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Baroness Miller of Hendon: My Lords, I am pleased to inform the Minister that we welcome these regulations, as we do any steps that reduce the administrative burden and expense on small companies. It is perhaps right that I should remind your Lordships that I have previously declared an interest, having been a member of the Small Business Bureau. I am also a director and shareholder of a number of family companies which will certainly benefit from the reduction in the audit requirements. I am glad that, following a speech that I made early in my career in your Lordships' House, the fee for filing an annual return was reduced from £36 to £18 and has since been reduced still further to £15--a considerable benefit to small companies. Following a persistent campaign by the Small Business Bureau, the Registrar of Companies has greatly simplified the annual return.

I regard the exemption from audit of companies with turnover of less than £1 million as another useful step in deregulation. It is likely to affect a very large number of companies, typically the small family business and the corner shop. The Government have claimed that this will save business some £180 million. That is a reduction on the figure of £500 million that they originally claimed. Both figures are disputed by the Institute of Chartered Accountants, but the theoretical saving is academic. Small companies will

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still require professional help because of their obligation to file statutory accounts at the Companies Registry.

The next step along this particular branch of deregulation may be to abolish the need for small companies to file statutory accounts, which in practice are totally useless. In small companies the shareholders are very close to the management--usually they are the management--so that the statutory accounts are of no use to them. The period of several months until the end of the financial year that is allowed for filing accounts makes them useless for the protection of potential creditors. I also expect that professional accountancy assistance will be required by many small companies to enable them to prepare accounts for the inspector of taxes. Therefore, the actual saving may not prove to be as we thought. Nevertheless, we certainly welcome the change and the benefits that it will bring. It is perhaps only just because of the regulatory burden that the Government have imposed on SMEs, which is estimated to be £10 billion per annum.

In a protest against working families' tax credit, the Institute of Chartered Accountants said:


    "There are many other burdens that seriously restrict the ability of SMEs to operate and grow for the benefit of employment and the economy generally. We urge the Government to act as quickly as possible to reduce these much heavier other burdens on business".

We on this side of the House entirely agree.

While we welcome the increased threshold, I have to record our mild disappointment that the Government have not bitten the bullet and increased the exemption up to the £4.8 million, the figure permitted under the European Union regulations, a step which has been endorsed by the Institute of Chartered Accountants.

A further part of these new regulations is to alter the requirements for filing accounts by dormant companies which the Minister mentioned. Those accounts have already been greatly modified and are already simple. I assume that the Registrar of Companies may read this short debate. I should like, therefore, to take the opportunity to ask why dormant companies should have to file any accounts. The definition of a dormant company is one which has no significant transactions. There are some 170,000 companies with dormant status. Since there is no fee for filing their annual accounts, it is a burden on the Registrar of Companies to have to deal with them, to say nothing of chasing the many small companies which, by the very nature of their being dormant, fail to do so in time.

We give a welcome to those steps which reduce the regulatory burden on business and we hope that in the very near future it will be followed by many similar steps.

Lord Sainsbury of Turville: My Lords, the major change to these regulations is undoubtedly the increase in the turnover threshold for audit from £350,000 to £1 million. It is a substantial change and offers an audit exemption to some 150,000 additional companies. When my right honourable friend the Secretary of

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State first floated such an idea about a year ago, it was seen by some as premature. Yet, a year on, roughly three-quarters of the 150 respondents to our consultation consider that the balance of argument favours raising the threshold at least to the £1 million, with many agreeing also that the second stage, moving to £4.8 million in the way I described, is also desirable.

It is possible to criticise the change as being too timid or too bold. However, there are two powerful reasons for taking the matter in two stages. I have explained the link to the Company Law Review. We do not think that it is sensible simply to cut across a major element in that work. It is sensible to explore the idea of an independent professional review for those larger companies before making a second change. There are dangers in moving too far too fast; and I believe that taking this sizeable step now will enable us to assess the benefits.

Dormant companies are required by European law to file their accounts.

Finally, the question is not whether there is value in having an audit--for many companies that will remain the case--but whether it should be a statutory requirement for smaller companies. We have seen very little in responses to our consultation to show that the balance of costs and benefits points to retaining a statutory requirement which these regulations dispense with. The change will in many cases free up accountants working with small firms to work more positively and imaginatively to develop the business. I commend the regulations to the House.

On Question, Motion agreed to.

Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000

8.13 p.m.

Lord Sainsbury of Turville rose to move, That the draft regulations laid before the House on 3rd May be approved [18th Report from the Joint Committee].

The noble Lord said: My Lords, the Government are strongly committed to providing fair minimum standards without imposing unnecessary burdens on business. The part-time work regulations are an important building block in this agenda. The measures announced on 3rd May, and due to come into force on 1st July, will ensure that part-time workers are protected against unjustified discrimination. They have an important role to play in protecting part-timers while opening up new part-time opportunities, and encouraging people to return to the job market part-time.

The basic aim of the regulations is simple: to make it unlawful for employers to treat part-timers less favourably than comparable full-timers. This will ensure that part-timers have a right to receive the same treatment as comparable full-timers. This includes the same hourly rate of pay as comparable full-timers; the same access to occupational pension schemes; the

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same access to training; the same entitlement to annual leave as well as parental and maternity leave on a pro rata basis as comparable full-timers.

Once the regulations come into force, part-timers could be treated less favourably only where this treatment can be objectively justified. In all their terms and conditions, part-timers will have a right to be valued just as highly as their full-time colleagues.

The regulations are only part of the Government's campaign to promote part-time work. The Government will build on these legislative foundations with a programme of information. This will provide more information on the legal position as well as providing examples of best practice. The first part of this programme has already been published on the DTI's part-time work web page. The programme will be rolled out over the next few months in consultation with interested parties.

The Government have created the right framework for a flexible and fair approach to part-time work. We have listened to the concerns expressed in the consultation process, and amended our measures where necessary. We believe that we have struck the right balance between regulation and best practice guidance. I commend the regulations to the House.

Moved, That the draft regulations laid before the House on 3rd May be approved [18th Report from the Joint Committee].--(Lord Sainsbury of Turville.)

Baroness Miller of Hendon: My Lords, these regulations are being introduced as part of the Social Chapter that Labour hastily and recklessly signed up to as soon as the Prime Minister stepped through the door of No. 10 three years ago.

Labour signed up to the part-time workers directive on 7th April 1998. But despite having had two full years to implement the measure it had humiliatingly to ask for an extension of time on 7th April this year. Perhaps that is not so surprising because the Secretary of State had a dress rehearsal for his speech on the order on 10th May. Where was that? It was on the BBC, where most government statements seem to be made these days. The information he gave to his listeners was at variance with everyone else's understanding of the proposals and implied that many more workers would benefit than is the case.

The Secretary of State had to be publicly corrected by the TUC, whose spokesperson said:


    "Poor Mr Byers, his head must have been softened by a strenuous week".

My honourable friend, the Member for Tiverton and Honiton, requested Madam Speaker to try to get the order withdrawn until the Secretary of State knew exactly what the order was about, and that was refused, presumably on the ground that it is not necessary for a Minister to understand the legislation he is introducing.

I have to assume that part of the delay in introducing this order--apart from the time it has taken to explain it to the Secretary of State--may have been as a result of the haggling that has been going on with the unions. Employers who may have to

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familiarise themselves with the new regime will have had less than what may be regarded as a decent period to do so because of the Government's dithering. On the other hand, I have no doubt that the unions with their massive resources and their fingerprints all over the document will be well prepared to deal with it.

I turn to the contents. Fortunately the Government have seen sense. Under Regulation 2 the comparison of part-time workers is going to have to be like with like; that is, between workers with the same type of contract. So without an identical contract a part-time worker cannot claim parity with a permanent employee and claim a pension, sick pay and the like. We congratulate the Government on having resisted the demands that part-time workers for whom there was no direct comparison in the same firm should compare themselves with a hypothetical worker instead. What a feast that would have provided for the lawyers.

Nevertheless, the Government have again failed to resist the temptation to gold plate the already burdensome EC regulations. Despite the original directive entitling member states to exclude part-time casual workers, the Government have not seen fit to do so. The European directive gave member states the opportunity to opt out of applying it to casual workers. Our Government have seen fit to impose this voluntary burden on business. Agency workers are also included. One National Health Service trust has complained that that will push up the cost of hiring agency nurses and care workers. Part-timers employed by the NHS already have the same rights as full-timers. As with the working time directive, the regulation will simply swallow up more of NHS funds.

However, we believe that the worst and most blatant piece of gold plating is the requirement that within 21 days an employer must give an employee who thinks that he or she has been treated less favourably a written statement in order to justify himself. Failure to do so gives rise to an inference that there has been unfair treatment. The statement itself is to be treated as evidence against the employer but not against the employee.

Nowhere in the EC regulations is there a requirement for a written statement, which a prudent employer would probably be well advised to have his lawyers draft for him. In any case, the employee already has a right to go to the employment tribunal for protection. It is absolutely no use the Prime Minister sanctimoniously lecturing the other member states of the EU that they should conduct themselves more like the USA when it comes to business regulation, when his Government lose no opportunity to pile more and more regulation and expense on our industry and apply the most rigorous and bureaucratic interpretation of every edict that comes from Brussels.

Finally, I want to quote from the Government's Regulatory Impact Assessment.


    "We do not believe that there is widespread unfavourable treatment of part time employees. Job satisfaction amongst part time workers is higher than among full time workers. The 1998 Workplace Employment Relations Survey found that part time employees were much more likely to regard themselves as fairly treated than were full time employees; 61 % compared with 45%".

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Like the CBI, the Opposition support the principle of giving part-time and full-time workers the same pay and conditions on a pro rata basis. The CBI believes that most employers already do so. Part-time employees are a valuable segment of the workforce, especially to smaller employers who may not need or be able to afford full-timers. These regulations, while on the face of it being for the benefit of part-time workers, are likely to lessen their employment prospects and damage small business.

I wonder whether the Minister will clarify one point. I am sorry that I was unable to give him notice of it, but the matter was brought to my attention only late in the afternoon. The Official Report of the other place was late in printing due to the burden of work. At col. 9, the honourable Member for St Ives commented on press speculation that the European judgment on part-time workers entitled to occupational schemes could cost the Exchequer up to £17 billion because of the way it would work retrospectively.

When the matter was debated in the other place, the Minister said in reply that that was an extremely valuable point and at col. 20 he said that it was an important point. But, having read the rest of his reply, I am not sure whether it was likely to cost up to £17 billion. It would be helpful if the Minister could give me an answer today or in writing. I apologise for the delay in mentioning the matter.

I return to the regulations before us. The assessment of the extra burden that this piece of legislation alone will impose on businesses is, in using the Government's own figures, £27.4 million. We on this side of the House are not happy with the regulations, first, because of the extra cost and, secondly, because of the gold plating in the written statement that I mentioned; the inclusion of casual and agency workers.

However, reluctantly and in accordance with the custom of your Lordships' House, we shall not oppose the passage of the regulations, although we believe that they may put a hard burden on businesses.


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