Informing and Consulting Employees

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Mr. Hesford: What would the hon. Gentleman estimate to be the cost to an employee who is turfed out on to the street by a company that has restructured without informing its employees?

Mr. Gibb: That would be shabby practice, and there have been recent examples in the car industry—although there are hints in the press that the leaking of information to the media before it was formally given to employees was largely the result of bad practice in the Department of Trade and Industry. It is wrong for such matters to be badly handled. However, the more prescriptive one is, and the more laws one piles on, the less likely it is that the economy will flourish and that people will find it easier to get new jobs after losing them.

Mr. Ivan Henderson: The hon. Gentleman thinks that it should be up to companies voluntarily to adopt procedures for informing and consulting their employees. What would he do if they did not adopt any such procedures? Would he allow employees to be treated as they were during the 18 years in which his party ruled the country?

Mr. Gibb: During those 18 years, Britain was turned from an economic basket case into a highly successful international economy. That was achieved partly by ensuring that we had much better industrial relations than those that we inherited from the previous Labour Government. Under the previous Conservative Government, a record low number of days were lost owing to industrial action. That was a tremendous success. One of the great problems in the 1970s was that too much trade union power damaged industrial relations.

I was interested in the Minister's response to my hon. Friend the Member for Vale of York about the cost of implementing the directive. He said that costs were not a factor in his mind, as if they were irrelevant. That does not surprise me, because the Government have been piling huge costs on to business. The estimated cost of implementing the directive—£209 million to £261 million a year—is twice the cost of implementing and running the working families tax credit, which, according to the National Association of Citizens Advice Bureaux, is causing enormous problems for the very people it was designed to help. Employers are refusing to take on people who qualify for the benefit because of the administrative burden that it constitutes, and sacking or reducing the hours of employees who take it up. That was predicted by members of the Standing Committee considering the Bill that introduced the working families tax credit. It is a foreseen consequence of imposing such draconian measures on businesses.

Mr. Hesford: Is the hon. Gentleman saying that if the NACAB report is at all accurate, or indicative of a widespread practice, Conservative Members support employers who are undertaking those disgraceful practices to get round the rights of workers who want to access the working families tax credit?

Mr. Gibb: No, we do not support them, but it was reasonably foreseeable that it would happen in the harsh economic world that we live in. We would return the working families tax credit to a benefit that is paid by cheque or standing order into people's bank accounts and sent to them at their homes, so that they do not have the humiliation and difficulty of having benefits paid through the payroll at work.

The Chairman: Order. Hon. Members are drifting on to the working families tax credit.

Mr. Gibb: I accept your stricture, Sir David. I was merely responding to questions.

The cost of the working families tax credit—£100 million—is small compared to the cost of the directive, which has been estimated at between £209 million and £261 million. That is yet another burden on business, which has accumulated over the past four years to some £5 billion a year and has pushed Britain down from fourth to ninth place in the competitiveness league.

Mr. Darvill: Clearly, the whole debate concerns the balance between regulation and encouragement, but there are major benefits associated with consultation that employers who adopt best practice use to their advantage. Does the hon. Gentleman agree that those benefits offset the burdens by improving productivity and enabling expansion in the market?

Mr. Gibb: No. There is a difference between adopting best practice because one realises that that is the best way to run a business—I am thinking of a company such as the John Lewis partnership—and having to read a summary of a law to understand whether one will fall foul of it if one fails to apply best practice. Even businesses with, say, 49 employees will have to read the law to understand that it applies only to businesses with more than 50 employees. That will create a huge burden that will drown small and medium-size businesses. A real crisis is developing, and the last thing that this country needs is yet another law—a £200 million a year law—imposed on business.

Mr. Darvill: I am grateful to the hon. Gentleman for giving way again because this is a crucial point. His argument is based on cost, but it is clear that there are major advantages associated with employee consultation. Employers who adopt best practice and consult—whether through a regulatory system or otherwise—have an advantage, and the cost burden that he describes is not an issue.

Mr. Gibb: That is the hon. Gentleman's view and to a large extent it is mine, but it might not be that of a particular employer. We live in a free society and work in a free market economy—at least I hope we do. If an employer believes that consulting and informing is the best thing to do in economic terms, he will do so; otherwise, he will not. My concern is the passing of laws. Whether or not consulting and informing constitutes good business practice, it is counter-productive to legislate to force employers to adopt a practice that the hon. Gentleman or some bureaucrat in Europe believes is best way to run a business. It will create a bundle of paperwork that every business in the country will have to read and digest. Such initiatives are creating a crisis.

With regard to this directive, the CBI said:

    ``A one-size-fits-all policy for every business employing more than 50 people''—

that is what the hon. Gentleman is seeking to impose—

    ``is exactly the type of Brussels initiative that will hinder UK growth, investment and job creation. Companies need the freedom to communicate with staff in ways that reflect national and local customs and practice.''

I agree entirely with that view. The hon. Gentleman must understand that we live in a diverse society and we do not want restrictive laws that prescribe the way in which businesses should be run.

I am making these points because the Government are at the heart of Europe and are highly influential in those corridors of power. In order to have such influence, we have given up a vast amount of sovereignty since the hon. Gentleman and his colleagues took office, so we should be entirely confident that the measure will be defeated in the Council of Ministers. The matter is subject to qualified majority voting, so the Government need to muster at least 26 votes to prevent the directive's proponents from achieving the 62 votes needed to pass it.

Dr. Ladyman: Given the thrust of the hon. Gentleman's argument, does he think that the previous Government were wrong to allow QMV to be extended to this matter?

Mr. Gibb: I do not know. I am not about to traipse through the history of the European Union. I became a Member of Parliament in 1997 and I shall deal with the matters that confront us today. What I will say is that when the previous Government believed that something was right, we stood up for it. We achieved success because we stood firm—for example, on the question of the rebate. This Government should have taken a much firmer line on various issues. Had the hon. Gentleman read the recent book by my right hon. Friend the Member for Wokingham (Mr. Redwood), he would know that when one stands firm one can achieve great success in Europe, even under QMV.

I hope that the Minister will stand firm on the issue. My understanding is that last year Germany, Denmark and Ireland all opposed the directive, but that support is beginning to wane. Indeed, the Library brief on the matter, which hon. Members will have seen, states:

    ``Elisabeth Gigou, President-in-Office at the Extraordinary Employment and Social Affairs Council meeting on 20 December 2000 which agreed the European Company Statute, is reported to believe that the Germans and Danes are now more positively inclined towards the proposals.''

I suspect that the Government have realised that support in Brussels is waning, so they are preparing for a climb-down, which is why the Secretary of State has announced a review of UK arrangements affecting collective redundancies. Will that review be a way of fudging a climb-down on the directive? Will the legislation that emerges from the review implement the terms of the directive, but be dressed up as implementing the conclusions of the review? Is this all about hoodwinking Parliament?

We are placed in an odd position. If the directive is eventually passed by the Council of Ministers, Parliament will be asked—

Mr. Hesford: I may have misunderstood the hon. Gentleman, but I thought that he agreed with the Government's position. If he supports the motion, how can he suggest that the directive will be slid in later? I cannot see how those two ideas can co-exist.

Mr. Gibb: It is really straightforward. The motion states that the Government oppose the directive and we agree with the wording of the motion. However, I suspect—and this is a suspicion that I should like the Minister to dispel—that despite the words used in the motion, behind the scenes the Government have realised that they will not win the battle in Europe. In order to get the legislation through Parliament, they are fudging the issue by reviewing domestic legislation on collective redundancies. We should be placed in an odd position if that were the case.

If the directive is passed by the Council of Ministers because the Germans and Danes have changed their view, Parliament will be asked to introduce legislation opposed by both the Government and the Opposition. Therefore, I hope that Parliament will express its honest belief when it debates the regulations. For example, I hope that the Minister of State for the Cabinet Office, the right hon. Member for Makerfield (Mr. McCartney) will vote according to the views that he expressed to the Select Committee on European Scrutiny on 7 July 1999. He said:

    ``We have made it absolutely clear in the election and since that the proposals for information and consultation which may come out of the Commission are unacceptable and that we believe in subsidiarity in these areas and we continue to do so.''

That was the Government's view then and, judging from the motion, it appears to be their view today. I hope that we shall not see the proposals put before Parliament, but if that occurs I trust that it will vote them out.

11.23 am

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Prepared 28 February 2001