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Mr. Hammond: I accept much of that, and the best guarantee that employers will listen to requests for flexible working practice is a healthy economy and a strong, tight labour market. Those of us who represent areas in which the labour market is incredibly tight do not recognise many problems that the Minister seeks to address through legislation, because employees dictate the terms and employers are tripping over themselves to be flexible to secure that precious and scarce commodity. I know that that is not the case in every single area, but the Government should focus their attention on ensuring that the buoyancy of the economy creates labour market conditions that mean

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that everyone seeks out best practice in order to engage as many people as possible in the labour market.

Will the Minister address a specific issue? He said that he thinks that he has got this just about right. Bearing in mind his earlier comments, I thought that he might say, because there were concerns on both sides, that those showed that he had got it just about right. On Second Reading, however, his right hon. Friend the Secretary of State, responding to an intervention from a Government Member, referred to what I must describe as a threat to employers from the new clause. She said that how it worked would be reviewed, and that if it was not found to be working satisfactorily, steps would be taken.

That is being interpreted by many employers to mean that although the provisions in the new clause are broadly acceptable, the DTI intends to push the steamroller further if employers do not comply with what the Government clearly want. That is my concern. Can the Minister say anything about the Government's future intentions and the implicit threat that his right hon. Friend made?

Alan Johnson: The hon. Gentleman is wrong in his analysis of the situation in places such as Runnymede and Weybridge. We have sought to combine the basic civilised rights of the workplace with a dynamic economy, and he is right in that, in the so-called war for talent, many working parents, especially women, can dictate their terms and conditions because of the skills that they have. However, we have found in the same areas that many working in other sectors who are not so highly skilled, especially women, are not so able to dictate their terms and conditions and are almost ignored on those issues.

Should we not be looking at work patterns that have existed for years, which have no flexibility, in order to accommodate very simple requests? I was present to hear the comment of the woman who said, ''I would have stayed in my job if only my employer had allowed me to start 15 minutes later so I that could drop my child off.'' That was in Reading, part of the booming Thames valley. I disagree with that part of the hon. Gentleman's analysis.

As for the threat that the hon. Gentleman mentioned, I believe that my right hon. Friend the Secretary of State is utterly incapable of issuing anything so inelegant as a threat. She was referring to the fact that the taskforce, made up of business and union representatives and other experts, said that the measure should be reviewed in three years. It made the point that because this was not a statutory right to demand to work more flexibly, the balance was absolutely right. We are providing is a right to make a request and a duty on the employer to take the request seriously. We expect the vast majority of employers not to go through some box-ticking exercise, but to give the matter serious consideration and to change their attitude and approach.

Many employers have done that during the past 15 or 20 years. There has almost been a revolution, sometimes in total quality management and sometimes through Investors in People, which was discussed this

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morning. Employers now genuinely value employees and look much more carefully at how individual rights, responsibilities and duties can be better balanced.

We have accepted the nine unanimous recommendations in their entirety. I do not usually read out CBI briefs, but the latest one is interesting and this would be a good point to read from it. It says that

    ''we accept that the new right is likely to increase the availability of flexible working without damaging business competitiveness. We support the Government's decision to adopt the unanimous recommendations of the Work and Parents Taskforce''.

One of those recommendations was that there should be a review in three years' time.

Norman Lamb: I support the thrust of the new clause. Does the Minister accept that in many respects it essentially codifies the way in which case law on indirect sex discrimination has developed? As the law stands now, any woman who wants to work part-time, reduced hours, more flexibly or from home for a period can put that request to the employer. An employer who refuses her request, if it is based on child care needs, is subject to a claim for indirect sex discrimination. In the same workplace, a man who is refused that request where a woman was granted it, could have a claim for direct sex discrimination. In a way, the new clause simply puts into writing, in clear form, the way in which the law has developed. Is that the Minister's understanding?

Alan Johnson: The hon. Gentleman makes an important contribution. Some small business people do not have such procedures and think that they are immune from any request to work more flexibly. Many small business people think that our approach is right. Sex discrimination could affect small companies, but that is a much more cumbersome and difficult process to go through.

Mr. Hammond: The hon. Member for North Norfolk made a very important point. Is the Minister saying, that where the new clause applies, access to sex discrimination law will be ruled out and the employee will have to go through this procedure rather than seeking to bring an indirect sex discrimination case? If the Minister is not saying that, he is not clarifying and codifying the law but heaping more upon it, because the sex discrimination route will still be available. I shall seek to show the Committee later that one problem is that the compensation and remedies available in the Bill and in the sex discrimination legislation are different. If both are available, that places a double jeopardy in front of employers, which could further confuse the situation. Can the Minister clarify matters?

Alan Johnson: I am not saying that this changes sex discrimination regulations but, in response to the hon. Member for North Norfolk, that there is a fear and a danger that employers who believe that they can ignore this changing pattern of work may be hit by the blunt instrument of sex discrimination law. That is a difficult route for individuals to pursue and it does not deal with the issue at the heart of this problem: how

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can an employer and an employee engage in a useful exchange about the way in which they can best make changes to the benefit of the company, the employee and the customers?

6.30 pm

Mr. Osborne: In general I support anything that we can do to encourage flexible working, which is something that my wife, as a new mother, benefits from. Sadly, the Conservative Whips' Office, probably like the Labour Whips' Office, is not so flexible when it comes to the father. However, I want to make a more substantial point.

I am concerned at the lack of rigour in the regulatory impact assessment on this proposal, because, even on the basis of the assessment, the costs involved are enormous—a quarter of a billion pounds. The impact assessment says that 3.8 million employees will be entitled to submit requests under the clause. It goes on to say that the premise behind the assessment

    ''is that a considerable proportion of parents do seek new working patterns.''

Yet, over the page the estimate for the cost suggests that just over 500,000 additional requests will be made—one eighth of eligible parents. There seems to be confusion about the facts: the assumption is that a considerable proportion will take it up, but the costs are worked out on the basis that only one eighth of eligible parents will make a request. Does the Minister accept that if more than one eighth of eligible parents use the clause, the cost will be considerably higher?

Alan Johnson: The regulatory impact assessment is difficult to make. We are in uncharted territory. We are working closely with the advice and guidance in particular of the charities that have encouraged flexible working for a long time, because they believe that there is a latent desire for flexible working. We are assuming 418,000 new requests for flexible working each year. A request may come at any stage in the child's life. It may come not when the child is born, but two years later. It can come up to 14 days before the child's sixth birthday.

Our other assumption is that the majority of those 418,000—about 80 per cent.—will be dealt with through the internal process. At the initial stage of the request, the individual and the employer will sit down together and decide a new way of working. Another big chunk will be dealt with at the appeal. The individual will say ''Fair enough. I accept there is no way I can do it.'' We believe that few of those will go to employment tribunals. They are rough assessments. Regulatory impact assessments are always difficult, but it is right that we should have a stab at it. I think that members of the Committee will appreciate having at least some indicative figures.

After the task force presented its views, we accepted all its recommendations, in full or in principle, and we have kept as close to its recommendations as possible when translating them into legislation, an approach that we shall continue to adopt as we draft and test the accompanying regulations.

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The taskforce's approach was to design the right to apply for flexible working so that it would work for small businesses. A right that works for small business will work for larger employers, and small businesses can benefit as much from flexible working as any other organisation. However, we recognise that the introduction of this new right will have costs for business. The impact will depend on the number of parents who exercise the right and the way in which employers respond. I have been through the regulatory impact assessment in response to the intervention of the hon. Member for Tatton, but we must also recognise that the economy also benefits, with savings in recruitment costs alone of about £113 million. However, processing requests and accommodating them is not without cost. Our assessment is that one-off implementation costs will be £38 million and recurring costs £286 million a year.

I consider that cost across British business to be justifiable, particularly as helping parents to balance their work and childcare responsibilities will be good for business by encouraging employee commitment and motivation and ensuring that businesses are better placed to deal more effectively with changing market conditions.

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