four working days, simply complying with existing regulations. That is an appalling statistic, and I fear that the Bill will impose further burdens of time and pressure.
The second problem is this. While a company employing 100 or 200 people will be able to cover absences for statutory maternity or paternity leave if four or five people have rights to such leave, the burden will clearly be much greater for a small family business employing only four or five people when two people wish to exercise their rights. Although elements of the Bill acknowledge the existence of the problem in financial terms, I am not sure that it has been fully acknowledged.
The Bill tries to be family friendly; but—I think I made this point on Second Reading—what about the father or mother who must spend time in the evenings and at weekends dealing with paperwork for the family business, rather than spending it with the family itself? That is one of the potential conflicts at the heart of the Bill. It is friendly to some families, but not to all.

§ Rob Marris
Of course running a small business is hard. I have helped to do so in my time, as the hon. Gentleman may have. Given that the burden he has just mentioned may fall disproportionately on small business, however, why does he apparently support new clause 3, which refers to an average reimbursement?

§ Mr. Prisk
New clause 3 is intended to provide for a clear assessment of the costs and benefits for all concerned. Without that, as my hon. Friend the Member for Tatton (Mr. Osborne) pointed out, we shall be flying blind. New clause 3 seeks to ensure that we know the costs, and indeed the potential benefits, so that we can be fair to all parties. New clauses 1 and 3 attempt to identify a problem accurately; they also reinforce the spirit of National Audit Office guidance to Ministers on how regulatory impact assessments should be compiled. The Minister may wish to consider that important aspect.
All that the three new clauses aim to do is provide an informed assessment of the Bill's impact on those whom it will affect. Although I have grave reservations about the costs to family businesses and other small firms, I think that new clause 1 will allow us to have an informed and intelligent debate.

§ Mr. Simmonds
I too support the new clauses. The Bill contains much that is good, particularly the clauses allowing parents flexible working hours when that is 113 appropriate and providing for paternity and extended maternity leave. Having run a small business, however, I believe that they will place additional burdens on such businesses.
I think we all accept that allowing more rights and greater flexibility in the workplace, where appropriate, is sensible and forward-looking. As my hon. Friends have said, however, the Government must understand that there is a cost to businesses. I am particularly concerned with the cost to small businesses. The provision of dispute resolution and grievance procedures are most likely to have an impact, mostly because they are less likely to have existing procedures from which to develop. According to the regulatory impact study, the total recurring cost—I am not talking about one-off costs—will be up to £610 million.
That extra money must come from somewhere. In the case of small businesses in particular, it can be found in only three ways. It may come from profits, which means that there is less money to reinvest in the business, thus enabling it to grow and making future jobs possible. It may come from a cut in employment. Some businesses living on the margin will not be able to cope with the additional regulatory burden, or with the extra administration and costs. Those businesses will disappear.

§ Mr. Mark Field
My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) made a good point. There will now be two sorts of employee, those who will benefit and those who are employers in small businesses. The latter will bear a double burden: they may have family commitments, while incurring large costs in terms of both money and time that will not even be included in the £610 million mentioned by my hon. Friend the Member for Boston and Skegness (Mr. Simmonds).

§ Mr. Simmonds
My hon. Friend makes a sound point. There is a paradox here in that one of the Bill's underlying themes is to create more family friendly policies so that more time can be spent with children. Yet there may be a direct impact, with those who own and run small businesses being able to spend less time with their families because of filling in forms and dealing with the administration and additional regulatory burdens imposed by the Bill.
It is my view that £610 million is an underestimate. The extension of union learning representatives will have a significant impact on small and large businesses. Furthermore, enormous additional costs could be imposed under the regulations. New clauses 1 and 3 should be considered carefully, otherwise we will have no idea of the costs for businesses.
It would be strange if the Department of Trade and Industry carried out no assessments and had no monitoring structures to ensure that these provisions did not have a detrimental impact on businesses, small and large. I hope that when he responds, the Minister will say that monitoring structures will be put in place. If not, how on earth will the Minister and his colleagues be able to judge whether the legislation has been a success? The only way in which the hon. Gentleman will be able to tell whether the Bill has been a success is if fewer cases go 114 to employment tribunals, and he has already said that that will not be the case. He must consider the new clauses carefully, as they will ensure the Bill's success.
Many small businesses struggle to survive. It is only by the hard work and dedication of those who run them that they can thrive in a highly competitive economic situation. The new weight of red tape to be placed on employers needs to be assessed. It is my view, as I stated in Committee, that small businesses with fewer than a certain number of employees should primarily be exempt from certain aspects of the Bill. It is my belief that certain measures will be so detrimental to small businesses and their ability to create employment, grow and drive the economy forward that the voluntary arrangements that are in place and have been thriving in the past should be allowed to continue.
My view is supported by the Forum of Private Business, which says: The Bill establishes formal provision—whereas small businesses operate more effectively under informal conditions. Where regulatory compliance becomes mandatory and recourse is through legal process, then advocacy requires the production of formal evidence …or in a word, bureaucracy.
It is not unreasonable for new clauses 1 and 3 to require the Government to report back to the House with a detailed assessment of the Bill's impact. Further burdens are already borne by business, such as the processing of loans and administration of benefits. Those are matters for which the Government are responsible. Fulfilling those tasks takes up valuable management time and distracts from the focus of what management or owners are supposed to do in running small and medium-sized businesses. I hope that that work will be clarified in the Carter review and that it will give recognition to those who run small businesses.
The burden of regulation on business has greatly increased under this Government. The one theme that runs through the remarks of all the business men and women I meet is that we must reduce red tape. I plead with the Minister: if the Bill goes through, a line must be drawn in the sand. There must be no more additional regulations and burdens placed on businesses, particularly small businesses, which will lead to a further reduction in competitiveness.

§ Alan Johnson
The new clauses would impose a regime of evaluation of the measures in the Bill that is both costly and unnecessary. New clause 1 requires an annual report of the impact of these measures. New clause 3 requires an assessment of the average cost to business per employee of administering each measure in the Bill and proposes that those costs be reimbursed from the public purse. New clause 4 seeks an assessment of the additional resources likely to be required by the Advisory, Conciliation and Arbitration Service before the measures in parts 2 and 3 of the Bill come into force.
Let me make it clear that I entirely agree about the importance of effective evaluation policy. We have already provided details of our proposals—they are included in the regulatory impact assessment—to evaluate the impact of the separate provisions in the Bill. That assessment, as hon. Members are aware, is available in the Library. It makes it clear that individual policies will be evaluated effectively. For example, we have accepted the recommendation of Professor Sir George Bain's work and the parents taskforce. That taskforce had 115 representation the CBI, and the splendid Simon Topham, a small business man, and other small business representatives contributed to the nine unanimous recommendations. One recommendation is about taking a baseline survey on current practice on flexible working later this year, with a repeat study, three years later, to measure the effect of the legislation.
We have taken account of the possible costs to ACAS arising from the implementation of parts 2 and 3 of the Bill and we have assessed the impact on employers of administering the maternity and paternity pay policies.

§ Mr. Hammond
The Minister said that the proposals in the new clauses were costly and then went on to say that he intends to carry out precisely the evaluations that we propose. How are his evaluations not costly while the ones proposed in the new clauses would be?

§ Alan Johnson
I will be coming to that.
On flexible working, the specific recommendation from the Bain taskforce was that in such a brave new world, as Conservative Members have said, there was no precedent and that, as we had scant information, we should take measures now because the provisions to set a proper baseline against which to evaluate those procedures will not apply until 2003. Accepting a recommendation to conduct such surveys does not mean that we will accept every proposal to conduct surveys and reconsider costs, as proposed in the new clauses.
I shall say more about ACAS in a moment. Evaluation is important, but it cannot be produced out of a hat. Immediate impact assessment is often of limited value, as I admitted in Committee. It takes time for evidence to emerge, and it is not always possible to separate the effects of legislation from other changes taking place in individual businesses.
Conservative Members must decide which way they want to play this. On the one hand, there is a kind of "Letwinisation" that says that these measures are part of a good society and that people should have adoption and paternity leave. On the other hand, there is the old and rather tired view. I pay tribute, however, to the hon. Member for Runnymede and Weybridge (Mr. Hammond), who accepted that there were benefits to society but put the fascinating and quite new argument that society should pay for them. They cannot have it both ways.
The Bill introduces measures that are long overdue. It is ludicrous that adoptive parents have received no help in the past. It is ludicrous that, despite having for 20 years been part of a World Health Organisation drive to encourage mothers to breast feed their children up to six months, we have done nothing about it. It is ludicrous that so many workplaces and workers have no recourse to internal procedures for resolving disputes and grievances.
These matters must be tackled. Each new clause refers to the cost of a measure for employers and the public purse, but none of them refers to the benefits. I am pleased that some of my hon. Friends talked about the benefits. The family friendly policies, the improved dispute resolution, the modernisation of the tribunal system and the other policies in the Bill are designed to create modern productive workplaces that provide the partnership and flexibility that both employers and employees seek to strengthen business competitiveness.

§ Mr. Hammond
The Minister said that none of the new clauses referred to the benefits, but that is not the 116 case. New clause 1 specifically asks for an assessment of the distribution of both the costs and the benefits of the Bill.

§ Alan Johnson
I stand corrected on new clause 1, but the Conservatives' whole approach to the debate, including—with a few honourable exceptions—practically all their contributions, has concentrated on the costs rather than the benefits.
It is true that many of the substantial benefits that will arise for employers are difficult to quantify in financial terms. None the less, it would be wrong to discount them. We do not want to fall into the trap that Oscar Wilde once described, of knowing the cost of everything and the value of nothing.

§ Mr. Prisk
One of the key points that we have tried to get across to the Minister is why we feel that there should be a continuing assessment. The reasons are that this is an enabling Bill, not a static item that can be costed instantly, and because things will change and the Secretary of State will have powers to add new elements. That argument lies behind our case, and I do not think that the Minister has tackled it.

§ Alan Johnson
If the hon. Gentleman saw me smile just then, I should let him know that I was not smiling at what he was saying; it is just that I could have done without the pager message saying, "Vote on new clause expected soon". I shall deal with the hon. Gentleman's point in a moment; there is a special little bit of my speech dedicated to him.
There are benefits that can be quantified. Good employment relations lead to improved productivity, better retention of employees and reduced recruitment costs. The average cost of filling a vacancy in 2001 was nearly £4,000—up over 11 per cent. on the previous year—and it is often small firms that find it most damaging to lose valuable staff. If only 10 per cent. of the women who currently do not return to work after maternity leave decided to return as a result of the improvements in maternity rights, employers could save up to £39 million each year in recruitment costs alone.
We are also taking the pain out of administering the new benefits by enabling employers to claim back in advance the moneys that they are paying out. Small firms will get back more than 100 per cent. of their payments. We are almost doubling the number of small employers who qualify for that benefit, and that is an important step forward.
Like me, Mr. Deputy Speaker, you may remember that once, all employers received 100 per cent. reimbursement of statutory maternity pay, so you, like me, might have wondered where that went, and why they now get only 92 per cent. Lo and behold, it was the Conservative Government in 1994, who reduced the percentage.

§ Mr. Lindsay Hoyle (Chorley)
Never.

§ Alan Johnson
Yes, that comes under the category of "Strange but True"—an item that I used to read every week in The Eagle. It was the party that is now telling us that we have to pay more attention to business, and not load burdens onto it, that cut the reimbursement of statutory maternity pay from 100 per cent. to 92 per cent. 117 just eight years ago. To coin a phrase, this is a win, win, win scenario. Employers, working people and the economy all gain.
The new statutory procedures for dispute resolution recognise the needs of businesses, both small and large. Avoiding costly, stressful and time-consuming litigation will benefit employers, employees and the employment tribunal system. The benefits should become apparent in the second year after the introduction of the procedures, producing an annual saving for businesses of between £60 million and £80 million.
What I said earlier about the number of cases is an honest assessment of how things will look in four or five years' time. The number of cases may have tripled—incidentally, they doubled before any new rights were introduced. That must mean that we have a healthier society in which people are more aware of their rights and less afraid to use them. They are more assertive, and they have more rights to be aware of; I do not apologise for that. I think that there is a consensus, even among Conservative Members, that age discrimination and so on should be tackled, so it would be strange if we did not envisage that at some stage the number of cases would pick up. Current estimates are based on the current number of cases, and we are expecting to make savings. When the new jurisdictions are introduced, having a procedure in the workplace will help to resolve the issues without a tribunal.

§ Mr. Hammond
The Minister is in danger of having his last remarks misinterpreted. He appeared to suggest that, as people become more aware of their rights, he welcomes the fact that they are taking more litigious action in support of them. Is he saying that a move towards a more litigious society is to be welcomed?

§ Alan Johnson
Not at all. I am suggesting that as so many workers now have no opportunity to exercise those rights so that problems can be resolved in the workplace, it must be right for us to introduce the changes in the Bill.
6.15 pm
I do not accept that employers should have the right to recover their average costs of complying with each of the requirements of the Bill from the public purse, any more than they should have the right to recover their costs in administering PAYE, national insurance, tax credits or VAT. The best employers already bear many of those costs, because they already recognise the value of providing their employees with those rights.
We understand the pressures that new regulation puts on business. We have, rightly, spent much time in Committee discussing the proposals, and we are committed to sympathetic implementation of the Bill and to ensuring that employers and employees have enough time to understand and plan for the changes. We will provide clear, accessible, user-friendly guidance to all, particularly small businesses. The Inland Revenue has also expanded the range of help available through business support teams, which now provide one-to-one on-site assistance to employers on every aspect of their obligations in respect of Inland Revenue business.
118 The hon. Member for Runnymede and Weybridge said that some employees would gain from the Bill and some would not. He mentioned flexible working, and I want to address that point again, because I agree with my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) on that. It is good of him to join us tonight. He is taking a break from his endeavours to become a father, so I hope that he can hang around until the end of the debate.
My hon. Friend was right to point out that we have a two-pronged approach. There is regulation; we are introducing the measures for parents of children under six because we do not want to miss out a generation. Best practice often emerges from small businesses, which have some cracking arrangements for flexible working, which help to recruit and retain staff. We are spreading that best practice for parents and small children.
As the hon. Member for Runnymede and Weybridge recognised, we all have a stake in helping to ensure that children are raised properly. We cannot wait a generation. There is also the work-life balance campaign. We have an enormous interest in spreading best practice for flexible working even when it is unrelated to parenthood. It might be that people have other caring responsibilities, or simply want to pursue a hobby. This is a two-pronged attack.
I have heard the backlash argument from several quarters, although the hon. Member for Runnymede and Weybridge did not put it so—[Interruption.] That is true; he did not put it at all—but that does not stop me from replying to the point, in case he does put it.
The backlash argument diminishes and insults working people, who in the wide consultation that we conducted in workplaces never once raised that idea. Of course, they understood the need for mothers and fathers to spend more time with their small children, and yes, many of them said that they would like the same kind of flexible arrangements for themselves, but they did not say it out of resentment.

§ Mr. Hammond
I shall put that argument now, in response to the Minister. Just for the record, does he acknowledge that when it is ruled either by the courts or through new statutory provisions that, for example, a policewoman with a small child does not have to work a night shift, by definition her colleagues who are not mothers of small children will have to work more undesirable night shifts? Is that not a logical and inevitable consequence?

§ Alan Johnson
That is a depressing approach to the clause. The answer to the question is no, not at all. In the vast majority of cases, such problems are resolved when one employee suggests that a change in shifts would be beneficial, and then finds a colleague willing to change out of a rigid shift system.

§ Mr. Hammond
indicated dissent

§ Alan Johnson
The hon. Gentleman shakes his head, but it requires only a little thought and imagination to break away from the rigid systems that developed when women were largely absent from the workplace because only men had full-time jobs. I think that the hon. Gentleman is wrong in that regard.
119 I am conscious that I need to make some progress. My hon. Friend the Member for Wolverhampton, South-West also referred to ACAS, and the hon. Member for Runnymede and Weybridge was right in new clause 4, to draw attention to that body's importance in matters covered by parts 2 and 3 of the Bill. However, in seeking an assessment of additional resources likely to be required by ACAS when the measures in this Bill are implemented, the hon. Gentleman is once again concentrating on costs and ignoring benefits. It is clear from the responses received from all parties to the "Routes to Resolution" consultation paper that the services of ACAS are highly regarded. That body will play a key role in ensuring that businesses, especially small businesses, have the advice and guidance that they need.
We fully support that role. During the financial period 1998–99 to 2000–01, funding for ACAS has increased from £26.2 million to £32.4 million, a rise of 23 per cent. As I said earlier, the regulatory impact assessment of the Bill already refers to the possible costs to, and efficiency gains for, ACAS arising from the implementation of parts 2 and 3 of the Bill. However, the hon. Member for Runnymede and Weybridge will be aware that the employment tribunals system taskforce, set up by my Department and the Lord Chancellor's Department and headed by Janet Gaymer, is considering the resources of the employment tribunal system as a whole. The operational impact on both ACAS and the ETS of the policies included in parts 2 and 3 will be part of that consideration. The taskforce reports in spring this year, and we shall take account of all its recommendations when considering the funding needs of ACAS.
As I said earlier, however, there are benefits as well as costs to consider. The dispute-resolution measures in the Bill are designed to encourage parties to resolve their problems in the workplace. That should reduce the number of cases resorting to litigation and using ACAS services. Secondly, clause 24 introduces a fixed conciliation period. That will free up conciliators' time to deal with claims in which both parties are engaged in the conciliation process, and will allow ACAS to concentrate on the cases where its expertise is needed most.
Overall, the policies in the Bill strike a balance between rights and responsibilities in the workplace. I was shocked and surprised by what the hon. Member for Weston-super-Mare (Brian Cotter) said. People are rushing in and out of my tent at great speed, but the hon. Gentleman was guilty of trying to have it both ways. Liberal Democrat Members seem to lurch from one position to another, depending on whether they are trying to win seats in the north or the south-west. We well remember that they opposed the windfall levy that supported the new deal, and that they supported a regional minimum wage. Now, almost alone, they propose that the national rate for the minimum wage should be available for people aged 16. That is an incredible change from their original policy. I am therefore disappointed with the hon. Gentleman, who needs to rethink his approach to the Bill.
The hon. Member for Runnymede and Weybridge asked whether I could say anything about the Carter committee, or whether it was a state secret. The Small Business Service has conducted a series of focus groups to obtain views about the recommendations made by Patrick Carter in his payroll review. Small businesses and other interested parties participated fully.
120 The SBS subsequently submitted a report to the Inland Revenue that will feed into the consultation process. However, I am afraid that Conservative Members will have to wait for the Budget report for more details, as the Carter committee was set up by my right hon. Friend the Chancellor of the Exchequer. I have no news of any imminent report.
The hon. Member for Hertford and Stortford (Mr. Prisk) said that the regulatory impact assessment was incomplete and uncosted. He suggested too that the cost of following the regulations provided for in the Bill was not included in the assessment. The implication was that those costs would be the wine bill that would follow the bill for the main courses.
I can tell the hon. Member for Runnymede and Weybridge that the RIA will be updated and placed before the House with all secondary legislation fully costed. However, the RIA that is in both Libraries of the House contains the best estimates of the costs of meeting both primary and secondary legislation. It is therefore wrong to say that the existing RIA does not cover the costs of meeting requirements imposed by secondary legislation. I am aware that Opposition Members have tried to add to the costs imposed by the Bill, and a later amendment that would extend statutory paternity pay to the self-employed would carry with it a considerable cost.
I do not believe that we have to make a choice between helping business and helping the work force. I believe that we can do both. The evaluations that we conduct will look at costs but also at benefits for employers and public funds. They will take account of the time that it takes for the impacts to be felt. I hope that I have reassured the hon. Member for Runnymede and Weybridge that these amendments are unnecessary. An assessment of the kind proposed in new clause 1 would be too narrow, too soon, and conducted too often. The proposal in new clause 3 could well mean more bureaucracy and red tape for employers, and the proposal in new clause 4 would duplicate work already in hand.
I ask the hon. Member for Runnymede and Weybridge to withdraw the amendments. Failing that, I hope that the House will reject them.

§ Mr. Hammond
To continue the culinary metaphor, I sense that the House is anxious to move on to other items on the menu, so I shall attempt to be brief. I am sure that the Minister will be relieved to hear that we will get rid of the big tent a little later on, and that we will resort to our customary small tents pitched on opposite sides of the parliamentary divide.
I am disappointed by the Minister's tone. I did not expect him to accept the new clause, but I hoped that he would make a more significant gesture in respect of the need for ongoing monitoring of the costs and benefits—and I emphasise the latter—arising from the Bill, and their distribution. In the absence of a provision in the Bill requiring that such assessments be made, we shall have to rely on what might be called unmandated assessments by the Department. It will be for Opposition Members to keep the Government on their toes by making sure that the matter remains in focus after the Bill has come into force. We will then be in a better position to evaluate its real impact.
I want to thank my hon. Friends the Member for Cities of London and Westminster (Mr. Field), for Tatton (Mr. Osborne), for Hertford and Stortford (Mr. Prisk) and 121 for Boston and Skegness (Mr. Simmonds) for their valuable contributions to the debate. Many small businesses are worried about the Bill's implications for them, and the extent of the burdens that it will impose. It is important that we explore such matters with the Government properly and thoroughly. Finally, while we remain inside the big tent in this debate, I should like to thank the hon. Member for Weston-super-Mare (Brian Cotter) for his support.
The hon. Member for Wolverhampton, South-West (Rob Marris) a couple of times mentioned the proposal in new clause 1 for an assessment of average costs on business. I accept that there is no meaningful concept of an average cost of doing something: different businesses will have different costs. The proposal was an attempt to establish a crude and dirty form of reimbursement that at least would recognise the costs being imposed on business.
I am disappointed that, in the 21st century, Government Members and the Minister are still capable of believing that the Government should legislate to impose benefits on business. If something benefits business, all the Government have to do is to help and encourage it through education so that smaller businesses in particular can be aware of the evidence in support of the assertion that a practice will be beneficial. I can think of no case where there is credible evidence that the Government, using the blunt instrument of legislation, have been best positioned to impose on businesses the benefits that they believe will flow from these measures.
I readily and willingly recognise that, in many cases, there will be benefits from many of the courses of action resulting from the Bill. One of the pities of the Bill is that, in many cases, we are talking about things that good employers are doing and are willing to do, and about areas where the arrangements and relationships between employees and employers are appropriate. The Government are seeking to impose a one-size-fits-all solution by imposing, by statute, a requirement that their practices be followed in every workplace.
I am disappointed by the tone of what the Minister said, but I shall look forward to seeing the evaluations to which he referred. It will be our duty to keep a close watch on those evaluations and to probe their results as they become available. I am sorry to upset the Government Whips, who may have sent out a pager message, but in view of the fact that the debate is tightly timetabled and that there is exciting business further on, I beg to ask leave to withdraw the motion.