2.03 pm

Lord Clement-Jones: My Lords, this summer Britain emphatically demonstrated the quality of its creative talent to the world in the opening and closing ceremonies

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of the London Olympics and Paralympics. The Government have done much that is positive to support the UK creative industries, not least through the new IP attachés, the new tax break for video games and high-end TV production and the extremely important work of Mr Richard Hooper in the creation of a copyright hub to simplify and improve copyright licensing, which has the enormous good will and co-operation of all rights holders concerned.

However, as a recent All-Party Parliamentary Intellectual Property Group report has demonstrated, there is real doubt about the championship of intellectual property in this country, not least by the IPO itself, which is reluctant to accept intellectual property as in reality a property right. Creativity, content and copyright are crucial for future growth and investment, yet Professor Hargreaves and others express the view that copyright is a barrier to innovation. As a result, I fear that we risk going on the wrong track with copyright reform and having an IPO which has lost the confidence of creators and the creative industries.

My noble friend the Minister, who I have every hope has assumed the role of IP champion, has been very willing to engage in discussion about Clauses 65 to 69 in Part 6 of the Bill dealing with copyright and rights in performances, but the fact is there are still a great many questions to be answered during the passage of the Bill and it is that area that I wish to focus on today. I start with Clause 65. This clause has been widely welcomed by designers. It means that copyright for works of artistic craftsmanship will now last for the usual term of copyright: that is, life of the author plus 70 years. However, others have not been so welcoming. The Minister will have seen the letter to the Times of 25 July signed by Lionel Bently, Herchel Smith, Professor of Intellectual Property at Cambridge University, and others. They asked: where is the impact assessment for this measure? Why was there no consultation?

We are assured that there will be transitional provisions and that there will not need to be a bonfire of unauthorised copies after the Bill comes into effect, but what are the specifics? Why do we have to wait until the clause is on the statute book before we know what they are? Why not outline the provisions at this stage, in particular those which will permit stock which is currently legal until this clause becomes law to be sold, and then consult on them? What about using or making images of these artistic works for illustrative purposes? Will this be a breach of copyright after this clause goes through? Publishers, galleries, museums and academic institutions need to know that.

Then we have Clause 66, which has already been the subject of some comment. Amendments that were made on Report stage in the Commons are welcome as they help to clarify that the Government cannot use the clause more widely than is permitted under the European Communities Act 1972 except as regards criminal penalties. Furthermore, it appears that the application of Clause 66 in relation to penalties will only be in respect of copyright exceptions. If that is the case, why is the clause not simply worded so that it is targeted specifically at introducing penalties greater than those permitted under the European Communities Act, as set out in the Explanatory Notes? As an aside,

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the Minister will, of course, be aware that there is a major doubt whether the Court of Appeal Oakley Inc v Animal Ltd case of 2005 would allow the Government to implement much of what the Hargreaves report suggests by way of extensive copyright changes by statutory instrument. Will the Minister confirm whether the Government have received legal advice on that?

Exceptions to copyright are potentially of huge economic importance to rights holders and creators. The fact is that all major previous copyright changes were enacted by primary legislation—the 1911 Act, the 1956 Act and the 1988 Act. Surely that should be the rule for all future legislation. What assurances can my noble friend give in that respect that primary legislation will normally be used? Even if my noble friend cannot concede that point, it might help if we knew exactly what the Government’s intentions were. When are we going to see, and be consulted on, the draft regulations bringing in the various exceptions recommended by Hargreaves such as format shifting, parody, data mining, right to digitise and so on? Crucial issues still remain to be resolved with the exceptions. Will there, for example, be an exception for photographs from the parody exception? Cannot the draft regulations for these exceptions be published with the relevant consultation paper while the Bill is going through the House? Furthermore, can the Minister give an absolute assurance to this House that, contrary to the fears of many, if regulations are used to introduce exceptions they will not be bundled together in a single statutory instrument and an individual impact assessment will be produced for each exception proposed?

Clause 67 enables the Government to reduce the term of copyright for unpublished works or published works which are anonymous or pseudonymous. The Minister may be pleased to know that I am not going to dwell long on Clause 67. However, there is a major problem here, too. Are the Government seriously proposing that unpublished works by Robert Graves, who died in 1985, or Christopher Isherwood, who died in 1986, should be prematurely thrust into the public domain and the owners of these rights summarily deprived of them? Is this a way of enforcing publication when authors or their estates do not want it?

Clause 68 deals with orphan works and extended collective licensing. The major question on orphan works is why we are going further than the EU orphan works directive which EU countries have to implement within two years of this September. This specifically makes provision for museums, galleries, archives and libraries, educational establishments and public services broadcasters to make use of orphan works. These are all, essentially, cultural institutions and would fulfil entirely what the noble Baroness, Lady Warwick, desired in her speech earlier. It may not be a perfect directive at this stage but, if it will apply in 27 EU countries, we should surely be building on it, not building an alternative.

The Government’s proposals under Clause 68 go much further, by permitting exploitation for commercial purposes. This is a matter of real concern to many, particularly the creators of images where the metadata has been stripped and attribution lost. This is the reason why equivalent provisions failed to get through Parliament last time in the Digital Economy Bill.

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Has no account been taken of the photographers’ strong concern, voiced during passage of the Digital Economy Bill and in the Hargreaves consultation? The impact assessment for these provisions sets out a ludicrous range of benefit to the economy of between £9 million and £91 million. This is hardly a credible business plan especially when, implausibly, it cites using genealogy as the example of where great commercial income might be made from the exploitation of commercial works. Furthermore, what will the “authorised body” under the proposals be? Is the copyright tribunal really suitable? What alternatives are being considered? Will it be the IPO itself? This could require an expensive infrastructure well beyond that envisaged in the European directive.

The second part of the clause deals with extended collective licensing. Without consulting a rights holder, an ECL agency would have the right to act on his or her behalf, agreeing commercial terms and financial compensation for the use of his or her content. ITN and many other news agencies such as Associated Press, Thomson Reuters, AFP, Press Association, Getty Images and DPA are deeply concerned about ECL. In their view, ECL removes the business logic for investing in digitisation and will starve the UK creative sector of valuable digital content. As Richard Hooper says in his second report, why proceed in this way when we have the digital copyright hub in the making? This is precisely what the copyright hub will do for non-orphan works. Is ECL not obviated except, perhaps, for orphan works, now that a more streamlined clearance system is being designed through the new copyright hub?

What is being proposed will, in effect, be compulsory for most people and organisations. Every creator of copyright-protected material outside the UK—and many English language creators are in other countries around the world, such as the USA, Australia, Canada and India—would need to keep themselves constantly updated about all the organisations which have been issued, and still retain, permits to operate ECLs within the UK and which might be licensing their works.

There is nothing in the impact assessment to quantify any benefits from ECL and there is no analysis of the losses that it would create. In any event, how on earth can the cost of administering the ECL be estimated at only £10,000 per annum, equating to 20% of the salary of two people on £25,000 per annum, as set out in the impact assessment? No countries operate ECL in the broad way envisaged by the Hargreaves report and the Intellectual Property Office. The use of ECL in Nordic countries is very specific and narrow. Rights holders, however, are generally very supportive of the broadcasters’ desire to open up their programme archives and appreciative of the administrative challenge that they face in doing so. That is precisely why they have been holding detailed meetings with the UK broadcasters in order to make their rights clearances both cheaper and more efficient.

The noble Baroness, Lady Buscombe, raised a number of questions about ECL. I can add others: how do we know what will make a collecting society sufficiently representative to operate ECL? What sums of money or percentages will be paid to copyright owners and what will be retained by the ECL organisations? What

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will be the duration of licences? With a few minor exceptions, much more straightforward identification and licensing of rights is universally thought by creators and the creative industries to be the way forward, through the proposed copyright hub and not through extended collective licensing.

Finally, I have a general question for the Minister, arising out of paragraph 168 of the second Hooper report. As Richard Hooper asks, what are the Government doing to meet the challenge of reducing the incidence of copyright infringement on the web in return for the creative industries making licensing easier? There are several avenues to explore, such as improving site-blocking court procedure and tightening up on metadata stripping, which is at the root of so much concern among image rights-holders. Will the Government examine the whole issue of moral rights in the context of giving better protection to individual creators?

In conclusion, we have a very flimsy set of ill- thought-through clauses here which risk confusion and litigation on a huge scale and risk the UK being shunned as a country to license to, produce in or license from. It is particularly sad that so little, if any, account seems to have been taken of the 471 responses to the Hargreaves consultation in framing the legislation. The clauses need a complete rethink. Will the Minister undertake to do so in Committee?

2.16 pm

Lord Whitty: My Lords, I believe that the Minister is today presenting his first major piece of legislation in his new department. Over the past two or three years I have watched him get his head around energy policy in DECC. In his new department, he has quite a task with this Bill because he has got to get his head around everything from the obscurities of employment law to, as we just heard, the intricacies of copyright law in its various dimensions. I wish him the best of luck because he has got what I will call, for the purposes of neutrality, a patchwork of a Bill. There are some attractive patches and some less attractive ones. It seems to be an amalgam of old ideas, which have been around the department for a long time, and some rather barmy new ones. I have to take at face value the view of the noble Lord, Lord Razzall, that Vince Cable has managed to resist the barmier elements of the Beecroft report, although some of them actually do appear here in one way or another. There are also some areas which we all agree would be useful.

We have, in the Bill, the good, the bad and the ugly. If it helps the Minister, I will, rather than dwell on any individual area, help to categorise the various parts of the Bill from my point of view. I start with the good; at least in conception. I very much welcome the announcement of the Green Investment Bank. I welcome what the noble Lord, Lord Smith of Kelvin, said earlier about it getting off the ground. However, it is not yet a real bank. A bank which cannot—at least at this stage—borrow on the market and thus multiply its leverage of private investment is not a real bank. In some ways, it is not as green as all that. We need some criteria for its investments that relate, for example, to targets for carbon saving and other resource reduction. This part of the Bill will need strengthening.

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Likewise, I welcome the big picture in relation to the competition regime. I agree with the merger of the OFT and the Competition Commission and regret that I part company with my noble friend Lord Borrie on that matter. It should add coherence and speed up investigations. I also welcome the dropping of the dishonesty requirement in relation to cartels which has been an inhibition to interventions in this area. My concern is about what will happen to the bits of the OFT’s responsibility relating to consumer protection, enforcement of trading standards and consumer education which drop out of the new organisation. They are coming forward in a number of different respects but are, essentially, being privatised or localised. I am not necessarily against that but I will need some reassurances. I recall my previous interest as chair of Consumer Focus, a body which is imminently to disappear, greatly reducing the amount of consumer protection or, at least, consumer advocacy. I also declare my role as honorary vice-president of the Trading Standards Institute. I shall definitely return to this whole area of consumer protection and the competition provisions at a later stage.

Some aspects of the Bill are mixed or inadequate. On the contentious area of copyright, I support the broad sweep of the Hargreaves recommendations and the adoption of the IPO proposals on orphan works and collective licensing. However, from a personal point of view at least, I am deeply suspicious of any attempt to extend copyright protection and I require a better justification for it than we have yet received. I regret the failure largely to come to grips with the new reality of copyright protection in a digital age. We rehearsed this ground under the previous Government with the Digital Economy Act and I fear that I shall once again probably part company with the noble Lord, Lord Clement-Jones, on aspects of that. In terms of the balance sought by his colleague, the noble Lord, Lord Razzall, I shall probably have slightly more sympathy with the under-30s, although I am evidently not one of them, than I do with some of the more aggressive antics of rights holders in this respect. We certainly need a new balance that reflects the reality of the internet.

My noble friend Lord Gavron and the noble Lord, Lord Tugendhat, have already welcomed the provisions on director remuneration but wished to extend them. This is one of the great difficulties of our time. The impact of the level of director remuneration on the morale of the workforce and the attitude of the population as a whole to our leaders of industry needs to be seriously tackled. I am glad that the Government are at least beginning to do so.

I now come on to the bad bits of the Bill. Most of the provisions on equality fall into this category. As the noble Baroness, Lady Campbell, movingly pointed out, the narrowing of the scope of ECHR interventions, and of its support, advice and conciliation services, is going to set back the mainstreaming of equality issues in terms of gender, race and disability. The commission needs to have independence and general responsibility. The threat that the Bill presents to both is of considerable concern to many around the House.

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Most of the employment law provisions fall into the “bad” category. Indeed, I should probably move them into the “ugly” category. It is not just these provisions which are of concern. They are part of a wider strategy. I hope this is not being done as consciously by the Government as the word “strategy” implies, but when we look at what has happened under the Legal Aid, Sentencing and Punishment of Offenders Act and the Welfare Reform Act in terms of access to tribunals and redress, we see a whole range of reductions in access to justice and redress for those in the most vulnerable and least powerful negotiating positions in our society. It is a strategy of which the Government ought to be ashamed. I am sorry to see bits of it in the Bill.

Ugliest of the lot are the provisions referred to by the noble Lord, Lord Low, relating to Clauses 61, which appears to provide that victims—physical, mental, financial or mortal—of the failure of private or public corporations to fulfil their statutory responsibilities will, in most cases, no longer be entitled to compensation. That takes us back more than 100 years, and it is something that I had not expected the Government to bring forward. This issue has not had adequate coverage. It was a late entrant to the Bill in another place. We need seriously to consider whether those provisions ought to be part of the Bill.

This is a bit of a tinkerer’s charter. It tinkers with a lot of bits of legislation in areas for which the Minister’s department is responsible. I am sure that Vince Cable is capable of doing better than this, but I recognise that he is somewhat hobbled in his intentions to turn the department into a driver for economic recovery and a provider of business confidence and jobs. He is hobbled by the Treasury, by some of his colleagues, by the right wing of the Conservative Party in another place and partly by the department, which—even going back decades, from the Board of Trade onwards—has never quite managed to translate itself into a real engine of economic growth.

The Bill is, frankly, one of the least impressive exigencies from that department, and it certainly will not fulfil the role of developing a proper and effective industrial strategy and giving confidence back to the population and businesses of this country.

2.26 pm

Lord Currie of Marylebone: My Lords, I declare an interest as the chairman designate of the Competition and Markets Authority which the Bill proposes should replace the existing Office of Fair Trading and the Competition Commission. I shall therefore focus on Parts 3 and 4, which establish the new authority and make some important changes to the competition and consumer regime that it will oversee. Without appearing presumptuous, I hope that noble Lords will allow me to speak of the new authority on the assumption that its creation comes about and that the Bill passes and receives Royal Assent.

I knew when I took on this role just what a privilege and responsibility it represents. Few people have the opportunity to create a new organisation, and I have been given that privilege twice, first as the founding chairman of Ofcom and now, exactly 10 years later, as

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the founding chairman of the new authority. I am conscious that I follow in the footsteps of many distinguished economists, lawyers and competition experts who have led the Office of Fair Trading and the Competition Commission in the past, including the noble Lord, Lord Borrie, who has already spoken in this debate. The responsibility is considerable. The Office of Fair Trading and the Competition Commission have strong reputations as effective competition authorities, both here and internationally. I have always known them as bodies that have attracted highly professional and dedicated staff; and that view has been confirmed by my many meetings at all levels of the two organisations over the past couple of months.

The early processes for building the new authority are necessarily under way—the search for the new CEO designate; the formation of a transition team drawn from BIS, the Office of Fair Trading and the Competition Commission; and the clarification of the legal basis on which the transfer of staff will happen. There is a great deal to be managed over the next year or so before the authority comes into existence. We need to make sure that the Competition and Markets Authority is established as a vibrant organisation with a fresh, dynamic culture that embodies both new elements and the best of the two legacy bodies and retains and integrates the talent of their staff. In contrast to many public sector mergers in the past, we have adequate time to manage this process and its complexity, and get it right.

Three high-level objectives will be paramount. First, we will ensure that the new body is a high-performance organisation that is at least as effective as, if not more so than, the two organisations that it replaces. That is a high ambition, but entirely achievable. Secondly, we will ensure that the casework of both the Office of Fair Trading and the Competition Commission continues unimpeded and that the transition of work in progress to the new authority is entirely seamless. We will safeguard business as usual. We need to find ways of enabling colleagues in the Office of Fair Trading and the Competition Commission to engage with the complex transition process, while not distracting them from their current roles. Thirdly, we will ensure that all colleagues are treated fairly and appropriately in the transition. We have established the legal principles for that transfer under an arrangement equivalent to TUPE. Not all staff will transfer to the new authority, but I expect that all but a handful of positions in it will be filled from the existing bodies, and at this point we envisage rather few redeployments or redundancies.

Despite these reassurances, it is a long and unsettling period of transition for staff, and we will need to work hard to communicate effectively through the processes to keep uncertainty to the minimum. There will be real benefits from the creation of the CMA. The combined organisation will be able to deploy resources more effectively and flexibly to different parts of its work, including phase 1 and phase 2 merger and markets decisions. It will deliver decisions in a more timely way, with no diminution of quality, to the benefit of consumers and businesses. It will provide a single and, therefore, stronger voice and advocacy, both at home

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and internationally on competition issues. With the right work environment, it will provide for its staff a wider range of work opportunities and experience.

I recognise the question that the noble Lord, Lord Borrie, has raised: how does one maintain the independence of the phase 1 and phase 2 processes while delivering those decisions in a more timely and efficient way? I believe that, with the redesign of the processes under a single roof, and while maintaining independence, we will achieve both timeliness and greater efficiency.

I am sure we shall debate the measure in the Bill to remove the dishonesty test in cartel cases. It is the single most important reason why the Office of Fair Trading has been unable to bring more cases to trial. Cartels represent a major barrier to dynamic, innovative markets and economic growth, and the change is greatly to be welcomed.

The new authority will have an important interface with the sector regulators in financial services, communications, energy, water, transport and, of growing importance, public markets such as health and education. In most of these sectors, competition and Enterprise Act powers are held concurrently by the sector regulators and the Office of Fair Trading, and in future the Competition and Markets Authority. Some have been critical of the sector regulators for using sectoral regulatory powers rather than competition powers, and the Office of Fair Trading has held back from exercising its competition powers. This has led some to call for the sector regulators to be stripped of their competition powers. I think there are better options, not least those laid out in the Bill. Removing concurrency could induce the sector regulators to use their sector-specific powers more, not less, which would be entirely counter-productive. It could also force the Competition and Markets Authority to build sectoral expertise that would be duplicative and wasteful. It may well be better to try what is envisaged in the Bill: enhanced co-operation, led by the authority, drawing on the sectoral expertise of the regulators and the competition expertise of the authority. Steps are already underway to put in place new mechanisms for that co-operation. We should be clear that if this co-operation does not work, the authority must be willing and able to exercise its powers in those sectors if regulators have not.

A number of other measures in the Bill, which I do not have time to discuss, will give rise to a much enhanced competition regime with a more dynamic authority with wider powers to deploy, but the Competition and Markets Authority will be more than a competition authority. It also has the important and complementary role of consumer protection. Consumer protection and competition law work together: effective competition empowers consumers; and well-informed and protected consumers make competition more effective.

As has been discussed, the Bill brings about a shift in the landscape for consumer protection and enforcement. Trading standards, under the National Trading Standards Board, will play a bigger role in the enforcement of consumer law, with the co-operation of the Competition and Markets Authority. The authority will have a broad range of consumer enforcement powers, and it

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will have primary expertise and responsibility for the enforcement of unfair contract terms legislation, taking responsibility for high profile national cases, such as surcharges that stem from misleading advertising prices as well as international cases. Mechanisms are being put in place to ensure enhanced co-operation between all the bodies involved, which include trading standards, Citizens Advice, the Competition and Markets Authority and the new Financial Conduct Authority, to make sure that they share intelligence on consumer detriment and allocate enforcement action. This will be a critical area of the new authority’s work and, as an early signal of its importance, I have already engaged with trading standards at both a national and local level.

Effective competition and vibrant markets play a crucial role in promoting the investment, innovation and growth that we need in these difficult times. Together with a high performance Competition and Markets Authority, this will maintain and enhance a world-class and robust competition and consumer framework that benefits businesses and consumers and promotes economic growth. Faster decision-making, a lower burden on business, and the better deployment of expert resources will all work to this end.

2.34 pm

Lord Clinton-Davis: My Lords, I add my congratulations to the noble Lord, Lord Marland, who regards this Bill as exemplary. In no way do I think that he would be regarded as immune from myopia. I do not think that some of this Bill is worthy of support. Notwithstanding its controversial aspects, the Bill has been introduced without adequate supervision. There has been no review in which the regulatory provisions imposing strict liability have been properly examined, as recommended by the independent Health and Safety Executive. I ask the Minister: why not? Why has he refrained from legislating on that important aspect of any Bill? Of course, this is not the only controversial provision. Indeed, there are so many others but I simply do not have time to mention them all.

I am particularly concerned about Clause 61, about which the Government have either had no discussions or have summarily dismissed the anxieties voiced by, among others, the Association of Personal Injury Lawyers, which concluded that health and safety provision would be put back by much more than 100 years. Indeed, the only time that the coalition reacted to this provision was when the House of Commons debated the Bill on Report. Why? Were the Government surrendering to the representations of the insurance bodies and their right-wing allies? Where do the Liberal Democrats stand on this?

In effect, the Government are now saying that employees will have to establish that employers have been guilty of negligence. Will it not make it infinitely more difficult for them to prove valid claims? They and the legal aid bodies will be exposed to more complicated, more protracted and more expensive claims. Employers will more easily get out of their proper civil law liabilities. Moreover, insurance premiums are bound to increase. In this probable event, do the Government think that that will be beneficial? If not, why do they not say so?

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The Government opine that the so-called burden of health and safety requirements will be reduced by Clause 61. What evidence do the Government adduce for that proposition? I believe none whatever. Simply to assert that Britain will be able to compete more effectively in the world markets will not suffice. Evidence is important and evidence is lacking.

The TUC has also made some valuable criticisms of the Bill, all based upon the claims that the Bill will reduce the employment rights of working people. We have heard something about that today. Yes, I am troubled by the fact that employers will find it much easier to fire employees. How can that benefit the country as a whole? Compensation awards for unfair dismissal are being reduced. Whistleblowers will be disproportionately hit. It all combines to support the view of those who proclaim that there should be a radical re-examination of the situation.

What is being claimed by Government in support of the provision that fees for employment tribunals should be introduced? Will this not have the effect of preventing many employees pursuing their just remedies? I submit that it is wholly unjust.

Legal officers, as they are described in the Bill, who will have no real training in employment law, are to preside over some employment rights. Is this worth while? Will it improve the law? This is another point that is missing from the Bill.

The Government ought to consider very carefully what outside bodies say. At the moment there is no evidence that the Government are willing to listen. I look forward to hearing what the Minister says in this regard. I hope that he will be rather more constructive than he was in his opening remarks.

2.41 pm

Lord Grade of Yarmouth: I hope noble Lords will agree that it is not contentious to say that the creative industries in this country are vital to our economy. They employ 2 million people and account for 6% of GDP. It is a growth sector that must be allowed to flourish. The creative industries can be defined as those that create copyright. Therefore, we should tinker with copyright legislation only with great care. I regret that I am in no doubt that proposals in this Bill would stem this growth by undoing the copyright framework that underpins the sector. I concur fully with everything that my noble friend Lady Buscombe said about extended collective licensing, and I fully support the remarks of my noble friend and erstwhile colleague Lord Clement-Jones.

Clause 68 would allow companies to license intellectual property belonging to others, and to set prices and terms for this property. Clause 66 would pave the way for statutory instruments to enable widespread free usage of copyright material. All of this would be economically damaging and morally wrong. I have yet to meet any serious commercial investor in new content who is not petrified by the potential unintended consequences of these measures. They seem to be designed to introduce the flawed Hargreaves report by the back door.

If someone invests in creating original material, and then invests further to digitally preserve it so that it can be licensed to others, that individual or company

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has a right to expect a full commercial return on their creative and financial investment. It seems to me that the Department for Business, Innovation and Skills has neglected its remit for business in favour of pursuing fashionable and ill founded innovation. The beneficiaries are likely to be companies such as Google and other international corporations that live off the backs of British creative industries on the internet.

Content companies across the media landscape questioned the unsound findings of the Hargreaves review. They voiced their concerns to the IPO in its consultation on copyright, and now they are perplexed at why legislation has sprung up in the Bill without the IPO having given an adequate response on its own consultation. Rather, the industry has been thrust into uncertainty about whether its continued investment in content is sustainable without important revenues from the licensing of its copyright material.

Industry innovators and investors are already developing business models and freeing up copyright content for widespread use. It is in their commercial interests to do so, and it does not require legislation. For example, the ITN archive was fully digitised last year in a multimillion pound project. News clips from 30,000 film cans and tapes dating back to 1955 are online for people to license at the click of a mouse. Other world-famous news agencies supply text, video and pictures from all over the globe to a host of UK companies. Without a robust intellectual property framework protecting those who make such investments, can we count on them continuing to keep making and investing in content? Film, TV and music companies, along with publishers, can continue to invest in new content only if they can be sure that copyright laws will enable them to earn the full rewards of that investment. If we dilute that certainty, as the Bill would inevitably do, we should understand the dire consequences for future investment in the most important growth sector of the UK economy: our creative industries.

I know from too many years of experience in content industries around the world that there is a queue of parasites waiting to pounce on and leech off other companies’ investments in the wild west of the web. The Bill provides a charter for companies such as Google to enjoy a free ride on the backs of our cherished creative investors. These clauses require very close scrutiny, and I urge the Government to listen carefully to the alarm bells that have rung around the Chamber today. I would be grateful if the Minister would indicate that the Government understand that there may well be unintended consequences following from these two clauses.

2.47 pm

Baroness Dean of Thornton-le-Fylde: My Lords, I certainly agree that our creative industries are not a contentious issue in this House. They are probably at the base of how we will get out of the recession, and will probably provide a lot of our growth in future. What is contentious is the stated intention of the Bill, as expressed in the Explanatory Notes, to promote long-term growth. It does very little of that.

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It is a complex Bill. In my time as a Member of this House, I have not seen another Bill that covers such a variety of issues. It does not even cover just one department. That is not unusual in Bills, but this Bill is particularly complex. As my noble friend Lord Whitty said, there are some good parts to it—but very few. I, too, agree with the bringing together of the Competition Commission and the OFT; I agree with the green bank; and I certainly agree that the issue of copyright will have to be debated very carefully. We need to get the balance right, because there are very strong arguments on both sides. It will be a difficult issue on which to get a resolution.

While I read the Bill, the words, “We are all in this together”, kept coming to me. It is not a claim the Prime Minister has used recently—probably very wisely. The Bill does nothing to contribute to that. It loads the burden of helping get us out of our present situation on to the people who are least able to bear it. Working people have already faced many challenges to their family income since the introduction of the austerity measures. Many of those measures were much needed; I would not argue against them. However, the Bill goes beyond what is reasonable and fair, even given our difficulties in this country. In many respects it sets back the relationship between employer and employee. You cannot bring about good relations through legislation; it has to be by mutual respect and by working together. The Bill, in part, strips away a great deal of the basic, decent values in the workplace that have been hard fought for, in some cases, over many years.

On my reading of the Bill, Clause 15 introduces a public interest test which whistleblowers have to meet. The noble Lord, Lord Low of Dalston, is absolutely right. He gave a list of areas where whistleblowing has brought to the public attention many wrongs which needed to be put right, but the amendment in the Bill will mean that people will think not once or twice but whether they should at all be a part of whistleblowing. That cannot be right. The changes that were made certainly helped make dealings much more transparent and open in both the public services and private companies.

Clause 16 will make a change in employment tribunal proceedings. At the moment, if a judge feels that a claim for unfair dismissal is vexatious and does not have a chance of succeeding, he can say that the claimant will need to pay up to £1,000 to register the claim. The Bill moves the boundaries to provide that if the judge feels that part of the claim for unfair dismissal will not succeed the requirement to pay up to £1,000 to have the claim heard can be ruled out. Many people in Britain are not members of trade unions and do not have representation and this requirement will put them off claiming for unfair dismissal. This clause will apply whether they have worked in a company for two years or 20 years. As the Bill is worded, if it is felt that part of their unfair claim will not succeed, they can be required to pay an amount of money. I suggest that most people will just walk away. We could be forgiven for thinking that that is the intention of the clause.

Much has been said about Clause 56 and later clauses in the Bill in relation to the Equality and Human Rights Commission. The noble Baroness, Lady

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Campbell, whom we are all delighted to see back in the House today, made a strong case in regard to the removal of the general duty. That provision in the Equality Act went through with cross-party support, not 20 years ago but very recently in the past few years. I ask the Minister: what is the Government’s intention in regard to the future of the Equality and Human Rights Commission—not what its role will be, but its future? I asked myself that question when I read the Bill and other briefing material. By 2014-15, the budget for this organisation will have been cut by 62% and 72% of its staff will have gone. The commission was formed by the merger of three independent organisations, which were brought together in the past few years. In addition, last month it shut down its helpline. It received 40,000 calls a year but is no longer available. It has to end its grant programme.

The Government have brought in a new chair and are bringing in new board members who have stronger business skills and experience. However, the organisation covers racial equality, gender equality, human rights and equality across the board, so why specify in one area when what is needed is a commission that has a range of skills? I ask the Minister whether the statement that if there is insufficient progress made on these changes the Government will move to implement more substantial reform, is a coded message to say, “We will end the Equality and Human Rights Commission, break it up and put it into different departments”. What is the long-term plan? Has the commission been given an agenda that will lead it to fail? If the Bill goes through as it stands, it will assist that failure.

Clause 57 deals with the repeal of Section 40 of the Equality Act and covers the issue of harassment of an employee by a third party. It makes the employer liable—but only after three formal complaints have been brought to the employer. When I read this I wondered whether any member of the Government has ever been in an accident and emergency unit on a Saturday night, or whether they have ever been on a bus or a train when the people working on those modes of transport have been subjected to physical violence. This is a retrograde step which will harm only one group of people—those providing services in the public and private sectors.

Clause 61 deals with health and safety. It is new: it was not introduced in the original Bill in the House of Commons until the Report stage and it has not been properly scrutinised. I advise the Minister that it will receive proper scrutiny in this House. If an employee has an accident at work, the clause will remove from the employer a liability that goes back to 1898, when people were able to claim compensation for an accident in the workplace. It removes that liability because the burden of proof will be on the employee to prove that the employer has been negligent.

When we go out to work in the morning, we all hope that we will come home to our family at night in the same state as when we left. Anyone who has worked in industry—and a number of noble Lords have—will know that industrial accidents happen to workers, who arrive at work fit and well and sometimes never go home. Many, many accidents happen. When I was a union official, certainly about a third of my

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time was taken up working in this area. To remove this protection and place the burden of responsibility on the employee is a retrograde step, not only for the Government—who may feel that they have not taken the right decision—but for the whole of the country. We lead the way in treating people decently, I hope. If the Bill goes through without changes, that record and many, many years of lobbying and work—much of it cross-party work, accepted by both sides not only in this House but in the other place—will be wiped away. The Bill needs to be severely scrutinised in some areas and I hope that it will leave this House in better condition than it arrived.

2.57 pm

Lord Teverson: My Lords, I welcome the Bill and my noble friend at the Dispatch Box who will take it through the House.

I should like to give the House some figures on the green economy. World-wide, the green economy is worth something like $4 trillion, or £3.3 trillion; in the UK it is worth some £1.2 billion, which is 8% of GDP and is only a couple of percentage points away from the financial services industry. It accounted for something like one-third of total growth in the economy in the last fiscal year. It employs some 950,000 people—almost 1 million people—of our workforce in the sector. It is estimated that by 2015 it could provide an extra £20 billion of GDP and reduce our trade deficit by some £0.8 billion. Those figures are not from an NGO or a green pressure group but from that hard-nosed organisation called the CBI, which feels that there is an opportunity to be taken to make sure that the green economy works for this country and provides that growth and that employment. That is why I particularly welcome the fact that this Bill includes the Green Investment Bank, which was a core part of the coalition agreement. It provides a way of adding the extra piece of the jigsaw to ensure that we as an economy can capture green growth and call it our own.

There is other good news. As I understand it, we have had state aid approval in terms of the initial proposals, and we have the chairman and the board. As we heard earlier, the noble Lord, Lord Smith of Kelvin, is confident that this bank can be effective and move forward. I like the subsection in the Bill that will ensure the independence of the bank in terms of decision-making. Clearly nothing is more important for potential future investors and indeed for those who the bank will lend to than knowing that the decisions which are made will be objective and taken properly by an investment bank-style committee and not swayed by politicians. That is vitally important for the integrity and the reputation of the bank.

The noble Lord, Lord Smith, expressed his concerns about ensuring that this is the institution that is able to provide a longer perspective for investment in this country’s green sector. While it often sounds like a cliché, we need to be clear whether the bank is to be a fund or is it to be a proper investment bank. I am the first to accept that the £3 billion birthright that it is to start with is not inconsiderable in today’s fiscal position, but in the end the bank has to build up a reputation and find investors. The last thing we want to do is rush

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into investments that will not work. We have seen that kind of pressure from time to time and it is a very negative one. It is £3 billion, but 2015 is not that far away, so we have to start planning for the position after the £3 billion has gone away. It is important to recognise in the Bill that the bank will be able to borrow on the commercial markets and that it is able to produce leverage not just through the initial investments it makes, which no doubt will be matched by considerable private sector funding, but that it is able to bring in its own leveraged funds from the markets so as to make the institution a far more powerful one financially as time goes on. The scale of the challenge is huge. We know that the electricity generation industry alone—the grid and so on—is potentially worth £200 billion. There are other areas for the bank to look at, including the extraction of energy from waste, adaptation issues and so on. It could get involved in a broad range of sectors, so it needs to be a financially strong and significant institution.

I would like to see the implementation of two ideas that were discussed at length by the Environmental Audit Committee of the other place: being able to raise money through green bonds and the democratisation of green growth by the use of ISAs and similar instruments. In that way we will involve individuals and households in investing in the sector through the new and reputable channel of finance that we are launching as a part of the Bill. I shall be interested to hear from the Minister when and how he thinks green bonds might be brought about.

There is also an issue around the scope of the lending of the Green Investment Bank. The noble Lord, Lord Smith, is obviously content with it as it is, but I think that we need to investigate it further. I hope that the Government will look at this to make sure that we are clear about the areas where the Green Investment Bank can, and more particularly cannot, invest for the future.

Another crucial aspect is the Chancellor’s statement that the bank will not be able to borrow beyond being a fund, if you like, until the deficit as part of GDP starts to decline. That is currently estimated to happen in around 2017. That is of real concern to me. Like all Members on this side of the House, and I am sure on the other side, I understand the importance of bringing the deficit down. We see it as a core part of the coalition’s mission. But if we are not able to move into a much more geared level of funding until 2017, we will forgo economic growth, quality and important jobs for the future. Indeed, let us look at the German equivalent of the Green Investment Bank, the KfW banking group. It is a much broader state bank that is owned both by the federal Government and the Länder. It has a balance sheet worth some €400 billion, so it is even larger than the European Investment Bank and only slightly smaller than the China Development Bank, which makes it one of the highest ranking banks in the world. As I understand it, its balance sheet and borrowings do not come under the German federal state’s public sector debt. Given that, I would like to ask the Minister why we are not so favoured, given that that bank also has to go for state aid provisions and that presumably it is subject to the

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same European fiscal rules as we are. Why is that much larger bank able to bypass this constraint while we feel that we are not able to do so?

I shall make one last point on the Green Investment Bank. It is an important piece of the jigsaw in terms of the investment we need to make into this nation’s future energy and green infrastructure. What is absolutely clear is that we on the Government side need to make sure that our message is singular and clear: in this country we want investment in this sector. We are determined not just to make our economy the greenest economy, which is perhaps a cliché but an important one, but are steady in our vision of decarbonisation.

3.06 pm

Lord MacKenzie of Culkein: My Lords, I do not believe for a moment that the provisions for the removal of the so-called regulatory burdens relating to employment in this Bill, which are clearly intended to water down or remove hard-won protections for workers, will do anything whatever to meet the claims of the coalition that economic recovery will be more likely and that more workers will be taken on as a consequence. Quite simply, I am of the view that a lot of the stuff on employment in the Bill is dogma-driven.

I want to concentrate on Clause 15 in Part 2, which deals with whistleblowing, and on Clause 61 in Part 5, which relates to civil liability for breach of health and safety duties. The proposed changes on whistleblowing will make it more difficult—much more difficult—for employees to enjoy protection from detriment and/or dismissal. The changes proposed in the Bill will mean that whistleblowing claims will be successful only if the worker believed that the disclosure was made in the public interest and can show that that belief was reasonable. The Public Interest Disclosure Act 1998 was never intended to be a complainer’s charter, which is why the legislation was so tightly drawn. Notwithstanding the Employment Appeal Tribunal decision in 2002 in Parkins v Sodexho, it is still not easy for anyone to make a protected disclosure under the legislation. The 1998 Act was successfully introduced after outrage at a number of disasters and company failures where many employees had known for a long time that matters were not as they should be but were afraid to go to the employer or, where they were ignored, to go public lest they would be dismissed or suffer other detriment. I can give a couple of examples, such as the Piper Alpha tragedy and the Barings Bank fiasco.

What is the background to the Government’s proposed changes? I think, as I suggested earlier, that it is an ideological matter where the hard-won rights and protections of working people are to be removed; yes, rights and protections, but also obligations. That is because there are obligations on employees to draw attention to dangerous practices and wrongdoing. As a nurse, I have always thought it in the public interest to draw attention to health and safety issues, both the health and safety of staff and, crucially, of patients.

The environment that obtains in health and other care services has never been very good at providing support mechanisms for whistleblowers. This is not

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new. Those who were around 20 or more years ago will remember the Graham Pink saga, where a well respected charge nurse, former military nurse and really decent human being—someone who could never be construed as a trouble-maker—complained about poor staffing levels on three wards at Stepping Hill Hospital, for which he had responsibility on night duty and where patients with multiple pathologies were being treated. Levels of staffing were so bad that patient care was poor in the extreme but he could not get management to listen. He went to the health authority but it did not listen. The regional health authority and the Department of Health did not listen, or even respond to his communications. He eventually went to the press, with the predictable outcome that he was sacked for breach of confidentiality.

In the end, Graham Pink was proven to be right. He was exonerated but nevertheless his career was destroyed. Lessons were supposedly learnt, but in reality it is a case of, “Plus ça change, plus c’est la même chose”. A quarter of a century later, we have two well publicised examples in healthcare. First, there is Winterbourne View—a classic example of where someone had to go outside the organisation, where management support and clinical governance were non-existent. Had someone not been brave enough to be a whistleblower, that maltreatment would be continuing to this day.

Secondly, the initial Francis report into the Mid Staffordshire NHS Foundation Trust raises the case in point. Despite that trust having a whistleblowing policy in place, nurses who complained about inadequate staffing never got a satisfactory response. Because managers at senior level did not listen, any prospect of a persistent pattern of reporting of concerns was discouraged. Managers told junior nurses that they should take care in making statements about staffing levels, and therefore it is not surprising that a culture of fear mixed with apathy was engendered, with the inevitable result that there was substandard care and far too many unnecessary deaths.

The Mid Staffordshire issues came at a time of relative feast for the health service. With the Nicholson challenge and the mix of cuts and reorganisation in the NHS, I think there will be relative famine in future years. We need nurses and clinicians to be able to speak confidently where there are very real concerns about delivery of care and to not be afraid of victimisation, bullying or worse. The NHS constitution, which is out for consultation at the moment, has a section on staff responsibilities to the public, patients and colleagues. It says that staff should aim to raise any genuine concern about risk, malpractice or wrongdoing. Will these new hurdles in whistleblowing make it more difficult for someone to expose wrongdoing in the caring services? We need to know.

Whistleblowing take courage. Fear of victimisation or losing one’s job is very real, despite all the efforts made in the health service by the Department of Health, regulated bodies, trade unions and others to show that there are occasions when it is justified. As the noble Lord, Lord Low of Dalston, said, it is very unwise for any Government to make it more difficult for whistleblowers to do what is right. Had there been

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whistleblowing 25 years ago, we would not be in some of the difficulties we are in over Savile and Hillsborough today.

I now turn briefly to Clause 61 in Part 5, which will amend Section 47 of the Health and Safety at Work etc. Act. It looks as if it is going to remove the ability of an employee to enforce a civil claim for workplace injury on the grounds of breach of workplace regulations. I am a nurse not a lawyer, but I understand the concept of strict liability, which was introduced over a century ago to recognise the very different balance of power between employer and employee. This Bill goes much further than removing strict liability, which the Government seems to justify by saying that they want to remove the burden of health and safety regulation on employers. The amendment will not achieve that objective, because compliance will still be there for the good employer. However, it will assist the unscrupulous to ignore health and safety law by reducing the chances of successful civil action. That is going to lead to more workplace injury in the future. We all know that almost all enforcement of health and safety law is done through civil litigation rather than criminal prosecution.

As a simple example, as a former theatre nurse, I am well aware of the problems of rubber gloves causing skin reactions and so on. There was a case where a member of my union, a nurse, succeeded in a claim where strict liability applied. The nurse suffered a series of serious anaphylactic episodes as a result of exposure to latex gloves coated with corn powder. The court found in her favour and awarded compensation, as it held her employer was strictly liable because it had not ensured under the COSHH regulations that employees were protected from harmful substances. Will the Minister confirm that this suggested amendment to the Act would mean that this nurse, whose nursing career was ended, would not receive compensation for an act of omission on the part of her employer?

As has already been said, this part of the Bill was introduced on Report in another place and has not been subjected to proper scrutiny. As my noble friend Lord Whitty said, some parts of this Bill might be good, some bad and some ugly. This bit of the Bill is particularly ugly and I think it deserves to be removed long before we ever get to Committee.

3.16 pm

Lord Touhig: My Lords, I want to follow on with much of the theme of whistleblowing spoken about by my noble friend Lord MacKenzie of Culkein. The revelations of the Jimmy Savile scandal paint a sadly familiar picture about the culture of silence. As with other scandals and disasters in recent times, such as Mid Staffordshire and phone hacking, some people knew about his appalling behaviour and were prepared to turn a blind eye. Some can legitimately say that they had only heard a rumour or conjecture, or that they only had a suspicion. Others will say that they spoke up but were ignored. How do we move on from the damaging perception that speaking up is futile? An all-pervading culture of silence operates in the workplaces of Britain. It is clear from these scandals that we need to remove barriers that discourage whistleblowers.

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A great deal has already been done to improve whistleblower protection. Former Members of Parliament Ian McCartney and Tony Wright led the way. Mr Richard Shepherd MP played an important part by introducing a Bill, and my noble friend Lord Borrie and the whistleblowing charity Public Concern at Work have been campaigning on this for some years. I was pleased to have been able to introduce the first whistleblowing Bill in the other place in 1996. Unfortunately, that Bill failed, but a Private Member’s Bill introduced two years later by Richard Shepherd received cross-party support and reached the statute book. The Public Interest Disclosure Act protects individuals who make certain disclosures of information in the public interest and allows them to bring action in respect of victimisation. At that time, the United Kingdom led on the corporate governance agenda. We were the first country to offer whistleblower protection to workers in all sectors. However, since then, a number of legal loopholes have come to the fore, and the Act is now ripe for review.

In the Bill before us, the Secretary of State proposes to remove one of the loopholes in the means by which workers complaining about their private employment rights can be protected. That might be a good aim, but I fear that introducing a public interest test will not deal with the problem. It will make legislation that is already showing signs of strain more difficult and complicated for workers to navigate their way through—a point made quite ably by the noble Lord, Lord Low of Dalston, and my noble friend Lady Dean of Thornton-le-Fylde.

Public Concern at Work and the BMA have argued that the Bill will be a barrier to whistleblowers. Business and trade unions have suggested that the amendment to the Public Interest Disclosure Act set out in Clause 15 will not tackle the problem of claimants using the whistleblowing laws in private employment disputes. Indeed, it will cause more confusion, litigation and uncertainty for all parties involved. While we would all agree that the whistleblower legislation should have public interest at its core, as currently drafted, this Bill will discourage the ordinary, honest worker who has witnessed malpractice from speaking up about difficult issues, as it adds another layer of complication to the law and will only enrich lawyers. I hope that in Committee some further consideration is given to this test to see how it will operate within the framework of whistleblower protection. During the Bill’s passage in the other place, two amendments were put forward to try to remedy these perceived deficiencies. Sadly, the Government would not accept them. We need to consider whistleblowing law in the round. As some recent news reports show, it is important that nothing is done to discourage whistleblowing.

I look forward to some consideration being given in Committee to the issue of vicarious liability. A loophole in the protection for whistleblowers has arisen in the context of three nurses from Manchester who raised a concern about a colleague lying about his qualifications. The nurses were concerned about the impact that this might have on patient care. They raised their concern within their service and their primary care trust, and it was upheld. However, the nurses were subject to bullying and harassment from co-workers. One of the nurses

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received a telephone call threatening her daughter and to burn down her house. The case went to court and proceeded as far as the Court of Appeal, which found that vicarious liability does not exist in the Public Interest Disclosure Act as it specifically does in discrimination law. Shortly after the publication of the judgment, the noble Earl, Lord Howe, the Health Minister, agreed that this area needed to be reviewed. He was quoted in the

Independent

on 31 October last year as saying:

“We are considering whether we need to do more to protect whistleblowers following this judgment. It was a complex case”.

We clearly welcome the response of the noble Earl, Lord Howe.

I know from my contact with Public Concern at Work that people calling its advice line speak of harassment and bullying by co-workers after they have raised a concern. If there is to be no protection in this area, the matter will be extremely problematic, and whistleblowers could be facing a cardboard shield in terms of legal protection. They will simply not blow the whistle when something is wrong. My noble friend Lord MacKenzie listed a number of cases where whistleblowers have played an important role. When I first took up the issue of a whistleblowing Bill, it was after seven reports of ferries sailing with bow doors open before the “Herald of Free Enterprise” went down. I had a young girl come to me. She was a 16 year-old student who had a Saturday job. She worked on the delicatessen counter in a supermarket, where she discovered that the manager was changing the sell-by dates on cooked meats. In all these instances, people were victimised as a result of bringing these matters to public attention. That is why we need strong law.

It surely cannot be right so far as vicarious liability is concerned that an employer can fail to do enough to protect a whistleblower from victimisation and yet escape any liability. The simple answer to this problem is to mirror equality legislation—that may be something that we can pursue in Committee. As it stands, this Bill is bad news for whistleblowers. It is up to us in this House to make sure we do all we can to protect them.

3.23 pm

Lord Ouseley: My Lords, I shall focus my concerns on the equality aspects of the Bill. I welcome the statements made by the noble Baronesses, Lady Campbell and Lady Dean, and the noble Lord, Lord Low, in support of the provisions that I shall refer to—namely, Clauses 56, 57 and 58.

The noble Lord, Lord Lester, said that we have some of the best equality legislation across the whole world. The UK can rightly and justly be proud of the legislative framework that has been created since the mid-1970s to tackle inequalities essentially about race, gender and disability, and more recently the enactment of more coherent equality legislation incorporating a wider range of protected characteristics that has enabled us to enhance that framework. However, the implementation of equality policies and the enforcement of our laws have been patchy to say the least. Parliament passed legislation with a clear definition of unlawful discrimination, enabling it to be challenged, to make

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equality of opportunity more accessible and above all to promote good relations between different groups of people with one or some of the protected characteristics that make up our diverse society.

This reform Bill reminds me of what I would call a rollback Bill. It almost takes us back to some of the darker ages of poor employment practices by employers. It should be an opportunity to consolidate the progress made to date on the equality front by encouraging more of the practices that have worked for our society, employers and employees while seeking to improve outcomes where appropriate. Instead, we have before us in these clauses another attempt to dismantle the equality infrastructure that has been built up—the architecture for which was expertly and carefully crafted by the noble Lord, Lord Lester of Herne Hill, starting some four decades or more ago. He has continued to devote himself to protecting human rights and fighting for equality legislation and its enforcement.

As someone who has had the privilege of running large, medium and small organisations as well as a small business, I support unequivocally the eradication of unnecessary and time-wasting bureaucratic burdens. I also appreciate the necessity of information gathering for scrutiny, analysis and monitoring purposes as part of efficiency, effectiveness and accountability in any organisation’s operations. In so far as they relate to the Equality Acts of 2006 and 2010, Clauses 56, 57 and 58 fail to achieve the balance necessary to remove bureaucratic burdens and retain fairness, particularly in the context of the respective rights of employers and employees.

Whether by intention or not, the Bill would remove the rights to reasonable redress for employees who have been treated unfairly, restrict access to justice and render the EHRC impotent at a time when prejudice and hatred are on the increase. The Government’s own Equalities Office report, Changing Attitudes to Equality, indicated as much. When we look at the data and statistics on hate crime, there are huge concerns. At the same time, the Government are imposing employment tribunal fees and cutting legal aid and the funding of advice agencies. Above all, with the ethos associated with this particular Bill, they are encouraging employers to ignore equality legislation, abandon good and best practices and become cavalier in how they treat their employees.

Virtually everyone involved in equality work has told the Government that these clauses will have an adverse impact on our society and have the potential to damage race and community relations in Britain. It is disheartening to know that the Government blatantly ignored their own consultation results, which indicated only minority support for their proposals. Surely the minimal perceived benefits for employers through these clauses would be worthless if there was deteriorating social and community cohesion to contend with.

The EHRC’s general duty and its duty to promote good relations are fundamental to the core purpose of the 2006 Equality Act. On that, I agree with my noble friends Lady Campbell and Lord Low of Dalston, and disagree with the noble Lord, Lord Lester. If the EHRC does not undertake such promotional activity purposefully and with statutory underpinning, who else

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will do it? Many public bodies, voluntary organisations and businesses seek to pursue their activities purposefully with a view to achieving inclusion, equality, fair treatment and good relations—all contributing to better social cohesion. However, they have had help, support, prompting and occasional coercion from the various statutory bodies when they existed to yield the positive benefits from such actions.

During my stint as chair of the Commission for Racial Equality, which preceded the recent legislation in 2006 and 2010, we relied on the Section 71 provision of the Race Relations Act 1976 to apply—in elastic and creative ways—what was then a more limited concept to identify and challenge exclusion, prejudice and bias in any organisational practices. The duty was also used purposefully to assist the commission in enabling people from different backgrounds to achieve greater interaction, better mutual understanding and secure improved relationships. I note that in a recent parliamentary briefing, the EHRC states that,

“these changes are unlikely to have a significant adverse impact on its work.”

I do not know if it said that to satisfy the Government to ensure its survival, particularly in the light of all the massive reductions that it has already experienced in its budget and which will continue to decimate the organisation and its capacity to do anything useful or purposeful. On the one hand, I agree with what it says, because it failed to use the provision in the way that it was intended. A light-touch, invisible regime was not what was envisaged or needed. The previous Government were as culpable for this failure as this Government. On the other hand I disagree with it, because it is an outrageous thing to say and demonstrates a serious incapacity to lead on such a dynamic, creative and central concept and achieve collaboration across employers and organisations to secure the success intended and required.

In Clause 57, repealing the provision for third-party harassment, there is no evidence that the third-party harassment provisions are a burden on businesses—none at all. Why should employees be unprotected from harassment by customers, clients of their employers or others who come on to their employers’ premises? I read in the London Evening Standardonly last night an interview with the chairman of Chelsea Football Club, Mr Bruce Buck, who himself is a lawyer. He stated that his club complied with this provision to provide its players with additional protection from harassment. Employees have a right to be protected in relation to all the protected characteristics; and employers benefit from having a defence against a harassment claim if they can show that they took all reasonable steps to prevent or deal with the alleged harassment.

Clause 58 would repeal the questionnaire procedure provision. It is quite incredible that the Government could even attempt to justify this proposal. There is no appetite for it—it will not save money. Yes, it will remove the employers’ requirement to answer relevant questions about their policies, procedures, practices and decision-making, but it will also create more problems for them as a consequence, as they return to that era of hiding behind bad and discriminatory habits. This repeal proposal is opposed by 83% of

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consultees, including the judiciary. It is ridiculously short-sighted, restricts access to justice and will deny both parties the opportunity to review the relevant information and conclude earlier in the process on the relative merits and weakness of a case before going further with any justified or unnecessary litigation.

In conclusion, I plead with the Government to reconsider these reforms. They bring little or no benefit to employers as perceived or intended. The current provisions are hardly burdensome. The evidence shows that there are more benefits to the workplace environment, to our society as a whole and to promoting fairness and equality if they were retained and applied with greater urgency and in ways which many employers and organisations can already demonstrate bring benefit to the workplace, employers and employees.

3.33 pm

Lord McKenzie of Luton: My Lords, I rise to speak on one specific aspect of the Bill, but one that I consider to be very important. I refer to Clause 61, already spoken to by my noble friends Lady Dean, Lord Clinton-Davis and Lord MacKenzie of Culkein. This is a provision which seeks to turn back the clock on employer liabilities for breaches of health and safety duties. I wholeheartedly agree with the assessment of my noble friend Lord Whitty that it is an “ugly” part of the Bill. Noble Lords will doubtless have had briefings from the Law Society, the Bar Council, the Association of Personal Injury Lawyers, the Personal Injuries Bar Association, trade unions and the All-Party Health and Safety Group. They deliver a consistent and compelling message: if adopted as it stands, this clause will mean fewer injured employees being able to claim for their injuries, claims will be more costly to pursue, greater costs will fall on the state and safety standards for employees will fall. As the Association of Personal Injury Lawyers points out, if the Health and Safety at Work etc. Act 1974 is amended in accordance with this clause, the law relating to workplace health and safety will be returned to where it was more than a century ago, which is quite unbelievable.

Currently when a worker is injured at work, perhaps by inefficient and unsafe machinery provided by an employer, they do not need to prove negligence to make a claim for compensation because the regulations provide for “strict liability”—that is, liability without proof of fault on behalf of the employer. The law was changed to create this situation because it became abundantly clear that it was difficult for employees to prove fault on behalf of the employer. As the Bar Council put it by way of an example, the equipment may have been chosen and bought by the employer, installed by the employer, maintained by the employer, and the employee may have been required to use it. The employee may know nothing of the history of the machine, and will probably be in no position after the accident to investigate whether the employer was at fault for the machine breaking down and injuring them. If Clause 61 remains intact, an injured person would have to rely on the law of negligence to claim compensation in the future. This is a much more complex approach, with the burden of proof shifting

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to the employee. The balance of power in these matters will shift dramatically against employees, a point that the noble Lord, Lord Low, made earlier.

Litigation will become more costly, time-consuming and protracted for everyone. Of course, the gainers from reduced compensation claims are the insurance companies because compulsory employer liability insurance would otherwise have to meet these costs. It certainly was the case that premiums on such policies have never been particularly sensitive to differential health and safety performance. I doubt this will change much, so employers will not see reductions in premiums. If the gainers are the insurance companies, the losers are the individuals, their families and, of course, the state. We should be mindful that compensation should not be viewed as some bonus or prize for an individual or family. Who would not want their life back to where it was before an accident rather than have the compensation? Which family would not prefer to have a loved one, who will never return home, back with them again?

The state will pick up the tab too. There is a scheme for compensation recovery where the state—the DWP, in fact—recovers elements of civil compensation awarded where benefits have been paid to claimants. In 2011-12, this amounted to some £75 million. Fewer compensation claims will mean reduced compensation recovery and therefore greater costs on the state. The adoption of Clause 61 will send signals to employers that they can be more lax in their health and safety arrangements. Coming at a time of restricted funding for the Health and Safety Executive, the curtailment of proactive inspections and the lack of resources for major preventive campaigns, all this risks undermining our health and safety system.

The Government point to the recommendations of Professor Ragnar Löfstedt in his independent review, Reclaiming Health and Safety for All, as the basis for these provisions, but they can derive no such authority. The report recommended that a review of the strict liability provisions should be undertaken by June 2013, with either a qualification of “reasonably practicable” attached or consideration of removing civil liability, but no such review has been undertaken—or certainly no review involving notice, consultation and engagement with stakeholders. As we have heard, the clause was slipped into the Bill on Report in another place with little opportunity for scrutiny. That task now falls to us.

The Löfstedt review concluded that there is no case for radically altering our current health and safety legislation. It is fit for purpose. Indeed, it states in its foreword to the Minister:

“There is a view across the board that the existing regulatory requirements are broadly right, and that regulation has a role to play in preventing injury and ill health in the workplace. Indeed, there is evidence to suggest that proportionate risk management can make good business sense”.

We strongly support this view, although it could not have been music to the ears of much of the Government, where we have heard the Prime Minister perpetuating the myths around health and safety to get cheap conference platform applause. Neither is it palatable

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to a Government who believe deregulation is the answer to everything, despite it not yet delivering sustainable growth.

We should be proud of our health and safety system in the UK. It was born of a political consensus generated by the Robens report and the Health and Safety at Work etc. Act 1974. Its core that those who create the risks are best placed to manage them is indeed central to the issue before us today. Over the years, it has helped save hundreds of lives and hundreds of thousands of people from being injured. It is a tribute to the Health and Safety Executive, local authorities, trade unions and stakeholders such as IOSH, RoSPA, the British Safety Council and others which strive to deliver the message of proportionate risk management. Indeed, it is an approach that helped deliver the extraordinary health and safety outcomes for the Olympics recently.

However, we should not be complacent. Still too many people die or are injured as a result of work. The system is beset by too many myths, sometimes happily perpetuated by the tabloids and politicians. Overzealous application remains a challenge. This is why we must fiercely resist Clause 61 as set out, which would undoubtedly further undermine our health and safety system. It is wrong in terms of parliamentary process, egregious in content and its outcomes would be grossly unjust. It must be removed from the Bill.

3.41 pm

Lord Mitchell: My Lords, in putting together any speech I have always tried to be logical. Most of all, I have always wanted there to be a beginning, a middle and an end to what I have to say. In addition, I always try to have a linking theme—but with this speech I am all over the place. The Enterprise and Regulatory Reform Bill is a hotchpotch without any discernible theme. There is certainly no beginning, middle or end. It just feels that everything that defies classification elsewhere has been thrown together and given a fancy name. In vain have I searched for the kitchen sink.

I have chosen to speak on three sections of the Bill: the Green Investment Bank, employment and director’s remuneration. My shadow brief is on SMEs so, where possible, I will refer to this very important sector in our economy.

The Green Investment Bank is a good thing and I must compliment the Government for setting it up, well trailed as it was by the previous Government. Choosing winners is a much discredited activity and we as a nation have had our fair share of companies that have been backed by the Government and subsequently failed. Choosing industries is a different matter. The green sector is one the UK should actively pursue.

The desire to lessen our dependency on hydrocarbons has always been driven by several factors, with the reduction of CO2 emissions being the most prominent. We have only to see the continuing extremes in weather patterns to know that massive forces are changing our climate. Maybe one benefit of Hurricane Sandy will be to drive home to one of the major centres of world finance that these natural phenomena are caused by global warming and the consequences are very painful.

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There have also been geopolitical reasons to develop alternative energy. Oil and gas tend to be located in inhospitable locations, often in inhospitable countries. However, suddenly things are changing, as I read that the United States is now expected to become the largest producer of oil and gas in the world by 2020. Due to new techniques in extraction such as fracking, America expects to become self-sufficient in energy very quickly. This will have a major effect on world politics and on the economics of green energy production. Oil prices could well fall and if they do some of the economic incentive for alternative energies will also fall.

Despite that, new companies developing new green technologies are growing at a rapid pace. It is said that in Silicon Valley a third of new investment is being channelled into the green sector. Other countries such as Germany are also pursuing green technologies. The Green Investment Bank will have an initial equity of £3 billion, and we welcome the news that the Government have now obtained state-aid approval for this investment, but the Government have failed to set a date for when the bank will be able to borrow, telling us only that it could be 2015. To be effective we need certainty on this.

Certainty is one of the key components of our economic recovery and there is not much of it around at the moment. Just look at the Government’s reply to the Oral Question asked this morning by my noble friend Lady Worthington. The Government’s reply was all over the place and, even now, I do not know whether they do or do not support onshore wind farms.

As I say, my brief is SMEs. We all know how important they are to our future growth, but also how often they lose out from government initiatives and from public-sector purchasing. The GIB could well be another grand project that will bypass the SME sector. I ask the Minister directly: will the GIB be given a clear directive to direct a certain proportion of its funding towards SMEs?

A year or so ago, a small charity that I was chairman of found itself in a messy employment situation. Without going into the rights and wrongs of the matter, we decided to terminate an employee just a few days over the 12-month period. Predictably, we found ourselves in a grievance situation. We were definitely in the wrong in that we had not followed the exact procedures of employment law to the letter, but we only employed five people and we were, like many charities, living in a hand-to-mouth existence. Money was always short and demands were always great. In common with many small organisations, we did not have a human resources department and our personnel policies were rudimentary. I do not think that we were much different from many other small enterprises.

I am a businessman and my natural instincts are, when faced with a problem, to find a solution quickly and get on with it. It will surprise no one that, in this situation, this course of action was not open to me. We went through the charade of a grievance procedure and the game of issuing letters bound by “Without prejudice” headlines. I found a level of patience within me that I never knew existed.

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The worst thing was that in the end we settled with the disgruntled employee by offering him an amount that I had always been willing to pay him right from the start. But we had to go through this convoluted dance to get there. It was a waste of everybody’s time and emotional energy. So I am pleased that, in this Bill, considerable attempts are being made to change employment-dispute procedures. I agree there is an important role for settlement agreements in cases where there is an existing dispute, but we have real concerns that a minority of rogue employers will use the extension of settlement agreements as provided for in this Bill, as a licence to bully employees.

Using ACAS in the initial stages of a dispute must be a good thing and I wish it had been open to my charity when we had our dispute; hopefully it would have been resolved much more quickly. However, I worry that ACAS will be deluged by myriad disputes. Again, I ask the Minister what are the Government’s plans to direct resources into ACAS so that it can be effective in its enhanced role?

I now want to come on to the final part of the Bill which is of particular interest to me: directors’ pay. I might add, with huge relief, that at long last I am no longer a director of anything. I first pay tribute to my noble friend Lord Gavron. He has previously tabled a Private Member’s Bill specifically on this topic. He withdrew it when this Bill was first published because many, although not all, of the clauses in his Bill are now incorporated into this one.

There is always a built-in conflict between shareholders and management and, these days, it seems that management is clearly in the ascendancy. The management team of many large companies tends be a cohesive unit; the shareholders are often disparate. So management, armed with sensitive information, can usually finesse the entitlements of the shareholders. My world is that of the entrepreneur, and my heroes are people who have built up large companies from nothing. Until he died, Steve Jobs of Apple paid himself $1 per year. Jeff Bezos the founder of Amazon has always paid himself an annual salary of $83,000, less than a Member of Parliament receives in this country.

Of course, such individuals are also paid bonuses, but these are real bonuses where, if profits fall, so, too, does the remuneration. To these types of entrepreneurs, the acquisition of personal wealth comes from the capital gain that results from the long-term success of the enterprise; raiding the kitty is not the way to build up a company. It also sets a bad example and creates a precedent that filters through across the organisation.

I am a great supporter of any move that makes directors’ remuneration not only transparent, but also subject to shareholders’ control. Senior managers are adept at finding loopholes, especially where there own paycheques are concerned. I therefore support my noble friend Lord Gavron when he requests that there should be no confusion about management packages: they should include all perks and be signed off in the annual accounts by the company’s auditors. The remuneration committee should present its recommendations every year at the annual general meeting and not every three years.

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Many of these masters of the universe believe that they are irreplaceable, that only they can do the job and that that is why they can make such outlandish pay demands. However, it is simply not true: nobody has a monopoly on talent; directors should be much more assertive and not be browbeaten by aggressive senior managers. Sometimes our captains of industry sound like Premier League footballers. My advice is: call their bluff. In the end, business needs to be made more streamlined; red tape needs to be reduced but employees’ rights need to be protected. It is a difficult balance and I hope that, as this Bill proceeds through your Lordships’ House, it will become more acceptable and better understood than it is now.

3.51 pm

Viscount Eccles: My Lords, as many noble Lords have done, I am going to concentrate on one part of this Bill—a very narrow part on competition. I am somewhat comforted by the Government’s assurance that the fundamental pillars of competition will remain unchanged, but only somewhat comforted. If the noble Lord, Lord Currie of Marylebone, was in his place, I would be congratulating him on taking on the restructured competition regime which will follow from the creation of the Competition and Markets Authority. However, I will in part be following the noble Lord, Lord Borrie, though I think I have a more astringent view of what is proposed than the noble Lord.

Part 3 is one and a half pages; it is followed by 180 pages to implement the decision made in Part 3 —180 pages out of 260. I am not proposing to talk about the 180 pages today, but no doubt that will follow in Committee. Part 3 provides for the abolition of the Office of Fair Trading and the Competition Commission and the transfer of their functions to the CMA. This was foreshadowed in the Public Bodies Act 2011. The test in the Act of making such a transfer by way of merger is the usual one: efficiency, effectiveness, economy and proper accountability. Arrangements of this nature are to be carried out under Section 2 of the Public Bodies Act—“Power to merge”—and this section cross-refers to the Competition Commission and the OFT in Schedule 2. My one real question to my noble friend on the Front Bench is, when can we expect to see the draft orders effecting these changes under the Public Bodies Act?

More seriously, why are these changes being made? I think naively we could consider from the proceedings on the Public Bodies Bill that it was something to do with saving money. I think that that was probably one of the driving forces in the drafting of that Bill, which of course suffered major changes that were engendered in your Lordships’ House, not least the dropping of Schedule 7. It perhaps started because there was a wish in the Cabinet Office to reduce the number of quangos by one or, as the CMA is to be a non-departmental ministerial office, we may be able to reduce the number by two, but that depends on the classification.

However, much more seriously, the Government have said that a one-stop shop will bring benefits. It will be able to simplify, to shorten and to avoid duplication within the competition regime. But, in order to inspect

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these rather abstract claims, we need to understand how it is expected that the system will work. What else in Part 4 will affect the answer to the test under the Public Bodies Act? On reading Part 4, in one frame of mind and at first sight, practically none of it needs primary legislation. It could almost all be done by administration. It may be that the removal of the word dishonesty requires legislation, for which there seems to be quite a welcome.

As to how the system of establishing whether a reference should be made about a merger or some market practice, and then when made the reference is investigated, the answer is that there is not to be any change in those procedures. Instead of the OFT and the Competition Commission, we would have phase 1 and phase 2. Indeed, much is made in the literature produced by the Government about the importance of continuity and, as has been referred to in this House today, the high respect with which the competition regime in this country is viewed internationally.

Perhaps at this point I should say that, unlike the noble Lord, Lord Borrie, who was with the OFT, I was for a while a member of the Monopolies and Mergers Commission. That name will tell your Lordships that I am history. Nevertheless, it was a very interesting thing to do and I think that we had, on the whole, very good success under the most brilliant chairman, Godfrey Le Quesne.

As regards the Government’s claims, the first one about the one-stop shop is clearly wrong. It will remain a two-stop shop. If we think about duplication, which has been mentioned, you would have a system for deciding whether to make a reference and then for an investigation. How can people who have been asked to give information to determine whether a reference should be made, and then have to be investigated, expect not to deliver two sets of information? The questions will be different and the information needed for the investigation is bound to be much more complex than the information given in the first instance. I do not believe that duplication will be in any way removed. Since we will still have phases one and two, and some additional powers in this Bill, how will the competition regime be simplified? I do not understand how anyone would claim that it is.

As for the shortening, you can put it in statute that there are different time limits and ask for best endeavours, but noble Lords will also notice that there is always provision for providing an extension. When things get complicated, there will not be much shortening. It is all rather unconvincing that there are benefits from these changes. What evidence have others given? There is no out-and-out enthusiasm for this move anywhere. It has just sort of been accepted. The witnesses to the House of Commons committee pointed out that the two organisations did different things, the risk that their culture would not merge satisfactorily was always there and we would need to wait to see what happened. The chairman of the Competition Commission said that if you are going to subsume—that was his word—that body into the CMA, you had better be rather careful how you do it. The Office of Fair Trading said that the Bill casts a long shadow. It is happy that it will not become effective until 2014. So, where are we?

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The Government no longer claim that this measure will save money. It might in the long run but in the short run it will cost money.

Finally, in the response to the consultation, which was delphically delivered by the Government, there is a wonderful sentence which says that some respondents questioned

“whether the Government’s objectives could be delivered without institutional change”.

However, we are not told who said that or how much weight we should attach to the evidence given by the witnesses. This is a very risky endeavour. Mergers are always tricky. The Competition Commission has 138 staff and a net expenditure of £17 million. The Office of Fair Trading has 635 staff and a £74 million budget. It is four times the size of the Competition Commission. Somehow the cultures of the two organisations have to be maintained by some sort of Chinese wall between phase 1 and phase 2. However, this is not the experience of most people who have been taken over by an organisation four times their size. We should be in no doubt that this is not a merger but a takeover. I look forward to a much more detailed explanation of the rights and wrongs of this proposal than we have received so far.

4.01 pm

Lord Morris of Handsworth: My Lords, in the time available I want to focus on the workplace impact of the Bill and say something about what I think is the Government’s mindset.

The Government claim that the Bill will create the right conditions for economic recovery, strengthen the business environment, reduce regulatory burdens and improve business and consumer confidence. These are worthy objectives and who could possibly oppose them? However, the problem with the Bill is not its objectives but the ideology and mindset from which it springs. These were ably summarised by my noble friends Lord Whitty and Lady Dean, and I share their sentiments.

What we have here is a coalition that is not very well advised about how the real world of industry operates. It appears to have no real understanding about what is holding back the economy. It is simple: lack of demand; falling consumer confidence; and the refusal of the banks to lend to and support UK businesses. The Government do not recognise the dangers posed by cuts that are too fast and too deep, which have taken the economy from growth to double-dip recession. Neither do they seem to be aware of the dangers posed by wage cuts, wage freezes and the biggest fall in living standards for a generation, which, together, have choked off any meaningful recovery.

The coalition clearly believes that growth and recovery will come from taking away the rights of hard-working people and the regulations that give them security. They are eager to dilute employment rights and abolish regulations which prevent accidents and save lives. This Bill is about a dismantling of workers’ rights earned over many years to stop exploitation. It is also about the abolition of the protection which ensures the health and safety of workers. As I understand it, this is not a one-off. It will be complemented by a

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so-called Growth and Infrastructure Bill where workers will be offered a few IOU shares in return for their employment rights.

The coalition does not seem to understand that workers’ rights can not be bought and sold on eBay. They have to be earned and they have to be respected. In the world of the coalition, basic employment rights are barriers to growth and health and safety laws are burdens on business. In the upside down world of the coalition, they believe the best thing to do with justice and fairness is not to spread it, nor embed it, but to abolish it. That is what the Bill seeks to do.

I know of no credible economic theory which has ever argued that making it easier to sack people will deliver employment growth and prosperity. The reality is very different. You do not boost recovery by making it easier to fire workers. You boost recovery by making it easier to hire workers. Nothing in the Bill will achieve that objective. It is regrettable that there are so many positive steps the Government could have taken to boost growth and jobs and create a totally new industrial workplace environment. Every economics student would be able to say precisely how. But no, instead the Government have opted to attack ordinary, hard-working people. Their rights and their safety are the target of the Bill. It is not only unjust, unfair and unnecessary: it is also unworkable. You cannot rebuild your economy by destroying the morale, commitment and productive capacity of your workforce but this is precisely what happens when workers are treated as liabilities rather than assets.

By any standards of fairness, a large section of the Bill is not just wrong-headed, it is actually self-defeating. It is often said that those who live the longest see the most. Even in my bonus years, which I am very much enjoying, I did not expect to see such an anti-workers Bill. It is a Bill that will undermine the rights of millions of people in workplaces up and down the country. It is a Bill that will undermine the economy, not help it. It is a Bill that says everything you need to know about the way the Government think, just how out of touch they are and the direction of travel for the future.

What is needed, to make a real difference, is a Bill built on fairness, investment and growth.

4.09 pm

Baroness Greengross: My Lords, as many noble Lords have spoken about equality and human rights issues, I decided to focus today on other issues and start by declaring an interest as chair of the Associate Parliamentary Corporate ResponsibilityGroup, and also as a vice-president of the Local Government Association. It is difficult to argue with the expressed aims of the parts of the Bill which deal with employment and aim to encourage growth and employment through, where appropriate, the simplification and reduction of the regulatory burden. We know that unemployment is a major issue and it is therefore a major corporate social responsibility issue.

It disproportionately affects the most disadvantaged in our community, whether because of where they live, their ethnicity, their educational background or other

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socioeconomic characteristics. Businesses of all sizes hold the key to addressing this issue through growth and through the way they recruit, retain and develop staff. Smaller businesses often work in the most deprived communities in our country, and we should all commit to helping SMEs and social enterprises to create jobs, particularly in deprived communities. I am therefore broadly supportive of any legislation that will streamline employment law and disciplinary procedures, particularly for small businesses. At the same time, however, there are dangers that the very same communities may be the most vulnerable to unchecked unethical behaviour. The key will therefore lie in the detail, and I look forward to addressing some of those details in Committee.

Like other noble Lords, I welcome the concept of the Green Investment Bank and its stated purpose. I hope that it will favour SMEs and social enterprises developing innovative products and processes to improve environmental sustainability. Coupled with Big Society Capital, this appears to provide a significant opportunity to channel funds into new sustainable business models. However, I suspect that one challenge may be to find investment-ready business programmes, and I therefore hope that the Minister can assure the House that the Green Investment Bank will work with intermediaries who can help identify and support appropriate businesses and programmes in much the same way as Big Society Capital is doing.

I welcome the principle of reducing red tape to help smaller businesses to grow and to encourage them to be more confident in employing staff. I also welcome, in terms of employment, the move to statutory arbitration as the first step involving external parties. Many disputes, as we know, can be settled through this common-sense and conciliatory approach, to the benefit of both parties, the wider workforce and business. According to the British Retail Consortium, pre-claim conciliation currently resolves 70% of voluntary cases, and the Government’s impact assessment implies 14,500 tribunal cases could be avoided each year. It would also avoid the attendant stress and costs for both parties. Streamlining and simplifying processes, including the use of legal officers in determining low-value straightforward claims should also be helpful. Nevertheless, there is a danger, inherent in judges sitting alone in determining points of law under employment appeal tribunal procedures, that they may be less well placed to understand some of the diversity issues involved, and this could increase discriminatory outcomes. A two-tier system of employment rights might also involve dangers. The emphasis should be on proportionate and outcome-focused legislation, providing a clear framework for all employers and employees, regardless of size.

Regarding competition, I am wondering whether the restrictions on any kind of collaboration, such as that carried out by the water industry on conservation, will prevent action being taken that would actually assist small businesses, deprived communities, and environmental objectives. Some advice from the Minister here would be much appreciated. We know that 4.5 million UK small businesses form the lifeblood of this country, providing goods, services and employment to the majority of our people. I see the Bill as a mechanism to encourage and facilitate larger organisations, especially in deprived communities, to engage with their local small businesses,

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act responsibly towards them, and advise and help them through working with them to overcome existing barriers to growth. Business in the Community, in its innovative recent series of enterprise inquiries, found that such barriers included access to supply-chain opportunities, procurement processes that discriminate against small businesses, and the prohibitive costs of accessing large contracts because of pre-qualifying requirements such as liability insurance, industry standards and access to affordable finance.

Overall, the BITC inquiries have demonstrated how powerful procurement can be as a source for economic growth at local level. The public sector has set a good example in this by tending to favour SMEs in terms of procurement and I believe that the new public services social value Bill will support this trend further, including its focus on social enterprise, which will maximise the positive social impact of public sector procurement. As part of the scrutiny of this Bill, it would be of great value to spread the practices outlined in the social value Bill to the private sector, including the further development of the principles underpinning values-based procurement.

I welcome the Government's proposal to extend the powers of employment tribunals to require employers to conduct an equal pay audit, if the tribunal finds that they have discriminated on pay. This is welcome and it will introduce a mechanism to deal with potential discrimination that is evidenced by pay gaps, particularly in terms of gender, disability and ethnicity.

I note that the provision in Clause 74, which inserts new Section 139A(4) into the Equality Act 2010, allows Ministers by order to specify further details of the new power, including,

“the content of an audit”,

and,

“the powers and duties of a tribunal for deciding whether its order has been complied with”.

In relation to these points, I suggest that in order for the new power to be effective there needs to be provision for sanctions to apply where an employer does not conduct an equal pay audit, or suitable alternative, and does not implement the action plan following a tribunal order. Implementing and monitoring the necessary changes is one of the most important aspects of an equal pay audit and must be insisted upon. Employers need to be made aware of the expectation to do that within the time limits that will be placed on them and of the sanctions that they will face if the time limit is breached.

There is also a proposal in the Bill to amend the Public Interest Disclosure Act in terms of a public interest test. There are some concerns about this proposal as the purpose of PIDA is to prevent disaster and to encourage workers to speak up when they have suspicions. As many noble Lords have pointed out, issues that at one point seemed trivial may in fact be indicative of underlying problems in an organisation and could be the tip of an iceberg. I believe that a wider comprehensive review of this whole subject is needed. If we do not do that, it will be a missed opportunity to address some of the legal loopholes that exist, which include a gaping hole in the protection if workers are victimised by co-workers for raising a concern; making sure that

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all workers are adequately covered; clarifying protection for GPs; and ensuring that workers who raise concerns, including the police and professional regulators, are protected.

Finally, in regard to Clause 60, the Bill should ensure that primary authorities and local authorities are not overturned by central government when they intervene in local partnerships by directing councils to follow inspection plans. I believe that central direction may reduce flexibility and innovation at a local level and goes against the localising agenda of the coalition Government.

4.19 pm

Baroness Thornton: My Lords, I am very pleased to participate in this Second Reading debate and to be part of my noble friend’s Bill team. We will try to do something useful with what is a pretty terrible Bill. Having worked on the Public Bodies Bill and the health Bill, there is quite a lot of competition for that prize with this Government. As other noble Lords said, the Bill is incoherent. It provides no compelling vision, no consistent message and no connected approach across government to drive growth. That is a shame.

I will concentrate on Clauses 56, 57 and 58, which are no less than a systematic undermining of the UK’s entire equalities infrastructure for what appears to be no reason other than dogma and political spite, which I hope at least the junior partners in the coalition will not support. The clauses relating to the Equality and Human Rights Commission—as even Vince Cable admitted—have no significant impact on business growth. The Government’s own impact assessment states that either they will have a negative impact or they will add nothing to the main purpose of the Bill. So why are they here? There is no tangible, quantifiable, empirical evidence linking the measures put forward in Clauses 56, 57 and 58 to business growth.

Clause 56 covers changes to the Equality and Human Rights Commission’s statutory powers and duties. I beg to differ from what I thought was the rather complacent view of the noble Lord, Lord Lester, about the dangers that face this body. The Bill seeks to amend Part 1 of the Equality Act 2006, which sets out the Equality and Human Rights Commission’s statutory powers and duties. It repeals Section 3, which sets out the general duty of the commission. It repeals Section 10, which imposes a duty on the commission to promote good relations between members of different groups. It repeals Section 19, which gives the commission powers in association with Section 10. It repeals Section 27, which enables the commission to make arrangements for the provision of conciliation in certain non-employment related disputes, and it amends Section 12, which requires the commission to monitor and report every three years on its progress. It reduces from three to five years the frequency with which the commission is required to publish a report on its progress.

These legislative changes should not be considered in isolation. In addition to the proposal to amend the legislative basis of the EHRC, the Government are undertaking a range of actions that seriously threaten the commission’s independence and effectiveness. By 2014-15, the EHRC will have had its budget cut by

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62%. It will have lost 72% of its staff compared to when it was established in 2007. These are disproportionate cuts. They will make the EHRC about the same size as the former Disability Rights Commission—just one of the three equality commissions that it replaced.

In addition, the new framework document between the EHRC and the Home Office pays little heed to Part 4 of the Equality Act 2006, which states:

“The Minister shall have regard to the desirability of ensuring that the Commission is under as few constraints as reasonably possible in determining … its activities … its timetables, and … its priorities”.

This has drawn concern from the chair of the ICC, who stated that the new framework document significantly limits the EHRC’s freedom,

“to determine priorities without undue influence by the Government”.

The EHRC works to reduce inequality, eliminate discrimination and strengthen good relations between people. Undertaking these functions effectively requires proper funding of the EHRC, and the retention of its full legal remit and independence. I do not say that the EHRC needs to be funded—in case the Minister is under any illusions—as it currently is. Of course it has to play its part, as do all other government departments. However, the figures that I cited—

Lord Lester of Herne Hill: As the noble Baroness accused me of complacency, perhaps I could ask her to confirm that nothing in these changes will affect the guarantees of independence that together we wrote into the 2006 Act—some of which she referred to—nor the functions on enforcement that I quoted in my speech. The changes deal only with aspirational matters.

Baroness Thornton: I think that the noble Lord is quite wrong, and I will go on to say why. According to the Paris principles, a national human rights institute needs to enjoy financial autonomy that will enable it to determine its priorities and activities. General observation 2.6 on adequate funding, issued by the sub-committee on accreditation of the International Coordinating Committee of National Human Rights Institutions, states:

“Financial systems should be such that the NHRI has complete financial autonomy. This should be a separate budget line over which it has absolute management and control”.

The actions of the Government are undermining the EHRC’s celebrated A status. Is their intention to preside over the downgrading of our national equalities and human rights body so that we can join Sri Lanka, Kazakhstan and the Congo, for example, with a B status, for whatever reasons those countries may have a B status—it could be that they do not have a body or that their body is not independent of their Government—instead of being part of the A status group, which includes most of the western world?

Section 3 of the Equality Act requires the EHRC to encourage and support a society based on freedom from prejudice and discrimination, individual human rights, respect for the dignity and worth of each individual, equal opportunity to participate in society and a mutual respect between groups based on understanding, valuing diversity and a shared respect for human rights. Section 3

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provides a guiding vision for the EHRC that unifies equality and human rights, which we discussed in 2006. While it is recognised that improvements are needed in the governance and management of the EHRC, confusing that with changing its legislative-provided remit is unjustifiable. Time should be allowed for the newly-appointed chair to implement the changes she wishes to make before the purpose of the organisation is undermined.

Vince Cable admits that there is no business advantage to be gained from removing Section 3 and terms it simply a piece of “legislative tidying-up”. However, there is a significant risk that removing Section 3 will prove to be a substantial loss. Professor Sir Bob Hepple QC, who I know has been a partner in crime of the noble Lord, Lord Lester, over many years, says that it has the potential to leave the Equality Act rudderless. Can the Minister explain exactly what getting rid of this general duty will do to encourage enterprise and grow the economy, or even what part of this duty puts a bureaucratic burden on business?

As to Section 10 of the Equality Act, which covers the duty to promote good relations, I can only assume that someone got out of the wrong side of the bed in a bad temper to draft this legislation to repeal the EHRC’s duty to promote good relations between members of different groups. That duty has been used in the past to include guidance on tackling political extremism in local elections, the kick racism out of football campaign and work carried out to improve social cohesion following the riots and troubles in Northern Ireland cities in 2001. Without this duty, the EHRC will be concerned only with regulating the vertical relations between organisations and individuals, rather than being able to undertake initiatives aimed at and positively influencing wider public attitudes and improving relations between individuals and groups. We need to keep all of this duty in the original legislation. As I have said, this legislation poses a threat and may lead to the removal of our A-grade status, which is a very serious matter.

I believe that we are at one across the House—many of us are with the noble Lord, Lord Lester—on Clauses 57 and 58. The Government seek to repeal Section 40 of the Equality Act 2010, which makes an employer liable for the repeated harassment of its employees by third parties, including customers, clients and service users. The noble Lord, Lord Lester, eloquently and adequately explained what that means and gave a very good example. There are many more examples, which I am sure will emerge in Committee.

While it may be true that there has been only one case of third-party harassment ruled on by an employment tribunal, it is also true that only four years have passed since the commencement of the provision and repealing it now would surely be premature. The TUC asserts that the introduction of Section 40 in the Equality Act has already led to a step change among employers, with actions undertaken to make it clear to service users that the harassment of their staff would not be tolerated. However—this is something which, I hope, will appeal to the Minister—there may be hidden costs to business of not prioritising action against third- party harassment. Harassment can have a significant effect on the mental and physical health of a workforce

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and be a major cause of work-related stress affecting performance and absence levels. I would also like to ask the Minister if repealing this provision would leave the UK in breach of EU law—the equal treatment directive 2002/73/EC which refers to the duty of employers to take measures to combat all forms of sexual discrimination, in particular preventive measures against harassment and sexual harassment in the workforce. I should also say that in the Government’s red tape challenge, there was no publicly available evidence of concerns being raised about this issue. When the Government consulted on third-party harassment, of all those who were asked, the vast majority, 71%, said that they opposed the repeal.

I turn now to Clause 58. Again, the noble Lord, Lord Lester, is quite right. Section 138 of the Equality Act 2010 means that a person who thinks that they may have been unlawfully discriminated against, harassed or victimised can obtain information from the person, employer or service provider they think has acted unlawfully against them. I think that the noble Lord, Lord Lester, was one of the authors of this legislation 40 years ago, so why the Government would want to remove it, I do not know. It is completely counterproductive. Some 80% of those who responded to this opposed the abolition of the questionnaire procedure, and there is no evidence to support the Government’s claim. In fact, case law makes it clear that businesses and other respondents find this to be a valuable way of dealing with issues before they reach the law or tribunals because they establish the facts and clarify the issues which are in contention. Indeed, the Government’s own impact assessment failed to provide any empirical support for removing this regulatory burden on businesses. I ask the Minister seriously to reconsider this part of the Bill as we proceed.

The Bill falls far short of the visionary legislation that the Government suggested. It is several Bills rolled into one, which is why a team of us will be dealing with those bits that form parts of our briefs. It has been labelled an enterprise Bill, but I do not think that that is the case. The Government are seeking to make fundamental changes not only to the employment rights of every person in this country, but to change the remit of the body charged with promoting a society free from discrimination. As a result of the changes proposed in Clauses 56, 57 and 58, this House should have very real concerns about the impact they will have on the most vulnerable in our society and, indeed, on our nation’s international credibility.

4.32 pm

Lord Sheikh: My Lords, this is a most important and welcome Bill. The Queen’s Speech which promised this Bill enticed us with the words that the Government would,

“create the right conditions for economic recovery by strengthening the business environment, reducing regulatory burdens and improving business and consumer confidence”.

A clearer and more precise definition of the mission for the Government would be hard to find, and this debate provides us with a good opportunity to pause and reflect, not so much on what we have done to date, but what we need to do now to lay the foundations for

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our future economic well-being. The Government’s record on the macroeconomy has been hard-fought, but we are certainly making tangible progress. As we nudge ourselves out of recession, it is vital that we provide businesses with the tools they need to strengthen the path to recovery. Addressing the microeconomic challenges will enable businesses to make their contribution to our prosperity. As someone with a long career in business, I welcome the Government’s commitment to regulatory reform, but too many important stakeholders such as the CBI and the Institute of Directors have been critical that action has not met rhetoric. However, this Bill provides us with a clear opportunity to provide them with the reassurance that they seek. Business confidence is a crucial element in our strengthening economy.

One of the most important factors which has undermined our commercial environment has been the ebb and flow of confidence of both consumers and businesses. A stable and predictable regulatory environment is important, as is one that delivers the right balance between affording an appropriate level of protection while not obstructing innovation and enterprise.

Consumers need to have confidence to spend and businesses need to be able to find their customers. Small businesses are at a relative disadvantage in the regulatory environment. They are not able to afford large teams dedicated to monitoring compliance, and the proportion of staff time dedicated to regulations is greater than for larger enterprises. Some estimates suggest that the impact of regulations is 30 times as great for a small business as a larger company. Measures in this Bill will take action to address that, which will be most welcome to businesses of all sizes.

I welcome the commitment in the Bill to make it easier for sunset clauses to be included in secondary legislation. I commend the increased use of sunset clauses in regulations. They are very popular with businesses and ensure that regulations that do not meet their objectives have a natural time limit.

The red tape challenge has been broadly welcomed across all sections of our economy and has achieved a great deal to make life easier for businesses, with more than half of the regulations considered to be improved or got rid of. I acknowledge that this Bill provides the first legislative vehicle to deliver on the deregulation that the red tape challenge promises.

We also need to do more on the potential problems caused by excessively obstructive employment legislation. Small businesses can be very anxious about taking on extra employees, but we should want them to feel comfortable in accommodating growth. Most businesses start small, and I know from my own experience that corporate growth increases confidence and improves a company’s contribution to the wider economy. However, many small businesses fear that one mistake on the employment front will affect their business, distracting their focus while they deal with the consequences. Employment law is a minefield, which puts off many small businesses that cannot afford a dedicated human resources department. Making sure that the balance

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between employee protection and business efficiency is not easy, but I believe that this Bill strikes the right balance.

It is in everybody’s interest that workplace disputes are resolved swiftly. One of the companies that I previously chaired was recently involved in a dispute with an employee. The proceedings were lengthy and acrimonious but the complaint was not justified and the case was decided in our favour eventually. ACAS acknowledges that problems at work can be a barrier to growing a business. The Rapid Resolution Service should increase efficiency, with cases dealt with more effectively, thereby avoiding significant legal fees or the need to attend a hearing.

I also welcome the measures in the Bill that seek to address competition policy, improving the robustness of decisions and strengthening the regime. I support the competition authorities taking forward the right cases, to increase the speed and offer other improvements for businesses. I support the new Competition and Markets Authority, which will dispense with the duplication that currently exists between the OFT and the Competition Commission. This will result in efficiency.

Markets serve the interests of consumers and ensure that the best businesses thrive. Where market forces fail to deliver, it is right that competition authorities step in to act. However, when they do, the investigation can take an incredibly long time to complete—sometimes more than 30 months. By any measure, that is too long and I welcome the provisions in the Bill that will impose time limits on these inquiries. The establishment of a single competition authority should prove an efficient response to this challenge.

I also welcome the proposed changes in some powers and duties of the Equality and Human Rights Commission, and the proposed amendments to the Equality Acts of 2006 and 2010.

Another area where the Bill offers positive prospects for business is in the provisions relating to the Green Investment Bank. I care about the environment; in fact, my maiden speech in your Lordships’ House was on this subject. Increasingly, the world is embracing the importance of low-carbon solutions to our problems. The Bill defines the “green purposes”, but investors are looking for certainty in this area. I congratulate the Government on investing significant sums of money in the Green Investment Bank and I hope that they will allow the bank to borrow further for its well-being in the future. I applaud the fact that the bank will have independence.

I shall make a few observations about the provisions in the Bill relating to directors’ pay. It is right that shareholders should have a say in how a company is run, but we need to be careful that these measures do not lead directors to err on the side of caution at the expense of economic growth. Encouraging shareholders to take a close interest in the performance of their companies is a good thing, but pay should reflect performance and we must be careful that these provisions do not result in shareholders micromanaging as an unintended consequence. I hope that my noble friend the Minister will let the House know how the correct balance will be achieved between improved levels of

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engagement between companies and shareholders, and the risk of directors being pushed away to less restrictive economies.

As someone who believes in competition, I welcome the clauses relating to cartels. I also welcome the proposals relating to health and safety duties, as these will help to avoid unnecessary civil litigation. In this regard, I declare an interest in that I chair an insurance brokering and underwriting organisation.

This important Bill comes at a particularly critical time for our economy. The needs of businesses are very clear. They want a simple, predictable, reliable and agile regulatory environment. We should do everything that we can to encourage entrepreneurs to start and grow businesses in this country. We need a competition regime which champions competitiveness and opportunity. These are tough asks, but I believe that this Bill will measure up and meet the challenges.

4.42 pm

Baroness Brinton: My Lords, as others have already said, this Bill covers a large number of different topics. To mix the metaphor slightly, I shall do a pick-and-mix of some of the areas that my colleagues on these Benches have not covered and a couple that they have. I shall confine my remarks to employment and tribunals, copyright, payments to directors of quoted companies and equal pay audits and a brief comment on the EHRC.

Part 2 proposes changes to employment law and tribunals. We are told that the Bill does not remove any of the existing rights that workers enjoy and that employees remain able to reject proposed compensation offers and to proceed to a tribunal should they so wish. I hope that the Minister can confirm this given some of the comments that we have heard during the debate today.

I also welcome one omission in the Bill: the Beecroft proposals for no-fault dismissals are notable by their absence. I hope that this makes it clear that they have been defeated by the Liberal Democrats in the coalition. In light of various briefings, I hope that the Minister is able to reassure your Lordships’ House that the fears expressed by, among others, the CAB and the TUC regarding employee status are unfounded, and that there will not be any unintended consequences of this legislation.

I welcome the proposal for claims to be lodged with ACAS for early conciliation. ACAS does a very effective job and involving it early will help both parties understand where agreement can be reached early in proceedings. In the past, I have seen cases from both the employer’s and employee’s perspective, and I know of the strain placed on both parties, especially employees and small businesses—which others, including the noble Lord, Lord Mitchell, have spoken eloquently about earlier today.

Anything that can reduce this strain and the number of cases that end at tribunal, but with a fair settlement, will be beneficial to all parties, with the additional benefit of reducing the current cost to the taxpayer. We are told that that was £87 million in the year 2010-11. However, I look for reassurance from the Minister that ACAS will receive extra funding to do

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this new work, financed—I hope—by some of the savings in the cost of tribunals that the Government talked about. Without those resources, we are setting it up to fail.

I also welcome the proposal of rapid resolution by legal officers, sifting through papers at an early stage, if, and only if, the matters are clear under the law. However, I am concerned that in Clause 11 there appears to be a move to reduce or remove lay members from the tribunal. They have provided a very valuable perspective in the past, so that would be regrettable.

Clause 14 gives the Government the power to fine employers where their actions are negligent or malicious. This will help in cases where employers behave badly. This is a very positive step for employment rights.

Clause 15 changes the rules around whistleblowing to make it plain that protection is given to whistleblowers for issues where there is a genuine public interest in disclosure. When will the Government’s proposals for defining the scope of public interest tests be published? Clarification is fine, but it must not be drawn so tightly as to prevent genuine whistleblowers being given the protection that they need.

Others have referred to the compensation cap. As I read it, the terms in the Bill refer only to the employment decisions of tribunals that are presently capped, not to the current unlimited awards for discrimination. Can the Minister confirm that?

The Equality and Human Rights Commission has had its difficulties in the past, not least in its failure to deliver value for money and have its accounts signed off for three years. I am sure that it is time to review the way that it operates. While Clause 56 reduces its very broad responsibilities to concentrate on its activities in core areas, it is good that no powers and duties under the Equality Act 2006 have been removed. It is vital that we have an EHRC that is fit for purpose, able to deliver its core functions well and can continue with its huge progress in the past few years, including groundbreaking legal cases and inquiries exposing exploitation of migrant workers in the meat-packing industry, harassment of disabled people, discrimination in home care and the finance industry, and equality deficiencies in the Treasury’s 2010 spending review.

Clauses 65 to 69 set out the updating of copyright law to, I hope, bring it into the 21st century a mere decade after it started. While it is vital to protect the rights of and payments to authors and producers of copyrighted material, as my noble friend Lord Clement-Jones outlined, we also need to recognise that users of copyrighted material face difficulties under the present structures, especially universities, museums and libraries. The proposals outlined here will make it easier for them, especially the proposals on orphan works—where it has not been possible to trace the copyright holders—and create a system of extended collective licensing.

I understand that there is a difference of view here. I suspect that much of the time in Committee will be spent trying to balance the two sides in this particular argument, but we need a mechanism to facilitate the use of orphan works. I hope that the Minister can either make it clear that the safety net for authors and creators who cannot be identified has been covered by the creation of the body for orphan works, or will be

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prepared to consider amendments that would enable genuinely orphan works to be regulated but used and give authors the reassurance that they need that that cannot be abused. We need to ensure that diligent research has been carried out by any proposed user. Payment can be made once an author has been identified, or held by this body until one is.

Clauses 70 to 73 set out changes to payments to directors of quoted companies. The total remuneration packages of company directors, the transparency of that remuneration to the public and the power of shareholders to set effective and realistic pay levels have rightly come under public scrutiny recently and have already been referred to in this debate. I welcome strongly the proposals to give shareholders a binding vote on future directors’ pay at least every three years. I also welcome the support for these proposals from business organisations such as the CBI and the TUC which recognise that change is needed here. This consensus is vital to making it work.

Turning to Clause 74 and equal pay audits, good employers—whether large or small—will already use and have reflected on equal pay, using audits, among other tools, to ensure effective and fair practices with their employees. They are not the problem. All employers should be encouraged to do them. This clause provides significant progress to ensure that companies or organisations which employment tribunals have found in breach of equal pay law must carry out an equal pay audit of the entire company or organisation. It will strengthen the hand of employment tribunals and ensure that companies that favour male over female staff in, say, selectively awarding bonuses, will be brought to task. In the longer term, using the equal pay audit will reduce the number of discrimination cases, because organisations that are serial offenders will have to make it plain in the audit exactly what they are doing, and they will be held to account publicly for that.

This Bill fulfils some of the promises of the coalition, especially introducing the Green Investment Bank—which I welcome—holding companies and directors to account over directors’ pay and equal audit, and the move to the complex issue of copyright in the 21st century. I look forward to the further stages of this Bill.

4.51 pm

Lord Monks: My Lords, perhaps the first test of this or any Bill is whether it lives up to its hype. Will its espousal of enterprise inject some much needed dynamism into our struggling economy? Will it encourage long-term growth, as it claims it wants to do? With the interesting exception of the Green Investment Bank, the Bill falls well short of these objectives. It claims to be about enterprise, but its measures are unenterprising, small-scale and modest. Compare it for a moment, as my noble friend Lord Stevenson did, with the recent report of the noble Lord, Lord Heseltine. This started by recognising the stark truth, which I agree with, that we are in,

“the worst economic crisis of modern times”.

We are almost in a war situation. Whether you agree with it or not, that report is ambitious, urgent and seeks to draw some lessons for the UK from the more robust and successful economies on the other side of

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the North Sea. Importantly, it seeks to build on a national consensus on the way forward. I ask the Government whether this is not the right approach, rather than this modest Bill which fiddles around in so many areas and, I guess, in many cases to so little effect.

Apart from the Green Investment Bank, I welcome one aspect of the Bill: expanding the role of ACAS. It does a good job and can do even more. However, as my noble friend Lord Stevenson, the noble Lord, Lord Razzall, and the noble Baroness, Lady Brinton, among others said, will it have the resources to do the job at a time when nearly everybody is suffering from fewer resources? There could be some very long queues outside ACAS’s doors after this Bill goes through. Even that provision to strengthen ACAS is linked to a weakened entitlement for workers to claim unfair dismissal. That means that the workers’ influence at the conciliation stage will inevitably be weaker than perhaps in the present circumstances.

When we get to employment, this part of the Bill is based on what I regard as a rather tired mantra that reducing employment rights will lead to creating jobs. I and many people not just on this side of the House regard that as the low road to economic growth. It is not a road ever shown to have had any great success. The balance is to be tilted a bit more to employers and away from workers. Could we not have pointed the UK towards the high road to growth instead, towards more investment and fewer debt-ridden companies financially engineering to minimise tax payments and maximise dividends? We should look for more skills for higher productivity and better relationships at work. Instead, under a parallel Bill to which my noble friend Lord Morris referred, rights are to be marketised and sold on. I look forward to seeing a secondary market developing in due course, once the City of London wide boys get their hands on it.

The reality is that rights are under attack. Anyone now pursuing a claim of unfair dismissal has to cope with an increased qualifying period of two years. A possible deposit will be levied and, under this Bill, the scope for levying that deposit will be extended. There will be more freedom for employers to press for compromise agreements. I heard what the noble Baroness, Lady Brinton, said but this last measure is not that far from the no-fault dismissal provision of the Beecroft report, which was so excellently and expertly derided by the Secretary of State. I wonder whether he lost a battle on this provision.

I, like others, want to highlight Clause 61. As my noble friend Lord McKenzie said, this will reverse the Health and Safety at Work etc. Act 1974, which was an all-party measure in which the Conservatives were prominent, by the way. That Act allows claims from a worker for damages for breach of health and safety regulations. Instead, under this Bill, the worker will have to prove negligence so it will not be enough to prove the breach of the statutory obligations. In effect, the burden of proof shifts to the injured or damaged worker. The Government have claimed support for this idea from a recent review of health and safety regulation by Professor Löfstedt, but he did not

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recommend a blanket removal of employer liability from health and safety law and it really must not be alleged otherwise.

It has been said by many of your Lordships that there was no consultation on this provision. It was sprung at a late stage in the Commons and its promoters apparently include the insurance industry. In the opinion of quite a few lawyers who are looking at this, it turns the clock on health and safety back to 1898. Through our nation’s story, we know that it took tough legislation from this House and determined politicians to improve the appalling health and safety practices of the 19th century. That is what is now being weakened. This small clause cannot be underestimated. The Government are sending out a message that they are easing up on health and safety. That is not a good message. I hope that this House will challenge it and remind the Government that such a weakening is not appropriate—not with 20,000 workers in this country seriously ill at the moment, many of them dying, from a work-related illness or injury and 176 workers having been killed in workplace accidents last year. Clause 61 should, frankly, be dumped.

Finally, I have two questions. First, are the Government going to move on the proposal of the noble Lord, Lord Heseltine, to assert the public interest in mergers and acquisitions, especially where foreign takeovers are concerned? I am not opposed to foreign takeovers but the UK needs to get more on jobs and investment than is currently the case and not be so,

“timid in engaging with potential investors in … key sectors”,

words, by the way, that come from the Heseltine report. Secondly, on Part 6 of the Bill, given that chief executive officer pay and benefits in major companies went up on average by over 10% in 2012—a year when, as we know, growth was generally negligible—how do we check that excess? Will it be enough to rely on shareholders when, as has been said in the House today, many of them, particularly the institutional investors, are in the same circle? Will the Government change their mind and agree to insert employee representatives on to remuneration committees and so interrupt their current, cosy boardroom practices of mutual back scratching? This is not a matter on which to be timid either. We have a duty to improve this Bill. I hope that we can take it vigorously and with both hands.

4.59 pm

Lord Mawson: My Lords, I want to focus on Part 1 of the Bill concerning the Green Investment Bank. The Americans have a polite expression that denotes deep scepticism. The phrase is “horse feathers” and it may replace a less polite phrase of which your Lordships might officially disapprove. I come to this issue as someone who has been involved in finding and making common ground between the Government and social action as we have attempted to apply business principles to challenging social issues. I am aware that there is a lot of equine plumage around. I hope not too much in our case.

My record and that of my colleagues has been founded on taking a different approach. The result has invariably been less talk, more action and more money

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in the bank for everyone, including the most disadvantaged in our society. I recognise a familiar danger in all our talk of global warming and climate change. There are many out there who would sceptically use “horse feathers” to describe it. Such scepticism is serious but there is one horse that is totally featherless and I want encourage your Lordships to think of it as a runner, although perhaps not a dead cert.

If we cannot make money out of saving the planet then it is not going to be saved. The business of saving the environment has to be our business and it has to be a commercial enterprise or it will mean nothing to many. We are in danger of running scared at the awful vision that researchers, scientists and climate change experts confront us with daily. We are tempted to pour our money on to catastrophes in some kind of ritual gesture in the sad hope that this will absolve us of responsibility and they will disappear.

However, there is an alternative, practical solution. A host of companies is already making the running. The horse feather merchants have long disappeared. Among the survivors is one very interesting firm called Solarcentury. Its chairman is Jeremy Leggett. He is an ex-oil man. He was once full of the jet-setting, can-do romance of the industry, especially in its cutting-edge research capability. Then he saw what the oil world was doing to the natural world so he changed businesses. He is now a leader among many private companies researching and installing solar energy. The account of what he has done in a comparatively short timeframe is impressive.

Solarcentury began with domestic installations and these now number 9,000. It has recently begun much more ambitious commercial schemes such as on the Co-operative Insurance Tower, a skyscraper in Manchester, where it developed solar cladding to replace the old conventional cladding. Those who know that rain-kissed city will acknowledge that this is a serious challenge to the notion of solar power. The company has also developed a vast solar-powered waste disposal plant in Waterbeach in Cambridgeshire and its Blackfriars Railway Bridge project will see the bridge become Britain’s biggest solar bridge with more than 4,400 photovoltaic panels. Solarcentury has been in profit since 2006 and has created charities in Africa which use solar power for schools, community centres and clinics, creating a clean environment and new jobs.

These are one company’s achievements. The approach of this and many other companies is to be both creative and sustainable. We need to be creative. We need to make changes in directions that now seem unimaginable. These firms are in the business of imagining the future. That future needs to be sustainable; we must use the vast resources of the market to find out who is doing what, how well they are doing it and, above all, at what price. In the area of solar power there are many firms doing good business or going broke on our behalf. They are finding out what does and does not work.

Somewhere in the background I hear somebody growl, “subsidy”. There is no such thing as an absolutely free lunch, but this one is as free as makes no difference. The companies find what works for us and are making it happen. If it does not work, then they go bust.

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My final point is best illustrated by a story; apologies to those who have heard it many times before. A man in New Jersey spent his days raising money to spend on gambling. The game was bent. A friend said to him, “Why do you do this? The game is rigged.” The gambler replied, “I have to do it. It’s the only game in town.”

However, this is not the only game in town. Thousands of firms worldwide are pursuing the challenge of climate change. For example, the recent environmental conference in Rio de Janeiro was described as a damp squib: the usual shed load of talk followed by no action because there was no public money available. But 1,500 business people turned up; whereas, previously, almost nobody from the commercial sector had bothered. According to New Scientist,

“some 1500 business leaders had attended the summit, and had stumped up half a trillion dollars of corporate cash to fund various UN agendas … Among the new corporate actors at the heart of UN policymaking on the green agenda is Chad Holliday, chairman of the Bank of America and former president of DuPont. He is now also co-chair of the Sustainable Energy For All initiative”.

We might well ask, “Does Chad Holliday know something we don't know?” What kind of dark future in oil product is DuPont betting on?

My intention has emphatically not been to argue about climate change figures. It has been to show that business people of some importance have made a serious commitment to the climate change challenge. In the case of Jeremy Leggett of Solarcentury, that commitment has been radical. In the case of Chad Holliday, the head of the Bank of America, the change is conventional but significant.

Climate change is an idea whose time has come. The Government should take the courage to act in good faith. So if the proposed UK Green Investment Bank is to play a role in all of this what should it be looking out for? First, the Government need to be clear from the outset with this bank and must not keep changing the goal posts. Continuity is the name of the game, and businesses soon lose interest if they doubt your credibility and commitment: game over. Secondly, do not try to oversell it. If the terms are not better than those commercially available, do not pretend that they are: get real.

Thirdly, this bank needs to be run by practical people. We can set up whatever legislation we want, but the bottom line will lie with the individual who is in charge of this bank. Practical people are not yes men. If an idea does not work, they are not afraid of changing the design. Do not make the mistake that is so often made by government and invest in spin: in someone who looks and sounds good to the media. Get an awkward customer, who can bend this bank into reality and make it credible. That is my advice.

Fourthly, what is going to be the attitude to risk of this bank? Will this Green Investment Bank be encouraged to take risks and back business entrepreneurs and social entrepreneurs? What will be its policy on SMEs? Will innovation be smothered because an SME lacks a strong asset base? Can the Minister tell us in his summing up what is to be the attitude of this bank to failure and risk? If we are not planning for failure, we will not be taking risks. Fifthly, is this fund going to be

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run by entrepreneurs who understand green energy, or by banks that understand liquidity and protecting capital? Actually, both are needed but can the Minister tell us who will call the shots?

I could draw an analogy with housing. We now have so many constraints on housing. Houses need to be very energy efficient, include renewable energy, pay Section 106 contributions, have lots of parking—or no parking, depending on the local authority—be accessible, 25% affordable, and so on. There are now so many constraints that very few homes are built at all. Houses that are built are mostly cheap, unimaginative and small because it is the only way to square the circle. It is the law of unintended consequences. All the requirements individually are perfectly reasonable but, collectively, they have a disastrous effect that nobody planned.

Some of us in life are tasked with doing. We sometimes wonder whether the real purpose of government is an existential experiment: are you in the business to discover whether the number of hoops that a project has to jump through before it can start is finite or is it, in fact, truly infinite? We in your Lordships’ House, I suspect, sometimes unwittingly add to this number ourselves. Will the Minister please tell the House how many hoops will be embedded into the operation of this bank? How will he ensure that they do not grow exponentially? If this green debate is for real, then we must get intensely practical. This bank now has to put its money where its mouth is.

5.10 pm

Baroness Turner of Camden: My Lords, the Minister will not be surprised to learn that I find much of this Bill quite unacceptable. The section dealing with employment is apparently based on the notion that employment rights are responsible for the lack of employment opportunities. I believe this to be untrue. Such evidence as there is appears to indicate that unemployment is due to a lack of growth. The interesting report from the noble Lord, Lord Heseltine, which has already been mentioned, refers to the need to balance our economy and, in particular, the need for support for manufacturing industry. The Bill does nothing to address these important economic problems.

Making it easier to fire workers—which is part of the intention of this Bill—will not create more jobs, but will increase the feeling of instability among those in jobs. The Government have already introduced regulations requiring a tenure of two years in a job before action for unfair dismissal can be attempted. This already makes it impossible for many women in part-time employment, most of whom do not have a two-year tenure in a job, to utilise the procedures anyway. The Bill lays down procedures involving ACAS mediation, including reference to a conciliation officer, and the emphasis is on a settlement rather than process to a tribunal, which apparently—according to the Government—must be avoided. A certificate will be required before the employer can take the next step; then a legal officer has to be involved before the tribunal can consider the case. If the employee eventually makes it to a tribunal, the hearing is by a judge alone

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—not the current set-up involving lay-people with some knowledge of working practices. There is also a charge to the employee in order to get his case heard. There is a great deal more complication set out in the Bill and all of it is clearly proposed in order to make it as difficult as possible for an employee to activate rights for which many of us fought hard in the last century.

There are further problems for employees. Health and safety at work regulations are to be amended. The Government claim that this will cut down spurious personal injury claims, but it should be remembered that the Health and Safety Executive figures for last year show that 173 people died in workplace accidents and 22,433 sustained serious injury. The Government’s current proposals would involve less attention paid by employers to workplace safety and greater expense to the taxpayer through NHS costs and welfare payments to workers who have been injured.

Many workplaces are inherently unsafe. Some industries like construction have many accidents, but the workers who do this necessary work have the right to maximum protection and employers have an obligation to provide as safe a working environment as they possibly can. There has already been some reference by my noble friends to Clause 61, which was introduced at a late stage in the House of Commons. It would radically change the way injured workers claim compensation from their employers. If an employer breaches health and safety regulations and injures an employee, that employee will no longer have a consequent right to compensation. He or she will have to prove negligence and the burden of proof will transfer to the injured worker, who will find it harder to claim compensation as a result. Litigation will be more protracted and costly.

What about insurance? When I was much younger, I worked in the accident claims department of a major insurance company. I saw little evidence there of so-called compensation culture; on the contrary, getting compensation was pretty tough. I remember often feeling sorry for injured workers who, in those days, had to fight very hard to get any compensation at all. Because they needed the money, they often settled for much less than the injury was worth. It seems to me that what is clear is that this legislation, if it reaches the statute book, will result in increased insurance premiums.

The sections of the Bill to which I have referred relate to improvements over the years intended to benefit the workforce. At a time when poorer households are already being hit by rising food prices, soaring gas and electricity bills, and stagnant wages, the removal of employment rights are bound to be deeply resented.

I hope that the Government can be persuaded to reconsider some of the provisions in the Bill. If not, we shall have to attempt amendments in Committee and on Report. It should be understood that in this country we have, I regret to say, a low-wage environment. An employer who profits from employing low-paid workers benefits from subsidies from the taxpayer via the benefits system. Landlords, in London particularly, charge enormous rents for one-bedded flats also are subsidised by the taxpayer via housing benefit. But it

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is always the worker who is described as a scrounger and is told that he or she is lucky to have any sort of job, and not to expect any employment rights either.

In the mean time, as my noble friend Lord Gavron indicated, senior executives in large companies are helping themselves to large salaries and even larger bonuses. In my view, the answer should be a collective one—trade union organisation—and the right of employees to representation. That is not envisaged in the Bill but it should be.

5.16 pm

Lord Young of Norwood Green: My Lords, I congratulate the House on the number of people who have participated in this debate. I admit that we had some concerns about it being on the day before a recess. To paraphrase the saying that goes around in other industries, we wondered whether it might be POET’s day today—push off early, tomorrow’s recess. However, I am happy to say that that did not happen and that we have had a very wide-ranging and forensic debate.

I made a few notes and this Bill was described as a hotchpotch, a patchwork, incoherent, good, bad and ugly. I do not know how to add to that. I also looked at the better descriptions, one of which was that it was wide-ranging. As someone who presided over the Digital Economy Bill, I cannot criticise it for that. If I had to find a phrase, I think that the Bill is a curate’s egg, which is a bit of a cliché but appropriate. As a number of my noble friends have said, it is good in parts. I will cover the parts that make a positive contribution. I join others in welcoming the Minister, the noble Lord, Lord Marland, to the sheer delights of this wide-ranging Bill.

The criticism of many of my noble friends is that the Bill will not do what the Minister says that it will do; namely, encourage growth and investment, and create a fair environment. Indeed, it is incoherent. I noted carefully the points made by the Minister. He said that it will deal with the fear of employment tribunals, which is what some employers say and, of course, what Beecroft said. The Minister said that it will streamline directors’ pay and that it will deal with the gap between pay and performance.

However, he did not say whether it will deal with the ever-increasing gap between the pay of the directors and the average pay of those workers who carry out the work in the company, to which I will return. Although there are some good bits of this Bill, overall, we do not believe that it will make a contribution to growth and investment or have a positive impact in terms of reducing regulation in a way which would be fair to all concerned. I will say why that is so in my contribution.

There was one aspect that the Minister did not cover, or if he did I missed it—it must have been a low-level whistle blow—but there have been plenty of contributions on that particular matter so I am sure that he will deal with it in his response. My noble friend Lord Stevenson rightly criticised the Bill for having no overall vision. Business leaders have told the Government that they are unimpressed with its lack of a clear and coherent growth strategy. My noble friend rightly said that this is a Beecroft-like Bill and gave the

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first warning that a lot of the changes and recommendations are not based on evidence. Along with many of my noble friends, he referred to the recent report of the noble Lord, Lord Heseltine, on growth. I welcome the Minister’s response on that issue.