Wages Bill

HL Deb 26 June 1986 vol 477 cc483-524

House again in Committee on Clause 14.

[Amendments Nos. 88 and 89 not moved].

Lord Stoddart of Swindon moved Amendment No. 90: Page 16, line 9, at end insert (" ( ) fixing appropriate premia payments other than overtime rates in respect of time worked in excess of basic hours;").

The noble Lord said: I was not expecting to move this amendment but I shall do so. We have had a discussion on various payments that should be made on the fixing of holidays and on what should be paid for holidays. This amendment seeks to fix premium payments for hours worked in excess of basic hours other than overtime. We are talking here about things like nightwork or split duties.

Once again, the people who are covered by wages councils are the weakest among the working population, without the opportunity of negotiating, without the opportunity of ensuring that there are proper payments made for nightwork and for split duties, and without other payments which are in the natural course of events on the shop floor in large places where there is a good trade union organisation. I feel quite sure that my noble friend Lord McCarthy will have something more to say about this amendment in due course, but for the time being I beg to move.

Lord McCarthy

As my noble friend Lord Stoddart said, this amendment is about fixing appropriate premium payments other than overtime rates. Therefore, it is right that we should look at what the wages councils orders do in particular cases, to see what it is that the Government are taking away. As I argued earlier, the occupational variations which wages councils fix are sensible and so are the premium payments which they fix for things other than overtime rates. What the Government are saying is that none of these things can be fixed by wages councils in future.

The licensed trade wages council fixes a rate for rest day work and a rate for working public holidays. The laundry trade wages council fixes a separate rate for waiting time, a rate for a two-shift system and a rate for night work. The boot and shoe wages council fixes a waiting time rate, guaranteed pay for casual workers and a guaranteed week payment for time workers. The hairdressing wages council fixes a rate for a weekly short day and a rate for waiting time.

All these different wages councils fix appropriate premium payments which are designed to fit their particular circumstances. Even my old friend the sack and bag fixes very complicated overtime and premium rates which mix days of the week with hours worked. They are all designed carefully by those who sit on the wages councils to meet the actual circumstances of the workers in those industries. They fit circumstances; they fit the case.

These kinds of variations are not complicated for the industry concerned and usually consist only of two or three variations for each trade. They avoid exploitation where workers are especially weak and especially subject to pressure. Once again we would argue, as we have argued before, that there is no reason why wages councils should not have the power to do this. These differentials have been fixed for many years in many cases. Most workers and all employers by now should be very much aware of the differential structure in their industry. In some cases it has been like that for 70 or 80 years or so. There is no reason, no sensible reason, why the new wages council system should not be allowed to make those appropriate premium payments that they traditionally have made. I support the amendment.

Lord Trefgarne

I am not likely to get much support from my own side just at the moment; nonetheless I make no apology for restating once again the thought which underlies Part II of this Bill: the radical reform and simplification of the wages council system. The Government are responding to the almost unanimously held view of employers who commented on the consultative paper. There could be no mistaking their message. The system was in urgent need of fundamental overhaul and if this could not be achieved, then it should be abolished. It is clear from this and other similar amendments which we have been discussing that noble Lords opposite are not concerned with whether employers are encumbered by unnecessary burdens. They would have them spend valuable time digesting unduly complicated regulations which inhibit them from getting on with the real job—that of creating wealth and jobs.

The Government are not prepared to see that happen. In future there will be only one minimum basic rate and one minimum overtime rate, irrespective of the time at which the work is undertaken. The Bill does not remove workers' rights to premium rates. The majority of workers are likely to continue to be entitled to their current rates under the terms of their contracts of employment.

Limiting councils to setting a single basic and overtime rate is central to the Government's reform policy and still keeps in place basic protection. It is therefore a balanced measure, contrary to what some noble Lords opposite have suggested. Employers must be allowed to get on with the job of running their businesses, free from constricting bureaucracy. The Bill achieves that objective. The amendment would have the opposite effect and I must therefore ask the Committee to reject it.

Lord McCarthy

The Committee will not be surprised that we are not convinced by the Minister. He uses these arguments about fundamental overhauls. We are never told precisely what the employers said and precisely what they meant by fundamental overhaul; and we are never told why a fundamental overhaul could not in fact allow us to have appropriate premium payments. Nevertheless, we are not going to force a Division on this tonight. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McCarthy moved Amendment No. 91: Page 16, line 15, at end insert—

(" ( ) provide for the protection of existing rates of pay for a period of not more than three years after the day on which this section of this Act comes into force; ").

The noble Lord said: This amendment, the Minister may or may not be pleased to know, as the case may be, actually does change the emphasis. We are not now trying to put little bits back into the Bill, though we may come back to that. We are trying to provide for the protection of existing rates of pay for a period of not more than three years after the day on which this clause of the Bill comes into force. That is the substance, and those are the terms, of Amendment No. 91.

The aim of the amendment is to provide for the possibility of a transitional period, to control the rates at which the real value of pay declines in particular wages councils. The Minister has frequently told us of the desires of the employers. He told us that their latest desire was for a fundamental overhaul of the system. That is very much the desire of the trade unions. It is representing the views of, as they see it, the workers on their side.

The request was made in many of the representations by individual unions to the Government that anything that might be done to remove the protection of the 1979 Act should at least be done gradually, in view of the fact that real rates might decline and rates of increase might fall. And we have it on the authority of the Chancellor himself that, unless the rates of increase do fall in real terms, there can be no improvement in employment. He has said repeatedly that only if real wages decline in relative terms can there be any significant increase in employment. If that is done, then at least it should be done in a staged and transitional way.

We have other amendments on the Marshalled List which we may not move tonight but which aim to achieve such a transition in various different and more complicated ways. I choose to focus on this particular amendment because I believe it suggests the simplest way. It is the way that even the smallest of businessmen would understand. It provides a limited but clear form of protection.

Clause 14 enables the wages councils of the future to carry on, but to do so on a more limited basis. It states in subsection (4) that the Secretary of State shall have the power to do various things in order to facilitate the transition from the old system to the new. We propose to add, as it were, an additional facilitating formula or power; that the Secretary of State could provide that wages councils themselves may provide for the protection of existing rates of pay for a minimum period, by orders where appropriate, to ensure that none of the existing rates of pay now paid by the wages councils is reduced in money terms.

In other words, the club steward's rate of pay—the high rate of pay in the licensed trade—could not be reduced in money terms. It might not advance as fast as it has advanced before, but it would not be reduced in money terms. The differential between, say, foremen and managers in boot and shoe could narrow because the single rate could be increased, whereas the foreman's and manager's rate could not be increased—but it could not be decreased. Therefore, over a three-year period the rate might be squeezed in real terms relative to the basic rate but in money terms it would remain where it was. The rate for managers and for street vendors in retail food would again be in a similar position. The rate could decline in real terms but it would not fall in money terms.

Indeed, the basic rate itself would not decline in money terms. But then we do not expect—although we have no experience of the new people with whom the Secretary of State will now pack the wages councils—that the existing members of the wages councils will seek to bring about a reduction in money terms. I suppose that what they will seek to bring about over a period of time is some decline in the rate of increase in money terms.

We are suggesting in the amendment that there should be some simple practical index of what the Government expect to do and of the rate at which the Government expect the real level of wages council wages to fall. In the absence of any attempt by the Government to give a figure for what they expect to happen, the least they can do is to support this amendment. I beg to move.

8.15 p.m.

Lord Trefgarne

This amendment would give wages councils the power to provide for workers employed at the time when Clause 14 comes into force to continue to be entitled for a period of not more than three years to minimum rates of pay laid down in the current wages order relevant to their employment. The Committee will wish to know that many of the arguments advanced today in support of the amendment were debated at length in another place, and I shall be happy to restate the Government's position.

Part II of this Bill is about deregulation and simplification. Wages councils have been able to fix a wide range of terms and conditions. That has had the effect of putting employers in a legal straitjacket, which has made it all but impossible for them to negotiate with their workers in a way that is more closely tailored to the needs of their businesses. The majority of employer responses to the consultative paper were clearly in favour of radical reform and simplification if the wages councils system were to be retained.

The Committee will wish to be aware that workers currently employed under a contract of employment incorporating any or all of the terms and conditions of existing wages orders may expect their employment to continue on that basis, unless the terms of their contracts are changed. A contract cannot be changed unilaterally but either party may seek at any time to change the terms of contract by agreement, subject to the minimum level of protection laid down in the current wages order. That has always been the position.

If an employer seeks to change the terms of a worker's contract and the worker is unwilling to accept the new terms, whether or not his employment has terminated, then he can sue in the civil court for breach of contract. I hope that in the light of those reassurances the noble Lord will not wish to pursue this matter.

Lord McCarthy

I do not wish to pursue this matter but I am not convinced by what the noble Lord has said. This is an extremely modest amendment, and the next amendment is even more modest. Nevertheless, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Wells-Pestell)

In calling Amendment No. 92, I must point out to the Committee that, if it is agreed to, then I cannot call Amendments Nos. 93 to 97.

Lord McCarthy moved Amendment No. 92: Page 17, line 6, leave out subsection (6).

The noble Lord said: This amendment does direct itself to one of the central thrusts of the Bill, and it is one that has not been the subject of a great deal of discussions until now. Indeed, it was not discussed at any length in another place. It concerns the reference in the Bill that instructs the new members of the wages councils to pay particular regard to the level of employment, and to ensure, I suppose, that nothing that they do has the slightest chance of increasing the rate of unemployment.

Strangely enough, for reasons that have never been clear to me and which have not been sufficiently explained, the clause in question goes on to suggest that the wages councils should pay particular attention to that criterion, where the remuneration received by such workers is generally less than the general average for such workers".

Such phrases are not generally known in the industrial relations business. I repeat, generally less than the national average for such workers".

We wish to make a number of points about that particular form of words and to argue the case for leaving out the whole of subsection (6), which would strike from the Bill the special consideration for the level of employment.

There are three points to be made. First, there is no evidence known to me or offered by the department, to suggest that, at the moment, members of wages councils do not take into account the effect of their decisions on the level of employment. Wages councils' rates, on the whole, follow other rates. In recent years, they have on the whole increased rather less than the rates in industry in general. Certainly they have increased much less than the rates of increase among higher paid workers—particularly among non-union workers and those in executive capacities, on the boards of industries, managing directors, and so on. That is where the contemporary inflation of the wage system is being germinated.

As I have argued before in this Chamber, if there is wage inflation, and if wages in this country are being dragged up above the rate of increase in prices, then they are being dragged up from the top and not pushed up from the bottom. All the evidence suggests that over the past six years we have become a more unequal society, and that down among the wages council rates the increases are now significantly below the increases for the better paid, non-unionist, white-collar executive class.

There is certainly no evidence that the present members of the wages councils are disproportionately pushing up rates and not taking into account the possible employment effect of what they do. It is, of course, true that they have not done this at a rate which satisfies the Government. It is, of course, true that no Government that I know of has so peppered the chairmen of wages councils with gratuitous instructions as to what they ought to do about their rates of increase. Nevertheless, there is no evidence that these people do not take into acccount the general level of employment and the level of employment in their area, together with the effect of remuneration which, in their area, is generally less than the national average for such workers.

This brings me to my second point. As, in effect, quasi-arbitrators who have to produce some kind of acceptable level, wages councils take other matters into account, too. That is the Government's problem. I suppose that if the Government were bluff enough and tough enough and sufficiently straightforward, they would not have this clause at all. They would say to the councils, "You must take into account the level of employment and nothing else. The only thing you are allowed to take into account is the possibility that the award you give might take into account some other factor". But the Government do not. They just say that the level of employment should be taken into account although, as I have said, members of the wages councils take into account all kinds of factors.

Often those other aspects are taken into account because one of the parties before them has made a particular mention of one of them in its submission. For example, employers frequently argue that there is a problem of recruitment and that particular categories of workers—perhaps not the lower paid but the managers—require their differential to be widened. They put forward a recruitment argument. The employers may use a quality of labour argument. The unions may argue that there is a high rate of labour turnover and that the wages council must increase the rate for a particular group of workers under their control in order to reduce the rate of labour turnover. All kinds of arguments can be put to wages councils at the moment, and within their context the argument about employment takes its place. That is what a wages council system is. That is what third party dispute resolution involves.

What the Government want to do, and what they do in this clause (and the reason why we are moving that it should be left out) is put a differential special statutory emphasis on the employment effect to the automatic and natural exclusion or down-grading of any other matters which the wages council might take into account. It is unclear—and I ask the Minister to answer this—exactly how the two halves of this clause are designed to work. If the wages council takes into account the effect of employment, particularly where remuneration is generally less than the national average, does that mean that if it is generally less than the national average there should not be an increase? I should have thought it was the other way round. I should have thought that where it was generally much less than the national average there should be an increase, even if that affected the level of employment. So are the two halves of this clause complementary or do they both lead in different directions? How are the unfortunate members of the wages councils intended to balance them, or are they supposed to reinforce themselves?

This arises because the Government want to give instructions to these people. They want to give instructions and at the same time, in general debate in this Chamber, they are always saying that they do not want to give instructions, that they do not want rigidity, that they do not want to bind hands, and that they want to take hands off—but not off the people who run the wages councils. The wages councils are going to be instructed precisely on what they must take into account and, I suggest, by inference, what they must ignore. We think that that is an unnecessary and unjustified interference with what wages councils do, and I therefore move that the clause should be left out of the Bill. I beg to move.

Lord Trefgarne

Subsection (6) of Clause 14 requires councils, before making a wages order, to have regard to the effect that the rate they fix will have on the level of employment among workers covered by the wages order, particularly in those parts of the country where the remuneration of such workers is generally lower than the national average for the workers concerned. Councils must also have regard to any other factors which they consider appropriate—and that, of course, is only common sense. Amendment No. 92 would remove those sensible requirements, and I must therefore ask the Committee to resist it.

Noble Lords have agreed in the past that the wages councils system provides a safety net through the setting of minimum rates. For the system to operate on a national basis allowance must be made for the effect the order will have in those areas where the pay rates are traditionally lower than the national average. I hope that the amendment will not be agreed to.

Lord McCarthy

The noble Lord said something interesting. He now says that the two halves of the clause are complementary; that they are not alterna-tives which balance but that they reinforce each other. I understand. I think that late at night, at twenty-five minutes past eight o'clock, we are having a statement of policy. We are now being told that where rates are generally low—let us use the crude words: where they are near starvation level—one would particularly take into account the factors which are likely to lower them still further. That is what is being said. We are being told that where they are generally low one should take into account the possibility of a negative employment effect; and the lower they are, the worse they get.

That makes sense of a great deal of Government policy. I now understand why it is we do not worry about what happens to company directors; that we do not worry when we give special awards to judges: that we did not bother ourselves when executive increases last year went up by 11 per cent.—because up at that end of the scale nothing disastrous occurs. There cannot be an employment effect on directors. There cannot be an employment effect on the higher paid. We are not bothered about them because, after all, some of us qualify. But for the lower paid workers we have to protect them from themselves. There is a disproportionate employment effect. The elasticity works only at the bottom.

That is a strange economic theory. But the theory is that the rich can get more and more and we shall employ more and more of them; but if we allow the poor to get a penny more we shall not want any at all. However, I shall not press this amendment. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendments Nos. 93 and 94 not moved. ]

8.30 p.m.

Lord McCarthy moved Amendment No. 95: Page 17, line 13, leave out ("national average") and insert ("general level").

The noble Lord said: This is our old friend the general level of pay. In this part of the Bill the Government want to keep in the "national average" and we want to insert the "general level" of pay. We want to substitute the test of the general level for the Government test of the national average when the members of the new wages councils decide whether rates of pay should be raised, and by how much.

The Government say that they are concerned about wages councils pricing workers out of jobs. As I said, they wrote many letters to the chairmen of the wages councils complaining of this. They are now going to give councils this statutory direction under Clause 14(6) that they must have regard to the effect of the proposed increase on the employment of the workers and make special note of the position where the pay is generally less than the national average.

In this amendment, and it is partly a probing amendment, we propose to find out what the Government have in mind. To some extent in his previous answer the Minister has told us something of what the Government have in mind, but we are still seeking enlightenment and we are trying to find out by asking a series of questions.

The first question has probably been partly answered. Is the assumption that if wages are generally less than the national level they are not likely to be raised or increased at all, and if so by very little? The Minister seems to have told me that that is the case. Secondly, is it the case that if they are not generally less than the average level, the worker can expect the wages council to give him a reasonable increase? Does the reverse happen? Is it the case that when they look into the average level of payment and find that it is not bad, they will say, "We therefore assume that there is not a negative employment effect and can allow an increase, say, like the RPI"? Is the obverse the case in the way that the Minister seemed to suggest in an earlier answer? Thirdly, what does the Bill mean—what do the Government mean—by the national average for such workers, and how does one discover it?

Take the laundry hands or the sackers and baggers under the sack and bag wages council. How does one discover the national average for those workers? They should be getting what the wages council determines. If the wages council system works and if it operates effectively—and we assume that the Government do not accept what we say: that there is a great deal of evasion at the moment because the inspectorate is constantly being reduced—then most people in the wages council industries should be getting on average more or less what the wages councils award—perhaps a little more. Not many of them should be getting less.

So what is this average that we are discussing, and how does one arrive at it? What about those workers who are below the average? Since only one rate is to be allowed, what rate do the Government think should be applied to those people who are below the average? Suppose that the rates are substantially higher than the wages council rates, as indeed they are in one or two wages councils. Does that mean that there will be no increase at all?

We suggest that many of these questions arise because if the members of the wages councils take this part of the Bill seriously they will be searching for a meaningless average, which in some cases nobody is actually being paid because it is made up by taking all the payments made to all the workers and dividing that figure by the number of workers in the industry, in so far as we have the figures.

What is much more realistic and is generally applied in collective bargaining is the concept of the general level, which was introduced into previous legislation. The general level takes account of distribution. It does not add up every worker and then divide the total by the number first thought of. What one is thinking about in the general level is some notional figure which most people are receiving most of the time, below which very few people are falling and above which there may be a minority of people. It is a distributive and not an averaging concept and it is a much more sensible concept to have in the Bill.

We are trying to help the Government on this occasion because it is arguable that what we suggest will not, in their terms, be any more inflationary than what they suggest. It is rather easier to work out and rather more what industrial relations practitioners would expect; and it does not depend on artificial attempts to calculate and divide by an arbitrary number. I beg to move.

Lord Trefgarne

As I have said in speaking to an earlier amendment, Clause 14(6) requires councils, before making a wages order, to have regard to the effect that the rate they fix will have on the level of employment among workers covered by that wages order, particularly in those parts of the country where the remuneration of such workers is generally lower than the national average for the workers concerned.

For the system to operate on a national basis, allowance must be made for the effect that the order will have on those areas where the pay rates are traditionally lower than the national average. The term "general level" is one of uncertain meaning, and amending "national average" to "general level", as Amendment No. 95 requires, would mean that the councils would have no clear bench-mark upon which to base their deliberations. I think that the proposal of the noble Lord would add considerable uncertainty and confusion and I hope that it will be resisted.

Baroness Seear

I am genuinely very confused about this matter because if one has a single wages council figure then it is illegal if anybody falls below it. I think that is agreed between us. But anything that is above that figure is what the employer has seen fit to pay. However, I do not see where the low pay comes in. Except by breaking the law, one cannot be below what the wages council has laid down.

So what is the Minister really talking about? Is he taking into account those places where the employer is paying considerably above that amount and so raising the average figure above the minimum laid down by the wages council? Nobody can be below it except by being in breach of the law, as I understand it. I am genuinely confused about what he is trying to say, or rather about the sum that he is trying to do. What is the arithmetic of it? That is the point.

Lord Trefgarne

As I understand it, wages councils set different rates for different parts of the country.

Lord McCarthy

On the contrary, there are very few wages councils so far as I know—maybe there are one or two—which set a London rate. The general practice in wages councils is not to set premia which are related to different parts of the country. Anyway, the Government would be taking this provision out, because even if it were done, under this Bill it will not be allowed in the future. Under this Bill there will be one single rate. With her usual preciseness, the noble Baroness has made the point much better than I did in a much longer and more flaccid way.

One of the reasons I say that the word "average" is meaningless is that people should not be below the average. They could be below the general level but they could not be below the average.

Lord Trefgarne

If the word "average" is meaning-less, the words "general level" are worse than meaningless.

Lord McCarthy

On the contrary. The noble Lord cannot get away with that remark. There was a general level referred to in the 1978 Act. This was applied by the CAC for years and years with no problem whatever. It is a concept that is very generally known in industrial relations. I am not trying to correct the noble Lord's ignorance, but he cannot come along and say that a phrase such as "general level" is unknown in industrial relations. It is very well known in industrial relations, whereas the concept of the average is just a statistical, isolated nothing. As the noble Baroness has said, unless one is facilitating the breaking of the law then "average" cannot be put in. Will the noble Lord try to answer the point before I withdraw this amendment?

Baroness Seear

There is genuine confusion over this point. I ask the Minister whether he will please take this matter back and look at it again because in industrial relations terms it does not make sense. Honestly, it does not make sense. We have a great deal of sympathy with the Minister. His mind is on defence, and that is enough to keep anybody very busy. He cannot be expected also to be a great expert on wages councils, which is an irritating and fiddly subject, as we all know.

While the Minister is thinking about this point, will he also think about another point? The noble Lord, Lord McCarthy, did not give me a chance on a previous occasion to say this, but while I am on my feet I shall say it now. Will the Minister take back subsection (6) and look at it again? Will he look again at the extraordinary remark: such other matters as appear to it to be appropriate"? What on earth are members of wages councils expected to do except to take into account such matters as appear to them to be appropriate? The Government soon will be telling them how to breathe. I ask the Minister to please have a look at this matter again; I beg him. It is ridiculous as it is.

Lord Trefgarne

I do not think that it is ridiculous at all. Indeed, in many respects it largely mirrors the arrangements that have been in place for a long time. The new factor here is the employment factor.

Perhaps I may clarify what I said earlier. It is perfectly possible to be paid below the average while being paid more than the wages council rate. That arrangement of course would be much more difficult to sustain if we accept the amendment.

Lord McCarthy

The noble Lord is clearly saying that he will not take this away and think again. Nevertheless, it is twenty to nine and I shall not divide the Committee. With great reluctance, because the Government are quite hopeless on the subject. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Stoddart of Swindon moved Amendment No. 96: Page 17, line 13, after ("workers") insert— ("( ) the effect that that rate will have on the living standards, efficiency and rate of turnover of the workers to whom it applies;").

The noble Lord said: We on this side of the Committee have listened to the noble Lord with growing exasperation, tinged with admiration. He is batting on a very sticky wicket indeed. The noble Lord, Lord Young, is not here to deal with the matter. It is his business, but he has seen fit to put in the Minister of State for Defence Procurement, and he is not making a very good job of defending the noble Lord's Bill. I think that he has probably missed his vocation. This is where the admiration comes in. He has stonewalled so very well tonight that he should have been a cricketer. Had he been, I think that Trevor Bailey would have taken second place to him. He will be known after tonight as "Stonewall" Trefgarne.

Lord Wedderburn of Charlton

Or "The Night Watchman".

Lord Stoddart of Swindon

Yes, depending on how long we go! The noble Lord has not helped us very much tonight. We can only hope that he will help us on this amendment. It is related to all the others. My noble friend Lord McCarthy tried to help him by moving Amendment No. 92. Had he accepted that amendment, none of the others, including this one, would have been necessary. But he did not and so we have to move this one.

Had Amendment No. 92 been accepted, wages councils would not be burdened with the need to take into account unemployment in fixing levels of pay and could have continued to take a wide range of elements into account. Amendment No. 92 was not accepted, and that is a great pity. We must therefore seek to add to and clarify the matters that a wages council in fixing the rate of remuneration should take into account in addition to the effect that a rate of pay will have on the level of employment.

The phrase in the Bill is: such other matters as appear to it to be appropriate". I read that as being matters appropriate to the level of unemployment; to reduce wage levels in order to achieve what the Government believe will be achieved—that is, a lower level of wage so that, on their theory, employment will be improved. We do not believe that.

Our amendment seeks to add three elements: the effect on living standards, efficiency and the labour turnover rate in respect of workers affected. A wages council ought to take into account the living standards that a rate of pay will provide for the recipient. In so doing it should have regard not only to the basic living standard that will be available on a given rate of pay but also the relationship of that standard to the generality of living standards and the standards in closely related employment. Regard must also be given to trends in wage movements, as well as to the cost of living and any especial trend; for example, in housing costs.

I now come to efficiency. Here it is vital to ensure that any rate of remuneration set will attract an adequate number of people with the proper skills to perform the tasks demanded for the job to be done efficiently and profitably. Sweat-shop wages produce a sweat-shop mentality. As we know from the clothing industry, good management and unions are united in demanding proper wage rates, which should be enforced rigorously. The sweat shop is not good for British industry. It is unfair to good employers and eventually drives them out of business. It is not good for British industry generally, because quick profits and shoddy goods are the objectives, and those in the long run injure Britain's ability to compete at home and abroad. That consequently damages the economy generally. The Prime Minister is in favour of a fair wage for a fair day's work. I understand, and we agree. This part of the amendment would achieve that objective which is so dear to the Prime Minister's heart.

Finally, the amendment refers to the, rate of turnover of the workers to whom it applies". It must be self-evident that wages councils in fixing a rate of pay should have regard to the labour turnover rate. That indicates most positively whether the rate of pay, and to a lesser extent conditions at work, are sufficiently attractive to retain workers in any given employment. If the rate of pay is too low, the labour turnover rate will be correspondingly higher. That is an indicator to the wages council that something needs to be done.

I hope that the noble Lord will be rather more forthcoming on this amendment. As my noble friend Lord McCarthy said, we are trying to help the Government and prevent them falling into a pit which in the long term will injure the Government, work people, employers and the good name and economic performance of this country. If he continues to stonewall and will not accept anything that we say, we can only conclude that the Government's sole objective is to drive down wages in the economy. If that happens, it will accord with the doctrine of the Chancellor of the Exchequer, the Prime Minister and I suppose every other Member of the Government that what needs to be done to resuscitate the economy is to make those who are rich richer and those who are poor much poorer. I beg to move.

Lord Trefgarne

I am sorry that the noble Lord thinks that I have been unreasonably stonewalling, as he calls it, throughout this stage of the Bill. I assure him that had my instructions been to resist all amendments, regardless of their merit, I should not be standing before the Committee this evening. All the amendments tabled have been considered carefully. Had there been merit in any of them, we should have recognised that fact. I shall not tell him which one, but there is an amendment later this evening on which I shall be saying just that. If you are good boys and get there quickly, with a bit of luck you might get a lollipop at the end of it! But I am afraid that that does not apply to this amendment, which reflects an unacceptable interference in matters which can be of no concern to government.

In the new legislation we are retaining the protection of the two central elements of pay—the basic rate and the overtime rate—to protect those on low pay, who have heavy domestic responsibilities which they could not otherwise meet, through family income supplement and a range of concessions and exemptions. In due course there will be the much improved family credit system.

While the Government accept that the councils should be able to set basic minimum rates in respect of those two elements of pay, it must primarily be the business of employers, and not third parties, to decide the level of pay which will recruit and retain the right kind of worker and which will maintain company efficiency. The Government must concern themselves with other ways of helping the low paid, by reducing their tax burden and the level of national insurance contributions. Above all, we must consider the employment prospects of those with no jobs and no pay. That is what is expressed in the Bill, and I hope that the noble Lord will recognise that.

Lord Stoddart of Swindon

We are excited now. We are waiting with baited breath for the amendment which the noble Lord will accept—a lollipop, though I think an ice cream would be more appropriate today. We shall wait and we must not look a gift horse in the mouth in advance. I shall be on tenterhooks until that great concession comes.

There is a fundamental difference between us; there is no question of that. The noble Lord confirms what I said earlier. The Government's great hope for the economy is that they can force down wages. They have a one-track mind on that. They believe that the only way the economy can be resuscitated and be made competitive is to drive down wage rates. The Bill is the way in which they intend to do that.

The Government are saying to us that while they will drive down wages they will protect people personally, in their personal lives, through family income supplement and later through the family credit system. In other words, the Government are saying they are prepared to subsidise low wages and bad employers. That is what that means. Let us make no mistake about it. As I said earlier, there is no substitute for a fair day's pay for a fair day's work. In the Bill the Government are seeking to ensure that there is an unfair day's pay for a fair day's work. To help their employer friends they are prepared to subsidise them because that will help them to force down the general level of wages.

Later of course the family income supplement and the family credit, as I suppose it will then be, will also be reduced. Once the Government's objective of forcing down wages has been achieved, they will come along and say, "We can no longer afford to pay these high family credits. The PSBR is getting out of control. We shall have to do something about that. We shall have to reduce the PSBR, and the only way we can do that is by not increasing family income supplement or family credit, and perhaps other benefits as well, in accordance with the increase in the cost of living". That is what will eventually happen.

Lord Trefgarne

That dastardly plot is a total figment of the noble Lord's imagination, I am sorry to say. I can assure him that the Government have no such ghastly scheme in mind. The noble Lord has made much of the unfairness of the Bill. There is nothing fair about having no job and no pay. That is what in a small way the Bill seeks to correct. I hope that the noble Lord will recognise that.

Lord Stoddart of Swindon

I do not recognise that. I believe that the Government's strategy is not good. It is unfair, because it militates against those in our society who are weakest and those who are already the lowest paid. Whether the Bill will create more employment is debatable. It may create more employment for certain classes of people, but it may put other people out of work. There is no certainty about that. The Government are taking a huge risk. They have embarked upon a policy which is unfair to the people to whom it should be fair.

I do not believe that what I was relating as the Government's overall long-term strategy is a figment of my imagination. We have been able to see that strategy developing slowly but surely since 1979. The Wages Bill is just one part of that strategy. We shall see more as the Government's plan unfolds. We shall always see that the poorest and weakest in our society will be on the losing end.

Baroness Seear

We do not go along with the drama that has been unfolded before us by the noble Lord, Lord Stoddart. I agree with the Government. We on these Benches have always argued in favour of an incomes policy, because we agree that wage increases which greatly exceed the level of productivity affect our ability to increase our market share. That is an argument for a sensible incomes policy to prevent excessive increases such as we experienced in the days of very high inflation.

We do not agree that the way to tackle the problem is to attack the people at the bottom of the pile. That is the point. If the noble Lord and the Government could keep separate in their minds the perfectly legitimate argument—the correct one in our view—that it is extremely dangerous for earnings greatly to exceed the level of productivity, thereby enfeebling us in world markets, I would go along with that. One does not solve that by attacking the lowest paid people. That is what the Government are doing in the Bill, and hence our objection. It is not for the reasons given by the noble Lord, but because the Government are attacking the wrong target.

Lord Trefgarne

I am not attacking anybody, if the noble Baroness will forgive me. The purpose of the Bill is to unshackle the structure which surrounds all these issues. Over the years a great web of controls has been built up around the wages council system to the extent that not only are employers discouraged but so, too, are employees in many cases. I hope that the noble Baroness will understand that we are seeking to help the matter, not hinder it.

Baroness Seear

I believe that the Minister believes what he says because I am sure that he is an honest man. If I may be blunt, I do not think that he understands the intricacies with which we are dealing. In the past I have operated a wages council system. I agree that there were certain unhelpful complexities with which one was better without. But the Government are going to an absured extreme now in saying that all we need is a minimum rate and protection of the overtime rate. I agree that we do not want to return to all the detail. It was a confounded nuisance. I often said that about the detail that was woven into the wages council system.

The Bill goes from one extreme to another. The noble Lord is telling us that the simple additional safeguards for which we are asking will so greatly increase the problems of the small businessmen that they will drive him out of business. My goodness, we are always being told from those Benches that this country's future depends on small businesses. If they are so stupid that they cannot understand such small additions to the basic minimum as a holiday requirement and premiums for which we ask, they will go out of business anyway.

9 p.m.

Lord Dean of Beswick

I have listened carefully to the Minister's replies to some of the points made on this amendment. I do not think that the Minister understands how many of the establishments which come under the different wages councils work. If the Minister and the Government are so convinced that wage rates decided by the boards are too high, can he explain why such a substantial proportion of people covered by the boards are paid wages so low that the establishments in which they work have to impose surcharges of 12½ per cent. in gratuities in order to attract people to the jobs? How does he relate the two if the base rate is overpaid?

Lord Trefgarne

I have never said that the rates are too high or too low, certainly not in the context of these amendments. We are talking about the complex-ity of the arrangements that surround setting the rates. I think that the noble Lord is mistaken.

Lord Dean of Beswick

The Minister, a few minutes ago, was philosophising on the main purpose of the Bill. He actually said that it was to lower rates of pay in order to spread jobs out. I did not draw any other conclusion. The Bill cannot have any other effect or intent.

Lord Trefgarne

I do not think that the noble Lord has been here all afternoon, although I dare say that he has for a large part of it. We are now dealing with a separate part of the Bill to that discussed earlier, when we were debating the rates set for young people. That is a rather different consideration.

Lord McCarthy

The noble Lord cannot get away with that. We are dealing with an amendment that asks the Committee to put into the Bill the effect that the rate will have on the pay, the living standards, the efficiency and the rate of turnover—that is what the amendment says—of the workers to whom it applies. The noble Lord says that he cannot have this because—these are the words that he has used—he wants to unshackle the workers and employers. He wants to liberate the workers and the employers. He want to get rid of the complexity that weighs down the workers and the employers. I agree with the noble Baroness, Lady Seear. When the noble Lord utters words like "unshackle", "liberate" and "complexity", he does not really mean "attack". He does not like us saying that unshackling, liberating and making less complex is an attack.

But the mechanism of the Bill and the reason why he will not accept the amendment—he has been saying this all day—is that the mechanism by which the Bill works is by lowering the wages of the workers. It is lowering the wages of the workers who are already in employment in the facile hope, as I would say, although he may not, that this will get some people off the dole queue.

We say that there are many other ways of getting people off the dole queue. If the debate tonight was about employment, we would be boring the pants off him with various ways in which this could be done. But the Government believe that the only way—this is all that they will accept—is by attacking the workers and by lowering their wages. The noble Lord does not like our calling it an attack. In the same way, the burglar does not like his activities being called burglary. He likes to say, "It fell off the back of a lorry". But for those of us who lose the stuff, it does not make any difference what it is called. You lose the stuff, you lose the pay, and you lower the wages. That is the way the Bill is designed to work. It lowers the wages of those in employment in the facile hope that it will put into employment people who are unemployed. If the noble Lord does not like to face it, he should not be on that side of the Table.

Lord Stoddart of Swindon

I do not know whether the Minister wishes to respond. This has been an interesting and a lively debate. The fact is that the Minister is virtually alone. He has no defenders. He has had to defend himself against a concerted attack. No one has come to his rescue because, I suppose, no one agrees with him. The noble Baroness, Lady Trumpington, is sitting there looking very beautiful, but she has not come to his assistance in any sense at all. The fact is that the noble Lord, whether he understands this or not, is in charge of the Bill. He has been handling it tonight. It is a Bill that inevitably is going to drive down wage rates. The noble Lord believes that by driving down wage rates, people will be placed in employment. If that were true, Germany, which is a high wage rate economy, would have twice the unemployment that we have instead of having an unemployment rate of 8.6 per cent. whereas ours is 13.2 per cent. Bombay, instead of having mass unemployment, would be the richest city in the world and would have no unemployment. Those facts militate against the noble Lord's argument and his reasoning.

I feel sorry for the noble Lord because he is such a nice chap. I really do feel sorry that he has had to sustain this attack on behalf of his noble friend Lord Young, who, really, we would like to have got at. He is the chap we are after. In the light of what has been said—

Lord Trefgarne

Will the noble Lord remind me to which amendment he is speaking?

Lord Stoddart of Swindon

It is Amendment No. 96, the same one. We have had a good debate. In the face of his obduracy—it is, I understand, obduracy on behalf of his noble friend—I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 97 not moved].

On Question, Whether Clause 14, as amended, shall stand part of the Bill?

Lord McCarthy

We wish to oppose that the clause stand part of the Bill. It is nice to be told that at some time this evening we shall get a little sugar loaf, a little knob of sugar of the kind that you might throw to the dog. It is nice to be told that it is coming, but it has not come yet. It has not come on this clause. We have moved a whole series of amendments, but the Government have been obdurate. The noble Lord does not like us to say that he has stonewalled, but the fact that he has stonewalled cannot be in doubt. He has offered us absolutely nothing. One might argue about whether, when he stonewalls, he is reasonable or justified, but that he stonewalls cannot be in doubt. We have tried to put back occupational rates, Sunday premia, piecework minima, holiday pay and shift premia, and he has said "No" every time. We even tried, in a very modest attempt to concede something, to say, "What about just putting in holidays without holiday pay?"

It is perfectly normal in this House as we all know—it has happened hundreds of times—that governments get up and say, "I do not like that part of your amendment, but I do not mind that other part. If you leave it with me I shall see what I can do." But the noble Lord did not say that. The noble Lord said, "I speak to the amendment". He tried to fence us off by saying, "That is the amendment. I am not going to say what I shall do if you gave me a slightly different amendment". That is a most untypical thing to do. That is because he does not have an inch to move. He has been told to stand there and stonewall, whether it is reasonable or unreasonable, and, apart from the sugar plum that is to come, he will go on being unreasonable, I have no doubt.

We even tried to get the Government to accept a three-year period of easing in. We tried to get them to take into account factors beside employment. We tried to get them to consider a very common concept in industrial relations: the general level. This concept was somewhat unknown to the Minister. Nevertheless, he would not take it on board or consider it, and he would not even say that he would go away and look at it.

The Bill now remains with this clause as it was when it came to the Chamber. There is to be nothing more than a single rate. There are no premia, there are to be no regional differentials; there is to be nothing but the single rate. It gets darker and darker. The water rises higher and higher. Soon it will be absolute night. Before it is night we have to divide against this amendment. We do not believe in it. We do not believe that it is justified. We do not believe that the Government have made any case at all.

There is the possibility that we shall be in total darkness, and while I can see my notes I must say that I do not accept that the Government believe they will solve the unemployment problem by this Bill. 1 have never believed it. I think they are in a hole. They are in a corner. They have ruled everything else out. When they came to office they thought they could solve their problem by M3, and M3 vanished. Now they do not like us to talk about it. The whole of the monetary basis of the Government vanished. They were not talking about wages councils when they came into office. It was not in their first manifesto but in their second, when their discredited monetarist policy collapsed. Then they believed that they could do it by reducing Government expenditure. They never reduced Government expenditure and now they feel in order to keep themselves in office they will have to raise Government expenditure. There are only the workers left. The Government cannot get up and say, "We have no solution for unemployment", because it keeps rising. Therefore they are forced to say that they will get back to full employment by driving down wages. I prefer to believe that those who understand it do not believe it; and those who believe it do not understand it. We oppose this clause.

Lord Trefgarne

Oh dear, oh dear, oh dear! When the noble Lord, Lord Stoddart, was speaking a few moments ago he referred to some of the actions this Government have taken. Just now the noble Lord, Lord McCarthy, was also referring to such matters. When this Government came into power in 1979 after five years or so of Labour party rule we found that the economy was grinding to a halt, to put no finer word on it.

Over the period of their administration, and indeed in earlier years—for some of which I dare say earlier Conservative governments were responsible—a great web of controls was being applied to businesses of every kind, not least to small businesses which are least able to bear them, least able to see their way through, and who suffer most grievously from them. Among the great web of controls to which businesses of every kind have been subjected over the years, I accept, has been that of the wages councils. They have been justifiably criticised, in the Government's view, for allowing themselves to lose touch with the needs of their industries by legislating in great detail and complexity for an enormous variety of terms and conditions of employment. The result has been wages orders which are, to a large extent incomprehensible to the audience at which they are aimed. I dare say that the noble Lord, Lord McCarthy, understands them. He is a distinguished practitioner in these matters, and I should not be surprised if he had not written many of them.

Not surprisingly there has been widespread confusion and many underpayments attributable to misunderstanding of these great works of art. In short, wages councils have brought themselves into disrespect in this regard. The responses to the consultative paper on wages councils showed a substantial measure of support for the proposition that wages councils' powers ought to be limited to fixing a single minimum hourly rate for basic hours. The Government took the view that it would also be sensible to provide for a single minimum overtime rate to apply in respect of time worked after basic hours, and to enable councils to set a daily limit on deductions for accommodation provided. The noble Lord will be aware that that is a particular feature of the hotel business.

Together, these would enable the core of the minimum wage-fixing system to be preserved, but allow employers and workers to agree other terms and conditions to suit their particular needs. This is in line with the Government's commitment to deregulation and lifting the burden from business, and that is an endeavour to which we are totally committed.

These reforms are important in the context of providing a framework within which employers in wages councils' trades can get on with running their businesses without having every conceivable detail of their workers' terms and conditions rigidly laid down without regard to the circumstances of small firms in particular. In that sense they are what the Government believe to be the correct balance between the twin needs of cutting out unnecessary bureaucracy and retaining basic safeguards for workers. I very much hope that the Committee will agree that this clause should stand part of the Bill.

Lord McCarthy

Before the noble Lord sits down, he is very fond of saying, and has been saying all night, that nobody can understand wages councils' awards. I wonder whether the noble Lord has ever tried to understand a wages council award. I happen to have by me a good 15 or so wages councils' awards, and most of them are very short. For example the mutton award covers only two pages and the toy award covers only two pages. Most of these awards are very simple and the great majority do not change year in and year out.

I shall present these documents to the noble Lord, so long as I can have them back. I should like him to read them and tell us at the Report stage whether he finds the slightest difficulty in any of them. I do not believe that the noble Lord is stupid and I do not even think that the average small businessman is stupid. I think that it is a put up job. There is nothing complicated about these wages councils' awards, and the noble Lord should try reading them.

Lord Trefgarne

I am grateful to the noble Lord for offering me some short, sharp documents. Whether or not they are the ones in which he had a hand I do not know. However, in return I should be happy to send the noble Lord some which are long and incompre-hensible.

9.16 p.m.

On Question, Whether Clause 14, as amended, shall stand part of the Bill?

Their Lordships divided: Contents, 37; Not-Contents, 20.

DIVISION NO.5
CONTENTS
Belstead, L.	Hooper, B.
Boardman, L.	Long, V.
Brabazon of Tara, L.	Lyell, L.
Brookes, L.	Macleod of Borve, B.
Caithness, E.	Masham of Ilton, B.
Carnock, L.	Monk Bretton, L.
Coleraine, L.	Montgomery of Alamein, V.
Craigmyle, L.	Mottistone, L.
Crathorne, L.	Murton of Lindisfarne, L.
Davidson, V.	Shannon, E.
De La Warr, E.	Skelmersdale, L.
Denham, L. [Teller.]	Stodart of Leaston, L.
Elliot of Harwood, B.	Swinton, E. [Teller.]
Elton, L.	Teviot, L.
Fanshawe of Richmond, L.	Trefgarne, L.
Ferrers, E.	Trumpington, B.
Gardner of Parkes, B.	Vaux of Harrowden, L.
Gray, L.	Zouche of Haryngworth, L.
Hives, L.

NOT-CONTENTS
Airedale, L.	Ponsonby of Shulbrede, L.
Carmichael of Kelvingrove, L.	[Teller.]
Dean of Beswick, L.	Rochester, L.
Grey, E.	Seear. B.
Hatch of Lusby, L.	Stoddart of Swindon, L.
McCarthy, L.	Tordoff, L. [Teller.]
McNair, L.	Turner of Camden, B.
Morton of Shuna, L.	Underhill, L.
Mountevans, L.	Wedderburn of Charlton, L.
Parry, L.	Wells-Pestell, L.
Pitt of Hampstead, L.

Resolved in the affirmative, and Clause 14, as amended, agreed to accordingly.

9.23 p.m.

Schedule 3 agreed to.

Clause 15 [Application of wages orders to piece workers]:

[Amendment No. 98 not moved.]

Clause 15 agreed to.

Clause 16 [Effect and enforcement of wages orders]:

[Amendment No. 99 not moved.]

Clause 16 agreed to.

Lord Trefgarne moved Amendment No. 99A:

After Clause 16, insert the following new clause:

("Computation of remuneration.

.—(1) For the purpose of determining, for the purposes of this Part, the amount of remuneration paid to a time worker by his employer in respect of time worked by the worker in any week there shall be added together—

1. (a) the total amount of any money payments made by the employer to the worker, on or before the relevant pay day, by way of remuneration in respect of time worked by him in that week, and
2. (b) the total amount of any deductions made by the employer (whether in accordance with Part I or not) when making the payment of wages which consisted of or included those money payments, apart from deductions falling to be left out of account under this paragraph by virtue of subsection (2), and then, from the aggregate of those amounts, there shall be subtracted the aggregate of—
1. (i) the worker's necessary expenditure in connection with his employment to the extent that such expenditure is attributable to that week and is not met, or designed to be met, by an allowance paid to him by the employer, and
505
2. (ii) the total amount of any payments received from the worker by the employer (whether in accordance with Part I or not) and falling to be taken into account under this paragraph by virtue of subsection (3).

(2) The following deductions shall be left out of account under subsection (1)(b), namely—

1. (a) any deduction in respect of the provision of living accommodation for the worker by the employer to the extent that the deduction exceeds any limit for the time being in force in relation to the worker by virtue of section 14(l)(c), and
2. (b) subject to subsection (4), any other deduction made by the employer for his own use and benefit (and accordingly not attributable to any amount paid or payable by him to any other person, or to any authority, on behalf of the worker).

(3) The following payments by the worker shall be taken into account under subsection (l)(ii), namely—

1. (a) any payment made by the worker to the employer in respect of the provision of living accommodation for him by the employer to the extent that the payment exceeds any limit for the time being in force in relation to the worker by virtue of section 14(l)(r), and
2. (b) subject to subsection (4), any other payment made by the worker to the employer and retained by the employer for his own use and benefit (and accordingly not attributable to any amount paid or payable by him to any other person, or to any authority, on behalf of the worker),

being in each case a payment due from the worker in the week in question.

(4) Subsections (2)(b) and (3)(b) do not apply to deductions made or payments received by the employer on account of any of the following matters, namely—

1. (a) any conduct of the worker or any other event in respect of which he (whether together with any other workers or not) has any contractual liability,
2. (b) any advance under an agreement for a loan or any advance of wages,
3. (c) any goods or services supplied by the employer (whether in connection with the worker's employment or not), or
4. (d) the purchase by the worker of any shares or other securities or of any share in a partnership; and accordingly any such deductions shall not be left out of account under subsection (l)(b) and any such payments shall not be taken into account under subsection (l)(ii).

(5) The preceding provisions of this section shall apply to a piece worker as they apply to a time worker but as if, in subsection (1), any reference to remuneration in respect of time worked by the worker in any week were a reference to remuneration in respect of—

1. (a) work executed by him in any week, and
2. (b) any such time as is mentioned in section 15(4) that occurs during the week.

(6) In this section— deduction" does not include any such deficiency in the payment of wages as is mentioned in section 8(3);

"money payment" means—

1. (a) a payment in cash,
2. (b) a payment by cheque or by a money or postal order issued by the Post Office, or
3. (c) a payment (however effected) into any account kept with a bank or other institution;

relevant pay day", in relation to any week of a worker's employment, means the day on which his remuneration in repect of that week is payable; wages" has the same meaning as in Part I.").

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

[Amendment No. 99B not moved.]

Clause 17 [Computation of remuneration]:

[Amendment No. 100 not moved.]

Clause 17 disagreed to.

Lord Trefgarne moved Amendment No. 100A:

After Clause 17, insert the following new clause:

("Apportionment of remuneration

.—(1) This section applies where—

1. (a) in respect of part of the time worked by a time worker in any week ("the relevant period") the worker is entitled to the statutory minimum remuneration provided for him by an order under section 14, and
2. (b) in respect of the remainder of the time worked by him in the week ("the remaining period") the worker is not entitled to any such remuneration or is entitled to any such remuneration by virtue of another such order;

and in this section any reference to the worker's computed remuneration is a reference to the amount of the remuneration paid to the worker in respect of the time worked by him in the week in question as determined in accordance with section (Computation of remuneration).

(2)Subject to subsections (3) to (5), the amount of the worker's computed remuneration that is to be attributed to either the relevant period or the remaining period for the purposes of this Part shall, if not apparent from the terms of the worker's contract, be the amount which bears to the total amount of the worker's computed remuneration the same proportion as the relevant period, or (as the case may be) the remaining period, bears to the total time worked by the worker in the week in question.

(3) Where any particular amount falling to be added or subtracted under section (Computation of remuneration) (1) as it applies to any week is exclusively referable to the relevant period, the amount of the worker's computed remuneration to be attributed to that period for the purposes of this Part shall be determined by either—

1. (a) adding the unattributed balance of that particular amount to the amount to be attributed to that period in accordance with subsection (2) above, or
2. (b) subtracting the unattributed balance of that particular amount from the amount to be attributed to that period in accordance with that subsection,

according to whether that particular amount falls to be added or subtracted under section (Computation of remuneration) (1); and a corresponding adjustment shall be made in the amount of the worker's computed remuneration to be attributed tor the purposes of this Part to the remaining period.

(4) In subsection (3) "the unattributed balance", in relation to the particular amount in question, means so much of that amount as is not taken into account for the purpose of determining the amount to be attributed to the relevant period in accordance with subsection (2).

(5) Where any particular amount falling to be added or subtracted under section (Compulation of remuneration) (1) as it applies to any week is exclusively referable to the remaining period, subsections (3) and (4) shall apply to any such particular amount as if—

1. (a) any reference to the relevant period were a reference to the remaining period; and
2. (b) the reference in subsection (3) to the remaining period were a reference to the relevant period.

(6) The preceding provisions of this section shall apply to a piece worker as they apply to a time worker but as if—

1. (a) any reference to time worked by the worker in any week were a reference to work executed by him in any week; and
2. (b) the word "work" were substituted for the word "period" wherever occurring;

and for the purposes of those provisions as they apply to a piece worker in accordance with this subsection the worker shall be treated as executing work during any such time as is mentioned in section 15(4).").

The noble Lord said: Again, I have spoken to this amendment. I beg to move.

Lord McCarthy

The noble Lord said when he moved this amendment that he had spoken to it. I accepted that, but we wanted to have this clause moved separately. I do not want to quarrel over that at this time but I should like to ask him whether he would do the same thing in respect of this clause as I asked him to do in relation to the earlier clauses that he moved at that time; that is to say, that we should have notes on the clause. It is just as complicated as the previous clause, if not more complicated.

I should like to return to the answer that he gave me on that occasion because, with respect, I do not think that he quite said that he would give us Notes on Clauses. First of all, he said on these new clauses that he would write to me. Then he said he would write to me and that he would put a copy of what he wrote to me in the library. With the greatest respect, I do not think that that is enough. There are many people in this Chamber—some of them are here tonight and some may not be here—who would like to have an amplification of what these new clauses mean.

We had Notes on Clauses circulated for all the other clauses in the Bill and I believe that it would be only reasonable to ask that the Government do exactly what has been done in regard to all the rest of this Bill. In respect of these two complicated amendments— there is one about putting five people on the wages council; and even we can understand that—I want to ask him once again whether he will publish Notes on Clauses.

Lord Rochester

I should like to support that and to ask that a copy of any letter going to the noble Lord, Lord McCarthy, on this subject should come to me as representative of those of us who have been involved in the Bill from these Benches; and, it may be, to other noble Lords who have taken a prominent part in the proceedings.

Lord Trefgarne

I am happy to assist the noble Lord, Lord McCarthy, and other noble Lords in this way. May I suggest that I write to the noble Lord, Lord McCarthy, in a very full way, certainly no shorter than he would expect from a note on a clause, and copy that letter to every noble Lord who has taken part in this debate today?

Lord McCarthy

My noble friend Lord Stoddart is a much older hand and is shrewder than I am about these matters. I wonder whether the noble Lord the Minister can let us know whether we passed the sugar plum. We are, at this time of night, trying to help the Committee and so we are not moving everything. It would be a tragedy if, as a result of not moving a particular amendment, we were to lose the sugar plum.

Lord Trefgarne

I do not think the noble Lord has passed the sugar plum, but if I find that, inadvertently he has, I will try to find another one.

On Question, amendment agreed to.

Clause 18 [Obligation to keep records etc.]:

9.30 p.m.

Baroness Turner of Camden moved Amendment No. 101: Page 22, line 6, at end insert— ("(2A) The employer of any such workers who are homeworkers shall give to those workers a statement in writing informing those workers—

1. (a) of any order under section 14 or proposal under para-graph 1 of Schedule 3 that affects them, and
2. (b) of such other matters as may be prescribed.").

The noble Baroness said: I rise to move Amendment No. 101 and to return again to the question of home workers, which was touched upon earlier, notably on an amendment which dealt with young home workers. This clause deals with home workers generally, and the object of the amendment is to attempt to write in some continuing protection for home workers. I do not want to repeat what we have been saying on this side of the Committee almost all afternoon, but we are again talking about vulnerable and often badly exploited people. In the case of home workers we are in fact talking mostly about women. As I understand it, there are approximately 30,000 home workers covered by wages councils today. Their wages are notoriously low. A survey carried out by the Low Pay Unit in 1983 found that one-third of the sample still earned less than 50p per hour, while three-quarters earned £1 or less.

Home workers, more than any other type of worker, find themselves vulnerable to exploitation by low wages. They are a captive workforce and their child care responsibilities are normally the reason why they are unable to go out to work and so they have to seek work that can be done at home.

A number of surveys of home workers have been conducted in recent years. An ACAS survey of the toy industry, for example, found that 58 per cent. of home workers in the industry were mothers with young children. The Department of Employment has found that most home workers, though not all of them—as was stated earlier, there are some young home workers —are aged between 25 and 44 and have dependent children of school age.

It is generally supposed that home workers are employed on simple, unskilled work, but a surprising proportion, according to studies carried out, have prior industrial experience and skills. Home workers are trapped in their homes and are therefore non-unionised and work in isolation. However, it should not be thought from that that the trade unions and the trade union movement have paid no attention to them. Indeed, I was myself a member of a TUC committee some years ago which did extensive work into the conditions of home workers and produced much documentation on the subject.

Although the hour is late, because it gives some indication of what conditions are applicable in certain types of this work I should like to read a very short extract from the results of the research that we then carried out. This concerns a woman engaged in this sort of work and she describes what it is like—

Lord Trefgarne

I wonder if I may interrupt the noble Baroness. I apologise for intervening in her most interesting speech, but it may assist her to know that the sugar plum is in front of us now.

Baroness Turner of Camden

In that case, I am so happy to give way. I should like to hear what that is and I am most grateful to the noble Lord. I wait with great interest to hear what he has to say. I beg to move.

Lord Trefgarne

I am sympathetic to the proposi-tion in this amendment. I am advised that the words are not entirely perfect, but if the noble Baroness will withdraw this amendment I will undertake to bring one back at the next stage which achieves what she desires.

Baroness Turner of Camden

I really am most grateful to the noble Lord. With great pleasure 1 beg leave to withdraw the amendment and I await his wording with keen anticipation.

Amendment, by leave, withdrawn.

Clause 18 agreed to.

Clauses 19 and 20 agreed to.

Lord Wedderburn of Charlton moved Amendment No. 102:

After Clause 20, insert the following new clause:

("Unfair dismissal and Wages Council.

.—(1) The dismissal of an employee to whose remuneration a wages council order relates shall be regarded as unfair for the purposes of Part V of the 1978 Act if the reason for it (or if more than one, the principal reason) is that the employee has made, or proposes to make, a complaint or other communication to an officer appointed under section 19 of this Act.

(2) Section 64(1) (a) (qualifying period) of the 1978 Act shall not apply to a dismissal to which subsection (1) above applies

(3) In section 71(2)(6)of the 1978 Act, after the words "section 58 or 59(a)", there shall be inserted the words: or by virtue of section 20A of the Wages Act 1986".

(4) An employee shall have the right not to have action (short of dismissal) taken against him as an individual by his employer if the reason (or if more than one, the principal reason) falls within subsection (1) above.

(5) Sections 24 to 26 of the 1978 Act shall apply to action which contravenes subsection (4) above as they apply to section 23 of that Act.").

The noble Lord said: I feel sure that the noble Lord, Lord Trefgarne, when he reflects, will feel that he gave only half the lollipop, in the sense that he has gone away to find a better one. So he has a bit left in the bottom of the barrel and I feel sure that, if he looks hard, he will see that it was reserved for this important amendment, which is concerned with a general point for the workers covered by wages councils.

Workers covered by wages councils are relatively unprotected by many of the other mechanisms of our industrial society—a point that has been flowing through many of the debates about the specific workings of the wages councils. One essential step which such a worker will have to take in order to protect his position, whatever is left of the wages councils, is a communication to an inspector or other officer appointed to enforce the mechanisms. If that worker is then victimised for so doing, he is a precise parallel to someone who is victimised for trade union activity, because the justification for wages councils —at least, in large measure—has historically rested, whether they did it well or did it badly, upon the fact that they stood in place of collective bargaining.

So that since the Government have not seen fit, in their long period of office, to take out the protection of workers from unfair dismissal—which is automatically unfair if they take part in union activities or have trade union membership—although they have added non-unionism as a parallel, here is the third part of the tripod: the case where the worker is trying to enforce the basic mechanism by which his conditions can be upheld against (it may be rare, or it may be frequent in his part of the industry) the employer who will not observe the basic conditions.

On that basis we have constructed this amendment, which is precisely parallel and analogous to the position in other parts of industry, outside wages councils; that is to say, there is no qualifying period, because there is no qualifying period where the dismissal of a worker for trade union activities takes place, as that is such a bad reason for dismissal that Parliament in its wisdom (and it appears to be bipartisan in that no-one seems to want to change the fact that the worker who is dismissed for trade union reasons needs no qualifying period) has decided that you do not require a qualifying period of two years or any other period of service.

So for the same reason we have included here the enhanced compensation, because if you are dismissed for a trade union reason you get the enhanced compensation, to which the Government have added—we think unwisely—if you are dismissed for non-unionism. Nevertheless, there it is. Here we say that if someone is victimised by dismissal (to which we add action short of dismissal in the last subsections of the amendment, because it is only logical that what you do for dismissal you do for action short of dismissal, on the pattern of our employment protection legislation) then what we do in those circumstances in the area of trade union dismissals we do here; that is to say, if a worker is victimised because he has taken a step which it is necessary for him to take to enforce the position of a basic—as it will be if the Government get their way—one-rate remuneration in the wages council.

I hope that this very simple and very moderate amendment will not meet the regiment of the new, young liberation army which is marching across industry to liberate employers from every possible complexity. At least if it does, the Government had better tell us when they are going to get rid of the rest of the unfair dismissal legislation, because there is absolutely no case for opposing this amendment unless you believe that unfair dismissal should go and more particularly that unfair dismissal for trade union reasons, or non-union reasons on the Government's logic, should also go from its special place. It is a perfectly normal logical amendment which simply makes sense of the position. I beg to move.

Lord Trefgarne

The effect of this new clause, as the noble Lord has said, would be that dismissal or action short of dismissal taken against employees covered by a wages council (with the exception of those aged under 21) would automatically be regarded as unfair if the reason for it (or, if more than one, the principal reason) was that the worker had made or intended to make a complaint or other communication to the wages inspectorate. I do not consider that the provisions of Part II of this Bill are in the same category as fundamental rights such as the right not to be discriminated against on grounds of sex or race or the right to belong or not to belong to a trade union. I dare say that the noble Lord does not share that view and I shall not attempt to persuade him to change his mind. But I am sure he recognises the protection which currently exists for a wages council worker who finds himself in this situation.

If a worker is dismissed for having made a complaint to the wages inspectorate and he has the necessary qualifying service, he can take his case to an industrial tribunal. The onus would be on the employer to show that in the circumstances he had sufficient reason for dismissing the worker. Where as a result of having made a complaint to the wages inspectorate the employer's conduct towards the worker is such that the worker terminates his contract of employment, again he can complain to a tribunal on the grounds that he has been constructively dismissed. It would be for the tribunal to decide whether the employer's conduct amounted to constructive dismissal.

These are substantial protections which strike the right balance between the legitimate interests of workers and the burden the legislation places on employers. I do not believe that there is any justification for special provisions of the kind proposed. I hope that the noble Lord will not press the new clause.

Baroness Seear

I am afraid that I find it very difficult to follow the Minister's logic. You have a wages inspectorate here in order to enforce the legislation, just as you have a factories inspectorate in order to enforce the factories legislation. In both cases one of the only ways in which it can operate is for people who think an offence is being created to go and tell the inspectorate.

It used to be a requirement to have the address of the factory inspector at the works in order that people could do precisely that. There is no other way. You cannot have the inspectorate crawling all over industry the whole time. The information that comes from people who think they are affected by a breach of regulations is a major method of enforcement. You will have to treble the inspectorate if you are going to attempt to make the wages council orders enforceable but are not going to allow people without protection against dismissal to write to the inspectorate and say "Look, I have been cheated". For decades and decades this has been a traditional way of enforcing legislation. It saves an enormous amount of manpower in the inspectorate.

Lord Trefgarne

I would not want the noble Lord to think that I am unsympathetic to the predicament in which a worker might find himself in these circumstances. The noble Lord and the noble Baroness will understand the philosophy that lies behind this Bill and which I have repeated on a number of occasions during the course of this evening. I shall spare the Committee another repetition of that. But if it will help the noble Lord perhaps I may consider the matter a little further and see whether there is any accommodation I can suggest.

Lord Wedderburn of Charlton

I am grateful to the Minister and will confine myself merely to one remark which is meant to help him in his mature reflections and his search for other plums. It is the case in the Government's own consultative document that two-thirds of the wages councils' workforce is part time and that four-fifths of the workers are women. When one adds to those the other well-known facts concerning the situation of continuous employment, the idea that such workers are well served, while the rule is that they should have two years' continuous employment before they can go near a tribunal, will perhaps give the Minister pause for thought. I am grateful that he will look at this matter again and I look forward to the results of that scrutiny. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 21 and 22 agreed to.

9.45 p.m.

Clause 23 [Transitory provisions relating to existing wages councils and wages orders]:

[Amendment No. 103 not moved.]

Lord McCarthy moved Amendment No. 104: Page 26. line 1, leave out subsection (4)

The noble Lord said: I am not sure what one keeps plums in. One does not keep them in barrels, one does not keep them in tins, and one does not keep them in jars—and when one eats plums, they do not usually come off trees. But whatever the Minister keeps his plums in, I can only hope that he has one or two left. These two amendments are in a sense probing amendments that do slightly different things. However, we agreed through the usual offices that they should be taken together.

Both amendments are an attempt—and I make no bones about this—to reassure those trade unions who have told us that they are worried about the transitional period. They are worried that it seems, from the face of the Bill, that the Secretary of State can unilaterally, the, day after the Act is implemented, act so as to cancel existing orders and impose new ones. That worries the users of the wages councils system, and they have asked us to find out whether the Government are prepared to consider some way of avoiding such a possibility.

The aim of Amendment No. 104 is to prevent the Secretary of State from taking such action altogether. The aim of Amendment No. 105 is not to prevent him from taking such action altogether but to provide that: On a date not less than two months before introducing an order under subsection (4), the Secretary of State shall notify the relevant wages council and provide them with an opportunity to voluntarily vary the terms of an existing order".

Therefore, there are two ways of achieving such a safeguard. Amendment No. 104 is a much more draconian and, one might like to say, extreme way of achieving it. If the Minister were to say to me that he does not like Amendment No. 104 but would think about Amendment No. 105, then we would in fact find another plum.

The situation is that the present expiry dates for wages councils orders are for the most part late in 1986 or early in 1987. For example, the expiry of the wages council order for the clothing industry is December 1986; for hairdressing, April 1987; for the licensed non-residential wages council, January 1987; for the licensed residential wages council, October 1986; for retail food, April 1987; and so on. Surely it would be feasible to give those involved time to establish whether, through the voluntary system and through the wages council itself, it would be possible to adapt to the new system. Otherwise, it is possible that the day after the Act is implemented, the Secretary of State himself could instantly and unilaterally act to cancel the existing orders and impose new ones. I beg to move the first amendment standing in my name, though I have spoken to them both.

Lord Trefgarne

Clause 23(4) enables the Secretary of State to make an order, (a) disapplying all or any of the provisions of an existing wages order, and (b) restricting the operation of such an order between the date of the passing of the new legislation and the coming into force of a wages order made under the provisions contained in Clause 14.

Amendment 104 would remove this power. This could mean that the existing wages orders might be preserved in their entirety for a prolonged period, possibly a year in some cases, if the councils so chose. By taking the power embodied in subsection (4). we can, if we consider it necessary, act in order to pursue our deregulation policies at a more vigorous pace. Though no decisions have been taken on how it might be used, this is not a power we are prepared to surrender.

Amendment 105 would simply delay the speed with which the Secretary of State could make orders under the subsection and, even though the delay would be shorter, the same objections apply. Wages councils have in the past been given ample opportunity to simplify and streamline their procedures, but sadly with little result. I see little point in consultation for the sake of consultation when it is known by everyone that the end result will be the same. I therefore hope that your Lordships will not accept these amendments.

Lord McCarthy

I should like to be absolutely clear on what the noble Lord is saying, because it may be worse than I feared. I had thought that the intention was that after the Bill became law the Government would not seek to impose new orders without the intervention of the wages councils. Of course it might be the case, as he says, that a dilatory wages council would sit around and try to delay matters for 12 months, or so. The Government would therefore need, as the noble Lord said, this reserve power in subsection (4). Of course, they could always replace the members.

Surely it is not the intention of the Government not to give existing wages councils any time at all. Surely it is their intention that, in the move from the old system to the new system, the fixing of a single basic rate—which is the most important effect and, one might say, the only significant function left to these poor bodies—would be decided by the councils and not by the Government.

If the councils are dilatory the Government may step in, but if they act within normal periods and renew the wage orders as they normally do at twelve-monthly intervals, surely that would be all right. Some of these wages councils I have mentioned have six or seven months before they introduce their next order —for example, retail foods, which has until April 1987. Surely there will be no objection if it introduces the next order in April 1987. Are the Government going to rush the council and say that they want the order by next week otherwise they will invoke subsection (4)? One hopes that the normal expectation of the Government will be that these councils will have the normal period and will do it their way.

It is a very critical first decision that the councils have to make. They have to decide where to fix the rate, knowing that it is to be the only rate they will be allowed to fix, particularly if they have differential rates. Will they seek to fix it slightly above their lowest rate? Or will they think they have somehow to move, in some way, at the lower end, the lower quarter, of their series of rates? Surely that is a job for the wages councils. It would be most inappropriate, and the Government have certainly not suggested it, if the Government suddenly pre-empted the one thing left to the retail non-foods wages council and did not give them until April 1987 to decide what to do but said that the Minister was going to do it for them next week. Surely that is not what the noble Lord is saying.

Baroness Seear

Once again I find it extraordinarily difficult to follow what the noble Lord the Minister is saying. We understood that the Government wanted to get off industry's back. The Government claim that they are not a centralising government but my experience has been that they are an extremely centralising government.

We have heard the word "philosophy" which I must say is a rather gradiloquent word for what is proposed in the Bill. The philosophy of the Bill is to free industry, and having set up a wages council to do that job the Government then proceed to say that they will override it and tell it what to do. I really must tell the Minister that if he intends to restrict the work of the wages councils so much and if he then gives the Secretary of State powers to override them, he will not get any people of any calibre whatsoever to agree to sit on his wages councils.

Lord Trefgarne

I believe that the noble Lord and the noble Baroness have perhaps read more into this provision than is really there. We have been discussing the provisions of this Bill for a long time and I dare say that, despite my inadequacies, the Members of the Committee are now coming to understand the essence of our intentions.

The fact of the matter is that without the powers contained in these particular clauses we shall not be able to ensure that the decisions taken by the Committee and Parliament can be implemented in a timely way. I am sure that wages councils will now understand the way in which we wish to proceed and the way in which I hope Parliament will decide that they should proceed, and I dare say that by and large they will do so with proper expedition. But where there is some improper or excessive delay we want to be in a position to deal with that difficulty, and these clauses provide for that situation.

Lord McCarthy

With very great respect, it gets worse. I do not want to hound the noble Lord, but he has done it again. He has replied to Amendment No. 104, and everything that he says fits Amendment No. 104—it is rather like holidays again—but he does not reply to Amendment No. 105. Amendment No. 105 was tabled precisely because we thought that the Minister might very well say just what he did say about Amendment No. 104.

Let us look at Amendment No. 105. All that he is being asked to agree to on Amendment No. 105 is that, On a date not less than two months before introducing an order under subsection (4)". So his power to stop the wages council mucking him about is still there; he has the power under subsection (4), but two months before invoking that power he will, you might say, have the courtesy to, notify the relevant wages council and provide them with an opportunity to voluntarily vary the terms of an existing order". So, two months before he feels that he has to kick them up the backside, he writes them a letter and says, "In two months' time I propose to kick you up the backside if you do not move. Will you please voluntarily vary the terms of the existing order and not muck about?" That is reasonable enough. Surely the noble Lord can accept that.

Lord Trefgarne

Amendment No.105 is indeed a little less awful than Amendment No.104, but awful it is nonetheless! The fact is that if we were to agree to that amendment we should simply be accepting a delay in the way that the Secretary of State could ensure that the will of Parliament wasimplemented. I proceed. do not think that is a sensible way to proceed.

Lord McCarthy

Is it being said that the Government will not write the letter? If the noble Lord were to come to me and say, "We shall do that anyway" (because they often say that over there; they say that they will do it anyway so why put it in the law), it would not convince me but it would be a little more defensible. Is the noble Lord really telling me that they do not intend to write to them but that it will come out of the dark if they decide to violate the rights of the wages councils, even if the wages councils are only saying, "We shall do it on the due date"? Maybe they will do it in January 1987 and the Minister cannot wait that long. Is he saying that the Government cannot agree to that amendment because in those circumstances they do not propose to write to the damned fellows—let them stick it?

Lord Trefgarne

By virtue of this legislation we are inviting Parliament to change the arrangements. The noble Lord is suggesting that we should put some further delay between the decision that Parliament has taken and the implementation of Parliament's decision. I do not believe that that is a very good idea. After all, these wages councils—the ones about which we are particularly concerned—over a number of years have been generating the complex orders to which I referred at an earlier stage of this Bill. They are well aware of the anxieties about their shortcomings which are felt by the Government and which I believe Parliament will feel when the passage of this legislation has been completed.

They have had ample opportunities to overcome the difficulties and have not taken advantage of them. All that the noble Lord's amendment does is to see that those great disadvantages are perpetuated yet longer. I do not think that that is a good idea.

Lord McCarthy

I do not see that, but we shall not get anywhere on this. I would say that we shall come back to the matter on Report, but there are now so many things that we are to come back to that I do not know whether we shall have time, and so although I am very unsatisfied, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 105 not moved.]

The Deputy Chairman of Committees (Lord Airedale)

I have to point out that if Amendment No. 106 is agreed to, I shall not be able to call Amendments Nos. 107 or 108.

[Amendments Nos. 106 to 108 not moved.]

Clause 23 agreed to.

Clauses 24 and 25 agreed to.

Clause 26 [Restriction of redundancy rebates to employers with less than ten employees]:

10 p.m.

Lord Wedderburn of Charlton moved Amendment No. 109: Page 29, line 36, leave out ("nine") and insert ("199").

The noble Lord said: We are now into something quite different, although it is related. The Minister will explain this to us in so far as I get it wrong or leave things out, but in Part III of the Bill the Government are to do away with redundancy rebate, with an exception, and this amendment is concerned with the exception. I preface what I shall say by simply stating to the Minister that, having read what occurred in another place, I do not have a clear picture of the philosophy precisely lying behind the abolition of the redundancy rebate. He will no doubt explain that to us.

Perhaps it is partly because I do not understand the philosophy of the withdrawal of the rebate that I do not understand exactly why it is that new Section 104A, which Clause 26(3) is to insert into the Employment Protection (Consolidation) Act 1978, makes an exception of employers who will go on receiving the redundancy rebate by reference to: A payment made by an employer to an employee [for redundancy] and falling within subsection (1){a) or (b) of section 104 shall be treated as a qualifying payment if at no time on the appropriate date did the number of employees employed by the employer, added to the number employed by any associated employer, exceed nine".

Employment law has in the past been littered with exceptional provisions for small firms or small employers which have sometimes not had a great deal of explanation or reason. It is not a one-party matter. Although there was some reason given for it, from 1975 the need to present a written statement of health and safety policy was applied by a Labour Government, but not to those employers with four or fewer employees. The Sex Discrimination Act had certain exceptions in regard to small firms, again related to five employees, which had to go.

However, this Government made the situation very much worse. In 1980 they caused employees in firms with 20 or fewer employees to have two years' qualification before they could complain of unfair dismissal. They told us that that would produce jobs. I do not know what they have done to prove that since. They applied a similar cut-off point to work-place balloting, and they applied a similar set of limits in regard to employees of firms employing five or fewer employees when they cut down women's rights to maternity leave in 1980.

There was not a great deal of justification of the specific figures on those occasions as I remember it. Here the Government come up with another figure. It is because I have been unable to find an explanation of the calculations that they did, and the reason for choosing this figure, that my noble friends and I have put down the amendment in the form it is in. It will of course be obvious to the Minister that we chose 199 for the simple reason that that is the cut-off point that the Department of Trade and Industry uses for a small firm in a number of its presentations of figures and descriptions relating to small firms.

Is that figure as good as nine or does it merely save a great deal of money? Is there some functional justification in nine as against 10, 20 or 199? How many employees are involved? Some colleagues of mine in some universities have tried to do some calculations as to how many employees are employed in various types of small firm. The calculations are not very firm. They show that if one takes a cut-off point of 10 and 24, one is probably moving from about 1.75 million to 1.5 million excluding farming, fishing and forestry.

The Minister must have better figures than that. He should be able to tell us how many workers are involved. He could perhaps tell us about one or two other matters in relation to the clause. In moving to a different number I obviously increase the importance of new Section 104A. That makes me ask: if it is convenient for the Minister to include it here, why is the new subsection phrased as it is? There are two important things about the numbers game of exceptions in labour law. We have to know how many are involved and whether associated employers are included, and they are here. Then we have to know what period of time to count.

There is an interesting phrase which I do not think is matched in previous clauses. It says that the qualifying payment will arise, if at no time on the appropriate date".

One would normally find, "on the appropriate date". If we look at the definition of "appropriate date" in Section 104, we go to Section 104A and then back to Section 104 and then on to Section 90, because that is the route that must be taken. We find that they all refer to "a date". Presumably the Minister's phraseology, at no time on the appropriate date".

imagines that there will be great mobility of labour during the day. If that is not so, the phrasing is very strange. The courts may have some trouble with that.

There is a final point. However we do it—and it may be that that is clever phrasing—those cut-off points, especially with small firms, have a great deal of arbitrariness necessarily associated with them. It seems odd that if there is one small firm employing nine employees, run by one man who is a director and manager but who is not an employee—perhaps for tax reasons—and next door there is a firm employing nine employees and the manager-owner, or whatever he is to be called, is also a director and employee, which he may well be in law, those two firms will now be treated differently.

Any legal test has a line, and there are always cases on either side, but there is no need to have anything quite as arbitrary as that with regard to redundancy rebates. That is also a case for having a higher figure because the more employees one has, the less arbitrary the line is likely to be in that respect. One can think of many legalities which would be arbitrary as between one very small firm and another, which would make for great unfairness as to who received a redundancy rebate, whereas if we had a slightly higher cut-off point those arbitrary factors would be less likely to apply.

On the central point, I look forward to what I think would be the first explanation of the Government's choice of a number. I beg to move.

Lord Rochester

This is, I believe, the only amendment at this stage that refers to Part III of the Bill. With the agreement of the Committee, I should like to widen the discussion a little to take account of the philosophy underlying this Part, if only to save having a further debate on clause stand part, if that is acceptable to the noble Lord the Minister in particular. At the same time, I wish to support what the noble Lord, Lord Wedderburn, has said and to amplify his remarks by way of another example.

Part III of the Bill, as the Committee will remember, restricts the payment of redundancy rebates to firms employing less than ten people. The Government claim that the 35 per cent. of the cost of redundancy payments to employers now repaid from the redundancy fund should, in their view, be put to a different and better use. But people continue to be made redundant in large numbers. The effect of this part of the Bill must be either to make overall redundancy payments smaller or add to employers' costs.

Another factor, I suggest, that we need to bear in mind is that the redundancy fund is one to which both employers and employees have contributed in the expectation that they will receive some benefit. If this part of the Bill goes through, they will be denied that benefit. There was, at the last audit, a substantial surplus in the fund—some £9 million, I believe. If payments from that fund are to be eliminated, it would surely be more equitable and serve better to maintin our competitiveness if the surplus was distributed to employers and employees by providing for a reduction in their contributions.

Following upon what the noble Lord, Lord Wedderburn, said, I have received a communication from the National Farmers Union which is concerned that, as the clause is now drafted, it appears that casual and seasonal workers will count towards the number of employees who can be taken into account in deciding whether a rebate can be claimed. Since employees are not entitled to a redundancy payment unless they have been continuously employed for a period of two years under a contract of employment normally involving work for 16 hours or more, it seems logical that employees who do not qualify for such payments should not be counted for the purposes of the exemption under Clause 26, which we are now discussing.

What this means, if I may take the example that the NFU has given, is that where a business employs five full-time employees and five casual or seasonal employees, that business would be ineligible for a redundancy rebate if it is necessary to make one or more of the full-time employees redundant even though some of the other employees would have been ineligible for a redundancy payment. It seems that the clause should be interpreted to ensure that businesses with fewer than ten full-time employees are still eligible for redundancy rebate whether or not they employ casual or seasonal workers in addition. I should like some thought to be given to that point. I would be grateful for any comment that the Minister feels able to offer at this stage.

Another communication that I have received comes from the Association of County Councils. Its concern is this. The purpose of the clause is, basically, it is claimed, to effect savings in public expenditure. County councils will lose the right to claim redundancy rebate, and there will therefore be no saving in public expenditure overall in the case of a redundancy within a county council which will often, obviously, employ relatively few people. Instead, an increased financial burden will fall on the county councils.

Their concern is that if this is not adequately recognised within the overall framework of local authority expenditure, it could even inhibit proposals which might otherwise come forward for restructuring within a local authority in order to achieve value for money. They feel—and I must say I share the feeling on the face of it—that this would be an unfortunate side effect, to say the least, of the removal of the redundancy rebate. I am sorry to have wearied the Committee with this, but those are examples of bodies and people affected adversely by this part of the Bill. It may be that the Committee will find it helpful if the Minister makes some response to those points.

I think I speak for my noble friends in saying that we are not happy with Part III for the reasons I gave at the beginning of my remarks. I take this as the only opportunity, without spending even longer on it tonight, of saying that to the Minister.

10.15 p.m.

Baroness Seear

As a very brief supplementary point to what my noble friend has said, may I ask the Minister whether he will give us a clear statement in answer to this question? I am sure that there must be an answer, and it would be valuable to have it on the record. It is accepted on all sides that employers and employees have paid into the fund. As I understand it, this is a form of insurance: they pay in advance when times are good so that when they are confronted with redundancy they can take some money out. It is now normal suddenly to say that the insurance will not pay. What is the Government's legal justification for denying employers the right to draw out of the fund into which they have paid, when they are faced with the circumstances for which the fund was created? That is the first question I wish to ask.

I feel that this removal of the right to withdraw one's money from the fund is extremely questionable economically. When a company is faced with redundancy it is, by definition, in a bad way; otherwise it would not be making workers redundant. A firm is concerned about coming out of the redundancy situation in as good a shape as possible in order to recover. This is no moment at which to withdraw from it money which it very badly needs if it is to be success-ful in the future and overcome the difficulties which have created the redundancy. First, what is the legal justification for denying these payments? Secondly, what is the economic justification for crippling a firm still further when it finds itself in a bad way?

Lord McCarthy

I have no intention of intervening in this debate, and the Committee will be glad to learn that I shall not make another speech. I had thought that we would keep this debate to the narrow issue of the amendment. It has now rightly widened, as I suppose was inevitable, to encompass the whole question of Part III of the Bill.

The noble Lord, Lord Wedderburn, has dealt in detail—and no doubt will again—with the illogicality of this part of the Bill. I just want to say that we detest the whole of Part III of the Bill for exactly the same reasons that have been given by the noble Baroness, Lady Seear. We think that it is a detestable, unnecessary part of the Bill. We do not say so much about it only because it may do less damage to fewer people than the even more detestable Parts I and II. There is nothing to be said for it, and I thought that I should make that clear at this point.

Lord Trefgarne

There are no sugar plums, I am afraid. Perhaps I may first deal with the general proposition contained in this part of the Bill. This clause brings to an end, except for the very smallest employers, the insurance arrangement whereby part of the cost of statutory redundancy payments is rebated by the Government. This arrangement may have been justified in the labour market conditions of the 1960s when it was necessary to encourage the shedding of surplus workers who could be redeployed in unfilled jobs. In present circumstances, apart from a few exceptional cases, there is no justification in subsidising employers' redundancy costs, particularly as redundancy payments are in any case allowable against tax. The Government believe that a decision to make people redundant is a commercial judgment which the employer should make and pay for without subsidy from other employers or the state.

Nevertheless we have decided to make an exception in the case of firms with fewer than 10 employees because we recognise that the cost of redundancy payments can bear relatively heavily on employers running very small businesses. For this purpose, a casual part-time employee at the employer's home is disregarded, as long as he works fewer than eight hours per week, and there is no more than one other person so employed.

This step may be seen as the logical consequence of a series of reductions in the level of rebate which have been implemented over the past 20 years by governments of both parties. Those reductions have been absorbed by employers without any significant difficulty and we are clear that this compulsory pooling of redundancy costs has outlived its usefulness.

I stress that the change relates to the employer's rebate only, not to the employee's entitlement, and that where an employer fails to make the payment —for example, because of a serious cash flow problem —the employee can apply to the department for the payment to be made in full direct from the redundancy fund and leave the department to try to recover the payment from the employer later.

I turn now to the amendment. As I have said, the Government's intention in restricting redundancy payments rebates to the very smallest of employers is to mitigate the effects of the loss of rebates upon those for whom redundancy costs are most burdensome. Whatever threshold or cut-off we had chosen, someone would have been calling for a higher figure. I believe that the threshold that we have chosen concentrates the relief we are able to afford on the employers who most need help from the fund. The amendment proposed has the effect of raising the threshold for the payment of rebate. The direct consequence of this would, of course, be a considerable increase in public expenditure. This increased cost would need to be found from within current allocations and could only be found by making savings elsewhere.

The threshold that has been chosen serves to focus relief on those firms most likely to need help without adding unduly to public expenditure or to the adminis-trative burdens of employers. The noble Lord, Lord Rochester, gave a particular example about a fanner with seasonal workers. It is true that part-time and seasonal workers are to be included in the count. However, I would suggest that it is unlikely that a farmer would want to make his full-time employees redundant at his busiest time—that is, when he was employing seasonal workers for his harvest, etc. Therefore, I do not think that the noble Lord really painted a realistic picture.

The noble Baroness, Lady Seear, spoke about the consequences of this for the fund. The fund will, of course, still have to find money for direct redundancy payments where the employer cannot pay and indeed for rebates to very small firms. However, the fund also pays arrears of wages and other payments to employees whose employers have become insolvent. The fund has only recently moved into surplus after a long period in deficit. The level of contribution will of course be kept under review for the future.

Baroness Seear

The noble Lord really has not answered the point that employers have paid into this fund. It may well be that an employer has paid into this fund for 20 years. Now, for the first time, he needs to draw out. What legal justification is there for denying someone who has paid into what is virtually an insurance fund any right to draw out from that fund?

Lord Trefgarne

To be truthful, I am not quite certain what the position on past contributions is. Perhaps I can look into that matter and let the noble Baroness know. That is the essence of the provision in this part of the Bill. I have also recited the basis of our difficulties with the noble Lord's amendment.

Lord Wedderburn of Charlton

I think that, in fact, the noble Lord has invited us all to come back to Part III on Report. In order to be helpful, I put again the question that he did not answer: how many workers are involved?—that is to say, what sector of the workforce are we talking about if we talk of firms with a workforce of up to nine? What are the other details? It is no good merely saying that these are the firms most likely to need help, as against those employing 11, 12, 20 or 30, unless we are told why. I agree with the Minister that any line drawn has an arbitrary element in a certain sense; but this appears to have such a high arbitrary element that we are bound to come back to it at Report stage.

My amendment drew lots of plums because it was, in effect, a mini "Clause stand part" debate. We shall have to take in what the noble Lord the Minister has said. He has to consider past contributions and the case made by the noble Baroness, Lady Seear, about the legal and economic reason (which has not been answered). We have to consider the different levels of rebate, which it is true have varied over the years—41 per cent. and 37 per cent.—but that is a very different thing from taking it away altogether, and doing that on a discriminatory basis. If I were a middle employer I cannot see how I should not be walking up Whitehall screaming, "Burdens on business!" at the noble Lord and at his noble friend the Secretary of State. But he can think about that.

With that reflection, that we are inevitably bound to look at it again, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 agreed to.

Clauses 27 to 31 agreed to.

Schedule 4 agreed to.

Schedule 5 [Repeals]:

[Amendment No. 110 not moved.]

Schedule 5 agreed to.

Schedule 6 [Transitional provisions and savings]:

[Amendment No. 111 not moved.]

Schedule 6 agreed to.

Clause 32 [Short title, commencement and extent]:

[Amendments Nos. 112 to 115 not moved.]

Clause 32 agreed to.

House resumed: Bill reported with amendments.

House adjourned at twenty-nine minutes past ten o'clock.