Employment Relations Bill

I support the noble Baroness, Lady Miller, especially in relation to Amendments Nos. 4 and 5. It was Groucho Marx who complained, I worked my way up from nothing to a state of extreme poverty”. This aspect of the Bill in its present form could cause many small business owners to echo those words. The heart of the problem is that under the terms of the Bill the definition of a small business is one with 20 employees or fewer. That automatically puts a firm with just 21 workers in the same league as a giant corporation with huge resources. It is like the young chap who called himself a plant manager when in reality all he was required to do all day was water them.

The Confederation of British Industry, the British Chambers of Commerce, the Federation of Small Businesses and the Institute of Directors have all asked the Government to raise the threshold. They suggest that an exemption for small companies with fewer than 50 employees is more realistic. It is a great concern that the Bill uses the arbitrary number of 20 workers, ignoring all the advice and submissions from those expert organisations.

The figure 20 has no real significance. My first fee as a lawyer many years ago was a four-figure sum. That sounds impressive until I tell your Lordships that it was £12.95. I should like to know what impact analysis the Department of Trade and Industry or any other government department have carried out. What will be 1164 the percentage cost increase of compliance for firms employing 20 people? If that research has not been done, why not?

It would not be unusual for a firm with fewer than 50 workers to have just one personnel manager and one accounts manager, or even just a bookkeeper. A letter from a firm’s trade union requesting collective bargaining at a time when some key people are away, on sick leave or on holiday could make it difficult for the employer to respond within the statutory timetable. One could argue that a union is likely to take advantage of such an employer, but the very existence of such provisions makes smaller firms more vulnerable.

The future of small companies is vital to our economy and I do not believe that anyone here would disagree with that. They are the majority of businesses in this country, contributing 40 per cent of turnover and employing 50 per cent of the private sector workforce. Since this Government came into power in May 1997, they have imposed 2,400 new regulations. The Institute of Chartered Accountants estimates that the extra cost of these regulations for small businesses is £5,000 a year. As a vice-president of a small business bureau, I know that many small firms have struggled to survive this onslaught. Now, just as they see a light at the end of the tunnel, it is the light of an oncoming train called the Employment Relations Bill.