Enterprise and Regulatory Reform Bill

Public Bill Committee, 28 June 2012.

Clause 7 - Conciliation before institution of proceedings

Ian Murray (Labour, Edinburgh South)

I beg to move amendment 9, in clause 7, page 4, line 15, at end insert—

‘(1A) A “prospective claimant” may seek support from ACAS for any necessary assistance to comply with the requirements in subsection (1).’.

Graham Brady (Conservative, Altrincham and Sale West)

With this it will be convenient to discuss amendment 11, in clause 7, page 5, leave out lines 31 and 32.

Ian Murray (Labour, Edinburgh South)

Good morning, everyone. It is a pleasure to see you back in the Chair for this sitting, Mr Brady. I hope that the breakneck speed with which we went through clauses on Tuesday will be repeated this morning. I pay tribute to my hon. Friend the Member for Hartlepool the former Minister. I am sure we will see a significant amount more of him as the Bill progresses through the House, and that he is thoroughly looking forward to the Stone Roses concert, which he has been—boring would be too strong a word—incessantly chatting about with everyone over the last few days. We wish him well for that.

I thank the Minister, who, since being appointed to his ministerial role, has been kind, supportive and good-humoured. I hope that will continue. I was rather unkind to him on his first appearance as Minister when I wished him a modicum of success. Since he has had that modicum of success, I am sure he will stop there and not continue with that theme.

I promised myself and my staff that I would not mention the B-word at this sitting. I am talking not about Beecroft, but about B for book. The Minister’s wonderful book on how to maximise compensation at employment tribunals is available at all really bad bookshops at only £14.99, and claimable on IPSA, given that it is work-related. In the last few months, I have single-handedly increased sales of the book to probably about one.

Norman Lamb (Liberal Democrat, North Norfolk)

You borrowed it!

Ian Murray (Labour, Edinburgh South)

I have borrowed it, yes. I did not buy it.

There is a serious issue regarding the book. Its depth and complicated nature shows how complex the employment tribunal system is, and I think we will go on and talk about that this morning. The purpose of our amendments is to make employment tribunals less complicated. We would welcome that, and we will help the Government in any way we can to ensure that that happens. Business is demanding that, the trade unions are demanding a simpler and more effective procedure, employers are demanding that, and employees are also demanding it. We must make sure we get clause 7 right. That is why we have made a genuine attempt in the amendments to ensure that the process is better, and we will be interested to hear the Minister’s comments.

There is no doubt that the Government are keen to change the employment tribunal system, but Opposition Members are slightly disappointed that many of the changes so far have arisen from anecdote and not from empirical evidence. Last Thursday, when we questioned Mr Beecroft, there was not much in the way of evidence to suggest the changes, but that is not to say that the anecdotal—

Julian Smith (Conservative, Skipton and Ripon)

Will the hon. Gentleman clarify what he means by evidence? When looking through all the evidence sessions, there is clear evidence that employment law is a burden on business. The recent MORI polling of micro-businesses shows that more than 60% of very small businesses find employment law a burden, and say that it stops them taking on staff. Various submissions to the all-party group on micro businesses also showed that it is a burden. What evidence is the hon. Gentleman looking for? Does he have other sources that he has not told the House about?

Ian Murray (Labour, Edinburgh South)

You would have thought, Mr Brady, that I set that intervention up, because the hon. Gentleman, who was present in the Committee’s evidence sessions last week, will have heard clearly that there is evidence out there that flies in the face of much of the evidence that the Minister has been talking about over the past few months. I shall provide some of that evidence. The Department for Business, Innovation and Skills’ own small business index evidence showed that only 6% of small businesses see regulation as a burden, and only 3% see employment regulation as a burden. As the OECD reports, it is a fact that the UK already has the third most liberal employment laws in the world.

The evidence is stacked up, and it was quite stark when Mr Beecroft said last Thursday that he was not even aware of the Donovan commission that set up the employment tribunal system in the first place. The evidence is out there to suggest that, yes, we need to make the system better, but it really is not a hamper on growth. Indeed, as the hon. Gentleman knows, the only hamper on growth in this country at the moment is the Government and No. 10.

Julian Smith (Conservative, Skipton and Ripon)

I just totally disagree with what the hon. Gentleman is saying. He was a successful business person himself. In fact, he is, I believe, one of the only business people on the Opposition Benches in this Committee. Most of the employment in my constituency comes from very small businesses, and they say in surgery that the biggest reason why they are not taking on new employees is the burden of the onerous employment law. He knows that that is the case, so why is he pushing this dodgy argument?

Ian Murray (Labour, Edinburgh South)

Have we not just heard anecdote No. 1? We should perhaps have anecdote bingo today. The hon. Gentleman has met someone at his surgery who has said that it is the employment law that is stopping him taking on people. I do not doubt that and I wish that we could share, even in private, the details of that particular business so that we can see all the information behind what he is saying. That would probably take away some of our suspicions about anecdotes.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

On the point of anecdotes, the hon. Member for Skipton and Ripon said that my hon. Friend was the only business man on this side of the Committee. I do not know whether he was deliberately being gender-specific, but I can say that he is certainly not the only business person.

Ian Murray (Labour, Edinburgh South)

I am grateful for that intervention. Indeed, the hon. Member for Skipton and Ripon has twice in previous Committees accused me of having run my own business, which puts the record straight. I am delighted that this is the third time that it has sunk into the hon. Gentleman. There are business people on the Labour Front Bench in the Business, Innovation and Skills team. My hon. Friend the Member for Chesterfield (Toby Perkins) ran his own business in the area of rugby and sports. We also have people with other experience. The former Minister, my hon. Friend the Member for Hartlepool, was a former accountant. The shadow Secretary of State is a former employment lawyer, who brings a great deal of experience to his role.

Geraint Davies (Labour, Swansea West)

My hon. Friend may know that I was in charge of global brands in various multinational companies as well as starting and running a series of my own businesses. The level of ignorance of the hon. Member for Skipton and Ripon is amazing. He himself was a head-hunter, which is not a proper business anyway.

Ian Murray (Labour, Edinburgh South)

I give way to my hon. Friend the Member for Rochdale.

Simon Danczuk (Labour, Rochdale)

I just want to put it on the record that I set up a business in Manchester in 1999 and ran it successfully for 13 years. I was involved in social research surveys, opinion polls and gathering the sort of information that has not been called on by the Government to substantiate the proposals that they are putting forward in this legislation.

Graham Brady (Conservative, Altrincham and Sale West)

Now that we have all of that on the record, we can hopefully return to the detail of the Bill.

Ian Murray (Labour, Edinburgh South)

I give way to my hon. Friend the Member for Vale of Clwyd.

Chris Ruane (Labour, Vale of Clwyd)

I think that my hon. Friend may have misled the Committee on an important issue, and that is the price of the aforementioned book on employment tribunals. I googled it on Amazon and found that it is not £14.50 but £13.50. One review says:

“There really is nothing more thorough or useful as an aide-memoire for experienced practitioners, or better as an introduction for more junior employment lawyers. This book is still frequently on my desk nearly three years after publication. I can only hope that the author and publishers are willing to bring out a second edition”—

signed, Norman Lamb.

Ian Murray (Labour, Edinburgh South)

That says it all. Indeed, that book will probably be on my desk for three years as well. It is certainly well thumbed. The Minister should take to heart his own review on the Amazon website. When we have gone through this Bill and it is on the statute book, he may have to rewrite the book. Indeed, I will be queuing up in my tent outside Waterstones when the book is launched so that I can get one of the first copies. To be fair, the Minister has been offering to sign this book. [Interruption.] Yes, desperate. Given that it comes from the university of Liverpool, I have been reluctant to allow him to do that. Indeed, I hope that the £13.50 value holds up, but signing it may mean that the price will dip somewhat.

Geraint Davies (Labour, Swansea West)

Does my hon. Friend agree that the more amendments that go through, the more changes there will have to be to the subsequent edition and the more money the Minister will make? [Interruption.]

Chris Ruane (Labour, Vale of Clwyd)

He will have to declare an interest.

Geraint Davies (Labour, Swansea West)

Indeed, Lamb to the slaughter.

Ian Murray (Labour, Edinburgh South)

It has only taken until 9.9 am for someone to use the expression, “Lamb to the slaughter”. I am surprised that it has taken that long, given the track record in really bad one-liners and puns of my right hon. and hon. Friends.

Iain Wright (Labour, Hartlepool)

Where is the evidence?

Ian Murray (Labour, Edinburgh South)

I think the evidence is self-fulfilling.

To return to the Bill, there is no doubt that the Government are keen anecdotally to alter the rights of workers as a panacea to the economic growth problems in this country. However, we genuinely welcome the provisions in the Bill for claimants to go to ACAS before entering the employment tribunal system. That should provide for faster resolution of disputes, keep claims out of the tribunal system, which is what we are trying to achieve, and save time and money for employers and, importantly, employees. Of course, there is the underlying issue of its saving money for the Treasury. That is something to which we all aspire.

However, the Bill does not provide details of how early conciliation will work in practice. That is one of our main concerns. Much of the detail will be provided in future regulations. I understand that the Department plans to consult on the scheme in the near future, but it would be useful to hear the Minister’s thoughts on how he sees it operating. I hope that this debate and the amendments that we have placed before the Committee will assist in the process.

It is strange for the Government to bring such a large and fundamental change to the employment tribunal system to this Committee without bringing any of the finer detail, and to consult on it later. I know that that is something that Governments do and it is happening with many other clauses of the Bill, but something as fundamental as this should be taken forward with the people and the professionals giving ideas on how to make it work, because if we do not get it right, it could make the system worse and mean that it does not work for employees or employers. That would be a missed opportunity.

As I said, we think that pre-action conciliation is a good idea, but the method proposed in the Bill is unnecessarily complicated and there is a view that it may lead to more satellite litigation, resulting in more costs, more uncertainty and more management time for employers. With all due respect to the Minister in his previous profession, we do not want this scheme just to be another excuse for lawyers to print money. We know that the employment tribunal system was set up originally to try to take the legal system out of the process, but as time has gone on and the guidebooks for employment tribunals have become bigger and more complex, the legal system has had to intervene, quite rightly, in the system to guide people through the potential pitfalls.

If the scheme is taken forward in its current form, it is essential that individuals are not subsequently barred from making an employment tribunal claim because they did not provide sufficient or full information to ACAS during early conciliation. That is the crux of our first two amendments.

The Federation of Small Businesses, in its written submission to the Committee, has welcomed the principle of the new role for ACAS in receiving all claims. However, it has said that

“compulsory ACAS ‘Early Conciliation’ poses some concerns despite its initial attraction. We would not support this unless satisfied that the process will not require the business to be legally represented and that it is a genuine streamlining of the existing process rather than an additional administrative layer”.

The FSB is clearly saying that it welcomes the measure very much, as Opposition Members do, but it has the same concerns that others have—not just Opposition Members—about the unintended consequences that might flow from badly drafted legislation. It shares the concerns of Citizens Advice and the TUC but from the perspective of the business community. Citizens Advice and the TUC are very concerned about employees being wrapped up in legally challengeable unintended consequences, and the FSB has exactly the same concerns but from the business perspective. Both sides of the employment tribunal process have real concerns that this measure may create additional burdens.

That only emphasises the fact that the claimant and the employer must have confidence in the process, but that can be achieved only where support is given to both the applicant and the business to ensure that they are in order when going through the process. Conciliation can be an off-putting process. It often comes down to trying to persuade one side or the other to give in—to concede—without regard to the merits of the case. In practice, the experience and work load of the ACAS representative involved in a case can be a challenge. The Bill places the onus well and truly at the door of the employee. We heard during our evidence sessions last week that the profile of those seeking redress through the tribunal system is that they are often the most vulnerable, low-paid workers, often with literacy and numeracy skill deficiencies.

As has been mentioned, some people have described the new process as a potential additional hurdle to accessing the justice system, and many people have bandied around the word “vexatious”. That is not to say that there are no vexatious claims in the system, but it is clear that, in trying to find a faster and more efficient system, we should not put in place an additional hurdle for legitimate claims that can be dealt with on their merits, and which should perhaps progress to an employment tribunal so that justice is seen to be done.

John Cryer (Labour, Leyton and Wanstead)

A lot of what my hon. Friend is saying is absolutely right. Has he, however, thought about going down the path of judicial mediation? That comparatively recent phenomenon, which was introduced only in the past two or three years, means that the two sides meet in an informal atmosphere but with a judge with training in industrial relations. Under those circumstances, a dispute can often be resolved.

Ian Murray (Labour, Edinburgh South)

I am grateful to my hon. Friend for his intervention; judicial mediation is not something that I had considered. The clauses about rapid resolution are perhaps an attempt to look at such more streamlined ways of dealing with disputes. Early conciliation with ACAS is almost the same, although without the presence of a formal legal representative to arbitrate. We do not want to slip into a situation in which we are turning conciliation—and ACAS—into an arbitration service, because we would lose the intended ethos of conciliation. However, I am sure that the Minister has heard and will respond to that point.

On the potential hurdles for employees, and indeed for employers, Citizens Advice has said it hopes that the new process will “not become a logjam” in the system. It does not want gates and hurdles that would stop people from, quite rightly, exercising their rights and having some redress in the exercise of their rights. That is why it is key that employees receive as much support as possible in submitting forms and complying with the legislative arrangements. We do not want yet another legalistic insertion into the redress process, which would particularly affect those who do not have representation or those who have the literacy or language issues that I have mentioned.

People will have to lodge two forms within two different time limits, and I want to explain how the proposals correspond with the current system. The legal profession has told us that it is concerned about that twin-track approach, and about how it might be simplified. The amendment is important, because it would give people the comfort that they can seek advice from the professionals who can provide it. The first time limit is for lodging the form for early conciliation with ACAS, and there clearly has to be such a time limit to ensure that people implement the process at the appropriate time. There is then a further time limit of one month for submitting the employment tribunal form—the ET1 form—following receipt of the ACAS certificate, which is issued when conciliation has not been successful or when the prescribed period has lapsed.

Proposed new section 18A(1) of the Employment Tribunals Act 1996 states that the prescribed form has to be presented to ACAS “in the prescribed manner” with the prescribed information. That sounds to me very bureaucratic indeed. Once the form, the manner and the information are prescribed, the claimant then has to ensure that everything in that ACAS process is done properly. Once the form, the manner and the information have been prescribed in secondary legislation, the lawyers involved will immediately ensure that all the i’s are dotted and all the t’s are crossed; otherwise, there might be satellite litigation in the background to the conciliation process, which could undermine the whole system.

Proposed new section 18A(2) of the 1996 Act states:

“On receiving the prescribed information in the prescribed manner, ACAS shall send a copy of it to a conciliation officer.”

I will return to that, but the key point is that once the form goes to ACAS it will be sent to a conciliation officer, so the first contact with ACAS will not necessarily be with the conciliation officer dealing with the case. We could argue that the Bill or subsequent regulations should not prescribe any types of information that workers should be required to provide ACAS with when accessing early conciliation. We are in a process whereby ACAS will look at the merits of the case and try to come to some arrangement—there will be jockeying for position, a bit of give and take on both sides and a hearing of the facts of the case. There might be an argument to suggest that the information provided to ACAS does not need to be in a prescribed format or to be prescribed information, although obviously the key facts are necessary, but ACAS should be able to probe those a little more.

If the information has to be prescribed, claimants and employers need to access expert advice; otherwise, we will be creating an unjustifiable barrier to people accessing the employment tribunal system, especially to those who do not have access to legal or trade union advice. The trade union advice thing is important, because as we heard from the witnesses last week—the GMB, Unite and the TUC—that is, essentially, what they do. The unions are the barrier against vexatious claims to the employment tribunal system, because it costs them money to take claims to the tribunals, and they do not take claims for the sake of it. It is important that individuals who do not have access to such services are given some support.

Let us not forget that many of the claimants who go through the employment tribunal system are migrant workers, because they are exploited by unscrupulous employers. Most of the employers in this country are well-meaning and contribute so much to our economy— when I ran my own business, the first call on my business was to ensure that the staff were well looked after and well protected—but that is not to say that all employers have such an attitude, and with migrant workers that is particularly evident.

Proposed new section 18B makes it clear that ACAS will be able to offer conciliation if an individual has not provided the requisite information, but also that such individuals will not be able to proceed to an employment tribunal if conciliation is not successful. That seems to be a barrier to justice. We could have a situation in which a vulnerable, low-paid worker wants to seek legitimate redress, goes to ACAS for conciliation but makes a minor mistake in the prescribed form, the prescribed manner or prescribed time; satellite litigation is deciding whether that is something that should be challenged and, while all that is going on, the employer can say, “Well, I’m not going to come to a conclusion or settlement here, because the form filled out is incorrect, the information provided to ACAS is incorrect, so the claimant has no recourse to the employment tribunal process.”

I ask the Minister to clarify that point, because it is important: the people who will get such forms wrong or who will not provide the appropriate information are the people who need most support and, in such circumstances, they are always the most vulnerable. It would be a real barrier to natural justice if people who had legitimate claims and a legitimate right to redress were not able to go on to the tribunal system just because they did not get the form correct in the first place.

We do not need to look too far to see where that has happened before: with the statutory dispute resolution procedures, which were repealed not so long ago. The well-meaning procedure that was put in place essentially ground the entire employment tribunal system to a halt, and the Government had to step in and repeal the legislation, because it provided not only a barrier to the employment tribunal process but a whole raft of satellite litigation that was going on in the background because people had not filled out forms properly and there was a real problem with procedure. We cannot allow that to happen. The only winners, if it does happen as an unintended consequence, would be the legal profession, and the very reason that early conciliation is being considered as a proposal is to suck some of the legal profession out of the system and to get back to the principles and spirit of the legislation and of how the system was meant to be put together.

If the requirement to provide information in a prescribed form is retained, it is essential for ACAS to have the powers and the proper resources to provide advice and support to individuals, to ensure that they are not subsequently barred from an employment tribunal. In proposed new section 18B(2), it seems that the initial contact with ACAS—as I mentioned—is by someone who is not a conciliation officer. That should allow for flexibility in assistance for the claimant. ACAS should not accept any formal early conciliation process until such time as it is satisfied that the information provided is correct and in the correct format. If that is ensured, there will be confidence in the system for both employees and employers, and it will negate the potential for satellite litigation. It should not be complicated to do. Of course, there are resourcing issues for ACAS. We will come on to some of those issues when we debate later clauses and perhaps in the stand part debate later this month, Mr Brady.

It is clear that ACAS needs flexibility built into the system. I have spent time at ACAS sitting with one of their experts, listening to the calls that come in. Their experts are hugely experienced and hugely professional. They are a wonderful resource to have. The depth and breadth of calls that I heard when I was there for a few hours was extraordinary, and the ACAS personnel on the helpline were very helpful in directing people in the right way. That is the right thing to do. If the compulsory process is to work properly, there is no reason why ACAS representatives should not receive information in the first instance. They can make sure that it is in the prescribed format on the prescribed form and in the prescribed time.

Once the process is complete and the advice has been given to both the employer and employee on both sides of the problem, it should progress to the conciliation officer. That is when the time scale should start in the conciliation process. That would ensure fairness in the system. It is similar to going to the post office and using the passport checking service. We send the prescribed forms in the prescribed format with the prescribed information to the correct place to ensure that the system is as efficient as possible.

The Bill should include provision for the employee to seek advice from ACAS on how to complete and submit their forms. That is why we have tabled two important amendments. They would limit the problem of satellite litigation around incomplete forms and confusion with the process and give the claimant the ability to seek proper redress. The early conciliation scheme should not be undermined by the prescribed information forms required and the risk of the claimant not getting such forms accurate.

The financing of ACAS, which the Law Society has highlighted, will be an issue for a future debate in Committee, but it is clear that people support, with caveats, the early conciliation process. I urge the Minister to look closely at the issues to ensure that we get it right. If the Government get it right, they will have the opportunity not just to free up the employment tribunal system, but in a small way take away the perception, particularly of small businesses, of fear of the employment tribunal system. Having the support of a well-respected organisation such as ACAS to ensure there is a first filter to the employment tribunal system should certainly help.

I would ask the Minister to consider the amendments and ensure that in all his deliberations on the Bill he puts fairness, equity and access to justice at the heart of the early conciliation process.

Norman Lamb (Liberal Democrat, North Norfolk)

It is a pleasure to serve under your chairmanship, Mr Brady, for the first time in this role. I hope that I will comply as much as possible with the proper process and not make too many mistakes. As always, I am sure you will keep good order.

I thank the shadow Minister for his positive comments on the principle of—

Iain Wright (Labour, Hartlepool)

The book.

Norman Lamb (Liberal Democrat, North Norfolk)

I was going to come on to that. I am grateful to the hon. Member for Edinburgh South for his determination to persist with promoting the book. I am disappointed he was not around 15 years ago when we were trying to market it. We would have sold more copies had he been there to assist me with all his experience in business.

Ian Murray (Labour, Edinburgh South)

I am delighted that the Minister has given way so early in his contribution. The problem now, which I hope he will dispel, is that we have marketed a book that is out of date. I hope this is not a ploy by the Minister for legal firms to get more work when people take advice from a book that is clearly out of date.

Norman Lamb (Liberal Democrat, North Norfolk)

In his somewhat light-hearted comment, the hon. Gentleman raises an incredibly important point. The fact that there is such a substantial book that deals with compensation and employment tribunals makes the point that the system’s complexity, which has grown up over many years, serves no one but lawyers. It is absolutely not in the interests of either employer or employee. As I appreciate he readily acknowledges, that complex system involves extra cost, which we need to reduce if at all possible, not only, self-evidently, for employers, but for employees. Any employee who brings a claim to a tribunal with legal help must pay fees: whether on a no win, no fee basis or in any other way, that is a cost to the employee. The more complex the system, the higher the fee. Anything that reduces cost in the system, as the Government are seeking to do, is good for both employer and employee.

There is a seductive view that we must ensure, at all costs, that an employee can go through to an employment tribunal. Currently, however, the average wait to get a case heard in an employment tribunal is 24 weeks, at enormous cost in terms of legal fees and anxiety for the employee. That is in the interests of no employee. Steps that we take to help both parties settle cases, both through the clause under discussion and the settlement agreement clause later, must be in the interests of employer and employee.

Julian Smith (Conservative, Skipton and Ripon)

Can the Minister confirm that the reforms in the Bill, together with a host of other employment law reforms that the Government are making, are designed to ensure that those without a job have the best chance of getting a job, because employers will be more confident to take them on?

Norman Lamb (Liberal Democrat, North Norfolk)

I am grateful to my hon. Friend for making that point. He is absolutely right. In the past, there has often been an exclusive focus on protecting the interests of those in work, sometimes at the expense of those with no job at all. If we stop and think about it, we should try to ensure that we have a system that gives employers confidence to take on workers. The hon. Member for Edinburgh South conceded that there were perceptions of complexity, but they are the reality, not perceptions. He himself described the system as having become very complex and therefore costly, which amounts to a disincentive to employers to take on new workers. We must take that very seriously.

Simon Danczuk (Labour, Rochdale)

How many jobs does the Minister think the proposals will create?

Norman Lamb (Liberal Democrat, North Norfolk)

It is impossible to say how many—it would be facile to try to put a figure on it.

Simon Danczuk (Labour, Rochdale)

Ten?

Norman Lamb (Liberal Democrat, North Norfolk)

I appreciate the hon. Gentleman asking the question—it is a reasonable question to ask—but if he thinks about it, I am sure he will accept that one cannot put a number on it. Although we might have different views about how to do it, we both want to create an environment in which companies feel free, able and confident to take on new staff. That is what the proposals are all about.

Andrew Bingham (Conservative, High Peak)

Does the Minister agree that the proposal will help smaller businesses, which do not have the HR departments that the large companies have, and particularly micro-businesses, whose perceptions of the complications and deterrents to employment will be washed away?

Norman Lamb (Liberal Democrat, North Norfolk)

I am fearful of saying anything about what I know from my experience because I will be accused of anecdote. None the less, I have experienced small businesses that find themselves in a tribunal having to pay my fees—very good value for money, I hasten to add, but a significant cost to their business. If a system is introduced under the clause that reduces the number of cases that get to that point, it will help small businesses very much.

Interestingly, the system builds on reforms made by the previous Government, who introduced a voluntary system of early conciliation, which permitted—but did not require—claimants to go to ACAS first, and something like 75% of people who used that system ended up not issuing a claim to the tribunal. That tells us something. It is impossible to know how many of the claimants would have done that anyway, had they not used the system—some of them might have just given up—but the voluntary system resulted in some people who would otherwise have issued a claim not doing so, because they received, not advice—ACAS is not there to give advice—but guidance about the law. We can learn lessons from that voluntary system, but we recognise that we can do so much more for both claimants and employers by requiring claimants to go through the process.

Ian Murray (Labour, Edinburgh South)

I am grateful to the Minister for being so generous with his time. We are in danger of conflating two issues. Yes, we should try to make the employment tribunal system simpler and more effective for both employees and employers, so as to uphold the rights of both groups—the vast majority of employers are good—but we are conflating that with an attempt to get rid of some of the perceptions out there about employment.

Joy Drummond said in her evidence to the Committee:

“Isn’t it more responsible for a Government to educate small employers and publicise the traps and how they should behave, rather than to legislate on the basis of a myth which, in itself, will, through implementation in such a way, cause more problems for everybody?”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 97, Q212.]

Will the Minister comment on that? He must be careful not to legislate for the sake of perception.

Norman Lamb (Liberal Democrat, North Norfolk)

The hon. Gentleman conceded two things in his opening speech: that there were “perceptions of complexity”, and that the system actually was complex. That lawyer clearly spoke from a lawyer’s perspective—I shall say no more—and I do not think that she told the whole story by talking about just perceptions. I think we can all agree that the system is complex, and favours only lawyers. I do agree with her, however, that it is also the task of Government, and indeed of ACAS, to improve the level of knowledge out there.

Geraint Davies (Labour, Swansea West)

Will the Minister give way?

Norman Lamb (Liberal Democrat, North Norfolk)

Let me finish the point. Incidentally, I have not yet got to the opening paragraph of my speech because there have been so many interventions. I want to make some progress. It is the task of Government to simplify the process, but also to educate. Through the guidance that we and ACAS can offer, we can do a lot to improve employers’, and indeed employees’, confidence in the system.

Before I make some progress, I want, however, to make one other point. The hon. Member for Edinburgh South made three references to satellite litigation. That is an unreal concern. I understand why he makes the point, but the measure is designed so as to take lawyers out of the system and to reduce, not increase, legal costs, and I am sure that that will be the effect.

John Cryer (Labour, Leyton and Wanstead)

The Minister will remember that the statutory disciplinary and grievance procedures were abolished exactly because of satellite litigation. That was pointed out earlier by my hon. Friend the Member for Edinburgh South. I might be wrong, but so far I can see no evidence that that situation would not be repeated in the new system; nothing in the Bill says to me that satellite litigation would be prevented.

Norman Lamb (Liberal Democrat, North Norfolk)

We can never legislate for the odd individual who seeks, through their own mindset, a basis on which to challenge the system, but we know from the voluntary system that the majority of people who go to ACAS choose, in the end, not to pursue a claim to the tribunal, because they either agree a settlement or decide that they do not have a claim. The main effect of the new system, as has been acknowledged by the Opposition Front-Bench team, will be to help settle claims.

I am grateful to the Opposition for their amendments and understand their concern to ensure that claimants can comply with the new obligations arising from the introduction of early conciliation. I want to reassure them that the aim of early conciliation is greater settlement of claims without the need for the intervention of the employment tribunal, not to impose additional burdens on claimants. That is important.

We are currently considering the detail of how early conciliation will work, and are, incidentally, working closely with ACAS to do that. We are mindful of the need to ensure that the detail that claimants are required to supply to ACAS is kept to a minimum—it would be ludicrous to do otherwise—and that the system is straightforward. The shadow Minister will, I think, concede that the chair of ACAS, who gave evidence last week, spoke with a lot of confidence about its capacity to make the system work effectively, and not to cause anxiety for employees or claimants.

We will consult on the detail of the new process later this year. The hon. Member for Edinburgh South made the point about the need to ensure that stakeholders—those interested in the system—should have the chance to contribute their views on the proposals. That will happen. We intend to make sure that the information sought from claimants is no more than is necessary to enable ACAS to begin the process of conciliation.

The form needs to be very simple, with the minimum information requirement. Obviously, name and address and employer are necessary. The hon. Gentleman conceded that the basic facts would have to be given. However, beyond some indication of the problem, we want to keep that to a minimum, with no extra burden on claimants or extra bureaucracy.

We think that ACAS can play a role in assisting prospective claimants to comply with their obligations, but we do not believe that such assistance should extend, for example, to providing support with the completion of the form. A vulnerable claimant might perhaps seek support from the citizens advice bureau; but of course such a claimant would need help from someone in issuing a claim to the tribunal. Given that the information required would be the absolute minimum, I do not see that the burden would in any way compromise or prejudice such vulnerable claimants. Rather, we see ACAS’s role as advising the prospective claimant on what information needs to be provided, or contacting the claimant where there are substantive gaps in the information submitted. Such an approach is in the interests of claimants. It means that those who need it will have reassurance about what information is required, while errors or gaps in the information can be addressed, thereby protecting ACAS’s ability to achieve settlement.

We will, as I have said, endeavour to make the system as simple and accessible as possible and will consult specifically on the issue of vulnerable claimants. That is why it is, in a sense, appropriate to deal with the matter by secondary legislation; it is possible to go into the detail of how to assist a vulnerable claimant in the conciliation process, which could never be done in primary legislation. That obviously makes sense.

Julian Smith (Conservative, Skipton and Ripon)

Having visited ACAS this week, I concur with the shadow Minister that it is professional, and fields calls in a very high-quality way. I urge the Minister not to be too prescriptive about the regulations. ACAS seems to be in a position to put many of the rules in place and keep things as informal as possible. I urge the Minister not to prescribe too much in the next phase of the regulation process.

Norman Lamb (Liberal Democrat, North Norfolk)

I thank my hon. Friend for that helpful intervention. I intend to keep the prescription to a bare minimum—only what is required to facilitate the process. There is no point in anything more. We shall be mindful of that as we draft the regulations and consult on them.

Ian Murray (Labour, Edinburgh South)

The issue then becomes the fact that the Bill states that if the prescribed form, timing or information are not correct, while the early conciliation process can be followed through, a claimant will be prevented from going to the employment tribunal system. That claimant may have a perfectly legitimate case for which they seek redress. Not all employment tribunal claims are vexatious, despite what the Government tell us. I appreciate that the Minister is committed to keeping things as simple as possible, but a proper claimant, with a claim that is proper on its merits, who needs to seek redress at an employment tribunal can no longer do so if they do not fill out the form properly, even though, in this system, a separate ET1 form would have to be completed for the process to commence.

Norman Lamb (Liberal Democrat, North Norfolk)

I suspect that the hon. Gentleman is trying to find problems where there are none. I do not think that filling in a form with one’s name and address, something about the problem that has led to the dismissal and the name of the employer is too onerous. As he says, the claimant would have to complete an ET1 anyway, and the ACAS officer can talk to the claimant if information is missing from the form. It can be easily resolved. There are of course CAB officers around the country to assist claimants if necessary. May I move on to amendment 9?

Amendment 9 does no more than provide a right that individuals already have. They can already ask ACAS officials for assistance with their employment dispute. There is no evidence anywhere that anyone is ever turned away from ACAS. Giving individuals the right to go to ACAS when they already have that right, adds little value. What is more important is that, where they exercise that right, ACAS is required to provide the necessary assistance. New section 18A(12)(b), introduced by the clause, requires just that, by providing an appropriate power so that we can impose a duty on ACAS to assist prospective claimants with the early conciliation process. A right already exists for anyone to go to ACAS, and we propose to introduce, through secondary legislation, a duty for ACAS to help that individual.

Amendment 11 would delete the power that we are introducing to impose a duty on ACAS to provide support. It would be rather self-defeating and to the disadvantage of claimants. I am sure that that is not the intention of the hon. Gentleman, but that is the amendment’s effect.

Iain Wright (Labour, Hartlepool)

I am following closely what the Minister says, and I agree with a lot of it. To what extent will the Government work with ACAS to promote the new duty to employees, to ensure that it is widely recognised and avoid the risks of perception and the anecdotes we have already heard?

Norman Lamb (Liberal Democrat, North Norfolk)

Absolutely. When it is introduced, it will be important for everyone to spread awareness of the fact that there is a new system in place. It will take a while for people to understand that, so to start I am sure that claimants will go straight to the employment tribunal. They will be told, “You have to contact ACAS first. Here’s the address.” It is also important to spread awareness of the fact that ACAS has the duty to assist claimants. It will want to ensure that people are aware that it is there to help and to assist in achieving a settlement—it is its purpose and raison d’être.

Julian Smith (Conservative, Skipton and Ripon)

If claimants refuse conciliation, is there an argument for making that clear on the certificate that goes to the employment tribunal?

Norman Lamb (Liberal Democrat, North Norfolk)

We will consult, and it will be dealt with through secondary legislation. The purpose of the measure is to settle claims without any pressure from either side. There is simply a requirement to go to ACAS, which gives it the opportunity to have the conversation and introduce the possibility of settling the matter. Given that one has to wait four months to even get a claim heard at a tribunal, once claimants recognise that, the prospect of getting the matter sorted so that they can move on with their lives will become attractive. It will be a minority of people who say to ACAS, “I don’t want to have anything to do with it.” We will have to wait and see. Imposing an implied pressure on claimants is not necessarily the right thing to do. I note my hon. Friend’s concern to ensure that people engage in the process and we will do everything we can to encourage that.

Iain Wright (Labour, Hartlepool)

The Minister mentioned the four-month period and possible bottlenecks in the tribunal process. We might come on to this at a later stage, but regarding resources for ACAS, is the Minister not concerned that there might be a logjam when people go to ACAS, because the resources will not be there? Will there be a bottleneck when trying to help ACAS in the early conciliation process?

Norman Lamb (Liberal Democrat, North Norfolk)

I think the hon. Gentleman last week heard the chair of ACAS express confidence that the system will work. ACAS has a duty and role later on in the process. It contacts all applicants during a tribunal process in that long four-month period of waiting for the claim to be heard. We are bringing the whole thing forward. We are not adding a lot of new people for ACAS to contact; it just has to contact them earlier. ACAS is confident it can make the system work well. The Government have made it clear that they will ensure that it has the resources to perform the role. ACAS, of course, has to ensure it is operating as efficiently as possible. The default option should not be to throw more money at it. We should ensure that it is robust in the use of public money. It expresses confidence that the system can work.

Iain Wright (Labour, Hartlepool)

The Minister has been extraordinarily gracious. The Government’s response to the consultation “Resolving Workplace Disputes” says:

“The Government recognises that there will be an increased burden on Acas that will require sufficient resourcing. This requirement will be met through the savings that will accrue to the Exchequer as a result of fewer cases requiring determination at ET.”

I do not want to jump the gun on future amendments and consideration, but the Government have recognised that ACAS requires more money than is proposed in the Bill to do its task. Is that not the case?

Norman Lamb (Liberal Democrat, North Norfolk)

I think I have already provided reassurance that the Government will ensure that ACAS has the resources it needs to perform its task. The Government’s new clause on settlement agreements has emerged since that document was produced. If that becomes law, that will also reduce the number of contested claims through the tribunal system. That is another way that through settlement of issues we can reduce the burden both on ACAS and on the employment tribunal system. The overall effect will be that claimants have to wait a shorter time to have their case heard at tribunal, because we will have taken cases out of the system through earlier settlement.

Simon Danczuk (Labour, Rochdale)

Will the Minister give way?

Norman Lamb (Liberal Democrat, North Norfolk)

Let me move on. I have tried to be generous with interventions but I should make some progress.

We do not consider that the issue of what and how assistance should be provided is a matter that should be dealt with in the Bill. It is properly a matter for procedural regulations, and the order-making power in new section 18A(12)(b) will provide for such regulations to be made. On that basis, I hope hon. Members will be prepared to withdraw amendment 9 and not to press amendment 11.

Ian Murray (Labour, Edinburgh South)

I am grateful to the Minister for his considered response to our amendments. I would like to pick up on some of the issues he has raised. He is right that we welcome early conciliation. However, I intervened on the Minister to make it clear that we have heard a lot of anecdote, not just from the Government but also their advisers, including Mr Beecroft who kindly appeared as a witness at the hearings last week. I concede there are perceptions, but I think Joy Drummond from Simpson Millar got it right. It is surely the job of Government to deal with the perceptions, rather than change the law to deal with the perceptions. That is not to say that we should not put all our efforts into making the employment tribunal system more efficient. We should, and I have said consistently that we welcome early conciliation. However, we need to ensure that it is done properly and that is designed for those who need to seek redress. The Government seem to come at this from the viewpoint that there are so many vexatious claims that the system is grinding to a halt and people have decided that, rather than get up in the morning and do a good day’s work and earn a good rate of pay and support their families, lifestyle and friends, they seek some way to undermine their employer and take them to a tribunal. That is not the way that it works. The number of employment tribunals is a tiny fraction of the number of people who work in the UK every single day.

I take slight exception to the hon. Member for Skipton and Ripon saying that these systems are designed to get people out of work into a job. This goes back to my earlier point about conflating the two issues. No one, anecdotally or otherwise, is saying that the greatest barrier to a business employing staff is the rights bestowed on people becoming an employee. Instead it is access to finance and the general state of the economy, and to be fair to the Minister, before he was appointed to his post he was very clear that any undermining of job security could undermine consumer confidence. Consumer confidence is already historically low and we have to make sure that we do not undermine people’s job security.

Julian Smith (Conservative, Skipton and Ripon)

Could the hon. Gentleman clarify that Labour’s view is that employment law burdens are not a barrier for business taking on new staff? Is that the Labour party’s view?

Ian Murray (Labour, Edinburgh South)

The hon. Gentleman asks for the Labour party’s view. It is not the Labour party’s view that matters; it is businesses’ view, given that the analysis was done by a business. It may be business’s view—the chief executive of anecdotes r us has been telling us that it is their view—but it is not according to business’s own impact analysis in their small business index. The Federation of Small Businesses has also said in its surveys that it is not one of the main reasons why employers are not taking on staff. It is the general state of the economy, the double-dip recession, the issues around the eurozone, the inability to access finance and the inability of large companies who are sitting on large resources to invest them in the economy. Those are the real reasons why people are not taking on staff. Look at one last piece of evidence. The Government, by statutory instrument, have already increased the qualification period for unfair dismissal from one year to two. When that went down from two years to one in 1999, there were 1.75 million jobs created in more than a million small businesses. So it is the general state of the economy.

In the witness sessions last week, many people made the point that if you said to an employer, “You will have to take on three members of staff in order to make a million pounds more profit,” the business owner is not going to say, “Hold on. I do not think I will do that for fear and perception of the employment tribunal system”. That is not to say it is not a real perception or real fear, but let us deal with that particular point, rather than anecdotal evidence.

Geraint Davies (Labour, Swansea West)

Can my hon. Friend confirm that research by the OECD across a number of countries, using a vast quantity of data, shows that there is no significant association between employment levels and the level of employment law? That being said, it is still evident that, other things being equal, no small business wants more rather than less regulation. All Beecroft pointed to was out-of-date opinion data from 2008, where only 13% of small businesses mentioned regulation. If you said to a small business, “Do you want some more regulation or would you prefer less?” it would say no. Obviously there is no association. Nobody wants more regulation, but let us be serious about this.

Ian Murray (Labour, Edinburgh South)

I am grateful for that intervention. The OECD, in another piece of empirical evidence, shows that this is not a barrier to people taking employment. Indeed, the OECD concluded that the UK already had one of the most lightly regulated labour markets among developed countries, with only the US and Canada with lighter overall regulations. Again, we heard from some of the questioning of the witnesses last week that we should be following a German model. That would be delightful. The Germans are somewhere around 32 out of 36 developed countries in terms of the employment regulation regime and if that is what the hon. Member for Skipton and Ripon aspires to, he will certainly get support from this side of the room.

Geraint Davies (Labour, Swansea West)

The accepted wisdom in Germany is that because it is difficult to get rid of workers, they invest in their training and productivity. If you can just get rid of people, why spend money on training and productivity? That is part of the key. In many instances, employment protection provides human capital assets that provide productivity. The proof is in the pudding and Germany is growing.

Ian Murray (Labour, Edinburgh South)

I do not want to stray from the amendments, but I invite hon. and right hon. Members on this Committee and across the House to reread what my hon. Friend has just said in Hansard, because that is the crux of the issue. Pretty much all employers, with the exception of a very small number, invest in human capital, because they see that as being about productivity and profitability. People in small businesses, particularly in this country, will take people on if they feel that doing so is good for the business and for the economy. We have seen the Government’s borrowing go up this week for two reasons: more benefits and less growth. That is the equation. More benefits and fewer people in work equals higher deficit. I wish the Government would realise that.

David Mowat (Warrington South) (Con) rose—

Graham Brady (Conservative, Altrincham and Sale West)

The shadow Minister has helpfully indicated his reluctance to be drawn from the substance of the amendments, and I hope Mr Mowat will not seek to make that more difficult for him.

David Mowat (Conservative, Warrington South)

I hope not, Mr Brady, although I am not sure whether I understood the shadow Minister’s point.

The shadow Minister says that having German-style regulation would be delightful. I agree that the German regulatory burden is probably a little higher than ours in some respects, so is it the position of Labour’s Front-Bench team that we should, along German lines, impose further regulation on the UK’s model?

Ian Murray (Labour, Edinburgh South)

I was merely drawing a comparison between the OECD, as raised by my hon. Friend the Member for Swansea West, which said that we have the third most liberal employment regime in the world, and Government Members, who have called for a German-style employment regime in some of their witness statements. The witness statements are all here for the hon. Member for Warrington South to read and review. Many people use the German example, but as he has rightly conceded, the German economy has far more workers’ rights. Germany has the right balance.

Neil Carmichael (Conservative, Stroud)

We should have had a German expert among our witnesses, because, ironically—I hope the shadow Minister accepts this—Germany has reduced the burdens on small businesses for prime contracts. That is not too different from some of the measures in the Bill, which is well worth noting.

Graham Brady (Conservative, Altrincham and Sale West)

Mr Murray, I hope we can get back to ACAS.

Ian Murray (Labour, Edinburgh South)

Certainly. I will quickly answer the point raised by the hon. Member for Stroud, if I may.

I have consistently said on these amendments that we accept and support early conciliation. The amendments seek to help with that. We welcome anything that produces jobs in this country while, on the one hand, protecting workers’ rights and, on the other hand, generating growth. Indeed, we will be jumping for joy as soon as the Government come forward with any proposals to create growth in this country. I am sure we would support such proposals. I am happy to circulate by e-mail, or perhaps through the Clerks, Labour’s five-point plan, which the hon. Gentleman may wish to read and which would provide growth and jobs in this country.

So back to the amendments, Mr Brady, before people test me on the five-point plan. We are considering the detail of early conciliation through ACAS, which is important. The Minister said that I am trying to create issues where there are none, but the Bill clearly states that if the prescribed information on the prescribed form is not submitted within the prescribed timetable, that could bar people from going to an employment tribunal. That gives me grave concerns, because this is about access to justice. As a former employment lawyer, I believe that access to justice is hugely important. New section 18B states:

“This section applies where…ACAS has not received information from the prospective claimant under section 18A(1).”

New section 18A(1) addresses the prescribed form, the prescribed time scales and the prescribed information. Will the Minister consider the ET1 form? There is one form for one purpose being submitted straight to ACAS that people are already aware of without having to run a parallel two-form system.

The Minister also said that the difficulty of completing the form would not prevent people from entering the employment tribunal system because they could use Citizens Advice for support. I do not know whether the Minister has sent any constituents to Citizens Advice recently, or whether the organisation has referred any constituents to him, but it is under a significant amount of pressure. An individual, who may be in a highly stressful situation because they have just lost their job, will find it difficult to get a quick meeting with Citizens Advice to talk about the issues. It is unfair and unkind of the Government simply to pass the responsibility for the legislation on to Citizens Advice.

Norman Lamb (Liberal Democrat, North Norfolk)

On that point, I am sure the hon. Gentleman would agree that although we all accept that citizens advice bureaux are under pressure, we would all encourage those who need support and help, and who cannot afford to pay for it, to go to their local CAB. Members on both sides of the Committee support local citizens advice bureaux.

On the hon. Gentleman’s earlier point about the additional requirement to submit a claim, there is nothing about when it has to be submitted. Of course, most claims must be submitted within the three-month period; if an ex-employee does not bring a claim to the employment tribunal within that time, they lose their right to do so. That is self-evident and it has been the law for a long time, under the previous Labour Government as well as under ours. The measure simply requires the prospective claimant to contact ACAS during that three-month period. If the claimant is unaware of that new right and contacts the tribunal straight away, all the tribunal will do is to give them ACAS’s address and telephone number. It is not complicated.

I understand why the hon. Gentleman is questioning and challenging the matter but if he thinks about it, I genuinely think he will see that it is not a problem. The information required is simple. Instead of being required to fill out a whole ET1 form at an early stage—perhaps a week after dismissal, when an applicant will not have thought, or sought advice, about the complex information that has to go into that form—an applicant will simply be required to provide their name and address, the name of the employer and the basic problem that led to their dismissal. That does not seem too onerous to me, and ACAS did not view it as such.

Ian Murray (Labour, Edinburgh South)

I am comforted by the fact that the Minister is aware of some of the problems and the time scales involved. If the proposed form is so simple, however, why will the Government not accept amendment 9, which would stipulate that ACAS will provide the support that people need to complete the form?

Norman Lamb (Liberal Democrat, North Norfolk)

As I tried to explain in my response to the hon. Gentleman’s opening speech, amendments 9 and 11 take away the Government’s power to impose a duty on ACAS to help claimants, which is why we do not want to accept them. I am sure that that was not his intention, but it is the effect of the amendments. Do the Opposition really want to remove a duty on ACAS to provide support to claimants? I do not think so. It would be largely pointless to introduce a right for the claimant to seek help from ACAS when such a right already exists.

Ian Murray (Labour, Edinburgh South)

The Opposition merely seek to ensure that the most vulnerable workers are supported. [ Interruption. ] I accept what the Minister has said about the duties. If he feels that the Opposition have a point about trying to protect vulnerable workers, I hope that on Report he will provide us with some evidence and comfort that vulnerable workers who are unable to complete the processes will be given as much support as possible.

John Cryer (Labour, Leyton and Wanstead)

Is my hon. Friend aware that during 2010-11, 218,100 claims went to the tribunal service, although only 20% of those went to a full hearing? That means, because of various exceptions, that ACAS could find itself dealing with 200,000 claims a year. I am not convinced that it will have the resources to deal with such a massively increased volume.

Ian Murray (Labour, Edinburgh South)

That is slightly off the amendments that we are looking at.

Regarding one of the critical points of the entire debate about ACAS, which I am sure we will come on to later, I asked a parliamentary question to the Minister’s predecessor about the funding for ACAS. In 2009-10, when the Government’s impact assessment starts assessing how much employment tribunals have increased, ACAS had a total budget allocation of almost £56 million. In 2011-12, it had a total budget allocation of under £48 million, and we are putting more responsibilities on it. I appreciate that the chair of ACAS has said quite clearly that it will cope and remodel the service, but I am not sure that that is what we want to achieve for it to be successful.

Norman Lamb (Liberal Democrat, North Norfolk)

I will respond to the hon. Gentleman’s concern by way of an intervention.

The vast majority of claims before the tribunal are multiple claims. Single claims amount to about 60,000. The clause makes it clear that for multiple claims—let us say that there is a group of people who have been dismissed from one workplace—if one in that group of employees asks ACAS to intervene, there will not be a requirement on the whole group to do so. An awful lot of the claims before the tribunal in the year mentioned by the hon. Gentleman are part of those multiple claims, and there would not have been a burden on ACAS.

I made this point earlier: ACAS is contacting claimants anyway during the wait before the tribunal hearing to see whether it can assist. The clause will bring the process forward.

Ian Murray (Labour, Edinburgh South)

I am sure that there was a question mark at the end of that intervention.

Norman Lamb (Liberal Democrat, North Norfolk)

There was, absolutely. Does the hon. Gentleman agree?

Ian Murray (Labour, Edinburgh South)

I agree. I am sure that we will come on to the issues regarding the Government’s evidence base for employment tribunals in the clause stand part debate. The Government have said that the number of employment tribunals is increasing by a vast number, but that is not the case, and the Minister has quite helpfully just explained why.

Iain Wright (Labour, Hartlepool)

Following on from what my hon. Friend is saying, and in response to the Minister’s intervention, the Government’s own impact assessment quite rightly says that there were 218,100 employment tribunal claims, of which about 60,000 were single claims. However, it concludes:

“Recent spikes have involved large numbers of multiple claims in specific industries so it is not clear whether recent increases will be sustained over the longer term.”

Does my hon. Friend agree that there are two conclusions from that? First, the Government are leaping in the dark and have no evidence whatever regarding future claims. Secondly, it puts to rest the myth that the reason why the British economy is in recession is the large number of employment tribunal cases.

Ian Murray (Labour, Edinburgh South)

I could not have put it any better myself. The Ministry of Justice’s own figures, which my hon. Friend has read out, show that the number of claims went up by a considerable amount, but that was multiple claims. If my figures are correct, the number of multiple claims went from around 7,000 to 7,400, while the number of individual claimants within those claims went up by some 158,000 or so. Perhaps we will come on to those figures a bit later.

The crux of my hon. Friend’s comments is echoed by the chief economic adviser of the Chartered Institute of Personnel and Development, who said:

“If you look at the evidence on unfair dismissal, I mean there isn’t actually anything to suggest that watering down those rights would create any more jobs and indeed the job insecurity it would create would actually be bad for the economy and businesses.”

People in the CIPD, who are professionals in the area, are saying that the watering down of rights could have the opposite effect on the economy and on business.

I want to challenge the hon. Member for Skipton and Ripon. When he intervened on the Minister during his contribution, he suggested that if claimants did not accept conciliation or were objectionable or obstructive, perhaps that should be put on to the ACAS certificates, so that the employment tribunal could see whether the employee—

Andrew Bridgen (Conservative, North West Leicestershire)

The hon. Gentleman may be misquoting my hon. Friend the hon. Member for Skipton and Ripon, who I think was indicating that either the applicant or the respondent could be unwilling to take part in conciliation. Either action could be of interest to the tribunal when awarding costs at the end.

Ian Murray (Labour, Edinburgh South)

I am absolutely delighted by that intervention, because it is exactly the point that I am coming to. While the hon. Gentleman was enthralled by my contribution, he did not see that the hon. Member for Skipton and Ripon was nodding in agreement at what I said. He said earlier that if claimants refuse, it should be made clear on the form what the refusal was in order for that to be able to proceed to an employment tribunal. However, on the other side, that is actually true, and I shall explain why.

I raised a point of order last week with you, Mr Brady, about dealing with the Bill’s provisions without seeing the impact of the employment tribunal fees that are being brought in. We could have a situation in which a claimant, in all good faith, goes to ACAS for early conciliation, as does the employer. It might be a low-paid, vulnerable worker, who has just lost their job and has no income. The employer might say, “I can either come to a settlement, or I can play hardball on the basis that they will not be able to raise the money for the employment tribunal fee”, which is the next stage.

Julian Smith (Conservative, Skipton and Ripon)

The hon. Gentleman knows that he is going down the most ludicrous track with that argument. The Underhill review on employment tribunal rules will allow low-income workers to go to an employment tribunal at no cost. He is aware that that is the case, so why is he prattling down that useless path?

Ian Murray (Labour, Edinburgh South)

Prattling down a useless path is something that I often feel I do as a member of such Committees.

The Minister responded to the hon. Member for Skipton and Ripon using the words “implied pressure”. Let us take away the semantics of whether somebody would be eligible not to pay fees. With that on one side, there is an implied pressure if the employer of somebody who has lost their job—that person might be asset-rich and cash-poor, who knows?—does not want to come to a settlement at ACAS early conciliation. That is key: the implied pressure is actually in the employer’s hands, not the employee.

I point out to the hon. Member for Skipton and Ripon that if an employee has been unfairly dismissed— and an employment tribunal finds that to be the case —and that employee does not want to settle at early conciliation, perhaps they should not. Perhaps the employee wants their day in court in order to expose what has happened to them in the workplace. It is important to give people that ability without the implied pressure of fees that they are potentially unable to afford.

I conclude by returning to where I started. In order for the system to work effectively, this must be done absolutely properly. It is disappointing that the proposals were not consulted on before the legislation was introduced, that we are now determining clauses that are not specified, and that the consultation will happen afterwards. We have proposed the amendment in all good faith to say that ACAS needs resources to enable it to support workers who approach it for help with filling out forms, in the prescribed manner, to the prescribed time scale, and with the required information, as set out in the Bill.

Norman Lamb (Liberal Democrat, North Norfolk)

I will resist the temptation to respond to the hon. Gentleman’s rather expansive speech on matters that seem wholly unrelated to the amendments that he proposed.

I shall make a few brief points. I am left completely confused, because on one hand, the Opposition say that they support the new concept in principle, but on the other, the shadow Minister accused the Government of leaping in the dark. We seem to agree that the proposals are a good thing, and they are widely supported by parties outside this place. Let us focus on what we are actually doing. This is not about taking away any rights; this is about helping the parties to conciliate and reach agreement to avoid unnecessary tribunal claims that are to the disadvantage of both employees and employers.

The hon. Member for Edinburgh South talked about perception and referred again to the lawyer who gave evidence last week. He conceded in his opening speech that it is not only about perception; the system is complex. We are seeking ways to avoid claimants having to use a complex system and want to ensure that they can settle their claims simply, allowing them to move on in their lives and avoid extra cost.

I come back to the specific purpose of the amendments. Again, I invite the hon. Gentleman to consider withdrawing them, because their effect would be to take away the duty on ACAS that we will introduce by way of secondary legislation to help claimants. Do they really want to remove the duty on ACAS in these circumstances to help claimants? If they vote for the amendment, that is what they will be doing. All the other amendment would introduce is a right for employees to go to ACAS, which they already have. So the provision would add nothing, but would take away an important duty imposed on ACAS to help claimants.

The hon. Gentleman made one specific point about vulnerable claimants. I absolutely give him the reassurance that the whole purpose of the measure is to ensure that the system is as light-touch as possible and that no unnecessary burden will be imposed on claimants, so that they provide the bare minimum of information to allow conciliation to proceed. Secondary legislation will specifically help vulnerable claimants put their case to ACAS. On the basis that if hon. Members vote for the amendments, they would be removing the ability to impose a duty on ACAS to help claimants allow the system to work, I invite him to withdraw them.

Ian Murray (Labour, Edinburgh South)

Mr Brady, may I seek your advice? I accept what the Minister has said about the wording of the legislation. Would it be possible to test the Committee’s view on the first amendment?

Graham Brady (Conservative, Altrincham and Sale West)

Yes indeed.

Ian Murray (Labour, Edinburgh South)

I would like to press amendment 9.

Ian Murray (Labour, Edinburgh South)

I beg to move amendment 10, in clause 7, page 4, leave out lines 26 and 27 and insert

‘the conciliation officer may extend the prescribed period if the conciliation officer deems it necessary to reach a settlement between the persons who would be parties to the proceedings, with the consent of both parties.’.

We lost that vote so spectacularly I almost feel like the Minister’s party in terms of disappointment—I am surely misunderstood. What we are trying to achieve with amendment 10 is fairly self-explanatory. An important aspect of early conciliation must be to give every opportunity to allow settlement between the parties to be reached.

I will explain why we feel that that is an important matter to consider: as with the previous amendments, it relates to the fact that clause 7 has the potential for significant unintended consequences. The idea of early conciliation has cross-party support, and I emphasise again to the Minister that we will do all we can to ensure that it is supported and, indeed, improved. We welcome the input of ACAS, which, as we have already said, is to all intents and purposes the household name on these issues.

Ian Murray (Labour, Edinburgh South)

Nothing disappoints me more, Mr Bayley, than the fact that you were not subject to this morning’s exciting and vigorous debate on clause 7.

Hugh Bayley (Labour, York Central)

We will doubtless make amends.

Ian Murray (Labour, Edinburgh South)

We will not go over amendments 9 and 11 again, but we have been rattling through the Bill at a swift pace. The number of Opposition members of the Committee is slightly diminished at present, but—as I have said to my hon. Friend the Member for Hartlepool —we are more interested in quality, not quantity. He is currently considering whether that statement is correct.

Before the Committee adjourned this morning, I was explaining that amendment 10 is fairly self-explanatory. Like amendments 9 and 11, it seeks to address the clause’s potential unintended consequences. The idea of pre-conciliation has cross-party support, a principle that I must have emphasised some seven or eight times during this Committee. We welcome the input of ACAS, which we discussed earlier. However, an overly prescribed and complicated process could give rise to similar problems with satellite litigation, as we have seen in the new repealed statutory dispute resolution that I mentioned earlier. We have discussed some of the issues already. We must avoid a situation whereby this ragbag Bill, as it was described on Tuesday and in some of the witness statements, creates a new landscape in employment law where a lawyer’s dream is predominant at the expense of the rights of employees and, indeed, of employers. We have to make sure that that does not happen.

Clause 7 proposes that a potential claimant must first provide ACAS with details relating to their claim before making a complaint to an employment tribunal. The process is complex, which is why I think some employment lawyers, including those in the Law Society, expressed concern about this part of the Bill when we took evidence. We have tabled the amendment to try to be helpful and to eke out some of the clause’s problems and potential pitfalls. We support the measure and want it to be effective, but we need to at least examine some of the issues, particularly if there is a consultation to come.

Iain Wright (Labour, Hartlepool)

Welcome to the Chair, Mr Bayley; it is a pleasure to see you again. I hope that I am not going to pre-empt what my hon. Friend the shadow Minister is going to say, but I was struck by Joy Drummond’s evidence last week when she stated, in stark language:

“I am not even against the idea of making it compulsory that people try conciliation before an employer has to respond to a claim. The difficulty is that the method proposed by the Bill, as currently drafted, is unnecessarily complicated and will lead to more uncertainty, more litigation, more cost and management time for employers—not to mention that it places additional hurdles in front of claimants with valid claims.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 89, Q201.]

What does my hon. Friend think of those strong words?

Ian Murray (Labour, Edinburgh South)

I am grateful to my hon. Friend for that intervention. The comments of Joy Drummond, who has more than 30 years’ experience in employment law, are key to the amendment and the clause. She said that one of the potential pitfalls of including an ill-thought-out, ill-advised and rash ragbag clause in a ragbag Bill—I am desperately trying to think of something else that is ragbag—is that it might make the process worse. She is an extremely experienced employment lawyer who has warned against the potential dangers.

Julian Smith (Conservative, Skipton and Ripon)

Could the hon. Gentleman confirm that the biography of the witness to whom he and his colleagues have referred several times states that she advises mostly trade unions and their members?

Ian Murray (Labour, Edinburgh South)

The hon. Gentleman never fails to disappoint with his interventions. The panel of expert witnesses was agreed to by the Committee on a cross-party basis. We cross-examined them, and all Committee members had an equal opportunity to do so. Indeed, some of Ms Drummond’s responses that we have quoted were from her answers to the hon. Gentleman’s questions. It is perfectly legitimate to quote someone with more than 30 years’ experience. To go back to my opening remarks, I say to the Minister and Government Members that we support early conciliation and that we are genuinely trying to improve the clauses.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Before my hon. Friend moves on from answering the supposed point made by the hon. Member for Skipton and Ripon, does he agree that part of the role of trade unions is to save businesses and the economy money by reconciling and working with their members to minimise the number of cases that require tribunals, and that having advised trade unions qualifies someone to speak on this subject?

Ian Murray (Labour, Edinburgh South)

I am grateful for my hon. Friend’s intervention. The Government tend to bandy around “unions” as a dirty word, although they provide so much to our economy. Frankly, I would rather take the word of an employment lawyer who has 30-odd years’ experience and is an expert in the field, than a venture capitalist who writes an ideological report without any evidence whatever.

Graham Evans (Conservative, Weaver Vale)

Most small and medium-sized enterprises do not have any union representation, so that point is not relevant. Are not the hon. Gentleman and his party in danger of becoming the party of employment lawyers?

Ian Murray (Labour, Edinburgh South)

Intervention after intervention has been irrelevant and founded on ideological prejudice. [ Interruption. ] Some of my richest friends are employment lawyers.

To put all the interventions in context, we congratulate the unions on what has happened at Ellesmere Port. That shows the strength of the trade union movement, which is working with employers and employees to create growth and employment in this country. The movement is a great part of British society and should remain so.

I am delighted that the hon. Member for Skipton and Ripon mentioned the biography of the employment lawyer Joy Drummond, because we can also advertise her book. I hope that, after his intervention, it will sell more copies than this solitary copy of the Minister’s book—incidentally, I am deeply disappointed that my hon. Friend the Member for Hartlepool spilt water on it earlier.

The hon. Member for Weaver Vale is correct to suggest that SMEs do not have the same support as larger companies do. It is critical to ensure that clause 7 is absolutely right because, if it is, the main beneficiaries will be employees and particularly small businesses. We have tabled the amendments in good faith to try to ensure that the clause is as responsive as possible to small businesses.

Iain Wright (Labour, Hartlepool)

While my hon. Friend is responding to the hon. Member for Weaver Vale, does he accept that although SMEs are not often unionised workplaces, they have their own excellent organisations? The Federation of Small Businesses springs to mind, and I would also mention the manufacturers’ organisation EEF, which is fantastic at pushing for the best for its members. Does he agree that they also have rights and that it is important to consider them in a wider context?

Ian Murray (Labour, Edinburgh South)

Absolutely. Small business organisations do a wonderful job. A few Fridays ago, I met Scottish Engineering, which has a very affordable package of legal support, particularly in the employment field. Many hundreds of members have signed up to that, and they receive wonderful legal support in going through the system.

To return to the amendments, I want to highlight the complexity of the conciliation clauses. A form prescribed by the Secretary of State must be lodged with ACAS within the current time limit for an ET1 form, which must be submitted one month after an ACAS certificate has been issued to show that early conciliation has been exhausted or completed. Schedule 2 states that during early conciliation the time limit for employment tribunal cases will be effectively frozen and claimants will always have at least one month to file their ET1 claim form for an employment tribunal at the end of the ACAS early conciliation.

Will the Minister clarify the time limits that would apply to the proposed ACAS form? I will run through two or three of the main ones to show how complicated this can become. With unfair dismissal claims, a person gets three months less one day from the date of termination of employment. Discrimination claims must be within three months starting with the date the act or actions took place or such period as the tribunal considers just and equitable. Disability discrimination claims must be within three months of the act of discrimination. Equal pay must be within six months of the employee employment. Deduction from wages must be within three months from the date of the deduction. Wrongful dismissal is three months starting with the effective date of termination or later if it was not reasonably practicable for the claim to be presented within three months. On redundancy payments, employees must have two years’ continuous service, must be an employee, and must not be within an excluded class.

The time limits are written in law and are well established, but we can see that this is already a rather complicated process, and access to justice should not be hindered by what should be an ACAS gateway turning into a significant hurdle. We are essentially running a system with two different forms and parallel time scales. This would particularly affect those without representation or with literacy or language issues—as with the first group of amendments proposed this morning—because they would need to lodge two forms within two different time limits.

The amendment seeks to make the process as easy as possible for employees and employers to ensure that we do not end up with a situation in which satellite litigation becomes the order of the day. As already mentioned, several law firms have expressed concerns that the measure will lead to more satellite litigation about whether the requirements have been met in the time limits. They had said that this was the case with the former requirement for pre-claim disciplinary and grievance procedures, which we spoke about this morning and which were introduced in 2004. They had to be abolished in 2008, because the intended purpose—positive purpose—of those requirements ended up with the employment tribunal system grinding to a halt.

Such precedents are in danger of being repeated. The Gibbons review, which resulted in the abolition of the pre-claim grievance procedures, stated that the main problems with the statutory dispute resolution procedures —let us see whether there are any parallels—included unnecessary high administrative burdens on all parties; disputes were becoming formalised that could have been resolved informally; the one size fits all approach did not work for smaller employers; and the procedures were too bureaucratic and complicated. If the claim form had more than one jurisdiction, differing time limits led to employees submitting more than one claim form covering the same event. Vulnerable employees could be deterred from accessing the tribunal system. The adjustments to the compensation were not applied by tribunals, and employers and employees were now seeking legal advice earlier because the procedures were too complex.

Such problems sound rather familiar and remind us of what we spoke about this morning and indeed this afternoon’s amendments. The amendment proposes that the clock should not start on the employment tribunal procedure until the conciliation officer is clear that there is not going to be a settlement. This could be easily achieved by the prospective claimant having to submit only one form to one time limit. This would remove the two time limits and would ensure that the long established statutory time limits remain in place for the formal employment tribunal process. Indeed, the Secretary of State can accommodate this through clause 7(1)(11):

“The Secretary of State may by employment tribunal procedure regulations make such further provision as appears to the Secretary of State to be necessary or expedient with respect to the conciliation process provided for by subsections (1) to (8).”

Our amendment is intended to prevent the implementation of clause 7(1)(4)(b) where the prescribed period expires without a settlement having been reached. That means that the clock is not ticking on the formal employment tribunal process as clause 7(1)(5) suggests that ACAS can still endeavour to reach a settlement after the expiry of the prescribed period. With our amendment, ACAS could have the flexibility to use additional time, should that be required on top of the prescribed period, in order to settle the claim and keep it out of the employment tribunal system—if the ACAS conciliation officer feels that that is necessary to settle the case. If one party does not agree, the ET1 form, alongside the certificate from ACAS, would then be sent to the employment tribunal for its procedures to commence formally. This simple amendment merely says that, in this process, if a conciliation officer, with the consent of both parties, feels that, the prescribed period having expired, he would like to continue to try to reach a settlement, the clock would stop permanently on that issue until such time as he thought it appropriate to issue the certificate to the employment tribunal to take the case forward.

That is why we are proposing this amendment. We are making sure that both parties agree, so that the conciliation ethos continues and the well established employment tribunal time scale process remains in place.

Norman Lamb (Liberal Democrat, North Norfolk)

May I say, Mr Bayley, that it is a pleasure to serve under your chairmanship—for the first time in a speaking role. I will do my best to stick to the proper procedural rules that you impose upon us.

The shadow Minister seems to be devoting a lot of time to quoting employment lawyers. I just caution him about spending too much time in the company of lawyers—it is not good for the hon. Gentleman. We must always bear in mind—I say no more than this—that lawyers have a vested interest in this process. We should remember that when we hear what they say. The quotation he made from Joy Drummond, suggesting that this will lead to more litigation, more claims, is exaggerated, given that this is about taking lawyers out of the process and settling claims without using Joy Drummond and her colleagues. To suggest that this will lead to more litigation, more work for lawyers, undermines the credibility of evidence—it is clear that this clause is designed to achieve precisely the opposite.

Ian Murray (Labour, Edinburgh South)

I do not disagree with anything that the Minister has just said about trying to take some of the legal processes out of this: this is precisely why we are proposing these amendments—to make this as efficient a process as possible, so that we do not end up with the legal profession looking at this system as an opportunity to add more on to their fee structure. They will litigate on the basis of forms that are incorrect or prescribed periods of time that are lapsed and this would just give ACAS the flexibility to deal with that.

Norman Lamb (Liberal Democrat, North Norfolk)

I know the point that the hon. Gentleman makes and I accept his bona fides in accepting that, in principle, this is a good reform. I just say that Joy Drummond said something in her evidence that I agreed with, which was that pre-action conciliation is a very good idea—I endorse that at least.

Ian Murray (Labour, Edinburgh South)

I accept the Minister’s point that employment lawyers, like every other group, have vested interests, but if it was in the interests of employment lawyers to increase their fees as a result of what the Government are proposing, surely Joy Drummond and others would be supporting in full what the Minister is suggesting. However, in stark language to the Committee, that proved otherwise. They are trying to help provide a middle way forward for the Minister. Does he not accept that?

Norman Lamb (Liberal Democrat, North Norfolk)

The tone of some of the evidence, although accepting, in principle, that the conciliation proposals are a good idea, was to raise all sorts of concerns about the potential for them to create extra litigation—concerns which I do not share. It suggests to me that tampering with a system in a way that involves a lot of lawyers and a lot of expense for both employers and employees is not a good thing. That is where I disagree with Joy Drummond’s evidence.

The hon. Member for Edinburgh South referred to the fact that different rights have different limitation periods. One of the many problems that has grown up over the years with this horribly complex area of law, which is completely contrary to the original purpose of a simple tribunal process for lay people to use without lawyers, is that there are differences in the ways different limitation periods are defined. In a sense, we do not have to worry about any of that as far as the clause is concerned, because it is simply designed to stop the clock, whatever the limitation period is, for a defined period in order to allow conciliation to take place. That is all it is designed to do.

Ian Murray (Labour, Edinburgh South)

The Minister has just said that the clause is in place to, in his words, stop the clock and allow pre-conciliation to take place for a defined period. Our amendment would do exactly that, but allow flexibility in that defined period if a conciliation officer decides that more time is required.

Norman Lamb (Liberal Democrat, North Norfolk)

Let me get on to that, because I agree with the hon. Gentleman’s sentiment, and I hope I can reassure him.

I agree entirely with the sentiment underpinning the suggestion that the expiry of the prescribed period for early conciliation should not be allowed to thwart the achievement of a settlement for want of a few more days; that is where we are at. If the discussions are going nowhere, there is no point in just extending the time. However, if there is a sense that parties are within touching distance of a settlement, it would be crazy if the system simply brought it to an end.

I accept the sentiment behind the amendment, and that is why, as we set out in the Government’s response to the “Resolving workplace disputes” consultation, our intention is to allow the early conciliation period to be extended where the conciliation officer believes that there is a reasonable prospect of a settlement and, critically, where both parties agree. In a scenario where they are close to a settlement and both parties think it is worth giving it a few more days to seal the deal, the conciliation officer will have that power, as the hon. Gentleman wants through the amendment.

We will deal with the issue through secondary legislation, as is appropriate, and, critically, after consultation. However, we recognise that any extension cannot be indefinite, and that is the problem with the amendment, which would provide no time limit to the framework. Parties must have a final deadline, both to focus their minds and to provide reassurance that the process will not simply drag on indefinitely. We therefore intend to use secondary legislation to prescribe the period for early conciliation and to use those regulations to give ACAS conciliators the power to extend that period by up to two weeks.

We do not think that provisions on the duration of conciliation or about extensions to that period need to be contained in the Bill. It is more properly a matter for procedural regulations. The order-making power in proposed new section 18A(12)(c) will allow us to make such extensions. Having the provision in secondary legislation will allow us to monitor how the system is working. We can also look at whether, in light of experience, it makes more sense to limit the extension period or even extend it. Let us look at how the system works. Secondary legislation will allow us the flexibility to make changes in light of experience.

Finally, the amendment would have an unintended consequence, which I think will lead the hon. Gentleman to accept that it would make sense to withdraw it. I have tried to make the point that we accept the sentiment behind the amendment. The problem is in the lines that the amendment would delete. It would remove the obligation on the conciliation officer to serve a certificate on a prospective claimant. Without the certificate, the claimant would not be able to present their claim to the tribunal. I am sure that on reflection, the hon. Gentleman will not want to prevent claimants from bringing claims to the tribunal; he has already said that he wants the conciliation process to work. In light of that, I hope that he will agree to withdraw his amendment.

Ian Murray (Labour, Edinburgh South)

I am delighted by the Minister’s response. I am pleased that he has used terminology such as “accepting the sentiment”, because we have tabled the amendments in the spirit of trying to make the clause as responsive as possible to what it is trying to do. I am delighted that the conciliation officer will have more power to look at the flexibility around the timings of the conciliation process, and I am happy to accept the Minister’s assurances that the Government will look at this issue quite seriously when consulting on the process of how it would work, perhaps extending by up to two weeks. There may be unintended consequences, but the purpose of the amendment was to seek those assurances and to obtain some comfort that, where two parties are almost at the stage where they might be able to come to some kind of agreement, the ability for them to do so will exist. That may take away some of the issues around brinksmanship, which may come to pass with these pre-conciliation hearings.

Having received those particular assurances from the Minister, I am happy to ask to beg leave to withdraw the amendment.

Ian Murray (Labour, Edinburgh South)

I beg to move amendment 12, in clause 7, page 6, line 17, at end add—

‘(3) The Secretary of State must within 12 months of the coming into force of this Act, and afterwards annually, prepare and lay before both Houses of Parliament a report on the workings and implementation of this Section.’.

Hugh Bayley (Labour, York Central)

With this, it will be convenient to consider clause 7 stand part. Therefore, we will not have a separate stand part debate for the clause.

Ian Murray (Labour, Edinburgh South)

We are all experts now—probably—on early conciliation at ACAS, so hopefully we will be able to get through the stand part debate and indeed the debate on amendment 12.

It is fairly clear what we are trying to achieve with amendment 12; it really just encapsulates the other amendments that we have tabled this morning and earlier this afternoon. It aims to ensure that early conciliation is operating properly and gives an opportunity for the Secretary of State and indeed the Minister to come back to both Houses of Parliament and give us an update on how it is working, to ensure that any unintended consequences—satellite litigation, the involvement of the legal profession—are better balanced, so that they do not turn this idea of early conciliation into something that it is not intended to be.

We heard the Government proudly declare before the Queen’s Speech that this Parliament was going to be focused on one thing and one thing only—growth. This Enterprise and Regulatory Reform Bill could not be less appropriately named. As we discussed in the Committee on Tuesday and earlier this afternoon, it is a ragbag of BIS proposals that have been brought together as some kind of panacea for economic growth. It could not be further from the actualities of what it is trying to achieve.

It is important to put in context the rhetoric and narrative of the Government in proposing clause 7 and subsequent clauses. At the outset, I must say that we recognise, we have always recognised and it is on record that we recognise that reform is needed in the employment tribunal system, but that reform must be strongly evidence-based.

The chair of ACAS gave evidence to the Committee last week; for the benefit of the hon. Member for Skipton and Ripon, I emphasise that I will not be quoting an employment lawyer but the chair of ACAS. He said:

“Anecdotes make bad law.” ––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 71, Q153.]

That is what concerns me about the clause.

The economy is in double-dip recession, not because of the hard-won rights of millions of workers but because of the lack of a growth strategy and the ideologically driven austerity that has gone too far and too fast. With more than 2.7 million people unemployed, the Government should be using the Bill to make it easier for employers to hire staff, rather than making it easier for them to fire staff.

The unintended consequences of not getting the clause right are immeasurable. They could result in a further loss of job security and confidence in the jobs market. That would ultimately lead to even lower consumer confidence, which is already at an historically low level. That would be bad for business and bad for the future of this country.

The spectre of Beecroft hanging over the heads of workers up and down the country is not about economic growth but about ideology and anecdote. That was exposed to the Committee just a week ago, when we interviewed Mr Beecroft himself.

Norman Lamb (Liberal Democrat, North Norfolk)

It is not in the Bill.

Ian Murray (Labour, Edinburgh South)

The Minister says from a sedentary position, “It is not in the Bill.” Perhaps if I look through the papers here, I may find the analysis that has been done on the Beecroft proposals. I believe that, of the 33 Beecroft proposals, 17 are either contained in legislation that has already been passed or they are being consulted on. So, more than 50% of the Beecroft proposals are in there, and perhaps we could play a piece of Beecroft bingo later on and find out who has got “House” in terms of all the Beecroft issues that are contained in the Bill.

Julian Smith (Conservative, Skipton and Ripon)

Is there any reason why the hon. Gentleman continues to ignore the submissions from the IOD, the CBI, the EEF—the manufacturers’ organisation—and from micro-businesses that have been in touch with parliamentary groups and say that employment law is stopping them from having the confidence to take on staff? Why is he ignoring those submissions?

Ian Murray (Labour, Edinburgh South)

That is a very similar question to the one we had this morning. We are not ignoring the evidence; the evidence points to the fact that the BIS small business survey showed that only 6% of small businesses rated regulations as a problem, and less than half of that 6% said that employment regulation was an issue. The evidence is there. We are not ignoring the CBI and IOD—in fact, some of the later clauses in the Bill support what the CBI and IOD said to the Committee last week—but it has to be measured up with evidence and, as ACAS said last week, we cannot be making law through anecdote.

Julian Smith (Conservative, Skipton and Ripon)

It is time to come clean. Every Labour hon. Gentleman on the Committee has either a trade union link or a trade union sponsorship. That is fine—I thought that the trade unions performed very well last week in evidence sessions—but that background to every Labour hon. Gentleman on the Committee means that their focus is on protecting those in work, while we those our Benches focus not only on workers’ rights, but also on the rights of those risk-takers that we need to create jobs, and the unemployed. It is that balance that these reforms are intended to ensure.

Ian Murray (Labour, Edinburgh South)

I am delighted with that intervention, because only 1.8% of the constituents of the hon. Member for Skipton and Ripon are unemployed. In the constituencies that I and many of my colleagues represent, where the figure is 11.8% or 15%, issues around employment are starker. None of those employers is saying that resolving the employment rights issues that he portrays in an anecdotal way would make them take on more staff. What will make them take on more staff is access to finance and an economy that looks as though it may be coming out of the double-dip recession and recovering. Those are the two biggest issues that employers speak to us about. If you asked the IOD and the CBI to choose the measure by which the Government would get the economy back on track, and the choice was between clause 7—changing the qualification period for unfair dismissal—and injecting money into the economy so that money could get to small businesses, I am sure they would take the latter. I would not be exaggerating to say that.

Chi Onwurah (Labour, Newcastle upon Tyne Central)

Before my hon. Friend moves on, does he agree that the hon. Member for Skipton and Ripon was implying that membership of a trade union—he spoke of a trade union link: I am not sponsored by a trade union, but I am a member of one—makes it impossible for one to be objective about such important national economic issues as employment rights and ACAS tribunals? Does my hon. Friend think that the hon. Member for Skipton and Ripon would apply that to the millions of trade union members up and down the country who have a right to have their voice heard in these matters?

Ian Murray (Labour, Edinburgh South)

Absolutely. Indeed, the trade union movement up and down the country numbers 7, 8 or 9 million people—those are the individual levy payers of unions which represent workers. Just to correct the hon. Member for Skipton and Ripon, I am not sponsored by a trade union. My constituency Labour party is, and proudly so, and indeed is sponsored by the largest private sector union.

John Cryer (Labour, Leyton and Wanstead)

Is my hon. Friend aware that both the Queen Mother and George VI were members of the Transport and General Workers Union? Presumably the hon. Member for Skipton and Ripon believes that they were involved in a far-left, wild-eyed plot to destabilise democracy and destroy prosperity.

Ian Murray (Labour, Edinburgh South)

This is probably slightly pushing the boundaries of clause 7, but my hon. Friend deserves some recognition for his historical take on trade union membership.

Hugh Bayley (Labour, York Central)

It was right for the hon. Gentleman to reply to the hon. Member for Leyton and Wanstead, but we could be here for 100 years if we debated the whole of the TUC’s history and that is not the question in front of us. The question is about the use of conciliation services at an early stage in employment disputes and we must concentrate on that.

Ian Murray (Labour, Edinburgh South)

I could not agree more, but I was trying to set out some of the rhetoric that has led us to this position and part of the rhetoric is about the historically high number of employment tribunals that there are in the system. I fundamentally agree with the Minister when he said that anything in the employment field that undermines consumer confidence and job security would be crazy. However, the Opposition contest that some of the issues regarding the rhetoric of how we have arrived at the Bill undermine job security.

Norman Lamb (Liberal Democrat, North Norfolk)

And clause 7.

Ian Murray (Labour, Edinburgh South)

I thank the Minister for reminding me from a sedentary position about clause 7. I want to demonstrate that if we do not have a proper evidence base to take the issues forward, we will end up with a law that will not satisfy the properties for what it is there to do. We wholeheartedly support the spirit of clause 7 and what it is there to do, but we want to ensure that it is done on the basis of proper evidence.

The hon. Member for Skipton and Ripon will be pleased to hear that John Morris from the Law Society said that the purported increase in vexatious claims was not supported by the evidence. The increase in employment tribunals, as we discussed briefly this morning, is due mainly to airline disputes regarding the working time directive and equal pay.

In seeking to justify their package of reforms in clause 7, the Government have stated, for example, that employment tribunal claims

“rose to 236,000 [in 2009/10], a record figure and a rise of 56% on [2008/09]…there were 218,100 claims in 2010/11, a 44% increase on 2008/09”.

Reading those figures on their own, one would see that the employment tribunal system is under extreme pressure, and the number of claims going through has gone up by a disproportionate and unacceptable number. Someone reading those figures on their own would probably come to that conclusion.

In fact, as the Minister conceded this morning, the number of employment tribunal claims fell in 2010-11. The headline figures of 236,000 claims in 2009-10 and 218,000 claims in 2010-11, used by Ministers and the Government, give a highly misleading impression of the actual work load of the employment tribunals system. The headline figures include both the number of claims by individual workers and the total number of worker claimants covered by multiple claim cases, in which two or more workers claim against the same employer.

It is important to use the real figures when discussing clause 7. The year 2008-09, for example, had a headline figure of 151,000 claims, but that was made up of 63,000 single claims and 88,000 multiple claims, of which there were only 7,400 multiple claim cases. That is just over 70,000, not the vast number being quoted to justify changes to employment law.

In 2009-10, when the headline figure rose by 56% from 151,000 to 236,000, used by the Government to justify their package of reforms, in actuality it went up through multiple claims going from 88,000 to 164,800. Government arguments that many claims are vexatious, that there is a massive increase in claims, that the employment tribunal system is grinding to a halt and that everyone is on the side of employees do not bear fruit in the figures. We must bear in mind that the number of individual claims rose by only 12%, which is historically relatively modest, given the state of the economy at the time.

I know that the issue is not directly related to clause 7, but it is important to put it on the record that the justification that the Government have been using for making their changes is a false premise based on anecdote, not on the hard figures of evidence; the figures are from the Ministry of Justice’s own website.

Clause 7 will, as we have heard, make employees with a claim submit their claim to ACAS before they can proceed to lodge a claim in an employment tribunal. If the conciliation officer concludes that no settlement is possible, or the time period ends with no conciliation, the officer will issue a certificate that allows the employee to take his claim before the tribunal. An employee will have one month after the end of early conciliation to take their claim to the tribunal.

The Bill envisages that every case must go to ACAS before it can go to a tribunal. The explanatory notes point out that that is a significant expansion of the role of ACAS. Of all the claims lodged at an employment tribunal at the moment, less than a fifth of claimants contacted ACAS for advice before submitting their claim. It would require a significant redesign of the services provided by ACAS, and the chair of ACAS made precisely that point in his evidence to the Committee last week. However, it is not yet clear—my hon. Friend the Member for Hartlepool raised this key point this morning—how much additional resource ACAS will require or will be granted for the process.

The changes in clause 7 must be read alongside the Ministry of Justice’s introduction of fees. As I said this morning and in a point of order last week, nothing in the documentation provides a proper analysis of the impact of the introduction of fees on the proposed system. The Department for Business, Innovation and Skills produced a useful schematic diagram showing the old and new employment tribunal processes, but that did not mention fees. Fees will have a significant impact on the operation not only of the clause, but of the entire package of measures in the Bill. The prospective claimant diagram that has been circulated to the Committee does not mention fees, and the Minister must therefore address the significant issue of how the process will then operate. I have written to him to ask for his comments on that, and it would be useful for the Committee to have an analysis of the impact of the introduction of fees.

Conciliation is not entirely new, because ACAS has provided a conciliation service, although it is not compulsory, since 2009. We all appreciate the role that the ACAS helpline plays in the conciliation process. As I said this morning, we listened in to calls to ACAS for a few hours, and they were dealt with incredibly professionally. Some call handlers were slightly frustrated that they did not have the ability, without forcing the issue, to send a claimant for conciliation when they knew that that would be a way to resolve the case.

ACAS and BIS economists have estimated that the process will save a significant amount of money, as is set out in the BIS impact assessment. We carried out an analysis using data collected in the “Evaluation of the First Year of Acas’ Pre-Claim Conciliation Service” from 2008, and in the ACAS management information data about the “2010 Annual Survey of Hours and Earnings”. The average cost of resolving a claim through pre-claim conciliation is about £475 for employers, compared with the average cost of about £5,500 for dealing with an employment tribunal claim, which is a significant difference of £5,000. The average cost for employees of resolving a pre-claim conciliation case is about £80, compared with almost £3,000 for dealing with an employment tribunal claim. Therefore, the process will help not only employers, but employees. Indeed, for the benefit of the hon. Member for Skipton and Ripon, it will also save the trade union movement a considerable amount of money—as it should do, given the issues that they have to deal with in representing their members.

Pre-claim conciliation cases also reduce the amount of time—a key issue in relation to the clause—that both employers and employees spend on dealing with disputes. Employers spend an average of five days on employment tribunal cases, compared with one day or less than eight hours in a pre-claim conciliation case. Employees spend an average of seven days dealing with an employment tribunal case, compared with 5.7 hours in a pre-claim conciliation case. In addition to the significant money saving, there will therefore also be a significant time saving.

It has been estimated that early conciliation through ACAS in such a form could lead to 44,000 early conciliation cases, compared with just under 20,000 cases at the moment. When he gave evidence last week, Ed Sweeney did not press the Minister, who was in a generous mood. There was a suggestion that money would be forthcoming for ACAS if that was necessary. [Interruption.] It is amazing how Front Benchers’ ears prick up when we mention money.

If we put together the figures from the evaluation of what ACAS currently does and the increase in the number of early conciliation cases that ACAS predicts will come its way, we are looking at costs of up to £10 million. All the witnesses to the Committee, whether they were employment lawyers, trade unions, ACAS or employers’ organisations, said that they found it difficult to see how ACAS could cope with that increase in business without additional resources to provide the proposed new service.

Early conciliation will prove effective only if enough conciliators are deployed and have sufficient time to explore the options for a settlement between employers and the individual. The individual case loads for each conciliator could be considerable. If so, the system may grind to a halt, because people would not be able to go to an employment tribunal until either their ACAS conciliation period had expired or a certificate had been issued.

The amendment highlights the assistance that some clients may need to ensure that the process is properly followed up. ACAS needs to be funded properly, and parliamentary questions have shown that its budget was £8 million less in 2009-10 than it was just a few years previously.

Julian Smith (Conservative, Skipton and Ripon)

I am sure the hon. Gentleman questioned Ed Sweeney hard on that when he met him at ACAS, but my assessment is that the money required by ACAS is more like £4 million or £5 million than £10 million. I am sure the hon. Gentleman checked the figures, being a rigorous financial obsessive. If he has not, I urge him to do so, so that we get the best value for money in these difficult times.

Ian Murray (Labour, Edinburgh South)

Whether the figure is £5 million or £10 million, it is £5 million or £10 million more than ACAS has at the moment. We are putting a lot of responsibility on ACAS to put through one of the biggest changes in the employment tribunal service that we have probably ever seen. Unless ACAS is well resourced—every single witness last week had concerns about whether ACAS is well resourced—there will be a fundamental impact on ACAS’s ability to conduct its business properly.

I will share my analysis of the figures with the hon. Gentleman. Whether the figure is £4 million or £5 million, or £9 million or £10 million, is neither here nor there, because ACAS still requires more money, which the Government have so far failed to commit or provide. Take that on top of ACAS’s £8 million reduction in the past few years and we are now up to £13 million or £14 million, or, indeed, £17 million or £18 million. On that scale, the measure could have a fundamental impact on the way in which ACAS conducts itself.

There is a danger, and many witnesses have said this, that the ACAS pre-conciliation system might turn into little more than a tick list because ACAS does not have the resources to provide proper conciliation. That would be a real shame, because we support the spirit of clause 7.

Finally, amendment 12 would require the Secretary of State to prepare a report to be laid before the House on the workings of early conciliation. Again, I say that in the best possible spirit of trying to ensure that we get this right. If the provision does not appear to be right, at least the House would have the opportunity to debate amendments or changes.

The report should consider—and this is not an exhaustive list—the number of settlements agreed; the number of cases in which settlements are not achieved; the impact on the number of employment tribunals; an analysis of any satellite litigation; and a full equality impact assessment of the system’s operation. The report should also include the overall cost for employees, employers, ACAS and the Treasury; the number of approaches to ACAS that are not taken forward; the impact of fees on the ability to settle claims, which I think is a key aspect; the overall ACAS funding requirement and staffing levels; and the impact on the ACAS helpline. More people might use the early conciliation service, rather than taking advice on the helpline, so that might be one unintended consequence worth considering. The report should also consider ease of use; the relationship between the system and the employment tribunal system; and an analysis of the legal implications of the new system as a whole.

The Opposition support early conciliation, as I have said nine times, but we have some fundamental concerns about the system’s operation. We have fundamental concerns about the funding of ACAS and its ability to be a supportive gateway for the employment law redress system, rather than just a hurdle for genuine claimants to navigate. We will not vote against the clause, but we encourage the Minister to address the issues on Report to ensure that the process that comes out of clause 7 is something of which we can all be proud.

John Cryer (Labour, Leyton and Wanstead)

It is a pleasure to serve under your chairmanship, Mr Bayley. Like the Minister, I will do my best to observe the rules of order, or at least get away with what I can. I do not want to fuel the paranoia of the hon. Member for Skipton and Ripon any more, but I would point out that when Ernie Bevin died in 1951, one prominent member of the royal family said that he was a splendid Englishman of the old school, so that is enough material for the hon. Gentleman to raise an urgent question on Monday afternoon asking for an enquiry into the leftist activities of the royal family.

Iain Wright (Labour, Hartlepool)

Subversive!

John Cryer (Labour, Leyton and Wanstead)

Indeed. I want to pick up briefly on three of the points that the Minister made earlier. First, there was the point that because a large number of cases—actually, all cases with a very few exceptions; there are exceptions in the Bill, which I assume will be clarified in the statutory instruments that will follow—will go through the ACAS early conciliation procedure, a lot of cases will not go to tribunal. In reality, I do not see the numbers of cases going to tribunal being cut, because already only 20% of cases go to a full hearing with a conclusion. That is actually a small number of the cases that go into dispute every year, and that has been the case for a long time.

Secondly, the Minister argued that too many cases go through a complex legal procedure. That is probably a fair point in that context. He seems to be arguing for increased trade union membership, because trade unions tend to act as filters to industrial complaint cases. I worked for a trade union for several years, and a union will often say, “We are not going to pursue that particular case, because we don’t think that you have sufficient grounds for going to a tribunal”, or, “We will pursue that particular case, because we think you have.” Of course, if individual members of a work force who are not members of a trade union go to a no win, no fee lawyer—I am not attacking the legal profession—there will inevitably be a greater temptation for such lawyers to say, “Well, it’s more of a 50:50 case, but we’re tempted to pursue it, anyway.” Trade union officers will tend not to say that. They will tend to say that if it is 50:50, the odds are not particularly great on winning, so they act as a filter on cases going through to tribunals.

The Minister talked about the issue of vulnerable workers: an issue that was raised by the shadow Minister, my hon. Friend the Member for Edinburgh South. The matter of vulnerable workers has become an increasingly important issue in the past few years. A high proportion of the work force in this country—including in my constituency, by the way—do not have English as a first language. In many cases, they do not have any English at all and their command of English is virtually non-existent. I am thinking of eastern European workers who generally do not intend staying in Britain, but intend to work here for perhaps two, three, four or five years.

Like the Indian work force that came over in the 1940s, 1950s and 1960s, the eastern Europeans intend to stay in Britain for a relatively brief period and then go back, so there is no great incentive to learn how the ropes work or to acquire English. That is not a criticism of eastern Europeans. I have had experience of such matters. I worked for an organisation that dealt with a large employer in the west country. I will not name it, because the case is very complicated and controversial, but it is a big agricultural producer and a significant player in the British market. The employees were treated absolutely appallingly. When they became members of a trade union, the union was able to make representations and reach an agreement with the employer. Hardly any of the work force could speak English. If they were asked to start filling in forms and perhaps having to comply with certain regulations, they would struggle to do so.

The Minister said that people could always approach the local Citizens Advice office, but, as was pointed out earlier, and this is certainly the case in my constituency, the CAB offices are being cut left, right and centre. In the next year or two, a lot of CAB offices will be closing. Even the one in my borough might be facing closure in the next couple of years. I am not impugning the Minister’s motives. I just think that he is he is too optimistic if he thinks that the CAB can provide the sort of advice and concern that the Government are starting to expect.

Moving on to points that have been discussed, the statutory disciplinary grievance procedures were, as I said in an earlier intervention, abolished two or three years ago. They were abolished on the grounds that it led to all sorts of satellite litigation. It did not really work, it did not prevent cases going to tribunal, it just made the procedure more complicated, more difficult, and it meant that lawyers ended up in fights with each other over whether the conditions had been observed. I think that that may well be replicated in the new system. I can see no evidence—I have read the Bill and many of the briefings that have come in—or solid argument to say that this will cut the number of cases going to tribunal, or be different from the previous system that existed until two or three years ago.

It was at that point—again, I mentioned this earlier—that judicial mediation was introduced. That seems to have worked. I am afraid that I do not have figures to demonstrate this, but I have talked to a number of lawyers who deal with judicial mediation, and the argument has been put to me that the system works well. For one thing, it is in front of not just a judge, but somebody with experience of industrial relations and tribunals. It is in an informal atmosphere, not in a courtroom, so arguments can be put in circumstances that are not particularly pressured, but the judge brings experience of the workplace, of industrial legislation and industrial relations to the case, which seems to me to be a good way of doing things. I am not sure that ACAS, for all sorts of reasons—mainly lack of resources—will be able to cope with what they face.

That leads me to another question—I do not think that we have had an adequate answer to the question of what extra resources and staffing will be available to ACAS. Earlier, I raised the fact, which the shadow Minister dealt with, that in 2010-11, 218,000 cases went to the employment tribunal service. The shadow Minister rightly pointed out that only 60,000 of those are individual cases, the rest being group cases. Because we do not know how large or small the group cases were, it is very difficult to say what number over and above the 60,000 will actually go to the employment tribunal service. It could be 80,000, it could be 100,000. I think 80,000 is probably a fair figure, but the shadow Minister is quite right to say that it will not be 200,000. Nevertheless, the volume going to the employment tribunal service will be hugely greater than it is now and I do not see how ACAS has the resources to deal with it.

There has been no indication, apart from one or two hints, that the falling demands on the tribunals will release finance and resources that can go to ACAS—that was in a House of Commons paper that I read. As I said earlier, I do not see that that cut is going to happen because I do not anticipate an enormous reduction in the cases going to the employment tribunal service; therefore there will be a shortfall in the resources and cash available to ACAS. The Government have to take that on board.

Finally, it has not been discussed yet that sometimes early conciliation is a completely inappropriate path to go down. In cases, for instance, of discrimination or harassment, the last thing that an employee or ex-employee who may have been subjected to racism or something equivalent wants to face—I have dealt with such cases, by the way, and I am sure many of us have, as MPs—is going into a room with the person who is accused of that harassment or discrimination. You are putting two people in a room who may have a visceral hatred and dislike of one another. In such cases, people should not be forced to go into a room together, even with representation. They should be allowed to go down the traditional path of the tribunal. [Interruption.] Does somebody want to intervene on the far side?

Chris Ruane (Labour, Vale of Clwyd)

On the far right.

John Cryer (Labour, Leyton and Wanstead)

I did not say the far right, but I meant it.

Andrew Bridgen (Conservative, North West Leicestershire)

Is the hon. Gentleman suggesting that when the two individuals who have a visceral hatred of each other go to a tribunal, they will not be placed in the same room, with legal representation? What is the difference between that and early conciliation?

John Cryer (Labour, Leyton and Wanstead)

Not necessarily. In a tribunal, that is not always the case. In ACAS, there would be a far more formal procedure. Early conciliation is not a formal procedure but a much cosier one. It will make someone who has been on the receiving end of harassment or discrimination feel far more vulnerable than in a formal court procedure. They do not always have to be together; it is in the hands of the chair whether they are together in the same room, and it is decided on a case-by-case basis.

Returning to my point, will the Minister respond to that? It has not been raised before.

Lorely Burt (Liberal Democrat, Solihull)

It is a pleasure to serve under your chairmanship, Mr Bayley.

I want to make a few brief comments in the stand part debate of this important clause. I begin by declaring an interest: in my previous life, I worked as an HR professional. It was a long time ago—[Interruption.] That was so kind. The memory of going to ACAS is seared into my mind. It was a big deal then. By the time we got to that stage, matters would have irretrievably broken down. We would have gone a long way down the line, and negotiations would have failed. In those days—in the previous century—that was how things were. Therefore I wholeheartedly welcome the clause and the move to pre-conciliation. ACAS does an excellent job. It will be able to give its wisdom and help when it is wanted before things get to a worse stage.

I have a question for my hon. Friend the Minister regarding resources, which has been raised by the Opposition. I totally agree that there is no requirement for resources to be placed in the Bill and that it can all be sorted out, not even through secondary legislation. However, it is important to think about the early stages. We have no idea, unless the Minister has a crystal ball underneath his desk, how things will pan out. We do not know how much time will be saved by transferring conciliation to the earlier stages, and we do not know how many negotiations will fail and end up in a tribunal.

However, I think we can predict one thing, which is that in the early stages, ACAS will be dealing with the backlog of cases that have not been through a pre-conciliation process as well as new pre-conciliation cases. We can predict a growth in demand for ACAS’s services at the early, tender stages. Can we ensure, particularly at those early stages, that if there are early indications that ACAS needs additional help, even temporarily until things shape down, it will be possible to furnish it with the resources that it needs?

Ian Murray (Labour, Edinburgh South)

I have tremendous respect for the hon. Lady, who is making a strong case for ensuring that ACAS is properly resourced so that early conciliation is as grounded as possible into the employment tribunal system for it to succeed. Does she not agree that amendment 12 covers many of her suggestions and will she consider voting with us on it?

Lorely Burt (Liberal Democrat, Solihull)

I am grateful to the hon. Gentleman, and I am tempted by his kind offer. However, I shall listen to my hon. Friend the Minister, and I am sure that I will be reassured by him.

Iain Wright (Labour, Hartlepool)

I rise briefly—[ Interruption. ] That sounds like a challenge. I support my hon. Friend the Member for Edinburgh South on amendment 12. He put across a perfectly reasonable point of view, and I do not see how Committee members can argue against the amendment, which would improve parliamentary scrutiny.

On clause 7, I listened closely to the hon. Member for Solihull, and she emphasised what I said this morning on how little evidence there is for the likely number of early conciliation claims and about what will happen. She supported my view that the change is to some extent a leap in the dark. Nevertheless, we fully support the notion and concept of early conciliation, which makes perfect sense.

I wanted to catch your eye, Mr Bayley, to put on the record the fact that the number of employment tribunal cases is not why the British economy is in a double-dip recession. Although we fully support early conciliation, I want the Minister to make the point that although the change is welcome, that is not why the economy is spluttering.

Julian Smith (Conservative, Skipton and Ripon)

Will the hon. Gentleman give way?

Hugh Bayley (Labour, York Central)

Order. I will stop that debate at this point, because we are not here to discuss the double-dip recession. We are debating pre-hearing conciliations, which I know Mr Wright was just moving on to.

Iain Wright (Labour, Hartlepool)

Thank you, Mr Bayley—I shall skate delicately.

I want to draw to the attention of the Committee the evidence submitted by the Law Society. It states:

“The justification for this package of reforms is that there has been a significant rise in Employment Tribunal claims caused by a prevalence of weaker cases and an insufficient use of mediation and conciliation, combined with over-long Tribunal hearings...The evidence does not support this.”

As my hon. Friend the Member for Edinburgh South eloquently pointed out, the combined number of single claims and multiple claim cases fell by 15% in 2010-11. Today, figures have been published for the number of claims in 2011-12, showing another fall of 15%—a drop of 31,800 cases—with multiple claims down by 19%, which probably reflects the fruition of the equal pay claim process.

Lorely Burt (Liberal Democrat, Solihull)

I am heartened by the figures that the hon. Gentleman is citing. Does he not agree that we should consider being very flexible on resources? As the number of claims is falling, it may well be that the resources are adequate and that savings can be made, so we should wait to see what to do about the whole matter of resources.

Iain Wright (Labour, Hartlepool)

The hon. Lady makes the fair point that we have to be flexible. However, I think she would agree with me that the first and foremost principle is that ACAS should be given the resources to enable it to do its job. That is absolutely what needs doing. In Committee last week, we heard evidence from a wide variety of stakeholders who are concerned that the funding will not be made available, so we need to press the Minister on that. To back up what my hon. Friend the Member for Edinburgh South said, the amendment would allow Parliament to reconsider in a sensible and balanced manner, and I hope that the hon. Lady will support us if we press it to a Division.

In conclusion, it is important to set the context. As the Law Society has said, there is no evidence to suggest that the number of employment tribunal cases is spiralling out of control and ensuring that enterprise cannot be encouraged. We are considering an enterprise Bill. Opposition Members want to ensure that measures are in place to promote and facilitate enterprise. I hope that the Minister will put it on the record that clause 7—important though it is; supportive though we are—is not hindering the ability of British firms to expand.

Julian Smith (Conservative, Skipton and Ripon)

Can I just ask the shadow Minister, as I asked his colleague, is it the Labour party’s position that employment law burdens do not cause entrepreneurs, start-up businesses and businesses generally any worry at all, and that they are of no consequence in their decisions about whether to take on staff? That is what he seems to be saying. It would be good to know what the Labour party’s policy is.

Iain Wright (Labour, Hartlepool)

I go back to what my hon. Friend the Member for Edinburgh South has said about this. When businesses’ own evidence shows that 6% of small businesses think that regulatory barriers are a big hindrance to growth, we should take that into account. That is important. Do we want to support an environment in which regulation is flexible and conducive to businesses growing and expanding? Of course we do, but let us put to rest the myth that the employment tribunal process is somehow hindering the British economy in its attempt to grow, because it is not. When the Minister sums up, I hope he will acknowledge that Opposition Members are going to support clause 7 and acknowledge the context in which this is set.

Norman Lamb (Liberal Democrat, North Norfolk)

I will resist the temptation to stray into the broader debate about the state of the economy. Suffice it to say that one of the fundamental problems facing the British economy is the disastrous state of the public finances left by the Labour Government. This country had the biggest deficit of any G20 country, with rising debt levels. We were spending £150 billion per year more than we were bringing in in taxes.

Hugh Bayley (Labour, York Central)

Order. In fairness to both sides of the Committee, in the same way that a double-dip recession goes beyond this clause, so does the state of the public finances two years ago. I think perhaps we should now move on to the conciliation matters, which are part of this clause.

Norman Lamb (Liberal Democrat, North Norfolk)

Thank you, Mr Bayley. You have rescued me from myself in wanting to talk more about the disastrous state of the finances left by the Labour Government. I will make one other comment about the Bill itself. The shadow Minister likes to condemn it as a ragbag Bill, and yet when we talk about each of the individual measures, it turns out that Opposition Members support the principle of them. So when we talk about competition, there is support for the Competition and Markets Authority. When we talk about the Green investment bank, we suddenly find that they support it. When we talk about employment, we find that there is support for clause 7. No doubt we will see support for the principle of dealing with directors’ high levels of pay, and indeed the measures that will make a real difference on copyright. Although Opposition Members condemn the whole, in the parts they support the principles.

I will now follow the instruction of the Chair and focus on the clause. The shadow Minister conceded early in our discussion of the clause that there is not simply a perception of complexity; there is a problem of complexity. The legislation is very complex. The processes are complex and that is bad for both employers and employees. Anything that can be done to make systems and processes simpler must improve the environment for business and therefore encourage businesses to take on new employees. I am sure that if Opposition Members think about it, that is something that they would support. We are trying to make this country an attractive place for inward investment. We want an environment that is attractive for setting up companies and for taking on employees.

Iain Wright (Labour, Hartlepool)

Will the Minister give way?

Norman Lamb (Liberal Democrat, North Norfolk)

Let me focus on the issues in the clause. The hon. Gentleman referred to the number of claims brought to employment tribunals. I do not rely on that as the justification for the measures. I rely on the justification that this is a good reform. It helps employers and employees and for that reason should be supported.

The hon. Gentleman quoted interesting statistics about the cost to employees of a tribunal claim. Steps taken by the coalition Government to reduce the cost to employees when they lose their jobs should be wholeheartedly welcomed by the Opposition. That is why the proposals on conciliation in clause 7 and on settlement agreements achieve a win for employees who lose their jobs and who, instead of having to wait four or five months for their claim to be heard in tribunal, at enormous cost in legal fees, get the matter settled quickly so that they can move on in their lives.

The hon. Member for Leyton and Wanstead mentioned judicial conciliation. I share his view that it is an interesting concept. That is one issue being looked at by Mr Justice Underhill in his review of employment procedure rules. It seems there is a place for that in the overall architecture.

I will also mention the concept of workplace mediation. Pilots of workplace mediation have been launched in Cambridge and Manchester. That is a mechanism whereby companies can group together to help each other sort out problems before a dismissal takes place, to resolve disputes. That again is a highly attractive proposition pioneered by the Government that will prevent unnecessary dismissals and help keep people in their jobs. I thoroughly welcome those pilots.

The hon. Gentleman also mentioned the role of the trade union officer or official. I share his view that they often take a more pragmatic view than employment lawyers. One of the problems we have with the system is that if a claimant comes for advice about pursuing a possible claim to a tribunal, the lawyer’s duty is to the client and the lawyer is pretty much obliged to advise them to issue a claim, however spurious, to the tribunal, because it gives a bargaining position from which to claim money. That is not a good position to be in. That is not something that public policy ought to encourage. If there is no claim to be pursued on merit, there ought not to be a position where lawyers encourage clients to issue claims. That is what happens at the moment. That is why the issue of fees has merit. There has to be some mechanism to make the potential applicant at least think about the consequences from their perspective of issuing a claim in the tribunal.

The hon. Gentleman also mentioned the issue of non-English speakers and the fear that they might be put off completing a form for ACAS. I have already tried to explain that the details required will be basic and limited, vastly simpler than on ET1, the claim form to the tribunal. For that same non-English speaker who might be in his constituency, the hurdle they will have to overcome to issue a claim in the tribunal is far greater, in terms of completing forms, than initiating a conciliation process. I suggest that this informal process is a good way to give extra rights to those non-English speakers who might otherwise be dumbfounded by the complexity of issuing a full tribunal claim. It at least gives them the chance of a conversation that might help to settle their claim.

The hon. Gentleman also mentioned concerns about race discrimination, where it might be inappropriate for early conciliation. He talked about bringing the two parties into a room together. That suggests a misunderstanding of what is proposed. We are not suggesting an informal hearing. That might be why he has expressed concerns about the cost of all that. The way that ACAS operates, and has always operated, is that it would make phone calls to the employer and the employee and go back and forth to explore the possibilities of achieving a settlement. The way a settlement is achieved through ACAS, both under the previous Government’s voluntary scheme and under the current conciliation that takes place later on in tribunal applications, is that an ACAS officer explores whether there is common ground and tries to bring the two parties to a common position.

Therefore, I do not think that there is any fear that someone who has suffered outrageous behaviour—perhaps racial or sexual discrimination—will be required to come into the same room together with a respondent. In fact, the process will provide an early means for settling a claim for someone who may have been appallingly treated by a rogue employer. At present, they are left waiting for five months, often suffering an awful lot of stress while waiting for their tribunal hearing.

I will deal with issues of the cost of the process to ACAS, raised by my hon. Friend the Member for Solihull, in a moment. First I will make some additional comments on the shadow Minister’s contribution.

As members of the Committee know, either through personal experience, as I do, or through conversations with their constituents and others, going through the tribunal process is a daunting experience for all concerned. It costs time and money, not only for the respondent but for the claimant and the taxpayer. It is right, therefore, that we take what steps we can to encourage and support parties to resolve their disputes outside the tribunal. That is why we are introducing the requirement for prospective claimants to first submit details of their case to ACAS before they are able to lodge a claim with a tribunal.

While the requirement to submit details to ACAS will be mandatory, it will be for the claimant and the respondent to decide whether they wish to accept the offer of conciliation. Where both parties agree and it is successful, they will set out the terms of their agreement in a binding document and no tribunal claim will be made. Where either party declines to enter conciliation—they will be entirely free to do so—the claimant will then at least have received information from the ACAS conciliator about what is involved in taking the matter to a tribunal, so that they can make an informed decision about whether to proceed. We know from the current voluntary system that 75% of those who go to ACAS end up not pursuing a claim in a tribunal.

ACAS currently offers a limited but highly effective pre-claim conciliation service. We believe that it is right to make the opportunity to resolve disputes before a claim is lodged available to all who want it. We have received broad support for such an extension from business, employee representatives and the Opposition, for which I am grateful. However, many have expressed concerns about ACAS’s funding. The Committee heard from Ed Sweeney, the chair of ACAS, at its evidence session last week. He said that work is under way to develop the process for early conciliation. That will, in turn, inform discussions about what additional resource may be needed. I assure the Committee that once that work is finalised and any additional funding requirements are identified, we will ensure that ACAS has what it needs to deliver the new duty. To respond specifically to my hon. Friend the Member for Solihull, we will ensure that if there is a brief period of overlap between the old and new systems, ACAS will have interim funding and resources to get through that period.

The default position of the Opposition is always, “If there is a problem, just throw money at it.” To be blunt, that is why we have got ourselves into the mess that we are in with public spending. ACAS’s first obligation is to ensure that it operates with maximum efficiency. We should ensure that we have analysed the processes as carefully as we can to ensure that public money is being spent with maximum efficiency.

Julian Smith (Conservative, Skipton and Ripon)

I agree wholeheartedly with the Minister’s comment. Does he agree that we also need a change to the advisory council at ACAS? If we look at the biographies of everyone on the advisory council—all very good, all very qualified—we notice that there is no one from a very small business on it and there are no inward investors on it. If we are to make the Minister’s vision work, we need to ensure that the ACAS council represents every type of employer in this country.

Norman Lamb (Liberal Democrat, North Norfolk)

I am grateful for that intervention. I have not looked at the advisory council, but I will consider my hon. Friend’s point, which is a fair one. That body is highly regarded on all sides. It does invaluable work not only for individuals, but in seeking to settle disputes. In performing its role, interests from both sides of industry are relevant, so that is a fair point.

Iain Wright (Labour, Hartlepool)

I absolutely agree with the Minister that every public sector organisation—indeed, every organisation—should be run at maximum efficiency to provide value for money, especially when it comes to the taxpayer. Does he think ACAS is inefficient?

Norman Lamb (Liberal Democrat, North Norfolk)

I have not undertaken any assessment of the efficiency of the organisation. ACAS seems to be very enthusiastic about undertaking this new system, which I welcome, and as I have said, it is a highly regarded organisation All I am saying, absolutely genuinely, is that when we look at new pressures on an organisation, the first step we should take, as I am sure the hon. Gentleman would agree, is to ask whether we can make it operate more efficiently and whether we could take steps to get better value for money—I do not know whether such is the case, but that should be considered—before we proceed to the step of agreeing to extra funding. The point is that the process for examining that must be robust.

In addition, we have tabled a new clause on settlement agreements, which I honestly believe can be used to bring employment relationships to an end in a consensual way, without the big battle that takes so long, costs so much and is so beneficial to lawyers. If that option is taken up by employers and employees—indeed, trade unions can play a very sensible role in helping to facilitate the whole process—we will see a reduction in the number of claims that ACAS has to deal with, which would be very good.

Ian Murray (Labour, Edinburgh South)

The Minister is making a thoughtful contribution. It was slightly unkind to suggest that the Opposition are merely looking to throw money at the problem. The EEF, the Federation of Small Businesses, the CBI, the IOD, the TUC, the Law Society and every single legal representative who gave evidence to the Committee was concerned that ACAS is under-resourced. That is the nub of the problem we are trying to get at; to suggest that we are looking to throw money at it is rather unkind. Indeed, in his reply to the hon. Member for Solihull, the Minister has just said that the Government are going to throw some money at it.

Norman Lamb (Liberal Democrat, North Norfolk)

I am really grateful to the hon. Gentleman for his intervention. I again reiterate that when we look at a new process, we first look at efficiencies —we ask whether we can achieve any—and then, if necessary, we look at whether additional funding is needed. The Government have said that we will ensure ACAS has the funding it needs to make the process work.

Iain Wright (Labour, Hartlepool)

I fully support what the Minister is saying. I want him to go away, think about efficiencies in ACAS and report back to the House on his findings. On that basis, and given the level of cross-party support, will he support our amendment 12, which would give him that opportunity to go away, think about efficiencies in the organisation and report to Parliament?

Norman Lamb (Liberal Democrat, North Norfolk)

On that very point, I have just received inspiration—from my left. ACAS has been selected by the Department for Business, Innovation and Skills as one of the first non-departmental public bodies to participate in the current triennial review process. That process will look at governance, including of course the whole issue of funding, and should be completed by the end of this year. I am sure that the hon. Gentleman would support the Government in going through that important process with those bodies in order to ensure that the taxpayer always gets value for money, which is not something that has always happened in the past.

As I have said, there is still much to be determined in respect of the detail of the early conciliation process and this will be set down in procedural regulations in due course, following public consultation. I am as concerned as Opposition Members to ensure that early conciliation achieves its objectives—the greater use of early dispute resolution to settle differences, rather than referring the matter to an employment tribunal—and the benefits that that brings to employers, claimants and the Exchequer.

However, I think that the proposed amendment would achieve little given that ACAS is already under a duty to report annually on its activities to the Secretary of State under section 253 of the Trade Union and Labour Relations (Consolidation) Act 1992. I am sure Opposition Members will be familiar with the provision. That report is published and indeed laid before Parliament. In addition, we will consider whether and how to obtain further information on the use of early conciliation, in particular on its effectiveness in resolving disputes through the survey of employment tribunal applicants—SETA—which is run periodically. The data obtained from the survey is published and widely analysed by academics and others. It could be a mechanism to gain a real insight into how the early conciliation process is working.

I hope that hon. Members are reassured that, in light of the existing statutory requirement, there seems little point in adding an additional duty to provide an additional report, given that everything that this is about will be covered in ACAS’s report to Parliament. There is no need for any additional reports. It is therefore appropriate for the amendment to be withdrawn. I commend the clause to the Committee.

Ian Murray (Labour, Edinburgh South)

We have had a robust and wide-ranging debate. For the tenth time—I think my mathematics is correct—we support the Government’s intention with regard to clause 7. We will, as the Minister challenged us at the start of his contribution, try to do everything we can to improve the landscape for business. Within the boundaries of staying in order, Opposition Members have tried to emphasise that such changes, while welcome, are not a recipe for economic growth.

Julian Smith (Conservative, Skipton and Ripon)

I have been contacted during this debate by a business in Edinburgh East, a neighbouring constituency of the hon. Member for Edinburgh South, saying that it will take on more workers if the Government push ahead with the reforms. Would he welcome that development from Mike Martin in Edinburgh East?

Ian Murray (Labour, Edinburgh South)

It is wonderful that we have modern technology and that a constituent from a neighbouring constituency has made contact. In accordance with parliamentary protocol, I could not possibly comment on a constituent of my colleague and hon. Friend the Member for Edinburgh East (Sheila Gilmore). Again, I challenge the hon. Member for Skipton and Ripon. If he can send us the information, which we will keep utterly and completely confidential, I will ensure that my hon. Friend the Member for Edinburgh East meets that business. However, I can pretty much guarantee that that business will be looking to raise finance and trying to grow their business. I cannot believe that an early conciliation clause in any Bill will make people run to the Jobcentre and put up cards that say, “We are now taking on staff.” I appreciate that the hon. Gentleman has that information and I would like to see it if he will share it in confidence.

We are trying to make a point in terms of improving the landscape for business and in terms of the inward investment that was referred to by the Minister. I am sure that any inward investor, if they wanted to come to this country, would do one of two things. They would view the overall economic landscape, but they would also refer to organisations such as the OECD, which said quite clearly that we have the third most liberal employment regime in the world. That would not be something that would stop me from investing.

Norman Lamb (Liberal Democrat, North Norfolk)

Would you welcome that?

Ian Murray (Labour, Edinburgh South)

Of course we welcome that, because most of the landscape that is in place to make us the third most liberal regime was put in by the Labour Government.

I want to touch on one or two things that the Minister said. I agree wholeheartedly with the Minister about making the system cheaper for both employers and employees. He rightly emphasised employees. However, I want to make a strong point about that. The Law Society said that the Government were trying to justify the changes they were putting in the Bill on the basis of a massive increase in employment tribunal numbers. That is not the case. As my hon. Friend the Member for Hartlepool has said, the number of employment tribunal cases in the past 12 months has just gone down by another 19%.

Norman Lamb (Liberal Democrat, North Norfolk)

The Law Society makes that assertion, but the Government do not rest their case on the increasing numbers in the employment tribunal. We make the case on the absolutely strong basis of reducing complexity to make it more attractive for employers to take on more staff.

Ian Murray (Labour, Edinburgh South)

I appreciate that, and I have the utmost respect for the Minister. He does these things in the spirit that he has portrayed, but why did it take my office to produce the figures for how much it would cost an individual employee or employer under this new process? It was my office that produced those figures because they were not available when the Government proposed these reforms. I would have thought that it would have been an incredibly strong argument for the Department to say, “This is how much cheaper it would be for an employee and an employer to do this.” I am happy to share the information with the Minister, but it emphasises the wrong rhetoric that we hear in the promotion of some of these issues.

Iain Wright (Labour, Hartlepool)

In reflecting on the Minister’s intervention—I hope I have correctly interpreted what he said—to the effect that the Government do not base their policy on employment tribunal claims on the hiring behaviour of firms, I note that the impact assessment states that

“it is apparent that the costs and risks faced by employers from employment tribunal claims can affect their hiring behaviour.”

Does my hon. Friend agree that that sounds as though the Government are indeed hinging their proposals on the hiring behaviour of firms?

Ian Murray (Labour, Edinburgh South)

My hon. Friend highlights a point from the Government’s impact assessment. I remember the robust debate that we had on the statutory instrument on changing the qualification period for unfair dismissal from one year to two years, when the Minister was promoting a policy that was entirely against the impact assessment that had been presented by his Department. So it does not surprise me that the impact assessment for this Bill says that.

We welcome workplace mediation, and there is little in what the Minister said that we would disagree with. But workplace mediation happens every single day in workplaces up and down this country, facilitated by workplace representatives through facilities time and the trade union movement. Mediation between management and employees happens continually.

Norman Lamb (Liberal Democrat, North Norfolk)

I accept that, but the attraction of this scheme—as I am sure the hon. Gentleman will welcome—is that it is a mechanism that allows small businesses to group together to help to resolve disputes that might be resolvable in bigger workplaces, with which he might be more familiar. That seems to me to be an entirely good thing.

Ian Murray (Labour, Edinburgh South)

I am delighted by that intervention, because it shows the power of what happens in large workplaces that are organised by trade unions or other workplace reps if the aim is to replicate that in smaller businesses. Such workplace mediation helps because it stops people even going to ACAS. There are conversations day in and day out between management and workplace representatives on a plethora of issues, from health and safety to terms and conditions to general grievances. The devil is in the detail, but that is something that we will seek to support.

My hon. Friend the Member for Leyton and Wanstead mentioned mediation, and I understand that the figures show success. There were 525 mediations in the UK in 2011, with a 71% success rate. Indeed, there have been 443 this year already, saving nearly 2,500 hearing days. So it does work, and I am sure that the Minister will reflect on that point.

Another issue concerning vexatious claims is slightly anecdotal and shows that the rhetoric and evidence behind these policies is based on the wrong foundation. It is not in the interests of the legal profession or the trade unions to knowingly take a vexatious claim to an employment tribunal. That would almost verge on professional misconduct, and the risk for the organisation that took a vexatious claim—not just in having costs awarded against it, but in reputational damage—would be huge. We have to bear that in mind—lawyers and trade unions are not taking vexatious claims to employment tribunals.

Norman Lamb (Liberal Democrat, North Norfolk)

I agree that the number of claims in the vexatious category is small, but the assumption by the Opposition seems to be that every claim that goes to tribunal is necessarily related to an unfair dismissal. We know that a very substantial proportion of claims fail, because the dismissals are found to be fair. The problem that Labour members have to grapple with is that sometimes employees are guilty of misconduct, sometimes they underperform or there is a genuine redundancy, and companies, particularly small employers, have to deal with those problems. The Government are interested in making that easier for employers, while not taking away basic rights for employees.

Ian Murray (Labour, Edinburgh South)

I am at risk of sounding like a stuck record, because I again agree with the Minister. When I was a small business owner myself, with anything between 12 and 60 staff, these would have been the issues that I dealt with. People do not want to end up in an employment tribunal situation, so he is absolutely right to make that point. However it goes back to the fundamental point that everyone on this side of the Chamber has made in this stand part debate on clause 7: the evidence base and foundation for making these changes is wrong. If the Government want to change that evidence base to one that is supportive of these issues and in conjunction with what all the witnesses have said, it would solidify their arguments and give us confidence that what they are promoting is done in the best interests, rather than on anecdotal evidence.

I have two quick points. The hon. Member for Solihull is right to question the resourcing to ACAS. I hope that the Government will come forward with proposals that will support ACAS financially. I am delighted with the reassurance the Minister gave that there may be some transitional funding, but I hope that the ongoing funding will help ACAS. There could be tens of thousands of pre-conciliation procedures in cases going through ACAS. Its funding has been cut by £8 million already and we have debated whether or not anywhere between £5 million and £10 million additional resources may be required. That is a huge amount of money to be denying an organisation that has been given the responsibility of being the gateway to employees’ rights in this country.

My last point would be that we support most of this Bill, but the issue about it being a ragbag Bill is that all these individual elements have been brought together under this umbrella of enterprise. In fact, there is very little in this Bill that promotes enterprise. It is merely a regulatory reform Bill and perhaps the word “enterprise” should be dropped. So we support the individual elements, but not on the basis that this is a recipe for economic growth and that we will all be tripping down gold-plated pavements in the next 10 years because of the growth that this Bill is going to generate in the United Kingdom. It will not do that and it is slightly disingenuous to use the word “enterprise”. On the basis of the Minister’s reassurances I beg leave to withdraw the amendment.

Hugh Bayley (Labour, York Central)

We now come to a number of clauses and schedules to which there are no amendments and on which we may be able to make progress quite quickly, although Members may speak if they wish. The next question is the quaintly worded question that Schedule 1 be the first schedule, which for those of you who studied archaic English is, in effect, a stand part question in relation to the schedule.

Clause 10 - Decisions by legal officers

Ian Murray (Labour, Edinburgh South)

I beg to move amendment 13, in clause 10, page 7, line 14, at end insert—

‘(6E) The Secretary of State and the Lord Chancellor acting jointly, shall consult on—

(a) the level of professional attainment required by legal officers to carry out provisions in subsection (6D).

(b) the appropriate remit of proceedings that an appointed legal officer could determine, and

(c) the appropriate mechanism for appeal,

with regards to the provisions of subsection (6D).

Thank you, Mr Bayley. I hope that no one is spinning with dizziness at the break-neck speed at which we are going through the clauses of the Bill. We are up to double figures, and at mid-afternoon on a Thursday, that is great testament to the pace at which we are dealing with the Bill.

Iain Wright (Labour, Hartlepool)

Double figures, double dip.

Ian Murray (Labour, Edinburgh South)

“Double figures, double dip,” I hear from a sedentary position.

Norman Lamb (Liberal Democrat, North Norfolk)

Cheap.

Ian Murray (Labour, Edinburgh South)

Which is, yes, you are correct, quite cheap, but none the less effective. Clause 10 is about the use of legal officers and rapid resolution, as it has been termed. Again, we agree in principle with the Government in their desire to introduce a rapid resolution system to deal with employee/employer disputes.

Too often low-paid workers wait for months to recover wages or holiday pay from employers, which leaves them out of pocket. For example, Ministry of Justice research in 2009 found that an astonishing four out of 10 awards are simply not paid at all, and fewer than half of all awards are paid in full. It is sad that too many rogue employers fail to give these workers what they are due and we hope that this part of the Bill will help. Indeed, it has been suggested that at least 10% of all employment tribunal claims are simple claims that could be handled without an employment tribunal hearing. Not only would there be a significant saving to the taxpayer, but the stress and worry of the employment tribunal process itself would be removed from both employer and employee.

As we know, some key workplace rights are additionally policed by five separate enforcement bodies. What is the position of those enforcement bodies in relation to this clause and what will their future be? The national minimum wage is enforced by a unit within Her Majesty’s Revenue and Customs; the agricultural minimum wage and other aspects of the agricultural wages order are enforced by a unit within the Department for Environment, Food and Rural Affairs; the right not to have to work more than 48 hours a week, on average, is enforced by the Health and Safety Executive; rules governing the conduct of employment agencies are enforced by the employment agency standards inspectorate; and rules governing the conduct of licensed gangmasters are enforced by the Gangmasters Licensing Authority. I know that the bodies I have just mentioned are wide-ranging bodies with different statutory functions, but is the Minister able to say whether this clause will have any impact on those bodies in terms of the enforcement functions of the employment tribunal system?

Citizens Advice, which is often at the forefront of helping vulnerable workers such as restaurant and bar staff, cleaners, retail staff, couriers and clerical staff, has countless examples of people who have lost out on relatively small sums of money. In one case a woman, having been made redundant from her job with a bakery, made an employment tribunal claim in respect of £240 holiday pay that her former employer had failed to pay her upon her redundancy. The company did not respond to the tribunal claim and did not attend the tribunal hearing. As a result, a default judgment of £240 was entered in the claimant’s favour by the tribunal. However, the company did not pay the award and as of April this year she has not received a penny of the £240 of statutory holiday pay denied to her. This is why the rapid resolution system in this clause is critical to allow such cases involving sums of money that are small in comparison to the employment tribunal system, but are critical sums in terms of natural justice to people who deserve to have their rights upheld.

Citizens Advice has produced a useful document with some statistics relating to cases going through the tribunal system and some of the figures are stark. They make some of the other issues that we have been dealing with this morning almost pale into insignificance. Of the case studies that went through their pay and work rights helpline between 2007-08 and 2009-10, the last year for which figures are available, there were some 87,000 claims that either fell into one of the national enforcement bodies that I mentioned earlier, or involved holiday pay or otherwise fell into the employment tribunal system. Of all of those, 23% related to paid holiday, 6% sick pay and 5% redundancy pay. It is important to recognise that there could be a fast-track system to deal with some of these issues that are fundamental to people who are being made redundant or have not been paid holiday pay or sick pay.

As we recognised when we were in government, vulnerable workers’ access to enforcement options is complicated because five separate bodies may be involved, each with its own helpline and statutory obligations. That is why in 2009 the pay and work rights helpline was established as a single gateway to enforcement bodies. I wonder what the relationship will be between that helpline and any rapid resolution process that is put in place.

The principle of rapid resolution is well established, as is the principle of early conciliation through ACAS, which has been operating since 2009. The Gibbons review, which was mentioned earlier, stated that

“a new, simple process to settle monetary disputes on issues such as wages, redundancy and holiday pay, without the need for tribunal hearings”

is essential. Has the Minister thought about whether other enforcement bodies could take some of the slack on small monetary claims? The HMRC’s national minimum wage enforcement body, for example, could take responsibility for holiday pay.

The previous Government considered the measure in some detail, and the position back then was to leave it in the employment tribunal system. Will the Minister update the Committee on whether he has had any thoughts about taking some of the employment tribunal issues out of the tribunal system and into some of the other enforcement bodies or, vice-versa, whether some of the enforcement body procedures could go into the new rapid resolution procedure?

Julian Smith (Conservative, Skipton and Ripon)

I agree with much of what the hon. Gentleman is saying. He seems to be contradicting much of what he said earlier this afternoon. In fact, there are huge problems with the system as it stands, and I welcome the fact that he has finally admitted that the Government are right to think about radical reform.

Ian Murray (Labour, Edinburgh South)

The reason I have been tallying up how many times I have said that I support the Government is because I expected that intervention from the hon. Gentleman. Indeed, I hope he wisely spends his weekend reading this morning’s debates in Hansard, because he would realise that this is the 11th time I have expressed my support for the Government on the Bill’s early clauses. We support these clauses because they will make the system easier. Nobody ever said that the employment tribunal system does not need reform, but the Opposition are saying that the system has to be reformed properly.

I apologise to the Committee, because I must be doing something wrong if the hon. Gentleman agrees with me on any of the points I have raised. I will chastise myself seriously this evening and ensure that my contributions next week are on a different scale.

Norman Lamb (Liberal Democrat, North Norfolk)

Move on! Move on!

Ian Murray (Labour, Edinburgh South)

I may even produce a book, like the Minister.

The Government’s failure to flesh out how the rapid resolution system will work is disappointing and concerns us because the clause permits legal officers to determine employment disputes. The amendment would establish the ability of legal officers, as well as the appropriate remit for their decisions, and importantly, that any subsequent appeal should be to an employment tribunal, a fully qualified legal judge, or the Employment Appeal Tribunal. I want the Minister to respond robustly, because if a legal officer is determining something that previously would have had the status of an employment tribunal, would it be more efficient to allow a judge to redress the system or does the appeal have to go through the full Employment Appeal Tribunal process?

Fundamentally, however, the Secretary of State and Lord Chancellor must consult widely with, for example, businesses and the trade union movement to establish a suitable sphere of activity. I suspect that businesses and employees who have been through the process could easily suggest amendments to the Minister that would make the system far more effective. Crucially, the Minister has to ensure that the employer and employee sides both buy into the proposed system, which we hope will benefit both. If they do not buy into the system, there might be the concerning consequence of satellite litigation.

Concerns have been expressed that legal officers do not receive the equivalent training to employment judges and may not be employment law specialists—perhaps I should refer them to the Minister’s book. That is dangerous, because decisions made by a legal officer would have the same status as employment tribunal decisions. Our amendment would therefore require the Government to undertake a consultation to establish what that training should be, and how it compares with the training of a fully qualified employment tribunal judge or an Employment Appeal Tribunal judge.

As I have explained, the decision-making remit of legal officers has not been clearly set out, but it has been suggested that that might include more straightforward cases, such as those involving unfair deduction from wages, non-payment of the national minimum wage and holiday pay. Our amendment would require the Government to consult on the matter.

Julian Smith (Conservative, Skipton and Ripon)

Does the hon. Gentleman agree that the ultimate direction of travel should be to get almost every case solved outwith the tribunal system, leaving only the most complex cases—day one rights cases and discrimination cases—for the judicial system?

Ian Murray (Labour, Edinburgh South)

I am delighted that the hon. Gentleman has intervened, because we are now going to agree for the second time in the past 15 minutes. On Second Reading, the shadow Secretary of State suggested just such a four-pronged system. He proposed that there should be a rapid resolution system that would deal with some of the simpler issues, a specialist system that would deal quickly with equal pay cases, an employment tribunal system for unfair dismissal and discrimination cases, and a fourth element that would send high-value cases straight to the High Court. The shadow Secretary of State has already trailed that proposal, and it is worth consideration. Perhaps it might form part of the consultation that we hope the Department for Business, Innovation and Skills will carry out on the clause to see how it can be improved, and to see how we can get as much as possible out of the tribunal system. We agree on that.

Finally, if legal officers are to determine some basic cases, it is essential to ensure that any decision can be appealed formally either to an employment tribunal or, as the legislation suggests, to the Employment Appeal Tribunal. I must raise the issue of fees again at this point. Will the Minister confirm whether someone who brought a fact-based claim for holiday pay would have to pay a fee for its enforcement after any conciliation through ACAS? Will the fee system be inserted before or after rapid resolution? It seems to me that the insertion of fees at this point in the system would make the enforcement of small claims—such as the example I gave of £240 of holiday pay—impossible, because the employee could not afford to pay a fee to recover such a small amount of money.

For the 12th time, we welcome the principle of rapid resolution. The question is whether any decisions that a legal officer makes will be enforced. Given the kind of employer that is likely to be involved in many of the cases that will be dealt with under the proposed scheme, it is likely that a significant proportion of legal officers’ determinations will never be complied with. That brings us to the current arrangements for enforcing unpaid employment awards. They are clearly inadequate, which is one of the reasons why we have tabled amendments to clause 13.

Norman Lamb (Liberal Democrat, North Norfolk)

First of all, I will pick up one or two of the points that the shadow Minister has raised. I want to clear up a possible misunderstanding. The rapid resolution process would be confined—of course, everything will go through consultation before any scheme is introduced—to a subset of simple claims that currently go to the employment tribunal, including “wages at” claims and holiday pay. There is a view, which I think many people share, that those very simple claims can be dealt with much more simply and quickly by a legal officer, rather than by waiting five months for a full tribunal hearing.

The hon. Gentleman mentioned other bodies he represented. He talked about agricultural wages, the national minimum wage and so on. It has no bearing on that at all. I make two observations. The hon. Gentleman pointed to a myriad different bodies and enforcement processes, which, as my hon. Friend the Member for Skipton and Ripon remarked, is highly complex and unsatisfactory. It is worth exploring whether there is scope for rationalisation. However, that is not what the Bill and the measures in the clause are about.

My other observation is about the payment of awards made in employment tribunals. The levels at the moment are unsatisfactory. We have to look at ways to improve the enforcement of awards, so that those claimants found to have been unfairly treated or discriminated against get the compensation awarded to them.

The hon. Gentleman referred to the relationship between early conciliation and rapid resolution. What would happen is that the claimant would go through the early conciliation process and an attempt would be made to settle. If that was successful, all well and good, the matter would be at an end, the COT3 form would be signed and the parties could move on. If it was not successfully settled and the claimant made the claim to the tribunal, and if the claim fell within a category relevant to the rapid resolution scheme, according to the secondary legislation that we will consult on, the parties could opt for rapid resolution as an alternative process to the main tribunal process. Both parties would have to agree to that.

The hon. Gentleman mentioned fees. Officials are exploring various options for a rapid resolution scheme and will consider whether a fee is appropriate once the options have been developed in more detail. We will, of course, as I have said repeatedly, consult on those proposed arrangements.

Julian Smith (Conservative, Skipton and Ripon)

I urge the Minister to be radical in his thinking about changes to employment tribunals and how far he can go with the reforms. The Underhill review is ongoing but it is limited in scope. I hope that as he continues as Minister for Employment Relations he will push forward with more radical proposals.

Norman Lamb (Liberal Democrat, North Norfolk)

I am always open to ideas. One should always be prepared to look at the nature of the problem. The shadow Minister has conceded that the system is complex. Most people recognise that the way the employment tribunal has developed since it was introduced, as a layman’s court for parties to use without having to resort to expensive legal advice, has gone off course. It has become highly legalistic. The body of case law is enormous, as is the burden it imposes on employers. Critically, the cost to employees who seek to pursue a claim is burdensome. There is always a case for exploring what changes can be made to address those problems.

Clause 10 is an enabling clause; it provides one solution to deliver the rapid resolution scheme that we committed to consider in the Government response to the “Resolving workplace disputes” consultation.

Officials continue to explore whether and how such a scheme might work to provide determinations in less complex cases. One option under consideration is to give legal officers the power to make determinations in specific instances. Clause 10 simply ensures that we have the necessary statutory authority, should we choose, as I hope we will, to pursue an option for rapid resolution that involves legal officers.

Much work still needs to be done on understanding what any rapid resolution scheme will look like. Opposition Members have raised valid points, and in due course we will consult on precisely such questions. I recognise the value of having a consultation on rapid resolution and I will undertake one before I introduce any such scheme, but it is not the norm to stipulate a requirement to consult in statute. Hon. Members will be aware that the Employment Tribunals Act 1996 recognised legal officers as valid decision makers for interlocutory work in tribunals, and there is no existing statutory requirement to consult on the appropriate qualifications for such officers.

Interestingly, in a debate on 20 March 1998, the then Minister, Mr Ian McCartney—that colossus—argued the case for the introduction of legal officers and sought to reassure the then Opposition that there was no need for a provision to require a consultation. On the basis of his reassurance that the Government would consult—as we are guaranteeing that we will consult—the Opposition withdrew their amendment. It is perhaps instructive that Labour legislated in 1998, but never quite got round to implementing the scheme for which it had legislated, which is a rather sad reflection on too much of what happened during its period in government.

On the basis of my reassurance to the hon. Member for Edinburgh South that there is an absolute commitment to consult, I hope that he will withdraw his amendment.

Ian Murray (Labour, Edinburgh South)

I appreciate everything that the Minister has said, but it is important to lay a very strong foundation in the clause, and there are real concerns about how the changes will impact on and lock together with the rest of the tribunal system.

Norman Lamb (Liberal Democrat, North Norfolk)

I thank the hon. Gentleman for giving way, as there was one other point that I wanted to mention. On appeals, the proposal is that the appeal will apply exactly as it would to a full tribunal decision. There must of course be a right of appeal against a decision made by a legal officer in a case pursued through any future rapid resolution scheme.

Ian Murray (Labour, Edinburgh South)

I am grateful to the Minister for intervening, and perhaps I can ask him to do so again. If he gives me an assurance that the consultation, which he has said is forthcoming, will cover the attainment of legal officers, their remit and the appropriate mechanism for appeal, I would be willing to withdraw the amendment. However, if he cannot give me such an assurance, I will want to seek the Committee’s approval by pressing the amendment to a vote.

Norman Lamb (Liberal Democrat, North Norfolk)

The first two things will be part of the consultation. It will of course be right to look at the sort of claims that are appropriate for rapid resolution and the qualifications of the individuals who will adjudicate on those claims. There is simply no need to consult on the appeal, because—I say this on the record—the appeal will apply in exactly the same way as one for a claim that is taken to the full tribunal.

Ian Murray (Labour, Edinburgh South)

I am still uncomfortable about the mechanism for appeal. To take such an issue straight to the Employment Appeal Tribunal may make the system overly complicated. We should consult on the best mechanism for an appeal, particularly if all the legal officers look only at the interlocutory aspects of an employment tribunal system in terms of administration and so on. It would be cumbersome to say that a case should go straight to the appeal tribunal.

Norman Lamb (Liberal Democrat, North Norfolk)

We have to remember that we are talking about what, typically, is a claim for holiday pay of £100 or something like that. In those circumstances, the claimant and indeed the employer would see absolute merit in speedily concluding the complaint, without having to wait for five months for a full tribunal hearing. As in an employment tribunal, an appeal to the Employment Appeal Tribunal can be made only on a point of law, and that would also apply in this determination. Changes will be consulted on before secondary legislation is introduced, but when the claims are relatively minor—of course, I absolutely agree with the hon. Gentleman that they may be important to the individual—and modest in scale, it seems entirely appropriate to have a mechanism that the two parties can opt into, which is all that has been suggested, for speedy resolution. Introducing an internal appeal within the employment tribunal adds complexity and cost, and it seems that that would completely defeat the purpose of having a speedy process to deal with modest claims.

Ian Murray (Labour, Edinburgh South)

I am still slightly uncomfortable that the whole process in clauses 7 to 10 is about making the system more responsive, and for such small claims, it seems unnecessary then to take an appeal to the Employment Appeal Tribunal, for all the pitfalls that the Minister has discussed. All we ask is that the consultation takes into account the best mechanism for appealing, which will be used rarely, because the claims are very small, are almost on a point of law, and they relate to administrative issues. It would be useful for any consultation to allow that to be looked at.

Norman Lamb (Liberal Democrat, North Norfolk)

It might help the shadow Minister if I refer him to the existing right to review in the employment tribunal rules. That process runs short of appeal, but the judge in the employment tribunal could review a legal officer’s decision. The power exists in the employment tribunal rules and will remain in place. I hope that that reassures the hon. Gentleman enough to allow him to withdraw the amendment.

The rest of the debate is in Hansard.