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Baroness Darcy de Knayth: My Lords, I support these amendments most warmly. I agree with what the noble Baroness, Lady Blatch, said, with a few reservations. We all want the same thing: to remove the arbitrary line. Of course, I acknowledge that the number went down from 20 to 15 in December. We disagree on when this should be removed. In Committee on 4th February (at col. 1672 of Hansard) the Minister said that she felt the Government needed to find out more about how the courts and tribunals were interpreting the concept of reasonableness so as to help them to inform and reassure the small employers. Indeed, that was very much what the noble Baroness, Lady Blatch, had in mind.

However, there is another side to the argument. Indeed, it was compellingly argued by the noble Baroness, Lady Hollis, on the second day in Committee on the Disability Discrimination Bill on 15th June 1995. She said--and I shall paraphrase her remarks to begin with in the interests of time--that all organisations were protected from having to make adaptions which were unreasonably costly. She went on to say that if the small firms were excluded at that stage, then what counted as unreasonably costly would actually be determined by the larger firms to which the Act would initially apply. So the concept of reasonableness would be determined by the larger firms. Therefore, smaller companies might have lost their voice and might actually lose out.

The noble Baroness then said:

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I believe that the noble Baroness made a powerful case. Nevertheless, I hope that the Minister will respond more positively this time. If she does not, perhaps she will agree to consider the matter before Third Reading.

Earl Russell: My Lords, my noble friend Lord Addington has fully dealt with the human rights aspect of the amendment. I should like to address rather tentatively the area to which the noble Lord, Lord Ashley, drew our attention; namely, the agreement between the two noble Baronesses on the other two Front Benches. He is not the first person to composite them. Indeed, I think it was the Guardian at the beginning of this Parliament which composited them under the title of, "Baroness Tessa Blatch". The common point that they have brought forward is the belief in flexibility and in keeping down business costs. This is the area about which I want to think tentatively and in an exploratory way.

We all agree that business must be able to make a profit; if it does not, there is no future for any of us. We all agree that costs which are impossible to bear are likely to have serious effects. The real question is how far one goes in that direction. If one studies views about labour market flexibility over the past century or so, it will be seen that those views have always been cyclical. We have periods of unregulated competition; then the tide swings back the other way; and, finally, it goes round the circle again.

I do not know how many noble Lords present in the Chamber today watched the television programme "Newsnight" on the day when the Fairness at Work White Paper was published. The programmed claimed--and its research is, I think, quite often good--that among people working in business schools there is now a tendency to suggest that firms that have a rather less unregulated approach to their employees and which are rather more generous about pay, tenure and holiday conditions, and so on, in fact do rather better in profit terms. I do not know what is behind that suggestion. I hope that the Minister does. However, if she does not, she may possibly find out and ascertain how seriously the Government want to take it.

It seems to me that we may be at the beginning of another turn in the cycle of views on the question. It will not be the first; indeed, I am sure that it will not be the last. There obviously must be a limit as to how far labour flexibility can go. In the first place, there is clearly a potential truth in the fact that a satisfied workforce may be capable of putting more effort and more loyalty into the business than a dissatisfied one. The other point of real substance is that if labour market flexibility goes too far and wages go right down and conditions get harder, in the end the employees of these firms will find difficulty in buying others' products.

Last summer there was the prospect of a world recession. It seems to have stopped just short of that, but it was a fright which caused many people to do a certain amount of thinking. We might wonder whether flexibility may perhaps go too far. Of course, the key point is that we are dealing with measures which are designed to enable people to enter the labour market who might otherwise be unable to do so. The general

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thrust of government policy is, wherever possible, to give more people the chance of entering the labour market, to remove barriers in the way, and to make it easier for them. I do not think that the social security Bill is quite as crippling as some people suggest. But where it can be reduced by allowing people to do the things which they positively want to do, then it seems to me to be well worth doing.

If we do the costings of all this properly and we consider the overall effect on the national economy and on the world economy, the balance may not be quite as much in favour of flexibility as we think at present that it is. I say this with great tentativeness, but I shall be interested to note whether other people who know much more about this than I do also start thinking about it.

Lord Swinfen: My Lords, I am not a lawyer and I have absolutely no legal training, but I have always understood that it was a principle of law that all should be equal under the law. As the situation stands at the moment disabled people employed by smaller firms are not in an equal position to those employed by larger firms, and that is wrong. It is morally wrong. The fact that allowances have to be made for those people and alterations made to premises is protected by the concept of reasonableness. The reasonableness will depend on the firm concerned. Some small firms will struggle to exist and therefore it would be unreasonable for them to pay the cost of installing a ramp. Other small firms will make huge profits with no trouble at all and therefore in their case it would be unreasonable for a ramp not to be installed. Each case must be considered on its own merits. That can be done quite easily by considering the firm concerned and the disability of the person concerned. The same also applies to the large firms. It is, in my view, quite wrong that this discrimination--for that is what it is--should be allowed to continue. To misquote George Orwell, I am reminded of the situation that all animals are equal but some are more equal than others. I strongly support the amendment of the noble Lord, Lord Ashley.

7.45 p.m.

Baroness Blackstone: My Lords, I hope that Members of your Lordships' House will forgive me if at this time on a Thursday evening I do not pick up some of the rather broad points that have been made in this debate. While I endorse what the noble Earl, Lord Russell, said about the need for joined-up policy thinking, the importance of considering matters such as the Fairness at Work White Paper and the social security Bill, and seeing how they all fit together, I do not think an amendment at the Report stage of the disability rights Bill is perhaps the right vehicle to address such issues.

As with the similar amendment moved by my noble friend Lord Ashley in Committee, the purpose of Amendment No. 25 is to try to have another consultation about the small firms threshold before 1st January 2000. My noble friend wants to ensure that the Government reduce the small employers' threshold without necessarily waiting for the commission to be established. I know how strongly he feels about that.

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The purpose of the noble Lord, Lord Addington, in tabling Amendment No. 26--although I am not sure whether he was speaking to that amendment or to my noble friend's amendment--

Lord Addington: My Lords, I thought I had made it clear at the start of my speech that I would not move Amendment No. 26.

Baroness Blackstone: My Lords, I am grateful for that clarification. However, the commission would have to be consulted, as we intend, because that requirement in the Bill would not be amended. The noble Lord's purpose is therefore to ensure that a consultation takes place as early as possible while trying to meet our concern that the commission should be involved. I have considered again the comments that a number of noble Lords made in Committee, but I am afraid to say that I have not been entirely persuaded by them as to the virtue of beginning a consultation before January. That does not mean to say that I and the Government are not extremely sympathetic to lowering the small firms threshold again. However, the question concerns when that should be done.

We have made clear our commitment to achieving comprehensive civil rights for disabled people. Where we differ from noble Lords who have spoken on this is on the timing of implementing further change to the exclusion threshold. We believe that effective rights for disabled people require the support and understanding of business. Seeking the involvement of the commission in the future is entirely right given that we are establishing it in part to advise us on reviewing the working of the DDA and in improving awareness of disability issues among employers.

The noble Baroness, Lady Darcy de Knayth, quoted what my noble friend Lady Hollis said when the Disability Discrimination Act was going through this House. I follow that by saying that in December we made a reduction in the threshold from 20 employees to 15. That is a significant step forward. We did that fairly soon after coming into government. I reiterate that it has widened the coverage of the employment provisions of the DDA to bring in 45,000 more employers with around 800,000 employees--that is an awful lot of additional people--any of whom may need protection in the future and 70,000 of whom are currently disabled. Every disabled applicant for a job in these firms is also covered. Over 75 per cent. of disabled employees are now covered by these provisions. Of course I agree with my noble friend that eventually we shall want to reach those who are not covered.

The concept of reasonableness which was mentioned by the noble Baroness, Lady Blatch, will certainly help to ensure that small employers are not unfairly burdened. However, at the moment we do not know how the courts will interpret the meaning of reasonableness. Preliminary findings from research that will be published soon shows that there is concern about what might count as reasonable, even among those employers covered by the DDA since December 1996. There was an expectation that case law would probably make the

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position clearer over time but also a belief that more guidance was needed despite a detailed code of practice. Guidance is one of the things which the commission will be able to provide and by then the courts are likely to have clarified more key areas of the DDA. Therefore we see the setting up of the commission as entirely constructive and helpful in taking this measure forward.

No one will benefit from the very smallest employers having to learn by trial and error how this law applies to them. Such employers rarely have specialist personnel who can devote time and expertise to dealing with some of the issues that are involved here. There is a fear--which I think we should recognise--among very small firms that relatively small mistakes will prove costly at a tribunal. It is not so much that the costs of employing disabled people need necessarily be high, although I have to say that I do not think we should completely dismiss those costs either. There are sometimes costs. That is, I believe, recognised by everyone who has spoken.

Although many small firms already employ disabled people, a number do not. Even some of those that do know less--I think perhaps understandably--about disability than larger firms, and they do not always know how to respond effectively, as they should, to the needs of individual disabled people. All the information and advice that the commission will provide ought greatly to help in this process.

Some small firms may know about a particular disabled employee but if another develops a disability or someone with an uncommon condition applies for a job, the circumstances may not always be quite so clear. That is the reality we need to accept.

That said, disability issues are often fairly straightforward. Everyone, whether disabled or not, has their own requirements. Most can be met relatively simply and cheaply. Employers are generally quite skilled at getting the best from their employees in any event. However, the legislation is new; it is in places quite complex. We believe that difficulties in understanding and applying the law may be rather greater for those businesses that are currently below the threshold. We do not want extended protection of employees under the Disability Discrimination Act to create unjustified fears for smaller businesses which we are, through various measures at present, trying to encourage. Our economy very much depends on them. It would be unfair and, I think, would cause some employers either to avoid their duties or make very poor attempts to ensure compliance, perhaps leading to bad employment relations.

One of our key objectives is to ensure that evidence is available on the effects of the provisions on very small employers. Some of that will remove uncertainties and provide both the Government and the commission with a really informed basis for considering further change. Once again I want to reassure those noble Lords who feel strongly about the matter that we are very supportive of that. Our comprehensive programme evaluating the Disability Discrimination Act will produce findings which should help us further reassure and help business and underpin future decisions

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concerning small employers. For instance, one research project seeks evidence of how employers, including smaller employers, are responding to the Disability Discrimination Act. All this will help to show employers that the Act's provisions can help them recruit and retain the best workers and increase their competitiveness.

It is also important that those businesses are aware of the assistance available, whether it is in a case requiring expert help or simply seeking more routine information. We have already begun the process by improving the Disability Discrimination Act helpline. That provides an increasing range of information on the Act and can help businesses and others by giving advice and helping them to make contact with specialist organisations. It is very gratifying and significant that so many voluntary organisations have joined with us to try to make this system work.

The Employment Service will continue to provide specialist help to employers who want to take on and keep disabled employees. The DRC will also help to ensure that there is appropriate awareness raising and provision of information and advice. As noble Lords will recall, we are also developing a communications strategy in co-operation with the National Disability Council and disability and employer bodies to help ensure that small businesses and others are more informed and aware. That is a very important step on the route to the wider coverage that we all seek through this legislation.

I recognise the great passion of my noble friend for making change in this area. We want to bring down the small firms' threshold further, but I hope that I have made clear why the Government believe that they should take the matter gradually and not in too much of a rush. We feel that we must await the establishment and full involvement of the DRC before we consider further change. Our proposals will ensure that the threshold is monitored and lowered in an effective and appropriate way. I make that pledge to my noble friend. I hope therefore that those noble Lords who have put their names to, and supported, these amendments--my noble friend in particular--will feel able to withdraw them.

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