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Enterprise and Regulatory Reform Bill

Volume 551: debated on Tuesday 16 October 2012

[1st Allocated Day]

Consideration of Bill, as amended in the Public Bill Committee.

New Clause 14

Civil liability for breach of health and safety duties

‘(1) Section 47 of the Health and Safety at Work etc. Act 1974 (civil liability) is amended as set out in subsections (2) to (7).

(2) In subsection (1), omit paragraph (b) (including the “or” at the end of that paragraph).

(3) For subsection (2) substitute—

“(2) Breach of a duty imposed by a statutory instrument containing (whether alone or with other provision) health and safety regulations shall not be actionable except to the extent that regulations under this section so provide.

(2A) Breach of a duty imposed by an existing statutory provision shall not be actionable except to the extent that regulations under this section so provide (including by modifying any of the existing statutory provisions).

(2B) Regulations under this section may make provision about the extent to which breach of a duty imposed by other health and safety legislation is actionable (including by modifying that legislation).

(2C) The reference in subsection (2B) to “other health and safety legislation” is to—

(a) any provision of an enactment which relates to any matter relevant to any of the general purposes of this Part but is not among the relevant statutory provisions; and

(b) any provision of an instrument made or having effect under any such enactment as is mentioned in paragraph (a) other than a provision of a statutory instrument that contains (with other provision) health and safety regulations.

(2D) Regulations under this section may include provision for—

(a) a defence to be available in any action for breach of the duty mentioned in subsection (2), (2A) or (2B);

(b) any term of an agreement which purports to exclude or restrict any liability for such a breach to be void.”

(4) In subsection (3), omit the words from “, whether brought by virtue of subsection (2)” to the end.

(5) In subsection (4)—

(a) for “and (2)” substitute “, (2) and (2A)”, and

(b) for “(3)” substitute “(2D)(a)”.

(6) Omit subsections (5) and (6).

(7) After subsection (6) insert—

“(7) The power to make regulations under this section shall be exercisable by the Secretary of State.

(8) The Secretary of State must obtain the consent of the Welsh Ministers before making any regulations by virtue of subsection (2B) that contain provision which would be within the legislative competence of the National Assembly for Wales if it were contained in an Act of the Assembly.”

(8) In section 82 of the Health and Safety at Work etc. Act 1974 (general provisions as to regulations)—

(a) in subsection (3), after “subsection (4)” insert “or (5)”, and

(b) after subsection (4) insert—

“(5) A statutory instrument containing (whether alone or with other provision) regulations made by virtue of section 47(2B) shall not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”

(9) Where, on the commencement of this section, there is in force an Order in Council made under section 84(3) of the Health and Safety at Work etc. Act 1974 that applies to matters outside Great Britain any of the provisions of that Act that are amended by this section, that Order is to be taken as applying those provisions as so amended.

(10) The amendments made by this section do not apply in relation to breach of a duty which it would be within the legislative competence of the Scottish Parliament to impose by an Act of that Parliament.

(11) The amendments made by this section do not apply in relation to breach of a duty where that breach occurs before the commencement of this section.’.—(Matthew Hancock.)

Brought up, and read the First time.

Government new clause 14 relates to civil liability for breaches of health and safety duties. It fulfils our commitment in the Budget to introduce measures to reduce the burden of health and safety, following the recommendations made in the independent Löfstedt report. Professor Löfstedt considered the impact that the perception of a compensation culture has had in driving over-compliance with health and safety at work regulations. The fear of being sued drives businesses to exceed what is required by the criminal law, diverting them from focusing on sensible preventive health and safety management and resulting in unnecessary costs and burdens.

Professor Löfstedt identified the unfairness that can arise when health and safety at work regulations impose a strict duty on employers that makes them liable to pay compensation to employees injured or made ill by their work, despite all reasonable steps having been taken to protect them from harm. Employers can, for example, be held liable for damages when an injury is caused by equipment failure, even when a rigorous examination would not have revealed the defect. The new clause is designed to address that and other unfair consequences of the existing health and safety system.

We all have different reasons for coming into politics. When I was growing up, I had one of the experiences that brought me to this place, concerning the over-burdensome intervention of health and safety officers. I worked in a family computer software company when an over-long health and safety investigation took place, which took up huge amounts time for the officers and senior management. The only result at the end of it was the recommendation that some bleach in a cupboard must be labelled correctly. After a sign was put up saying, “There is bleach in the cupboard. Please do not drink it,” the company was passed under the health and safety regulations.

These changes will ensure that there is a reasonableness defence in the consideration of some health and safety cases.

I am enjoying the march back through time to the Minister’s computer existence. I speak as a former health and safety barrister—on behalf of the prosecution, I should say. I welcome the changes recommended in the independent report. Is not what we are trying to do to bring flexibility and fairness to a system that is too old and defunct?

We are ensuring that due health and safety measures are protected, but that there is a test of reasonableness for the actions of employers, so that those who have taken all reasonable precautions cannot be prosecuted for a technical breach. That will reduce the impression among many businesses, especially small businesses, that they are liable to health and safety legislation in many cases when they are not. It will reduce that impression while ensuring that taking reasonable steps to abate health and safety difficulties remains a vital part of everybody’s responsibilities. Indeed, the new clause does not change the criminal procedures in relation to health and safety.

How do we propose to do this? Civil claims for personal injury can be brought by two routes: a breach of the common-law duty of care, in which case negligence has to be proved, or a breach of statutory duty, in which case the failure to meet the particular legal standard alleged to have been breached has to be proved. The new clause will amend the Health and Safety at Work etc. Act 1974 to remove the right to bring civil claims for breach of a statutory duty contained in certain health and safety legislation.

As I am sure the Minister knows, the 1974 Act is riddled with the phrase

“so far as is reasonably practicable”.

Does that not give the protection against flimsy claims that he has been talking about?

The 1974 Act does not give that protection, because a test of negligence is not required to proceed with a prosecution. In future, proof of negligence will be required to bring a case. It will be possible to bring a civil action for a breach of common law duty of care only on the basis that the employer has been negligent.

I am enjoying the Minister’s attention to detail on this important matter. Will he reassure us that this provision will not add to the burden for small businesses because of the process of providing proof? Has he done any number crunching to show what it will mean for the businesses that matter so much to Britain?

My hon. Friend anticipates my speech, because this provision will reduce the burdens on business. It is difficult to know precisely by how much because businesses react not only to the letter of the law, but to the perception of the law. There are perceived health and safety requirements that go beyond technical breaches of the law, and we want to remove them. One can go to the new Government website and ask whether something is required by health and safety legislation. Many of the cases that are brought to the Government’s attention are not required by health and safety legislation. The problem is the perception of health and safety legislation. By including a reasonableness defence, we will help to remove the implied, expected and perceived burdens on business.

When my hon. Friend became a Minister, what assessment did he make of the previous Labour Government’s attempts to lift the burdens on business and the perception of those burdens over the 13 years that they were in office?

I have found no evidence of that. If my hon. Friend can point any out to me, I would be extremely grateful.

I welcome the direction in which the Minister is taking the debate and the policy. I will never forget a conversation that I had in Macclesfield marketplace, a place with which I know he is familiar. A lady told me how disturbed she was that the perception of health and safety was giving it a bad name. I asked who she worked for and she said the Health and Safety Executive. The situation is going too far. Does the Minister agree that it is important to move to a common-sense approach, which I think is the direction in which he is taking Government policy?

It is important to have a health and safety framework in which responsible businesses act in a way that supports and enhances the safety of the people who work for them. Indeed, it is vital that we all have a duty to behave reasonably on questions of health and safety.

I hope that making negligence a requirement before a health and safety case can be brought will mean that those who behave reasonably have no reason to fear health and safety legislation and that those who think carefully and responsibly about the businesses that they run will know that they are behaving not only reasonably, but lawfully.

I thank the Minister for his speech. Does he agree that the managers of companies who are acting reasonably will be freed up to go out and win more export business, including those in the manufacturing and engineering companies in my constituency of Dudley South?

Indeed, this action will reduce the burdens on business and help Britain to compete. It also provides important reassurance to employers that they will be liable to pay compensation only when it can be proved that they have been negligent.

I well recall when I worked in the shipyards watching the white particles of dust and asking whether they had any health and safety implications, only for the employer to tell me, “Don’t be stupid. Get on with your lot, young man. It won’t do you any harm.” Hundreds of thousands of people are now suffering from mesothelioma. Is that the kind of employer that the Minister wants to support?

The hon. Gentleman gives a good explanation of why there is cross-party support for health and safety measures that are reasonable. After all, it was a Conservative Government who brought in the Factory Acts. On the specific point that he raises, the provision is forward looking and is not retrospective. It will not have an impact on acts that were committed in the past, but is about actions that take place in the future. He raises an important question and I hope that I have reassured him.

I thank the Minister for giving way; he is being very helpful. Will he clarify whether there is currently—or will be in the legislation—a legal definition of what “reasonable” actually means?

The definition of reasonableness will come from the common law interpretation, and the concept is already well regarded and specified in law.

The new clause makes a significant contribution to the Government’s reform of civil litigation to redress the balance between claimants and defendants. It is good for Britain’s competitiveness, reduces burdens on businesses, and strengthens and underpins our health and safety system, thereby ensuring that people think it is fit for purpose.

I am concerned by the Minister’s remarks because far too many people are already killed at work each year, and people are also injured through faulty or wrong seating and other things that happen. The office is not a safe working space, and when the Minister says that we worry too much about health and safety, I am worried that we will make things far worse for people not only in heavy industry but in other working situations. Health and safety legislation exists to protect those people from back injury, repetitive strain injury and all the other things that occur. This legislation will completely reduce that issue in people’s minds.

On the contrary, although I share the hon. Lady’s concerns to ensure that health and safety legislation is regarded and reasonably interpreted throughout work forces, whether in industry, agriculture or offices, and although such legislation is an important part of the modern workplace, it is unhelpful when health and safety becomes a byword for regulations that get in the way and stop businesses competing or, for instance, children from being taken on school trips once reasonable precautions have been put in place, and instead bring the whole system into disrepute. That is what the Government are trying to stop. The key defence of negligence ensures that if people breach health and safety rules or have not acted reasonably, that will—of course—be taken into account under the system, and the new clause will not change criminal health and safety procedures. We must, however, ensure that unreasonable claims, and the existing perception of health and safety legislation, do not get in the way of Britain’s ability to compete.

The Minister is pushing the point about perception. He is right: businesses do respond to perception, and sometimes go further than is legally required. However, if they respond to perception in one direction, they may well respond to a new perception in another direction and do less than is required. If that is the case, how many injuries or deaths will it take for the Minister to be back at the Dispatch Box rewinding some of the changes?

If businesses behave unreasonably and are negligent, they will be caught by the system. That proves the point about why we have to strike a good balance between a health and safety system that everybody supports and under which employers—and others—have to behave reasonably and take reasonable precautions, and a system in which the test of having acted reasonably is not a defence in civil law. That is the change being made; it will help to free up business, and I commend the new clause to the House.

If only, Mr Deputy Speaker.

This is my first opportunity to congratulate the hon. Member for West Suffolk (Matthew Hancock) on his promotion. It is a pleasure to see him at the Dispatch Box, as he has been many times in his guise as Disraeli, Churchill, or perhaps Sir Robert Peel, and it is good to see him in his current incarnation.

In his opening remarks, the Minister mentioned that the new clause seeks to deal with perception. We should not, however, be legislating on the basis of perception, and as he spoke I became increasingly concerned that this is yet another example of an insensitive, out-of-touch Government who somehow deem all regulation as inherently bad, and health and safety legislation as all-encompassing, bureaucratic and often unnecessary.

I have missed the hon. Member for Skipton and Ripon (Julian Smith) over the course of the summer, and I remember with affection some of his interventions in Committee. I welcome him back; it is good to see him.

I reciprocate the hon. Gentleman’s remarks. Does he agree with the Government that perception is important in health and safety legislation in almost the same way as in employment law? Does he claim that there is no issue with perception, and does he totally disagree with what the Government are trying to do?

On perception, there is a feeling in the country—it is often fuelled by the media—that the so-called health and safety culture is inevitably a drag on economic growth and recovery. We must, however, set the context, and I want to make an important point to the Minister. The TUC estimates that every year at least 20,000 people die prematurely as a result of injuries, illnesses, or accidents caused by or in their place of work. That is far too many. The shocking figure from the Health and Safety Executive of 173 workers who were fatally injured at work often excludes a large number of other work-related deaths, but that figure alone means that 173 people went to work and did not come back, and that should not happen in a modern, compassionate society.

Does my hon. Friend agree that improvements to the health and safety regime were out there for all to see during the construction of the Olympic site? There were no deaths and few injuries, which was because the health and safety regime had been properly applied.

I agree with my hon. Friend. In the great and almost universal celebration of the London Olympics this summer, we should never forget that we saw the first Olympic stadium and village in the history of the games to be built without a single fatality. That is something to be proud of and was a result of the good partnership between Government—of all political persuasions—management and trade unions, together with workers, working to ensure that nobody was injured or killed while doing such important work.

I will give way to a fellow member of the Public Bill Committee, and then to a fellow north-eastern MP.

Not only did I serve on the Public Bill Committee for this important Bill, but I served on the Löfstedt review into health and safety reform, as did a representative from the Trades Union Congress, Sarah Veale. I assure the shadow Minister that there was absolute agreement among those on the Löfstedt review, including the TUC, that the perception of health and safety legislation—indeed, over-perception—is wrong in this country, and is holding back business and giving health and safety a bad name. The new clause goes some way in addressing that.

I will go on to address the Löfstedt report in specific terms, and say where we agree with it and where we disagree, particularly with regard to the new clause, and if the hon. Gentleman will allow me, I will expand on that point. I am conscious that my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), a proud member of the Union of Construction, Allied Trades and Technicians, also wants to intervene, but I will first give way to the hon. Member for Hexham (Guy Opperman).

I am most grateful. All hon. Members will support the fact that the Olympics produced a death-free environment during the construction phase. However, changing laws on limited civil issues from strict liability to a balance of proof civil liability would not necessarily have affected or changed that. I hope that the hon. Gentleman will agree with and acknowledge that.

I understand where the hon. Gentleman is coming from. In his opening remarks, however, the Minister mentioned a degree of concern about perception. Health and safety is first and foremost an important means to achieve safety for the worker, but a safe and healthy work force and workplace can also be efficient and productive. I wish to expand on that point, but I will first give way to my hon. Friend.

My hon. Friend is generous in giving way, and I echo his welcome for the fact that there were no deaths during the construction of the Olympic site. However, there were 50 deaths in this country last year on construction sites, and as he said, 173 fatal injuries, which was only two fewer deaths than the previous year, which indicates that we have a long way to go; 173 families have been affected. The Minister spoke of perception, but I am concerned about the reality for the families of those who have tragically died at work.

My hon. Friend is absolutely right. It is important that the House and the country has 28 April—workers memorial day—as a focus for remembering that people should not go to work and not come back, and that families should not be disrupted by death and injury at work. We need to pull together to ensure that health and safety is considered not as peripheral and a nice thing to have, but as central to our society and a productive economy.

If the hon. Gentleman will allow me, I will move on.

There are benefits to business from an effective and proportionate health and safety regime. As I mentioned, a safe and healthy work force can be a productive and effective work force. The Institution of Occupational Safety and Health estimates that, by having an effective health and safety regime, employers could save up to £7.8 billion, individuals could save up to £5.12 billion, and the economy, each and every year, could save up to £22.2 billion. It is important that health and safety is classed not as unnecessary and bureaucratic, but as conducive to good, effective and sustainable economic growth.

It is with those figures in mind that we should consider the merits of health and safety regulations and legislation, and the long-established premise of strict liability. As we know and as the Minister said, Professor Löfstedt reported in November last year. My right hon. Friend the Member for East Ham (Stephen Timms), who speaks for the Opposition on health and safety, welcomed many aspects of Löfstedt’s review. As my right hon. Friend said, most of it was positive, sensible and evidence-based, which is not a phrase we have heard often in deliberations on the Bill, and reinforced the view that health and safety is not a burden.

Over a number of years, the Health and Safety Executive has undertaken simplification exercises, which had support from both trade unions and employers. There are 46% fewer regulations than 35 years ago, and there has been a 57% reduction in the number of forms used. There is a perception that firms, and particularly small firms, spend disproportionate time on health and safety to the detriment of business and growth, but the average business spends 20 hours and just over £350 a year on health and safety risk management and assessment, according to the Minister’s Department. Such activities therefore do not exactly take up a huge amount of businesses’ time.

The shadow Minister might be about to say this, but does what he just said mean he will get on the side of the small business in Britain, as the Government are doing, and vote with them on new clause 14, or will he oppose it?

The Labour party has always been on the side of small businesses, and Labour Members will continue to be so. In the 13 years of Labour government from 1997 to 2010, 1.2 million businesses were created, whereas 50 businesses each and every day are folding as a result of the current Government’s macro-economic polices and the double-dip recession. I shall therefore take no lessons from the hon. Gentleman.

Professor Löfstedt suggested that the UK needs a greater understanding of risk. We need to reject tabloid claims and the perception at the centre of the debate so far that health and safety legislation has somehow gone too far. He also recommends that education is provided to employers, workers and students on the dangers they face. However, the short section on strict liability in Professor Löfstedt’s report offers no argument or evidence for changing the current legislative arrangements, but rather an assumption that strict liability is unfair on employers. In fact, Löfstedt refers to three cases, but two were not strict liability cases, so would not be affected by the new clause. The assumption that the Government are guilty of making—they have been guilty of making many such assumptions on employment rights—is that the removal of that type of liability in some cases will boost the economy. That is economically illiterate, however, and not the solution that businesses, including small businesses, want to get us out of the double-dip recession that has been made in Downing street.

I mentioned the accusation of there being no evidence—we have heard that phrase time and again during the consideration of the Bill. There has been no consultation on the measure, which means that there could well be unintended consequences, because the Government have not sought the expertise of those who deal intimately with such issues. There has been no impact assessment on the measure, but can the Minister say why not? What are the expected costs and benefits of implementing the measure, which is supposed to liberate businesses to concentrate on economic growth? Does he have tangible, quantifiable, empirical evidence to support such claims?

Health and safety regulation has always contained a balance between different types of obligation—the majority are qualified by the phrase “reasonable practicability”, but some are strict. Although Professor Löfstedt had the insight that “reasonable practicability” has underpinned health and safety regulation, it has never been the key concept. A central point of the Opposition’s argument is that the balance has existed since the Factories Act 1937, which has been mentioned. In that three quarters of a century, the balance has been generally considered fair. Removing it risks taking us back to a 19th-century mill owner’s view of health and safety, which the Opposition could never support.

If someone is injured because of a defect in a piece of equipment provided by their employer, the law is that it is no defence for the employer to say that they had a proper system of maintenance and inspection. Most people would think that right and fair, so it is unfortunate that the Government do not. They believe it is unfair for an employer to be the subject of civil action and pay compensation when they are not at fault, but what about fairness and justice for the injured worker? They are not at fault and did not ask to be injured. The new clause would remove the right to compensation for workers in those circumstances unless they can prove fault. The Government seek to place the burden on vulnerable employees, but the employer, and not the employee, selects and provides the work equipment. Regardless of fault, it is therefore the employer and not the employee who creates the risk. That is important.

Prior to my previous question, I should have declared an indirect interest, which is already on record.

Given the emphasis placed on business concerns by Conservative Members, does my hon. Friend agree that it is slightly surprising that the Federation of Small Businesses briefing to MPs does not mention them? Perhaps that suggests that the line he is taking is the correct one.

The FSB has been incredibly important throughout the consideration of the Bill, including on the green investment bank and ensuring that the supply chain can derive benefit from the potential in the new green economy, but it did not mention such concerns. The measure is not a priority for business and its absence is not a hindrance to economic growth. The balance, which has been well established for three quarters of a century, works well and will not hinder growth or recovery.

I mentioned that it was the employer, not the employee, who creates the risk. Importantly, however, it is also the employer who can better distribute the cost that the risk creates. Indeed, the employee has no ability to distribute the costs at all. Removing strict liability does nothing to remove unfairness or to mitigate risk. All it does is move it elsewhere to the detriment of the vulnerable employee. There is an inevitable unfairness in that scenario that requires such a policy choice—between innocent employee and innocent employer—and there seems to be no compelling reason why the loss should fall on the employee.

Where there is no fault among the employer or employee, one sensible solution would be to allow employers to sue third parties—for instance, manufacturers or suppliers of potentially defective goods—because it would allow them to manage risk and effectively recoup compensation made to employees. What consideration has the Minister given to this sensible approach in an area that has been overlooked? I urge him not to pursue it by tampering with an approach to regulation that has served us well since the 1937 Act and certainly since the 1974 Act.

This is yet another example of Ministers seeking to water down vital civil redress on the basis of anecdote, ideology and perception. Such a measure should not be in what the Government deem to be an enterprise Bill.

In Committee, mention was made of anecdote, a lack of evidence and perceptions, but we have to add a new one, which the Minister led with—impressions. We now have a Government run by impressions, but they are not very good at making impressions.

The Minister is the Mike Yarwood of the House of Commons. It is nice to see a good, relevant, pertinent and timely reference to popular culture, from my own point of view.

The new clause will do nothing to enhance recovery and enterprise, and might have the unintended consequence of making the health and safety environment less safe and therefore less productive and efficient. I ask the Minister to think again, because this does nothing to aid the recovery that the country so badly needs.

The Minister started with his experience in the world of health and safety. My experience is based not only on my life as someone who worked for 20 years in the coal mining industry and then as a care worker but before that on the experience of my father, who worked the coal mines in the 1930s, when, in this country, one coal miner was killed every six hours on average. Think about that. One thousand men a year did not go home, in part because health and safety was a laughing matter and put to one side, because production was all. My father was twice buried alive—thankfully, he got out both times—and had a very close friend die in his arms, having had his head crushed between two mining coal tubs. It was not a satisfactory way to spend your life.

As a result of that history, the Government in 1947 nationalised the coal mines, set up a train of processes that included health and safety committees in the mining industry and joint consultative committees, and started planning for legislation that produced the Mines and Quarries Act 1954. That Act was actually put in place by a one-nation Tory Government, but they did it for the right reasons—to improve the conditions of people who were vital to the economic success of this country. As a result of that legislation and the improved techniques and machinery, the number of people dying in mines in the 1980s could be counted in single figures. The work force was depleted by about 70% between the 1930s and 1980s, but the number of health and safety measures fell from 1,000 to fewer than 10. For me, that history is vital to understanding how important health and safety issues are.

In 1989, I moved from the mines to become a care worker taking care of elderly people. Members might think that that is a completely different scenario, but let us think about it. The Minister gave the example of the bottle of bleach in the cupboard. It is important to know what is in cupboards to which people might well have access, particularly older people who might not have the capacity to understand what they are dealing with. That is why we introduced measures such as the Control of Substances Hazardous to Health Regulations 2002, which were about protecting people dealing with dangerous liquids.

There were issues around the lifting and handling of people who were not mobile. The impact on care businesses was huge. People accepted, however, that if they wanted to do things properly and protect not only the workers but the people they were taking care of, they needed to introduce such measures. There were other issues around medication—how to supply it, how to make it safe, how to make sure it was not given to the wrong person, how to make sure that medication records were kept up to speed—that were all part and parcel of the health and safety measures that we should all be pleased are in place.

The discussions on the Bill have been marked, certainly in Committee, by a lack of real evidence. The man tasked by the Prime Minister with reviewing employment law, Adrian Beecroft, was questioned during the evidence-taking sessions, particularly by my hon. Friend the Member for Vale of Clwyd (Chris Ruane). In response to the question about what the empirical evidence and research was based on, Adrian Beecroft said:

“I accept the accusation that my views on whether the change would improve the efficiency of people working in businesses are based on conversations with a sample of people, which is not statistically valid.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 145, Q330.]

The hon. Gentleman is making some important points, but, regarding evidence, perhaps we could learn lessons from our European partners. For example, the nursery staff ratio in Germany is considerably less than here, which has driven down the costs while maintaining safety. So there is evidence, if we look further afield.

I am more than happy to follow that knowledge. If we want examples, let us look at Germany right across the board—at its employment legislation and practices, including on health and safety. It is a good example of an economy that is growing while having much tighter working rights and better regulation than this country does.

I was interested in what the hon. Member for North Swindon (Justin Tomlinson) said about Germany, but he forgot one thing—after the war, it was a Labour Government who, along with their allies, set up the German industrial and other structures.

That is absolutely right. We took the best of what we had in this country, and thankfully the Germans picked it up. It would be a good idea if we looked at what they did and brought it here.

To repeat, Adrian Beecroft talked about

“conversations with a sample of people, which is not statistically valid.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 145, Q330.]

So there is no evidence base. It is a couple of guys talking in the pub, at a football match or out playing golf. It is two old guys sitting in deck chairs, saying, “Wouldn’t it be nice if we got rid of all this health and safety stuff and all these employment rights? Then everyone could make more money.”

Whether perception or reality, one thing we know for certain is that nearly 200 people were killed in the workplace last year and that in excess of 20,000 people were killed or died as a result of work. That is the evidence base. That is factually correct. There is little evidence other than that. Does my hon. Friend agree?

I could not agree more with my hon. Friend. He speaks from the history of the real world, not from just reading books and studying things at university. He has been in the real world and seen how people are affected when health and safety is allowed to go by the board. The words that were used continually in Committee were: “The perception is this”, “The impression is this.” It was based on anecdotes and assumptions. There was no evidence. If we create laws without evidence, we create nonsense.

In conclusion, I return to the word that I asked the Minister to define—“reasonableness”. In 20 or 30 years of negotiating contracts for people at work, that is one of the words I used to hate in any contract, because “reasonable” is made of elastic. It is a word used by lawyers and others to get around things. I will give hon. Members a real example. I used to represent home care workers, who went into people’s houses and took care of some of the most vulnerable people in this country. Their contracts included a range of duties, and included the words, “and other reasonable things”. There were questions: is it reasonable for a home care worker to bathe an old man or old woman? Is it reasonable for a home care worker to distribute medication to a man or woman? One would think, “Well, of course it is,” but if something went wrong, the employer would say, “You shouldn’t have been doing that. You’re not paid to do that. You shouldn’t have given that medication; you didn’t know whether they’d had it earlier in the day.” I am therefore concerned when the Minister says that the word “reasonable” can apply in that way, because it is a word that will be argued over and tossed around whenever there is a dispute.

Let me return to the point, which was mentioned earlier, that the Bill will create a “new impression”. It will create the impression that all bets are off—that employers do not have to care about health and safety, and that people can do what they want as long as they believe it is reasonable. It will not be reasonable when the statistics that my hon. Friend the Member for Wansbeck (Ian Lavery) spoke about earlier are not 200 people but 300 people a year killed in the workplace. Indeed, it will not be 20,000 people dying from injuries, but 30,000 people. We will come to regret this; it should be stopped at this stage.

I rise to speak as chair of the all-party health and safety group. Unfortunately there are no active junior coalition partners on the group; hence the reason we have such a poor turnout from the junior coalition partners for this debate. I have no doubt that at the next election the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson)—who is in her place on the Front Bench—will be telling people in the west of Scotland that she stood up for workers. However, we will be reminding her of what her party has been doing for the workers.

The all-party group’s activities include producing reports. Just recently we published a report in conjunction with the TUC on asbestos in schools. I would encourage the Minister to get a copy of that report, which basically suggests that we have to challenge perceptions. Who would have thought that there was a health and safety issue in our schools? But there is. Some of our decaying schools are riddled with asbestos, and pupils, teachers, janitors and other people working in schools are being exposed to it. People do not see it, so they think there is not a problem, but there is in fact a major problem. Despite representations to the coalition Government to take action, they have so far refused to do so, which is unacceptable. Indeed, I am told that this place is being shut down for a number of years to deal with asbestos, so it is quite okay to clear the asbestos in this place, so that we can all live safely, but we cannot do it for our children in the schools. That for me tests the perception of this coalition Government when it comes to health and safety.

As I have said, in my earlier days when I worked in the shipyards in the west of Scotland in Glasgow, I remember seeing white flakes floating down and being told by the employer, “You’re just a trouble maker. There’s nothing wrong with them; it’s just rays of sunshine coming through.” I have to admit that we do not get many rays of sunshine in Glasgow, but on the days that we did, we could see those white flakes floating down. We raised concerns, but we were told that we were just being stroppy and obtrusive, when in fact we were talking about something that caused a real disease that people could not see. Since then I have attended far too many funerals of people who worked in the shipyards and had died a horrible death from mesothelioma. Indeed, even insurance companies are now refusing to pay out. Those poor people and their families who are chasing compensation are having to deal with unscrupulous insurance companies that even today are denying them the opportunity of compensation. I hope that those on the Government Benches will be able to tell their constituents who are suffering from asbestos-related disease that they are doing the right thing for future generations, because at the moment that is exactly what they are not doing.

Does my hon. Friend accept that asbestos is not only a hazard in the workplace? I know of numerous cases where people who just used to give their dad a cuddle when he came home in his work clothes died some years later of mesothelioma or asbestosis. Indeed, we have not yet reached the peak incidence of such cases, because it takes so long before the disease manifests itself. Will the changes being proposed today not make the problem so much worse?

My hon. Friend is absolutely right. There is nothing more concerning for people who work with asbestos than to see their relatives catching such a serious disease as mesothelioma. Indeed, I know of one person who worked in a shipyard who had the displeasure of burying his daughter who had died from mesothelioma, simply because when he came home at night she used to sit on his knee. The dust was still there and she was swallowing it, but they did not see it and she was suffering. It was horrible to watch that father bury his daughter.

Every week in this House the Prime Minister and the Leader of the Opposition pay tribute to our armed forces in conflicts throughout the world, and quite rightly so. However, when it comes to fatalities and near fatalities, there are more people killed or injured in the workplace than there are members of our armed forces affected in conflict areas around the world, yet we do not talk about them. Indeed, instead of talking about those people, we want to introduce legislation that will increase their number. When we talk about the armed forces and people losing their lives, please let us remember the workers who are losing their lives, of whom there will be more as a direct result of the Government’s legislation.

Does my hon. Friend agree that this debate is not just about those terrible deaths and injuries? It is also about the long-term conditions that people develop—for example, because their desk is crammed in a corner and they cannot sit at it properly, or because they get repetitive strain injuries. The Bill will make things worse for the conditions that give rise to such long-term problems. Ministers may say that the Bill will not affect deaths and injuries—we question that—but I am sure that my hon. Friend is convinced, as I am, that it will make things much worse for those long-term conditions.

My hon. Friend is absolutely right. Indeed, there is a school of thought that says, “If you work in an office, there are no health and safety hazards,” but that is not true. Indeed, the reality is quite different.

We also have to consider the excessive burden put on the NHS as a result of accidents in the workplace. However, we are only talking about the accidents that are reported. We need to understand that more accidents happen in the workplace that go unreported, because the individuals do not want to report them in case they get the sack. We are therefore not getting the true figure for people injured in the workplace.

With regard to mesothelioma and asbestos-related diseases, at any one time we have roughly 9 million children in school, which is a huge concern. There are also about 800,000 to 900,000 teachers in schools where there is asbestos. Should we not be looking immediately for the full withdrawal of asbestos from schools? It has been done in other countries, by the way, Northern Ireland being one. Should we not be looking for a phased removal and, in the meantime, managing asbestos properly in schools to prevent people from dying? The problem is that such diseases have a latency period of between 30 and 40 years, so people do not report them. They do not develop diseases until 30 or 40 years later, and even then they are not sure where they have come from.

Order. I did not want to interrupt the hon. Gentleman, who I know was making an important point, but I should just remind the House that this is not a general debate on health and safety; rather, we are talking about new clause 14.

I appreciate that, Mr Deputy Speaker. I congratulate my hon. Friend the Member for Wansbeck (Ian Lavery), who is secretary to the all-party health and safety group. He is absolutely right about asbestos and schools. He has done an extensive job of work on that and the point he makes is absolutely right.

On the overall question of accidents or fatalities in the workplace, may I remind the Minister of the extensive amount of money that it will cost the NHS to treat people who have been injured at work through no fault of their own? It is a false economy to have unscrupulous employers putting their workers in danger and then for the NHS—that is, the taxpayer—to have to pick up the bill. That is completely wrong.

On the perception of employers, I worked for a number of years for an excellent and progressive employer, Thales, in the defence industry. It looked after its employees and had a health and safety director, and people reacted accordingly. If we treat people sensibly, we get a sensible response.

I recently asked my local chamber of commerce what problems it had in creating jobs and moving the economy forward, and what barriers were caused by the current health and safety situation. It told me clearly that it did not have a problem with health and safety legislation in the workplace, and that it wanted the Government to concentrate more on restarting the economy, creating jobs, getting money back into the economy and employing people. It said that the Government should focus on that, not on going back to the old Conservative days of saying that the trade unions are the enemy within and should be dealt with accordingly.

The Minister mentioned a bottle of bleach in a cupboard, but there are occasions when children are in offices or other places where there are bottles of bleach lying about, perhaps because of a lack of child care facilities. If those bottles are not clearly identified, there is every possibility that a child could lift one up and drink from it. I would not like to think of any child suffering as a result of that. The new clause is a complete diversion from where the country has been going. There is no appetite in the country for this type of waste of parliamentary time.

Does my hon. Friend agree that when the Conservative manifesto at the last election mentioned cutting red tape, as previous Conservative Governments have, it actually meant an attack on working people’s rights in the factories and coal mines?

There is no doubt about that. We know the rationale behind it—it is just a backhanded attack on trade unions and health and safety representation in the workplace. I worked in the construction industry for many years, and there is clear evidence that where there is trade union organisation on construction sites, safety is considered paramount and the number of accidents is far lower than on non-organised sites.

I do not believe that there is any appetite for the new clause among either our constituents or our businesses, large or small. They want the coalition Government to focus on doing what they were elected to do—getting us through these difficult times, getting people back to work, getting our kids educated and rediscovering our health service. This self-indulgent new clause is not worth the paper it is written on, and there are far more important things to be discussed.

We have had impassioned contributions to the debate, not least from the hon. Members for Blaydon (Mr Anderson) and for Paisley and Renfrewshire North (Jim Sheridan). Several Opposition Members have made the point about a lack of consultation with the Opposition Front Benchers. However, the Löfstedt review involved a consultation, to which there were something like 400 submissions. That review published some of the evidence on which our proposal is based, not least evidence showing that most employers do not make a distinction between health and safety measures on a civil and a criminal basis. They are therefore more likely to waste time over-complying—the hon. Member for Paisley and Renfrewshire North mentioned the problem of time being wasted—than to focus on the need to ensure rigorous health and safety so that they can reduce the number of deaths and serious injuries in the workplace. That is what is valuable, and Opposition Members have spoken powerfully about it. That is where the focus should be, rather than on over-compliance with the details and technicalities that are often put in place, which are not required and not helpful for safety purposes. Instead, they give health and safety a bad name.

Is not the danger, though, that we will end up with under-compliance, which will lead to more people dying? I would rather waste time, as the Minister puts it, than waste lives.

I assure the hon. Gentleman that if there is under-compliance, people will have been negligent and the full force of both the criminal and civil law will be available.

The hon. Member for Hartlepool (Mr Wright) mentioned the Federation of Small Businesses, but it has stated:

“A wider problem for small businesses is that many do not feel confident that they are compliant owing to confusion about what is absolutely necessary, and so feel the need to gold-plate the law to protect them.”

Indeed, an FSB survey showed that 87% of its members supported the Löfstedt approach. Given that figure, and given that the FSB is clear about the lack of confidence caused by the current confusion in the law, I hope he will accept that it is very much behind the Government’s approach.

Likewise, EEF, the manufacturers’ organisation, has stated:

“The current compensation system is serving the needs of neither employees nor employers and is the source of many of the media stories and public concern about excessive health and safety.”

That concern has been part of our debate. Of course, the substance of when technical breaches occur is a crucial part of the change that we are making, but I am glad that the hon. Gentleman acknowledged that there is also the problem of perception, which leads to over-complication. Both those problems need to be addressed, and they will be by our changes.

I was moved, as I am sure everyone else in the House was, by the earnest statements that Opposition Members made about how members of their families and other people they knew had been killed by industrial diseases. However, difficulties such as those that we find in the current legislation do not help to prevent such cases.

Indeed, and over-compliance and the fear of technical breach bring the wider health and safety law into disrepute. All parties support that law. As has been acknowledged, it was introduced by a Conservative Government, and it has been vigorously supported by Labour Governments over the past century or so. However, it is undermined when the impression is given that the system is over-complicated, confusing and aimed at technical, rather than substantive, breaches.

I, too, was impressed with the genuine passion of Opposition Members who talked about health and safety, but I honestly believe that they missed one fundamental point. They seem to believe that there is no cost to over-compliance with regulations, but there is not only a cost to our economy and the Exchequer, which is important at the moment, but a cost borne by the long-term unemployed and the workless. They pay for over-compliance by not having access to the workplace, which vastly decreases their life expectancy. They are the people paying the price.

My hon. Friend makes the point with great power that those who are out of work pay for an uncompetitive economy. They are the people whom we need to support.

The benefits are set out clearly in Löfstedt. Most importantly, because it is necessarily difficult to ascertain the amount of over-compliance, Britain’s health and safety system will benefit from being able to compete and focus its resources on avoiding substantive breaches of health and safety law rather than on technicalities and over-compliance. All parties should focus on problems such as death in the workplace due to negligence. The hon. Member for Paisley and North Renewfreshire—[Laughter.] North Renewfershire—

If the proposals are passed by Parliament, does the Minister envisage a great reduction in the number of fatalities in the workplace next year?

I would expect the focus to be on the substantive breaches and negligence that, sadly, bring about the injuries and deaths in the workplace that we all want to minimise.

The hon. Member for Paisley and elsewhere mentioned the problems with asbestos in educational institutions, and especially in further education colleges. I want to give him the reassurance that past actions will not be affected by the changes in the law, should it be passed according to the will of Parliament. Now that the problems with asbestos are widely known and documented, I anticipate that people who ignore those problems will be ruled negligent by the courts, rather than such instances merely being considered technical breaches. I therefore do not see that question applying in such circumstances.

For the benefit of Hansard, I should like to point out that my constituency is Paisley and Renfrewshire North. Concern has been expressed that this whole debate has been driven by B-list celebrities and B-list journalists on The Daily Mail who have probably never worked in such a workplace in their lives. Can the Minister name one company that has clearly told him that it will employ more people if the Bill goes through?

As I have said, 87% of FSB members support the Löfstedt approach—[Hon. Members: “Name them!”] I am sure that if the hon. Gentleman asks the FSB, it will give him the names of some of those supporters. I prefer to be driven by evidence such as that survey, rather than by unnecessary concerns, given that precautions are being put in place through these amendments. The hon. Gentleman mentioned sunshine in Glasgow, and I hope that the new jobs and benefits to business that will result from the ability to remove the perception of a fear of health and safety will bring that sunshine not only to Glasgow but to the rest of the country. I hope that the new clause will reduce the effects of the perception of a need for over-compliance with health and safety measures, and that instead the focus can be placed on substantive breaches of health and safety regulations. I commend the new clause to the House.

Question put, That the clause be read a Second time.

New clause 14 read a Second time, and added to the Bill.

New Clause 16


‘(1) In Part 14 of the Insolvency Act 1986 (public administration (England and Wales)), before section 399 and the cross-heading which precedes it insert—


398A Appointment etc of adjudicators and assistants

‘(1) The Secretary of State may appoint persons to the office of adjudicator.

(2) A person appointed under subsection (1)—

(a) is to be paid out of money provided by Parliament such salary as the Secretary of State may direct,

(b) holds office on such other terms and conditions as the Secretary of State may direct, and

(c) may be removed from office by a direction of the Secretary of State.

(3) A person who is authorised to act as an official receiver may not be appointed under subsection (1).

(4) The Secretary of State may appoint officers of the Secretary of State’s department to assist adjudicators in the carrying out of their functions.”

(2) In Part 9 of that Act (bankruptcy), before Chapter 1 insert the Chapter set out in Schedule [Adjudicators: bankruptcy applications by debtors and bankruptcy orders] (adjudicators: bankruptcy applications by debtors and bankruptcy orders).

(3) Schedule [Adjudicators: minor and consequential amendments] (adjudicators: minor and consequential amendments) has effect.’.—(Jo Swinson.)

Brought up, and read the First time.

With this it will be convenient to discuss the following:

Government new schedule 2—‘Adjudicators: bankruptcy applications by debtors and bankruptcy orders.

Government new schedule 3—‘Adjudicators: minor and consequential amendments.

Government amendments 37, 41 and 44

As well as moving the new clause, I shall speak to new schedules 2 and 3, along with Government amendments 37, 41 and 44, the latter of which are consequential amendments on territorial extent and commencement.

These amendments will reform the process by which an individual may apply for his or her own bankruptcy. They will remove the existing requirement for the indebted individual to present a bankruptcy petition to court and replace it with a new administrative process. Currently, a person with unmanageable levels of debt who wishes to make him or herself bankrupt must petition the court—the local court—for a bankruptcy order. There is no dispute that requires a court to make a judgment on competing interests in these scenarios. The vast majority of such applications—last year there were more than 30,000—are accepted by the courts with very little scrutiny.

The amending provisions mean that instead of petitioning the court, applicants would submit their bankruptcy application to a new adjudicator. This proposal was consulted on by the previous Administration and was broadly supported by interested parties. I should say that the Government consulted on removing the court from a wider range of cases, but as significant concerns were raised, this amendment concerns only debtors’ own petitions.

The adjudicator will hold a new statutory office, which we intend to be located in the Insolvency Service. The adjudicator will consider each application, and will decide on an objective basis whether the criteria for the making of a bankruptcy order have been met. If they have been met, the adjudicator will make the order. The administrative process is similar to the way in which individuals enter bankruptcy in Scotland, and in some other jurisdictions throughout the globe.

Applicants for bankruptcy will no longer need to attend court. Applications will be electronic, which will deliver significant savings, and applicants will be able to pay the fees in instalments. Bankruptcy will none the less remain a serious step. It may be the right solution for some debtors, as it allows debts to be written off and a fresh start to be made; but, quite rightly, those advantages are tempered by the serious implications of a bankruptcy order. Bankrupts are subject to restrictions, their assets can be sold for the benefit of creditors, and a portion of their incomes can be used to help repay their debts. For many, other debt remedies will continue to be more appropriate. We will therefore encourage debtors to take independent debt advice before making their bankruptcy applications. We will work with the Money Advice Service and providers in the debt advice sector to ensure that all debtors have the information that they need in order to make an informed decision.

There will be no change in the process that takes place after the making of a bankruptcy order. When an order is made by an adjudicator, the present post-bankruptcy order procedures will continue to operate, and the serious consequences that apply to an individual who is made bankrupt will remain.

It is good to reach the Bill’s report stage following a mammoth session in Committee before the summer recess, and it is interesting to note that the Opposition made such a strong and determined case in Committee that no Ministers from the Department for Business, Innovation and Skills are left on the Front Bench.

The new clause amends the Insolvency Act 1986 and introduces an administrative procedure for debtor petition bankruptcies. It is extremely worrying that the number of people who find themselves caught in a spiral of debt is increasing, and that many are forced to declare themselves bankrupt as a result. The figures are stark. Citizens Advice has dealt with more than 2.2 million problems involving debt, and has received 131,000 inquiries about bankruptcy and 142,000 about debt relief orders. The issue is not just about financing and debt; it is about relationships and, in some cases, lives. Bankruptcy is all too often a stigmatising experience, and evidence shows that that applies particularly to men.

Although the number of people declaring themselves bankrupt has fallen, the number of those becoming insolvent has risen sharply, according to official Government figures. As the Minister said, there were more than 30,000 personal insolvencies in just one quarter this year. That is a staggering figure, which shows how many households need help with debt problems. Insolvency is a very difficult condition to have to face, and it usually comes at the end of a long struggle to deal with debt and other money problems. The leading debt charity Clarifi, formerly known as the Consumer Credit Counselling Service, has said that it expects the number of personal insolvencies to increase over the next year, and has warned that more than 6 million households are still living on the edge. It is therefore vital for those who are struggling to pay their debts, or even just worried about their debts, to seek free advice and support. Opposition Members believe that it is hugely important for the process of insolvency to be as swift as possible, and we welcome the initiatives that will speed up that process.

As the Minister will know, key stakeholders have broadly welcomed the proposals, but they have raised several issues that I hope the Minister will deal with. First, there is the issue of the establishment of the location and how the new administrative process will deal with bankruptcy tourism. Secondly, there is the issue of the qualifications of adjudicators, which has prompted concerns similar to those relating to the Government’s proposals in respect of the role of legal officers in the employment tribunal system, and has been raised on a number of occasions. It is important for adjudicators to be in a position to make crucial judgments not just about bankruptcies, but about referrals to court. They need both knowledge of insolvency law and experience of the court system. Given that the Secretary of State has the power to appoint adjudicators, may I ask what experience-related criteria they will have to meet?

Thirdly, there is the issue of fees. People who are struggling with debt often cannot afford the £700 that it costs to go bankrupt, even when bankruptcy would otherwise be the best way out of their problems. That leaves them in a financial black hole. The number of people using debt relief orders, one of the cheaper remedies, has risen sharply again. It seems slightly perverse that someone who is struggling with debts should have to find more money in order to petition for bankruptcy.

The Bill empowers the Lord Chancellor to be flexible in fixing fees. Given that the new streamlined system has the potential to be electronic, and to be simpler and cheaper, I wonder whether the Government will consider some remedies for the problem of fees, such as allowing people who are seeking bankruptcy to pay in instalments.

The Minister mentioned advice for debtors. There is a view that taking the bankruptcy system out of the formal courts process and making it more administrative will reduce the gravity of the situation in which people find themselves. It is important for bankruptcy to be seen as a last resort, but all possible advice and guidance should be given to those who seek to go down that route.

Finally, may I press the Minister on one of her great loves, the Post Office? It has been said that the new administrative task of filling out the bankruptcy forms in the prescribed manner could be performed through the Post Office by means of a passport-style “check and send” arrangement. That would also allow the Post Office to divert people to other forms of debt advice, including free advice.

We support the change to a more administrative bankruptcy system because it is one of the critical remedies for debt, but we should be grateful if the Minister could provide some comfort on the issues that have been raised.

Like my hon. Friend the Member for Edinburgh South (Ian Murray), I welcome the new clause and new schedules. On Second Reading, I asked the Government to look at the Insolvency Act 1986 in the context of the Bill, but they said at the time that they did not want do so. I am glad that they have now revised their view.

As my hon. Friend said, it is important for a number of issues to be tested, not least bankruptcy tourism. That is causing concern in both parts of Ireland at present, in key agencies and in terms of public opinion. I support the new clause and the extension of the Bill to amend the 1986 Act; however, I ask the Government to consider not just section 263, with which new clause 16 deals, but section 233. Changes could be made that would reduce the number of companies that go bankrupt.

Although these provisions are about making insolvency more straightforward and easing the process of bankruptcy, both as it is going on and afterwards, the amendments to section 233 being sought by R3—the Association of Business Recovery Professionals—would mean that businesses, which are currently subject to demands for ransom payments from suppliers once they go into administration, could instead be protected and brought into recovery rather than ransomed into bankruptcy. Essentially, the suggestion is that chapter 11-style protections could be brought into UK law. As it stands, the Insolvency Act is meant to protect companies in administration from having their supplies cut off, but utility supplies under that Act extend only to gas, electricity, water and telecommunications and not to IT and software, which are vital services for a modern business.

That is an extremely important point. First, utility companies can reset the tariff and choose the most expensive option, further adding to pressure on keeping the company viable. Secondly, we need to modernise the language, because IT contractors were not an option when the law was first introduced but are now essential to most businesses.

I thank the hon. Gentleman for that intervention and he has amplified the point that I am trying to make. In 1986, IT and software were not seen as vital for the conduct of a business but now, clearly, they are and the Bill must make good the deficit in the legislation. Also, as he said, the law as it stands forbids utility suppliers from ceasing to supply a company that has gone into administration although, of course, it does not prohibit them from charging a super-high tariff. That exposes companies in administration to ransom demands that can drive them towards bankruptcy. The Government are right to consider the Insolvency Act, but they must widen the scope of that attention beyond these very welcome amendments.

I merely seek reassurance from the Minister. I can understand the need to simplify the bankruptcy procedure for those who, through no fault of their own, seek it because of their debts, and that is absolutely right. I am slightly concerned, however, that some companies shift money around and go bankrupt because it suits them to do so, taking other companies down with them. I want the Minister to reassure me that the adjudicator, or whatever he or she will be called, will have the powers to look into such cases so that it is not easy to go bankrupt when one should not. Such companies bring other good companies down with them.

I have appreciated the good but brief debate on this issue, on which there is clearly a degree of support on both sides of the House. That is always welcome and I particularly welcome the support for these measures from the hon. Member for Edinburgh South (Ian Murray) and the official Opposition.

I share the concern about the fact that too many people sadly need seriously to consider bankruptcy. We all know from our experience in our constituency surgeries the distress and heartbreak that can cause to the people who are contemplating such a measure. The impact of that decision on individuals is why it is absolutely right to do what we can to improve the process, to make it swift and efficient and, where possible, to prevent people from having to appear in court, which adds to the stigma that has been mentioned and is a distressing and difficult experience.

Bankruptcy should be considered as a last resort. A wide range of different measures are promoted and encouraged through people who give debt advice such as individual voluntary agreements, of which there are about 49,000 a year; debt management plans, of which 150,000 people take advantage each year; and the new debt relief orders for specific categories of very vulnerable and poor debtors, 29,000 of whom take them up every year. In that context, the 38,000 bankruptcy orders show that bankruptcy is not used by all the people who face such difficulties. Of course, the general advice to individuals in difficult financial circumstances is to seek advice early. The earlier the problems can be confronted, the more possible it is to avoid the worst consequences.

I am happy to address the specific issues raised by Members. The hon. Members for Edinburgh South and for Foyle (Mark Durkan) mentioned bankruptcy tourism, which is a practice whereby a debtor opts to access insolvency proceedings in a particular member state by relocating to that member state. That potentially enables them to seek a better outcome than might have been possible in their previous country. That is allowed for under the EU insolvency regulation provided that the relocation is genuine. For many individuals in such circumstances, the relocation might not be straightforward so it is perhaps unsurprising that the number of individuals from other EU countries who relocate to the UK for this purpose is very small. There is no evidence of widespread abuse, but the official receiver or a creditor can apply to court to annul the bankruptcy order if abuse takes place.

On the question about the adjudicator, the Insolvency Service is already looking at this for the debt relief orders that it administers and it will be able to do exactly the same in relation to the way in which adjudicators conduct their business.

On the qualifications of adjudicators, they will be making an objective decision by reference to prescribed criteria and there will be a right of appeal for an applicant if the adjudicator refuses to make an order. Obviously, they will need appropriate qualifications and experience to function effectively, and the Secretary of State will make sure that people appointed to that role are appropriately qualified. They will be based within the Insolvency Service which, as the House knows, is an executive agency of BIS, and will already have extensive experience of administering an electronic administrative process similar to the debt relief order regime. It is important to point out that adjudicators will not be able to be official receivers as well, as that would be deemed to be a conflict of interests so those roles will be kept separate.

I appreciate that for individuals seeking bankruptcy, the levying of fees on that is not straightforward. The administration fee will remain unchanged at £525, which is a significant sum for people in that situation. In the context of overall bankruptcy, where they will be expecting debt relief of at least £15,000, it is not as huge as could be imagined in the comparison.

What is important about the way in which the new system will operate is that it will take the courts away from a process in which they do not need to be involved. Where there is no dispute, where somebody wants to declare themselves bankrupt and nobody has a problem with that, there will be no requirement for that costly court process. That will generate significant savings so the application fee for the process is expected to be about £70, instead of the current court fee of £175. That will be helpful and of benefit to people applying for this option. It is estimated that overall debtors will save about £1.5 million. There is a saving for the Court Service as well, as this will be a more efficient process handled through the adjudicator, and individuals personally affected by bankruptcy will benefit. The suggestion from the hon. Member for Edinburgh South about paying in instalments is one that the Government have taken on board. It is part of the process and offers real advantages, compared with the current situation.

I was delighted that the hon. Gentleman mentioned the Post Office, which I, as the Minister responsible, am passionate about, as I know are Members in all parts of the House, who support their local community post offices. The Government are committed to ensuring that the Post Office can be an effective delivery mechanism for more front-office Government services. There is good news—last year, for the first time in a decade, the income stream that the Post Office received from Government services increased, so there is a positive story to tell.

The Post Office is looking at a wide range of ways in which it can increase its services and its revenue. Playing a wider role in identity checks, as was mentioned, is one of those. It is important to bear in mind that the Post Office will bid for such contracts on the basis of being able to provide an effective and efficient mechanism for doing so. It is a very good organisation that is able to provide such services and win those contracts on the merits of the bid that it submits.

On the issues relating to advice, there are examples of more credit union facilities and a wider range of financial services being able to be accessed through post offices. Access to financial services from that excellent network of 12,000 branches is of particular help to people in communities that do not have a local bank branch, perhaps because they are very rural communities. Now that 95% of bank accounts are accessible at post offices, the recent announcement from HSBC was welcome. The hon. Gentleman certainly raises an important point.

On the points made by the hon. Member for Foyle and my hon. Friends the Members for North Swindon (Justin Tomlinson) and for Tiverton and Honiton (Neil Parish), it is important to point out that the amendments relate to personal insolvency, not company insolvency, and were I to detain the House on company insolvency, Mr Deputy Speaker may have concerns. I hear Members’ concerns and I know from Members’ correspondence that people are worried about the procedures when companies become insolvent. The change of termination clauses in insolvency would have implications for the suppliers, so many demands need to be balanced, but I recognise the concerns and we are looking more widely at issues facing companies in insolvency. My officials have been engaging with interested parties and stakeholders and will continue to do so.

I think I have dealt with the various points made by hon. Members, so I commend the new clause and the amendments to the House.

Question put and agreed to.

New clause 16 accordingly read a Second time, and added to the Bill.

New Schedule 2

‘Adjudicators: bankruptcy applications by debtors and bankruptcy orders

‘Adjudicators: bankruptcy applications by debtors and bankruptcy orders

“Chapter A1

Adjudicators: bankruptcy applications by debtors and bankruptcy orders

263H Bankruptcy applications to the adjudicator

(1) An individual may make an application to an adjudicator in accordance with this Chapter for a bankruptcy order to be made against him or her.

(2) An individual may make a bankruptcy application only on the ground that the individual is unable to pay his or her debts.

263I Debtors against whom an adjudicator may make a bankruptcy order

(1) An adjudicator has jurisdiction to determine a bankruptcy application only if—

(a) the centre of the debtor’s main interests is in England and Wales, or

(b) the centre of the debtor’s main interests is not in a member state of the European Union which has adopted the EC Regulation, but the test in subsection (2) is met.

(2) The test is that—

(a) the debtor is domiciled in England and Wales, or

(b) at any time in the period of three years ending with the day on which the application is made to the adjudicator, the debtor—

(i) has been ordinarily resident, or has had a place of residence, in England and Wales, or

(ii) has carried on business in England and Wales.

(3) The reference in subsection (2) to the debtor carrying on business includes—

(a) the carrying on of business by a firm or partnership of which the debtor is a member, and

(b) the carrying on of business by an agent or manager for the debtor or for such a firm or partnership.

(4) In this section, references to the centre of the debtor’s main interests have the same meaning as in Article 3 of the EC Regulation.

263J Conditions applying to bankruptcy application

(1) A bankruptcy application must include—

(a) such particulars of the debtor’s creditors, debts and other liabilities, and assets, as may be prescribed, and

(b) such other information as may be prescribed.

(2) A bankruptcy application is not to be regarded as having been made unless any fee or deposit required in connection with the application by an order under section 415 has been paid to such person, and within such period, as may be prescribed.

(3) A bankruptcy application may not be withdrawn.

(4) A debtor must notify the adjudicator if, at any time before a bankruptcy order is made against the debtor or the adjudicator refuses to make such an order—

(a) the debtor becomes able to pay his or her debts, or

(b) a bankruptcy petition has been presented to the court in relation to the debtor.

263K Determination of bankruptcy application

(1) After receiving a bankruptcy application, an adjudicator must determine whether the following requirements are met—

(a) the adjudicator had jurisdiction under section 263I to determine the application on the date the application was made,

(b) the debtor is unable to pay his or her debts at the date of the determination,

(c) no bankruptcy petition is pending in relation to the debtor at the date of the determination, and

(d) no bankruptcy order has been made in respect of any of the debts which are the subject of the application at the date of the determination.

(2) If the adjudicator is satisfied that each of the requirements in subsection (1) are met, the adjudicator must make a bankruptcy order against the debtor.

(3) If the adjudicator is not so satisfied, the adjudicator must refuse to make a bankruptcy order against the debtor.

(4) The adjudicator must make a bankruptcy order against the debtor or refuse to make such an order before the end of the prescribed period (“the determination period”).

263L Adjudicator’s requests for further information

(1) An adjudicator may at any time during the determination period request from the debtor information that the adjudicator considers necessary for the purpose of determining whether a bankruptcy order must be made.

(2) The adjudicator may specify a date before which information requested under subsection (1) must be provided; but that date must not be after the end of the determination period.

(3) If the rules so prescribe, a request under subsection (1) may include a request for information to be given orally.

(4) The rules may make provision enabling or requiring an adjudicator to request information from persons of a prescribed description in prescribed circumstances.

263M Making of bankruptcy order

(1) This section applies where an adjudicator makes a bankruptcy order as a result of a bankruptcy application.

(2) The order must be made in the prescribed form.

(3) The adjudicator must—

(a) give a copy of the order to the debtor, and

(b) give notice of the order to persons of such description as may be prescribed.

263N Refusal to make a bankruptcy order: review and appeal etc.

(1) Where an adjudicator refuses to make a bankruptcy order on a bankruptcy application, the adjudicator must give notice to the debtor—

(a) giving the reasons for the refusal, and

(b) explaining the effect of subsections (2) to (5).

(2) If requested by the debtor before the end of the prescribed period, the adjudicator must review the information which was available to the adjudicator when the determination that resulted in the refusal was made.

(3) Following a review under subsection (2) the adjudicator must—

(a) confirm the refusal to make a bankruptcy order, or

(b) make a bankruptcy order against the debtor.

(4) Where the adjudicator confirms a refusal under subsection (3), the adjudicator must give notice to the debtor—

(a) giving the reasons for the confirmation, and

(b) explaining the effect of subsection (5).

(5) If the refusal is confirmed under subsection (3), the debtor may appeal against the refusal to the court before the end of the prescribed period.

263O False representations and omissions

(1) It is an offence knowingly or recklessly to make any false representation or omission in—

(a) making a bankruptcy application to an adjudicator, or

(b) providing any information to an adjudicator in connection with a bankruptcy application.

(2) It is an offence knowingly or recklessly to fail to notify an adjudicator of a matter in accordance with a requirement imposed by or under this Part.

(3) It is immaterial for the purposes of an offence under this section whether or not a bankruptcy order is made as a result of the application.

(4) It is not a defence in proceedings for an offence under this section that anything relied on, in whole or in part, as constituting the offence was done outside England and Wales.

(5) Proceedings for an offence under this section may only be instituted—

(a) by the Secretary of State, or

(b) by or with the consent of the Director of Public Prosecutions.” ’.—(Jo Swinson.)

Brought up, read the First and Second time, and added to the Bill.

New Schedule 3

‘Adjudicators: minor and consequential amendments

‘Adjudicators: minor and consequential amendments

1 The Insolvency Act 1986 is amended in accordance with this Schedule.

2 In section 253 (application for interim order), omit subsection (5).

3 In section 255 (cases in which interim order can be made), in subsection (1)(b) for “petition for his own bankruptcy” substitute “make a bankruptcy application”.

4 (1) Section 256A (debtor’s proposal and nominee’s report) is amended as follows.

(2) In subsection (1) omit the words from “unless” to the end.

(3) In subsection (3) for “petition for his own bankruptcy” substitute “make a bankruptcy application”.

5 For the heading to Chapter 1 of Part 9 substitute “The court: bankruptcy petitions and bankruptcy orders”.

6 In section 264 (who may present a bankruptcy petition), in subsection (1) omit paragraph (b).

7 For section 265 (conditions to be satisfied in respect of debtor) substitute—

“265 Creditor’s petition: debtors against whom the court may make a bankruptcy order

(1) A bankruptcy petition may be presented to the court under section 264(1)(a) only if—

(a) the centre of the debtor’s main interests is in England and Wales, or

(b) the centre of the debtor’s main interests is not in a member state of the European Union which has adopted the EC Regulation, but the test in subsection (2) is met.

(2) The test is that—

(a) the debtor is domiciled in England and Wales, or

(b) at any time in the period of three years ending with the day on which the petition is presented, the debtor—

(i) has been ordinarily resident, or has had a place of residence, in England and Wales, or

(ii) has carried on business in England and Wales.

(3) The reference in subsection (2) to the debtor carrying on business includes—

(a) the carrying on of business by a firm or partnership of which the debtor is a member, and

(b) the carrying on of business by an agent or manager for the debtor or for such a firm or partnership.

(4) In this section, references to the centre of the debtor’s main interests have the same meaning as in Article 3 of the EC Regulation.”

8 In section 266 (bankruptcy petitions: other preliminary conditions), in subsection (4) omit “, (b)”.

9 (1) Sections 272 to 274A (and the cross-heading immediately preceding those sections) (debtor’s petition) are repealed.

(2) In consequence of the repeal of section 274A by paragraph (1), omit paragraph 3 of Schedule 20 to Tribunals Courts and Enforcement Act 2007 (debt relief Orders: consequential amendments).

10 For the cross-heading immediately before section 278 substitute—A

Chapter 1A

Commencement and duration of bankruptcy”.

11 In section 278 (commencement and continuance), in paragraph (b) (discharge of bankruptcy order) omit “the following provisions of”.

12 In section 279 (duration of bankruptcy), in subsection (6) for “adjudged” substitute “made”.

13 In section 282 (court’s power to annul bankruptcy order), in subsection (2)—

(a) omit “, (b)”,

(b) after “section 264(1)” insert “or on a bankruptcy application”, and

(c) in paragraph (a) after “pending” insert “or the application was ongoing”.

14 In section 283 (definition of bankrupt’s estate), in subsection (5)(a) for “adjudged” substitute “made”.

15 (1) Section 284 (restrictions on dispositions of property) is amended as follows.

(2) In subsection (1) for “adjudged” substitute “made”.

(3) In subsection (3) for “presentation of the petition for the bankruptcy order” substitute “making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy petition”.

(4) In subsection (4), in paragraph (a) before “petition” insert “bankruptcy application had been made or (as the case may be) that the bankruptcy”.

16 (1) Section 285 (restriction on proceedings and remedies) is amended as follows.

(2) In subsection (1)—

(a) after “when” insert “proceedings on a bankruptcy application are ongoing or”, and

(b) for “adjudged” substitute “made”.

(3) In subsection (2) after “proof that” insert “a bankruptcy application has been made or”.

17 (1) Section 286 is amended as follows.

(2) Omit subsection (2).

(3) In subsection (8), for “adjudged” substitute “made”.

18 In section 288 (statement of affairs), in subsection (1) for “debtor’s petition” substitute “bankruptcy application”.

19 In section 290 (public examination of bankrupt), in subsection (4)(a) for “adjudged” substitute “made”.

20 (1) Section 297 (appointment of trustee of bankrupt’s estate: special cases) is amended as follows.

(2) Omit subsection (4).

(3) In subsection (6) omit “(4) or”.

21 (1) Section 320 (court order vesting disclaimed property) is amended as follows.

(2) In subsection (2)(c) before “bankruptcy” insert “bankruptcy application was made or (as the case may be) the”.

(3) In subsection (3)(c) before “bankruptcy” insert “bankruptcy application was made or (as the case may be) the”.

22 In section 321 (orders under section 320 in respect of leaseholds), in subsection (1)(a) before “bankruptcy” insert “bankruptcy application was made or (as the case may be) the”.

23 In section 323 (mutual credit and set-off), in subsection (3) before “a bankruptcy” insert “proceedings on a bankruptcy application relating to the bankrupt were ongoing or that”.

24 In section 334 (stay of distribution in case of second bankruptcy), in subsection (2) before “presentation of the petition” insert “making of the application or (as the case may be) the”.

25 (1) Section 336 (rights of occupation etc of bankrupt’s spouse or civil partner) is amended as follows.

(2) In subsection (1) for “presentation of the petition for the bankruptcy order” substitute “making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy petition”.

(3) In subsection (2) for “adjudged” substitute “made”.

26 In section 337 (rights of occupation of bankrupt), in subsection (1)—

(a) in paragraph (a) for “adjudged” substitute “made”, and

(b) in paragraph (b) before “bankruptcy petition” insert “bankruptcy application was made or (as the case may be) the”.

27 In section 339 (transactions at an undervalue), in subsection (1) for “adjudged” substitute “made”.

28 In section 340 (preferences), in subsection (1) for “adjudged” substitute “made”.

29 In section 341 (meaning of “relevant time” under sections 339 and 340), in subsection (1)(a) for “presentation of the bankruptcy petition on which the individual is adjudged” substitute “making of the bankruptcy application as a result of which, or (as the case may be) the presentation of the bankruptcy petition on which, the individual is made”.

30 (1) Section 342 (orders under sections 339 and 340) is amended as follows.

(2) In subsection (1) for “adjudged” substitute “made”.

(3) In subsection (5)—

(a) for paragraph (a) substitute—

“(a) of the fact that the bankruptcy application as a result of which, or (as the case may be) the bankruptcy petition on which, the individual in question is made bankrupt has been made or presented; or”, and

(b) in paragraph (b) for “adjudged” substitute “made”.

31 In section 342A (recovery of excessive pension contributions), in subsection (1) for “adjudged” substitute “made”.

32 In section 343 (extortionate credit transactions), in subsection (1) for “adjudged” substitute “made”.

33 (1) Section 344 (avoidance of general assignment of book debts) is amended as follows.

(2) In subsection (1) for “adjudged” substitute “made”.

(3) In subsection (2) before “presentation” insert “making of the bankruptcy application or (as the case may be) the”.

34 In section 345 (contracts to which bankrupt is a party), in subsection (1) for “adjudged” substitute “made”.

35 (1) Section 346 (enforcement procedures) is amended as follows.

(2) In subsections (1) and (2) for “adjudged” substitute “made”.

(3) In subsection (3)—

(a) in paragraph (b) before “bankruptcy” insert “bankruptcy application has been made or a”, and

(b) in paragraph (c) before “on that petition” insert “as a result of that application or”.

(4) In subsection (4)(a) after “while” insert “proceedings on a bankruptcy application are ongoing or (as the case may be)”.

36 (1) Section 347 (distress, etc) is amended as follows.

(2) In subsection (2)—

(a) after “individual to whom” insert “a bankruptcy application or”, and

(b) before “on that petition” insert “as a result of that application or”.

(3) In subsection (3) for “adjudged” substitute “made”.

37 In section 348 (apprenticeships, etc), in subsection (1)(a) for “petition on which the order was made” substitute “application for the order was made or (as the case may be) the petition for the order”.

38 In section 350 (application of Chapter 6 of Part 9: bankruptcy offences), in subsection (1) after “applies” insert “—

(a) where an adjudicator has made a bankruptcy order as a result of a bankruptcy application, or

(b) ”.

39 (1) Section 351 (definitions for the purposes of Chapter 6 of Part 9) is amended as follows.

(2) In paragraph (b) before “presentation” insert “making of the bankruptcy application or (as the case may be) the”.

(3) Omit paragraph (c), and the preceding “and”.

40 (1) Section 354 (concealment of property) is amended as follows.

(2) In subsection (1)(c) before “petition” insert “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy”.

(3) In subsection (3)(a) before “petition” insert “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy”.

41 (1) Section 355 (concealment of books and papers; falsification) is amended as follows.

(2) In subsection (2)(d) before “petition” insert “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy”.

(3) In subsection (3)(b) before “petition” insert “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy”.

42 In section 356 (false statements), in subsection (2)(c) before “petition” insert “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy”.

43 In section 358 (absconding), in paragraph (b) before “petition” insert “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy”.

44 (1) Section 359 (fraudulent dealing with property obtained on credit) is amended as follows.

(2) In subsection (1) before “petition” insert “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy”.

(3) In subsection (2) before “petition” insert “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy”.

45 In section 360 (obtaining credit and engaging in business), in subsection (1)(b) for “adjudged” substitute “made”.

46 (1) Section 364 (power of arrest) is amended as follows.

(2) In subsection (1)(a) after “to whom a” insert “bankruptcy application or a”.

(3) In subsection (2) before “presentation” insert “making of the bankruptcy application or the”.

47 In section 376 (time limits), after “anything” insert “(including anything in relation to a bankruptcy application)”.

48 (1) Section 381 (definition of “bankrupt” and associated terminology) is amended as follows.

(2) In subsection (1) for “adjudged” (in both places where it occurs) substitute “made”.

(3) After subsection (1) insert—

“(1A) “Bankruptcy application” means an application to an adjudicator for a bankruptcy order.”

(4) In subsection (2) for “adjudging” substitute “making”.

49 In section 383 (definition of “creditor” etc.), in subsection (1)(b)—

(a) after “to whom a” insert “bankruptcy application or”, and

(b) after “that” insert “application or”.

50 In section 384 (definitions of “prescribed” and “the rules”), in subsection (1) omit “section 273;”.

51 In section 385 (miscellaneous definitions), in subsection (1)—

(a) before the definition of “the court” insert—

““adjudicator” means a person appointed by the Secretary of State under section 398A;”,

(b) in the definition of “the debtor”, in paragraph (b)—

(i) before “bankruptcy petition” insert “bankruptcy application or a”, and

(ii) after “to whom the” insert “application or”,

(c) omit the definition of “debtor’s petition”, and

(d) before the definition of “dwelling house” insert—

“determination period” has the meaning given in section 263K(4);”.

52 In section 387 (meaning of “the relevant date”), in subsection (6)(a) after “after” insert “the making of the bankruptcy application or (as the case may be)”.

53 In section 389A (authorisation of nominees and supervisors), in subsection (3)(a) for “adjudged” substitute “made”.

54 In section 390 (persons not qualified to act as insolvency practitioners), in subsection (4)(a) for “adjudged” substitute “made”.

55 In section 415 (fees orders), after subsection (1) insert—

“(1A) An order under subsection (1) may make different provision for different purposes, including by reference to the manner or form in which proceedings are commenced.”

56 In section 421A (insolvent estates: joint tenancies), in subsection (9) in the definition of “value lost to the estate”, for “adjudged” substitute “made”.

57 In section 424 (who may apply for an order under section 423 in respect of transactions entered into at an undervalue), in subsection (1)(a) for “adjudged” substitute “made”.

58 In Schedule 4ZA (conditions for making a debt relief order), for paragraph 3 substitute—

3 A bankruptcy application under Part 9—

(a) has not been made before the determination date; or

(b) has been so made, but proceedings on the application have been finally disposed of before that date.”

59 (1) In Schedule 4A (bankruptcy restrictions orders), paragraph 2 is amended as follows.

(2) In sub-paragraph (2)—

(a) in paragraph (a), for the words from “petition” to the end substitute “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy petition and ending with the date of the application for the bankruptcy restrictions order”, and

(b) in paragraph (j), for “presentation of the petition” substitute “the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy petition”.

(3) In sub-paragraph (4) omit the definition of “before petition”.

60 In Schedule 6 (categories of preferential debts), in paragraph 14(1) for “adjudged” substitute “made”.

61 (1) Schedule 9 (provisions capable of inclusion in individual insolvency rules) is amended as follows.

(2) After paragraph 4 insert—


4A Provision for regulating the practice and procedure of adjudicators.

4B Provision about the form and content of a bankruptcy application (including an application for a review of an adjudicator’s determination).”

(3) After paragraph 4B (as inserted by sub-paragraph (2)) insert—

“Appeals against determinations by adjudicators

4C Provision about the making and determining of appeals to the court against a determination by an adjudicator, including provision—

(a) enabling the court to make a bankruptcy order on such an appeal, and

(b) about where such appeals lie.”

(4) After paragraph 24 insert—

24A Provision requiring official receivers—

(a) to keep files and other records relating to bankruptcy applications, and

(b) to make those files and records available for inspection by persons of a prescribed description.”

62 (1) In the Table in Schedule 10 (punishment of offences), insert the following entry after the entry relating to section 262A(1)—


False representations or omissions in connection with a bankruptcy application.

1. On indictment

2. Summary

1. 7 years or a fine, or both.

2. 12 months or the statutory maximum, or both.”

(2) In the application of the entry inserted by sub-paragraph (1) in relation to an offence committed before the commencement of section 154(1) of the Criminal Justice Act 2003 (limit on magistrates’ court powers to impose imprisonment), the reference in the fourth column to “12 months” is to be read as a reference to “6 months”.’.—(Jo Swinson.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 12

Equality Act 2010: third party harassment of employees and applicants

‘In section 40 of the Equality Act 2010 (employees and applicants: harassment) omit subsections (2) to (4).’.—(Jo Swinson.)

Brought up, and read the First time.

With this it will be convenient to discuss the following:

Government new clause 13—Equality Act 2010: obtaining information for proceedings.

Government new clause 17—Power to provide for equal pay audits.

Amendment 56, page 43, line 27, leave out clause 52.

Government amendments 35, 36, 45 and 47.

We come now to equality measures and various technical and consequential amendments relating to territorial nature and commencement. The new clauses relate to Great Britain’s legal framework on equality and human rights. New clauses 12 and 13 repeal provisions in the Equality Act 2010 that expressly place liability on employers for repeated harassment of their customers, and provisions related to obtaining information. New clause 17 enables Ministers to require employment tribunals to order equal pay audits where an employer is found to have broken equal pay and/or sex discrimination laws. Opposition amendment 56 seeks to remove from the Bill measures to improve the focus and effectiveness of the Equality and Human Rights Commission.

The Government’s amendments and clause 52 are necessary to clarify our legal framework on equality and human rights, and in doing so make it more effective. But they are also about laying the foundations for a sustainable economic recovery. In the current economic circumstances we simply cannot afford not to maximise the full potential of our work force. All hon. Members support making it easier for people to play an active role in our economy, and it is for that reason that I hope we can agree on the provisions. A vague legal framework, full of aspiration but lacking clarity, helps no one, and, worst of all, can hold people back.

The shadow Secretary of State for Business, Innovation and Skills has described these measures as a sign of the Government rowing back on equalities. They are anything but. Rather they are a clear indication of the Government’s commitment to making a real difference on the ground. This is reflected not only in the legislative measures that we are debating today, but in what the Government have achieved since taking office in 2010. [Interruption.] The shadow Secretary of State asks what we have done for equalities. I will tell him.

We have established the first ever inter-ministerial group on equality and published the first ever cross-government strategy; legislated to allow civil partnerships on religious premises; published the first ever transgender action plan; introduced support for disabled people seeking elected office; launched “Think, Act, Report” to have gender equality reporting; established the Women’s Business Council, which is doing vital work to help identify the barriers holding women back in the work place; provided support for women to set up and grow their own businesses with more than 5,000 women mentors; and championed equality on company boards, with the number of FTSE 100 all-male boards halving and new appointments to boards rising from 13% women in the last year of the Labour Government to 34% under this Government. We have published the first ever sports charter aimed at combating homophobia and transphobia; all premiership and championship football teams are now signed up against homophobia and transphobia. We are of course consulting on equal civil marriage, something the previous Government did not do. We have also legislated to end age discrimination in the provision of goods and services.

This Government have a proud record on equality, but of course there is more to do. In my dual role as Minister for Business and Minister for Equalities I see big opportunities, because new measures for growth must go hand in hand with continued measures to promote equality. The benefits of a more balanced and diverse work force are absolutely clear. Technology has transformed people’s ability to communicate and work in different ways, but too often our working practices are stuck in a time warp that values slogging away in a standard pattern of hours rather than doing whatever works to get the best results from the individual.

The coalition Government are committed to revolutionising how we work by introducing shared parental leave, sharing best practice on and challenging outdated assumptions about part-time work, and extending the right to request flexible work to everyone. The benefits of these changes are not just for parents and carers; they will help everyone to work in a way that suits the realities of modern life. They will also benefit employers through reduced staff turnover, greater productivity and fewer working days lost. However, these benefits can be realised only if we have a clear and robust legal framework that everyone understands and that is fit for purpose.

I will now turn to the specific measures set out in the amendments, starting with new clause 12, which relates to third-party harassment. We propose repealing the third-party harassment provisions, which are now unnecessary. They are confusing for many people, and employers and businesses have genuine concerns about them. It might be helpful if I give the House a brief overview of how these provisions came about in the first place. When the previous Government implemented the equal treatment directive in 2005, they introduced a specific protection against harassment by amending the Sex Discrimination Act 1975. The amended Act prohibited harassment “on the grounds of” a person’s sex. They published an accompanying explanatory factsheet stating that the harassment provisions would apply in a specific situation

“where an employer knowingly fails to protect an employee, for example from repetitive harassment by a customer or supplier.”

That claim, produced by the previous Government, was wrong. It was challenged by the Equal Opportunities Commission in 2007 and the court found that the new definition of harassment would not in fact cover that situation. The Government chose to comply with the ruling on that point by introducing the so called “three strikes” test into the 1975 Act. The test applies when an employee has been harassed at work on at least two previous occasions and the employer knows of the harassment but has not taken reasonable steps to prevent it from happening again. The test was later transferred into the Equality Act 2010, although to harmonise the law it was extended to most of the other protected characteristics, rather than just a person’s sex.

Introducing the “three strikes” test was in fact unnecessary, because at the same time the previous Government, crucially, also expanded the law by changing the basic definition of harassment within the 1975 Act to apply to conduct “related to” a person’s sex, which is a wider definition than “on grounds of” a person’s sex. The 2010 Act replicated that definition as well as the “three strikes” test. Therefore, depending on the specific circumstances of a case, section 26 of the 2010 Act also covers situations that are covered by the “three strikes” third-party harassment provision. Employers also have a general duty of care towards their employees and, in more extreme cases, the Protection from Harassment Act 1997 can apply.

Therefore, employers will continue to be liable for harassment of their employees by a third party even once the “three strikes” provision has gone. That may be the case, for example, when an employer knows that a customer has repeatedly harassed an employee but has not taken reasonable steps to prevent it from happening again. Those protections will remain. The fact that the “three strikes” provision is no longer needed is evidenced by our being aware of only one tribunal case being brought under the provisions in the past four years.

In addition, employers often find the test difficult to apply or misunderstand its purpose. For example, one NHS trust told us that it thought that it was intended to

“provide employers with additional tools to protect staff from the public discriminating against them”

and to

“provide further protection in the areas of stalking and domestic abuse.”

A number of respondents to the consultation provided what they thought, in good faith, were examples of third party harassment but which were nothing of the sort. That illustrates that the provision is easily misunderstood, and we intend to clear up this confusion. We consider that the provision is unnecessary and therefore unhelpful, and the new clause removes it.

New clause 13 concerns the procedure for obtaining information by an individual. This was intended to be used to help individuals to decide whether to bring legal proceedings and, if proceedings are brought, to help them to build a case to prove that discrimination has taken place. As the law stands, the questions and answers given are admissible as evidence and the court of tribunal can draw inferences from a failure by the respondent to answer the questions posed within eight weeks, or from evasive or equivocal answers. Ministers can, and have, specified the content of the forms to be used. However, claimants and their legal advisers are free to add additional questions and frequently do, sometimes running to very many pages.

There is clear merit in ensuring that an individual can establish the facts of a potential discrimination case, but a statutory provision is not the right way to provide for this. There are better non-legislative ways of achieving the same end that are less burdensome to business. It is clear from the responses to our consultation that the procedure imposes considerable costs on business. We were told that the questions are often long and technical and can request disproportionate amounts of data that employers have to seek out through checking years of records. We have been told about answer forms as long as 60 pages. A lawyer advising a small business told us about a sex discrimination case where the questionnaire had 102 questions plus sub-questions. The British Chambers of Commerce reported 100 questions in one form, and another case brought to the attention of the Government Equalities Office included 43 additional questions, many with sub-sections. The procedure has been described by a legal organisation as “oppressive” for an employer, and the British Retail Consortium described the collection of information as

“very onerous and time-consuming”.

There is no limit on how many and what type of questions can be asked, and employers are at risk if they do not respond to them. Based on a sample survey, we estimate that some 9,000 to 10,000 businesses complete the forms each year, in each case taking, on average, five to six hours, at a cost of about £160.

The Minister is describing an onerous list of questions, so perhaps she can tell the House how few need to be answered in order for the information to be provided so that someone can get proper redress.

This is a procedure about obtaining information. There are clearly differences between different cases. However, it is also clear from the consultation that this is being used as a sort of fishing expedition whereby additional questions are asked in order to produce an undue burden on business and perhaps sometimes to encourage the idea that the process might be seen to be far too burdensome and that a settlement should therefore be reached instead, even where there may not have been a breach by the employer.

Can the Minister say what percentage of responding organisations supported her position, because I believe that 83% were opposed to it?

It is certainly true that a wide range of views were put forward to the consultation. Among business groups, there was a very strong view that this costs a lot of money, and I will explain why. Based on the sample, the five to six hours spent on each form at a cost of £160 equates to a cost to employers of £1.4 million a year, and it could be considerably higher because many employers may use more expensive legal advice.

If the Minister’s complaint is about the quantity of questions, then why not limit the number that can be asked? We are all limited in the number of questions that we can submit at the Table Office, so why not apply similar principles to this procedure?

I have already outlined various circumstances in which there is a range of questions with many sub-sections. We are saying that it is helpful for business and employees to discuss these issues and to be able to provide information. However, this provision is placing requirements and fears on businesses, and the disproportionate costs that they are facing in complying with it represents a total cost to business of nearly £1.5 million a year. That is a significant cost that we should not take lightly.

Individuals can seek information from an employer about an alleged breach of the 2010 Act without relying on this provision; they can request that information verbally or in writing. Of course, it is in businesses’ interests to respond to reasonable requests of this kind, because the courts would still be free to draw inferences from any employer or service provider’s refusal to answer questions or from answers that seem evasive.

I am sure the Minister would accept that in many businesses there is an imbalance of power between an individual employee, who might be in a non-unionised workplace—a small business—and the employer, who, after all, is paying that employee. The employee may therefore be reluctant to upset their employer, and the statutory questionnaire procedure at least means that the employee can look to a formal external process to try to elicit information.

What assessment, if any, has the Minister made of the costs and savings in court time? Notably, many of the 83% of respondents in favour of the existing procedure were members of the judiciary, presumably because it makes for a simpler court process when cases do go to tribunal.

I thank the hon. Lady for her intervention. Some of the previous Government’s reforms were introduced, ostensibly, to try to reduce the number of cases coming to tribunal, but they have not that effect at all. We have seen a mushrooming in the number of cases at tribunal, which has resulted in a huge backlog. That is no good for employers or for employees, as the stress of waiting for a tribunal preys heavily on people’s minds. The other measures in the Bill are taking firm and important steps to encourage conciliation at an earlier stage to try to reduce the number of tribunals, and to consult on ways in which we can have a rapid resolution so that fewer cases come to tribunal. Those things will do what she suggests is helpful; we all agree that we want to reduce the number of tribunals, but those are the right ways in which to address the concerns, rather than having lengthy and cumbersome questionnaires for businesses. We have therefore concluded that this obtaining information procedure is disproportionate, and our amendment would repeal it.

The Minister has said that this onerous, form-filling, information-gathering exercise costs £1.4 million, but she went on to say that the information can still be requested, verbally or in writing. Presumably a great deal of time will still be required by the employer to provide the information. So what net saving across the whole of business does she envisage? Is it a third of that figure—is it just over half a million pounds? What is the quantum in this?

As the hon. Gentleman says, there will clearly be some taking into account of and familiarisation with the new procedures, which will have a cost attached. The impact assessment therefore suggests that £800,000 is what business will save on an annual basis, and that is still a significant sum.

New clause 17 relates to cases where an employer has been found to have broken equal pay law or to have discriminated between women and men in non-contractual pay. It introduces a power to make regulations to require employment tribunals to order such an employer to carry out an equal pay audit. The pay gap between men and women stubbornly persists. In 2011, it was still more than 20%, having fallen only five percentage points in the previous eight years. That is why we are acting under the coalition commitment to promote equal pay. We have followed the lead of the previous Government in introducing a voluntary initiative, “Think, Act, Report”, to encourage employers to have more transparency about pay and other issues. More than 50 of Britain’s leading employers, covering hundreds of thousands of employees, are now supporting this initiative. They include Tesco, which publishes details of its gender pay gap, and household names such as BT, IBM, Fujitsu, Morgan Stanley and Unilever, which are all taking steps towards greater transparency. For those companies, which are doing the right thing, a voluntary approach is appropriate. I would argue that it is also often more likely to be successful, because of the genuine buy-in from senior management.

At the same time as we pursue that voluntary, positive action, we still think that it is right to introduce stronger legislative sanctions for cases where employers have been found to have broken the law. We know that many businesses agree with this approach. For example, in response to the “Modern Workplaces” consultation, a large organisation told us that equal pay audits could be an effective way to increase transparency where the law was seen to be breached. Representatives of one small and medium-sized enterprise said:

“For the sake of all those employers who do make huge efforts to have a fair pay system, if others can ‘get away’ with discrimination and generally provide women with lower pay, this is anti-competitive and a burden on ‘good’ employers. So a compulsory audit is entirely appropriate”.

Any regulations made under this power would affect only employers who are found to have broken the relevant laws. These regulations will: set out the content of an equal pay audit; outline the procedures for verifying that an equal pay audit meets an agreed standard; set out to whom and how an equal pay audit should be published; and specify the non-criminal sanctions that should apply where an employer fails to comply with an equal pay audit order.

I remind the House that the regulations will not be applied to micro and start-up businesses during the moratorium on new rules, which will apply until 2014. I assure the House that we will consult further on the practical detail before any regulations are introduced, and that they will be subject to an affirmative resolution of both Houses of Parliament.

Finally, I will speak to the Opposition’s amendment to remove clause 52, the purpose of which is to focus the Equality and Human Rights Commission on its core equality and human rights functions. Those important functions are: to promote understanding of the importance of equality, diversity and human rights; to promote awareness of equality and human rights; and to encourage good practice in relation to equality and human rights. Those duties, in sections 8 and 9 of the Equality Act 2006, remain. Likewise, the Government recognise the importance of the commission’s role as a strategic enforcer of equality and human rights law and as a guardian of legal rights. The commission’s powers in that regard remain unchanged. By focusing the commission on its core functions—on what it is uniquely placed to do—the repeals will enable it to become a more effective organisation.

I will address the measures individually. Although the general duty in section 3 of the 2006 Act reflects the best of intentions, it is an aspirational statement with no specific legal purpose. It does not, therefore, help to clarify the precise functions of the EHRC, and in its breadth and ambition section 3 is more akin to a mission statement than a legal duty. Moreover, we believe that the breadth of section 3 has actually hindered rather than helped the commission to define its role, because it has set unrealistic expectations, both positive and negative, about what it can achieve. John Wadham, the EHRC’s general counsel, said during his evidence to the Bill Committee—I know that this was well discussed—that the repeal of section 3 is not so problematic,

“because other parts of the legislation provide sufficient clarity on what our job really is.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 79, Q177.]

As a consequence of repealing the general duty in section 3, we need to amend section 12, to require the EHRC to monitor and report on changes and developments in society that are consistent with its core equality and diversity and human rights functions.

What message does the Minister think this gives when one in two young black men, compared with one in four of their white counterparts, are unemployed? How can she justify this downgrading of the EHRC in such conditions?

I accept the hon. Lady’s genuine concern about the issue she has raised: there is far too much of an equality gap in our society and between young white and black men. Of course, the Government are committed to tackling that. However, I question whether she really believes that section 3 of the 2006 Act will do that. The message that this sends is that this Government are committed to equality but focused on really making a difference. [Interruption.] I hear the shadow Secretary of State, the hon. Member for Streatham (Mr Umunna), murmuring various things from a sedentary position, but if he really thinks that the EHRC, which was bequeathed to us by the previous Government, was functioning well and was effective, I do not know what planet he is living on. We should consider what has been said about the organisation’s effectiveness. Its accounts were not being signed off and it was wasting money; £866,000 was spent on a website that was never launched. It was not functioning well. It is important that we focus it on its specific duties, and that is what our amendments will do.

The hon. Lady has referred to the previous Government’s record. As deputy general secretary of Unite, I work very closely with the EHRC. May I give one example of effectiveness and ask her to comment on it? The commission conducted a ground-breaking analysis of the two-tier labour market in the supermarket supply chain, which causes division in the workplace and damages social cohesion. As a result, the supermarkets were brought to the table and told that enforcement powers would be used unless they changed the way in which they procured. Major changes were made as a consequence, so that all workers enjoyed equal treatment in the supply chain. Does the hon. Lady challenge that excellent example of the effectiveness of the EHRC?

I am not saying for a second that the EHRC did nothing right. We are committed to keeping it and refocusing it to make it more effective.

The general counsel said that

“other parts of the legislation provide sufficient clarity on what our job really is.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 79, Q177.]

A raft of stakeholders has criticised how the EHRC was being run. Although it has done some good things, it was not being run in the efficient way that is required of an organisation with such an essential duty and such an essential role to play in the equalities and human rights make-up of our country.

I am very confused about the Minister’s statement that she will make the EHRC more efficient, when what she will actually do is to continue to cut its budget hugely. How can it be more efficient with a tiny percentage of the staff that it had? It will be unable to do the representative work that it used to do and a vast amount of the other work that it used to do. How will that make it more efficient?

The EHRC was not particularly efficient in some of the work that it was doing. For example, it cost its helpline far more to deal with cases relating to working rights than other Government and external providers. We are ensuring that the money is spent better. Opposition Members seem to forget that the financial situation left to this Government was an appalling mess. It does no good for equalities in this country not to have the effective use of public money. We should all want to see that. [Interruption.] I am answering the hon. Lady. We should all want to see the effective use of public money. It is wrong to suggest that there are no ways in which the EHRC could have been improved.

We have heard from various Opposition Members that the EHRC was functioning fantastically.

There are many ways in which the EHRC could improve. We are making a variety of changes to it, but we remain committed to this organisation and to improving it. Just this morning, we had the pre-appointment scrutiny hearing for the new chair, Baroness Onora O’Neill, which is a positive step. I am optimistic about how the organisation will move forward and improve its governance, which is badly needed.

The Minister is right that improvements were needed in the governance and management of the EHRC. Opposition Members have not disputed that. However, to confuse that with changing its legislatively provided remit is simply not being clear, as that is a very different point of principle. Nobody is saying that the organisation could not be run better. What Opposition Members are querying is the need to cut away the ground from under its feet by changing its very purpose.

I appreciate that Opposition Members are exercised about this issue, but it is not something that the organisation itself is exercised about, as is evidenced by the quotations from the general counsel in the Committee hearing.

A range of organisations responded to the consultation and gave their views on the change in the general duty. The Association of Chief Police Officers said that the general duty is

“broad in nature, open to wide interpretation and is more in the nature of a vision statement”.

The CBI said that it is

“too vague and creates unrealistic expectations”.

The Gender Identity Research and Education Society said:

“There is no essential specific legal function”.

I particularly like the way in which we managed to unite two organisations that are not usually in agreement—Stonewall and the Evangelical Alliance. The Evangelical Alliance said:

“It’s impossible to achieve and could lead to all kinds of unsatisfactory political interpretations”.

Stonewall said:

“We are not clear that the Commission has made a sufficient case for the retention of Section 3.”

I accept that many Opposition Members think that this change means that the sky is falling in, but the EHRC and its stakeholders do not concur with that viewpoint.

We are reducing the frequency with which the commission is required to publish reports.

I am not sure about compromise and co-operation. The Minister spoke about the repeal of section 3, but it is also the repeal of section 10 of the Equality Act 2006. Although it makes sense to make the EHRC more efficient and cost-effective, I am curious to know how removing the specific duty to promote good relations between different groups makes any sense, given her declaration that she wants the organisation still to function and do the good things it was doing.

The hon. Gentleman does not need to worry about that because under existing duties in sections 8 and 9 of the 2006 Act, the EHRC still has all the requirements and focus it needs. In the consultation, a range of stakeholders spoke about the repeal of the good relations duty in section 10, and whether it was the Association of Chief Police Officers stating that a greater emphasis on its responsibilities in regulating the new public sector duty is broadly supported, or Stonewall saying that the need for the good relations function has not been sufficiently demonstrated, a wide range of stakeholders did not seem to think that there was a problem.

We are reducing the frequency with which the commission is required to publish a report on progress from every three years to every five years, and by allowing a longer time scale between reports, we believe the commission will be able to capture more meaningful change over time. We accept, however, that seismic societal changes or developments do not always happen conveniently every five years, and there is no reason why the commission cannot report more frequently if it wishes.

I know that many Opposition Members have concerns about the repeal of the good relations duty in section 10 of the 2006 Act, but we are clear that a separate mandate is not necessary. The commission’s most valuable work in this area—for example its inquiry into disability-related harassment—can be carried out under its core equality and human rights functions, which we are not amending. That view is supported by the evidence I have outlined that was provided to the Public Bill Committee by the EHRC’s general counsel and other stakeholders.

We are repealing the power associated with the good relations duty in section 19 of the 2006 Act because other organisations gather the information that that legislation permits the commission to monitor. For example, since 2011, police forces in England and Wales have been required to collect data on suspected hate crime relating to race, religion or belief, disability, sexual orientation and gender reassignment. The commission will retain the ability to review and use those data under its existing equality and human rights duties which—I repeat—we are not amending. In Scotland, where the EHRC’s human rights remit is limited, the Scottish Human Rights Commission will be able to use its powers accordingly.

On the power to make arrangements for the provision of conciliation in non-workplace discrimination disputes, as set out in section 27 of the 2006 Act, unfortunately the commission has consistently failed to deliver a well-targeted, cost-effective service. The free conciliation service funded until March 2012 by the EHRC offered poor value for taxpayers’ money. Average costs were more than £4,000 per case, compared with £600 to £850 when going through the Ministry of Justice website, “Find a civil mediation provider”.

A good and effective conciliation service should—of course—be available to those who need it, to help people resolve disputes without recourse to the courts. Good quality, accessible and effective mediation is readily available at reasonable cost throughout England, Wales and Scotland through the MOJ’s website that provides access to a full range of civil mediation council-accredited mediators at set fees, and in Scotland through the Scottish Mediation Network’s “find a mediator” website. For that reason, we are repealing the commission’s power to make provision for conciliation. The new Equality Advisory and Support Service, launched at the beginning of this month, will signpost individuals with discrimination disputes to those alternative, more cost-effective, mediation services. In evidence in Committee, the general counsel of the commission agreed that it is not

“particularly important for us to provide the service for conciliation.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 79, Q175.]

Contrary to accusations from the Opposition, these legislative measures do not represent an attack on equalities or undermine the commission’s important role. On the contrary, we believe that they will help the commission to become more effective in delivering its core functions of promoting equality of opportunity and human rights, and creating a fair environment for jobs and growth. I am therefore unable to support amendment 56, and I commend the Government amendments to the House.

I will speak first to amendment 56, which is my name and those of my right hon. and hon. Friends. We propose to remove clause 52 in its entirety. I shall then speak to Government new clauses 12, 13 and 17 and related measures on third-party harassment, discrimination questionnaires and equal pay orders.

Clause 52 seeks fundamentally to alter the remit of the Equality and Human Rights Commission, which was established to promote equality and human rights in this country. The clause proposes to remove the general duty on the commission to promote human rights and a society free from discrimination and prejudice, and seeks to abolish the duty on the commission to promote, among other things, good relations between different groups in society. That duty led, for example, to the Kick Racism Out of Football campaign.

Numerous third parties have objected to the changes in the clause. Tomorrow, a letter signed by more than 20 stakeholder groups will be published. The letter makes it clear that the changes will leave “a much weaker body”. It is signed by the heads of Justice, the Fawcett Society, Mind, the Refugee Council, the Equality Trust and others.

Leading members of the Liberal Democrats—the Minister’s party—have also strongly objected to what she and her colleagues are doing in the Bill. The Liberal Democrat founder of the National Association of Black, Asian and Ethnic Minority Councillors has said he is deeply ashamed of what the Government are doing to the resources and remit of the commission. The chair of the ethnic minority Liberal Democrats wrote to the Minister’s predecessor to express alarm, stating that the Government’s actions

“amount to effectively abolishing the EHRC by stealth, which could potentially reverse progress made on equalities over the past decades”.

The Opposition agree with those concerns and believe the clause is totally objectionable, and I will explain why. First, section 3 of the Equality Act 2006, on the general duty on the commission, which will be repealed by the Bill, provides that the commission should

“exercise its functions…with a view to encouraging and supporting the development of a society in which…people’s ability to achieve their potential is not limited by prejudice or discrimination…there is respect for and protection of each individual’s human rights…there is respect for the dignity and worth of each individual…each individual has an equal opportunity to participate in society, and…there is mutual respect between groups based on understanding and valuing of diversity…equality and human rights.”

Those duties enjoyed cross-party support during the passage of the 2006 Act. Six years on, they are dismissed by Ministers.

The Minister’s immediate predecessor, the hon. Member for North Norfolk (Norman Lamb), having raised no objections to the duties in 2006, called them?

“vague motherhood and apple-pie duties”—[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 12 July 2012; c. 601.]

in Committee in July. I am not sure quite what has changed since 2006—aside from the acquisition of red boxes—but those duties should not be casually dismissed in that way. They make clear the vision and mission of the commission, not only to help to enforce anti-discrimination laws but proactively to promote human rights and a society free from discrimination and prejudice. As the Secretary of State—he is absent from the Chamber—pointed out in his leaked letter to the Prime Minister and Deputy Prime Minister earlier this year, vision is incredibly important.

The Opposition’s second objection is this: the repeal of section 3 and the abolition of the duty on the commission to promote good relations between different groups would not be so alarming were it not for all the other things the Government are doing to the commission. They have cut its budget by more than 60%—so much so that the United Nations High Commissioner for Human Rights was moved to write to the Government in June and July this year. The commission has confirmed that the cut will lead to a reduction in staff headcount of more than 50%. More worrying are the reports—this was raised by the chair of the ethnic minority Liberal Democrats in the letter I mentioned—that virtually all the commission’s employees who are black, from an ethnic minority or disabled are among those to lose their jobs. Will the Minister provide important clarification and reassurance on that?

In addition, as of this month, the commission’s helpline has been contracted out. Many who previously worked for it were highly respected and experienced advisers and there is deep concern that much of that expertise has been lost in transition. Furthermore, the Government are stopping the commission’s grants programme funding local support services for victims of discrimination.

I turn to our third main objection to clause 52. The Bill is supposed to promote long-term growth and simplify regulation, but the clause will achieve neither aim. Leaving aside the issue of whether our fundamental rights should be sacrificed at the altar of growth, no evidence has been produced during the passage of the Bill showing that the measures on the commission will promote growth.

It was rather telling that, in response to a question from my hon. Friend the Member for Stretford and Urmston (Kate Green), the Secretary of State said that this was just legislative tidying up. It is absolutely outrageous.

I agree that it is absolutely outrageous. Furthermore, on the issue of simplifying regulation, let me say this to Government Members: the promotion and protection of equality and human rights is not, and should not be seen as, regulation. The unrelenting pursuit of these things helps to make this the fair and decent country that Britain is to live in. It is something that we should celebrate.

What is the Government’s defence? What is their justification for pressing ahead with including clause 52 in the Bill? In Committee, the Minister’s predecessor—she did the same today—sought to rely heavily on the comments of the commission’s general counsel in the public evidence session. I have read that evidence in full, and it is true that at the end of it he said:

“The commission is not opposed to the Bill.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 80, Q180.]

As the general counsel made clear, however, it is not for him or the commission to take a position on the Bill. It is a political matter for the Government. That said, he made some interesting comments to which, I note, the Minister did not refer. He was clear that resources were being cut. He said that

“if the commission is given fewer resources, we will have fewer staff and less money to do the work that we would want to do.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 74, Q162.]—[Interruption.]

From a sedentary position, the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock), says, “Who racked up the debt?” I do not think that we can put a price on human rights and equality in this country.

On the commission’s remit, the general counsel was unequivocal. He said:

“This Bill reduces our powers and our remit… We would prefer to keep the remit we have, so we have not promoted the amendments in the Bill.”

Finally, on the repeal of the general duty in section 3 of the Equality Act 2006, he said that the section

“sets out a vision for a kind of society that I guess most people here would want to live in”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 79, Q176-79.]

and confirmed that the repeal of the duty “lowers the vision”.

Before moving on, it would be remiss of me not to turn to the Minister’s comments about the commission’s recent problems. Yes, the Joint Committee on Human Rights and the Public Accounts Committee have been very critical of the commission, and, yes, the National Audit Office has qualified its accounts, but none of these inquiries concluded that its remit should be changed in the way the Government are doing in the Bill. The most recent accounts were unqualified, and the running of the organisation has not been helped by the Government preventing it from recruiting a permanent chief executive and senior management team for more than two years. These recent problems are hopefully in the past and certainly do not justify the winding down of the commission.

The Minister, and the Secretary of State in his letter to me earlier this month, said that it was not the Government’s intention to water down, wind down or abolish the commission. Nevertheless, we know that many Government Members would like to see the back of it.

Of course, one of the benefits of the commission is its independence from Government and Ministers. Does my hon. Friend share my concern that altering the commission’s remit will fundamentally undermine the independence of what is left of this organisation?

Absolutely, and I would say two things about what my hon. Friend has just said. First, when it comes to the comments of the general counsel, one has to consider that he is passing comment on his masters who are cutting his budget massively. To suggest that that does not weigh on his mind when he makes comments about the Bill is probably quite naive. The second thing I would say is that the independence of the organisation is paramount, and its ability to do its job will be compromised by the changes being made.

Let me point out to the Minister that what people are entitled to do when making a judgment about her party and her Government’s intentions for the commission is to look at the actions they have taken. The catalogue of things that I have just listed has meant not only that people in her own party are incredibly worried about its future, but that many of the stakeholders who work in this area are also worried about it. At the moment, the general view among many people is that we are effectively seeing the abolition of this important organisation by stealth. That is what seems to be happening.

I should share with my hon. Friend the fact that I worked for the Commission for Racial Equality before it merged into the new body. I know that there are always challenges with any organisation, but the work it did was crucial. Does he, like me, share the concern raised only a few days ago by Brendan Barber, the TUC general secretary, that what the Government are doing essentially makes a mockery of their claim that equality is at the heart of the coalition Government?

My hon. Friend hit the nail on the head when he talked about abolition by stealth. Anyone who has ever had cause to take an issue to the Equality and Human Rights Commission knows that going to an independent body that has rights over other bodies to take action is vital. Taking an internal route through an organisation is sometimes too slow and inadequate. Will he make a commitment about what the Labour Government will do when we are back in power in 2015?

I am proud to be associated with a party that was responsible for setting up many of the predecessor bodies of the Equality and Human Rights Commission. Let me be absolutely clear: we thoroughly support this organisation. It is incredibly important, not only in taking an anti-discrimination stance towards some of the things that unfortunately happen in our society, but in being proactive in promoting that. I have just returned from a visit to Israel, where I learned more about the situation there. I met the Israeli and Palestinian Governments, and one of the things that I felt so proud of was the fact that an equalities commission was recently created in Israel. We know that society there has major challenges in that respect, but that commission is being modelled on ours. I think that says something about the body we have in this country.

I would be grateful if the Opposition addressed the proposals that we are meant to be debating. The Government are not saying, “Just strip it all away”; they are proposing equal pay audits and other mechanisms. It would be useful to know what the Opposition think about them.

I have just addressed each point about the commission that the Minister raised in her speech. I understand the right hon. Gentleman’s impatience; I shall turn to the other points now.

Let me turn to the Government’s new clauses. Last week the Government tabled new clause 12, which provides for the repeal of the provisions in the Equality Act 2010 relating to employer’s liability for third-party harassment of employees. That, of course, was a key recommendation in the infamous report of the Prime Minister’s employment law adviser Adrian Beecroft. To find the reason for the original introduction of those measures—I am basing my remarks on my legal practice and study: I was an employment lawyer before being elected—we have to return to the mid-1990s. In 1994, there was a well-known case in which two black hotel waitresses were made to serve drinks in Manchester during a performance by the notorious late comedian Bernard Manning. They were subjected to racially and sexually abusive remarks by Manning, and they took their employers to a tribunal. They should never have been put in that situation, and they issued proceedings and won the tribunal. After that case, however, case law was uncertain—I can say that, having dealt with the case law that existed before the Equality Act 2010 came into force. Through section 40 of that Act, which the Government are partly repealing, we legislated to put protection against such third-party harassment on to a firm footing and cover all types of unlawful discrimination.

That statute is relatively new, but in the tribunal case to which the Minister referred, which I believe was heard last year, we saw the value of section 40 in action. A care worker in a care home was subjected to repeated sexual harassment by a resident. When she complained to her employer, she was just told to be patient and wait for the resident to stop touching her. In no small part thanks to section 40, the tribunal was left in no doubt of the protection that should be afforded that worker. Before the implementation of section 40 it was not clear what the law was, because of the numerous examples of case law that there had been at different levels. The tribunal found the employer liable, holding that it could have taken a number of reasonable steps to protect the care worker, such as ensuring that she was always accompanied by another member of staff or maybe adjusting her rota to minimise contact with the resident in question.

Despite what I have just said about that case and about how section 40 of the 2010 Act came into being, Adrian Beecroft said in his report that the Government should repeal that law. It is worth repeating and recalling that Mr Beecroft was very clear at the Public Bill Committee’s evidence session that his findings were based not on proper evidence but on conversations with people. It was proper back-of-a-fag-packet policy making by the Government.

When my hon. Friend the Member for Stretford and Urmston (Kate Green) questioned the Secretary of State on the Government’s intentions on Second Reading, he assured the House that he had no intention of implementing that Beecroft proposal, yet that is precisely—

It is absolutely true. The Minister should check Hansard.

With this latest new clause, the Government are doing precisely what they said they would not, and we oppose it, as do more than 70% of those who responded to the Government’s consultation.

My hon. Friend is making his point very powerfully. My worry is that under the umbrella of saying that they want to get rid of regulation, the Government are affecting some of the most vulnerable workers in our society, who do not have the protection of a well-paid job and education to argue their case but rely on the law in question. Without it, they will just have to shut up and put up with the harassment that they face daily, often in domiciliary situations such as the one that he described.

My hon. Friend hits the nail on the head and identifies the Government’s real motivation. We are in the third quarter of a contraction, which we will hopefully come out of in the next quarter. We were promised many things in relation to the economy that have not turned out to be the case. In their desperation to get the economy moving, and with their complete refusal to stimulate the economy, the Government are now doing the traditional thing and looking to water down people’s rights at work as a substitute for a proper growth plan.

New clause 13 would abolish discrimination questionnaires, which employees can submit to their employers to obtain further information and make up their minds about whether to institute proceedings, or maybe to assist them in reaching a settlement with their employer. I know those questionnaires well, because I was professionally involved in drafting them on behalf of employees. I was also involved in drafting the responses on behalf of employers.

From the employees’ point of view, there is no doubt that those questionnaires help them access evidence at an early stage, which is incredibly important so that, as I said, they can determine whether to litigate or precipitate a settlement. They will now be all the more important because of the large fees that the Government are levying on people who wish to institute claims in an employment tribunal.

Turning to the employers’ point of view, the Government’s own Equalities Office carried out research on the questionnaires and found that only 2% of private sector employers had had to complete one in the past three years, and that most of those who had done so agreed that responding to them had been straightforward. We do not need to abolish the questionnaires, and I do not accept the reasons for doing so that have been put forward by the Minister. I say that not only from a political point of view but in the light of my professional experience of working for a number of years on these matters.

I want to make some progress; I have given way a few times now.

I welcome the addition of new clause 17 to the Bill. It will enable tribunals to recommend that an employer who loses an equal pay or sex discrimination case be required to carry out an equal pay audit. I simply want to raise one question about the scope of the measure. Is my understanding correct that it will apply to private sector employers only? Perhaps the Minister will expand on that point.

My hon. Friend is making a powerful case. Procedurally, a number of barriers are being put in the way of people seeking justice and the enforcement of their rights. Does he share my view that closing the regional offices and reducing the commission to a rump of its former self will mean that those who are powerless, when challenging those with power who are denying them equality and equal treatment, will no longer have an Equality and Human Rights Commission that is fully behind them?

I completely agree with my hon. Friend.

I have absolutely no doubt that if the Minister were in opposition, she would be making many of the points that I am now making. She would be jumping up and down and objecting in the strongest terms to what the Government are now doing. I have referred to the assurance that was given, then broken, by the Secretary of State, which the Minister does not seem to recollect. May I also remind her of something that she said to the Deputy Prime Minister in this House? She said:

“Will the Deputy Prime Minister reassure my constituents that the Government will resist any siren calls to water down the Equality Act as part of the red tape challenge?”

The Deputy Prime Minister replied:

“I can certainly confirm that, as far as I am concerned, there will be no move to dilute incredibly important protections to enshrine and bolster equality in this country under the guise of dealing with unnecessary or intrusive regulation.”—[Official Report, 24 May 2011; Vol. 528, c. 770.]

Well, if that is not a broken promise, I do not know what is.

My hon. Friend has repeated back to the Minister something that she said on a previous occasion. Does he agree that she is conspicuous in her silence in now refusing to stand up and defend what she said at that time?

Quite right. One argument that has been consistently advanced by Liberal Democrat Ministers, as well as at the Liberal Democrat conference the other day, is that the Liberal Democrats are a check on the worst excesses of their coalition partners. I believe, however, that people will look at their actions. Their words do not marry up to what they are doing in Government. The Secretary of State said at his party conference that if Britain wanted

“competence with compassion, fairness with freedom and more equality…that government must have Liberal Democrats at its heart.”

The measures in the Bill really do call that claim into question.

I shall speak to amendment 56. Far be it for me to correct my hon. Friend the Member for Streatham (Mr Umunna), but I think the amendment is in my name. I say that only to give notice formally that I intend to move the amendment and divide the House on it. It is in my name only because of my speed of pace in getting to the Vote Office—that is all.

This is not one of those parliamentary knockabout debates, but a fundamentally important one. I have been a Member since 1997 and I have noted that in every debate on equalities during that period, what emerged was a near consensus about the approach towards, and the commitment to, the legislative framework. When we debated the Equality Act 2006, near consensus was achieved in this House about the legislative framework that was being put in place. I thought that that was one of those occasions on which the House rose to its full height, and it was held in esteem for reaching that consensus.

To be frank, there is an element of tragedy to what is happening. We are going dramatically backwards here. The Minister listed a range of reforms that the Government had introduced, most of which I believe the Opposition supported. I welcome them, but the difference between those reforms and the one we are considering is that there was consensus about most of them, both in this House and outside it.

As my hon. Friend the Member for Streatham has said, a vast range of organisations have expressed concern. I received a briefing from the Equality and Diversity Forum—I hope that other Members have received it, too—which basically urged the Government to think again and provided a detailed brief, setting out point by point its arguments for opposing the Government’s proposals. Some of these organisations deserve listening to. They include Age UK, the British Institute of Human Rights, the Children’s Rights Alliance for England, Citizens Advice, Disability Rights UK, the Discrimination Law Association, End Violence Against Women—the list just goes on and on—the Fawcett Society, Friends, Families and Travellers, Justice, the Law Centres Federation, Mind, the National AIDS Trust, Race on the Agenda, the Refugee Council, the Royal National Institute of Blind People, the Runnymede Trust, Scope, the TUC and the Women’s Resource Centre—and there are many more. As my hon. Friend said, tomorrow there will be a further letter from organisations that supported this House for almost a generation as we devised the legislation and the legislative foundation of our equalities law. This Government are now breaking that consensus.

To be frank, there were concerns that there would be a Conservative party attack on equalities after the election. We were hoping that that would not be the case. I argued that many of the legislative debates we had had over the last generation would be put to bed and would not be reopened. Many feared such an attack, but most of us hoped when the coalition was born that the Lib Dems would head it off. I know that there are those who have tried to do so. We have heard today of letters coming in from different Lib Dem groups, urging the Government to think again. Unfortunately, they have failed. As a result of that failure to convince the Government to think again, we are faced with the most significant step backwards on equalities that we have seen in the last 20 years.

I share my hon. Friend’s distress and sorrow at what is happening under this Government. Is it not also the case that when the Equality Act went through the previous Parliament, it was Liberal Democrat Members, including the Minister’s own predecessor, who were particularly at pains to push our Government, a Labour Government, to go further? Is this not an appalling and distressing reversal of position?

This is a serious debate and, to be fair—my hon. Friend was here at the time—there were Conservative and Lib Dem Members who sought to push things further. What I thought was important about that debate was that we reached a consensus. We reached a fairly high plateau of agreement. It was recognised that some wanted to go even further, but no one wanted to go backwards, which is what this legislation does. This is a backward step.

My amendment should be considered in the context of what the Minister said about the future of the Equality and Human Rights Commission. I was one of those who did not agree with the proposal to bring together all the individual bodies, such as the Commission for Racial Equality, in a single organisation, but it was agreed to nevertheless, and I thought that at least we had reached a point at which we could proceed with a well-resourced organisation implementing a body of legislation, duties, powers and responsibilities. However, as the Minister has said, the Equality and Human Rights Commission is now under financial review, and as has also been said, its budget has been cut by 62%. The staffing loss is not just “above 50%”, as has been claimed; it is 72%. There has been review after review, and now, adding to the uncertainty, there is the promise of a zero-based budgeting exercise and a further review that will take us into 2013. I think that the organisation is being deliberately destabilised, and is being set up to fail.

I am listening carefully to what the hon. Gentleman is saying. Does he agree that John Wadham, the director of the EHRC, specifically said during an evidence session in Committee that he and the organisation did not have any problems with the Government’s Bill?

With the greatest respect, I do not think that that is the case. I know John well—he is an old friend—and I do not believe that he used that exact form of words. What the organisation said was that it was for the House to decide on the Bill. I think that what the staff and board of the EHRC are trying to do is survive, and I think that some things have been said simply so that they can survive.

The briefing from the EHRC uses very neutral language, but it nevertheless expresses blatant concern about, in particular, the removal of important functions such as the helpline, funding for voluntary organisations, and legal advice. The idea that people should have to pay to issue a challenge when they have been discriminated against is outrageous.

I agree. I think that what John Wadham and others in the organisation have said is that they will do their best and will live with what legislation there is, but I also think that when they gave evidence to the Committee, their intention was not to support the Bill. It is for us to decide.

Either the hon. Gentleman is calling me a liar, or he has not read Hansard. The written record of the evidence sessions shows that John Wadham said that the organisation did not have a problem with the Bill.

Order. Had the hon. Member for Hayes and Harlington (John McDonnell) referred to the hon. Member for Skipton and Ripon (Julian Smith) as a liar, I should have picked him up on it, but he did not.

No, he did not imply it. He did not raise the issue of the hon. Gentleman’s integrity in any way. There seems to be a dispute about what was actually said, and I think that that is different.

Let me assure the hon. Member for Skipton and Ripon (Julian Smith) that I would never call him a liar. What I am trying to say is this. The organisation has previously made it very clear that the House will be the determinant of the Bill. I believe that John Wadham has been a good and effective civil servant over the years, and that he will implement whatever comes out of the House as effectively as possible, but I also believe that he and his colleagues are simply trying to survive in whatever way they can, and will speak accordingly.

As I said earlier—and as my hon. Friend will know, because he has read what John said—John did say that he was not opposed to the Bill. However, I have just given chapter and verse on all the problems that he has raised in relation to it. He is, of course, an existing employee of the commission, so it is very difficult for him. Why should we not consider, for example, what the commission’s former director of human rights and director of disability rights said in July about what the Government are doing? He said:

“By repealing section 3 of the Equality Act 2006, the Commission will cease to be an agent of social change harnessing the law and its powers to address entrenched inequalities.”

We will come on to the individual elements, but it is clear from the representations that have been received that there is sufficient concern. Let me put it no more strongly than that. For any Government whose members have arrived at consensus on a contentious issue to come along and break that consensus warrants much deeper consideration than is being given by the Government. The messages from the organisation itself, which is seeking to survive in whatever form it can, have been clear enough to most of us to suggest that it has an underlying concern that it will be unable to fulfil the role we have expected of it up until now.

My hon. Friend makes a powerful point about the organisation’s inability to fulfil its role in the future. I have met the staff in the Birmingham office on the issue of disability access to public transport, from buses in Wolverhampton to the de-staffing of stations in the region by London Midland. The disabled are saying that they are being turned into second class citizens who are unable to access public transport and that the support of the Birmingham office of the EHRC is essential to them. Does my hon. Friend agree that if that office goes, so too will the champion of the disabled?

I chair the PCS parliamentary group, which represents the union that represents the staff. I have therefore been involved in the discussion with them about the cuts that have taken place. The pressures that existing staff are under are immense. Reducing staff numbers still further will lead almost to the breakdown of the organisation.

Let me return to the Bill. We have been saying that there is real worry about the Government’s intent and the future of the organisation. The cuts in resources and staff are being compounded by the undermining of the legislative basis on which the organisation operates. It is that legal basis that we must consider.

On clause 52, the original legislation laid out a general duty to send out the message to which my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) referred. As a community we needed and continue to need the message that there is an organisation advising the Government that will encourage and support a society based on freedom from prejudice and discrimination—a society based on individual human rights, respect for the dignity and worth of each individual, equal opportunities to participate and a mutual respect between groups based on understanding and valuing diversity and shared respect for human rights. I do not think that society has changed so dramatically that that statement is irrelevant—it needs to be embodied in legislation and repeated time and time again. It had all-party support in 2006.

My hon. Friend is absolutely right, and I am proud to have been part of the Government that introduced the Equality Act. However, does not this provision shed light on the Government’s real motives? By stripping down the commission and stripping it of its remit, they are undermining the equalities that we cherish and hold dear.

I do not see how it can be interpreted any differently. The argument has been made that this provision has been included in the Bill for a purpose and that it is all to do with removing restrictions on businesses so that they can be encouraged to be more enterprising and create better profits, which might somehow contribute to tackling the recession. The argument is almost that we cannot afford equality, but our argument is that we cannot afford inequality. That is exactly why we enacted that legislation in 2006. There were strong arguments about not just fairness but efficiency. If there is discrimination against people, sections and groups in society, they cannot make their contribution. That was why we made a strong economic argument for the 2006 Act.

I note that the Minister talked about value for money. Does my hon. Friend agree that the value-for-money argument for dismantling the commission is a very bad one, because of its impact on our economy through the added cost to businesses of failing to tap into the potential of people against whom there is discrimination in our society?

Exactly. In 2006 we had a lengthy debate on all sides when we identified groups in society that had not been given a fair crack of the whip and which, if they had, could contribute so much to our economy. Clause 52(1)(a), which removes section 3 from the Equality Act 2006, removes that statement.

It is interesting that only a few months ago the European Commission, in its recent report on equality, recommended to other Governments that they follow the example of the UK and embody in legislation a vision of an organisation that can contribute towards developing a society based on equality. Here we are, taking a step backwards from what is happening elsewhere across Europe. This is not just a tidying-up exercise. It is not about creating unrealistic expectations. It undermines the legislative basis of the organisation.

At the recent conference on discrimination law, Sir Bob Hepple QC made it clear what section 3 stands for. He said that it provides the link between the promotion of equality and good relationships between groups and society, and that without it we are rudderless. That was his statement. We included the measure in the original legislation to give direction.

It is extraordinary that in the Government’s own consultation, which has been cited time and again today and which was entitled “Building a fairer Britain”, there was overwhelming opposition to the abolition of section 3. The opposition was 6:1 against removing that visionary statement from the legislative basis of the commission.

Clause 52(1)(b) repeals the duty to promote good relations between members of different groups. MPs who have been working in their constituencies as MPs, councillors or community activists will recall that it is these sections that we have used to protect individual groups against racist attacks, attacks on Travellers and against undermining and stigmatising people with mental health problems. This is the legislative base that we have used time and again to ensure that the commission can play its full role.

As my hon. Friend the Member for Streatham said, this is the measure that we used to tackle racism in football, so it has been used in campaigns and it has been effective. We have used it to undermine the development of extremist racism in our society and to ensure that we give advice to public authorities, particularly local authorities at elections, to set standards.

It has been argued that other organisations will be available to do this, such as the Runnymede Trust and the Fawcett Society, but both of them are reliant on public funds and some of the public funds that go to those organisations are from the EHRC. The EHRC is having its grant-making cut so those organisations will not be out there to fulfil that role.

On the removal of the duty in section 10, I want to raise an issue on behalf of organisations such as DPAC—Disabled People Against Cuts—and the group in Scotland, Black Triangle. Section 10(5) places a duty on the commission

“to promote or encourage the favourable treatment of disabled persons.”

Over the past year we have had debate after debate on hate crime against people with disabilities. We thought we had a breakthrough with the Paralympics in raising the profile of people with disabilities and extolling what they can do if given the chance. What message does it send out that we are scrapping that duty of the commission?

Four or five categories of hate crime are monitored—race, religion, gender, sexuality and disability. Over the past year disability hate crimes are the only hate crimes across all the categories that have gone up, and the reason is the language used by the Tories. Does my hon. Friend agree?

In debates in Westminster Hall and in this Chamber, Member after Member has raised the issue of the rise in hate crime against people with disabilities. They have cautioned Conservative Members and others about the language that they use and about their actions. This proposal sends out a message that the Government are not interested in this matter, and it undermines the very organisation that has the statutory responsibility. We are not the only ones who are anxious about this. The Government’s consultation shows that the proposal was opposed by 7:1.

On section 12, the Government seek to reduce the frequency of monitoring progress from three years to five years. It is extraordinary that in the debate on the introduction of the monitoring process, it was Conservative Members who argued that three years was not enough, because there would be only one report every Parliament. Now it is to be every five years. That was opposed by 5:1. It is argued that further reports can be brought forward at the commission’s will, but the most important thing is the requirement that the House places on the organisation. The monitoring process every five years will prove totally ineffective.

The repeal of section 27 and the powers to provide conciliation services to resolve disputes involving alleged discrimination is extraordinary. In other parts of the Bill the Government promote conciliation to resolve disputes, yet in this area we are removing that role from the commission. The argument is that the commission has not been particularly effective. If we are concerned about the effective operation of the commission, we should reform the commission, not undermine its legislative base and remove its powers. If the pre-appointment hearing for the new head is today, we should give that person a chance to reform the organisation before we take away the opportunities to exercise effectively the powers that were bestowed upon it by previous legislation.

I will deal with new clause 13 and the abolition of the questionnaire only quickly, because, like my hon. Friend the shadow Secretary of State, I have dealt with these questionnaires from a trade union point of view. As has been said, only 2% of employers have ever been involved and none has claimed the duty was onerous. To be frank, when the questionnaires come back a trade union representative can tell his member, “This isn’t a runner,” or he can say, “This is a runner. We had better start negotiating.” When it can be proved that a case has merit, usually the employer will realise that there is something real to address.

Again, from my experience in the trade union movement I support what my hon. Friend says. As a result of the process of using the questionnaire, for every one case that goes forward, three cases do not, precisely because it is established that there is no case to pursue. That means that the hopes of individuals are not raised, but neither is any unnecessary burden imposed, in this case on employers.

Exactly. Part of the role of a trade union representative is to ask the individual, “Do you really want to put yourself through this when there is so little chance of success bearing in mind what information has come back?”

What I find so reprehensible about what the Government are doing to these protections in this Bill—the same applies to the points that we will be discussing tomorrow in relation to employment law—is that in many respects the people for whom these protections are so important are those who are not represented by a trade union because they provide backstop protections for them in the event that they cannot get assistance elsewhere.

Exactly. Amazingly, the questionnaire process has been operating effectively since 1975, and in the consultation, 83% opposed this proposal. Most people just want to get on with the practicalities of conciliation, not resort to law because of its expense and risk, and the questionnaires enable us to do that. The Discrimination Law Association offered example after example of the questionnaire’s effectiveness, but they seem to have been completely dismissed by the Government.

New clause 12 relates to third-party harassment which my hon. Friend the Member for Streatham eloquently addressed. I do not think that scrapping the duty set out in the legislation will in any way clarify matters. In fact, I think that it will cause more confusion. At least when cases are brought up with employers, even informally, representatives can point to the legislation and the duty and it is then clear what the employers have to do. Example after example has been pointed out, but I will give one that was raised with us some years ago. Black firefighters arriving at a scene were being discriminated against and targeted, so their employers had to put in place additional protections. Another example was of discrimination taking place in jobcentres. With regard to the consultation, if the Government were listening to people they would hear that 71% are opposed to these proposals.

Reference has been made to other cuts that have been made to the commission. The Minister raised the issue of the helpline, which has now been transferred to the Government Equalities Office. It only takes referrals from other organisations and does not advertise its services, so I think that the Government are effectively hoping that it will simply wither on the vine and there will no longer be a service for people.

I am also concerned—the Minister has not mentioned this—that a new framework document is now being discussed with the commission that, I think, threatens to limit its future freedom of operation. There is to be a further budget review, as I have said. If the Government are planning to abolish the commission, I would rather they came clean about it and were up front, rather than killing it off by stealth, by cuts and by undermining its legal powers. That would be more honest.

It is not the case that equalities are no longer relevant; discrimination is taking place in our society. We extol the virtues of British society but the reality is that, as everywhere else, discrimination takes place daily and has to be confronted, and we need an effective organisation to do that. If we want an effective organisation, it has to have legal powers that are set out clearly in law. This legislation will undermine those powers and make them less clear than ever before.

I think that this flies in the face of everything this House has worked for over the past generation and the joint work that has been done across parties to promote equality and give effective powers to a body and underpin them in legislation. That is now being thrown to the wind, and for what? I think that it is the result of a combination of ideology and the desire to make savings that, frankly, I do not think will be realised. The proposals will most probably cost more than they actually save. I urge the Government to think again. I urge the Liberal Democrat partners in the coalition to return to their first principles and to what they said a number of years ago. If the Government do not amend the Bill, I hope that the other House will take a role in this and stand up for equality in our society once again.

It is a pleasure to follow my hon. Friend the Member for Hayes and Harlington (John McDonnell) and to endorse his comments. We are genuinely shocked, disturbed and surprised that the Government, and particularly the Minister, have brought forward the amendments to the Equality and Human Rights Commission’s remit and by some of the specific changes proposed to employment legislation.

As my hon. Friend has just said, despite progress—progress that we can be proud of across this House and in society at large—in addressing inequality and injustice in this society, despite the fact that much good work has been done in our communities to boost and strengthen community harmony, despite the many efforts that have been made to create better educational opportunities for young people from all backgrounds, and despite many examples of progress for women, disabled people, black and ethnic minority people, lesbians and gay and transgender people, despite all that progress, we are still a fundamentally very unequal society.

We are a society where there is still a gender pay gap of 20%; where young black men are still disproportionately more likely not to be in employment, and even when they achieve good degrees still find that they end up with fewer employment chances and lower earnings; where disability hate crime is reported to be on the rise; and where great offence and hurt can still be caused within our communities, as we have seen only recently with the “Innocence of Muslims” film. It is really important that we do not take progress on equality for granted, because there is a very long way to go.

Many people of my generation thought that the days of overt racism in football died when bananas stopped being thrown at people like Clyde Best, but when we see such incidents as recently occurred at the Chelsea-QPR game, we realise that a fetid, bubbling sewer of racism still runs through the veins of our society. Does my hon. Friend agree that there has never been a time when it has been more important to have a strong, well-funded, supportive, proactive commission than now, because old Adam is not dead and the old evil has not gone way?

That is absolutely right. One of the great dangers of the Government’s proposals is that they assume that the problem is sorted and we can take our eye off the ball when that is clearly not the case.

It is important to think about the language we use and the provisions we make in legislation, because that sets a context, an ambition and a sense of priority for the country and for the institutions within it. Equally, beginning to weaken that language and remove provisions sends the message that this is not all that important and other things are more important.

I am particularly concerned that these changes are being made in the context of an enterprise Bill, as though equality were in some way inimical to enterprise, when in fact it lies at the heart of successful enterprise. The most socially and economically successful societies are also the most equal societies. It is wrong to seek to weaken our commitment to equality in an enterprise Bill, of all places.

My hon. Friend raises the very important issue of the “Innocence of Muslims” film and the inter-faith concerns that have been caused. Does she agree that a strong equalities body is vital for promoting a sense of good will, cohesion and understanding between communities that will not be there without the mechanisms in society to help to deliver that?

It is absolutely right that we need a strong institutional infrastructure to promote and encourage greater equality, respect for human rights and good relations between different sectors in society, particularly as regards the interests of marginalised and more vulnerable groups.

Does the hon. Lady not welcome the equal pay audits in the Bill, the Government’s same-sex marriage proposals, and the many equality proposals that they are taking forward? Are those proposals not more important than this body, which has, in a number of reviews, been given quite a lot of criticism?

The hon. Gentleman confuses the operation of the body with its remit. We are not saying that nothing can be done to improve the operation of the EHRC, but that is a different matter from its remit and the context that the Bill is important in setting. While the Government have made one or two grudging steps forward in relation to improving equalities, the proposal on equal pay audits is a watering down of our commitment to have such audits across the board for larger businesses, not only when they have been unsuccessful at tribunal, and the proposals on equal marriage now appear to have been kicked into the long grass. I am glad to see the Minister shaking her head and look forward to the legislation coming forward very shortly. Yet again, the Government have chosen not to go as far as Labour Members were calling for, by wanting to limit equal marriage to civil marriage. There seems to be no good reason not to take that further and for religious institutions that would like to offer a religious ceremony to be able to do so. The hon. Gentleman picked on one or two instances of progress set against a backdrop of failure to take the most progressive action, and in many instances an unwinding of progress on progressive action. It is unlikely that this Government can claim to have done much strenuously to promote equality—in reality, the opposite is the case.

It is important that we have a framework where the EHRC is responsible not just as a regulator but in terms of driving forward social progress, setting an ambition and a vision, and looking at the mechanisms that can help to bring that about. Because it has had that role and status under the Equality Act 2010, we have been confident of our United Nations A-rated status as an international human rights body. I am concerned that these proposed changes may put that exemplary status at risk.

Does my hon. Friend share my grave concern that the removal of the general duty under clause 51—now clause 52—was described by the Business Secretary as

“a bit of legislative tidying up”?—[Official Report, 11 June 2012; Vol. 546, c. 75.]

Does she agree that it is far from just “tidying up” and that it is in fact a watering down of a duty that is vital for our social well-being?

It is shocking that the Secretary of State regards this simply as legislative tidying up, because it goes to the heart of our vision for equality and human rights. I am also concerned that it has been suggested—indeed, the Minister alluded remarks—that other bits of the legislation are going to be good enough and we are not going to lose anything really. For example, the Government have mentioned the possibility of relying on the public sector equality duty, but that, too, is being reviewed by this Government.

What we have had with the red tape challenge, with this Bill and now with the consultation on the public sector equality duty is the piecemeal dismantling of our equalities infrastructure. It is utterly disgraceful that the Government have set about it in this way. They have made proposals today on the statutory questionnaire and on third-party harassment. The consultation on those has just closed and there has been no formal response from the Government; we have simply seen proposals brought forward in this legislation. The Secretary of State assured me personally on Second Reading that he had no plans to bring forward such measures, yet here they are today appearing in the Bill so I am very concerned that the Minister’s assurances that the equalities context is safe in the Government’s hands and that other aspects of legislation will continue to protect it are simply not worth the paper they are written on, given the Government’s track record on this matter over the past few months.

I now wish to examine the good relations duty, a really important duty that has been in place since the time of the Commission for Racial Equality and some of the shocking racial discrimination that we saw in earlier decades. That all culminated in the Macpherson report following Stephen Lawrence’s murder. That was a time that brought home a real shock to our society about how we had failed to address discrimination and inequality in our country. As I say, we have made progress in the intervening decades in our treatment of, and the opportunities afforded to, some minority groups in our society, but victimisation, discrimination, hate crime and disrespect to minorities continue today.

My hon. Friend the Member for Hayes and Harlington highlighted some of the groups that, even today, experience that discrimination: disabled people; people with mental health difficulties; and Gypsies and Travellers. There is still racism and there is still religious hatred. There are still women who are experiencing and are victims of violence, or who are at risk of it. All those groups continue to suffer from derogatory language, discriminatory behaviour, prejudice and public hostility. It is quite wrong to think that we do not need to continue to protect in legislation a positive duty to promote and improve good relations, particularly to protect the interests of minority and disadvantaged groups.

The situation is not helped when some of this hostility is whipped up by Ministers’ own language; it is not helped by language that implies that people on disability benefits are benefit scroungers or that Gypsies and Travellers are all involved in illegal encampments, arriving one Friday night, parking up with their tents and disappearing by Monday. There is too much condemnation based on anecdote, which fuels this culture of hostility. It is really important that we have a strong commission that is able positively and proactively to tackle that and promote good relations between different groups.

Could the hon. Lady give some tangible examples of how the general duty actually helped the groups of people she has mentioned?

The hon. Gentleman should realise that we are talking about the good relations duty, not the general duty, which is a duty to promote equality and reduce discrimination. However, we have heard some examples this afternoon of how it has been used. It was used, for example, to create the Let’s Kick Racism Out of Football campaign, and it has been used recently to underpin what I think all Members would recognise as an important report published by the EHRC last year, “Hidden in plain sight”, which addressed the issue of disability hate crime. I am not saying that there is no more work to be done; I am saying that the removal of the good relations duty does not inspire confidence that the commission will have its eye on the ball of doing more work. It is important that we do not lose sight of the progress that we still need to make.

My hon. Friend is absolutely right. We need a commission not only to act as an anti-discrimination vehicle that identifies discrimination and deals with it when it happens, but proactively to prevent such things from coming up in the first place. The section 3 duty makes it clear that the organisation has those twin purposes.

My hon. Friend is right. Opposition Members are wary of the commission being reduced to a mere regulator between two parties, rather than seen as an agent of social change. There is a real opportunity for a highly regarded, well-resourced public body, with the right remit, to shape and influence public attitudes. The Government’s proposals will put that work and ambition at risk.

Does the hon. Lady really think that a body can make such changes? Is this not about leadership in all our public sector organisations and private companies? Does she really think that a body, however much resource it has, can achieve those changes?

The hon. Gentleman is right to say that we need leadership in all walks of society—of course we do. We need to see it in our businesses, schools, public services and communities. I am sure he is not saying that there is no need whatever for the state to sign up, positively and proactively, to endorse and create an institutional mechanism and infrastructure to help achieve that. But if that is what he is saying, he is very much at odds with best international practice and the relevant directives of the United Nations and the European Union. As I have said, in a country where there is still gross inequality, it would take a great leap of faith to say that we can afford to dismantle the equalities infrastructure; surely what we should be doing is building it up.

My hon. Friend is right to say that the great advances that have undoubtedly been made in race equality, disability rights and so on do not mean that there is not unfinished work to be completed. There is an awful lot of progress still to be made and that is a case for a stronger commission, not the rolling back of provisions.

My hon. Friend is right. It is regrettable that we are having a debate about watering down the commission’s remit. There is no evidence of public support for that and there is not even much evidence of business support for it. Opposition Members believe that it sends the wrong the signal at a time when we still need to make so much progress.

On that point, this Bill is called the Enterprise and Regulatory Reform Bill, and in a spirit of generosity and open-heartedness I have been trying to identify the coalition Government’s motivation. I can only assume that they believe that industry is like a group of greyhounds, straining at the slips and longing to burst forward in a great explosion of entrepreneurial activity, that are somehow being held back by these fetters of legislation. If that is the case, I ask my hon. Friend why she believes that the most successful economy in Europe—that in Germany—has no call to abandon the protective mechanisms that make society a better place and that underline the old saying that this country would not be a good place for any of us to live in until it is a good place for all of us to live in?

I cannot begin to say why the Government want to weaken the equalities infrastructure. I cannot work out whether it is because of ideology; whether they genuinely believe that there is a business case for it, although they have not managed to demonstrate that clearly this afternoon; or whether there are pressures on them to be seen to be passing legislation in this field because there is not much else for the House to do. I regret that the fact that the Government have put this particular structure into this position, because that says something very profound about what is valuable and important in our society. I am very disappointed that the Government and this Minister are bringing these provisions forward this afternoon.

In the Bill, the Government pray in aid enterprise to deny equality. Does my hon. Friend agree with the automotive and engineering personnel managers whom I met in Birmingham, who said that the work of the commission had been invaluable in getting the best out of their work force and that they wanted to get the best out of the work force of the city? As one of them said, enterprise and equality are not opposites; they are partners.