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Moved, That the House do agree with the Commons in their Amendments Nos. 4 to 9.--(Lord McIntosh of Haringey.)
On Question, Motion agreed to.


10Schedule 2, page 26, line 37, at end insert--

("Application to Scotland 11. Paragraphs 7 and 8 do not extend to Scotland.").

Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 10. In moving this amendment, I should like to speak also to Amendment No. 11. These are purely technical amendments to the provisions in Schedules 2 and 4 which deal with the execution of documents on behalf of the New Opportunities Fund and the National Endowment for Science, Technology and the Arts. Paragraphs (7) and (8) of both schedules stipulate how documents should be executed on behalf of both of those bodies. In Scotland there is no need to make it an express provision because this matter is already dealt with by the Requirements of Writing (Scotland) Act 1995, which is intended to govern execution of documents in all circumstances.

The 1995 Act provides for documents to be executed on behalf of bodies corporate if signed by a member, the secretary or an authorised signatory and if signed either by one witness or sealed with the common seal of the body. I commend the amendment to the House.

Moved, That the House do agree with the Commons in their Amendment No. 10.--(Lord McIntosh of Haringey.)

Lord Skidelsky: My Lords, as the noble Lord says, these are technical amendments and we have no special observations to make about them. However, as we are being so very expeditious this afternoon,

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I should like to take the opportunity, first, to thank the noble Lord for his good humour in piloting the Bill through the House--

Noble Lords: Hear, hear!

Lord Skidelsky: My Lords, here is the sting. I only wish that the noble Lord's convictions or instructions--I do not know which have been more important--had not prevented him from accepting the very reasonable suggestions that we put forward which, in our view, would have produced a better, fairer and constitutionally more sound piece of legislation.

The Government have rejected all amendments which would have enshrined in the Bill the principle of additionality. Although there was no danger that the additionality principle would be breached under the 1993 Act, it is clear that the main purpose of the Bill is to use lottery money to help finance the Government's own social programmes. The Government have refused all the amendments designed to protect the money going to the existing good causes--the arts, heritage, sport and charities--from capture by the New Opportunities Fund. The Government have rejected amendments which would have limited the power under the 1993 Act for the Secretary of State to reduce the share of each of the original good causes to below 13 1/3 per cent.

In the other place, the Government rejected amendments to hold them to their manifesto commitment not to set up the New Opportunities Fund until after the Millennium Commission was wound up. They rejected amendments before your Lordships' Committee which were designed to remove from the Bill the retrospective provision which backdated the apportionment of National Lottery money to 14th October, and which has cost the original good causes £141 million. We have tallied it up over the past six months. The Government rejected our attempts to prevent NESTA becoming a venture capital or new development agency. Finally, they rejected amendments which were designed to ensure that the arm's-length principle applied to the New Opportunities Fund.

We believe that the Bill passes into law with weaknesses, injustices and broken promises which could have been avoided and which will cause problems in the years ahead.

Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for those kind personal comments. However, he will not be surprised if I resist the opportunity to treat this as another debate on Bill do now pass and if I defend, silently but not without conviction, the Bill against the strictures which the noble Lord has just made. I commend the amendment to the House.

On Question, Motion agreed to.

22 Jun 1998 : Column 47


11Schedule 4, page 32, line 24, at end insert--

("Application to Scotland 13. Paragraphs 7 and 8 above do not extend to Scotland.").

Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 11.

Moved, That the House do agree with the Commons in their Amendment No. 11.--(Lord McIntosh of Haringey.)

On Question, Motion agreed to.


12Schedule 5, page 32, line 26, at end insert--

("Part I Enactments relating to replacement of Director General by Commission

ChapterShort titleExtent of repeal
1967 c. 13.The Parliamentary Commissioner Act 1967.In Schedule 2, the entry relating to the Office of the Director General of the National Lottery.
1975 c. 24.The House of Commons Disqualification Act 1975.In Schedule 1, in Part III, the entry relating to the Director General of the National Lottery.
1975 c. 25.The Northern Ireland Assembly Disqualification Act 1975.In Schedule 1, in Part III, the entry relating to the Director General of the National Lottery.
1992 c. 53.The Tribunals and Inquiries Act 1992.In section 7(2), the words "33A,". In Schedule 1, paragraph 33A.
1993 c. 39.The National Lottery etc. Act 1993.Section 3. Section 14(2)(a). In section 20, the definition of "the Director General". Section 31(2)(a) and (3). Schedule 2.
1998 c. 00.The National Lottery Act 1998.Section 1(4).

Part II Other enactments").

Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 12.

Moved, That the House do agree with the Commons in their Amendment No. 12.--(Lord McIntosh of Haringey.)

On Question, Motion agreed to.

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National Minimum Wage Bill

4.45 p.m.

The Solicitor-General (Lord Falconer of Thoroton): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.--(Lord Falconer of Thoroton.)

On Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Tordoff) in the Chair.]

Clause 41 [Power to apply Act to individuals who are not otherwise "workers"]:

Baroness Miller of Hendon moved Amendment No. 116:

Page 25, line 37, at beginning insert ("After a process of consultation with persons representative of industry and small business,").

The noble Baroness said: In moving Amendment No. 116, I should like to speak also to Amendment No. 117 and, in doing so, to ask the Committee: why is a self-employed person like an elephant? Because they are both impossible to describe, but you can certainly recognise one when you see it.

Let us consider a few examples. A taxi driver who owns his taxi is clearly self-employed, but a non-owner-driver who uses the same radio service, which also handles his credit bookings, and who works on some sort of commission arrangement with the vehicle owner, may very well either be self-employed or not. A jockey, even one exclusively contracted to an owner or a trainer for a season, is probably self-employed.

If a man qualifies as a solicitor, sets up in practice and acquires some partners, he is clearly self-employed. If, after some years, he decides to spend more time with his golf clubs and goes into semi-retirement, becoming a consultant in the firm that he founded, dealing with just a few special clients and continuing to provide expertise in his specialty, he ceases at a stroke to be self-employed and becomes an employee, despite the fact that he is working in the same office, sitting at the same desk and doing the same job.

Under paragraph (a) of Clause 41, which is covered by Amendment No. 116, the Secretary of State seeks to apply the provisions of this Act to

    "any individual ... who would not otherwise be a worker".
That is a pretty sweeping power. I repeat that the clause refers to "any individual". The Secretary of State does not even offer to exercise that power reasonably--if I may remind the Committee of earlier discussions on other aspects of the Bill. The Bill does not give the slightest clue as to the criteria which the Secretary of State will apply when deciding whether to invoke this very wide power--yet it is a power that may very well turn the entire concept of self-employment on its head or make a mockery of the English language.

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Before the Secretary of State makes regulations which, at a stroke of her pen, turn my window cleaner into my employee, we believe that she must submit to some very minor restrictions. That is precisely what Amendment No. 116 seeks to achieve. Instead of merely acting on her own preconceptions, misconceptions or, indeed, a mere whim, we ask the Secretary of State to consult employers' representatives. The Government have repeatedly told us during this stage of the Bill that the Minister will consult widely before making any regulations. This clause as drawn does not oblige her to do so. All that Amendment No. 116 seeks is that she should be obliged to do so.

I turn to Amendment No. 117. In the Notes on Clauses the DTI informs the Committee that the object of this clause is

    "to prevent avoidance of the national minimum wage".
Once again, as when this aspect has been raised in other parts of the Bill, we entirely support that objective. However, I am puzzled that in drafting this and other provisions of the Bill the left hand (the DTI) does not seem to know what the right hand (the Treasury, in the form of the Inland Revenue) is doing and has been doing successfully and efficiently over generations. Does the DTI consult the Treasury? Does the DTI even speak to the Treasury? Does the Secretary of State speak to the Chancellor of the Exchequer? According to recent reports in the press, that is a wholly different question. It is as if the DTI has arrived from another planet unaware of the existing facilities and tried and tested definitions that cover matters which this Bill attempts to address.

In Clause 2(4) the Secretary of State seeks power to define by regulations remuneration, benefits in kind and allowable deductions from pay and to change those definitions when she decides to do so. That power is sought despite the fact that the Inland Revenue has an adequate set of rules and volumes of case law to deal with all of those. I argued that point in relation to Amendments Nos. 19 and 22. I then suggested that anything that was taxable should be regarded as wages for the purposes of this Bill. The Minister rejected my argument on grounds that I found far from convincing. He said that the regimes for income tax and the national minimum wage were different. I do not agree. If they are different it is only because the Government choose to say so.

In the present clause the Secretary of State wants to rush in and define "self-employed". Bearing in mind the allegorical elephant that I mentioned in my opening remarks, frankly, that will not do. The Inland Revenue has a perfectly adequate definition and a comprehensive series of tests to decide whether or not a person is self-employed. Those regulations and tests are designed specifically to prevent tax avoidance by a person who pretends to be self-employed when he is not. That is exactly the objective of this clause. We cannot have two parallel systems so that a person who is self-employed for taxation purposes is arbitrarily expelled from that status by a contradictory order of the Minister. The fact that such an order will need to be debated is of no real help given the Government's steamroller of a majority in another place.

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We also cannot have a state of affairs in which the Inland Revenue is able to decide in its own interests to rule that a person who is not recognised as self-employed by the DTI is not such for taxation purposes. Is it possible to envisage the Treasury giving up any of its power and authority? Indeed it is, in just two words: interest rates.

I read with interest the debate in Committee in the other place. I searched hard to find an explanation of the DTI declining to accept a ready made, tried and tested definition. The Minister for Small Businesses found the following unconvincing reasons on 3rd February at col. 749. First, she said that the Government wanted

    "to cover any loopholes which unscrupulous employers may find and exploit".
We certainly support that. But it is difficult to understand how setting up a new definition and structure that will undoubtedly have to be tested in the courts item by item will help to avoid loopholes, especially in the short term. The Minister also said:

    "The Inland Revenue has no strict definition of self-employment, but it does use certain criteria. As a result, cases are decided individually".
Fancy that, my Lords! To pay attention to the individual circumstances of each case rather than try to cram them into a rigid, inapplicable and inappropriate category is what a reasonably judicial, or quasi-judicial, system demands. The "certain criteria" that the Inland Revenue use are those that we want the DTI to use in the interests of consistency.

I revert to my window cleaner. Suppose that he falls off a ladder outside my house. I say that he is self-employed and the Inland Revenue backs me up. The Secretary of State can make him my employee and possibly make me subject to a greater liability, including criminal prosecution, because of the definition that she chooses to impose. I do not know what the Government are frightened of. In the short Clause 41 they take powers to include within the definition of the Bill persons who are not workers. All we ask is that the exercise of these powers does not override a person's established status as a self-employed person.

We do not propose to inhibit the power of the Secretary of State to close loopholes and therefore we support the principles of this clause. But we want the Government to be able to construct effective anti-avoidance devices without having to return to Parliament for fresh primary legislation. We must not allow a judgment to be made by the Secretary of State or her advisers who, with no disrespect, may have no great practical experience of the real world of self-employment and may hastily overreact to an emerging problem or make a decision that is inconsistent with a person's tax status.

To sum up, Amendment No. 116 simply obliges the Secretary of State to consult the representatives of industry, particularly small businesses for they are the ones who are likely to be most affected, before she makes a decision. We want the Secretary of State to be sure of the facts and the consequences before she makes her decision. She will still be entitled to make up her

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mind based on her own opinion having given due consideration to the advice that she receives, unless that decision proves to be wholly irrational. Amendment No. 116 does not inhibit the powers of the Secretary of State but simply requires her to pause to consider the matter before acting. I am sure that there can be no objection to that. All that we ask in Amendment No. 117 is that logic, consistency and continuity with the Inland Revenue's tried and tested rules are applied. I beg to move.

5 p.m.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): I apologise to the noble Baroness for missing the first few moments of her contribution this afternoon. I have been informed of her remarks by my noble friends on the Front Bench.

The noble Baroness asked a number of very pertinent questions. Does the DTI consult the Treasury? Yes. Do we speak to each other? Yes, quite a lot. Does the DTI come from another planet? I believe that the noble Baroness is a little confused and is perhaps referring to the shadow Secretary of State. It certainly does not, and that is widely recognised.

Clause 41 represents a very important part of this Bill. Its purpose is to provide the Secretary of State with a measure of flexibility. We want to be able to close any loopholes that may be opened at a future time by some employers who wish to dodge their responsibilities. We also want to be able to adjust the coverage of the Bill as necessary to deal with changing labour market practices and working arrangements. We have drafted the Bill sufficiently tightly to cover all of those who as far as we can tell should be covered at this stage. But who knows? In the light of experience, we might find it necessary to extend the Bill further. Some employers may go to great lengths to avoid their responsibilities. I hope that that is not the case. We are convinced that most employers will want to do the opposite; they will want to comply with the legislation. I put forward the reason for that to the Committee on the previous occasion. They do not want to establish bad practices in this regard. It is important that we have a level playing field and that the cowboys do not succeed.

Amendment No. 116 would require the Secretary of State to consult representatives of industry and small business before extending the Bill to further descriptions of individuals. I believe in consultation. I urged it on many occasions when I was sitting on the Benches opposite. It is right that the Opposition should probe the Government's intentions. I hope that that is what they are seeking to do.

Long before the election, and since, we have engaged in wide consultation. We did it with regard to the minimum wage policy. One of the reasons for setting up the Low Pay Commission was to ensure that we maximised the possibilities for consultation. My colleague, the Minister of State in another place, has confirmed that we will consult on the regulations under the Bill. I have said it many times in this place. It is normal and proper to consult. That is what I was told

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frequently by Ministers when I sat on that side of the Chamber. They said that it was not necessary to have such requirements within the framework of a Bill itself.

My problem with the amendment is that it would be over-prescriptive to require consultation to be established on the face of the Bill. The Secretary of State would of course consult before extending the Bill by using the power in the clause. Consultation will take place in normal circumstances, but there may be circumstances where consultation could make action less effective.

One of the aims of Clause 41, as I said, is to ensure that the Secretary of State can close any loopholes that might emerge. One cannot rule out the possibility that some employers, and some of their advisers, might find a loophole and seek to frustrate the legislature's intention. That might include reclassifying their entire workforce or revising all their working arrangements. If that were to happen, we would want to act rapidly to ensure that the workers concerned were not deprived of their rights. That might preclude consultation before action were taken.

There would not be much purpose in engaging in consultation in those circumstances, which may be extreme. Who knows? The amendment would also require the Secretary of State to consult one part of the social partnership only. That is not desirable. The point of consultation is to achieve an all-round perspective. We know that the previous government eschewed that possibility. They did not like consulting the social partners as a whole. Theirs was a one-sided operation. That is not my idea of consultation. I am not in the business of turning a deaf ear to important parties in consultations of this kind. We want to work together. It is a dynamic process. Both sides of industry and the Low Pay Commission provide a good example of what can be achieved by that process. The amendment is unnecessary and potentially harmful. I hope that the noble Baroness will not press it.

I turn now to Amendment No. 117. I repeat the point about covering any loopholes which unscrupulous employers might try to exploit. Self-employment is a potential area of concern. It is one of great complexity, as the noble Baroness recognised. In most cases there is no problem in distinguishing the self-employed from employees and workers, but there is a degree of uncertainty at the margins. The noble Baroness is worried about how we shall draw the distinction in such cases. The amendment seeks to tie the Bill to the definition of "self-employment" used in tax law.

There is no necessary correlation between the two. It would not be right to tie ourselves on the face of the Bill to criteria which are used in tax law as distinct from employment law. There are distinctions to be drawn. We are following an approach used in the Employment Rights Protection Act 1996 by the government of the noble Baroness. If it was right to do it then, why should we not do it in these circumstances? The noble Baroness did not seek to address that point.

In another place the Opposition pressed hard on the issue. Mr. Green, a Conservative Member, when a similar amendment was being discussed in

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Committee--I cannot quote him verbatim because I am not allowed to--in effect said that people who were self-employed in the assessment of one branch of government should not be regarded as employees in another. The noble Baroness must address the point raised by her honourable friend in another place. Self-employment for tax reasons is based on a number of tests designed to establish status on a case-by-case basis. In most cases it is clear whether someone is or is not self-employed for tax and minimum wage purposes. I concede that. There will be cases where the issue becomes questionable. It is not sensible to tie employment law to criteria drawn up for tax purposes where there is, in any case, no certainty.

The arguments adduced by the noble Baroness's honourable friend in another place, which I adopt, represent important answers to the case which the noble Baroness has put persuasively, but it would be wrong to take her advice. I hope that she will withdraw the amendment. If not, she will seek the opinion of the Committee, and we shall do whatever we can to reject it.

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