HL Deb 27 March 1998 vol 587 cc1494-6

1.26 p.m.

Lord Haskel rose to move, That the draft order laid before the House on 18th February be approved [24th Report from the Joint Committee].

The noble Lord said: My Lords, the purpose of the order is to increase the maximum amount of most of the awards that industrial tribunals can make to individuals whose statutory employment rights have been infringed. It also affects the amount of redundancy payments payable to employees.

As your Lordships know, the employment rights legislation requires the Secretary of State to review certain limits annually. Those are the limit on the amount and duration of guaranteed payments; the limit on the weekly amounts payable from the National Insurance Fund to employees of an employer who has become insolvent; and the limit on a week's pay used in calculating statutory redundancy payments, the basic award of compensation for unfair dismissal, and the additional award for an employer's failure to comply with an order for reinstatement or re-engagement.

After taking into account the factors that we must consider—the general level of earnings; the national economic situation as a whole, and other relevant matters—we propose that the limit on the daily amount of guarantee pay should increase roughly by the rate of inflation, as measured by the retail price index. Since the last increase in September 1995, that is, from £14.50 to £15.35 per day, and that the limits on a week's pay should increase from £210 to £220.

The Secretary of State laid a report on 18th February in which she explained why the periods in respect of which guarantee payments can be made would not be increased. The legislation also enables the Secretary of State to review other limits on payments at her discretion. Those are the awards for compensation for unfair dismissal and the special awards which may be made in cases where the dismissal is related to an employee's activities as a trade union or a health and safety representative, as an employee pension scheme trustee, or as a representative for consultation about redundancy or business transfer.

We propose that the limits on these awards should also rise with inflation. We propose that the limit on the maximum award for compensation for unfair dismissal should increase from £11,300 to £12,000. These increases will ensure that the real value of the limit on payments and industrial tribunal awards will not be eroded.

The proposed new limits will be set out in the order. In commending the increases to the House, I wish to say that in reviewing the awards, as well as taking into account the factors I mentioned earlier, we have also had regard to employers' costs and the cost to public expenditure.

In the longer term the Government wish to consider whether the limits, and the arrangements for reviewing them, work in the best way to meet our aims. Although we are not in a position to say yet what the options might be, we should be interested to hear and would welcome representations from your Lordships and from interested parties elsewhere. I commend the order to the House.

Moved, That the draft order laid before the House on 18th February be approved [24th Report from the Joint Committee].—(Lord Haskel.)

1.30 p.m.

Baroness Blatch

My Lords, the order that the noble Lord has set out refers to 12 areas where the increases are to take effect. I wish to repeat the point made by my honourable friend in another place, Mr. Tim Boswell, when he referred to an increase of 4 per cent. for redundancy pay, and an increase in compensation by a tribunal of 6 per cent.

I have read the reply by the Minister in another place. Although the Minister uses the argument of rounding up and rounding down for this range of increases, and indeed the Minister referred today to "roughly by the rate of inflation", I remain of the view that a 2 per cent. differential, when uplifting costs in line with inflation, should not become common practice.

It is important to record, and always to keep at the forefront of one's mind, that any increase must be met by someone. In this case, the burdens fall on business. I believe that the estimated cost to business is between £8 million and £111/2 million. Those costs, taken together with many of the other financial burdens being laid on business, certainly as a result of two Budgets from the present Chancellor of the Exchequer, are causing considerable anxiety.

It may come as a relief to the Minister that I shall not oppose the order. However, I ask that extreme sensitivity to the business sector—which will fall subject to these costs—should be shown in future.

It is not simply a question of employers being responsible, and therefore avoiding the need for such measures. That is an argument that I take as read. Legislation is constantly being passed, some during this Session and some to come, which derives from obligations that will result from signing the social chapter. If the country is to flourish, a prerequisite for jobs and prosperity is that business should also flourish.

Lord Haskel

My Lords, I thank the noble Baroness for those comments. My answer is the same as that given in the Commons; namely, that it is a matter of rounding. However, we will take note of the noble Baroness's remarks. It will not become common practice. I imagine that, as these matters are rounded each year, so they will even out.

I also note very carefully the noble Baroness's remarks about the burdens on business. It is a matter that the Government, too, take very seriously. The Government have taken into account the views of business through a consultation exercise, which was carried out in respect of the previous increase, and also very recently, between November 1996 and January 1997. It was regarded as suitable for the 1997 review. These increases are being kept in line with inflation. We do try to keep the burden on business down. Nevertheless, we take very careful note of what the noble Baroness has said. I commend the order to the House.

On Question, Motion agreed to.