Draft Trade Union and Labour
Relations (Consolidation) Act 1992 (Amendment) Order 2013

The Committee consisted of the following Members:

Chair: Mr Graham Brady 

Bray, Angie (Ealing Central and Acton) (Con) 

Cairns, Alun (Vale of Glamorgan) (Con) 

Corbyn, Jeremy (Islington North) (Lab) 

Crabb, Stephen (Lord Commissioner of Her Majesty's Treasury)  

Crouch, Tracey (Chatham and Aylesford) (Con) 

Dakin, Nic (Scunthorpe) (Lab) 

Hamilton, Fabian (Leeds North East) (Lab) 

Hart, Simon (Carmarthen West and South Pembrokeshire) (Con) 

Hemming, John (Birmingham, Yardley) (LD) 

McCabe, Steve (Birmingham, Selly Oak) (Lab) 

Murray, Ian (Edinburgh South) (Lab) 

Percy, Andrew (Brigg and Goole) (Con) 

Reevell, Simon (Dewsbury) (Con) 

Rotheram, Steve (Liverpool, Walton) (Lab) 

Simpson, David (Upper Bann) (DUP) 

Swinson, Jo (Parliamentary Under-Secretary of State for Business, Innovation and Skills)  

Uppal, Paul (Wolverhampton South West) (Con) 

Whitehead, Dr Alan (Southampton, Test) (Lab) 

Lloyd Owen, Committee Clerk

† attended the Committee

The following also attended ( Standing Order No. 118(2) ) :

Anderson, Mr David (Blaydon) (Lab) 

Brown, Mr Russell (Dumfries and Galloway) (Lab) 

Clark, Katy (North Ayrshire and Arran) (Lab) 

Cryer, John (Leyton and Wanstead) (Lab) 

Doran, Mr Frank (Aberdeen North) (Lab) 

Elliott, Julie (Sunderland Central) (Lab) 

Greenwood, Lilian (Nottingham South) (Lab) 

Lavery, Ian (Wansbeck) (Lab) 

McDonnell, John (Hayes and Harlington) (Lab) 

Morris, Grahame M. (Easington) (Lab) 

Sheridan, Jim (Paisley and Renfrewshire North) (Lab) 

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First Delegated Legislation Committee 

Monday 18 March 2013  

[Mr Graham Brady in the Chair] 

Draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013

4.30 pm 

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson):  I beg to move, 

That the Committee has considered the draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013. 

It is a great pleasure to serve under your Chairmanship, Mr Brady. Today, I am presenting an order amending the rules on collective redundancies. I shall set out for the Committee the three things it does. First, it reduces the current 90-day minimum period for 100 or more redundancies to 45 days, which is the minimum time that must elapse before the first dismissal takes effect. Secondly, it makes an equivalent change to the requirement to notify the Secretary of State in advance, which will also reduce the time before the first dismissal can take effect from 90 to 45 days. Thirdly, it removes fixed-term contracts that have reached their agreed termination point from the obligation to consult. The changes follow an extensive consultation process and will be complemented by guidance being developed by ACAS. 

To help the Committee appreciate the impact of the changes and the reasons why they are being made, I must first say something about the current rules. The starting point is the European directive on collective redundancies, implemented by the Trade Union and Labour Relations (Consolidation) Act 1992. The directive aims to protect employees in large-scale redundancies without preventing employers from taking the steps necessary to restructure. UK legislation expands on the directive by introducing minimum time periods, which apply where the employer proposes 20 or more redundancies at a single establishment within a period of 90 days or less. They can take two forms depending on the number of people involved: first, no redundancy can occur until at least 30 days after the start of the consultation where between 20 and 99 redundancies are proposed; and, secondly, no redundancy can occur until at least 90 days after the start of the consultation where 100 or more redundancies are proposed. The measure does not impact on individual notice periods, which do not begin until redundancy notices have been issued, and redundancy notices cannot be issued until consultation is genuinely complete. 

Collective redundancy obligations have been in place for 40 years and the 90-day minimum period has remained unchanged in that time. The same cannot be said for the working environment. Advances in communications technology make consultation easy and faster to carry out. People have easier access to details about alternative employment and training opportunities. CVs can be

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created and sent to an employer or agency in a matter of hours. There is less emphasis on career longevity with a single employer, and there are millions of movements between jobs, and between employment, unemployment and inactivity. Collective redundancies happen for a reason. A business may need to restructure to meet the demands of a changing market. It can be subject to mergers or acquisitions and change product lines or processes, and obviously a business can sometimes fail. The ability to adapt can create a stronger business, with the ability to grow and expand in future. Restructuring can also mean ensuring the survival of the business and protection for the remaining jobs. 

As part of its wider review of employment law, the Government carried out a call for evidence at the end of 2011 on the collective redundancy regime and a consultation from July to September 2012. The evidence we received set out a variety of issues for both employers and employees. Employers were concerned that the rules delayed their ability to respond in a timely way to changing market conditions and therefore hampered growth. For employees, the rules created uncertainties about whether and when to seek alternative employment or training opportunities, with employees torn between their desire to retain their current employment and doubt about whether they would be able to do so. Extended consultation periods were also seen as having a negative impact on morale and productivity. 

The call for evidence suggested that concerns about protecting the rights of those who are made redundant can often crowd out the interests of those who are not. Trade unions wanted an improvement in the quality of consultation, so that employees were genuinely engaged. They were also opposed to any change to the minimum period, because they believed it would reduce job protection and make employers more likely to make employees redundant. 

We considered all views carefully and identified three key objectives for reform: first, improving the quality of consultation; secondly, ensuring that employers can restructure effectively to respond to changing market conditions; and, thirdly, balancing the interests of the employees made redundant with those who remain. 

Steve McCabe (Birmingham, Selly Oak) (Lab):  The Minister said that trade unions opposed the reduction in the notice period. Does she plan to make public the consultation results, so that we can see how many people responded and who said what? 

Jo Swinson:  I thank the hon. Gentleman for his intervention. Obviously, people who submit their comments to consultations do not necessarily expect them to be released. Before making anything public, therefore, we would want to make sure that we respected confidentiality, where individuals wanted it to apply. However, the Government response summarised the responses to the consultation, and I outlined the general views that business groups and trade unions contributed; indeed, there may be some opportunity later to draw on some of the individual responses. 

Good-quality consultation is better for all parties and is most likely to deliver the best results overall. At the same time, the framework for the consultation process must be fit for purpose and flexible enough to allow each consultation to be tailored to its unique circumstances. 

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Let me turn to the specific provisions in the order: the minimum period and the treatment of fixed-term appointees. As I mentioned, our consultation identified a range of problems with the current 90-day minimum period. In particular, employers argued that it prolonged consultation beyond the point where it was constructive. Most told us that meaningful consultation usually lasts only 30 to 45 days. Viable alternatives to proposals were hard to find or quickly identify. 

A second major concern was the effect on staff morale and productivity. One leading trade association said that employees were left in a “state of paralysis” and 

“unmotivated on a day-to-day basis”. 

The effect was felt by a wide pool of employees, as the number of individuals subsequently made redundant is usually a much smaller proportion of those consulted over the changes in the first place. 

Lilian Greenwood (Nottingham South) (Lab):  Is the number not smaller generally because having that period gives people time to look at alternatives? If the period is reduced, there will be much less time to look at alternatives and to redeploy people into alternative jobs. That is why the 90 days is so important. 

Jo Swinson:  We want to avoid a misunderstanding about what we are talking about. We are not necessarily talking about a reduction in the time for consultation, but in the minimum time for consultation. Where consultation is ongoing, it can and should continue beyond that point. Some consultations, albeit a small number, can currently go on beyond the 90 days. Where that is necessary for the consultation to be meaningful, that consultation could, even under the new scenario, extend beyond the 45 days. However, where the consultation is concluded much earlier, and it is clear to everyone involved what the best solution would ultimately be, the order means that the consultation would not have to continue unnecessarily. 

Jeremy Corbyn (Islington North) (Lab):  Is not the truth of the matter that reducing the time for consultation makes it easier to have a greater number of redundancies, with less trouble from the public and the work force in the organisation? Giving employers these powers is damaging for industrial relations and for the prospects of any organisation having a coherent and motivated work force. 

Jo Swinson:  Nobody likes to see redundancies—the Government do not, and employees do not—but I would also argue that employers do not like to see redundancies, either. Where redundancies happen, it is a sign that change is required; it may often be a sign that the business is not doing well. To make sure the business can continue—and, importantly, can continue employing people and providing jobs—it may be important to ensure that restructuring happens. Having a long, drawn-out process can often be counter-productive in making sure the business can get back on a sound financial footing, so that the jobs of the people who remain can be safeguarded. I absolutely accept the strength of feeling on this issue and the importance of trying to make sure that redundancies are minimised, but I disagree with the

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hon. Gentleman that employers are always just out to make lots of people redundant. There will still be a minimum period of 45 days for large redundancies. 

It is also important to recognise that, in the grand scheme of things, we are talking about quite a small proportion of the overall redundancies. 

Several hon. Members  rose  

Jo Swinson:  I will finish the point I am making, and then I will happily take another intervention. 

Obviously, figures change slightly from year to year, but for the past decade annual redundancy figures have been about 600,000. Large-scale collective redundancies, at some 97,000 per year, account for 16% of that figure. That shows that the majority of redundancies do not actually come under these rules in the first place, so the hon. Gentleman’s concerns are not borne out by the basic facts. However, the ACAS guidance can obviously be accessed by any business undertaking redundancies, and we absolutely want and need to drive up that quality of consultation. 

Grahame M. Morris (Easington) (Lab):  I am following the Minister’s arguments closely, but it strikes me that we have some of the weakest protections of any labour force in Europe. She suggested that this measure will somehow improve things for struggling companies, but is it not familiar practice for companies to make workers redundant in the UK, where doing so is relatively easy, rather than in Europe, where the protections are stronger? Are we not likely to see more redundancies as a consequence of reducing protections such as the consultation period? 

Jo Swinson:  Of course, a consultation period is not actually a protection against redundancies ultimately occurring. If redundancies are required to get a particular company’s business model back on to a sound footing, they will happen whether the consultation period is 45 days or 90 days. 

Julie Elliott (Sunderland Central) (Lab):  Will the Minister give way? 

Jo Swinson:  If I may finish the point I am making, I will happily take another intervention. I know that Members are keen to participate in the debate, but it is courteous to finish a response before taking the next intervention. 

It is important that businesses have the opportunity I was describing. I do not believe the protections are reduced, because if businesses do not follow the proper procedures and have a meaningful consultation, the protective award remains unchanged. 

Julie Elliott:  My intervention is on that point. In my experience, because of the lack of legal protections for British workers, European and other international companies that are looking for an easy target in order to get rid of people will target British workers. The Minister’s proposal will actually make it much easier to get rid of British workers, which means European companies will target us even more. She must recognise that we often work in a global market, not just a British market. 

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Jo Swinson:  I agree with the hon. Lady, to the extent that we work in a global market and it is important that Britain is competitive. However, the way to do that is to have a well-skilled labour force, a flexible labour market and an investment climate such that companies want to locate and invest in Britain to take advantage of the workers we have in this country. The way to protect jobs in this country is, for example, to improve the business environment by reducing corporation tax. We are investing in skills, and my right hon. Friend the Secretary of State and others have undertaken intensive work on, for example, the industrial strategy, the automotive sector, aerospace and life sciences. I do not agree that a different consultation period will have the impact the hon. Lady suggests—that suddenly jobs somewhere else will be protected, instead of jobs in the UK. It is about making sure that we have the best-skilled workers, which can contribute to companies competing on a global playing field as well. 

Steve Rotheram (Liverpool, Walton) (Lab):  Will the Minister give way? 

Jo Swinson:  I will make a little progress and then I will happily give way to the hon. Gentleman. 

As I was saying, employers have discussed this very issue—that a prolonged period of uncertainty can make it difficult to retain skilled staff, and also affects investors, suppliers, customers and lenders. The vast majority of people who could be made redundant are not. Between 50% and 80% of those who are subject to collective consultation are ultimately not made redundant. However, when such a notification goes out within a company, that understandably creates uncertainty. People worry about their jobs, and even if they themselves are not going to be made redundant, they do not know that at that point, so they may start looking for other work. That can lead to a brain drain: an exodus of skills from such companies, which find it difficult to hold on to the most talented people, who contribute most to the work force and who are most likely to be snapped up by competitors. That long period of uncertainty therefore impacts negatively on workers. 

Mr Russell Brown (Dumfries and Galloway) (Lab)  rose—  

Jo Swinson:  I shall make a little progress before I take some more interventions; I have a list building here. 

After careful consideration of all the responses, we concluded that it was appropriate to reduce the 90-day minimum to 45 days. That is a statutory minimum, and each consultation will need to run for as long as necessary to demonstrate meaningful consultation. As Labour Members have asked about protection, let me say that we have retained the level of the protective award that can be made to employees who have not been consulted appropriately, and that can be up to 90 days’ pay per affected employee. Before I turn to the next part of the order, I will give way to the hon. Members for Liverpool, Walton and for Dumfries and Galloway. 

Steve Rotheram:  I normally listen to what the hon. Lady has to say, as she speaks with passion on many issues, but this is not one of them. There seems to be no

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heart in this at all. She is just the mouthpiece for a pernicious piece of Government legislation. She identified that the instrument will only affect a small minority of individuals, so why bother at all? If this is such a big problem, how is it being brought to the Government’s attention? What we should be doing is strengthening workers’ rights, as more people than ever are facing redundancy through the policies of a heartless Government. 

Jo Swinson:  The hon. Gentleman started his intervention by saying that he usually listens to what I have to say, so I suggest that he does just that, because he might then be somewhat reassured. He says that I said only a small minority would be affected, but that was in response to a point that was put to me. Most people are not made redundant through large-scale redundancies, so it is important that the guidance and the framework be right for everyone who is potentially in that situation. About 16% are made redundant through the collective redundancies process, but it is still important that we get the process right. We have undertaken a consultation, to which we have had a clear response. It is worth making the point that the business community wanted the Government to go further and to reduce the consultation period to 30 days, and they have not done so because they have listened to the points made by trade unions and other organisations that contributed to the consultation. That is an important point to bear in mind. The hon. Gentleman might have started his intervention by saying that he is not listening, and perhaps he is not prepared to listen, but I gave him that answer in any event. 

Mr Brown:  I want to take the Minister back to something she said two or three minutes ago. She claimed that it becomes difficult for a company when there is uncertainty and when it is losing skills and talent. She is plain wrong. As someone who has been involved in negotiating a redundancy situation on behalf of the work force, I can say that the whip hand—if I can use that terminology—lies with the employer. If the employer believes that someone in the work force is required for their skills and abilities and cannot be released, they have the right to say, “No, you will not be going.” Quite honestly, this idea of reducing 90 days to 45 days is a fallacy. 

Jo Swinson:  My point was that uncertainty is created when a consultation on redundancy is announced. Nothing the hon. Gentleman said suggests that that is not the case. When faced with that degree of uncertainty, it is an entirely natural reaction for some people to start looking for alternative work. The situation can be unsettling for people. Indeed the responses to the consultation made it clear that that is evidenced and understood. An association representing manufacturers said: 

“Members experience a dip in their productivity once consultation begins and can lose their most marketable (and often their most skilled and valuable) employees before the end of the consultation period.” 

That is not my suggestion but something said clearly to us in the consultation. 

Andrew Percy (Brigg and Goole) (Con):  I can give the Minister a practical example. In the Humber recently, the decision was made to lose a number of jobs at British Aerospace. During the consultation period, part

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of the criticism from employers was that because of the uncertainty and the length of time involved—I do see both sides of the argument on this—a number of skilled employees left the business, which caused other problems further downstream. 

Jo Swinson:  My hon. Friend has made my point powerfully. Hon. Members will have their own constituency experiences; it might be that in some cases such uncertainty did not lead to skilled members of staff leaving. 

However, we also know from the responses to the consultation, and my hon. Friend’s contribution just now, that the issue can be a concern. That can happen and it can have a negative impact on the future competitiveness of businesses, which of course has an impact on their ability to provide jobs, which is what we are all concerned to protect. 

Mr David Anderson (Blaydon) (Lab):  The Minister has twice mentioned that 45 days will be a minimum period. Who decides whether that period will be extended? Will it be jointly decided or can one side say that they are not satisfied? She also mentioned protective awards being retained. It is probable that more protective awards will be applied for. How does that square with cuts to the legal aid budget? The Government have made it harder for people to access their legal rights and to claim an award. 

Jo Swinson:  Clearly, if people are putting in claims for protective awards, that is one way in which it will be decided whether there has been meaningful consultation. That will be done through proper processes. The hon. Gentleman referred to cuts to legal aid. The Government have had to make a whole range of difficult decisions. It is easy to sit there in opposition and suggest that no cuts whatever would have been made by the Labour party, when we know that that is entirely not the truth. 

Of course there is still the opportunity for people to seek protective awards, but we do not want matters to end up in the tribunal system. That is why the Government have introduced a range of measures to try to improve early conciliation and dialogue between employers and employees. 

Although it has not been the main thrust of the comments made in Committee today, a really important plank of what the Government are doing is improved guidance. The consultation showed that the quality of consultation that happens at the moment is not nearly high enough, and that needs to change. That is why we have worked with ACAS to improve it. 

Several hon. Members  rose  

Jo Swinson:  I give way to my hon. Friend the Member for Ealing Central and Acton, as the other hon. Members have already made interventions. 

Angie Bray (Ealing Central and Acton) (Con):  My hon. Friend made an important point in saying that the European directive goes far further; it basically says that there can be a 30-day minimum, whereas we have settled for 45. Is that because we listened carefully to all sides during the consultation and because we wanted to be seen to be as fair as we possibly could be? 

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Jo Swinson:  My hon. Friend is absolutely right. As I mentioned, strong views were put forward in the consultation. The view from business was clear—it wanted 30 days—but we took a balanced view when looking at the consultation responses. I will be happy to make sure that those are published—on an anonymised basis, obviously, so that those who contributed to the consultation do not have an issue if they want what they said to be in confidence. 

Steve Rotheram  rose—  

Jo Swinson:  I give way again to the hon. Gentleman. Perhaps he has been listening more now—who knows? 

Steve Rotheram:  I hope I will not be misquoted this time. If hon. Members check Hansard, they will see that I did not say I was not listening; I said that I always listen to the hon. Lady. Perhaps I should not in future. 

I want to examine further the fallacy about the 45 and 90 days. Somehow everybody leaves within a certain time scale, and by reducing it those people are not going to leave. That is absolute nonsense. If people are going to leave, it does not matter whether it is 90 days or 45—in fact, if it is 45 days, the more skilled and able are more likely to leave. That argument simply does not hold up. 

Jo Swinson:  I disagree. I apologise—we will see in Hansard tomorrow whether the hon. Gentleman said that he always listens or usually listens to what I say. 

Steve Rotheram:  I did not say that I never listen. 

Jo Swinson:  I note what the hon. Gentleman says from a sedentary position. 

At the end of the day, we have heard strong views in the consultation about the time scale creating a period of uncertainty. That has a range of downsides. Some of that can be the loss of skilled staff. It can also be the negative impact on morale and on productivity, because people are understandably caught up in the issues about what is actually happening. Again, a legal firm representing many large employers responded to the consultation. It stated: 

“redundancy is a massively disruptive process...the 90 day consultation process equates to 90 days of poor productivity which can create a vicious circle...if employers are able to avoid falling into this bracket, by spacing out redundancy exercises across very long periods of time, they will do even if that means operating inefficiently in the meantime..” 

So the situation can lead to all sorts of perverse consequences. 

Mr Anderson:  Will the Minister give way? 

Jo Swinson:  I shall give way, but then I want to turn to the next part of the order. 

Mr Anderson:  Will the Minister answer the first part of the question I asked about what happens at 45 days? Who agrees whether that will be extended? Is that going to be jointly agreed, or can one side say they want to keep it going, while the other side cannot? What is going to happen practically when 45 days are reached? 

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Jo Swinson:  Obviously, any employers who take the view that they have carried out the meaningful consultation and that it has been concluded within 45 days will have to be happy to defend that view if they are ultimately challenged at a tribunal. The issue will ultimately be up to a tribunal to decide. 

However, the guidance put forward by ACAS for when the 45 days is reached is about having that dialogue so that people can get round the table and conclude whether that is a sensible way forward. But it is not as if the consultation has to be extended and that there is a veto over its ending; if that were the case, there could be never-ending consultation, and that could have devastating impacts on the jobs that we are looking to save. 

The point of any of these consultation processes, fraught though they are, is to ensure that as many jobs as possible remain and that the process is conducted as smoothly as possible, with as little disruption as possible for the remaining employees. For those unfortunately made redundant, the point is that they be given as much support as possible to find new employment. I hope we would all agree with those objectives. 

Andrew Percy:  The Minister has yet to touch on something I am sure she is coming to. What will the process be for assessing the impact? Some concerns raised by Labour Members may or may not come to fruition. What are the proposals for monitoring the implementation of the change and whether it is a success? 

Jo Swinson:  Parliament is having an employment law review. Throughout the five years of this Parliament, we are keeping all employment law under review. We are looking at different areas in turn. 

Part of the process has been done through the red tape challenge. That measure, if agreed, will come into effect next month and that will mean that there is time before the end of the Parliament to ensure that we assess the impact of the changes, as part of the employment law review. I am particularly keen to ensure that we assess whether the quality of consultation improves. Through my regular meetings with stakeholders, such as the TUC, I will seek views on whether that is happening. 

Jeremy Corbyn  rose—  

Jo Swinson:  I shall give way to the hon. Gentleman, but then I shall turn to the change related to fixed-term employees. 

Jeremy Corbyn:  Will the Minister tell us the exact response she got from the TUC during the meeting about this matter? 

Jo Swinson:  I meet the TUC on a regular basis as the Minister for employment relations. The TUC has been clear in its views. The consultation responses from the trade unions were clear, as they were from business. It could be argued that we are not pleasing either, because we are not doing exactly what either side of the labour relations world wanted us to do. 

It is clear, as I have already said, that trade unions did not want this change. That does not mean that I do not want to engage with the TUC on ensuring that what we are doing is as good as it can be, or that the TUC, to be fair to it, decides to take its bat and ball home and not

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discuss further how we can get better quality consultation. I have a productive working relationship with Frances O’Grady and welcome the discussions that we regularly have, and will continue to have. 

Ian Lavery (Wansbeck) (Lab):  Will the Minister give way? 

Jo Swinson:  I said that I was going to make some progress and I will now do so. 

I turn to the change relating to fixed-term employees. Our consultation identified that there is considerable confusion over whether the natural ending of a fixed-term contract triggers an obligation to consult. For example, employers were not sure whether they would need to consult if, for example, it was likely that they needed to make 18 people on permanent contracts redundant within a 90-day period and two fixed-term contracts were due to expire in the same period. 

The issue has proved particularly problematic for the higher education sector, where the cycles of academic funding mean the routine use of fixed-term appointments geared to the academic year. Universities can find themselves on a continuous cycle of consultation about appointments that are reaching the end of their natural life anyway, when no one is in any doubt that the lifetime of the contract is limited. 

We have decided to implement the provision in the directive that allows member states to exclude fixed-term contracts that have reached their agreed point of expiry. The regulations make clear that when the fixed-term contracts reach their agreed point of expiry, they are excluded from the obligation to consult. That would mean that, in my earlier example, there would be no obligation to consult. Where, however, the employer seeks to terminate the contract early and on the grounds of redundancy, consultation is still required if those thresholds are met—20-plus redundancies at a single establishment within a period of 90 days or less. 

Finally, I would like to mention the guidance being produced by ACAS. I have provided Committee members with a copy of the near-final version of that guidance. I appreciate that we are blessed with slightly higher attendance than the formal membership of the Committee and I apologise that the guidance has gone to members of the Committee, rather than to the additional Members who have turned up. Perhaps those who have received a copy will be happy to share, in the spirit of co-operation. 

The guidance is being developed by ACAS in conjunction with stakeholders, including employers and employee representatives. When the guidance is complete, it will represent the agreed approach between employers and unions. As I have already stressed, the guidance is an important component of the overall package. Consultation showed us that statutory solutions were neither desirable nor achievable for all the difficulties arising with the collective redundancy rules. In particular, ensuring that consultation is meaningful and constructive relies on its being conducted in the right spirit by all concerned. 

Jim Sheridan (Paisley and Renfrewshire North) (Lab):  I apologise for arriving late; I am sure the Minister is aware of the difficulty of travelling from Scotland these days. Will she clarify whether the order will apply to armed forces personnel? 

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Jo Swinson:  I would be happy to confirm that for the hon. Gentleman. I want to give him an accurate answer, so I will do so in my closing remarks. 

The commercial environment and our labour market have changed significantly since collective redundancies legislation was introduced. Communication is faster, easier and can reach more people more quickly. Our labour market is more flexible, with individuals moving more regularly from one job to another. To remain competitive in global markets, businesses must respond effectively and efficiently to commercial pressures. It is right that we make these changes today to ensure that the statutory framework is up to date. 

5.2 pm 

Ian Murray (Edinburgh South) (Lab):  It is always a great pleasure to serve under your chairmanship, Mr Brady. You were Chair of the Enterprise and Regulatory Reform Public Bill Committee, so you will be an expert on employment law. 

The attendance of Labour Members shows their interest in this subject and passion about these important changes to employment law—[ Interruption. ] Conservative Members can chunter and giggle at that if they wish, but given that the Liberal Democrats have completely sold out their principles on workers’ rights, it is only Labour that will defend the workers of this country. 

The order will change the collective redundancy period. In isolation, we would be against the proposal, but it is being implemented against the backdrop of a Government who are hellbent on delivering their Beecroft agenda. You will recall, Mr Brady, that when Mr Beecroft himself came to the Enterprise and Regulatory Reform Public Bill Committee, he said that he was intent on the Government pushing through most of the changes in his report on the basis of no empirical evidence whatever. The anecdote was used in that Committee that the report was based on conversations he had in the pub with his former colleagues. The Beecroft report is bad not just for workers in this country, but for business. 

The Minister talked about “hampering growth”, yet it is not collective redundancy regulations that are hampering growth in this country, but the Government’s policies. We had the existing collective redundancy rules during the longest period of economic growth in this country’s history. The Government should be making it easier to hire people, not fire them, and it is not just me saying that. The Government’s own small business survey showed that only 6% of small businesses in this country had any fear about regulations when taking on employees. That covered all regulations, including health and safety regulations as well as employment regulations, which is what we are considering today. 

The 60-page report commissioned by the Department for Business, Innovation and Skills from the market research firm TNS and Kingston university found that businesses that view employment law as burdensome do so purely because they have 

“a lack of understanding of the law”. 

Such business perceptions are at odds with what the Government are trying to achieve. The report says: 

“The UK has one of the most lightly regulated and flexible employment systems in the world.” 

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Indeed, the OECD said that the UK comes next after America and Canada in terms of employment regulation. I always go back to the comments of Joy Drummond, who has been a senior lawyer in this arena for 30 years. As you may recall, Mr Brady, she told the Enterprise and Regulatory Reform Public Bill Committee that if there is a problem with business perception, we should try to change that perception, not change the law, which would be detrimental to everyone who works in this country. 

To put this change to collective redundancy in context, let us look at what else the Government have done. They have changed the qualification period for unfair dismissal from one year to two, with no evidence whatever that that will create any more jobs or economic growth. With the Enterprise and Regulatory Reform Bill, they are merely pushing through the Beecroft agenda by the back door. As I have demonstrated time and time again in the House, as have trade unions and many other commentators, such as the Chartered Institute of Personnel and Development, when we take that Bill in its entirety, it is Beecroft by the back door, with compensated no-fault dismissal. The Government are completely driven by the Beecroft ideology, rather than by the need to change employment law through the proper processes. 

To put the order in context, I should add that, at the Conservative party conference in September or October, the Chancellor proclaimed: 

“Workers of the world unite.” 

Well, the workers of the world did unite, but very much against his proposal of shares for rights. He has therefore got one thing right, as the workers of the world did indeed unite, albeit against his policy. 

Last week, in a written ministerial statement on employment law, the Minister proudly stated: 

“Over a million private sector jobs have been created in the last two years. With employment at 29.7 million there are now more people in employment than ever before.”—[Official Report, 14 March 2013; Vol. 560, c. 13WS.] 

We could debate for many hours whether that employment involves under-employment, zero-hours contracts or short-hours contracts—we will not, of course, do that Mr Brady—but setting aside those arguments, the Minister has said that the Government have created 1 million new jobs. However, those 1 million new private sector jobs have been created under the current regime, not the regime they are introducing. The argument is that the proposals will generate economic growth and jobs but, according to the Minister’s own figures, jobs are being created under the current arrangements. 

Grahame M. Morris:  In the context of some of the other things that are happening with respect to protections and the erosion of workers’ rights, is my hon. Friend—or, indeed, the Minister—familiar with a film called “The Happy Lands”, which was produced in Scotland with backing from the lottery? It sets out the story of the struggles of working people in the 1920s in Fife, where wages were reduced, working hours were increased and evictions were commonplace. Are we seeing a repetition of that, with evictions under the bedroom tax and the reduction of workers’ terms and conditions? I suspect we are. 

Ian Murray  rose—  

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The Chair:  Order. Before the shadow Minister responds, let me say that I hope he will do so in the context of the order, rather than the Scottish film industry or other matters of interest. 

Ian Murray:  I will certainly take that guidance, Mr Brady, although my hon. Friend’s intervention is certainly timely. Where he gets things wrong, however, is that these changes to the employment landscape, and indeed to health and safety, are taking us back not to the 1920s, but to Victorian times. With that, however, I shall return to the order. 

On collective redundancy, a representative of the Union of Shop, Distributive and Allied Workers said: 

“I work in a large workplace. The reduction of consultation time to just 45 days will have a detrimental effect. Every employee has the right to individual consultation and this can take time. It is important that everyone feels they have gone through a fair process which they will no longer do. It also takes time to retrain people or bring in experts to help them find a new job. This is especially important now as the economic recovery relies on people being in work.” 

That person, who has front-line experience of this issue, sums up where we are today. 

The Minister has spoken eloquently, as she always does, and we always listen to her when she presents statutory instruments or speaks in the Chamber, but she failed to mention how catastrophic losing a job can be and the impact it can have on not just the individual, but their family, friends and community. It is one of the worst things that can possibly happen, and people also find living with the fear of losing their job very difficult. 

A study from YouGov’s UK household economic activity tracker revealed that one in five workers ranks unemployment as a major threat to the British economy over the next 12 months. Labour Members have been saying for the past two and a half to three years that unemployment is a major issue in this country and that we need to move towards getting people back to work. Ultimately, unemployment undermines consumer confidence and we end up in a spiral of economic inactivity. Before the Minister’s predecessor, the hon. Member for North Norfolk (Norman Lamb), took on his post as a BIS Minister—I have cited this in several debates—he said that doing anything to undermine job security would be crazy, yet that is what these changes to collective redundancy arrangements will do. 

It is through collective redundancy consultation that people’s fears about redundancy can be allayed. In a large-scale redundancy process with more than 100 people being made redundant, such consultation allows people to voice their fears and to be retrained. Indeed, it can save companies. There is a whole body of evidence—hundreds of pages—showing that companies have been saved because they have gone through the process. A 90-day period has various benefits for employees, employers and the Government, and I shall run through them briefly. 

First, there is the benefit for employees. If a business is demanding change, it should have to go through a proper process. One only needs to look at the experience of previous redundancies to see where that can come to fruition. A longer consultation period increases the prospect of avoiding redundancies by giving unions and employers the time to identify efficiency savings, to examine options for reorganising the company, and to

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generate increased orders and increased deployment opportunities. A longer consultation also gives Government agencies time to identify investment opportunities and to provide support through job search and training for staff who are at risk. 

Let us consider one of the most extreme examples of collective redundancy: the closure of Remploy factories. The Remploy workers who are going through a collective redundancy are the most difficult people to retrain and to find new jobs for. The 90-day consultation period is critical for that cohort of workers so that redeployment and re-employment can be considered. A shorter time frame would be incredibly detrimental to the people working in the Remploy factories. 

We have also been given a practical example by the Bakers, Food and Allied Workers Union. Warburtons bakery announced that it had come to a decision that would require 121 redundancies, following which consultation began with the union and interested parties. Towards the end of the 90 days, through hard negotiation and compromise, the company concluded that it did not need to make 121 people redundant, but instead went for 45 voluntary redundancies. There were therefore no compulsory redundancies at all following a proper 90 days’ negotiation. Whether the same conclusion could have been reached in 45 days is a matter for conjecture, but that is the empirical evidence about what happened at that company. 

Perhaps most importantly of all, a 90-day period gives workers who may face cuts in their pay the time to adjust their own financial arrangements. The Minister said that companies may fear losing their most experienced and skilled staff because they will seek further employment, but if a proportion of a work force is to be made redundant, people need to find out quickly who is affected. People involved in wholesale redundancies need time to adjust their finances, and a 90-day period allows them to do that properly. We are talking about mortgages and the economic development of local communities, as well as people’s livelihoods. 

This issue was highlighted in the House of Commons last week by the hon. Member for Harlow (Robert Halfon), who is someone I never thought I would support on issues of workers’ rights. He paid tribute to the USDAW and its work regarding the closure, at the cost of 800 jobs, of the Tesco distribution depot in his constituency. The hon. Gentleman was certainly asking the Government to pay attention, so we need to listen to what he says. There are 800 people—800 families—involved, and that situation is closely connected to economic development. 

In case the Minister thinks it is merely the trade unions that back our argument and provide us with our information, I will draw her attention to what some experts say. Roger Jeary, who has been an independent member of the ACAS panel of arbitrators and sits on the advisory panel of the Institute of Employment Rights, says: 

“It really is perverse for the government to suggest that it is in the employee’s interest to have a shorter consultation period for redundancy as this will ensure that notice of dismissal can be issued sooner. This it is suggested allows the employee to plan ahead sooner than would otherwise be the case under current consultation arrangements. In over 25 years of negotiations with employers on redundancy issues I have never met an employee who has wanted their notice of dismissal to be issued sooner rather than later thus reducing the possibility of saving their job.” 

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That is the view of someone who has been involved in such negotiations for well over 25 years, and we should listen to such arguments as we consider the order. 

Jo Swinson:  I am listening to the hon. Gentleman with great interest. He is setting out his strong belief that anyone being made redundant should have 90 days to adjust, but given that 84% of people who are made redundant do not have that opportunity, is he telling the Committee that it is Labour party policy to require employers to provide a 90-day consultation period for anyone being made redundant? If not, how does he square that apparent inconsistency? 

Ian Murray:  I come on to some issues around establishment later, but I am responding to the Government’s order, and it is clear that the process is more complicated when more people are being made redundant. The measure kicks in at the level of 100 people, but there could be a case in which thousands of people were being made redundant—there are 800 in the Tesco example. The more people who are involved in the collective redundancy, the greater the complexity, as well as the catastrophe for the community. 

We can all see how the 90-day period benefits employees but, critically, it also benefits business. We are not convinced by the argument that current consultation arrangements unjustifiably constrain—or, indeed, constrain at all—businesses’ ability to reorganise. Indeed, as the Minister said, the 90-day consultation period applies to only 16% of all redundancies or restructuring situations—that is 96,000 people each year. Indeed, if the 90-day period is what is hampering growth, it is those 96,000 who are hampering growth, but surely that is not correct, so why bother with the change? Perhaps part of the reason is the Beecroft agenda that I mentioned earlier. 

One advantage for employers of the 90-day consultation period is that it allows meaningful discussions with employee representatives to consider alternatives to redundancy that might save the business. If there was no collective redundancy regulation, a business owner could decide to make all the staff redundant without examining whether the business could be saved. Many businesses in hon. Members’ constituencies that have gone through the collective redundancy process will be aware of the advantages of that period. Collective redundancies undoubtedly affect business operation and strategy, and the 90-day period allows more time for employers to consider alternatives to permanent job losses, about which we have a great deal of information. 

Failure to engage in meaningful consultation is, of course, unlawful, and appearing to pay lip service to consultation requirements is damaging to workplace relations at a time when businesses are acutely reliant on staff support. As the Law Society said in response to the consultation, 

“shortening the 90 day period or otherwise not allowing for adequate consultation in the timetable could be a false economy.” 

A false economy is surely bad for business. 

On cost, the impact assessment says that business will benefit to the tune of £252 million, but that sum is actually staff salaries. Money is being taken out of the pockets of people who are losing their jobs, and ultimately out of the pockets of local communities. 

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Paragraph 84 on page 21 of the impact assessment is a shocking aspect of the document, because it says: 

“These lost wages are the loss to the employee of no longer being with their current employer for these 45 days. However, the employee benefits from having an additional 45 days to spend as they choose, whether on new employment, seeking new employment or leisure.” 

I am not sure what fantasy land the Government are living in when they suggest that saving businesses £252 million by making tens of thousands of workers redundant means that those workers can spend an extra 45 days on their own leisure. 

John McDonnell (Hayes and Harlington) (Lab):  I might have missed it, but did the TUC’s response say that it wanted a lower figure so that workers could have more leisure time during that period? 

Ian Murray:  That is a timely intervention, as I have not seen from anyone’s responses to any of the documentation whether reducing the period would increase leisure spend or activity in this country. Perhaps the Minister will respond to that in her winding-up speech. 

The Minister did not say that when jobs are saved as a result of the consultation process, employers avoid unnecessary redundancy payments and the costs associated with recruiting and training new staff, if that becomes necessary in the future. Ultimately, consultation is genuinely completed only when both sides agree that that is the case, and when it has been signed off as a formal legal agreement. There is no evidence—neither the Government nor the business lobby has provided any—that businesses are constrained by the existing thresholds. Indeed, the opposite might be the case. 

Jim Sheridan:  In anticipation of this debate, I consulted my local chamber of commerce, which is close to the Minister’s. Not one single company had came forward with any request for such legislation. 

Ian Murray:  I am grateful for that intervention, because many other Labour Members will have asked their local chamber of commerce whether the order is necessary. Many Members from north of the border will be aware of the collapse of Hall’s in Broxburn. The 90-day collective redundancy period almost saved that factory. Ultimately, it may still operate in some fashion, but a deal to save the factory was close, and that would have not only saved thousands of jobs, but maintained Broxburn as an economic area in which people can live and work. It is clear that we must ensure that things are done correctly. 

The Government also benefit from 90-day consultation, although the Minister appears blind to that fact, because it saves them money in the long term by keeping people in employment. A longer consultation period also gives time for Government agencies to identify investment opportunities and to provide support through job search and training for staff at risk. Surely that is of benefit to the Government. 

If there were statutory provision for employers’ representatives to shorten the 90-day minimum time period by voluntary agreement, would it be used? The two sides in the consultation can already shorten the minimum time by voluntary agreement. We would support the amendment of legislation to allow that to happen at

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any time during the 90 days, if agreement can be reached by all parties. The evidence that we received highlights examples of agreements that have been reached in a shorter period, such as 10, 30, 60 or 70 days. Legal measures are in place to allow agreements to be reached over a shorter time. 

Establishment is also clearly an issue, and we need look only at the example of Woolworths to see where that can be a problem. Some 27,000 people were affected by the demise of the Woolworths chain. Of those, 24,000 received terms under collective redundancy, yet 3,000 who were deemed not to be involved in the collective redundancy discussions, because they worked in stores that employed fewer than 20 people, lost out. The liquidators made the decision to close Woolworths. Those people’s PAYE and national insurance were being paid by Woolworths plc. If we asked any of the people in the smaller stores with fewer than 20 employees whom they worked for, they would say quite clearly that they worked for Woolworths, yet they were not included in the discussions. USDAW has been fighting on the issue. To its great credit, it has managed to get £60-odd million back into the pot to try to help some of the people, and that was the right thing to do. Will the Minister look again at the establishment rules to ensure that people who are quite clearly working for the same company, albeit in different areas, will not be affected by the changes? My hon. Friend the Member for Easington asked whether reducing the period to 45 days might increase the number of collective redundancies, and I think the Woolworths example suggests that that might be the case. 

Someone who worked for Woolworths said: 

“I worked for Woolworths for 19 years in a store that employed fewer than 20 people. I did not qualify for a protective award. It is totally unjust and discriminatory for an employee in a smaller branch not to be given the same benefits as those in larger branches. We had the same contract, we worked for the same company—we should have the same entitlement”. 

The decision to close Woolworths was made by Woolworths, and it should have acknowledged that those people worked for it. 

Ministers are wrong to suggest that the result of shortening the notice period will be a far better process. Instead, the change will make matters harder for employers and employees. It takes time for trade unions and employers to consider carefully what alternatives there may be to job losses and what impact they will have on the remaining work force. 

The Government consistently miss the point that those worst affected by their changes to employment law are not people in trade unions, but those who are not in trade unions, so one unintended consequence of their policies is to drive up trade union membership. As the Law Society pointed out: 

“The danger of a reduction in minimum periods is that this will place undue pressure on all those involved, with a detrimental impact upon workplace relations.” 

I hope that the public will hand this Government their collective redundancy notices at the next election, not just because they are changing the landscape of workers’ rights for everyone in work and every future worker, but because they are doing so without any evidence. I have always said to the Minister—she will

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acknowledge this—that when the Government come up with proposals that we feel we can support, we will work constructively with them to make those proposals work. However, what they are doing under the Beecroft agenda is bad for not just employees, but employers, which is ultimately bad for the economy. Let us hope that the Chancellor’s Budget on Wednesday will make the workers of the world unite by doing something to create employment in this country, rather than tinkering with people’s rights at work. 

5.27 pm 

Steve McCabe:  It is a pleasure to serve under your chairmanship, Mr Brady, in this surprisingly popular Delegated Legislation Committee. 

In fairness, I think the Minister’s heart is not in this at all; I think someone commented on that earlier. I am not that surprised, because her boss, the Secretary of State, has already said that he is against this kind of one-sided legislation. We know what the legislation is about; as my hon. Friend the Member for Edinburgh South says, it comes from a report by Adrian Beecroft, a venture capitalist and high-value Conservative party donor. The proposal is part of a set in his report, in which he also recommended allowing companies to fire workers without their being able to claim unfair dismissal; scrapping the Gangmasters Licensing Authority; abolishing employment licences for children under 16; and ending TUPE rules. What is happening today is the thin end of the wedge, and we have no reason to doubt what will come next. That possibly explains why there are so many people present concerned about it. 

In the current state of affairs, employers should be encouraged to give the maximum warning possible of a potential large-scale redundancy. By slashing the minimum notice period, the Government are sending out a clear signal that they are going to make it as easy as possible to fire people, at the very time when we need them to make it as easy as possible to hire people, so that we can cut the unemployment bill and get the country back to work. As some of my hon. Friends have said, the order will reduce the time available to consider the alternatives, so it will affect any work that local authorities may be able to do with jobcentres to cushion the effects, and any role that local enterprise partnerships can play in offsetting redundancies. Those were the kinds of measures that we saw when the Phoenix car company collapsed in Birmingham: people got together to work on the supply chain to try to cushion the effects. 

Steve Rotheram:  Just to illustrate my hon. Friend’s point, in a former life I worked for the Learning and Skills Council. When Cammell Laird went belly-up, there were over 100 apprentices there. I worked with a multi-agency team to try to find those apprentices alternatives. In fact, 90 days was not long enough, but we saved the vast majority of apprentices by working with employers and all the agencies across the board to do that. If it had been 45 days, I am certain that only a handful of those apprentices would have been saved. 

Steve McCabe:  My hon. Friend is absolutely right. One of the effects of this measure will be that all the experience that we have developed on doing all that can be done to cushion the effects of loss of employment on

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a significant scale will be lost. The Minister may think that a measure that affects 100,000 people a year is not a major issue, but that is not what folk in my constituency tell me; they think it is quite a serious issue. The sectors most likely to be hit will be manufacturing—already reeling from some of the Government’s policies—financial services and the public sector. We can see where the threats and redundancies are coming from, and this measure will simply smooth the path. It seems to me that this is a deliberate attempt to make it harder for trade unions to oppose and resist those redundancies when they are announced; I am not sure whether the hon. Member for Vale of Glamorgan thinks that is okay. 

The Government say that we should be grateful that they are not reducing the period to 30 days, but in the rest of Europe various other protections are set alongside the time period, so we should not be grateful in the slightest. Before we are compelled to vote on the order, I would be really interested to see who took part in the consultation and what was said. I doubt very much that anyone on the side of working people advocated cutting to 40 days, let alone 30 days. 

I am not particularly interested in the element that relates to fixed-term contracts because it is possible that the Minister has a point in relation to that, but she has not made the case for slashing the period to 45 days. I was amused to see in the paper yesterday that apparently one in six of the Conservative party’s 2010 intake are actively seeking another job. By my calculation, that means that they want an 820-day period of notice for their redundancies, as opposed to the 45 days that they are prepared to give everyone else. This is one-sided legislation. It favours employers. It will have the effect of reducing wage costs, and it will make it easier to fire people at the very time when the Government should be worrying about unemployment and trying to make it easier to take people on. 

Several hon. Members  rose  

The Chair:  Order. Before I call the next Member to speak, it may be helpful to note that we have just over 25 minutes left. If the three or four Members who are seeking to catch my eye want to hear the Minister’s response, they may want to keep their contributions brief. 

5.34 pm 

Mr Anderson:  It is a pleasure to serve under your chairmanship, Mr Brady, as my colleague the shadow Minister and I did on the Enterprise and Regulatory Reform Public Bill Committee. I want to refer to Adrian Beecroft, because when I asked him what evidence he had to back up what he was saying, his answer is on record as being “Um”. He did not have an answer. That is the difference in what is being done by the Minister and her Government. Clearly, the people she has approached may well not know about the real world of redundancy and the impact that it has on real people. 

I was a trade union representative at the National Coal Board from 1981 to 1989, when thousands of people lost their jobs. As a local representative on the Newcastle upon Tyne local authority from 1990 to 2005, I dealt with thousands of redundancies. Also, as a

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member of Unison’s national executive committee, I actually made people redundant when we had to cut £13 million of our budget, so to some extent, I have experience and evidence to back up what I talk about. 

The truth is that what we have heard about today is effectively an employer’s charter. Sadly, it is a bad employer’s charter, because a good employer recognises that working together with the work force is the real way to handle redundancy situations, which are not just about how easily we can get rid of people. If we are serious and this is about real consultation, we should be looking at whether there are alternatives to making people redundant—letting some people go, and retraining some and redeploying others, and other ways of doing business. However, if we limit the time in which we can do that, we will clearly have fewer options and less scope to make that work. 

It is quite clear that where there are trade unions and there is organisation, there is more chance of things being done in a constructive way, if they are working together with the employers. The trade unions can obviously refer to other people for research, and provide legal advice and all the things that go with being a member of a trade union. In a lot of the places where employers are not recognising trade unions, that will not be available to the work force, making it even harder for them to put forward a case for keeping the entity going in a new way or different direction. 

If people have to lose their jobs, the issue is how that is done in a way that minimises the damage and gives people who may not originally have been in the firing line the opportunity to go. We dealt with lots of examples of what are colloquially called “bunk redundancies”, where somebody who really wants to leave the workplace but is not in the firing line can let somebody else take their place because it suits them personally, and the person who did have to go but did not want to is allowed to stay. That is what happens when we have genuine dialogue and consultation. 

My hon. Friend the Member for Liverpool, Walton, gave the example of Cammell Laird. In Newcastle city council a number of years ago, it was proposed to do away with all the back-room staff and put in place a contract run by British Telecom. By working together with the work force, the staff were reduced by 25% because people volunteered to go. At the same time, we put in place a contract that saved the council £11 million more than BT were prepared to. That took a lot of work, and for the unions it took a lot of heart searching and soul searching, asking, “Should we do this?” However, at the end of the day, those jobs were retained in-house, with a saving for the council. That was done only because the unions were around to have a discussion with an employer that was genuinely prepared to say that there were ways and means of doing things differently. If we limit the time, that will not be the case. 

We know from experience that throughout the ages things have been stacked in the employer’s favour. The past two or three years have seen that increase, and these measures are just another example of that. In my constituency, we have a company called AEI Cables, which brought about a company voluntary agreement that effectively got rid of 126 workers overnight. It did maintain a core work force of some 240 people, and thankfully positive things are being done there, but the

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126 people who went overnight had no chance to be consulted, or to work out who should and should not go. They were out of the door. 

I looked up company voluntary arrangements today, and a website called www.companyrescue.co.uk sells CVAs by saying that they can 

“Stop pressure from tax, VAT and PAYE”, 

so they are robbing the Exchequer. It went on: 

“Company voluntary arrangements can terminate employment contracts, leases, onerous supply contracts and all with NIL CASH COST”, 

and allow 

“you to terminate lease obligations…You can terminate directors and/or managers contracts as well…Remove employees with no redundancy payments of lieu of notice costs (paid by the Government)”. 

There are already opportunities for employers to take advantage of the law as it stands, yet today the Government are giving employers even more chances to get away with murder in the work force. The truth is that for those who are made redundant, it could be the end of their lives as they know it. They must look at a reality of living potentially on benefits, and being in a job that has no financial or, to them, social value, and a completely different way of life. 

Making people redundant in a hurry makes it even more likely that they will suffer the effects of stress or a breakdown, which are only too common in such situations. The Minister said that employers do not like to see redundancies, but as someone who saw Margaret Thatcher make 200,000 coal miners redundant, that is pretty hard to accept. As someone who sat in the House and listened to the current Chancellor gloating when he raised the headcount—as he saw it—of public sector employees to be made redundant from 310,000 to 700,000, it was clear to me that he was not too displeased with what was happening. 

At the end of the day, according to the Minister we have a 45-day minimum period that could be extended, but if I heard her correctly, the employer would effectively have a veto. If after 45 days the employer decides that they have consulted enough and are not prepared to do any more, the only redress is for the employee and/or their trade union to go to court and undertake a legal process, which will take for ever and a day. The measure is part of an anti-worker, pro-boss agenda. It is, without doubt, nothing short of back-door Beecroft. 

5.42 pm 

John Hemming (Birmingham, Yardley) (LD):  I apologise to the Committee; I was on another Committee at half-past 4, so have not heard most of the earlier speeches. [Hon. Members: “Too many Committees.”] There are too many Committees. Sadly, the other Liberal Democrat Member who was to have been on the Committee, and runs a business, as I do, is ill and could not be here, so I have had to stand in at the last minute. 

I refer hon. Members to my declaration of interests, which includes John Hemming & Co—JHC plc—which I founded in 1983 and currently employs 250 people. Businesses go through phases, and in the early 2000s, we sadly had to make people redundant, so I have been through the process. It is obviously much worse to be on

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the receiving end, but it is not very nice to have to fire people, as I have had to do over the years. In the early 2000s, I also dealt with another company called AI plc, which was driven into administration because it did not have the resources to go through a 90-day consultation. One needs to be aware that tight constraints on how people operate can be worse. It is far worse for employees to go through administration than a relatively rapid consultation process, so I am happy to support the Government. The measure creates greater flexibility, and flexibility enables the work force to be protected. 

Ian Lavery:  I also apologise for being late. I was serving on a very important Committee about disciplining the clergy. 

John Hemming:  I was on the same one. 

Ian Lavery:  I left earlier. 

The hon. Gentleman highlights why the legislation is totally biased towards businesses, not the people being made redundant. As a representative of miners and those in the mining industry, I have had tremendous experience over the past 20 years with people who have been made redundant. He highlights the fact that the change is because business people want out as soon as possible, and that the individuals who are working in the industry do not matter. 

John Hemming:  If businesses are forced into administration, TUPE does not apply. The hon. Member for Blaydon talked about what happens with CVAs. Similarly, section 188 agreements mean people continually applying for their own jobs, as happened with Birmingham city council, because of the rigid nature of the process. I support reducing the rigidity of the process, which in the end will allow people to maintain employment and keep businesses going. 

5.44 pm 

John McDonnell:  I have never been in a situation where a trade union has insisted on rigidity when it would affect people’s jobs. The situation has always been one of ultimate flexibility, because we are all in the same boat, with the same motive of trying to preserve people’s jobs. 

We need to know the background to these redundancy arrangements. They were introduced when people were feeling incredibly insecure about rising unemployment. Several employers, too, were concerned about the rush to redundancy—the rush to sack people—by poor employers. A consensus emerged that a period of time needed to be established in law to prevent the short-termism of some employers, while giving some security to employees by ensuring that every route would be explored to preserve their jobs. Often, it was also about preserving the company and the operation. That was why 90 days was felt appropriate. 

We are citing example after example. My hon. Friend the Member for Edinburgh South gave an example about bakers. I am chair of the bakers union parliamentary group. Park Cake Bakeries in Bolton announced 105 job losses on the mince pie line, and it consulted for 90 days, but within 36 days it got a new order in and no redundancies were made. That is a regular occurrence, because the

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legislation forces the employer to consider the practical alternatives for securing the employment during that period. I do not know about the constituents of other hon. Members, but there is a feeling of insecurity among mine. They need some security so that they can plan their working lives. 

Ian Lavery:  Does my hon. Friend agree that it is not only a tool for employers to look at alternative means for their business to succeed, but an opportunity for employees to sit around a table in meaningful consultation and put forward their views on avoiding as many redundancies as possible? 

John McDonnell:  There are two issues here. The first is about giving the time to enable that to happen. We know that the reduction to 45 days means that the opportunity for consultation is hopeless. It will not happen and will be meaningless. There will not be the time for the employees to work with the employers to look at alternative plans for that company. As my hon. Friend the Member for Edinburgh South said, part of the issue in some companies is the establishment. In a number of these negotiations, it has been hard to find who has been employed by whom. 

John Hemming:  Does the hon. Gentleman accept that having an inflexible system that forces a company into administration is not a good mechanism? 

John McDonnell:  I think that it is bad management if a company has identified a problem and fewer than 90 days have passed and it goes into administration. Normally a company will come forward and say to the trade unions or the employee representatives, “We have a problem and we need to reduce the work force. How can we work together?” That is good management. Normally, those 90 days will be used productively to look at alternative plans for the company that will secure as many jobs as possible. Those who represent employees—including the trade unions—are realistic about those negotiations. They do not put something that cannot be achieved on the table; they put down something that can be negotiated in that period. The past short-termism of employers produced the legislation that gives the protection of the 90-day period. 

John Cryer (Leyton and Wanstead) (Lab):  Following on from many others, another example is that of Ford Dagenham. I was at the forefront of the campaign to keep Ford Dagenham working. The 90-day consultation period meant that there could be an effective campaign, including a large lobby of Parliament and negotiations with the management. If that had been curtailed, the work force of Ford Dagenham might have been cut to pieces, which was the original plan. As it has turned out, there are still 4,000 jobs in that plant. 

John McDonnell:  I just say this: the Beecroft proposals will, as my hon. Friend the Member for Blaydon said, be seen as another step in the Government’s anti-trade union agenda. I feel for the Minister, because the order is a set-up and is completely contrary to what she said in opposition. I learned this from Tony Blair: he used to find someone who advocated a particular policy before

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they came into this place and then have them advocate the complete opposite once they were here. The Minister has been set up to that effect, and, to be frank, is getting a reputation as the hammer of trade unions and trade unionism, and that is echoing back in constituencies. 

I finish with two points. There are two ways in which we can protect people: one is the time scale and the other is through the statutory guidelines and the guidance that is put out. We now know that the guidance will not be statutory. It will be produced by ACAS, but have no statutory implications whatever. People will lose their 90-day period, and at the same time the guidance that we issue to employers will have no statutory effect and therefore no real legal effect. 

Finally, let me just say this. When a crime is committed, we look at who benefits. That is the way we detect the perpetrator. Let us look at who benefits in this case. The impact assessment, in relation to the 45 days, says that for employees the reduction in pay is expected to total £252 million. That is how much working people in this country will lose as a result of this proposal. Who will gain? The impact assessment says that for employers there will be a reduction in wage costs in the region of £290 million. The employers gain £290 million and the employees lose £252 million—QED. We can see who is to benefit and what the motivation is. This Government, yet again, are backing employers against workers, despite all the historical knowledge that we have about trying to bring both sides together to plan for the long-term interests of the economy. This order undermines that completely. That is why we oppose it. 

Several hon. Members  rose  

The Chair:  Order. I remind hon. Members that I have no powers to protect time for the Minister to reply. It is in their hands. There are nine minutes left and two Members seeking to catch my eye. I call Julie Elliott. 

5.51 pm 

Julie Elliott:  As ever, it is a pleasure to serve under your chairmanship, Mr Brady. I shall keep my remarks brief, because many of the points that I wanted to make have already been made. I do have to say this. My hon. Friend the Member for Blaydon mentioned the company AEI Cables, which I had the joy of looking after for many years. It was not a surprise that that company did what it did. 

What is this order really about? As we have said, it is about what happens when there is a proposal to make 100 or more redundancies—a very significant number. Although that is by no means the largest number of redundancies that can take place, the impact of that number of redundancies in one place can be enormous. We often find members of a family all being made redundant together. The impact on communities from that number of people in a localised area being made redundant is huge. Therefore, it is not just the numbers involved that make having 90 days for consultation so important; it is also the multiplier effect of the impact of the redundancies. 

The Government are putting forward various reasons for why this should happen. They are saying that it would make things easier for workers. I simply cannot see how it would make things easier for workers. How it

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would save jobs when the time limit for looking for a solution to the problem is cut down is unfathomable. The idea that it would improve the UK’s economic performance when more people will probably be made redundant as a result of the changes is staggering. 

What does the impact assessment say? It says that the Government’s decision is based on anecdotal evidence and the perception of employers. It is not based on fact. It is not based on real experience. It is based on anecdotes. 

Jeremy Corbyn:  I am sure that my hon. Friend has read the TUC response to the Government’s proposals, which is quite interesting and shows that, where there has been a substantial period of consultation, many jobs have been saved. In one case, a very large programme of redundancies—700—was cut by one third through consultation with the work force, developing new products and changing the attitude of the company. Does my hon. Friend think that there is a lesson there that this shortening of the redundancy consultation period will lead to more job losses? 

Julie Elliott:  Absolutely. The position is stark for anyone who has had any experience of this. The TUC is basing its response on real, factual information from trade unions. Basing the decision on anecdotal evidence is a very dangerous path to follow. 

Let us look at what has to happen in the 90 days of consultation. There are what are called the information provisions. That sounds technical and it is technical, but it is what the 90 days of consultation is about. The employer has to provide in writing the reasons for the proposal to make redundancies, the numbers of employees who will be affected and the descriptions of those employees. That sounds very easy, but it can take weeks and weeks to sort out who falls into which category. Next is the total number and the methods of selection. Again, that is something that has to be considered very carefully in relation to both employees and employers, because they have to be left with the right skills balance to make their companies work. Then there is the background guidance to managers who will implement the policies. To ensure consistency and fairness across the patch, they have to be trained and to have gone through a process of learning about this. Then there is the proposed method of carrying out the redundancies. What is the timetable? What is the consultation going to be? Will it be individual consultation or collective consultation? If trade unions are recognised, it is easier, because there is an established body of people to consult. If that is not the case, there have to be elections in the workplace to find workplace reps, who need training. 

John McDonnell:  Two hundred and fifty jobs are going at Nestlé in my area. One of the key aspects there has been the engagement of the work force with the management to identify redeployment opportunities.

Julie Elliott:  Absolutely, and that often happens. As time is short, I will skip some of the other bits that I wanted to say. Having been a full-time trade union official, dealing with both the public and the private sectors for almost 12 years, I have, sadly, dealt with many, many redundancies, and the length of time involved is often too short. The work is intensive. Companies

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need help to restructure in a sensible manner to keep as many jobs as possible. Let us put it on the record that trade unions do not want to see companies doing badly. If companies are doing well, it means better work, better security of work and usually better pay. Sensible restructuring stabilises the future. None the less, it takes time to come up with ideas and have an input into the process. Meaningful consultation takes time. By the time we have gone through all the requisites for setting up a consultation process, the 45 days will have gone. Because of our restrictive practices on employment law, more workers will be made redundant in Britain, as opposed to in the wider EU. The recourse to protective awards that the Minister mentioned will not save jobs or keep people in employment. Although it is compensation, it is not sufficient for the trauma that will be caused. 

Ninety days is a tight timetable; 45 days is impossible. It will be bad for the competitiveness of British industry and it will give the advantage to our European competitors who have much more complex arrangements. There is no evidence base for these proposals; they are dangerous. In my view, 90 days should be retained. If anything, we should be moving the other way. 

5.56 pm 

Jeremy Corbyn:  I will be brief, so the Minister has time to reply—[Hon. Members: “There are four minutes.”] Please! I want to give her enough time to say that she has fully understood the points that have been made by Members and the concerns that have been expressed by the TUC and the unions, and to give her the opportunity to withdraw her proposals. If she gives me a nod of confirmation that that is what she wants to do, I will be happy to give her the opportunity to do just that. 

As a former official in the National Union of Public Employees of which my hon. Friend the Member for Blaydon was an executive member, I dealt with redundancies in the public sector. Where we got a long period for consultation—in hospitals, schools or local authorities—we could talk to the management and go through the whole process and work out where not to lose the skilled workers, how to give them something else to do and how to improve the service for the public. It is exactly the same principle in the private sector; I am talking about a proper consultation. Looking at the age profile of people who lose their jobs through redundancies—there has been a massive increase in redundancies since 2008—it tends to be young to middle-aged workers. They lose their jobs and their career prospects and have to start at the bottom of the ladder again. 

I say to the Minister that she should read the responses of the TUC and the Public and Commercial Services Union and the analysis that was helpfully provided to the Committee and understand that we do not want to create a vortex whereby we have the worst possible working conditions. Indeed, we want the best working conditions. Withdrawing the proposals will bring that about. The Minister has time to do it. 

5.58 pm 

Jo Swinson:  I am sorry to disappoint some members of the Committee. I have fully understood the concerns that have been raised, but that does not lead me to believe that withdrawing the proposals is the right thing

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to do. None the less, I want to answer some of the questions that have been asked. In answer to the hon. Member for Paisley and Renfrewshire North, Crown employees are not affected, because they have separate system that has been agreed with the unions. I am talking about the armed forces, the police, and the Prison Service. Public sector employers such as local authorities, the NHS and education are affected. 

Jim Sheridan:  They will not be affected? 

Jo Swinson:  Crown employees are not affected, but other public sector employees are affected. The hon. Member for Blaydon asked whether employees could veto the arrangements. I have to say that that is not the case, but section 7 of the ACAS guidance makes it clear that there needs to be genuine consultation with a view to reaching agreement. An employer can end the consultation only when it can demonstrate that it has listened and responded to the views and suggestions that have been raised. 

On the impact assessment, the £252 million does not mean that the individuals will lose that amount of money; that is the amount of money the current employer will not pay. Of people going on to jobseeker’s allowance, more than 50% leave within three months and 70% within six months. Therefore that money will not be the amount that individuals lose. On the establishment rules, we will look carefully at the appeal tribunal. Pages 12 and 13 of the guidance are also relevant, as they try to give more certainty to the matter— 

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6 pm 

The Committee having sat for one and a half hours after the commencement of proceedings on the motion, the Chair put the Question (Standing Order No. 118(5)).  

The Committee divided: Ayes 11, Noes 7. 

Division No. 1 ]  


Bray, Angie   

Cairns, Alun   

Crabb, Stephen   

Crouch, Tracey   

Hart, Simon   

Hemming, John   

Percy, Andrew   

Reevell, Simon   

Simpson, David   

Swinson, Jo   

Uppal, Paul   


Corbyn, Jeremy   

Dakin, Nic   

Hamilton, Fabian   

McCabe, Steve   

Murray, Ian   

Rotheram, Steve   

Whitehead, Dr Alan   

Question accordingly agreed to.  


That the Committee has considered the draft Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013. 

6.1 pm 

Committee rose.  

Prepared 19th March 2013