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Lords Chamber

Volume 697: debated on Monday 7 January 2008

House of Lords

Monday, 7 January 2008.

The House met at half-past two: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of Ely.

Israel and Palestine: Annapolis Conference

asked Her Majesty’s Government:

Whether they expect the Annapolis conference to lead to the creation of a fully sovereign Palestinian state.

My Lords, we welcome the agreement that has come from the Annapolis conference. This has put the Israelis and Palestinians on a path to real negotiations in 2008, leading to a final settlement, we hope, of two sovereign states living side by side in peace and security. As the Foreign Secretary highlighted in his Statement to the Commons, there is an end date to the negotiations initiated at Annapolis. All parties have agreed that these negotiations should seek to conclude by the end of 2008.

My Lords, I thank the Minister for that Answer and for the Written Answers of 17 December. Can he now reassure the House that these processes will not lead to the cobbling together of a Bantustan-like quasi-state for the already weakened Palestinians and that the British and EU part of the quartet will work hard to prevent this? Such a result would prevent the Palestinians from having what is their due under these processes, which is a fully independent, autonomous, proper sovereign state with its own borders.

My Lords, I can certainly confirm that it is the intention and purpose of British diplomacy over the coming months to ensure that a Palestinian state that emerges from these negotiations is truly independent and sovereign and no Bantustan. Obviously, given the way in which these negotiations are structured, others have an even greater say than we do, but we will use all the influence available to us to achieve a proper outcome.

My Lords, does the Minister agree that the continuing expansion of Israeli settlements in the West Bank and Jerusalem and the targeted assassinations among the population of Gaza, both of which the British Government have repeatedly declared to be illegal, not only run counter to the aspirations of Annapolis but also seriously undermine the prospect of creating an independent, sovereign and contiguous Palestinian state? If the Minister does agree with that conclusion, what are the British Government doing about it, either bilaterally or via the quartet?

My Lords, the British Government have used both public statements and private contacts to make clear our belief that new settlements and assassinations of the kind to which the noble Lord refers are indeed obstacles to peace. Equally, we have made it clear that the some 1,500 rockets that have been fired into Israeli civilian territory since July are similarly blocks to peace.

My Lords, does my noble friend know how important his statement is and how important it is that we work to try to bring the parties together? I say this having returned late last night from a visit to both Israel and Ramallah, so I know how many people on both sides seek to achieve the sort of peace that the two noble Lords do not seem to be aiming at and I understand how welcome is the financial and political support being given by Her Majesty’s Government towards these goals. Is it not now vital that this support, along with that of other members of the international community, continues so as to strengthen the talks? What steps are Her Majesty’s Government taking now and in the coming months to ensure that the necessary momentum is maintained so that a viable and sovereign Palestinian state is created alongside a secure state of Israel that is free from the threat of terror?

My noble friend’s views on this matter are always welcome and it is important to hear them. As he knows, the British Government made a generous pledge to the donors’ conference chaired by Tony Blair in Paris last month of £243 million over the coming years, but that was conditional on political progress. Indeed, the $7 billion committed overall by the donors was similarly conditional on the need for political progress. Both sides are in no doubt that not only the United Kingdom but all who want peace in the Middle East see that now is the time to move forward on both the political and economic tracks, and there will be strong support for that from the international community.

My Lords, does the Minister agree that some elements are opposed to the existence of two sovereign states—primarily Hamas, Hezbollah and their backers—and that we can confidently expect that they will take steps over the year to frustrate the talks? Have the Government thought of this and of what their response should be?

My Lords, as the noble Lord knows, Hamas has an interest in these talks—Hezbollah does not, because this deals directly with the issue of the Palestinian state—but is excluded from them because of its unwillingness to recognise Israel, commit to peace and pursue this kind of negotiation. That policy is critical. The appeal to Hamas remains: if it will disavow terrorism, disavow attacks on Israel and come into the political process, that would allow in the future much fuller negotiations and not leave people on the side trying to destroy them.

My Lords, given the repeated position of the quartet envoy and former Prime Minister, Tony Blair, that there are many lessons for the Middle East process from the Irish experience, and given that the essential element of that experience was direct dialogue with representatives of the IRA with the sole precondition of a complete cessation of violence, can the Minister guide the House as to how Her Majesty’s Government intend to apply that sole precondition to dialogue with Hamas, in particular, in order that there might be peace, stability and security for all the people of Israel and the Palestinian Authority?

My Lords, among the several differences between the situations is that in the Irish case we were a direct, principal party to the talks. In this case we are members of the quartet through the European Union, so we participate indirectly, in that sense, and we have a lot of voices heard. It is for us to persuade and influence other direct parties to these talks; we are not a direct party ourselves. On the noble Lord’s second point, we have stressed time and again that, although the condition is not quite as simple as only a cessation of violence—there must also be a recognition of the right of Israel to exist—if the conditions are met, the path for a political dialogue that includes Hamas could reopen.

My Lords, my noble friend Lord Trimble is right to remind us that Palestine is, sadly, divided not only geographically but politically. President George Bush of the United States is about to begin a huge tour of the Middle East. Have we had any input to the White House and to his advisers on the emphasis needed in maintaining a balance in the area? Secondly, what can be done to bring Hamas and Al Fatah together so that there is a Palestine authority with whom to deal and with whom to persuade the Israelis to get down to business?

My Lords, I can assure the noble Lord that there have been contacts in advance of President Bush’s trip, which is an enormously important development. As for Hamas, I cannot add to what has been said. The United States has made it abundantly clear that it, too, requires the quartet conditions to be met before a dialogue can begin.

Health: Severe Trauma

asked Her Majesty’s Government:

Whether they have any plans to improve the care of trauma patients in hospital accident and emergency units.

My Lords, my noble friend refers to severe trauma. Studies indicate that there are 3,000 to 4,000 such cases each year in the UK. The majority of hospitals see less than one severely injured patient per week. However, evidence suggests that seeing more cases leads to better outcomes.

In the NHS Next Stage Review, clinicians in nine strategic health authorities are discussing the best models of care available to us on the current evidence, including acute care, which would lead to improved trauma services.

My Lords, I thank my noble friend for that response. What is the Government’s attitude to the report Trauma: Who cares?, which states that of the severely injured people who attend hospital, more than 50 per cent receive poor care? If that allegation is true, it is a shocking situation, which the Government should not put up with for a moment. What are they doing about the report? Is it a fact that more than 50 per cent of such people receive poor care in National Health Service hospitals, which are the department’s direct responsibility? When will the proposed changes to improve the situation be carried out? Finally, will the Government now consider setting up an inspection unit to make sure that we do not go back to the old system of people being killed in hospital rather than cured or that they do not go into hospital expecting to be cured but are killed?

My Lords, my noble friend raises a very important issue. Severe trauma is a global health challenge. The incidence of severe trauma is four per million of population in the UK. However, it is the eighth leading cause of death in the developed world and the fourth cause of so-called DALY, the disability adjusted life years. In the NHS Next Stage Review, trauma services and their development in England is one of the priorities in the acute pathway. Let me put it in the context of the capital’s strategic health authority: London sees the largest number of traumas when it comes to both blunt and penetrating injuries. The recommendations of the London report are for three trauma centres in London which will provide not just care but the ultimate quality of care to which my noble friend refers.

My Lords, what plans are there to increase pre-hospital capability with specialist care and consultants specifically trained in on-site care and triage to increase survival? We know that secondary transfer is often a cause of death. Eighty-five per cent of these patients are young men, and it is the commonest cause of death in men under 40.

My Lords, the noble Baroness highlights some of the recommendations of the NCEPOD pathway which suggests that pre-hospital care should be significantly enhanced. At the place of the incident, ambulance services should be able to intubate and ventilate patients and make the right decision to transfer them to the right centre where there is a multidisciplinary team to deal with major traumas. As I said earlier, severe trauma is the eighth leading cause of death, and it is younger people who suffer most of the injuries.

We have taken on board the recommendations of NCEPOD, not necessarily just regarding pre-hospital admission. We also need to have, and define for the first time, dedicated regional trauma centres. It is the one area where there is clear evidence that centralisation of services, with adequate competencies at the site of receiving hospitals, will significantly impact on the quality of care.

My Lords, will the Minister give us some sort of encouragement to believe that in the next stage of the review there will be adequate consultation? It is fine for him to say that there will be three trauma centres in London, but in a huge area such as West Sussex—I declare an interest, being a resident there—there is anxiety about the lack of consultation and the apparent reluctance of the National Health Service trust to take into account the views of the people of West Sussex about cutting down on trauma centres. Although it is not right that every hospital should have a trauma centre, we wish to have confidence in the consultation process.

My Lords, I agree with the noble Baroness. As we speak, a significant consultation is going on in London with regard to the recommendations of the London framework, including the provision of three trauma centres. I wish to wait for the outcome of that consultation.

We need to separate consultations relating to A&E and emergency services from those relating to major trauma, which is what we are referring to here. Major trauma is defined as having an injury severity score of greater than 16. Each of the hospitals we are referring to receives no more than one case a week. This is a separate cohort of patients. Because of the rarity of such presentations, we strongly believe that we should have dedicated trauma centres that will create an adequate network to receive patients from more rural areas.

My Lords, will the Next Stage Review address the fact that standards of care for patients transferred between hospitals have not improved over the past five years, despite a major injection of funds into that service?

My Lords, the Next Stage Review has already identified that if we are to reform clinical services, the transfer of patients who have been pre-assessed at the place of presentation and taken to the right place at the right time is vital if clinical reform is to work. Otherwise, we will continue to have the wrong patients arriving at facilities that will not be able to cope with their presentations. We are injecting into our ambulance staff significant amounts of not just funding but training. Ambulances are no longer simply transport systems; they are treatment centres. And let us not forget the air ambulance service that will complement some of these services.


asked Her Majesty’s Government:

What is their assessment of developments in the negotiations intended to be facilitated by President Mbeki of South Africa between ZANU-PF and the opposition in Zimbabwe.

My Lords, we continue to support the efforts of President Mbeki and SADC to facilitate a dialogue between ZANU-PF and the Movement for Democratic Change, the MDC. Although many deadlines have been missed, we are nevertheless told that negotiations are entering their final stages. It is uncertain when and what the outcome will be. The key to any agreement will be that it is implementable in practice on the ground, because without effective implementation there cannot be free and fair elections that meet SADC’s own electoral standards.

My Lords, are there not two anomalies in particular in this situation? The first is that Mugabe’s henchmen carry out their brutal duties all the time, and that no one complains and no one stops them. The second is that Mugabe is quite clearly procrastinating so far as he can; his people do not turn up for meetings, and so on. He is doing so, I imagine, because he wants to delay the coming into force of the new constitution, which would make the electoral system more effective, before the elections that are due to take place in March. He is playing for time until then.

What is Mbeki actually doing to hasten proceedings? What are the members of SADC and the AU doing to persuade him to be a bit more forceful? What effort are Her Majesty’s Government making to change the minds of leading Africans who have been persuaded by Mugabe that the fault here lies entirely with the United Kingdom for creating this situation?

My Lords, the noble Lord knows that we use every encounter that we have with African leaders to make it clear to them that we believe that Zimbabwe’s problems are very much of President Mugabe’s own making. Many African leaders share our frustration about the refusal of President Mugabe to engage with the opposition and to move towards a new constitution. The choice is, as the noble Lord rightly says, his, because he still controls the levers of power in that country. He runs a brutal and oppressive regime. He has the choice of constitutional reform and open elections to allow his country to fully participate in the international community again, or he can continue further down this road of isolation that he has embarked on.

My Lords, towards the end of last year, my noble friend gave us the welcome news that an EU envoy was going to Zimbabwe who would report to European foreign Ministers. What progress has the envoy been able to make?

Some, my Lords, but not a lot. There has been progress. The mission has deliberately been kept discreet and low key, but there have been consultations. Perhaps the most important thing is that our European partners are confronted by the fact that there are no good, easy options in Zimbabwe. President Mugabe continues to resist change, and in Europe our position on that is well understood and supported.

My Lords, assuming that by the time the European Council has to decide on the renewal of the targeted measures against named individuals—on, I think, 11 February—Mugabe has not met the opposition and that no further progress has been made in the negotiations, will the Government press for the travel ban and the asset freeze to be extended widely to individuals, such as Mr Gideon Gono, who have made a fortune out of their illegal activities under the present regime?

With regard to the allegations of the corrupt deals made by Mr David Butau, who fled to Britain after having been accused of illegal currency transactions, to what extent will it be the duty of the police to collect information from him and to transmit it to those who ought to be aware of these facts, such as his own committee, Interpol and the African Union?

My Lords, let me address those two points. First, on the issue of the renewal of EU targeted sanctions and their possible expansion, we have to wait and see what happens on President Mbeki’s initiative between now and then. If that decision was taken today, there is no doubt that we would have to report that there has been no progress and therefore we would have to take further steps. But, if the noble Lord will forgive me, let us not deal with a hypothetical situation; let us see what happens in the coming weeks.

Secondly, for those Members not familiar with the case, Mr David Butau is a ZANU-PF MP who has come to this country. It is alleged in the Zimbabwean media that he is guilty of corruption, but no charges have been pressed against him in Zimbabwe, so he is in no way a criminal hiding from justice. He came here on a tourist visa which dates from before he became an MP. If criminal charges were pressed we would have to look into the issue, but at this point it is just speculation in the Zimbabwean media.

My Lords, surely South Africa holds the key to the future of Zimbabwe. Let us face it, under a different sort of Government it actually brought down the Smith regime in Rhodesia. Do we not feel that President Mbeki has been a broken reed and really has not come up to expectations in terms of all the faith that the western powers have put in him?

My Lords, President Mbeki has been confronted with an enormously difficult situation with an obdurate President Mugabe and at times a somewhat divided opposition, and he has been unable to move his mediation forward as effectively as any of us—including him—would wish. The difficulties faced in South Africa in recent weeks have further complicated this and have perhaps been a distraction from getting to a point of closure, which he had intended to do by now.

My Lords, has my noble friend reflected that the obvious absence of progress does not necessarily equate to failure? In those circumstances, instead of simply condemning President Mbeki in a very difficult situation—even the Question asked by the noble Lord, Lord Blaker, refers to ZANU-PF and the opposition—and because there is no coherent opposition, should we not encourage President Mbeki and those in SADC to act on their own account rather than simply carp?

My Lords, I welcome the opportunity that my noble friend has given me to confirm our support for President Mbeki’s initiative and thank him and his SADC colleagues for all the effort that they have put into this. However, the clock is ticking, and we are moving towards the March elections without reforms agreed, let alone implemented. We are rapidly passing the point of no return in terms of what would allow free and fair elections at that time.

Olympic Games 2012: Security

asked Her Majesty’s Government:

What additional funding they are providing to the British Transport Police to enable them to contribute to the multi-agency Olympic Security Directorate.

My Lords, the British Transport Police are already contributing to the Olympic Security Directorate through Assistant Chief Constable Steve Thomas. The security programme for the London 2012 Olympic Games is currently being developed with the involvement of key stakeholders, including British Transport Police. Decisions about funding, including that of the British Transport Police, will be made as part of that process.

My Lords, I thank my noble friend for that response. It is planned that 80 per cent of people attending the London 2012 Games will do so by using the rail network, which will require a capacity to move and ensure the security at peak of 240,000 people an hour using rail services to and from the Olympic Park. Can my noble friend give an assurance that the Government are not contemplating that part or all of the additional British Transport Police security and other policing costs of nearly £30 million for the Olympics, which are already starting to be incurred, should be borne by the railway companies, which already provide the normal revenue funding for the British Transport Police, and that they should be provided out of central government funds for this unique national one-off event?

My Lords, the noble Lord asks a valuable question on one of the issues under active consideration. He is right that the industry is normally expected to meet the revenue costs of policing matters relating to the railway network, and some of those discussions need to be continued. The development of the security programme is continuing and we are well advised by Assistant Chief Constable Steve Thomas of the BTP. No doubt that issue and other issues relating to governance and so on are still to be finally determined.

My Lords, to follow up the noble Lord’s question, there are likely to be nearly a quarter of a million—240,000—people coming on to the Olympic site at Stratford every hour. Given the problems of national security and the problems that that line suffered last week with the number of people currently using it, when there were almost riots on the stations, I hope that the Government are taking the matter more seriously than is suggested by the answers that the Minister has given us.

My Lords, we do take these issues seriously and the noble Lord should not consider anything that I have said this afternoon in your Lordships' House as doing anything other than that. These are very serious issues. However, there is a great deal of experience out there among the police forces that have to work with the train operating companies. Our security for major sporting events is often envied internationally, and our police service does a very good job in those very difficult circumstances.

My Lords, my noble friend said that many of these issues were still under review. The question being put is perfectly acceptable and worth while and it ought to be looked at favourably. While he is reviewing it, perhaps he could tell us how the review of policing for football matches is progressing. Many of us were surprised to learn that policing for major football matches is not paid for in any way by the clubs themselves although they appear to be extremely profitable. Perhaps some of the funding that could be released from policing football matches could go to the project suggested by my noble friend.

My Lords, I know that we have recently been through the Christmas period, and I can see that the noble Baroness is trying to extend the hand of generosity, certainly in one direction, but I have a strong suspicion that not everyone would necessarily agree with her premise. Although services provided by the police inside stadiums are to be funded by the football clubs, policing costs outside stadiums are met by the police service itself.

My Lords, would I be right in assuming from the Minister’s answers so far that the Government do not envisage trying to hive off the extra security costs arising from an event that is supposedly of national prestige; that they will ensure that the costs are met by the Government themselves; and that the only points which have not been crossed and dotted are the exact financing and which department will provide the funding?

My Lords, Tessa Jowell made clear last year when she announced the funding envelope for the Olympics that £838 million had at that stage been set aside for security and policing and that budget was confirmed on 10 December. The noble Lord is right to say that there are continuing discussions, as I am sure he would expect. The Olympics are four years away, the final details have to be put in place and the discussions continue.

My Lords, does the Minister agree that transport security is a critical element in the preparation for the Olympic Games? Therefore, any further failure or delay in clarifying the funding provision will unnecessarily add risk to the preparation for the Games, particularly at a time when the threat level is at “severe”, the second highest threat level for terrorism in the threat-assessment barometer.

My Lords, I am grateful to the noble Lord, with his great experience, for his contribution this afternoon, and I agree that it is important that these matters should be resolved. There is no argument that the funding has to be in place. There is no disagreement about that. The planning will continue as envisaged, and I am sure that behind that planning will be the necessary funds to ensure that we have the securest and safest Olympic Games ever.


My Lords, with the leave of the House, my noble friend Lord Malloch-Brown will repeat a Statement on Pakistan and Kenya following the three Front-Bench contributions in the Second Reading debate immediately following this statement.

Employment Bill [HL]

My Lords, I beg to move that this Bill be now read a second time.

The Government’s approach to the UK labour market is based on combining economic prosperity with social justice: enabling businesses to grow, employment to expand and delivering opportunity for all. Fundamental to this is the need for an effective and proportionate regulatory framework: one in which complying with the law is simple and straightforward for businesses and where individuals get the rights to which they are entitled, all supported by an effective, clear and speedy enforcement and penalties regime, while never losing sight of maintaining a flexible labour market that allows wealth creation to be at the core of our nation.

The Employment Bill extends this approach and makes changes to employment law with the aim of improving its effectiveness to the benefit of employers, individuals and other interested parties. The two key elements of the Bill increase protection for vulnerable workers while lightening regulatory burdens on businesses. Enforcement of employment law will be strengthened by the introduction of new penalties for businesses not paying the minimum wage and additional powers for employment agency inspectors to deal with disreputable agencies.

At the same time, the Bill will reduce burdens by repealing the workplace dispute resolution procedures. These legislative changes will be accompanied by a package of non-legislative measures to help employers and employees resolve disputes earlier, saving millions of pounds for businesses and individuals. The measures form an important part of the Department for Business, Enterprise and Regulatory Reform’s wider simplification plan, which is set to deliver net reductions in administrative burdens worth more than £1 billion per annum to the UK economy within the next three years. In addition, the Bill clarifies the position of cadet force adult volunteers in relation to the national minimum wage and amends trade union membership law to comply with the European Court of Human Rights judgment in ASLEF v UK.

I will now outline the measures in the Bill, beginning with those on workplace dispute resolution. On 21 March 2007, we published Michael Gibbons’ independent, Review of Employment Dispute Resolution in Great Britain, and an associated government consultation paper, Resolving Disputes in the Workplace. The review identified several key problems with the current dispute resolution system including that: the statutory dispute resolution procedures introduced in 2004, although right in principle, carry a high administrative burden for employers and employees and have had unintended consequences which outweigh their benefits; and around 75 per cent of claims made to an employment tribunal are resolved before reaching a hearing—a substantial portion with the involvement of ACAS. But a significant proportion of cases that reach a tribunal hearing really could be resolved beforehand between the parties, saving cost and time for employer and employee alike.

We will publish our full response to the consultation shortly. We have focused on the policy changes that require primary legislation. The responses to the government consultation were broadly supportive of the conclusions of the review. Clauses 1 and 2 provide for repeal of the procedures, and of the linked provisions on procedural unfairness.

Michael Gibbons also argued that there should be an incentive for employers and employees to take steps to resolve their disputes themselves. Clause 3 therefore gives tribunals the discretion to adjust awards upwards or downwards by a maximum of 25 per cent where they find that the parties have unreasonably failed to comply with ACAS’s statutory code on discipline and grievance. This will be a discretionary power for employment judges to apply in the circumstances of the case, without the rigidity of the existing link to the statutory procedures. ACAS will revise the code. The chair of ACAS has confirmed that the draft code will be concise and principles-based, and supported by fuller non-statutory guidance.

Gibbons also argued that the Government should make additional investments to improve the accessibility and quality of the advice services provided by ACAS, and to provide additional ACAS conciliation services for disputes that are likely to become the subject of an employment tribunal claim. We intend to do so. Two legislative changes intended to maximise the effectiveness of ACAS conciliation are contained in the Bill. First, Clause 5 changes ACAS’s existing duty to conciliate in cases which are not yet the subject of a tribunal claim, on request from the parties, to a power. This will underpin our investment in additional conciliation services, ensuring that ACAS is able to prioritise its caseload effectively without the risk of legal challenge. Secondly, Clause 6 removes time restrictions on ACAS’s duty to offer conciliation to parties already involved in employment tribunal claims.

Michael Gibbons recommended that some tribunal cases, which revolve around the determination of facts in cases of monetary disputes, could be dealt with more quickly and simply. The Government intend to enhance existing arrangements to deal with such cases by establishing a new “fast track” procedure. This will largely be achieved by changes to employment tribunal practice, but requires two legislative changes which are provided in the Bill.

Clause 4 creates additional safeguards where employment judges draw on their existing powers to propose to the parties that a fast track case should be determined in writing, without a hearing. Clause 7 will simplify the process for claimants who have suffered direct financial losses over and above the non-payment itself—for instance, as a result of charges for unauthorised overdrafts. The tribunal will be able to make an additional award against the employer to provide compensation for such losses, rather than leaving the claimant to bring a separate action in the small claims courts, requiring additional expense and time from employer and employee alike.

The Gibbons review and the consultation also addressed a number of issues concerning employment tribunals practice and, in particular, consistency across the regions. The Government do not propose primary legislative change but will be working closely with the Tribunals Service and judiciary to ensure a streamlined and consistent service, including in the treatment of weak or vexatious claims. A majority of consultees believed that tribunals had sufficient powers, but many commented that there was scope for those to be used more consistently across the country. We have asked the Employment Tribunals System Steering Board to lead work on establishing best practice and ensuring that it is consistently applied.

I now turn to the Bill’s provisions relating to the national minimum wage. Incidentally, I should point out that I never did oppose the introduction of the minimum wage. If I had been asked for my opinion at the time—and I was not because I was not at the CBI then—I would have supported its introduction with the caveat that its long-term success would depend on the rate at which it was set and to which it was subsequently increased, and the method of compliance. The minimum wage has been a success because it has not adversely affected inflation or employment, yet it has made a real difference to the lives of many people.

Last year’s increase in the minimum wage benefited around 1 million individuals. The vast majority of employers willingly comply with minimum wage legislation; but nearly a decade on from the National Minimum Wage Act some unscrupulous employers continue to underpay. That is unfair to those who are underpaid and to the vast majority of businesses that obey the law and are unfairly undercut in a local labour market. We are determined to crack down on the small minority of employers who fail to comply. Between 2003 and 2006, we completed 15,000 investigations and identified underpayments totalling £9.6 million. In the past year, the Government helped to restore more than £3 million in arrears to more than 14,000 workers. We now want to take that further.

The Government consulted during the summer on proposals for a new penalty for underpayment of the minimum wage and a fairer way of calculating arrears. As a result of this consultation, we have concluded that the enforcement regime for the national minimum wage should be strengthened in several respects.

Clause 8 amends the method of calculating arrears owed to those who have been underpaid. Currently, these are paid at the rate in force at the time the underpayment took place. The Bill will change that so that all arrears owed are paid at the current rate. That helps to compensate for the potential loss of purchasing power since the offence took place by taking into account the length of time that arrears have been owed.

Clause 9 introduces an enhanced penalty regime that reflects the serious view taken by the Government of employers who do not comply with the National Minimum Wage Act nearly 10 years after its introduction. Under the new regime, an employer will be liable to an automatic penalty if it is found to have underpaid. The penalty will be equal to 50 per cent of the total amount of underpayment—summed up for all those who have been underpaid by that employer—thereby ensuring that the penalty is proportionate. The minimum automatic penalty will be £100 and the maximum £5,000. We want to encourage employers to rectify any underpayment as quickly as possible, so we will reduce the penalty by one half if the employer complies with a notice of underpayment within 14 days.

Clause 10 ensures that officers enforcing the minimum wage can take records relating to it in order to make copies of those records. Clauses 11 and 12 enhance the way we are able to deal with the most serious offenders, by increasing criminal investigative powers and enabling offences to be tried in a Crown Court, with the prospect of an unlimited fine.

The minimum wage is a key right introduced by this Government to ensure fairness. We make every effort to ensure that those who are underpaid get what they are owed; but the best protection we can offer is to strive to ensure that arrears do not arise in the first place—and no business should be allowed to get away with unfairly undercutting legitimate business by this exploitation. Those changes will ensure that everyone who is caught not paying will be punished, with a potentially unlimited fine for the most serious cases. This is to send a very strong message with the aim of changing the behaviour of non-compliant employers. Coupled with an increase in the enforcement budget of £11.6 million over four years, the changes underline our commitment to securing the fairest outcome for employer and employee alike.

When the minimum wage was introduced, Parliament ensured that the voluntary sector would be able to continue to operate successfully and with certainty within the law. At the same time, the National Minimum Wage Act has minimised the chances of low-paid jobs emerging which could be unfairly badged as “volunteering”. Our recent consultation has shown that, by and large, these rules are working well. However, it has also shown that cadet force adult volunteers occupy a unique role in our society.

There are currently around 26,000 cadet force adult volunteers, who, despite facing a number of demands and challenges, devote large amounts of their time and energy to engaging 130,000 young people in the cadet forces. I think that noble Lords will all agree that we should be very grateful for their dedication to making a positive difference to the lives of many young people and their wider communities.

Any confusion that might arise about eligibility for the minimum wage could seriously damage the ability of the cadet forces to continue to provide their services. For that reason, Clause 13 amends the National Minimum Wage Act to clarify that cadet force adult volunteers do not qualify for the minimum wage. This will enable cadet force adult volunteers to operate exactly as they do at the moment and will not affect any entitlement to the minimum wage that they might have outside their cadet force activity.

Clauses 14 to 16 make changes to the enforcement of employment agency standards. Under the Employment Agencies Act 1973, any breach of regulations governing employment agencies is a criminal offence capable of being tried in a magistrates’ court. This has proved an inadequate tool to tackle the few seriously non-compliant agencies that seek to avoid their legal responsibilities at the expense of both agency workers and the great majority of reputable agencies. By making offences triable either way, we aim to increase deterrence against non-compliance. Stronger investigative powers, including the right to take documents away to copy and request financial information held by financial institutions, will enable more successful prosecution of the worst offenders.

Alongside the strengthening of those enforcement powers, we will also double the number of employment agency standards inspectors. This will provide an additional resource for legitimate agencies seeking to abide by the law and will also crack down hard on non-compliance. Our proposals have been welcomed by the sector. The Recruitment and Employment Confederation said:

“We welcome the Employment Bill as it aims to crack down on those employers and agencies that are breaking the rules”.

Finally, the Bill amends trade union law to ensure that it complies with the European Convention on Human Rights following the judgment of the European Court of Human Rights in the case of ASLEF v UK. According to that judgment, the current limitations on the ability of trade unions to exclude or expel individuals on the grounds of their membership of a political party breach Article 11 of the convention. Clause 17 therefore amends the relevant sections of the Trade Union and Labour Relations (Consolidation) Act 1992 which gave rise to the ASLEF case. The case involved the inability of ASLEF to expel BNP members, whose views are clearly incompatible with those of the union. Our proposed changes to the 1992 Act would give sufficient scope for unions to act decisively against such political extremists.

I should add that, to the best of our knowledge, no other membership-based organisation in this country is required by statute to ignore political-party involvement when setting its membership rules. In that sense, trade unions are currently subject to special treatment. Clause 17 has the effect of placing trade unions on an equal footing with other similar associations.

In summary, the Employment Bill makes important changes to key areas of employment law. It will save businesses and individuals time and money through reform of the workplace dispute resolution framework. It provides stronger enforcement of the national minimum wage and employment agency standards to the benefit of individuals and the vast majority of law-abiding businesses in this land. It also clarifies the position of cadet force adult volunteers and makes necessary changes to trade union membership law.

This country has one of the lowest levels of unemployment in the developed world and one of the most flexible labour markets. Whatever those whose vested interest lead to their selective observation may say, that is not a coincidence. We do not want to put a sign up in the UK saying, “Don’t invest here”. We want to continue to be the location of choice in Europe—second only to the United States in the world—for the inward investment that my department of UK Trade and Investment is privileged to promote every day around the world. This Bill does nothing to harm our jealously guarded flexibility. The United Kingdom has a stable economic framework capable of absorbing global financial shocks in a way that predecessor governments of both parties, over many decades, could not achieve. That, coupled with our flexible labour market, helps law-abiding businesses and helps the individual in the community and in the workplace. I commend the Bill to the House.

My Lords, the Minister says that Clause 17 is requisite in providing decisive action against political extremism. In what way is our present law defective in that?

My Lords, I became involved in exploring and researching this because I, too, found it quite confusing. I learnt that membership of a political party is a ground on which any organisation, except a trade union, can say, “You cannot join us”. That was at the core of ASLEF’s case to the European Court of Human Rights: the ruling was, “Sorry, unions will be treated just like every other association”. With this proposed legislation, we are trying to bring UK statute into line with that.

My Lords, the noble Lord very kindly sent me a briefing about the Bill. The final paragraph of the covering letter said that my noble friend Lord Bach and he would take it through the House. It went on to say:

“In advance of Grand Committee, Lord Bach will hold an ‘open house’ style briefing session in the House of Lords in order to help answer any queries you may have”.

Will the Minister be attending that session?

My Lords, first, I would love to; and, secondly, if I can, I definitely will. I have a programme of banging the drum for Britain and selling brand Britain around the world and if I am doing that job for the taxpayer I will be there and not here; but if I am here, not only will I gladly attend but I shall make every effort to attend.

My Lords, perhaps I could ask the Minister to elaborate on what he has just said to my noble friend. I am a lifelong member of the National Union of Journalists. I retained that membership when I was a Minister; I continued to pay my subscription, although the National Union of Journalists was not always in agreement with government policy—I could put that rather more strongly. Under the Bill, would it mean that, if it wished, the National Union of Journalists would be entitled to expel me from membership?

My Lords, I should point out that it is not under the Bill that the NUJ would be entitled to do it; it is the findings of ASLEF v UK in the European Court of Human Rights. This Bill is merely giving legal standing in Britain to what is already applied. Under the Bill, yes, if the union wishes to bring a court case to the European Court of Human Rights that will be precisely the conclusion. What I find difficult to understand, but it is true, is that a trade union is the only association in Britain that is not allowed to make that distinction. Every other sort of association from a golf club to a dog club can do that, but unions cannot. We are trying not only to give UK efficacy to a European judgment but to stop unions being treated as a special case.

Before the Minister sits down, I do not wish to take advantage but he said something that was quite shocking. He seemed to indicate that as the Minister responsible for taking this Bill through the House, he might not be available to do that. Has the ministerial code of conduct changed since my day when a Minister’s first duty was to Parliament and to legislation before the House?

My Lords, there are two consequent answers to that. First, there are two Ministers taking the Bill through the House—my noble friend Lord Bach and me—for precisely that reason. Secondly, it is extremely important that this nation pays its way around the world. I have those responsibilities, which is the basis of the job.

Moved, that the Bill be now read a second time.—(Lord Jones of Birmingham.)

My Lords, before I put the Question that the Bill be read a second time, it may assist the House if I make it clear that it is not necessary to use the device of “Before the Minister sits down” at Second Reading. It is possible to interrupt the Minister during his speech to raise a particular issue with him, but I am not sure that it is for the benefit of the House to have a debate on all sorts of matters right at the end. I hope that the House will not feel that it is beyond my role to point that out.

My Lords, I thank the Minister for his description of the Bill and his valiant attempt to explain the Government’s intentions in the areas that the Bill covers. I had hoped that his presence on the Bench opposite would signify a change in the Government’s approach to employment law. If he still held to his earlier opinion that this Government should really learn to understand business before pronouncing on it, I would look forward to a new consensus developing between Her Majesty’s Government and the Opposition. But he stated in 2002 that the DTI did not really understand the business agenda, and sadly this Bill shows that it still does not. No wonder the Minister continues to refuse to join the Labour Party. He is sitting on the wrong Benches and he knows it.

I am sure that the noble Lord, Lord Bach, will disagree with me and say that his Government have always understood the business agenda and are doing all that they can to reduce complexity and administration costs. But the facts do not bear that out. Since 1997, the Government have brought forward 28 Acts and 280 statutory instruments dealing with employment. We have now been told by PricewaterhouseCoopers that a third of businesses are avoiding taking on more employees because of the complexity of hiring and firing. The Minister said that he did not want anybody to say, “Don’t invest here”, but that seems to be the message that employers are hearing; PricewaterhouseCoopers’s word is pretty big in this area.

It is a shame that the only area of employment law that the Government can conceive of simplifying is that of dispute resolution. All we have here are seven clauses of deregulation. I am very supportive of those seven clauses and am glad that they are in this Bill, but is this really all that the Government can do? The original provisions, as I am sure my noble friends will enjoy reminding the Government, were opposed by my party. We were convinced that they would not reduce the number of employment disputes that escalated to tribunal cases and we were proved right. The Gibbons review shows that the number of tribunal cases has instead risen by 30 per cent and the costs to both businesses and government have shot up. The review states that the regulations cost firms nearly £290 million a year and that the Government spent £120 million on the Tribunals Service and ACAS in 2005-06. It also notes the enormous damage that is done to employees bringing cases before the tribunal, both to their health and to their employment prospects. I am therefore very relieved that the Government have seen sense and followed the review’s advice to repeal these provisions.

My Lords, it would save time if I asked the noble Baroness whether she would agree that the main opposition to the statutory codes of procedure was mounted by my noble friends Lord McCarthy and Lady Turner and me; all the Opposition did was to join in with a few squeaks. I do not know whether the noble Baroness was at the Grand Committee—I fancy she was not. It is important to put that on the record.

My Lords, my noble friend Lady Miller does not squeak. I have never heard her do so; she would have been quite firm.

I am relieved that the Government have seen sense and followed the review’s advice to repeal those provisions. Of course, that raises the question of what they will replace them with, and I look forward to hearing about the Government’s plans in this area in more detail.

I am also interested in finding out a little more about the Government’s thinking on the next clauses. The Government must make a proper case for these new powers and offences and should be able to produce evidence to show that they are needed. The Government’s arguments for increasing the penalty for non-compliance with the national minimum wage hinge on the current lack of a significant punishment for the offending employer. Apparently, last year only two cases led to a penalty notice; all other cases were resolved with no negative impact on the employer. These provisions therefore increase the deterrent effect by making it more likely that an employer who breaks the law will be punished. However, I was assured that the new penalty will fall only on the most egregious 5 to 10 per cent of cases and that the Government believe that the huge majority will continue to be resolved by civil procedure. Can the Minister explain how this new penalty, to be applied to only a tiny minority of cases, will be more of a deterrent than the rarely applied penalty notice currently allowable? Is there a problem with employers being repeatedly accused of underpayment under the current system? If so, why is the penalty notice not used more widely? Can the Minister really be sure that these measures are the most efficient way to help vulnerable workers? What is the expected cost of these new powers and enforcement measures?

It is sinister that these provisions are appearing some months before the Trades Union Congress Commission on Vulnerable Employment is due to report. Perhaps the noble Lord, Lord Jones of Birmingham, whose opinion of Labour’s cosy relationship with the trades unions is well known, has prevailed on the Prime Minister to get in early, but would it not be sensible for the Government to look at all suggestions in this area before proceeding with further regulation? Are they not just continuing the tweaking of employment law that business finds so costly and confusing?

Finally, on Clause 17, the question of trades unions and their relationship with the Government has frequently led to strong disagreement and I hope that we will be able to maintain a constructive note during the Bill’s proceedings. As an employer, I was always acutely aware that for a successful business employers and employees need to have mutual trust and that a trade union can be a powerful way of helping to establish that. I hope that the Labour Party will take care that it does not do anything to destroy that trust. I see that there are noble Lords with strong connections to trades unions on the speakers list and I look forward to hearing their contributions to this debate.

On these Benches, we have severe reservations that this clause is gold-plating. I feel that it can only increase the perception that the Government are in hock to the unions to an extraordinary degree. The Minister must agree with me, for only two years ago he warned that the financial relationship between Labour and the unions led to a conflict of interest in the Government’s dealings with what he called a vested interest group in society. On these Benches, we have always resisted the idea that the special relationship between Labour and the unions is beneficial for the unions or the Labour Party; it is certainly not beneficial for the country. From this Government’s complete surrender over public sector pensions, their refusal to address the serious issues raised by the political levy and their continuing claim that they, and they only, represent the working population of this country, it appears that they too often give in to the temptation of short-term opportunism when dealing with the unions rather than seeking the long-term good health of this country’s economy.

In this House—and across the board—Clause 17 raises several specific concerns. In the clause, there is a large potential for abuse, as the government consultation document itself acknowledges. Membership of the BNP is not illegal, however much we might all deplore its policies. Secondly, the clause opens up difficult questions on where the line should be drawn in future. Will membership of controversial political organisations, such as Greenpeace, or some of the more extreme animal rights groups, be grounds for expulsion in future? Thirdly, how far do the Government envisage allowing trade unions to go to establish political membership? Will only current or former card-carrying members be expellable? What if a member has made significant financial contributions to or has worked for a party that is disapproved of?

The questions seem to be endless. The clause represents the top of a very slippery slope. I will certainly be raising my concerns again as the Bill moves through the House and I hope that the Minister will listen carefully to both me and your Lordships, who, I am sure, will also have much to say on this matter and much experience to bring. Perhaps that is why the Prime Minister has decided that this Bill should start in your Lordships’ House, so that we can discuss in detail all its shortcomings.

In conclusion, the Bill is disappointing. It gets off to a good start with some very welcome provisions, but it goes rapidly downhill. I look forward to hearing your Lordships’ views and to hearing the closing remarks of the noble Lord, Lord Bach, on it. He is a most experienced Minister and I am sure that the noble Lord, Lord Jones, will be as interested as I am to hear what the Labour Party has to say in reply to this Second Reading of the Bill.

My Lords, in rising to speak from the Liberal Democrat Benches as the last survivor on the Front Bench of the 10 years of employment legislation by this Government—I think that I have spoken from these Benches on every one of the 28 Acts to which the noble Baroness, Lady Wilcox, referred—I cannot resist commenting on the endless schizophrenia that the Tory Opposition seem to have about employment legislation. They never really say whether they are in favour of it, despite the fact that, although the Prime Ministers have not been prepared to admit it because the Daily Mail might not like it, the employment legislation introduced by this Government during the past 10 years has clearly significantly changed the opportunities and rights of workers in this country, very much for the benefit of employees. One day, the noble Baroness, Lady Wilcox, will stand up and say so.

As the Minister will realise, I welcome the approach that his department has taken during the past 10 years to legislation, in the sense of bringing it in, having a review to see how it is working and then implementing what the review comes up with. Although the consultation on the Gibbons review has ended, we have not seen the Government’s formal response, except in this Bill. I understand that ACAS has a concern but has not yet commented on the Bill because it is waiting to see the government response to the Gibbons review. I notice that behind the Minister a number of his colleagues are nodding. This is a significant point.

On the Liberal Democrat Benches, we broadly support the Bill. We think that the statutory dispute resolution procedures introduced in 2004 were overly bureaucratic. I entirely endorse the intervention made by the noble Lord, Lord Wedderburn, who always puts his point effectively—I was going to say succinctly, but that is not necessarily always the case. He and his colleagues made the point in 2004, which the Gibbons review now supports. It is quite clear that the statutory procedure has proven overly bureaucratic and has acted as a barrier to justice for the most vulnerable. We support the Government’s recognition of that in the Bill. It is sensible to go back to the House of Lords decision in Polkey regarding procedural unfairness. If somebody was dismissed and the procedures were not followed, so that the dismissal would not apply, it is sensible to go back to the Polkey situation, as the Bill does.

Stronger enforcement of the national minimum wage must clearly be supported. We also support the provisions of Clauses 14 to 16 on employment agencies. We are against Clause 17; my noble friend Lord Lester of Herne Hill will speak to that and explain why. I do not want to intervene in something that the world’s foremost expert on human rights knows better than me. However, the proposition that a golf club and a trade union should be treated in the same way is slightly bizarre, given the special employment rights that have quite rightly been given to trade unions over the centuries, which do not, of course, apply to golf clubs.

The problem with the Bill is that the genie is again out of the bottle. This is the 29th piece of legislation in this area since Labour came into office, which inevitably tempts opposition parties to say both what is wrong with the Bill and what ought to be included in it that is not. This is in a sense a clean sheet of paper, on which we can say what the Bill fails to address.

First, on what is clearly missing from the Bill—there will be an opportunity in Committee to introduce amendments to this effect—there is no doubt that the enforcement mechanisms on awards by employment tribunals are defective. I hope that the Government have taken on board the representations made by the citizens advice bureaux on this. It is clear that in significant cases where an employee gets an award there is great difficulty in enforcing it; the costs are often prohibitive. I hope that the Government will look to strengthen the Bill to make it easier for employees with awards from employment tribunals to enforce those awards.

Then there is the question of the wider area of enforcement of all employment rights. Citizens Advice has done valuable work on this, demonstrating that it is a problem. According to its figures, some 275,000—mostly low-paid—workers go to citizens advice bureaux with their employment problems. Of them, 165,000 or more—a large number of people—have any problem from the following menu: a denial of the statutory right to four weeks’ paid holiday; denial of statutory sick leave and pay when unable to work due to illness; the reduction, particularly for migrant workers, of already low wages to illegal levels by deductions for accommodation, transport and other services, which are themselves illegal; being required to work 56 or even more hours a week, having been cajoled to opt out of the 48-hour legal limit; summary dismissal due to pregnancy and denial of time off for antenatal care; and the non-payment of wages owed for holiday pay and notice pay when the employee leaves employment. These are not minor problems; each year, 165,000 people are prejudiced in this way.

We draw the attention of the Minister to the speech made by John Hutton to the TUC in September 2007. He said that,

“the existence of workplace rights alone is not enough if employers think they can flout the law with impunity … Rights that exist only on paper are not worth the paper they are written on ... we must step up enforcement in workplaces across Britain … to root out the rogues, whichever sector they are in”.

A lot of people, including, I think, members of a House of Commons committee, suggested that the mechanism set up for HMRC to deal with enforcement of the national minimum wage could be a model for increasing the opportunity for enforcement of rights for employees. We could have a single gateway for complaints to HMRC, the HSC, the EASI or the GLA—I shall test people on what that means when they want. This is a very significant point and I would welcome the Government’s response on whether they feel that there could be an opportunity in this Bill to create a fair employment commission to enforce these rights on behalf of a very significant number of employees.

I cannot resist turning to the difficult issue of agency workers. In a previous debate, the noble Lord, Lord James, touched on potential exploitation by rogue employment agencies. I know that he will speak about his proposals at Second Reading and in Committee, and we will be very supportive. There is also the more fundamental question on how to define in law an agency worker and an employee. There have been two recent cases—Dacas against Brook Street and Cable & Wireless against Muscat—both of which introduced the concept of “implied” employment status. That is a significant issue, particularly in relation to whether people who regard themselves as freelancers working on a commercial basis are employees or implied employees. This Bill should provide the opportunity for the Government to define that on the statute book, rather than leaving it to case law, which inevitably gets it right, but only in the end—you often need interested parties to sponsor test cases to force such developments. This could be a missed opportunity if the Government do not introduce clear definitions of what is meant by “employee” in this area.

Finally, now that there have been 28 Acts and hundreds of regulations, dare I ask whether this is not the moment to have a consolidation of employment legislation?

Pakistan and Kenya

My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Foreign Secretary in the other place.

“I would like to make a Statement on recent developments in Pakistan and Kenya. Both countries are important to Britain and rightly important to many honourable Members. I know that the Foreign Affairs Select Committee visited Pakistan in November 2006, and that it was a key focus of its report on foreign policy aspects of the war on terror in July 2006 and then its report on south Asia in May 2007. I have today seen the letter from the honourable Member for Aylesbury, Mr Lidington, requesting an oral Statement on these crises.

“The situations in Pakistan and Kenya are very different, and I will deal with them separately. But there are important common elements to the recent crises that have afflicted these important regional powers. Both countries have experienced strong economic growth in recent years and the middle class is growing, but poverty is widespread and rising inequality is causing frustration and disillusionment. Both countries face violence and terrorism, and both countries are undergoing political transition. They are working to embed democratic systems and structures but are struggling to overcome the tribal or dynastic allegiances that have fed personality politics. In these circumstances, there is a temptation to turn away, but there are some 800,000 British people of Pakistani origin, an estimated 13,000 British citizens resident in Kenya and over a quarter of a million British tourists visiting each year. The UK is Kenya’s largest foreign investor and our bilateral trade with Pakistan is worth £1 billion. Further, both Pakistan and Kenya are key partners in the fight against al-Qaeda. That is why the Government are committed to using all their assets to help these countries on the path to peaceful and prosperous development.

“I will begin with Pakistan. I am sure that the whole House will want to join me in reiterating our condolences to the family of Mrs Bhutto at this terrible time, and to the other bereaved Pakistani families who are grieving for loved ones killed or who suffered injuries in the senseless attack of 27 December. There is cross-party condemnation of terrorism in this House and a determination to stand with the people of Pakistan against the power of the bomb and the bullet, and I welcome that.

“Whatever the disputes about her periods in office, Benazir Bhutto showed in her words and actions a deep commitment to her country. She knew the risks of her return to campaign for election, but was convinced that her country needed her. The target of her assassins is all those committed to democracy in Pakistan and it is vital that they do not succeed. The courage shown by Mrs Bhutto is now required of others as they take forward the drive to democracy and modernisation.

“The Government’s aims and role are fourfold. The first is to ensure that the circumstances of Mrs Bhutto’s death are established. A five-member UK police team arrived in Pakistan at the end of last week and has begun work in support of Pakistani colleagues. The second is to promote free and fair elections. The delay in the elections as the result of the assassination is regrettable, but the period between now and 18 February needs to be used to build confidence in the democratic process. When I spoke to the House on 7 November I made clear my conviction that democracy and the rule of law are allies of stability and development in Pakistan. Since then, President Musharraf has retired from the military. He has lifted the state of emergency. Almost all political prisoners have been released and most media restrictions have been rescinded. But more needs to be done, and we have continued to stress the Pakistani Government’s responsibility to create a level playing field on which credible and transparent elections can take place. This means that all remaining political detainees need to be released and the remaining restrictions on the media must be lifted. In my last telephone call with Mrs Bhutto on 9 December, I pledged that the UK would work on the details of the election process. In recent days, the Prime Minister has discussed the elections on three separate occasions with President Musharraf. I have also spoken to interim Pakistani Foreign Minister Inam ul-Haque.

“We continue to call on the Government of Pakistan to improve the prospects for credible elections, particularly by increasing transparency both now and on election day itself. This includes setting out clearly and early where all the 54,000 polling stations will be, posting the results for each station publicly immediately after the count, and ensuring that the media’s ability to report is untrammelled. We also want to see local mayors discouraged from the abuse of state assets which would allow them to interfere in the electoral process. I am glad that the EU is now working to put together a full-scale election observation mission. I understand that the American International Republican Institute mission may also be reinstated, and I believe that the Commonwealth can make an important and positive contribution, and I hope that Pakistan will decide to invite an observer mission.

“Our third priority is to further improve counterterrorism cooperation. The deadly attack on Benazir Bhutto shows terrorism to be a threat to Pakistan, not just to the West. Over the last year, hundreds of innocent civilians have been killed in shootings and suicide bomb attacks in that country. We have reiterated the UK’s commitment to build on the already significant counterterrorism support we provide to Pakistan. A team of cross-government UK experts will travel to Pakistan next week for further consultations. This will be a precursor to a further British visit to deepen our counterterrorism relationship.

“Fourthly, we are determined to ensure that British citizens of Pakistani heritage and Pakistanis resident in the United Kingdom are informed about developments and engaged in the drive to build a decent society in Pakistan. I met some of their community leaders earlier today. While the next five weeks are important, so are the next five years, and economic, social and political development in Pakistan needs to proceed hand in hand with international support.

“Kenya provided the second crisis of the new year break. When President Kibaki won the presidency in 2002 it was hailed as the most free and fair election that Kenya had seen. Daniel Arap Moi’s party accepted the result and ceded power. Tribal and ethnic divisions were overcome as the population rallied behind the new Government. It was a moment of great optimism.

“It is a marked contrast with the situation which has unfolded since the election on 27 December. I know I speak for the entire House in condemning the appalling post-election violence in Kenya, particularly the brutal killing of Kikuyu women and children in the church near Eldoret on 1 January.

“Let me deal with the three issues that have preoccupied the Government and indeed the whole international community over the past week: violence and the resulting humanitarian crisis, the elections and mediation. I have arranged for the nine Statements put out by the Prime Minister, myself, the International Development Secretary and our High Commissioner in Nairobi over the last week to be deposited in a single file in the House Library.

“The urban violence of the middle of last week has subsided. This is obviously welcome. But the reporting from rural areas suggests that there are up to 250,000 refugees. And there is the potential for violence to erupt again. That is why since 2 January our travel advice, along with other countries, has advised against non-essential travel to Kenya. That advice will remain in place until the security and political situation is clarified. We are advising Britons in Kenya to exercise extreme caution, to remain indoors in the affected areas and to seek local advice, from the tour operators or local authorities, if they need to travel.

“The humanitarian crisis we have all seen unfolding on our television screens is due entirely to the post-election violence. The UN, World Food Programme and Red Cross are leading the international effort. The Department for International Development is monitoring the situation closely and has had a team on the ground in western Kenya. A £1 million contribution to the Red Cross has helped to provide shelter for those displaced and to facilitate the major food shipments from Mombassa which took place over the weekend. The Department for International Development stands ready to provide more assistance if it is needed.

“In respect of the election itself, millions of Kenyans queued for hours, peacefully and with dignity, to cast their votes for parliamentary and presidential candidates after a relatively calm election campaign. It is vital not just for Kenya but for the whole of Africa, with important elections over the next 18 months, that the democratic process works and is seen to work.

“However, the counting of votes in the presidential election, and more particularly the reporting of votes from local to regional and then national centres, has, according to reliable European Union observation, been plagued by irregularity. These irregularities stand in the way of the formation of a stable Kenyan Government who have the confidence of their own people and the international community. All allegations of fraud need to be investigated and the perpetrators brought to justice.

“This requires due legal process, but there is also need for political mediation. Individual acts of fraud are reprehensible, but there is a deeper issue. Whatever the actual result, the country was deeply split. Yet when Kenya needs the diversity of its views to be respected, the presidential system is designed to concentrate power when Kenya’s immediate and medium-term future requires the sharing of power.

“Kenya’s political leaders must be willing to make the necessary compromises to find a way forward, but there is little sign of them doing so without external help. That is why at the heart of all our conversations—with Kenyan, African, EU, Commonwealth, US and UN partners—has been the need for a credible mediation process to be established. President Kufuor of Ghana, the current chairman of the African Union, is due to arrive in Kenya soon, and he will do so with our full support. But he needs Kenyan leaders ready to engage. There are some signs of this: on 2 January, Condoleezza Rice and I called for a ‘spirit of compromise’. Fail to compromise, and Kenya’s leaders forfeit the confidence, good will and support of their own people and of the international community. The stakes are high for the Kenyan people, and we will remain fully engaged.

“I conclude by thanking staff in the FCO and DfID, in-country and here in London, for their outstanding consular and political work around the clock in the very trying circumstances of the past 10 days. Their work is far from done, but both countries are better off for the engagement of these officials, and they deserve the thanks of the House”.

My Lords, that concludes the Statement.

My Lords, I am sure all noble Lords are grateful to the Minister for repeating this Statement from the Foreign and Commonwealth Secretary. We all react in horror to what we have seen and heard from both Kenya and Pakistan in recent weeks, particularly, as the Minister mentioned, the burning to death of 30 women and children in a church outside Eldoret in Kenya. That was perhaps the most sickening event in an appalling few days.

Do not both situations that have developed over the Christmas period confirm the extreme instability and fragility of the international situation generally and the need more than ever to be clear about, hold on to and look after our own interests and national security in this country? Do these crises not also confirm that while we all want to see democratic development, crude democracy does not necessarily equate with good governance, and that without general restraint, proper monitoring and law abidance, election campaigns can spell more violence, as in the tragic killing of Benazir Bhutto, and more division and carnage, as in the tragic case of Kenya?

I should like to deal first with Kenya, where the immediate humanitarian situation must be uppermost in our mind. It is good that quite a lot of UN and Red Cross food convoys are now getting through, but could we hear a little more about the situation at the port of Mombasa, which is the gateway of supply not merely to Kenya but to surrounding countries as well? Is not the blockage there and the reluctance of truckers to operate affecting not just supplies in central Kenya but vital food, equipment and supplies to the whole of central Africa? When will that be eased, because the situation in the past few days has been critical? Does this not underline the way in which civil disorder in the once orderly Kenya, for which many of us had such high hopes, spreads its negative effects like ripples through the whole region? Will we not have to pay a heavy price for that?

With regard to our own immediate interests, can the Minister confirm that all British nationals, both resident—he mentioned the number—and visiting, who make up a considerable number, are safe, well informed and in touch with our High Commission in Nairobi? Can he say anything more about the UK’s considerable commercial and investment interests in Kenya? I do not think that he mentioned any discussions with the DBERR—I have difficulty in remembering the name; it used to be the DTI. Is it correct that we have well over £1.5 billion worth of investment in Kenya alone and a number of major companies operating there? Have there been any reports of closures, withdrawals, sabotage or any difficulties? There seemed to be a bit missing from the Statement.

I turn to the lessons to be drawn and the actions now to be taken. Does the Minister agree that the Kenya tragedy underlines more than ever the need to avoid supporting corrupt leaders and to direct aid and support to the grass roots and to enterprise itself, rather than through corrupt bureaucracies and corrupt systems? Does he agree that the eruption of armed mobs and killing in Kenya, which is so untypical of Kenya’s recent past, comes less from old tribal rivalries— which have always been there and are still, to some extent, present—than from the rage that seems to be felt at the huge gap in wealth distribution between the rich and prosperous part of Kenya, which we tend to see in the newspapers and so on, and the slum-based majority in what is still a very poor country?

Regarding the politics of it all, we agree that we should now do everything possible from outside—although, frankly, that may be quite limited—to encourage electoral and democratic probity. Among all the international institutions sending envoys and seeking to help, such as the Commonwealth, the UN, the African Union and the EU, may we be assured that Her Majesty’s Government are giving the maximum possible support to the first of those, since it is the Commonwealth that is the most trusted in Africa, rather more so than the EU and other organisations? Does he accept that, for those of us who dreamt of and worked for an East African federation four decades ago or more, this is a time of sadness but also maybe a time of opportunity, which, together with other Commonwealth and African leaders, we should build on? Does he accept, as he also mentioned it, that, based on my own experience in the past few days in dealing direct with individual cases of people in Kenya, the UK High Commission deserves nothing but the highest praise, with a highly efficient and accessible emergency service that has served all those involved very well?

I turn to Pakistan and the murder of Mrs Bhutto, a woman of obvious courage and bravery—almost too much bravery, in the end. Our interest in restoring stability is even more direct. Events in Pakistan and the situation in Afghanistan are completely intertwined, with a permeable border between the two and large numbers of terrorists and fanatics feeding between them, particularly into Helmand province, as anyone operating there knows very well. Pakistan is the perhaps unwilling seedbed of terror—fed, it regrettably has to be said, by militancy often fostered here in Britain with our own ill judged and divisive multiculturalism that has done so much damage. In addition, Pakistan is at the centre of the nuclear debate, having already leaked secrets around the world. If control of Pakistan’s nuclear bomb fell into fanatical hands under a Government not of gentle, wise Islam, the kind we much admire, but of extreme ideological Islam, with its commitment to violence and its neglect of the Prophet, that would be a catastrophe for us all. Finally, as the Minister has reminded us, there are hundreds of thousands of British citizens of Pakistani origin in this country, all of whom must be deeply worried.

What now exactly is HMG’s policy towards that country? It is said that the USA had decided a few weeks ago to “back” Benazir Bhutto—which, if true, was probably her doom. Can we ensure that the Pakistani intelligence service, and indeed the whole formidable Pakistani military machine, are really working for our common aims in ridding Afghanistan of its Taliban nightmare and its terrorist infections?

Do we now welcome the postponed elections in any circumstances, which may or may not leave President Musharraf in complete control? What can we do, if anything, to see that the elections really are fair and open, in such a febrile and explosive atmosphere? Once again, the Commonwealth could be the best channel for our efforts. What use are we really making of it? There are many more questions to be asked about these unpleasant and tragic situations, and obviously not all are yet answerable. I should be grateful for as much guidance as the Minister can muster on those questions that I have put to him.

My Lords, we are also grateful to the noble Lord for repeating the Statement that was made in another place by the Foreign Secretary. We join the noble Lord, Lord Howell, in expressing our dismay at the horrific events in Kenya that have unleashed so much violence and destruction. As the noble Lord has just said, the effects have gone well beyond Kenya. Apart from the 250,000 people who are locally displaced and living in the most appalling conditions, as we have seen on our television screens, the fact that Kenya was the hub of the region, from which so many organisations operated to bring humanitarian assistance to the whole of east Africa, means that their operations may be undermined by the instability that has resulted from these events.

I am grateful for the assistance that has already been sent there, which was mentioned in the Statement, but I wonder whether it is in fact as much of a return to calm as was said in the Statement as to enable aid organisations to operate freely and to deliver their services throughout the whole of Kenya. From what I have seen of the reports, I understand that there are still large areas in which the situation is not stable and where it would be quite dangerous for foreign aid workers to operate. I should be grateful if the noble Lord would say whether we are satisfied that humanitarian assistance can be delivered throughout the whole country and whether any discussions have been held with the authorities about the possibility of providing armed escorts where it would otherwise not be safe for aid workers to go.

The EU Observer Mission found substantial discrepancies between the tallies at the polling stations and the numbers that were subsequently announced by the electoral commission. I gather from a conversation that I had with Nairobi this morning that many of the ballot boxes were not properly guarded and that they were broken into, or stolen, or have gone missing. It will be very difficult, with the best will in the world, for anyone to arrive at a true result. As your Lordships will know, the head of the European Union mission has called for an independent audit based on the reports from the polling stations, if they still exist. I should be grateful for some comment by the Minister on that. Even if the ballot boxes themselves have disappeared, do we still have the records of the individual tallies at the polling stations, which would at least enable the totals to be reconstructed?

The Commonwealth team has suggested a review by an international team of judges to determine who did or did not win. Has that suggestion been picked up? Is it President Kufuor himself who will be the facilitator of any negotiations between the Government and the opposition? Or will he simply be there to establish how that process should be organised and by whom it should be delivered? It is significant—I hope that the Minister will agree—that although there have been several people in the country talking to the leaders on both sides, most recently Dr Jendayi Frazer, the Assistant Secretary of State for African Affairs, it appears that, while there is an agreement between the two party leaders on power sharing, the mechanism for achieving it remains to be decided. Can the Minister confirm that Kibaki has agreed that there should be power sharing and, if that is so, what would be the mechanism for appointing the facilitator?

On Pakistan, I join in with the condolences that have been expressed with regard to Benazir Bhutto, whom I knew quite well and admired greatly for her courage and determination, particularly during the time which she spent in exile here in London, when the Pakistan People’s Party was under fire in her own country. The loss is not only to her immediate family but to the People’s Party and, indeed, the whole of Pakistan, whose return to democracy has been undermined by her assassination.

We note that Scotland Yard has been asked to advise on the circumstances of the murder—the Minister said a bit about that. Does the role of Scotland Yard extend to establishing the motivation of the killer, whether he was operating under his own initiative or on the orders of an organisation—and, if so, what was that organisation’s purpose? Does the Minister agree that there is a huge threat to Pakistan’s stability from terrorist gangs, not only those that commit such assassinations but from the murderers of the eight tribal elders in Waziristan, which was reported only yesterday, and the militant leader Maulana Fazullah, who broadcast an appeal on his FM radio station to his followers to kill members of the security forces? Is there any further help that Pakistan would like from the international community or Britain in particular in dealing with the terrorist threat and ensuring a peaceful election?

My Lords, I join noble Lords in praising the work of our High Commissions in Kenya and Pakistan. The staffs of both offices have had a couple of very tough weeks and have delivered extraordinarily.

On Kenya first, since noble Lords took the cases that way round, and on the issue of humanitarian assistance, because the violence and displacement is concentrated this time in rural areas we cannot speak with huge confidence about the level of access at the moment across the country or, indeed, whether there may not be pockets of violence that are continuing and have not yet been brought to the notice of those in Nairobi. It is fair to say that the Red Cross and the World Food Programme, which have traditionally used Kenya as hubs for their regional activities, have a huge capability deployed on the ground. Similarly, the good and bad news about Mombasa is that because it is the port hub for East Africa, food is able to be quickly moved from there across the country as long as access is possible. The bad news is, of course, that the disruption to Mombasa trade is clearly beginning to have a knock-on effect on Uganda and other neighbouring countries, as well as Kenya itself. The need quickly to return to a normalcy that allows the economic lifelines to resume is very great, and we shall continue to monitor it. While DfID has already made £1 million available, we will obviously be willing to make more available if resources become a constraint.

Secondly, on the point that crude democracy is not good governance, we are all getting an important lesson from both countries on the importance of having a vision of democracy that involves not just getting people to the ballot box and having elections every five years but building a real democratic culture, in which there is protection of minority rights and real power-sharing in an appropriate way as well as strong rule of law, an independent judiciary and the media being able to operate without interruption. We are seeing the limits of that in both cases, although particularly in Pakistan.

On the vote count in Kenya, it is difficult for us to be prescriptive about what is or is not possible. It would be very hard to reconstitute the paper trail of all the ballots as the voting actually happened. Certainly the rural count of votes seems to have been more reliable than the final tabulation and aggregation of votes in Nairobi at the centre, but it is hard to believe that there could be a vote count at this stage that would enjoy the confidence of all the parties.

The key job of a mediator is to look at the range of issues: the demands for a recount; the possibility of new elections at a later date—a rerun of the elections, if you like; and, critically, the possibility of constitutional changes. This winner-takes-all approach, with power concentrated in the office of the president and not shared with a prime minister, is something that Kenyans themselves have recognised is a huge obstacle to participatory, inclusive government in the country.

We expect President Kufuor to lead an effort that will do more than just start the process but will offer mediation and a way forward. Given that he already has a full-time job, I suspect that he may need to find others to help and support him in that process. We count on President Kufuor not only because he is a remarkable man—as noble Lords who know him will affirm—but also because he is the head of the AU and because Ghana is an important Commonwealth country. That combination of roles gives him the authority to lead an African approach to finding a solution. We will be extremely active, as we have been so far, in support of that mission to try to make it a success. I can confirm that President Kufuor will arrive in Nairobi tomorrow night and will begin work on Wednesday.

A number of issues were raised about Pakistan, including the role of Scotland Yard. As the Statement mentioned, the Foreign Secretary met Pakistani and other Asian community leaders this morning. I was at that meeting, and the Prime Minister joined it for a while. The point was made very clearly to him that Scotland Yard's integrity could be compromised if we were not clear about what it can or cannot do in a situation such as this one where a lot of the forensic evidence is no longer available. The Scotland Yard team will support the Pakistani investigation but it can only work with what evidence it can find. We recognise the possible limitations of that.

I should say a word on the other points raised. First, the intertwining of Pakistan and Afghanistan is obviously critical. In reflecting on the way forward for Pakistan, we must all recognise that a border area which was traditionally peaceful has become increasingly radicalised and a threat to the Governments in Islamabad and Kabul. We need a policy that brings that region of Pakistan back under the rule of law as quickly as possible. Secondly, we acknowledge what was said about radicalism and terrorism and its roots here in the UK as well as in Pakistan itself. This tragedy has reminded everyone that this is a shared problem. We are certainly conscious of the issues of Pakistan’s nuclear bomb, but there is no evidence at this stage that the control of that by the Pakistani military is under any threat or has in any way been compromised.

All of this points to the fact that the policy of the British Government must not be tied to individuals. The noble Lord suggested that the US Government had tied their flag to an electoral win by Benazir Bhutto. The British Government’s view is that the key objective for these elections is that all Pakistanis should believe that the result is credible. The elections will not meet western standards of freeness or fairness but everybody should believe that they broadly represent the opinion of Pakistan, because only from that starting point can a Government be built who can take on the critical issues of terrorism and radicalisation that were mentioned. So we are very concerned that our policy is seen as built around institutions and the integrity of Pakistan rather than around individuals.

My Lords, I associate myself with the Minister’s remarks about Benazir Bhutto, who was a very good friend of mine. Whatever criticisms may be made of her, she was thoroughly committed to the development of democracy in Pakistan.

I respectfully suggest that there may have been two omissions in the Statement. First, should it not have utterly condemned General Musharraf’s removal of the chief justice? Since President Musharraf’s action had no purpose other than to safeguard his own position as president, does it not cast in doubt his commitment to the rule of law and democracy? Secondly, is it not time that the restrictions on Mr Nawaz Sharif’s standing for election were also lifted? The Minister said that the US and the UK did not favour Benazir Bhutto over other candidates but is it not important that in the forthcoming elections the dice are not seen to be loaded against the more Islamically oriented parties?

My Lords, we repeatedly condemned the removal of the chief justice in statements made at the time it occurred. I welcome the opportunity again to confirm that we saw that as a major blow and a driving factor in the suspension of Pakistan from the councils of the Commonwealth. Restoring the integrity of the justice system to ensure it can operate freely both during and after the coming elections is a critical objective of our dialogue with the Government. We strongly believe that all parties and candidates should be allowed to stand. We have been in frequent contact with Mr Nawaz Sharif and we believe it very important that he and his party are able to participate.

On the point about Benazir Bhutto, whom we all so admired, we just hope that her party will not only live up to her commitment to democracy but, as it moves forward, keep the message alight of what she has spoken for and allow new leaders to come into the party from the very exciting new civil-society dimension of Pakistan. This crisis has also shown how thin the bench of leadership is behind people such as Benazir Bhutto.

My Lords, I thank the noble Lord for the opportunity provided to me to meet earlier today with the Prime Minister, the Foreign Secretary and the noble Lord himself. It was an illuminating and useful meeting. On the broader issue, I wish to make two points about Pakistan. The first is a short-term point and relates to the thriving civil society to which he referred. We understand the limitations of international monitors, particularly in the light of the insecurity of the frontier province and the other areas where they may not be able to travel. However, we also know—and I should say that I monitored the last election in Pakistan—that a good number of domestic monitoring organisations are available in Pakistan and that they could give us a better picture of the outcome of the elections. So the question to the Minister is: to what extent are we funding those domestic monitoring organisations in the absence of a Commonwealth mission that can carry out that brief?

Several times the noble Lord mentioned the importance of democratic institution building in both the countries mentioned in the Statement. He will be familiar from his work with the UNDP with the importance of per capita GDP growth in bringing about transitions to sustainable democracy where institutions work. The per capita figure usually cited is about $7,000 annually. DfID has nearly doubled its aid budget to Pakistan to £450 million over the next three years, which my rudimentary maths shows amounts to about £1 a year per head of Pakistan’s population. Do we really think that that can achieve very much in terms of Pakistan’s long-term stability? Can the Minister say where our aid to Pakistan ranks in the UK’s priorities? When I last looked at the league table, Pakistan did not figure even among the top 20 countries.

My Lords, first, I thank the noble Baroness for the advice she gave us this morning in the meeting with the Prime Minister. It was very much appreciated. Secondly, on civil society, we still very much hope that in addition to strong domestic monitors we will have both a strong EU team and a strong Commonwealth team. However, I know from my own experience of elections that that will not be enough unless there are also strong domestic monitors to really cover the ground, because there can never be sufficient international monitors to do that. I will look into what support we are providing to domestic monitors.

In our eyes the need for the elections to go honestly will be critical to the future of the aid programme. We have commitments to double aid but that assumes that there is progress towards free and fair elections. The noble Baroness was disappointed that the programme does not rank more highly. Pakistan still has a lot of poverty, but in overall per capita income it ranks much higher than the countries to which we target most of the aid programme. The fact that we are doubling aid to Pakistan is a measure of our belief that there are real problems and a real chance to improve the country’s social and economic status. But we have to balance that against countries with lower per capita income figures.

My Lords, I associate these Benches with the remarks of the noble Lord, Lord Lamont, about a personal friendship with Benazir Bhutto; she knew many of us for many years.

In addition to the points already made, is not one common factor between the two countries that although people talk about Sind versus the Punjab or Kikuyu versus Luo, many organisations cut across such tribal affiliations? I come from a trade union background and I remember Tom Mboya’s idea 30 years ago that civil society organisations, including trade unions, could cut across such affiliations. That is true also in Pakistan. Is that not a further example of how Her Majesty's Government could encourage such a process in those organisations and in business?

Finally, on electoral monitoring I took part in EU electoral monitoring in the Congo. One did compare notes on what the results looked like and how they were added up in village schools and in telephone booths around the country. If it is as clear as it appears to be that there was fraud in the counting of the aggregates in Kenya, the EU should not mince words in its report on what happened.

My Lords, I confirm my noble friend’s observation about the power of civil society to cross over ethnic boundaries and build a real national consciousness. That is true of both countries and we will encourage it. In addition to the groups he mentioned, I did not respond earlier to the point about business in Kenya. There have been extensive contacts through our high commissioner in Nairobi with the business community, both British and Kenyan. There has been a lot of support from that community, as there has been from other groups in civil society, for an initiative to ensure real power sharing and real change in the country. That is the view of civil society groups in both countries—businesses, trade unions, lawyers and social activists of all kinds.

Let me make a further point on whether it would be possible in Kenya to assemble or reconstitute a vote count based on rural numbers. It may or may not be possible but we are doubtful about it. In addition to the destruction of some ballots, meaning that only an indicative total would be available, which would not provide the proof of the actual ballots, in some areas observers from one side were not able to attend the election count because they were kept out by the other side. Therefore, we do not have a completely valid rural count on which to reaggregate a national total, but I think that this will be something for President Kufuor to look at.

My Lords, notwithstanding the huge admiration that we all have for the achievements that have been made in Kenya, does the Minister agree that its winner-takes-all political system has often been mired in corruption, favouritism and tribal ethnicity—something to which he referred? As a result, deep-seated injustices have existed for far too long in places such as Kibera—Africa’s biggest sprawling shanty town, which the Prime Minister visited in his previous capacity as Chancellor of the Exchequer. Does the noble Lord agree that the violence that has come out of Kibera has been particularly stark and that it demonstrates the need for us to do more to tackle the injustices that continue in places such as that?

Did the Minister also note that earlier today the World Food Programme reported that a convoy of 20 trucks had left Nairobi for the Northern Rift Valley and that another had left Eldoret for Kisumu loaded with 670 metric tonnes—enough for 70,000 people for two weeks? However, 100,000 people are displaced in the Northern Rift Valley alone, and the World Food Programme is using stocks from programmes meant for the 700,000 people affected by the recent drought, the 1.1 million children in 3,800 schools that were previously looked after, and HIV/AIDS projects. Therefore, this is borrowed food that will have to be repaid. Is that something that the Government would feel in a position to help with?

My Lords, first, I think that many of us who know Kenya well and admire it would say that its economic success over recent decades has been despite, and not because of, its Government. It is an example of a country where, despite weak and corrupt government over many years, a vibrant private sector, blessed by the geographic location and natural wealth of the country, has overcome the limitations of that government. Therefore, it is even more tragic that these political confrontations should now undermine that economic success story, in which impressive results have been delivered over the past few years. It simply exposes the underlying issue that a way has to be found of ensuring government of all Kenyans for all Kenyans by all Kenyans. That has eluded the country since independence, except for a brief period in 2002.

Secondly, on food aid, this Government have been taking a lead in developing emergency procedures at the UN which allow money to be put forward both for buying new food aid when it is needed and, as in this case, replacing food aid if it is transferred to other and unexpected purposes. However, if the WFP and others appeal for more resources, I can assure the House that we will be ready to respond.

My Lords, perhaps I may make two points regarding Kenya. I do so from a position slightly further away than that of the noble Lord, Lord Avebury. Last night I spoke to my daughter, who has lived in Nairobi for 10 years. Two of her comments struck me quite forcefully and I wonder whether the Minister would care to remark on them.

First, one problem with the distribution of food is that it is extremely patchy, but my daughter said that there has been absolutely no problem in the area in which she lives. One day they were short of fresh milk, which is not a great deprivation. She explained that the problem is that the road blocks that have been set up to prevent civil disorder have in turn prevented the distribution of food because the drivers and their employers are not prepared to send the trucks through.

The other point on which I should also appreciate the Minister’s comments concerns the media. I have always been in favour of a free media to the maximum possible extent but, to use a slightly difficult word, they are by definition ghouls. The media, particularly television, like to go for the sort of pictures that make the best copy. I was just as horrified as anyone else, if not more so, by the appalling pictures that we saw on television, but they portrayed very much a minority in Kenya.

My Lords, I think that the noble Lord would agree that both the issues he raises—the road blocks preventing food distribution and the pictures particularly of the terrible massacre in the Eldoret church—are reflections of what we hope is a short-term phenomenon in Kenya. They bring back our attention to the fact that the mediator’s first priority is to stop the violence in order to allow a negotiation over the elections, the government and the country’s future. While this violence continues and the humanitarian crisis worsens there will be neither the trust nor the stability to allow a medium and long-term solution to be found. Kenya is such a jewel that the sooner we can return it to a situation where it can seek out its own destiny and once more be a place of economic growth and opportunity for its people, the better it will be for everyone involved.

Employment Bill [HL]

Second Reading debate resumed.

My Lords, I am pleased to be speaking in this debate today on the Employment Bill. Overall, I welcome the aims of the Bill. They are to protect those workers who are among the most vulnerable and to reduce complications in the law for both employers and employees. Currently, the statutory workplace procedure can be both bureaucratic and burdensome. If industrial disputes can be solved earlier and less formally that would be a good step forward, so I welcome the proposal to strengthen unfair dismissal law and the new penalties for those employers who flout the national minimum wage. As the Minister said, there may be a few. I also welcome the creation of a further method for dealing with national minimum wage arrears which are owed to workers, the strengthening of the investigative powers of employment agency inspectors and the increased penalties on those agencies that breach minimum standards.

All the above aims are also supported by the TUC and its two largest affiliates—my own union, Unite, and Unison. As always, however, improvements can be made to the Bill to further its aims. Other noble friends, much more knowledgeable than I, will speak on these issues and I look forward to their speeches. I have two small points on which to question the Minister. First, will we have any opportunity to consider the revised wording of the ACAS code of practice prior to its circulation and implementation? Secondly, would it not be more logical and tidier for employment tribunals to enforce underpayment or non-payment of awards, rather than the county courts?

I now turn to two other areas covered by the Bill. The first relates to employment tribunals. I want to alert your Lordships to what is happening to employment tribunals today, I am afraid, in dribs and drabs in different Bills. We dabble in employment tribunals from time to time and we are doing so yet again in this Bill. I raise this issue because I firmly believe that in dabbling in this way we actually move the employment tribunal system away from its original purpose. That purpose, as my noble friend Lord Jones of Birmingham is very aware, was to be the court where working disputes could be resolved, a court where, most importantly, employers and those who work for them could present their cases to a tribunal, whose membership consisted of representatives from both sides of industry, sitting with a chair with legal expertise. That meant that those adjudicating had an in-depth knowledge of the matters under consideration, and those three members were of equal status. The more we tinker with employment tribunals and the access to them, as we are doing, the further away we move from their original purpose.

I shall give an example of what happens when we dabble with tribunals in different pieces of legislation. When we debated the Tribunals, Courts and Enforcement Act 2007, in answer to a point I raised, the then Lord Chancellor, for whom I have tremendous respect, gave a guarantee that the employment tribunals and the immigration tribunals would remain stand-alone pillars. However, it would appear that this may not remain the case.

At present, the Government are seeking views on a recently published document entitled, Transforming Tribunals, which is part of the ongoing implementation of a unified tribunal service. In this document the lines between the pillars separating employment tribunals and immigration tribunals from the rest of the tribunal system are becoming increasingly blurred. I am not the only person to be deeply disturbed by what is happening in this piecemeal way to employment tribunals. Many of those involved in tribunal work are deeply worried about their future direction. I will illustrate this concern by quoting the response of one tribunal to the Government’s proposals in the consultative document. The Government state that their starting point is the history behind the present use of non-legal members and they believe that now is the time for a major reassessment.

My husband has been a member of the Central London Employment Tribunals Members Association for over 12 years. Its response is that the Government’s proposals, if adopted, would open the way for radical changes to the widely accepted basis of tribunals, which would be to the detriment of the parties and the quality of decision-making, and to the detriment of the tribunals’ credibility and effectiveness. The concern of the non-legal members about their status and role in future employment tribunal decision-making processes is understandable when one considers the very recent decision to change the title of employment tribunal chairs to employment tribunal judges, even before the fundamental review has taken place. If we are not careful this could have disastrous results for industrial relations. We will need to keep a close eye on what happens in the future.

Finally, I turn to Clause 13 of the Bill, which covers the exemption of the cadet force adult volunteers—CFAVs—from the national minimum wage. These adults volunteer to assist in the activities of the cadet forces of our country, and they are invaluable to the running of the cadets in the Air Training Corps, the Army Cadet Force, the Sea Cadet Corps and the Combined Cadet Force. We have 130,000 cadets, many of whom will become the future generation in our Armed Forces. They are young people of whom we should be proud, and for whom we should ensure a high standard of support and training. This is where the cadet force adult volunteers come in—more than 26,000 men and women give up so much of their time to help. They give 1.6 million volunteered evenings and 590,000 whole-day’s training at weekends and annual camps each year. Of the 26,000 volunteers, 20,000 receive occasional remuneration.

I declare an interest here. I am very proud to be the honorary president of the Yeadon Squadron 2168 Air Training Corps, and I am also the representative of the Air League Council on the Air Cadet Council. In these capacities I see the work of the adult volunteers at first hand and it is remarkable. Men and women work side-by-side with the young men and women in the corps, schooling them in how to be responsible cadets and, equally importantly, to become valuable citizens.

Noble Lords will be aware that I am a keen supporter of the national minimum wage. I have fought over the years for the most vulnerable in our workforce to receive it. However, I totally agree with the exemption of CFAVs from the national minimum wage, as they do. It was never intended that CFAVs would be paid the national minimum wage. However, there has been confusion about the position, and Clause 13 clarifies the issue. The MoD has consulted widely with senior members of the CFAV, the cadet force association and the public, and the resounding response has been support for the view that CFAVs are not workers, but volunteers, and that they prize that position. The MoD recognises the enormous work they do by giving them a small remuneration, which has been the custom for many years. It recognises that CFAVs have to do much more than many other voluntary youth workers: they are trained to a high level of expertise; they deliver military-themed activities; they undergo special security; they sign the Official Secrets Act; and they adopt the military ethos of the armed services. Paying CFAVs the national minimum wage would designate them as workers and would impose obligations upon them which would remove their flexibility to volunteer as it suits. Like other noble Lords, I have received a letter from General Sir Jack Deverell, the president of the Army Cadet Force Association, seeking my support for Clause 13, and I am pleased to give it. General Deverell describes the CFAVs giving selfless commitment and inspirational leadership, and he is right.

My Lords, I join the noble Baroness, Lady Gibson of Market Rasen, in her tribute to the cadet force adult volunteers—I could not agree with her more. Secondly, I declare my interest as a partner in the national commercial law firm of Beachcroft LLP and my other interests set out in the Register; thirdly, I welcome the noble Lord, Lord Bach, to the Government Front Bench. He is one of the hardest-working Peers in this House. He gave me tremendous support when I had the honour of chairing the Joint Select Committee on the Legal Services Bill. In his safe pair of hands, I look forward to participating with him in the Committee stage of the Employment Bill.

Having said all that, this is by no means the neatest Bill we have ever had in this House. Even at Second Reading, I am finding it difficult to discern the unifying principle or principles that we should ideally be discussing. As my noble friend has already pointed out, if there is a unifying theme it is certainly not to reduce the regulatory burden on UK plc. Given the repeated commitment by Ministers to cutting back on the numerous impositions on business, that is pretty disappointing. It would be churlish not to acknowledge that employment levels in the UK are at unusually high levels, but the economic situation is not as we would wish it with the credit squeeze and signs of turbulence in the stock markets. Job creation in the United States is beginning to slump, and if the world’s biggest economy carries on sneezing, we will all catch a cold. There are therefore no legitimate grounds for complacency, yet here we have a Bill that boasts the title of “Employment Bill” but does nothing to stimulate job creation.

I fear that this may be a missed opportunity. What will the Bill do to help create the much-vaunted “British jobs for British workers” about which the Prime Minister was recently enthusing? Not much, as far as I can see. Later on, we will be debating apprenticeships. I humbly suggest that they are rather more important to our national prosperity and well-being than anything contained in the Bill.

I turn to what is in the Bill. I feel certain that two rather technical areas of the Bill—employment agencies and the enforcement of the minimum wage—will be subject to some detailed scrutiny in due course, both here and in another place. We should not be doing our job if we did not require Ministers to set out their detailed arguments for the new powers that they want to establish, but that is a matter for later stages.

I want to focus on two aspects of the Bill. In my professional life both as a lawyer and as a parliamentarian, I like to think that I have always had a reasonably good working relationship with trade unionists, and even with trade unions themselves. Through my work as president of the All-Party Group on Occupational Safety and Health, I continue to find myself regularly exploring common causes and interests with trade unions. I welcome that. I do not, therefore, approach Clause 17 from a position that is inimical or even remotely hostile to free and independent trade unions—not at all. I must say, however, that I share the unease expressed so eloquently by my noble friend about that provision.

I dare say that Ministers will stick gallantly to the line that they are merely responding to the judgment of the European Court of Human Rights in the ASLEF case. Having read that judgment, I was surprised to find that it focused so little on individual human rights. Perhaps that is something that we will debate in greater detail in future. Furthermore, Ministers will no doubt reiterate their aspiration, as the noble Lord, Lord Jones of Birmingham, did earlier, that the legislation will be used only against extremists and against members of parties that all of us regard as being outside the acceptable mainstream. Frankly, I take little or no consolation from that. The aspirations of Ministers are one thing; the actions of some trade unions in the courts can all too often take us in a different direction altogether.

I by no means oppose the provision on principle, but whenever Ministers trespass into areas of personal conscience, political loyalties and affiliations, they inevitably play with fire. Once again, detailed scrutiny will prove to be very interesting indeed. When one analyses the constitution of ASLEF, one finds in Rule 3.1(vii) a provision that members must,

“assist in the furtherance of the labour movement generally towards a Socialist society”.

We have not heard much about that in recent times, but it reflects the fact that we are entering a dangerous area here in interfering with individual human rights. Of course, I await with great interest the speeches to come from some of our distinguished Queen's Counsel, and I look forward to debating that clause in greater detail.

My principal interest in the Bill, however, lies in the earliest part, namely, Clauses 1 to 7, dealing with dispute resolution. I have long been an advocate of alternative dispute resolution, or ADR, in its various forms. This is another area in which my interests and activities outside this place coincide neatly with my role as a legislator. I should declare an interest as a mediator accredited by CEDR—the Centre for Effective Dispute Resolution.

I broadly welcome the provisions in the Bill dealing with the future of dispute resolution. I hate to say “We told you so”, and I know what the Minister said earlier, but there was a roar from a lioness—my noble friend Lady Miller—predicting that the Employment Act 2002 provisions would fail to provide the panacea for all ills that Ministers had hoped for. It is now clear they have indeed failed to reduce the number of employment disputes that escalate into tribunal cases: tribunal cases have increased by almost a third since the new measures were introduced.

I have read carefully the excellent report of Michael Gibbons on this subject, and my noble friend has shared some of the statistics with the House. It is to the credit of Ministers that they kept their word and subjected the statutory system to hard-edged scrutiny now that it has been up and running for a time, just as they said they would. The system they propose to abolish came about in an unusual manner. The Employment Act 2002 established a framework for promoting the resolution of employment disputes in the workplace, but the detailed procedures emerged from a process of substantial pre-consultation, consultation and due consideration during 2003 and 2004. Then, two years after the new regulations came into force, Michael Gibbons began his review. The forward to his report describes Michael Gibbons’s judgment in the following terms:

“This is perhaps a classic case of good policy, but inappropriately inflexible and prescriptive regulation”.

This is such an important area and the noble Baroness, Lady Gibson of Market Rasen, was right to highlight it.

The Centre for Effective Dispute Resolution estimates that conflict costs UK plc some £33 billion a year—an astronomical figure. The Gibbons report has now given us a far more flexible and less prescriptive way to take things forward than the stultifying hand of statutory regulation. Of course, as the noble Baroness pointed out, the devil will be in the detail. I hope that we will see these codes, particularly those referred to in Clause 3(2)—I press the Minister on that. To be more specific, will the codes explicitly refer to ADR in the workplace and encourage its proliferation? I am concerned to ensure not only that successful mediation in the workplace is encouraged, obviating the need for expensive tribunals, but also that mediation in particular should play a far greater role.

The keynote for mediation and mediators is preparation. Mediation often works best early in the process, but there are countless instances of it unlocking seemingly intractable deadlocks, even after a process has gone a long way down its unhappy track. As one director of CEDR wrote recently:

“Often it is the dynamic of an independent and impartial intervention that can be most powerful in enabling parties and organisations in disputes to see issues clearly”.

Another issue of which I am sure the Minister is only too aware is the inherent difficulty of reconciling a push for ADR with the requirement to uphold the entitlement of employees to enforce their rights under statute and European law. I think of the many products where generous promises of immediate reimbursement are accompanied by the slogan “Your statutory rights are not affected”.

Finally, I am also concerned about the role of ACAS. Is it envisaged that restoring and enhancing its role in the conciliation of workplace disputes will encompass mediation? I am not sure that I know the difference between conciliation and mediation, if there is one. But is it a practical or useful question? We will no doubt discuss that. In any event, an enhanced role for ACAS will have to be backed up by the restoration of resources. I note that the noble Lord, Lord Jones of Birmingham, referred to investment in ACAS and I hope that there will be substantial investment. I look forward to hearing many positive words about mediation in the debates ahead.

My Lords, I welcome the opportunity to contribute to this debate and I am obliged to the Minister for his detailed introduction. I should declare my interest: for many years, I was assistant general secretary of one of the founding unions of the Unite union. Much of the Bill I support; I believe it to be well intentioned. However, I have a number of queries.

As we know, a large part is concerned with dispute resolution. The first part repeals the statutory dispute resolution procedures introduced in the 2002 Act, which I welcome at least to some degree. I always felt that these procedures had an inhibiting effect on employees wishing to take their disputes to a tribunal. I can well recall when tribunals were first established to deal with individual workplace disputes. That was in the wake of the Donovan commission and its report.

The tribunals were intended to be easy of access for individual employees and fairly informal, where an individual would be able to present his or her own case. Union officials represented members before such tribunals. As a young official, I often undertook this work. However, as time went on, such tribunals and the law became much more complex and lawyers were more frequently employed by both sides. But ease of access to tribunals remains an important matter. It may be that the repeal of the procedures stipulated by the 2002 Act will assist this. It is of course true that conciliation can play a useful role in reaching a satisfactory settlement without people having to go to a tribunal. Of course, adequate disputes procedures at workplace level are also important, as is the right to union representation in such procedures.

Instead of the statutory procedures introduced in the 2002 Act, there is to be a code of practice, which I believe ACAS is working on with a view to its being ready when the Bill becomes law. But this produces a rather odd situation, in which we are debating the disappearance of one set of procedures without knowing what is intended to replace them. I do not find that very satisfactory. Perhaps we need to explore it further in Committee. Perhaps there is a case for waiting until we know what ACAS intends.

In the mean time, I still believe that easy access to tribunals is important, and not just for individuals. I have long felt that there should be some means of dealing with class actions. I remember feeling this particularly in equal pay cases. In trying to get the law applied, we had to find individual members and take cases in their names when we were really trying to secure rights for whole groups of members. In particular, there was a case for speech therapists, known as the Enderby case, with which I was very deeply involved. It took 11 years to resolve because there were constant attempts by the then Government to appeal at various stages. I am glad to say that a successful career followed for the speech therapist who was prepared to be our test case; she is now Dr Enderby at Sheffield University. However, a class action would have been much fairer and much less traumatic for the people involved.

In the case of individual dismissals, it is crucial that the individual has access to a system guaranteeing fairness. The loss of a job for many people is a deeply traumatic experience, which threatens not just financial difficulty but a loss of self-confidence and self-esteem, even sometimes threatening family life and marriage. Great bitterness may be involved and the individual will not be satisfied without his or her day in court. Incidentally, since the Bill apparently envisages a greater role for ACAS, we must be assured that ACAS will be provided with the resources to deal with these additional responsibilities.

The Bill also introduces welcome measures to ensure enforcement of the minimum wage and to increase the penalties and fines paid by rogue employers who do not pay the minimum wage. But do we have enough inspectors to ensure that enforcement actually happens? From what the Minister has said this afternoon, I understand that there have been 15,000 investigations and that there may well be more, but do we have enough people to carry out the inspections and thus ensure that people get what they are entitled to? Clause 7 also increases the compensation that must be paid to individuals who bring successful claims for unlawful deductions from wages. In future, tribunals will be able to order an employer to recompense a worker for financial loss experienced as the result of the employer’s actions, but would this include interest?

I am glad to see measures in Clause 14 to increase the penalties for agencies that commit offences under the Employment Agencies Act 1973, but what about agency workers themselves? Many immigrant workers secure their employment through agencies and they are often grossly exploited. The opportunity has been missed, in my opinion, to ensure that such workers—there are many of them; at least 1.25 million—are provided with equal employment rights. We are told that the Bill covers most workers, but with a sizeable proportion of the workforce omitted that is clearly not accurate. I hope that we will deal with this further in Committee, but in the mean time one of my erstwhile colleagues in the other place is introducing a Private Member’s Bill to try to address this omission by the Government. One way or another, the Government are going to have to deal with the whole issue of rights for immigrant workers, for agency workers and for people working on so-called contract—what at one time we called the “lump” when it applied to the construction industry.

Finally, I should like to deal with the important point of the right of unions to expel or exclude members on the grounds of membership of a political party. I understand why this has been introduced; it is an attempt to cope with the decision in ASLEF v UK. There has clearly been much consultation, but I wonder about the solution chosen. A union should have the total right to exclude those who disobey its rules. It is possible to indulge in activity of a racist character, conduct which is to the disadvantage of other union members, without actually being a member of a party. What is important is the activity itself. This could be further examined in Committee and may perhaps result in an attempt to amend the Long Title. In the mean time, much of the Bill I welcome; I look forward to further discussion in Committee.

My Lords, here we go again. Since what I consider to have been that dreadful day in May 1997 when my party moved from that side of the Chamber to this side, there have been no fewer than 28 Employment Acts, which is why I say, “Here we go again”. That is getting on for three a year, and the figure ignores those Acts not directly involved with hiring and firing, regulations and so on. Now, as the noble Lord, Lord Razzall, said, we are dealing with No. 29. Its purpose is to apply another sticking plaster to a hotchpotch of legislation, with some Acts rectifying areas found in their earlier, ill considered predecessors.

Before I deal with the Bill itself, I should like to tell the noble Lord, Lord Jones of Birmingham, that I am delighted to see him back in his place. After what was not exactly a fracas but a slight intervention when he mentioned that he would not necessarily be here for all the parts of the Bill as he would be travelling abroad selling trade for this country, and it was pointed out to him that his first duty is here in the House, I thought that, unusually, he had probably decided that enough is enough and that he would not come back for the rest of the debate this afternoon. That would have prevented me from thanking him for his courtesy in sending me a briefing note on the Bill to supplement the Explanatory Notes published by his department. It would also have prevented my asking him two questions that I am now going to put to him. I hasten to assure him, just so that he does not run out again, that I will not tax him with the vigorous statements that he made on the subject while he was chairman of the CBI, nor will I ask him how easy he finds the role of poacher turned gamekeeper. I would not dream of doing that to such a charming Minister. In fact, that role should enable him to answer my two questions easily.

First, when are the Government going to find time in the middle of the torrent of legislation that they constantly spew out to publish a consolidating Act to put all 29 Acts in one place? The noble Lord, Lord Razzall, asked the same question and I noticed that the noble Lord, Lord Jones of Birmingham, nodded his head as though he agreed. I hope that that means something will happen and that we will not have to refer to all of them when we want to sort out what is going on. There are 29 Acts in which some provisions have been amended or, as I said, repealed altogether. This is a totally confusing trap for the unwary employer and employee alike, who cannot afford to retain a high-priced specialist lawyer or have a personnel department—or, as it is nowadays pretentiously called, a human resources department—or have the backing of a powerful trade union or an employers’ organisation.

Secondly, when will the Government finally get the message, which I have repeated time after time in your Lordships’ House, that in employment law one size emphatically does not fit all? What is appropriate for a major industrial company or other large employer is not suitable for the owner of the local corner shop or for any of the thousands of other small businesses to which the Government and the CBI constantly pay lip service as what is often called the “engine of the economy”. Small businesses have to cope with 14 new regulations every week, imposed by a Government led by a man who promised to make a bonfire of regulations but who has so far failed even to make a start on it. Obviously that pledge has gone the same way as so many of the Government’s other manifesto pledges. I look forward with considerable interest to any reply that the Minister cares to give to these two questions. When I thanked the Minister for sending his note, I noticed that at the bottom of it he said that he would be delighted to answer any further questions, so I thought that I would start right away.

Turning to the Bill, I have only two comments, one of which directly relates to my point about one size not fitting all types of employer. I welcome the fact that the Government are now proposing to replace the arcane and convoluted process through which employers and employees alike have to go in the unfortunate event of a dispute, a procedure that lays traps for the unwary and in which one side or another can be deprived of justice, not because of a lack of merit in their case but because of a failure strictly to comply with some rigid, pettifogging piece of procedure. The existing complex procedure could have been drafted anywhere, even in a non-democratic country.

I draw your Lordships’ attention to two recent cases, one decided in favour of the employee and the other in favour of the employer. In Kennedy Scott v Francis, the employment tribunal, in the words of the report,

“bent over backwards to avoid a legalistic approach”.

It accepted that an employee who had attended a grievance meeting where his employer had taken notes was not to be non-suited because he had relied on the employer’s notes rather than submitting his own complaint in writing later. In Homeserve v Dixon, the appeals tribunal took,

“a very pragmatic and wide view”,

of the rules and held that an employee simply needs to be told that he is at risk of dismissal and why before a disciplinary hearing can take place. Hard cases make bad law. Why should employers and employees have to rely on tribunals bending over backwards or taking a pragmatic and wide view before a case can be dealt with on its merits and not on the basis of strict compliance with procedural rules? Why should there be a risk of inconsistent decisions between one tribunal and another when rules are rigidly applied or got around, depending entirely on the attitude of the chairman?

As your Lordships well know, I am not the sort of person who goes around saying, “I told you so”, but I did complain about the complexities of the procedure that is now to be amended, as my noble friend Lord Hunt mentioned in his excellent speech, when it was being enacted. I would have hoped that Clauses 1 to 6 would put an end to the strict formality in resolving disputes and that common sense would be allowed to prevail. However, I am afraid that the pendulum has been swung too far back by the very well meaning provisions of Clause 2. It repeals Section 98A of the Employment Rights Act 1996, which, very properly, allowed tribunals to find a dismissal to be fair even though the employer had breached some other non-statutory procedure where that breach did not in any way affect the outcome. As a result of the new Clause 2, a tribunal will again be required to find a dismissal unfair where the employer has not precisely followed the correct procedure, even though the dismissal was otherwise completely reasonable. In the decision of your Lordships’ House in 1988, it was ruled that all the tribunal could do in such a case was to consider reducing the compensatory award if it believed that the dismissal was inevitable.

In this very well meaning amendment, the Government have thrown out the baby with the bath water. I ask the Minister to consider amending the terse words of Clause 2 by importing some provision allowing a tribunal wholly to ignore what it finds to be an inconsequential breach of procedure by the employer. I do not expect the Minister to give such a pledge today but ask him for a promise that he will look into this aspect further and that before the next stage of the Bill he will have discussed the matter with employers’ associations and offered some suitable adjustment. That would be extremely helpful.

Secondly, I give a cautious—indeed a very nervous—welcome to Clause 17, which in effect allows a trade union to exclude from membership someone who belongs to a political party or organisation to which the union objects. The caution in my welcome to Clause 17 is to trust that it will simply not be the thin end of some witch-hunting wedge. I have no problem about excluding members of the BNP, with the focus of the case before the European Court of Human Rights. I have no problem about the exclusion of members of undemocratic organisations or parties whose aims are inimical to accepted public norms—say, for example, a terrorist organisation. However, where is the line to be drawn and who is to draw it? Could, for example, a union involved with workers in the nuclear or coal-mining industry exclude a member of the Green Party? Could the National Union of Mineworkers have excluded members of the Conservative Party in the 1980s?

The Bar Council Law Reform Committee says that the provision goes significantly beyond the European Court of Human Rights judgment in the ASLEF case and lends itself to potential abuse by trade unions. This is a classic example of gold-plating, to which the United Kingdom subjects the rulings emanating from European organisations many, many times. My noble friend Lord Hunt mentioned that as well. The Department for Business, Enterprise and Regulatory Reform is not living up to its high-sounding name when it indulges in this kind of practice.

I have just looked at the time and see that I have spoken for 11 minutes. There is no time limit, so I could go on—

Do you think I should, my Lords? All right, I will say just one or two things, but I might upset some of the people on the other side.

All right, my Lords, I will continue.

DBERR is not being even-handed between workers and the unions when it claims, without a shred of proof, that there is no evidence of abuse by unions or of the arbitrary persecution of individuals. Those who do not learn from history are doomed to repeat it. The Minister will know only too well from his former career—I am now looking in the direction of the noble Lord, Lord Jones, not straight opposite at the noble Lord, Lord Bach—that the trade unions have previously indulged in the blacklisting of individuals and businesses. That is all in the past, of course, but it has happened: boycotts, intimidatory mass picketing, fly-picketing and so on. Entire former mining communities are still riven, almost a quarter of a century later, by the bitterness engendered by the politically motivated miners’ strike of 1984. I am not sure that we can honestly say to everyone, “You can trust the unions to do this properly”. Maybe we can trust them, but we have to be careful.

A simple provision in this clause would bring it back into line with the meaning of the ASLEF judgment. It is not too much to ask to give an excluded union member, or a potential member, the right of appeal. It is up to the Government to solve the problem of the right of unions to exclude those who could be regarded, by any test of reasonableness, as inimical to the fair aims of the union and the ordinary rights of an individual in a free society. Will the Minister agree to consult constitutional lawyers further—I know that the noble Lord, Lord Lester, is a fine constitutional lawyer and I am sure that he will have a view—to restore a proper balance between the two interests without leaving the unions with an unfettered and perhaps unassailable discretion?

As my noble friend has told your Lordships, we on this side of the House support the Government on the principle of the Bill—the noble Lord, Lord Bach, need not look so surprised—but that does not mean that we love 100 per cent of it. It is right at Second Reading to point out the slight errors that have been made. As the Government are apparently in a reforming mode, I hope, as I said, that they will continue to try to reduce the regulatory burden on businesses, large and small, and endeavour to make the law simpler and hence more easily understood by all.

My Lords, it is always a pleasure to follow the noble Baroness, Lady Miller. By my calculation, this is the 11th major employment Bill to come before the House since I came here in 1977. Like many of the previous Bills of this Administration, the Bill, like the curate’s egg, is good in parts. I welcome the measures to improve the enforcement of the national minimum wage and to deal especially with arrears payable in that regard. I welcome the clause to comply with the ASLEF judgment in the European Court of Human Rights, which seems to have received very little attention today. However, it will be necessary in Committee to examine carefully whether the Bill complies with what the Minister, in his kind briefing, suggested it should: namely, that unions must have a right to determine their membership.

I wish mainly to address the earlier clauses of the Bill, which rightly repeal the 2002 Act’s compulsory dispute procedures, which were unfair to workers, counterproductive and unnecessarily complex. No one who heard the passionate objections to those statutory procedures raised in 1991 by my noble friends Lord McCarthy and Lady Turner of Camden—eventually with some support, in the last resort, from the Conservative Party—will be surprised that I welcome their repeal. The question is, however: what replaces the compulsory dispute procedure? I apprehend that it will be agreed in all corners of the House that the best way to settle disputes at work is to have a speedy and efficient procedure agreed between the employer and representatives of employees for the settlement of disputes. That is the way to bring down the number of cases that need third-party enforcement through an employment tribunal, yet the Bill does relatively little in that respect. The only measure here, which is a sort of carbon copy from the 2002 Act, is the power of a tribunal to increase or decrease compensation after a case has gone to the tribunal, according to what is reasonable or unreasonable.

What are we left with as the relevant code of practice to which the Bill directs the tribunal’s attention? We are left only with the basic ACAS code of practice as a required relevant code. The Explanatory Notes state that the ACAS code will be the relevant code in almost all cases, yet at 3.10 pm today the Minister, from his semi-detached position on the Front Bench of the Labour Government, asserted clearly that the ACAS code would apply in all cases. That should be made clear in the Bill, otherwise uncertainty will only lead to unnecessary litigation.

Even the current ACAS code is designated by authorities on the subject, such as Professors Deakin and Morris in their book on labour law, as a dilution of the high standards of previous codes. Under the Bill, however, we shall not even have the current version of the ACAS code before us; it has been required to rewrite its code of practice on disciplinary and dismissal procedures and grievance procedures for workers.

I have two questions for my noble friend Lord Bach. First, why does the Bill not make it clear just when the ACAS procedural code is, and is not, the relevant code of procedure? Secondly, why cannot the Government delay the Bill until we can see the nature of the new ACAS code that is being rewritten? My noble friends have made that point already, but it bears repetition. To ask the House to pass the Bill before we even know what is in the new ACAS code is asking it to buy a pig in a poke. That is not satisfactory.

A further practical question of great importance arises. What will be the status of voluntary procedures agreed between the employer and the trade union, which is the vital nub of settling disputes at work? Is that procedure never to be a relevant code of procedure under the Bill? It is a pity that the noble Lord, Lord Jones, is not replying to this debate, although I am sure he enjoyed moving the Bill from the Front Bench for a Labour Government. The job of replying has been left in the capable hands of the noble Lord, Lord Bach, and I hope he can say something on those questions.

There is no sustainable evidence that the number of claims to employment tribunals is excessive. That is the only way at the moment that workers can enforce their rights. Everyone with any knowledge of the tribunals knows that we have a gigantic backlog of equal-pay cases and cases of age discrimination which the Bill might have said something about. There must be a way of dealing with that backlog, which is otherwise going to overflow into a huge wave of litigation—not perhaps the best way of solving it, but what other ways at the moment do workers have? What is wrong with the Bill in that respect is the absence of high-level socio-legal research before it was drawn up. Serious socio-legal work was done before most of the Bills of the past 10 years were drawn up—my noble friends will remember the reports—but not in this case. It has merely produced the Gibbons report, which, to be frank, was a genuine attempt to present an amalgam of anecdotal evidence and uninstructed comparative law, more like a draft student essay—with the greatest respect to the document. Of course, it supported ACAS, and in that respect I welcome it.

I turn to another feature of the Bill. There is to be a fast-track procedure when cases reach the tribunal which will have no oral hearing at all. It is a very grave question; what is the position of this bureaucratic, administrative, office decision that will replace a normal hearing? We are told that this will be done in a limited number of jurisdictions. Surely those jurisdictions should be enumerated in the Bill. What kind of access to justice is this? The Government will say that the Bill ensures that the fast-track procedure will apply only where both parties agree. Even on that basis—we must look at that very carefully in Committee—there is a question of how far it will offend Article 6 of the European Convention on Human Rights, which we have adopted in the Human Rights Act. It is very questionable whether the Government have got this right and have failed to take advice on the European convention in drawing it up.

I turn to deductions from pay by an employer. Noble Lords may think that in these modern, civilised days, rather than what my Italians colleagues call “savage capitalism”, improper deductions from pay are a rarity. Noble Lords might like to know that in 2006-07 there were some 35,000 complaints about unauthorised deductions. ACAS conciliated a settlement for about 7,000, and nearly 20 per cent of the rest had to be fought for by workers in a tribunal, asserting their right to a proper wage. The Bill would add to the worker’s remedies the right to claim financial loss in addition to what he can claim now in a tribunal. Why only financial loss? There are many sorts of loss that a worker and his family may experience if he does not receive his proper wage. That must be looked at in Committee.

I will make one remark about the nature of the tribunals, about which I agree very much with my noble friend Lady Gibson. There is at the moment very widespread concern that the position of the lay members of the employment tribunals is being undermined. One of the reasons for that is that the tribunals appear to come within the scope of the Ministry of Justice. One might have thought that it would have taken care to understand the nature of tribunals and employment tribunals, but it has not, as its recent document Transforming Tribunals, issued in 2007, makes abundantly clear. I ask for clarification of just how far the Ministry of Justice is likely to go in its campaign to downgrade lay members of the tribunals.

The Bill makes changes in the conciliation process. I agree with the noble Lord, Lord Hunt, that of course that overflows into mediation. ACAS does it quite regularly; we do not have to give ACAS some exceptional, alternative dispute resolution to do that. It understands conciliation and mediation, although the Bill makes it more difficult for ACAS to demand the reinstatement of a worker who has been unfairly dismissed. That is very important for us to consider further in Committee. I ask for one undertaking from the Government on ACAS. Will my noble friend assure us that it will be given full resources to do its difficult work in settling disputes at work and that any recent cuts in its resources and funding will be restored by the Government at a very early stage?

With those caveats, I welcome the Bill, and I look forward to Committee, although I am very unhappy that the Bill is being transferred to that graveyard of amendments, the Grand Committee, rather than being debated in a Committee of the whole House as it deserves.

My Lords, it is a great pleasure to follow the noble Lord, Lord Wedderburn, who tried to teach me the principles of contract law 50 years ago. I agree with much of what he said, and I wish that there were time for me to comment on what is to be done about unequal pay for women and what is to be done about tribunals and equality tribunals. But there is not time, and I need to concentrate on one matter only; Clause 17.

Clause 17 gives extremely broad powers to trade unions to exclude or expel someone for belonging to a political party, as has been explained. It contains no safeguards against the abuse of those powers. I am a strong supporter of the trade union movement, and looking across the House I am reminded that it has been a great pleasure to work with old friends and colleagues, sometimes representing their trade unions, in important cases. I believe that it is in the best interests of trade unions to accept the need for statutory safeguards against the misuse of their powers. With respect to the Minister, trade unions are not like other voluntary bodies, which is why they have been subject to legislative safeguards. The Strasbourg court referred in paragraph 50 of the ASLEF judgment to membership of a trade union as being a fundamental safeguard for workers against employer abuse. That is why membership of a trade union is a precious civil right.

Section 174 of the Trade Union and Labour Relations (Consolidation) Act 1992 gives a right for individuals not to be excluded or expelled from membership of a trade union, unless the exclusion or expulsion is for a reason specified by the section. Section 174(2) makes it unlawful for a trade union to expel or exclude a person on the sole or main ground of “protected conduct” by that person. “Protected conduct” is defined as membership or former membership of a political party. The 1992 Act provides remedies where the employment tribunal finds that a trade union has breached this right.

Clause 17 amends the 1992 Act in response to the judgment of the Strasbourg court in the ASLEF case. It removes all reference to “protected conduct”. The effect would be to enable unions to apply membership rules which prohibit individuals who belong or have belonged to a particular political party from membership of the union and access to the benefits of membership.

The Government’s consultation document published last May, to which I pay tribute, suggested two options for amending the 1992 Act to bring the law into line with the Strasbourg judgment. Option A was to amend Section 174 to ensure that there was no explicit reference to a special category of conduct relating to political party membership or activities. Where such political party membership or activities were “unacceptable” to the trade union, it would be lawful for the union to expel or exclude on those grounds. The consultation document correctly noted that option A would provide unions with much greater autonomy in deciding their membership. It noted:

“However, there would be no special safeguards against possible abuse”.

It also observed that such safeguards might not be necessary because,

“there was no evidence that unions would make use of their greater freedom by expelling members or activists of mainstream political parties”.

I am not sure that I like that reference to “mainstream political parties”, because parties outside the mainstream have rights as well.

Option B in the Government’s consultation paper was narrower and would contain safeguards against abuse. It would mean that the special category of conduct relating to political party membership and activities would be retained, but that the right not to be excluded or expelled for such conduct would be significantly amended. Under the Government’s proposal, the amendment would refer to the limited conditions under which it would remain unlawful for the union to exclude or expel an individual because of his or her political party membership or activities. Those conditions would specify that the union’s decision would be unlawful unless the political party membership or activity concerned was incompatible with a rule or objective of the union, and the decision to exclude or expel was taken in accordance with the union’s rules or established procedures.

The Government’s consultation document explained that option B,

“would specify particular safeguards against potential abuse. Those safeguards are based on the reasoning of the Court which noted the need for the trade union to avoid arbitrary behaviour and to act transparently in accordance with its rules. Many union rule books now refer to racist, xenophobic or extremist political behaviour as unacceptable to the union. So, little adaptation by those trade unions would be needed in order to comply with this Option. Where a trade union was required to amend its rule book, then members and potential members should gain because they would be properly informed of the potential consequences of their political actions. Option B might, however, create grey areas and give scope for legal action to arise about the precise meaning of a union’s rules or objectives”.

I make no apology for placing this before the House because it is important to understand that the Government have a choice.

Thirty-three organisations responded to the consultation, 26 of which were trade unions. Not surprisingly, on the principle that the Home Office enjoys the fact that power is delightful and absolute power absolutely delightful, the great majority of the unions and their lawyers preferred option A, and argued for unrestricted union autonomy and power. Like the Government, they appeared to believe that blanket powers given under option A would not leave grey areas or give scope for legal action to arise. I believe that that view is mistaken, as I believe that option B would be more likely to secure compatibility with the convention rights and avoid litigation. It is fair to add that those independent of trade union interests prefer the safeguards in option B or, in the case of the CRE, would support option A only if there were safeguards.

Article 11 of the European convention guarantees the right of everyone to,

“freedom of association with others, including the right to form and to join trade unions for the protection of his interests”.

No restrictions may be placed on those rights except in accordance with legal certainty and proportionality. Before the Strasbourg Court, the Government referred to the countervailing rights of trade union members and prospective members to freedom of expression and freedom of association, which they rightly pointed out would be engaged by expulsion from a trade union—under rights which are at the very foundation of a democratic society. The Government also, rightly, emphasised,

“the special status of trade unions which set them apart from other voluntary associations, pointing out that they play a potentially very important role in the working lives of individuals and exercise a direct influence over matters such as pay, holidays and other terms and conditions of employment”.

The European Court noted the importance of the right to form trade unions, stating that,

“Prima facie trade unions enjoy the freedom to set up their own rules concerning conditions of membership”,

and that as an,

“employee or worker should be free to join, or not to join a trade union without being sanctioned or subject to disincentives, so should the trade union be equally free to choose its members”.

However, the judgment contained this important statement of principle, worthy of John Stuart Mill in On Liberty. In paragraph 43, the court said that,

“pluralism, tolerance and broadmindedness are hallmarks of a ‘democratic society’. Although individual interests must on occasion be subordinated to those of a group, democracy does not simply mean that the views of a majority must always prevail: a balance must be achieved which ensures the fair and proper treatment of minorities and avoids any abuse of a dominant position. For the individual right to join a trade union to be effective, the State must nonetheless protect the individual against any abuse of a dominant position by trade unions”.

It went on to explain how that abuse might arise.

Clause 17 as it stands contains no safeguards against abuse; it does not require unions to strike a fair balance between the competing rights and freedoms. The remedy for the certification officer, for reasons that I can explain, does not deal with the problem—and in any event, the officer can deal with complaints only from members or former members, not with cases of arbitrary exclusion.

It is quite serious that a legal challenge could be made at common law not only for breach of the rules but also challenging the unreasonable or arbitrary nature of the rules. That is what used to happen a generation ago, in the bad old days when I was young, when the courts recognised, in Lord Denning’s words, that the rules of a trade union were more than a contract and that they were, a “legislative code” that should be controlled,

“by the courts just as much as a code laid down by Parliament”.

What this means is that the courts would have to fill the vacuum created by Clause 17 by striking down or restricting a union rule which operates in breach of the individual’s convention rights to freedom of association and expression. They would do so, I have no doubt, in applying the common law, or, in some cases, when the union performs a statutory duty, under the Human Rights Act. Surely that is much less satisfactory than including safeguards in the Bill itself, as contemplated by the Government in option B. Clause 17 could easily be amended to include safeguards that make the union’s decision unlawful unless the political party membership or activity concerned was incompatible with a rule or objective of the union, and the decision to exclude or expel was taken in accordance with the union’s rules or established procedures.

Option B would ensure that the principle of proportionality and the fair balance test would have to be applied, and would thereby reduce the risk of further breaches of the convention. I very much hope that the Minister will be able to indicate in his reply that the Government remain ready to consider option B and have not closed the door by choosing option A in the Bill.

My Lords, I am grateful to the noble Lord who has just spoken because I can curtail my own speech, which is related to Clause 17. I wholly agree with him that there is no safeguard against abuse in Clause 17 and that the clause cannot stand part, as there is no justification for it. I have in my notes what the noble Lord said about the rules—but again, I shall not repeat it.

I am totally at a loss with regard to what my noble friend Lady Miller of Hendon said about gold-plating for the trade unions. I do not understand this. I say in passing—I shall then conclude fairly swiftly—that I have very great respect for the noble Lord, Lord Bach. For many years we have discussed and disagreed in amity. In my professional past, I appeared for many trade unions, which is very surprising in that I usually appeared for the employers. I was on the cab rank, however, and if they instructed me, as they did, I appeared for them. I have always had great respect for them—and, indeed, in my early days in the House, I managed to achieve, with the noble Baroness, Lady Turner of Camden, an amendment to a Bill in favour of the trade unions against my own party. So there is no hard feeling in this debate.

One has to take very seriously the fact that the measure, even if it is amended, is a change of considerable consequence to our domestic law. Therefore, the burden is on those who propose the change to make good their case. I will not take time over it today, but I have considered it and I am rather concerned about how that case can be made good.

In that context, I also read the finding of the court against ASLEF—I am afraid one has to do that sort of thing if one is going to take part in the debate. We should bear in mind that ASLEF is a small union of train drivers and not one of the big unions concerned in the age of mergers. The finding was that the expulsion was lawful, albeit that Section 174,

“interfered with the freedom of association”,

because the trade unions had the freedom of choice about who should become and remain a member.

That resulted in a proportionate judgment. That is crucial, because in some of the literature that has been sent to us it looks as though what the unions really want is an absolute position. That should never happen. It is not in the interests of the trade unions, the employers, the individuals, the economy or anything that the provision should be resolved other than by a proportionate decision in accordance with compatibility with the Human Rights Act.

I am referring to this because there appears to be a misunderstanding in the letter of 27 December. I make no criticism because anyone who writes a letter on 27 December is probably not quite in their right mind. If you read that letter, you see in references to the benefit of the individual employers, trade unions, the public sector and so forth, that the dominance of absolute collective authority should be asserted. Those are my words; they are not in the letter, but that is the tenor of the letter. One must watch that. It is one of the reasons why one needs to watch with care how the amendment works; whether it can be proportionately applied and so forth. I shall not take any more time. I am grateful to your Lordships for having listened.

My Lords, I declare an interest: I am not only a member of Unite but I was president and one of the founder members of that union. I must say how pleased I am that my noble friend Lord Bach is back in his rightful place on the Front Bench. From what the noble Lord, Lord Jones of Birmingham, said, it appears that the noble Lord, Lord Bach, will be doing most of the work in Committee with us. Any questions that we have about the Bill we should direct to my noble friend Lord Bach. From past evidence, we shall get well informed as well as courteous replies from him.

I have several things to put to my noble friend. Most have been mentioned earlier, but it is as well to stress from this side of the House some of the possible concerns that we have about the Bill. First, I must say at once that I welcome plans to beef up the enforcement of the minimum wage. It has needed beefing up for a long time and also needs an increase in its budget. I shall return to that later. I also welcome the plan to give further powers to the Employment Agency Standards Inspectorate. However, like my noble friend Lord Wedderburn, I am concerned about reform of the dispute procedure. We must ensure that what comes out of that does not affect the position of employees or trade unions who, in many cases, are in vulnerable positions. That is something that we shall be looking out for as we go along.

Like everyone else who has spoken on this side of the House, I am concerned about the code of practice that ACAS is drawing up. I do not see how we can debate this Bill, particularly as there will be enforcement powers, without seeing that. It is nonsense. Surely, we in Parliament have a right to see it and to debate it—how do we know what will come up?—whichever view we may take on the Bill. I hope that my noble friend will take note of that because nearly every speaker has referred to it. We are being bound by something and it seems absolutely ridiculous that we do not even know what will be said. I can see that he is taking notes about that.

The noble Lord, Lord Hunt of Wirral, asked what future role ACAS would have. That also needs to be explained. We know what its role has been in the past. It has been for mediation, to encourage collective bargaining and to try to get disputes settled at an early point. All of us on both sides of the House want to see that, but I agree that if ACAS is to have new powers it has to have the funding to carry them out. I want to stress that at this stage.

I am also worried about ETs. The noble Baroness, Lady Gibson, expressed a lot of concern about them. In relation to what happens to ETs and their role in the future, we must preserve and safeguard the position of people in difficult situations who are often in non-unionised companies. We need to protect their rights and ensure that there is no narrowing of the access to justice. My noble friend Lady Turner said that everyone had a right to their day in court. We must make sure that people will not be kept away and that tribunal staff themselves will not filter and stop people from going who should have that particular right.

The noble Baroness, Lady Gibson, said that there has been a tendency to look at the role of the chairperson and to diminish the role of the lay member. We do not want a situation where the lay person is not counted and where those whom we will call judges if this provision goes through will have absolute power in many cases. The knowledge of lay members has been very valuable indeed in relation to employment tribunals. We do not want to see that lost.

I said that the enforcement of the national minimum wage has been weakened in recent years. I welcome the Government’s proposal to double the enforcement budget over the next three years. That is a very welcome but overdue move, as is the tougher stance to be taken on penalty payments. Another factor that makes that absolutely necessary is the growth in agency employment and labour migration. We must address these new circumstances. I welcome the right for people to opt out of having to buy extra services from an agency. Many of them seem to be bound hand and foot by agencies as regards obtaining not only tools and uniforms but accommodation, heating, electricity, council tax deductions and even advice on visa assistance and training. There is almost a new kind of slavery growing up with the agencies and it is right that we should give people the right to break away from that.

I agree with what my noble friend Lord Wedderburn said about employment rights for agency workers. It is a great pity that this was not settled in Lisbon and that it must now be settled domestically. A solution to this must be found. I say to my noble friends on the Front Bench that a great opportunity was missed in not putting this to bed on that occasion.

I notice that the Government have put forward various options on financial loss. They have talked about option B and calculating interest. It has been suggested that this could be difficult as it could involve compound or simple interest and that neither side would know what was happening. It is also suggested that there are tax problems in relation to this. The case against the measure is rather overstated. I cannot see why there could not be a separate rule for the national minimum wage arrears and an award—an additional payment based on the arrears. I cannot see that there should be a difficulty with that but I agree with noble Lords who said that it is not just the wage itself that should be paid; compensation also ought to be awarded. I cannot see why we cannot build that into it.

Much comment was made by noble Lords opposite about trade unions and the judgment of the European Court of Human Rights in the ASLEF case. We shall have long discussions on that in Committee so I shall not go into it now but my noble friend Lord Wedderburn said that we may have to look again at the Long Title and see where we stand on this. We need to look not only at what happened in relation to expulsion but what would have happened in relation to other disciplinary action that might have occurred. However, we shall return to that matter.

I welcome the fact that we are returning to employment law. Let us hope that finally we can arrive at a solution that benefits all parties, is simpler and enables us to resolve disputes earlier. I look to play my part in Committee as this Bill goes forward.

My Lords, I welcome the opportunity to contribute to an important debate on an important Bill. I was slightly disappointed to hear the noble Lord, Lord Hunt, say that the Bill has little to say about, and will have no effect on, job creation. That may not be its direct effect but job creation is not meant to be what it is about. It is important to see it for what it is—a necessary tidying-up exercise. Many noble Lords referred to the number of employment Acts introduced over the past 10 or, indeed, 20 years. I do not think that is important. If legislation is necessary to improve employment law, it should be brought forward. The fact that it is often so necessary may be regrettable, but that is a separate issue. So long as we are improving the law, I see nothing wrong with introducing legislation and I do not think that anybody today has suggested that this Bill will not improve the situation in a number of respects.

We should regard this Bill as, rather than being concerned with job creation, addressing the needs of those who already have a job and are entitled to be treated fairly in all aspects of their employment. I think that everyone has accepted that the 2004 regulations were not a success in practice in resolving disputes. The Government have maintained their commitment to review them. As we have heard often today, that has been done and now we look to move forward. Those who had to use the regulations often reported that they were too complex and too unwieldy, so their demise through this Bill is welcome. In some cases the regulations acted as a barrier to justice for employees in non-unionised workplaces. That remains an issue, although it has not received much consideration today. How will people without access to representation appear before an employment tribunal, should that be necessary? In principle, there is no barrier to their doing so but, in practice, the barrier is there and is sufficiently daunting to dissuade all but the most determined and, it has to be said, financially secure from proceeding.

As a former employee of a trade union, of which three other former employees are represented on these Benches in this debate, I had considerable involvement with industrial tribunals, as they were then called. In those days, it was customary for an individual in a unionised workplace to be represented by his or her union official and for the employer to be represented by the head of personnel, as human resources departments were called in those days. The situation has changed and it is has become increasingly a legal battlefield, which I think is unfortunate. Indeed, my own union, which is now known as Unite, has resorted to having lawyers represent members in many cases rather than its own paid, full-time officials. I think that that is a shame, not just because I very much enjoyed the tribunals but because it has made it more daunting for individual members to pursue them—the question of cost is always there and the outcome is also less than certain, even when they win, as I shall illustrate in a few moments.

That brings me to a nub of the issue, which is slightly between the lines of this legislation: the question of unpaid employment tribunal awards. My noble friend Lady Gibson of Market Rasen and the noble Lord, Lord Razzall, mentioned this point. We do not have any official figures on how many cases occur where an award is made but is not paid by the employer. It is difficult to take that matter forward because many successful applicants are unwilling or, indeed, unable to take the matter up with their employer or, as is almost always the case by that time, their ex-employer. Employers who do not pay out are simply irresponsible and that behaviour cannot be acceptable in any situation.

Citizens Advice has provided a briefing for this debate. I want to dip into it a little because it contains interesting and important information. The briefing states:

“The Bill contains no measures to make it easier for successful claimants to enforce employment tribunal awards made in their favour”.

The research by Citizens Advice and its paper published in 2004 show that at least one in 20 awards made by an employment tribunal is simply not paid by the employer. The tribunals have no powers to enforce such unpaid awards. Instead, if the employer has not paid the award within six weeks, the successful claimant must enforce the award through the civil courts. Not surprisingly, most do not. I refer to the Citizens Advice figures, which provide clear evidence as to why they do not. The range of fees involved include £45 for obtaining information from the debtor about their assets, which may be needed to help to decide how to enforce the debt, between £55 and £95 to issue a warrant of execution involving bailiffs possessing assets for sale to pay debts, £55 to take out a charging order on a debtor’s assets or property, £55 to order a third party, such as a bank or building society with access to the debtor’s funds, to pay the debt directly, and £190 to declare a company bankrupt as a means of recovering the debt. This concerns action that is required to be taken and funds that are required to be spent by someone who has won their case; they have already won and are now being asked to win it again. To me that sounds remarkably like double jeopardy and it is completely inappropriate that anyone should consider that to be acceptable. We have an opportunity to legislate and this loophole should be closed.

In his opening remarks, the Minister mentioned that some £9.6 million had been identified in respect of arrears of the national minimum wage, that 14,000 people had benefited through the various means provided by the Government and that £3 million had been recovered. However, a considerable amount remains outstanding. In its briefing for this debate, the British Chambers of Commerce says that a failure by any employer to pay wages in line with national minimum wage regulations is an anti-competitive practice that impacts negatively on the vast majority of fully compliant firms. I thoroughly agree with that; I do not think that anyone could disagree. However, if that is the case, why should there be a laissez-faire attitude to employers who refuse to comply with an employment tribunal award? Why should the onus to win fall again on the applicant who has already won? That is unjust and I invite the Minister to say in his summing up why no such provision is in the Bill. I hope that a suitable amendment will emerge in Committee to ensure that winning a case at an employment tribunal brings with it the award decided on after all the facts have been heard by that tribunal.

I turn now to the question of employment agency workers and enforcement. It is said that there are some 1.5 million agency workers in the UK. They are often the most vulnerable employees and it is the understanding of most people that the powers of the Employment Agency Standards Inspectorate are less than adequate to deal with the extent of the exploitation that many agency workers face. It is often said that rogue employers and, indeed, employment agencies have too much flexibility in the treatment of employees, especially migrant workers. Many examples exist of permanent workers working side by side with agency workers who do the same work and hours for radically different pay, conditions, holidays, pensions and so on. That is unacceptable. Of course agency work is acceptable for some people. It may fit family circumstances or other aspects—perhaps the workers are partly retired and in receipt of a pension. Of course there are circumstances where that is suitable; if the individual is happy with that, that is fine. However, many individuals are not happy with it and we have to legislate with them in mind.

I repeat the comments of my noble friend Lord Hoyle and many others that it is unfortunate that the recent Lisbon process was unable to reach a conclusion on equal rights for agency workers. However, the Government will soon have an opportunity to resolve the matter at a domestic level because, as my noble friend Lady Turner of Camden said, a Private Member’s Bill is to be put forward in another place by Andrew Miller, the Member for Ellesmere Port and Neston. He has at least something in common with me; he may not think that he has much in common, but we started our work for a union that was, back in 1977, called the Association of Scientific, Technical and Managerial Staff. It has gone through three name changes since then. He is at one end of the Corridor and I am at the other, but I certainly support what he is attempting to do in his Private Member’s Bill, which comes to the House of Commons next month. I very much hope that the Government will see what they can do to speed up the progress of that Bill. Opponents will say that it could cost jobs, lessen flexibility and cause harm in various ways, but I seem to remember that the same arguments were advanced 10 or 11 years ago when the national minimum wage was first proposed—and, of course, employment has risen in that period. Not too much time needs to be spent listening to the scaremongers. There are positive reasons for doing what is suggested in Mr Miller’s Bill and I hope that it will have the necessary support.

The strengthening of penalties for offences by employment agencies under the 1973 Act is to be welcomed, particularly the opportunity for cases to be heard in a Crown Court where there is no limit on the fine that can be imposed. There is also a proposal to increase the fines that can be imposed by magistrates’ courts to a statutory maximum of £5,000. I should point out to noble Lords who are not aware of it that last month the maximum figure in Scottish courts was increased to twice that amount. I hope that the Government will consider following suit at a suitable time in the not-too-distant future, because the potential increase could be a considerable deterrent for errant employers.

The doubling of the enforcement budget of Her Majesty’s Revenue and Customs during the next three years and the increased penalties provided for in the Bill are also welcome and will help, but not by as much as an extension of employment rights for agency workers would. I shall finish there. Like other noble Lords, I look forward to participating in the debates that will follow in the Committee stage of this important piece of legislation.

My Lords, as ever, I must emphasise that I speak as a non-lawyer, but I have been a frequent customer of the employment laws for a long time, often in difficult and complex circumstances. As such, I was extremely surprised and concerned, in the debate on 17 December on the statutory instrument on employment agencies, to discover that aspects of the law that were apparently set down in the 1978 employment legislation had been widely, easily recognisably and consistently broken since then and that the Government appeared to be unaware and not in the least bit concerned about that. In response, they actually asked me for evidence of where those breaches were occurring. I hope that the Minister, the noble Lord, Lord Bach, found in his e-mail the answer to that question; I sent him details of at least half a dozen of the companies concerned in that breach.

My concern this evening is that it is quite unreasonable that a Bill of this importance, which effectively, by implicit consent, endorses the breach of those laws, should go forward. It does not set out to rehearse them and ensure that they are understood. These breaches are surely failures of comprehension, clarity and rigour in the management and application of the law. The first breach that concerns me relates to the requirement enshrined in the original 1978 legislation and reiterated in the statutory instrument passed by this House on 17 December that no fees should be taken by an agency from a jobseeker; they should be taken only from a job provider. This requirement has been breached for a great many years through the function known as the outplacement agency, whereby a redundant executive goes to an agency and asks it to represent him in finding job opportunities for which he can apply. The agencies appear to have been in breach for most of the past 39 years or so by ignoring the fact that they cannot take the fee directly from the jobseeker. That is still happening to this day, although to a very much lesser extent than used to be the case.

During the debate on 17 December, I witnessed considerable surprise on the government Front Bench when I announced that at times the fees for representation by these agencies were as high as £2,000 per month per individual. That figure is correct. Since then, I have been doing further research and have found that the agencies have now decided that they are not strictly outplacement agencies according to the old concept but consultant agencies helping to improve candidates’ prospects of getting a job by being better groomed and turned out and by putting them through a process of mock interviews to prepare them for the rigours of getting a job at the tough end of a market. That would be all very well except for the fact that their fee structures still range from a simple £500 for teaching someone how to dress for an interview to £5,500 for teaching a person how to access a database that will tell them where the opportunities are and enable their CV to be better prepared and written.

These agencies also provide the opportunity for people to spend time on their premises, where they are given an endless supply of coffee and access to newspapers and databases. In some cases, as sadly I know, people who have been made redundant have not told their wives that they are out of a job but have hidden in these places throughout the day, spending their entire redundancy money there until it has all gone. In one case, an individual was found in his potting shed three weeks after he had died—his wife had left him. Therefore, these places have a dubious background and ethic, and it is wrong that they are not regulated or brought within the compass of the Employment Act. I invite the noble Lord, Lord Bach, to consider whether the Government can introduce their own amendment to provide for at least the establishment of a code of practice whereby these organisations would gather together in a trade representation body and agree to be bound by sensible rules enshrined in the law. I do not think that they should be allowed to continue in this undisciplined manner any longer. That is my first, serious concern. If the Minister has an appetite for it, I can provide him with half a dozen names for him to investigate in addition to those that I gave him this morning.

My second concern is one on which we have to be very cautious because it deals with a matter that is sub judice. I shall not identify it but it deals with the group or collective block-booking of large numbers of temporary staff for a single assignment—for example, the catering staff for a sports event. I refer to a number of young people who live away from home and not necessarily in well controlled conditions as regards their upkeep, welfare, moral oversight or anything else. These young people are block-booked and I am concerned about the pressures that they are put under and whether the agencies exercise due responsibility for their moral and physical welfare.

That matter was touched on in our debate on Regulation 7 of the instrument that went through on 17 December but I do not believe that it was addressed anywhere near toughly enough. Since then, there have been some unfortunate allegations of misbehaviour elsewhere in this country, which, had they come about a week earlier, would surely have provided a different focus for our debate on that instrument. Therefore, again I ask the Minister to consider the possibility of correcting the imperfection of the regulations passed on 17 December by bringing about a stricter, more vigorous and more rigorous control over the future recruitment of temporary staff by that sort of block-booking, because I think that it is quite wrong as it stands.

Those are the two concerns that I present to your Lordships with a specific request for amendments. I think that it would be better if those amendments came from the Government and I invite them to consider that.

I wish to raise two other points, which are requests for clarity. The first relates to the apprentice system, which is a matter for later debate. My recollection of apprentice control dates back to my days of running a very high-skill shop floor, when we were heavily dependent on toolmakers and so on. Over the past few days, I have been asking some of my former colleagues what happens today. They all looked at me and said, “We didn’t know that you had taken the title of ‘Lord Dinosaur’”. “Why so?”, I asked. They replied, “We don’t have anything like that nowadays. We don’t bother with those high skills any longer. We just buy it all from Italy. We don’t need apprentices in high-skill categories”. When we come to look at the apprentice issue, could we consider whether there should be a more positive, proactive element in the Bill to bring about more unity between the workforce, management and unions by sponsoring the return of some of those higher-grade skills? They do not appear to be there at the moment and this would surely be a good opportunity to encourage their reintroduction.

There was once on the government Benches the great and much lamented Monty Finneston. In 1977, he wrote a magnificent report in which he was all too prophetic about what would happen to the skill base of British industrial society. Because it was so good, it was largely completely ignored and unused but it provided an absolutely brilliant analysis of what the future held, and that is what we have today. There are no skills and very little high-skill industry. There is all the electronic stuff but that is what we have learnt latterly. We still do not produce the good industrial floor skills that we had. My noble friend Lord Hunt said that we should be looking at job creation, but what about job protection and protecting the skills that we have and what is left of British industry? Are we doing enough to bring about a positive factor involving the co-operation of the unions and management?

In my time, the shortfall in apprenticeships lay in the fact that the unions would not sanction the payment of an adequate wage for an apprentice because it would eat into the wages of the master teaching him. That is no longer a factor and to some extent the situation is covered by the minimum wage, but should there perhaps be a separate and higher minimum wage for people taking high-skill apprenticeships? That is the only way that they will be kept going through the five long years of serving to become a toolmaker. Without it, we will not succeed in providing an adequate additional incentive. Those would-be apprentices could certainly earn enough to marry a pretty girl at the age of 19 by being a bus conductor but they could not do so by being a tool apprentice. That is something about which the Government should think very hard in the debate on apprentices.

My final point is also a request for clarification. One factor that has been a thorn in my side but which I would not be without is trying to work within TUPE. As I said, it is a pain that I do not wish to be spared. I should like to know whether TUPE is a British institutional law that will work independently and whether it will be secure against the privations and invasions of Europe. For example, if I sell a business in Basingstoke and its assets to a company in Bradford and I have 500 unemployed people in Basingstoke, I have a responsibility for those people, regardless of the fact that the expanded market may produce 1,000 jobs in Bradford. That is fair enough, but under the present laws I would have a potential liability of £50,000 per head for the people whose jobs were transferred to Bradford. That total of £50,000 a head for 500 people would be too much, so I would not go ahead with the deal. However, what would happen if, instead, I sold my company in Basingstoke to a company in Bayonne or Hamburg? Would I have the same rights and the expectation of being able to call on the same compensation, and would it have the same impact on the viability of that deal? I should like clarification on how far TUPE is matched by European law or whether it comes outside that law and can be subverted, diverted or avoided.

Those are serious points which should be considered. The first two are essential for inclusion and on the latter two I seek clarification.

My Lords, I start with a double declaration of interest. I am a member of the trade union Unite and I also sit as a member of the Employment Appeals Tribunal.

In his introduction to the Bill, my noble friend Lord Jones of Birmingham said that it was predicated on the twin pillars of economic prosperity and social justice. Although I can see much economic prosperity, I am still searching for the same degree of social justice, and I shall say a little more about that later. For now, I draw attention to the proposals on the national minimum wage. The emphasis for change is not that low-paid workers are being exploited by unscrupulous employers, but that some employers complain of undercutting by their competitors who do not pay the minimum wage. The emphasis on enforcement for non-payment of the minimum wage is not on the failure to pay, but on the failure to comply with the enforcement notice.

The key principles of the Bill are rightly focused on a number of fault lines in the current employment legislation which need to be addressed; for example, the structure for the resolution of disputes. Therefore, the Bill offers a real opportunity to rebalance the current provision for dispute resolution, including the employment tribunal process. Here I fully support my noble friend Lady Gibson of Market Rasen, who expressed her concerns about employment tribunals. Under successive Administrations, the key pillars of the employment tribunals have stood the test of time. That is to say, tribunals have benefited from the knowledge and experience which lay members from both sides of industry bring, ably supported and guided by the eminency of a learned chairperson. It is important that the current safeguards are preserved, but it is most important that access to justice is maintained. I hope that, in his response and through the various stages of the Bill, the Minister will assure the House that this delicate but constructive balance will not be put at risk.

We all want to get rid of rigidity and unnecessary red tape in the labour market, but as the labour market develops an even greater degree of flexibility, so the need for better employment safeguards increases. Reading the Explanatory Notes to the Bill, one could be forgiven for thinking that the provisions are addressing a balanced relationship in the workplace on the issues raised. But nothing could be further from the truth. That relationship is not about equity of resources—resources have not been deployed equally in industrial tribunals for those whom the Bill aims to help the most—it is about access to justice.

Although I very much welcome the principles in the Bill, it is still a Bill of missed opportunities. There are two particular areas of disappointment. First, the Bill misses the opportunity to do basic justice to agency workers. My noble friend Lady Turner of Camden and other noble Lords have already drawn attention to the proposed Private Member’s Bill coming from another place. The scale of the problem is set out in a recent article by the Member who intends to promote that Private Member’s Bill on agency workers. He freely admits that many of the 1.4 million agency workers in the UK are treated well and enjoy the flexibility that that pattern of employment provides. For the majority of them, however, it is a very different story. He describes a firm in his constituency where workers were employed for 15 years as temporaries. The matter came to light only when the firm closed and those agency workers received not a penny in redundancy pay after 15 years. One can only describe that not as temporary employment but as permanent abuse. As I said, although I can see the economic prosperity in that scenario, I fail to see the social justice.

The article describes the three-tier labour market, each tier on different terms and conditions, made up of the directly employed, agency workers and casual workers. Bottom of the bottom are the council cleaners, some of whom might even be working in Whitehall, lined up at 5 am waiting to find a day's work, waiting to see whether they will be picked. It is reminiscent of the pre-war period of casualisation in the docks industry, when dock workers had to enter what was called “the pen”, waiting to be inspected and hoping to be picked by the supervisor for a day’s work. No one in this House can imagine the sense of shame and worthlessness of having to return home and confess to your family that you were not picked for a day’s work. Let us be clear: all of this as it currently applies to agency workers and to casual workers is legal. It is being done in our name and in the name of the flexible labour market. It may bring economic prosperity but it certainly does not bring social justice.

What has been our Government’s response to this exploitation of agency workers? Let me tell you. Our Government have worked tirelessly to deploy as much resource as possible to block the European directive aimed at giving rights to agency workers. Indeed, it is not too strong to suggest that the Government worked tirelessly to maintain legalised discrimination against agency workers. That may be in the name of economic prosperity, but it certainly is not social justice. Some will argue, as has been said today, that such practices will ensure continued employment. Tell that to the people waiting in the pen from five to nine without being chosen. Up and down the country there are thousands of first-class agency workers who are keeping the economy going but are treated as second-class citizens.

The second area of missed opportunity is the failure to extend to other employment sectors, such as construction, the legislation regulating gangmasters in the agricultural industry. Make no mistake: there is an army of gangmasters in the construction industry and their behaviour is infinitely worse than that which motivated the regulations to control gangmasters. The plight of agency workers which I have described is liberated luxury compared with the conditions of abuse and exploitation suffered by workers in other sectors of the economy. It may be legal but it certainly is not moral.

Finally, I have some difficulty with Clause 17, which proposes the exclusion of trade union members. To be judged by our actions—on what we do, not on what we are members of—has long been a cherished tradition of freedom and liberty in our country. Having examined Clause 17, I ask myself where unacceptable membership starts and where it ends. What organisations will be proscribed? Is there a list that will form an addendum to the Bill? Who will be the judge? Where are the safeguards? Is this the first step not only towards expelling someone you do not find favour with but to banning the organisation to which they belong? It is just one small step. I ask the good people of Barking to forgive me, but I believe that Clause 17 is barking mad.

My Lords, there is fairly general agreement on and support for this Bill—apart from the previous speaker’s trenchant remarks—although of course some concerns have been raised. It was particularly encouraging to hear the Minister say that it will lighten the regulatory burden on business and to hear talk of the saving of millions of pounds for business.

There are encouraging signs, but as always I am sure that the Minister will forgive me if I say that we wish to wait and see. I hope that it will be so, since on these Benches we see this as only a start—one of many in the past—of reducing burdens. As my colleague my noble friend Lord Razzall said, more could have been done even now in a number of areas of the Bill. At this point, I repeat the call that we have made here and in the other place frequently, and which we will continue to make, for effective regulatory impact assessments.

My colleague also spoke about the possibility, among others, of a fair employment commission. We on these Benches feel strongly about the need for consolidation, this being the 29th piece of legislation, so there is still much to be done. It was welcome to hear the noble Baroness, Lady Miller, robustly agree with us on that point—as of course did the noble Baroness, Lady Wilcox. The point was well made by my noble friend Lord Razzall that those on the Conservative Benches must tread with care—as they do—since it has frequently not been clear whether they have been for or against many employment regulation Bills that have helped the workforce enormously. I can attest to that having scrutinised many Bills while I was in the other place—particularly on the national minimum wage legislation. I can tell the noble Lord, Lord Wedderburn, that the Conservatives do not always squeak. They certainly did not squeak when we debated the National Minimum Wage Bill; they were robustly, loudly, vociferously and at length against the national minimum wage, as I can attest by the Committee sitting we had that went on for 24 hours. I note that the Minister nods. We very much supported the national minimum wage and I am glad that the Conservatives have finally seen the light. We have always supported the national minimum wage. Indeed, even at this stage, we are still somewhat concerned about young people getting a fairer rate than they do now. But it is welcome that the Bill will strengthen its implementation and introduce strong penalties.

On workplace dispute resolution, many noble Lords have raised points, which we welcome having the opportunity to discuss in Committee. The matter of the definition of people’s status has been referred to, whether employed or self-employed. I am sure that the Minister will recollect IR35 when status seemed to be decided by the tax authorities.

I turn to Clause 17, about which my noble friend Lord Lester and others have expressed concern. As he said, the clause gives broad powers to trade unions with no safeguards against abuse of those powers. I join my noble friend in paying tribute to trade unions and their work. He said that there is concern about the words “mainstream political parties”. My colleague addressed various points with clarity and in great detail, and raised the issue of adopting option B as opposed to option A. I hope that the Minister will make a positive response to that point.

In conclusion, there are many other issues that we are looking forward to debating in Committee. We on these Benches broadly support the Bill in the hope that it will reduce the burden on employers and increase fairness for all—especially for employees who have been and are unfairly treated by rogue employers over the minimum wage, or at least the lack of its implementation.

My Lords, I start by offering a little advice to both the Liberal Front Bench speakers who seemed to devote most of their time to attacking this party. I advise them that it might be worth marching towards the sound of gunfire in future. The opposition is opposite.

My Lords, the noble Lord, Lord Henley, is being seriously silly. I spent 10 seconds attacking the Conservative Opposition and my colleague, my noble friend Lord Cotter, probably spent 12. That is 22 seconds out of 20 minutes, which is not spending all of our time attacking the Tory Party, however justified that might be.

My Lords, the noble Lord is being oversensitive. I suggested to my noble friend that it smacks slightly of a faint element of Stockholm syndrome, but I shall leave it at that. I shall explain the syndrome later if the noble Lord so wishes.

I start by offering my thanks to the noble Lord, Lord Jones, particularly for the letter that he so kindly wrote to us on 27 December. We admire his hard work and admire the fact that he took the trouble to come back from—I presume—Birmingham on the train, if it was working, or perhaps a ministerial car brought him back to Victoria Street. It is an important letter because, as the noble Lord, Lord Hoyle, reminded us, the noble Lord, Lord Bach, will hold an open-house-style briefing session in the House of Lords. The noble Lord, Lord Hoyle, put the point bluntly and said that he very much hoped that the noble Lord himself will take that briefing session. We appreciate that the noble Lord, Lord Bach, is an experienced Minister and has served in a number of departments in this House. But this is the Bill of the noble Lord, Lord Jones. He has put his name to it and he has made the declaration that the Bill is compliant with the European Convention on Human Rights. He is the one responsible for the Bill and is answerable to the House, so he ought to be at that meeting.

Secondly, as the noble Lord will know—this point was raised by my noble friend Lord Forsyth and others—we have agreed to take this Bill in Grand Committee in the Moses Room. I understand that the usual channels have already put together dates, which I have in my diary. It would be only right if we could get an assurance from the noble Lord—if he wants to interrupt me now—or a commitment that will have to be made by his noble friend Lord Bach that he will be present for the Committee stage of the Bill.

I have been in this House for a number of years. I served as a Minister for some eight years so I know of the pressures on ministerial diaries and that we have to do other things on occasion. I know that Ministers sometimes could not be present for the whole or some part of a Bill. Illness may have taken them away, or something else, but in the main in all the 30 years I have been in this House—as long as the noble Lord, Lord Wedderburn—I have always known Ministers to make every possible effort to be there for Committee and later stages of Bills. I have never asked this before, but on this occasion it is right to seek a firm commitment from the Government that the Minister will try to be here for the Committee stage of the Bill. One of the reasons why we have Bills in the Moses Room is to give greater flexibility on dates to allow Ministers to fit them into their diaries. If the Minister has other duties that will take him away on the dates that have been discussed by the usual channels, I am sure that we and noble Lords on the Liberal Benches will be prepared to look at our diaries to find other dates that will suit the Minister, but all of us would like to see him take the Bill—his Bill—through all its stages in this House.

That brings me to the question of consolidation. I find I am in agreement with both the Liberal speakers on this occasion—it is rather nice to be in agreement with them. As many noble Lords will know, the Bill was originally entitled the Employment Simplification Bill. We know that the Government are very keen on spicing up the names of their Bills to imply that they do more than they possibly ought to, just as they spice up the names of their departments. The Minister now represents something called the Department for Business, Enterprise and Regulatory Reform—whether it achieves any of those things is another matter. This Bill was originally called the Employment Simplification Bill and it is now purely the Employment Bill—simplification has been dropped. Is that an admission that for all its good intentions—and there are some good intentions in the Bill—it does not amount to very much, as my noble friend Lady Wilcox put it and that, as my noble friend Lord Hunt put it, it lacks a theme? Like Churchill’s famous pudding, the Bill lacks a theme and does not amount to very much. It simply further complicates the statute book and brings in further unnecessary complications.

As my noble friend Lady Miller and the noble Lords, Lord Razzall and Lord Cotter, put it, we need consolidation. We have had 29 Bills relating to hiring and firing since 1997 and I imagine that we have had 10 times that number of statutory instruments. Can the Minister say whether that figure is correct? How many more regulations will the Bill bring in? Since it was originally called the Employment Simplification Bill and comes from the department for regulatory reform, how many will it repeal? In passing, I shall say that I am quite grateful to see that the first two clauses relate to repeals.

With all this extra complication, how can the poor employer, especially the small employer, cope? The Minister, with his former responsibilities and experience at the CBI, might feel he knows all about big business, but he does not necessarily know much about how small businesses cope. Does the Minister accept just how difficult it can be to employ people? I do not know whether he has come across the recent survey, which was referred to earlier, that found that one-third of businesses are prevented or deterred from employing people by the complexity of the legislation, particularly when it comes to getting rid of people. If you cannot fire people it is very unlikely that you will want to hire them. What does the Minister say to that? The case for consolidation seems to be overwhelming.

I shall turn briefly to the Bill, which was described by my noble friend as lacking a theme. As the noble Lord made clear to us, it is in four parts. The first part deals with dispute resolution. In it we see the abolition of something brought in by the Government only two, three or four years ago. It seems to be an odd way of proceeding first to legislate, then to announce a review of that legislation and then to repeal it. I suspect that life might be easier if the Government accepted a few more of the sunset clauses that we occasionally suggest. It would save them the trouble of repealing parts before they brought in further changes.

Like others, I noticed with amusement that the noble Lord, Lord Wedderburn, felt rather deeply that the role played by him, the noble Lord, Lord McCarthy, and the noble Baroness, Lady Turner, in the opposition to the part brought in in the 1992 Act had been underplayed. In turn, he wanted to underplay the part played by my noble friend Lady Miller. We all know that she does not squeak. I was her Chief Whip for some years, and I know with some pain that she does not squeak and can howl and roar just like the best of them. The simple fact is that we did oppose it, as did the noble Lord, and the Government are now repealing it. The important thing is to ask them what next? As was stressed by my noble friend Lord Hunt, the noble Baroness, Lady Turner, and the noble Lord, Lord Hoyle, it seems to be difficult to know how we can discuss these matters if we cannot see the codes themselves, in particular, those in Clause 3(2)—if I have got that wrong, I am sure that the noble Lord, Lord Bach, will correct me. It is important to say to him that we want to see them. When will we see them? Can we have an assurance that we will have something to see—in the form of those codes—before we get to Committee stage? If not, could Committee stage possibly be delayed? It might also be convenient to delay it a bit longer for the noble Lord, Lord Jones. As the noble Lord, Lord Wedderburn, put it, we need to remove the uncertainty in the Bill.

Turning to the national minimum wage, I echo everything that the noble Baroness, Lady Gibson, had to say about the cadet force adult volunteers. Like the noble Lord, Lord Bach, I served for a short while as a Minister in defence, and I hope we did what we could to support them. We always looked for a great deal more support from all other aspects of the Government and all other departments. I am very grateful that here is another department doing its bit to support the work of something that emanates from the Ministry of Defence but benefits the whole of society—the cadet force movement and the work of the adult volunteers. In passing, I shall put one brief point to the noble Lord in a genuine spirit of inquiry. It is something that we might want to come back to in Committee. Are there any other volunteers or people in an analogous position who might also have to be considered? For example, there might be some people in the TA or retained firemen. Are there others? I hope that the noble Lord will give that some thought—we will give him an opportunity to give it some thought when we reach Committee stage.

There are one or two other Committee points that we will want to pursue at a later stage. In particular, I understand that offences will now be triable as indictable offences, not just summary offences, which will mean higher levels of fines. I move over employment agencies because that involves detail that might be more appropriate for Committee stage.

The fourth aspect of the Bill is trades union membership—ASLEF v UK. The noble Lord, Lord Morris of Handsworth, said, with apologies to the residents of Barking, that he thought that this was truly barking. If one does not want to go that far, one might say it is at least two stops short of Barking—Upton Park. We can look at that in due course. The general point, however, that seemed to emerge from those who spoke—I am especially grateful to the noble Lord, Lord Lester, and my noble friend Lord Campbell of Alloway—was to stress, following the considerable unease expressed by my noble friends Lord Hunt and Lady Wilcox, that there is no safeguard against abuse. That is our concern and that is what we want to pursue at a later stage of the Bill, whenever that may come.

I look forward to the Committee stage. I repeat again that it is important that the Minister should make himself available to the House. I regret having to put it in those terms, but because there seems to be some doubt, it is important to do so. We look forward to Committee and later stages of the Bill and, this evening, we especially look forward to the reply of the noble Lord, Lord Bach, on behalf of the Labour Party.

My Lords, first, let me say what a pleasure it has been to listen to this Second Reading debate. There is a huge amount of expertise on all sides of the House in this field and the speeches have been extremely powerful. The speech of the noble Lord, Lord Lester, was powerful. On my side, if I may mention it in particular, not to embarrass him, the speech of my noble friend Lord Morris of Handsworth was powerful.

This is an interesting Bill, which has been criticised for being something that it has never claimed to be. It is really a bits and pieces Bill in dealing with employment law—nothing wrong in that, I think—concerning major and important issues. Indeed, I do not think that we should have had such powerful and impressive speeches if it had not raised such issues. It is not a minor piece of legislation by any means, but please see it for what it is and let us judge it on that basis.

The noble Lord, Lord Henley, said—I think probably tongue in cheek; I hope so, for his sake—that this is an odd way of legislating: to legislate, agree to have a review in a couple of years and, if the legislation is working well, not repeal it, but if parts of it are not, repeal them. That seems to me, as it did to the noble Lord, Lord Razzall, an immensely sensible way to deal with complicated matters such as this.

The noble Lord, Lord Hunt of Wirral—I thank him very much for his kind words, but I knew that a “but” was coming eventually—talked about the Bill not being about job creation. I think that my noble friend Lord Watson dealt with that to some extent. No, it is not a Bill about job creation, but I think that we will all agree—I know that the noble Lord will from his time when he was Employment Secretary—that the better employment relations are, the better it is for economic success in the country. In that sense, a Bill that is aimed at better employment relations goes to the heart of whether we remain a successful economy.

I am sorry that the main opposition party does not really support the Bill. I was hoping for words of support from the Front Bench, but I never got them. I was disappointed. The Liberal Democrat Benches were much more favourably inclined. The CBI, the voice of business, is very encouraged by the Bill and supports it a great deal. I make no apologies whatever for pointing this out, especially to the Conservative Party opposite. It states:

“The CBI welcomes the Employment Bill and supports its major provisions. The Bill provides a balanced package of measures which will help promote the resolution of disputes … and protect vulnerable workers”.

Not bad. Even noble Lords opposite may have received the TUC’s comments on the Bill. It, too, in general terms, supports it—not completely, but it supports it. On this occasion, as has perhaps been true about industrial relations for a long time, the party opposite is the party out of step.

As for employment, we heard comments about difficulties there. I point out to the House, if I may, that employment in the UK is at its highest level since comparable records began, with 29.3 million people employed as at October 2007. The employment level in October 1997 was 26.6 million, so that represents a 10 per cent rise in the number of people in employment since October 1997. By any standards, that is not a bad record.

I want to deal with as much as I can in the limited time available to me. If I do not succeed in answering everyone's questions—of course, I will not—I will try to write with the answers to particular questions. We know that many of these issues will come up in what will undoubtedly be a fascinating Committee.

On consolidation, the Department for Business, Enterprise and Regulatory Reform is undertaking a major project to improve and promote guidance on the body of employment law. That is projected to save £365 million per year by 2010 by reducing the cost of understanding and complying with employment law. That is as far as I can go in answering the questions about consolidation. A fair point has been made all around the House about that.

What is the Bill trying to do? It is trying to strengthen and clarify key aspects of employment law. In doing so, we believe that it will improve the effectiveness of employment law for the benefit of all: employers, trade unions, individuals and the public sector. Importantly, we argue that it brings together both elements of our employment relations strategy: on the one hand, increasing protection for vulnerable workers; and, on the other, lightening the load for law-abiding businesses. I argue that that is exactly what the Bill does.

There are four parts to the Bill, and I shall deal with them as shortly as I can. Dispute resolution is one. The national minimum wage is second. Employment agencies are third. The fourth is the vexed issue about which we have heard especially impressive speeches: Clause 17. I will not do justice to any of those four tonight, but let me try to deal with some of the issues that arise from them.

On dispute resolution, in Clauses 1 to 7—praised even by the party opposite for their deregulatory effect; I am grateful for small mercies—the Bill provides for the repeal of the statutory dispute resolution procedures and implementation of a package of replacement measures aimed at ensuring that the underlying principles of good practice in resolving workplace disputes are followed, while removing inflexibility and reducing administrative burdens. Many noble Lords wanted to know about the package. It includes statutory changes, revision of the ACAS code on disciplinary grievance procedures—I shall say more about that in a moment—and substantial investment to improve advice to employees and employers and to provide additional ACAS conciliation services. Through those measures, we seek to encourage more early and informal resolution of disputes.

As regards some individual questions raised, the noble Baroness, Lady Miller, made the very important point that one size does not fit all. She is absolutely right. We need some flexibility. The dispute resolution provisions will abolish what has turned out to be a fairly inflexible statutory provision. The chair of ACAS has confirmed that the revised code on discipline and grievance will be short, principles-based and proportionate. My noble friend Lord Hoyle asked about the role of ACAS, and other noble Lords, including my noble friend Lord Wedderburn, were also concerned about that. ACAS will continue to have its current role in conciliating disputes. We are going to invest new resources—the noble Lord, Lord Hunt, was also concerned about this—in disputes which are not yet the subject of an employment tribunal claim. The Bill will enable ACAS to use these resources to best effect where it is needed to conciliate in pre-tribunal disputes.

Why does the Bill not state when the ACAS code is the relevant code for the purpose of tribunal judgment? The tribunal has a duty to take into account any procedural provision of a code which appears to be relevant to the proceedings being decided. My noble friend Lord Wedderburn went on to ask why we could not delay consideration of the Bill until we have the revised ACAS code. I know that there is strong feeling around the House that it has not seen enough yet. I understand that. I want to be careful in the words that I use now, so that they are not held against me in the future, although I am sure that no noble Lord would be so mean as to do that. I will do my utmost to ensure that a draft copy of the ACAS code is with noble Lords by the time we get to Committee. I make no promise that that will happen, but I will do my utmost—and my noble friend Lord Jones agrees that he will, too—to ensure that it does. The point is well made: a draft copy of the code is necessary. However, those who have been in and know about government will know that these things are not always quite as easily available as we would like. I hope I have dealt with that point and the one about resources.

Alternative dispute resolution is an important issue. We agree that mediation often provides an excellent way to resolve disputes, and will invest resources in improved advice for people in dispute that will include advising on all the potential mechanisms for resolving disputes. I hope that goes some way to dealing with that point.

The noble Lord, Lord Razzall, my noble friend Lord Watson and others talked about a fair employment commission to enforce tribunal awards. There are new powers in the Tribunals, Courts and Enforcement Act 2007 which streamline the process by which unpaid awards are enforced. They may be enforced in the same way as any county court judgment if unpaid after 42 days. I hope noble Lords will be patient. We want to assess the effectiveness of these measures before considering any potentially more burdensome methods for enforcing awards, but we know how strongly it is felt that some enforcement is necessary.

There is obviously strong feeling, perhaps mostly from behind me, about employment tribunals and where they are going. My noble friend Lord Wedderburn talked about tribunals deciding cases without hearings: fast-track cases. I make it absolutely clear that each party will have the right to request an oral hearing in any fast-track case. The human right to a fair trial can generally be waived in any case. The clause in fact introduces more safeguards to this power than previously existed.

The noble Lord also asked whether we can guarantee that a lay member role in tribunals will be maintained. Responses to the consultation showed the great importance placed by many tribunal service users on the role of lay members. I emphasise that the Bill makes no changes to that role.

My noble friend Lady Gibson asked about the threat to the employment tribunals as a separate pillar. We are committed to the maintenance of employment tribunals as a separate pillar within the tribunal service. Employment judges will still be required to have seven years’ legal experience before appointment.

My noble friend Lord Hoyle asked whether he could be assured that there would be no change in workers’ ability to go to an employment tribunal. Yes, there is no change at all in the right to go to a tribunal. The abolition of pre-acceptance mandatory procedures will ensure that technical failures by claimants do not invalidate their claims. Of course that right will exist. One of the issues is whether it should always be exercised.

My noble friend Lord Wedderburn asked about the status of voluntary agreements between workers and managers to resolve disputes. The tribunal will be able to take into account how far a party unreasonably failed to follow the provisions of the ACAS code. The code will be principles-based, and so it is likely that agreed arrangements, if followed, will be compliant.

My noble friend Lord Watson asked how non-unionised workers can access the tribunal. We intend to invest significant resources in better advice services from ACAS to ensure that all employees and employers have access to the best advice on how to sort out the disputes.

My noble friend Lady Turner asked about arrangements for bringing class actions. I have noted what she has said, and will pass her comments to the Minister responsible so that she gets a proper reply to that. The noble Baroness, Lady Miller of Hendon, talked about Clause 2 requiring a tribunal to find a dismissal unfair for the slightest error in procedure. The consultation certainly showed that most people believe that the clause that we have drafted reverts to a well understood position, where the tribunal must consider whether the employer acted reasonably in issues of procedure. This was supported by many consultees as a fair balance, but I am sure that we will come to this in Committee.

Moving quickly on, there was widespread support in the House for the measures we are going to take on the national minimum wage issues. There was a slight reluctance by the noble Baroness, Lady Wilcox, but we can forgive that bearing in mind her party’s record in this issue. Still, I know that it is now the policy of the party opposite to support the national minimum wage and, for that, everyone will be delighted. Since April 1999, enforcement teams have identified more than £27 million in wage arrears. In 2006-07, arrears of £3 million were identified as being underpaid to 14,000 workers. Do not just look at the figures; they are high enough as it is, but we are talking about underpayments to the worst-paid in our country. That, of course, is the point of the national minimum wage in the first place.

Non-compliance was raised by the Low Pay Commission in two annual reports: 2005 and 2007. Almost 10 years after the introduction, we consider—and I believe that this has general support—that it is right to strengthen the national minimum wage enforcement regime to encourage compliance by creating sanctions for employers who do not comply. We want to send a clear message that non-compliance is not an option. This is not just for the low paid. It is very much for the vast majority of British employers who pay the national minimum wage as the law requires.

I know that we will come back to the national minimum wage in Committee, but I will move on and say a little about agencies. There are real issues around employment agencies, and we understand the strength of feeling on all sides of the House about how some employment agencies behave. It must be said that the vast majority of employment agencies behave well. My noble friend Lord Morris, who went on to criticise the status of some of the workers there, made the point that many agency employees were well looked after. It is important to remember that. The noble Lord, Lord James, had some particular issues about this which were important. He will forgive me if I do not deal with them today; I will write to him with the answers to his queries.

The general point about employment agencies is that we continue to support the underlying principles of the draft agency workers directive, but we want a directive that offers appropriate protections and does not damage economic flexibility or close off a valued route into employment for many people. I do not claim that getting the balance right is easy, but it is something that any Government must do.

Finally, because I want to finish in two or three minutes, I move on to Clause 17, which in some ways probably dominated—

My Lords, could the noble Lord explain the intendment of the clause having regard to the concession that there is to be a proportionate resolution?

My Lords, I shall try to answer the noble Lord’s question. This was a decision made by the European Court of Human Rights. Over a number of years, government policy on human rights issues has been that it is right for us to follow what the court says. Most people, whether or not they are critical of what we are trying to do, would agree with that, which is a starting point. But significant issues have been raised by the noble Lords, Lord Lester and Lord Campbell, and others.

Let me make the following points briefly. Clause 17 increases the freedom of trade unions to set and apply their own membership rules. Of course, where individuals believe that a union has applied its membership rules wrongly or arbitrarily, such individuals can take legal action against a trade union for a breach of rules. There may be issues around a complaint made to the certification officer about such alleged breaches of rules. Noble Lords are concerned that, despite the court’s judgment, Clause 17 provides too much freedom to trade unions, and I want to make two points about that.

First, the origins of the provisions which Clause 17 seeks to repeal were found in the 1992 Act, which came into force in 1993. We are not talking about a fundamental or a long-standing feature of our trade union law. There is no evidence either before or after 1993 that trade unions have sought to expel or to exclude individuals for belonging to mainstream political parties. The example raised by the noble Lord, Lord Fowler—who is not in his place and did not speak in the debate, but posed a question to my noble friend—is a case in point. When he was a Minister and a member of the NUJ, there was no such law in existence as that which we seek to repeal. If a trade union had wanted to, it could have said that because a person was a Conservative Member of Parliament or a member of the Conservative Party he should not be a member of the union. But of course trade unions did not do that. Our case is that they will not do so if this change becomes law.

My Lords, is not the position that in the bad old days it was left to the courts to deal with abuses of trade union power—for example, those old, terrible cases such as Breen v AEU and Edwards v SOGAT? In 1992, a different Government introduced legislation to give protection against arbitrary power, which went too far. Now we have to modify that. Is the real position that the 1992 Act was a reforming Act dealing with an abuse?

My Lords, I am not sure where in the situation we are talking about—membership of a political party by an individual trade union member—it was ever abused. It certainly was not abused in the 1980s. In the example given by the noble Baroness, Lady Miller of Hendon, in regard to the National Union of Mineworkers, as far as I know, there was never any question of a Conservative member of that union being expelled, and I am sure that there were some Conservative members.

My second point is probably my better one. It was made by my noble friend when he opened the proceedings many hours ago. No other membership-based organisation is subject to the sort of restrictions in respect of political party membership as those which apply to trade unions, or certainly did until the court’s judgment. We therefore propose treating trade unions like other unincorporated associations. My noble friend used the example of golf clubs, but there are others. If this Bill is carried, trade unions will be treated—

My Lords, it is not a question of golf clubs. The question is the relationship between the Labour Party, the trade unions, political activity and so forth, which is a totally different situation. Perhaps the Minister’s noble friend does not understand yet that it is not just a sort of CBI problem. This is a problem of funds for the Labour Party.

My Lords, I do not think that Clause 17 has anything to do with whatever relationship there may have been between the Labour Party and the trade unions. That is not the issue. If a golf club is not the best example for the noble Lord, perhaps the Confederation of British Industry, the National Trust or the RSPB, which has millions of members as I understand it, are better examples. We are seeking—I know that we will rightly discuss this major point at length in Committee—to put trade unions in the same position as those other organisations, which is all that I shall say on this.

I have a winding-up section of my speech, but noble Lords will be delighted to hear that I do not intend to read it all.

My Lords, if the noble Lord is not going to give us the joys of the final part of his speech, perhaps he would at least answer my principal question on whether his noble friend will deign to attend the Committee stage of this Bill. I asked for a categorical assurance on that.

My Lords, before the Minister answers, I wish to make entirely clear from these Benches that—although we are somewhat bored by, but also amused by, the application of the Stockholm syndrome which the Tory party seem to wish to apply to the noble Lord, Lord Jones of Birmingham—it is a matter of complete indifference to us whether the noble Lord, Lord Bach, or the noble Lord, Lord Jones, appears in Committee. We do not care whether it is the organ grinder or the monkey and we allow noble Lords to decide which is which.

My Lords, for a moment I thought that the noble Lord, Lord Razzall, was complimenting me, but I am now not so sure. I think that my noble friend answered the noble Lord very adequately when he was asked questions after his opening speech. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Grand Committee.

Apprenticeships (EAC Report)

rose to move, That this House takes note of the report of the Economic Affairs Committee on Apprenticeship: A Key Route to Skill (Fifth Report, Session 2006-07, HL Paper 138).

The noble Lord said: My Lords, I am very pleased to introduce this debate. The report of the Economic Affairs Committee on apprenticeships was published last summer. However, the Government are now preparing their apprenticeship review for publication, I hope, within a few weeks and later in the year they plan to introduce a Bill reforming apprenticeship provision. On that basis, this debate is extremely timely. First, I should like to thank my colleagues on the Economic Affairs Committee for their painstaking work on our report. As usual, the report is evidence-based and entirely non-party-political, and has been agreed by all members of the committee. I also would like to thank our specialist adviser for this inquiry, Dr Hilary Steedman of the London School of Economics, as well as our clerk and his team.

Perhaps your Lordships will permit me to interject a personal note. This is the ninth report produced by the House of Lords Select Committee on Economic Affairs under my chairmanship. Along with our report on climate change some years ago, it is one of the most important. But more than that, if they are wise, all Select Committees produce unanimous reports. All of ours are unanimous, but some are more unanimous than others. I have chaired many committees and Select Committees in my time and I had absolutely no difficulty in getting members right across the committee to agree this report. We were all keen not to place the blame for the present situation, which is pretty serious, on the present Government. We recognise a point given to us in evidence: the problems we are dealing with go back over 100 years. So while those of us who have served in government and some distinguished advisers to governments in the past must accept some partial responsibility, it is to this Government whom we look for solutions to the problems of the present.

We thought that the Government response to our report was disheartening. It set out or reiterated many eminently worthy objectives, but what was sadly and blatantly missing was a coherent, credible action plan to achieve those objectives and thus address the skills crisis among Britain’s youth. Indeed, the Government even declined to acknowledge a number of the problems raised by the committee. However, I hope very much that the response does not represent the Government’s final word on the matters raised by the committee and I look forward to fresh thinking in the review and the Bill, of which I hope the Minister will be able to give us a foretaste today.

I shall briefly outline the committee’s findings. Britain’s record in vocational training is poor. This is a longstanding problem. Indeed, we found that it goes back for more than 100 years, and as a result, legions of young people—

My Lords, perhaps I may intervene briefly. First, I congratulate the committee on an excellent report. I think that the noble Lord will find that it is nearer 130 years, and on top of that some 20 committees of inquiry were involved. I suspect that the greatest mistake in education since the war was the abandonment of technical colleges.

My Lords, I am happy to give way to the noble Lord, who gave the committee very distinguished evidence. I suspect that he is absolutely right to say that the problem goes back 130 years, but I sought to make the task easier for the Minister by just saying “over 100 years”. As a result, legions of young people have been condemned to low-paid, low-skilled jobs; disaffection and a string of social problems have inevitably followed.

The failure in vocational training has not only wasted the potential of far too many young people, but has left employers having to look overseas to recruit the skills they need. So much so that in the construction sector, one newspaper cartoonist suggested that the slogan for the UK Olympic Games should be: “London 2012: Make Poland Proud!”. That quip illustrates the serious point that many Britons who could benefit from jobs created by the Olympic Games are unable to do so because of poor vocational training.

The committee argued that the solution is a radical overhaul of the system of apprenticeship provision to make it the centrepiece of vocational education in Britain today. The great strength of effective apprenticeship is that it gives young people the skills that employers actually need. This boosts their earnings and gives them firsthand experience of the workplace. However, under the present arrangements, countless young people who could and should benefit from apprenticeships are not doing so. This represents not only a heavy economic cost to the country, but an enormous personal loss to those individuals.

This is clearly a problem of numbers. Far too few apprenticeships are being provided. The Government have plans, or at least an idea, to almost double the number of apprenticeships, but as things are now, I am far from being alone in seeing this objective as pure fantasy. The Government have simply not begun to show how, in practical terms, they can achieve that objective. I hope that the Minister will be able to cast some further light on this, and I certainly hope for more specifics in the apprenticeship review when it appears. Alongside the problem with quantity is the equally serious problem with quality. At present, apprenticeships often do not meet basic minimum requirements. They may be too short to provide adequate training, and according to the latest figures from the Office for National Statistics and the Learning and Skills Council, completion rates are running at a disappointing 50 per cent, and even lower for advanced apprenticeships. Yet in response to our report, the Government have quoted completion rates of over 60 per cent. I shall be interested to learn how the Minister arrived at those figures, or whether he has now reviewed them. Further, there is not enough progression through the different levels of apprenticeship and on to higher education. Unless this is fixed, apprenticeships will continue to be perceived as a dead end.

Successive Governments, while full of good intentions, have failed to provide vocational education with the radical shake-up that is clearly needed. The lack of effective leadership, again from successive Governments, has been a big part of the problem. No single body is clearly responsible for apprenticeships, so we urge the Government to set up a powerful unit, directly answerable to a Cabinet Minister, to “own” apprenticeship. When the present Government were formed, we did finally get a radical shake-up, but it seems only to have made the situation worse, because we now have not one but two departments heavily involved. Indeed, the Government’s World Class Skills report on vocational training, published in July, was signed off not by one or two but by five Secretaries of State plus the Prime Minister for good measure. No doubt the intention was to show how seriously the Government take the skills crisis, but it revealed instead that the lessons of long-term failure in vocational training have still not been learnt. Too many cooks spoil the broth, and I fear that the new set-up looks like a recipe for more failure.

The committee urged the Government to put employers at the centre of apprenticeship provision. Under the current arrangements, employers too often become little more than passive partners and hence do not rush to provide apprenticeship places. Our recommendation was for all government funding for apprenticeships to go directly to employers within five years, in order to encourage them to provide more places. On this issue, the Government have apparently buried their head in the sand, making it clear that they will carry on as before. This is a particularly disappointing response as it is so crucial that more employers are brought on board to provide apprenticeships. It is one of the key points on which I hope the Minister will today be able to give some indication of new thinking within the Government.

Much more must also be done in schools. The appallingly high number of teenagers leaving school without the basic skills in reading, writing and arithmetic required to take up apprenticeships must be addressed much more urgently than it has been so far. But schools must also do more to inform teenagers about the opportunities available through apprenticeships. We were given a consistently gloomy picture of the inadequacies of the present arrangements to provide information and advice to school leavers. For instance, on a visit to a training centre in Aylesbury, we heard from apprentices who said that they had been told very little about apprenticeships during their school years. In their response, the Government concede that there is room for improvement, but they need to show more urgency in taking effective action. With that, students who are not suited to going on to university would learn much more about how they can benefit from apprenticeships.

It is also important that public policy should encourage a genuinely rigorous commissioning process. This should ensure selection from among the different types—private, voluntary and local authority—of providers of information, advice and guidance on apprenticeship, the very best services for young people.

It is not encouraging that over the past year a number of local authorities have decided to take these services in-house without tendering. In the past, when information and guidance on apprenticeship was commissioned by local authorities, it too much tended, I regret to say, to be a Cinderella service. A return to local authority control runs the risk of this area becoming a low priority for local authority funding, with the consequent threat to the quality of the services that has always been the bane of much of the entire apprenticeship system. So it is essential that the Government put in place adequate quality control processes. I hope the Minister will give the House some reassurance on this point.

However, I am glad to see that the Government are moving forward on another important point identified in our report and are preparing to start a clearing house for apprenticeships next year to match up young people with available places. If properly done, this should make it considerably easier for young people to find apprenticeship places.

I have already referred to the Government’s apprenticeship review. I hope that this will address many of the Committee’s continuing concerns. I trust that the Minister will be able to confirm today when the review will be published and perhaps he will also give us a taste of some of its conclusions. On the assumption that the review will address the key issues a good deal more effectively than the Government’s response to our report, I hope also that it quickly leads on to an apprenticeship Bill that tackles the long-standing problems that bedevil apprenticeships.

I want nothing more than for the fears that I have expressed today to be shown to be misplaced, but millions of young people have already missed out and the Government must move beyond good intentions. They must urgently and effectively act to see that today’s youngsters get the skills they need to compete in the modern world. I beg to move.

Moved, That this House takes note of the report of the Economic Affairs Committee on Apprenticeship: A Key Route to Skill (Fifth Report, Session 2006-07, HL Paper 138.—(Lord Wakeham.)

My Lords, it is very good that today we are once again discussing the issue of apprenticeships. It is always encouraging to have the presence of the Minister, the noble Lord, Lord Triesman, with his distinguished record in this House. Perhaps I may take the opportunity to congratulate him on his recent appointment as the FA chairman. It is very adept to be appointed once the new England manager has been put in place. It is also encouraging to have the Minister, the noble Lord, Lord Jones of Birmingham, in his position as he also has a great commitment to skills and apprenticeships. We are very hopeful that, as a result of the heavyweight people involved, we will see progress.

I congratulate the noble Lord, Lord Wakeham, and the committee on their excellent report and on the robust way in which the noble Lord put forward the committee’s views today. I am glad that there was a united view on the committee. I am very impressed as a new Member of this House to see such a high level of care given by the committee and others to the report on Apprenticeship: a key route to skill. The Economic Affairs Committee report has identified many issues which we hope the Minister will address.

The Government must take their commitment very seriously because we face a very complex situation in apprenticeships. We must publicise apprenticeships, encourage young people and the business community to engage and ensure that our education system prepares young people for the workplace. On the latter issue, time and again the concern is expressed that our children must have literacy skills. Indeed, in this connection I can call in support the evidence given by Sir Digby Jones, as he then was—now the Minister, Lord Jones of Birmingham—to the Economic Affairs Committee. Along with many others, he identified that as a key issue and pointed out that we achieve good literacy in this country at primary school level but lose momentum after that. At secondary school level there is not the needed continuity to carry forward literacy and to address the problems particularly of those who are not quite as literate as others. It is a grave concern. I am sure that the noble Lord, Lord Jones, now that he has his ministerial role, will still be making this crucial point. With his declared interest, I hope he will provide the necessary influence, input and enthusiasm to carry forward and deal with the many problems that there are.

We had a debate on the Leitch report last summer and I should like to repeat a couple of points that I and others made then, starting with the need for good careers advice. Careers staff do not always offer adequate or positive advice and guidance early enough to people for whom a vocational education and career might be more appropriate than academic or university education. In this connection, later this year it is proposed to introduce an education reform Bill. The Bill will emphasise duties and rights but I hope it will also be seen as appropriate to consider the need to encourage apprenticeships—for example, as I say, through the Careers Service. If they are not encouraged and not publicised, they will not happen.

Another point I would like to repeat from that debate is the need to raise the status of apprenticeships so that young people will see them not as a second best choice but as something interesting and with status, something for which to strive.

I turn now to the question of small and medium-sized businesses, a subject raised by a number of contributors in the evidence sessions of the Select Committee. While a number of submissions drew attention to the need to engage with small business, I wonder whether there could not have been a contribution, via written evidence or otherwise, from a small business organisation or association to ensure that its views were asked for and put specifically. I may have missed something in that respect but it could be quite useful as a general principle to ensure that small businesses, be it those with apprenticeships or business in general, have their voice heard in a specific way.

Some good points were put forward—for example, by Sir Roy Gardner and the Minister, the noble Lord, Lord Jones—and various suggestions were made, including providing financial inducements, which has been referred to, or help specifically for the smaller business community. The bureaucracy and paperwork needed can be a very big stumbling block for small firms. Larger companies are better equipped to deal with bureaucracy and red tape. It is often said that small and medium-sized enterprises are the backbone of this country. If we do not concentrate on ways and means of helping and encouraging SMEs, a whole tranche of opportunities for expanding apprenticeships will be lost.

The debate is welcome, as is the work that many are putting in to make vocational training and education operate and work. The matter is urgent. On the train here today I was speaking to someone who, as luck would have it, had experience in the engineering field. He told me of the grave concern that there is about the aid profile of those engaged in technical fields, particularly in engineering. He made some startling points. For example, each member of a significant group of six engineering experts will retire in the next five years but no young people are in a position to take their place. The question of urgency can be centred around the age profile, as he referred to other areas in which there is a similar situation. Young people have not been encouraged to come in and there is a grave risk of losing the knowledge and expertise that have been built up over many years.

I know that others have many points to make and we look forward very much to the maiden speech of my noble friend Lady Garden. I hope that as a result of the report, the fact that we have had a number of debates on apprenticeships in this House and the Bill that will come before us later this year, we can ensure that we are fit to meet the increasing competition from around the world.

My Lords, it is not often that a report from this House is followed within four months by the promise of a government Bill. As a member of the committee, it would be nice to think that this is a case of post hoc, propter hoc. Whether or not that is so, the prospect of a Bill is extremely welcome. I would like to say a few words about why a Bill is necessary and what it needs to contain.

The issue is nothing other than the future of half the population—the half that does not go to university. As has been said, we have always done well in higher education and very badly when it comes to those who do not go on to higher education. Our graduates get paid as well as any elsewhere in Europe, whereas our manual workers get paid something like two-thirds of the amount paid in a typical country north of the Alps. This reflects their low productivity and is a major cause of the low productivity—the aggregate average—of the British workforce.

This has been recognised as a national problem, therefore, but how do we deal with it? There is only one way, and it has been obvious for some time. We should reinstate the part-time route to a skill which has been so shockingly neglected for the past 30 or 40 years. We have to make apprenticeship work, and work on a much larger scale. Why the part-time route? Because employers like people who have been trained that way; they have been doing an apprenticeship at the same time and have acquired learning that is relevant to the job for which they will be employed. Young people like the system, partly because it is more interesting to learn something that is obviously relevant and partly because they get paid while they are doing it. This is the obvious solution to the problem, yet for decade after decade, we have been trying to deal with the below university-level skill problem by expanding full-time vocational education, GNVQ, and so on. This has never delivered the trained manual workforce that we want, because those who took such full-time courses were the kind of people who wanted to go on into full-time academic study and higher education. The others have been left in the soup, and it is quite extraordinary.

We have an almost unimaginable situation where 15 per cent of men between 16 and 25 are doing nothing. They are not in education, employment or training because we have not offered them anything which made any sense to them. For young ladies, the proportion is even higher.

The Government took a really important decision in 2007 that apprenticeship is the only way in which to deal with the huge problem of lack of skill and lack of engagement in the educational process. They took two really important steps last year. First, there was the decision to extend the education-leaving age—full-time or part-time—to 18 by 2015. That was a really historic decision. Secondly, access to an apprenticeship is guaranteed to everybody with minimum qualifications who emerges from the school system and would like to have one. The second step is the only way to achieve the first; unless you have something serious to offer people, there is no way that you can get them to participate in learning up to the age of 18 on the 100 per cent scale at which we are aiming.

The challenge facing the Government in delivering this is how to get enough apprenticeship places and how to make sure that the quality is simultaneously strengthened, as our chairman said earlier. That is why it is so valuable to have a Bill—it gives us purchase on guaranteeing the quality and setting out the structures within which we can deliver the quantity.

Let me mention four key features which would be necessary elements in the Bill. First, there must be a dedicated national apprenticeship service. Unless we establish that, there is no way we can possibly find the places or maintain the quality. There has to be a body which is almost missionary in character committed to finding opportunities for young people in the world of employment. Some people have suggested that this role could be tagged on to the role of the existing brokers who are doing the Train to Gain scheme for adult employees, but that would be the wrong route to take. Those people are trying to help existing employees, not encourage employers to take on new employees, which is a much more difficult task. There is almost a conflict of interest between those two objectives. We need a dedicated service; not only will it have to find places, it will have to support the employer in providing a quality on-the-job training environment, including having a mentor. It will have to sell the idea of an apprenticeship to young people from the age of 14 onwards and then operate the system that matches the young person to the opportunity for apprenticeship.

Some of us have spent some time thinking through the idea of an apprenticeship service since the Bill was mooted. It would naturally receive its funding directly from the department rather than indirectly through local authorities. That would give it the financial security needed to carry out its remit and deliver the guarantee. That gives rise to the obvious question of who has the statutory obligation to deliver the guarantee. What should be written into the Bill? If there is a commitment to adequate funding and the service is given the funding direct, it should be the obligation of the apprenticeship service to deliver the guarantee. The service might be part of the Learning and Skills Council but that obligation should be statutory.

What would the service do other than finding places? It would deal with issues of quality. It is really important that, if this is part of a serious educational effort, a guaranteed amount of time away from the employee’s workstation is dedicated to the off-the-job learning that leads to the technical certificate, which is part of the requirement for getting an apprenticeship certificate completed. There has to be a guarantee of something like 350 hours a year. For the on-the-job training there also has to be a mentor provided by the employer to supervise the young person and to provide that training. All of that—the mentor, the time off the job—will cost the employer money. It is being done partly for the benefit of society as a whole and the employer should be recompensed for the cost they incur. There is no chance of getting the number of places needed unless we recompense the employer for the costs they incur on behalf of society.

That means—and this is my third point—that there has to be an employer wage subsidy for apprentices under 18. If we think it is that important that they should be studying, we have to be willing to pay for it. That is not a recommendation that we made originally in the committee’s report, but over the past four months I have been convinced that there will have to be a well advertised wage subsidy for taking people on, by whatever route the funding goes. Some funding may go, as the committee recommended, in total to the employer, but some of it may still go through intermediaries. Either way, there must be a wage subsidy separately identified and paid separately to the employer.

That will make apprenticeship more expensive than sixth-form education—and it should be. It is important that we accept that. If you think, in terms of fairness, “What do these people get?”, most of them are likely to have no more than two years’ education beyond the age of 16. Is it not fair that they get more in any one year than people who will have five years of sixth-form and university education? Of course it is. It is economically sensible, too; we know from studies of social rates of return to apprenticeship that good social product comes from this system. We should bite the bullet and come up with the money.

We also have to come up with enough places. At present the proportion of 16 to 18 year-olds who are on apprenticeship is between 7 per cent and 8 per cent. That has to go up to at least 20 per cent if we are going to have anything like a serious apprenticeship guarantee. To go back to our chairman’s remarks, that is way beyond the figures that the Government have already committed themselves to. They have to show that they can both deliver what they have promised and adopt a further target if this is going to be a serious affair.

How do we make all this happen? In this field there are an almost uncountable number of fingers in the pie: the Learning and Skills Council; the local authorities, which have an important role to play; the Sector Skills Council; the Qualification and Curriculum Authority; and Ofsted. Given that situation, it is understandable that we have not been making the progress we needed to without someone knocking everyone’s heads together. There has to be a completely new approach to this issue. As the chairman said, the Government have to set up a powerful unit whose head must report directly to a Cabinet Minister. The head can be a public figure, well recognised in the way that, for example, Sir Michael Barber was a recognisable figure in the literacy campaign. Someone of that type and stature is required to make all this happen, otherwise we are talking pie in the sky. There has to be strong organisation and the clear message: “If you don’t want to get a degree, get an apprenticeship certificate”. That must be said over and over again by every MP and every Minister. Then the message will get through and we will deal with these hordes of unskilled, inactive young people. There is no other way to do it.

We have a huge opportunity here. Although the review is not finished, I hope we are going to hear what it will say.

My Lords, it is a great privilege and pleasure to join your Lordships’ House. The range of experience and the quality of debate are truly impressive, as instanced by this very debate. I join others in congratulating the noble Lord, Lord Wakeham, and his committee on an excellent and trenchant report. It is vital that we rekindle in this country the co-operation between education, industry and Government that underlies the concept of training through apprenticeships. This report, as do so many reports from your Lordships’ Select Committees, tries to unravel some of the confusion in recent developments and to point to a coherent route forward.

I feel I have been going through a form of apprenticeship myself since I was introduced to the House last October, listening and learning. I look forward now to beginning to contribute somewhat more to the work of this great institution.

The last months have been a turbulent time. These Benches were a place where my much-loved husband Tim, Lord Garden, participated in, initiated and influenced debate, and used his clear thinking and expertise to contribute to your Lordships’ business. Your Lordships have been gracious in tribute to him. His commitment was matched by the purpose he found here over the past three years, as well as by the good fellowship of your Lordships. I sense his loss to public life, and know how very greatly he is missed at home.

In the circumstances, the renowned friendship of this House towards new Members has been particularly appreciated. I am most grateful to your Lordships and also to the House staff, the Doorkeepers, the librarians and the catering staff for the warmth of their welcome. I have met with unfailing readiness to offer guidance in the customs—and indeed around the Corridors—of the House, and with generous levels of collegiate support. I still have much to learn.

I take great interest in the topic of this debate. During many years as an Air Force wife, with frequent moves, my professional employment was intermittent. In those days a graduate was regarded as qualified to teach, so my Oxford degree in French and Spanish led to a succession of teaching posts in a range of secondary schools, and a range of subjects, in England and Germany. Coming to London, I moved from academic to vocational education and from teaching to administration. I have worked with City & Guilds for 20 years, developing and promoting work-based qualifications and discovering a world of exciting and inspirational practical achievement that is woefully and illogically undervalued when set against academic results. I worked on the very first national vocational qualifications, and then on one of the early forerunners of the new school diploma. I then set up the City & Guilds Senior Awards programme, which involved forging partnerships with higher education, employers and professional bodies, not unlike those for apprentices.

Successful examples of constructive collaboration for apprenticeship go way back to the early guilds and livery companies; they are historic but with much contemporary relevance. Livery companies continue to be actively involved in monitoring standards and encouraging achievement in craft, technical and business skills, often alongside initiatives by the City of London, which gave evidence to the committee. Government funding can benefit from considerable economies on quality assurance if there is this sort of proven track record for those charged with standards and training. The Department for Innovation, Universities and Skills has a stated commitment to streamline the system:

“Simplifying funding and audit arrangements, better and more coherent use of data, and developing better, more strategic relationships built on trust”.

Increasing the trust placed in skilled and experienced professionals can, and should, minimise the resources used for external monitoring. In this, further education colleges are natural partners with local employers. They play a crucial role in providing work-related training, assessment and qualifications, for which they merit reliable funding. The 25 sector skills councils are not short of “best practice” on which to build. The report highlights concerns,

“that too much responsibility is being devolved too fast to SSCs, which require more time and resources to operate effectively”.

Currently they are variable in their effectiveness, but as they cover nearly 90 per cent of the workforce, ongoing developments should ensure that they all operate at the levels of the best.

The report highlights another major concern, which has been raised by noble Lords, about the low levels of numeracy and literacy among those young people who have left school ill-equipped but who could be motivated by, and benefit from, purposeful, paid learning. The Ofsted estimate that,

“some 300,000 16-19 year olds are unable to access training or any worthwhile employment as a result of a lack of basic skills”,

is deeply disturbing for society, for the economy and not least for those individuals. How can they gain a sense of self-esteem and value to the community if they are cut off from a route into productive work? Replacing “key skills” with new “functional skills”, as proposed in the government response, may not be tackling the root of the problem.

With an ageing population, as my noble friend Lord Cotter remarked, and a decline in the birth rate, it has been estimated by the Institute for Employment Research that 1.35 million new jobs will enter the economy in our current decade, with only an additional 500,000 young people entering the workforce. In the decade from 2010, the position is projected to become more acute. The shortfall will need to be made up by adults already in the workforce, by immigration and by those currently not in employment joining the workforce. The figures provide powerful additional reasons why the country can ill afford not to engage as many young people as possible in productive work and why removing the upper age limit for apprenticeships makes social and economic sense.

The challenge of engaging employers in training has been raised recently in the debate on adult learners in your Lordships’ House. Many businesses encourage experienced workers to pass on their mastery to the next generation. Large organisations can justify training expenses against quantifiable long-term benefits, although it is all too easy to see training budgets as a soft target when economies need to be made. For small businesses, the hurdles to taking on apprentices can include real or perceived burdensome regulation, time-consuming recruitment, daunting employment responsibilities and simply not knowing what is available.

It is made more difficult for employers when there are constant government changes, such as changes in name and in the remit of departments, with a spaghetti soup of initials which come and go. With lack of clarity, it is understandable if formal training combined with rigorous assessment lose out against the daily challenges of running a viable business. As low-skilled jobs become fewer, there is an increasing need to promote apprenticeships to schools, careers advisers, young people and parents, as well as to make a better business case to employers. The global economy demands that the country has a world-class workforce. This important report has constructive proposals to help the country to rise to these challenges.

My Lords, I congratulate the noble Baroness, Lady Garden of Frognal, on the excellent contribution that she has made to this debate in her maiden speech to your Lordships’ House. What she said tonight was based on a distinguished career in teaching and, in particular, on her long-standing role in the administration of City & Guilds qualifications, whose standards have done so much to improve the skills of so many young people over the years. Clearly, from what we heard in this debate, we can look forward to the noble Baroness sharing with this House her wide experience of educational and business affairs and, I am sure, of many other matters of public interest. In doing so, she will continue the outstanding service given to this House and to his country by her much admired husband, Tim, who made such a great contribution in all too short a time.

I also pay tribute to the chairman of our Select Committee on Economic Affairs, the noble Lord, Lord Wakeham, for his able and affable handling of this complex subject in the committee and his leadership of the debate today, as well as to my noble friend Lord Layard for the expertise that he brought to our deliberations and the powerful points that he made tonight.

Our report is yet another milestone on a very long route. As the noble Lord, Lord Dearing, told us during the recent debate on the Address, the shortage of skills in British industry was first investigated by a Select Committee back in 1868. Since then, many other parliamentary committees have continued the search for solutions to this seemingly very British problem. One explanation was offered by Professor Martin Wiener in his fascinating study, English Culture and the Decline of the Industrial Spirit: 1850–1980. England may have been the cradle of the new industrial age but, alas, Professor Wiener argued, its bucolic myths and innate conservatism esteemed the gentleman above the entrepreneur, the landowner above the factory owner, and thus contributed to our economic decline.

At the start of the 1980s, that academic critique was shared with a mass audience through Granada television programmes broadcast in peak time. As a Granada producer at the time, I remember well the angry chorus of agreement tinged with real sadness at the eclipse of traditional industries that had once made Britain the workshop of the world. Along with millions of others, I shared that sense of loss, having served a five-year apprenticeship as a marine fitter in a Clydeside shipyard now long gone. It is worth recalling what it was about those lost crafts that meant so much to many skilled working people.

We may have left school at 15, but apprenticeship was a rite of passage to adulthood and the status of a time-served tradesman. What we missed in schooling was compensated for by the disciplines engrained by skilled manual work. As an engineer, for instance, you would grind away to one-thousandth of an inch until the job was just right, knowing that if you got things wrong it would not work and, worse, it might break and do someone damage. With that came a sense of responsibility and, in heavy industry, teamwork—and, perhaps in time, leadership. Back then a good apprenticeship was the foundation of many successful careers to the highest levels of industry.

Of course, the education system has changed radically since then and mostly for the better. For instance, when I left school in the 1950s, only one pupil in 20 went on to university, mostly boys. Today by contrast the status of women is transformed and nearly half of all young people go on to higher education. That is as it should be in a very different world, where our universities have become the factories of the emerging knowledge economy.

Elitists still claim that in higher education more means worse, but I would argue that their overly academic view fails to appreciate the range of expertise required in a changing economy or indeed to value properly the natural aptitudes, emotional intelligence and social skills of many people now excluded from worthwhile employment. As a former visiting professor of media studies at Stirling University, I am familiar with the mockery of so-called Mickey Mouse degrees, but our record for graduate employment was very good—and there was nothing Mickey Mouse about the profits that my company used to make, producing “The Disney Club” in Scotland.

In recent decades, the growth in service industries and financial services has more than compensated for the loss of traditional manufacturing jobs, yet too many have been left behind as their options have narrowed with the decline in unskilled jobs, with hundreds of thousands of young people not in education, employment or training—the so-called NEETs—or living on disability allowances. The social benefits of putting significant numbers of these youngsters into apprenticeships could be considerable.

It is worth noting that almost half of all jobs now require computer skills and that the proportion of jobs needing less than one month’s training has fallen to just 19 per cent. We can see ever tougher challenges ahead in the rapidly globalising economy. All this gives renewed urgency to the historic parliamentary search for a solution to Britain’s skills shortages, in particular to proposals for a revivified system of apprenticeship, recruitment and training as outlined in our Select Committee report. The noble Lord, Lord Wakeham, in his characteristically fair-minded introduction, summed up our continuing concerns very well, and I wish only to underline some issues and ask some questions.

Can we trust government departments to deliver on recent promises? The former Department for Education and Skills and its predecessors had a pretty poor record of innovating and nurturing vocational education and apprenticeship schemes in particular. Recruited as they are largely on academic prowess, one fears that there might have been a cultural aversion among senior civil servants to giving vocational training its proper priority. Of course, the same may also be true of Ministers, very few of whom have now climbed up from the shop floor. Whatever the reasons, our concern, as the most recent Select Committee to address the issue, is that having so many unskilled young people with restricted employment opportunities is one reason why productivity in Britain still cannot match that of other advanced economies.

We suggest, as we heard from my noble friend and Professor Lord Layard, that the main route to skills below graduate level should be through apprenticeships combining work and learning. I therefore welcome the recently published Education and Skills Bill which, at long last, raises the educational leaving age to 18 and establishes new rights for young people to take up opportunities for education and training. This Bill also places a duty on young people to participate in these options, including apprenticeships.

As I understand it, a tripartite structure will be put in place. First, A-levels remain as the principal academic route to higher education. Secondly, new diplomas are being introduced, and thirdly, there will be work-based apprenticeships. The new diplomas are being designed to bridge the gap between academic and vocational studies. Diplomas in languages, humanities and science will, it seems, be largely academic. However, most are vocational—construction industry careers, for instance—yet they will be based mostly on classroom learning. I hope that we can be reassured by the Government that the introduction of diplomas will not leave apprenticeships branded by vested academic interests as the inferior low-status option. What prompts that particular concern is evidence that we took suggesting that schools, with their laudable academic aspirations, sometimes do not appreciate the importance of apprenticeships to many young people and to our economy, and that teachers, consequently, fail to promote apprenticeships as an attractive career option.

I look for assurance that the new diplomas, with their classroom bias, will not be allowed to become a vehicle which takes away either esteem or resources from apprenticeships. That would be particularly damaging since the world-class skills that the noble Lord, Lord Leitch, seeks to encourage in his report, will surely require many more young people to progress through the apprenticeship route into higher education, as they aspire to greater professional expertise.

Our committee’s conclusion that apprenticeships should be the main route to skills below graduate level implies that there should indeed be a shift in the balance of resources away from other post-16 provision in favour of apprenticeships. Since the Government's response to our report did not address this matter, perhaps the Minister can today.

Our committee also expressed concern about the lack of encouragement given to apprenticeships through careers advice in schools. The new Education and Skills Bill intends to transfer careers responsibilities to local authorities. That will be most welcome if we can anticipate that this switch will lead to more impartial information, advice and guidance being given to young people in the future, particularly about apprenticeship opportunities.

The Bill also strengthens the duty of local authorities to collaborate with partners in the provision of education and training for 14 to 19 year-olds. The most important local partners, in our view, will be local employers. They should be at the centre of all apprenticeship provision. Additionally, I support the noble Lord, Lord Wakeham, in saying that we believe apprenticeship funding should be routed through employers, who could then subcontract off-the-job training and other services which they cannot themselves provide—subject, of course, to appropriate regulation and supervision.

It was encouraging to read last week that the Institute of the Motor Industry wanted to double the number of its apprentices over the next five years. Retail motor businesses at present have more than 11,000 vacancies— almost half for skilled technicians—and reckon that they will have to train 120,000 more skilled workers over the next decade. Gathered more widely throughout business, that kind of information would help us to estimate more accurately the employer demand for apprentices.

The positive counterpart to that problem of skills shortages is on the supply side—the reported demand from young people for high-quality apprenticeship places, with no fewer than 200 applicants for every apprenticeship place offered by BT. This shows the potential for well planned progress based on employer demand. Already, 130,000 employers offer apprenticeships in 180 different lines of business. I hope that the CBI and other industry bodies will encourage companies to create even more training opportunities, particularly for young people from ethnic minorities who are not well served at present. A wider range of opportunities for young women would also be welcome. At departmental level, government should insist on more comprehensive monitoring and reporting to strengthen the statistical base required for better delivery across this field.

That said, I applaud the relative success of the Government’s policy on apprenticeship in the past decade. Since 1997 the number of young people in apprenticeships has trebled to about 250,000 in England. Completion rates, which were such a problem, are also improving. We should note the energetic promotion of the skills agenda by the Secretary of State, John Denham, at the new Department for Innovation, Universities and Skills. Particularly welcome was his announcement in November that funding would be made available for the 400,000 apprenticeship places in England targeted by my noble friend Lord Leitch in his review of skills.

A departmental review of the existing apprenticeship programme is under way on the scope for reform and the need for any legislative change. Echoing the noble Lord, Lord Wakeham, I am sure that your Lordships would be interested in any “preview of the review” that could be offered to us today.

In conclusion, I hope that the report of the Select Committee on Economic Affairs will be judged to have made a useful contribution to the continuing debate on this issue of national importance and, indeed, to the forthcoming apprenticeship Bill.

My Lords, I am happy to follow my noble friend Lord Macdonald, who spoke about his five-year apprenticeship, because I also did an apprenticeship but many years earlier than he did. I do not think that mine was as good as his. The important thing is that a higher number of people took those apprenticeships. Not only the quantity but the quality was greater than we have now although we should bear in mind the way in which these matters have changed over the years.

The noble Lord, Lord Wakeham, rightly dealt with the Bill to reform the apprenticeship committee. That will be very valuable. I am not sure that it will deal with most of the matters that we had in mind but we shall need to examine it with care. He mentioned the nine reports that we had produced, all of which were unanimous. Much of that success is due to the role that he played as chairman of the committee.

The noble Lord, Lord Layard, mentioned the very important combination of the learning and skills experience. It is not only learning that you require but skills as well. The ability to combine them is enormously important and has been very much underplayed over recent years.

The number of apprenticeships has declined greatly. In 1988, it was 341,000; in 1996, it fell to 174,000—half the figure that it was only eight years previously. It has risen a bit—215,000 is the latest figure, but I think that it is probably a bit more than that now. There was a very big drop-out rate and it is important to tackle this.

At question 354 of the evidence, Sir Digby Jones, as he then was—now the noble Lord, Lord Jones of Birmingham—said:

“We have a lot of apprentices who do not complete the course … If employers were better engaged with schools, let alone colleges, so that it would be a natural progression, it would be seen as part of an education system and not something that is completely divorced from it, that would probably help”.

He is quite right in that very useful contribution. It is important to have a link between employers and schools. The education system must take account of that.

The major difference that I had in mind was from my experience and that of the noble Lord, Lord Wakeham, when we went to Germany and saw the apprenticeship system there, which was very different from what we have in this country. In the United Kingdom we have a system of apprenticeships that average about one year, and only half of apprentices complete them. In Germany, the apprenticeships last for three years and are important decisions for employers and apprentices; some 75 per cent complete their three-year apprenticeships. There are great expectations and subsequent employment is pretty well guaranteed. In the United Kingdom, such employment is more limited and frequently there is none at all. In Germany, we saw people with great enthusiasm and expectation during their period of apprenticeship. They had great hopes as to what they were going to achieve—quite different from the experience of the sort of people whom we would see in a similar situation here.

There is no record kept in the United Kingdom, as compared with Germany. In paragraph 44 on page 18 of our report we state:

“There was strong competition for apprenticeships in the Düsseldorf department store we visited; this was symptomatic of increasing difficulties in Germany in providing sufficient places to meet the demand from young people”.

We saw those people and they were impressive and felt that they had a great future ahead of them. Our report continues:

“Currently, around half the age group in Germany enters apprenticeship but often only after a considerable waiting period. We learned that it was normal for young people to improve their qualifications in fulltime further education in order to be considered for an apprenticeship; the average age on entry is now 18 years. The apprentices we met in both the hotel and department store saw apprenticeship as the gateway to further career advancement; they appreciated the support and training provided by the company, less so the courses provided at the vocational school they attended”.

That was very important for those people and we do not have that situation here. Apprentices felt that they were successful and had achieved what they wanted. Apprentices here do not have anything like the same feeling of achievement and of the wide opportunity that lay ahead for those in Germany.

We cannot copy Germany, of course, but we should have a role in encouraging and possibly in determining the role of apprenticeships. There needs to be in the Government some responsibility for apprenticeship that does not exist at present. Neither the Department for Education and Skills nor the Learning and Skills Council have a proper attitude to this. There is a division between the two departments; they collect information, but different kinds of information. The important thing is that there are no data on the number of people seeking apprenticeships and we do not know how many are doing so. We do not know how many people are being employed in apprenticeships. We do not know how many businesses employ apprentices. This is fundamental information that we should have in order to deal with these matters.

Perhaps I may quote from paragraphs 75 and 76 of the report. It states:

“It is clear that many young people who have the capacity to benefit from apprenticeship fail to find a place. There should be an effective clearing house where all apprenticeship places are advertised and through which young people can apply—as for university entry. It should be operated by the LSC … The DfES has neglected to compile any record of young people who unsuccessfully seek an apprentice place and keeps no central record of employers seeking apprentices. No reliable data are compiled on prior qualifications. Urgent measures are needed to ensure both the production of proper statistics on apprenticeship and also effective monitoring”.

That is absolutely essential here—to know what is happening and to be able to meet requirements that follow from this. We hear from the response that the review is to look at ways of improving data on apprenticeships. That is pretty modest, is it not? I was hoping that it would be much clearer than that, and perhaps we might hear about that from my noble friend when he replies.

My Lords, I join others in thanking the noble Lord, Lord Wakeham, and his committee for producing this excellent report on a very important topic. Rightly, it was critical of the Government for their failure to develop a set of coherent initiatives and to carry them through consistently and with consistency over time. I agree very much with the noble Lord, Lord Wakeham, that the answers that we have had from the Government in their response are very disappointing. In most cases, they merely repeat the initiatives that the Government are already making and in no way respond to the criticisms in the report.

At this point, I declare an interest. I am a member of the Guildford College Corporation, which is involved in work-based learning and, in that sense, in training apprentices.

At present, apprenticeship is in essence, as we heard from the noble Lord, Lord Layard, training on the job, which combines earning and learning with a career progression pathway. As my noble friend Lady Garden pointed out, in medieval times the guild system was the main form of training by which those seeking to become craftsmen made their way into a profession. Here, perhaps I disagree slightly with the noble Lord, Lord Macdonald, but it seems to me that the system survived the Industrial Revolution to provide the main distinction between skilled and unskilled and semi-skilled craftsmen. Quite a few of our leaders of industry in the 20th century rose to that position through the apprenticeship system. However, in England, unlike in much of northern Europe, it did not survive the post-Industrial Revolution.

In 1975, there were 400,000 apprentices in the UK, many of them on five-year or even seven-year apprenticeships. By the early 1990s, this number had dropped to fewer than 100,000, and that led to the introduction of the modern apprenticeship programme. This was to be a three-year post-16 training programme, rather like the one in Germany mentioned by the noble Lord, Lord Sheldon, leading to a vocational qualification judged to be equivalent to A-level. Sadly, this proved to be too difficult for most of those entering the new programme and, in 2000, the intermediate, or level 2 NVQ, qualification was introduced. Today, of the 250,000 studying for modern apprenticeships, three-fifths are doing the one-year level 2 training and only 100,000 the full three-year level 3 training, in spite of the fact that, as came through very clearly in the evidence received by the committee, most commentators agree that the level 3 qualification is required to confer full craftsman status and that it is at this level of skilled craftsman or technician that Britain’s key skills shortages lie.

Why do we find ourselves in this position? The committee pinpointed a large number of issues but perhaps I may start with the two identified by the noble Lord, Lord Layard. The first is the fact that for the past 40 or 50 years the secondary school curriculum in this country has failed to interest or motivate some 50 per cent of young people. In consequence, far too many leave school having been turned off learning and have a totally inadequate command of literacy and numeracy to be able to join the world of work. The Tomlinson proposals for an overarching diploma that offered a mixing and matching of academic and vocational qualifications was supposed to be the answer to this, and Mike Tomlinson worked with a group of experts for two to three years to try to come up with the right answer. Sadly, the Government rejected those proposals and instead have chosen to introduce a separate diploma stream, with specialist diplomas that will be rolled out from September this year and which will provide an alternative practical and vocational option to the GCSE/A-level route.

At present, it is not at all clear where apprenticeships lie in relation to those diplomas. In his evidence to the committee, the Minister implied that apprenticeships were a third and different route to qualification. Surely it would be logical to align the two and to make, say, a level 2 diploma the requisite entry point to an apprenticeship. I would like the Minister to clarify the relationship between apprenticeships as the Government see them now and the diploma system that they are introducing.

Side by side with the failures of the school system have been the failures of careers guidance. The committee points out that neither teachers nor young people and their parents know what is involved in apprenticeships these days. Many of them assume that apprenticeships are for those who fail GCSEs, yet, when they learn more about them, many young people and their parents are very interested and like the thought of being able to earn and learn and gain substantive qualifications. I pay tribute to the programme being put forward by the Edge group in promoting apprenticeships. Its advertisements on television are opening up the minds of many parents about what is involved in apprenticeships. We need to see more of that kind of initiative.

In many respects, as the committee indicated, an apprenticeship should be the career of choice for many students. I was very taken by the evidence of Mr David Sherlock, the Chief Inspector of Adult Learning, when he spoke of his visit to Land Rover. I shall quote the paragraph, because it is very interesting. He said that Land Rover,

“had not only a substantial apprenticeship scheme and a foundation degree scheme, but they got in kids for summer schools from the age of six for a couple of days to be involved in what industry was about, what Land Rover was about and so forth. They had then junior apprenticeships from the age of 14, kids coming in from school a day a week with the company taking all the responsibility for looking after 14-year-olds and the difficulties that are associated with that. By the time young people reached the age of 16, they were enthusiastic about the whole business of working in industry and they were aware of the status of it, they were aware that the experience could be just as enriching and exciting as going to university and they were fully signed up to Land Rover”.

That should be the experience of many of the 50 per cent who are failed by the system at the moment. The noble Lord, Lord Dearing, and I would like to see the development of skills academies for those post-14 because we feel that they could more easily lead to that sort of experience.

The Government are reforming the secondary school agenda, they are introducing the new diplomas, they are reorganising the careers service and they are backing the Leitch agenda, which puts employers in the driving seat. Can we be confident that they will now be able to achieve their goal and double the number of people in apprenticeships? The committee rightly expressed reservations about whether we are now in a position to enable young people to have the Land Rover-type experience. The Government response does not answer those reservations.

First, as the committee and others have pointed out, there are too many fingers in the pie. The responsibility is split. Now the Government have added to the alphabet soup—the LSC, SSCs, QCA, SSDA and so on—by splitting responsibility between two departments. The split is right down the middle, at the age of 19. Those who are under 19 are dealt with by DCFS and those over 19 are dealt with by DIUS. Who will champion apprenticeships in the face of competition from GCSE and A-levels and these new diplomas? The Minister said that he hopes that the diploma will become the qualification of choice for young people, universities and further education colleges seeking candidates for foundation degrees.

Secondly, there are far too many initiatives and no coherent relationship among them. We have already instanced the lack of clarity between diplomas and apprenticeship qualifications. The major initiative now for employers is Train to Gain, with £500 million going in this year. By 2011, the figure will be £1.4 billion. Again, however, it is quite unclear whether Train to Gain comprehends apprenticeships. Indications are that it does not. In his evidence, the Minister stressed that Train to Gain is the upgrading of qualifications for those who are already members of the workforce. If an employer is to be paid for training an employee to gain an NVQ level 2 qualification but not for taking on an apprentice for training for a similar level of qualification, what incentive is there to take on an apprentice? Can the Minister clarify the position? The information issued with the draft legislation on apprenticeships indicates that there will be funding. If so, can the Minister tell us the answer to the question?

Thirdly, are the SSCs up to the job? One of the perennial problems with apprenticeships in Britain has been to get sufficient support from employers. Many see this as the classic example of the free rider. Employers are reluctant to spend money on training because they fear that they will lose their trained, skilled craftsmen to the unscrupulous employers who spend nothing and then poach from those who have spent, so we end up with no one being prepared to invest in training. This was the logic that led to the levy grant system, which was not popular, so instead we tried to develop institutions that instil a training ethos into employers. In the late 1980s, we had the local TECs and the NTOs. We then replaced those with the employer-led local LSCs and the SSCs. Now we have Leitch, the training pledge and Train to Gain, with the SSCs being elevated to a role where they are entrusted both with enthusing their sectors with a training ethos and with the role of setting and accrediting standards.

There are two questions to ask. First, are employers up to providing the training places? The noble Lord, Lord Layard, was enthusiastic about this solution, but experience shows that it is extremely difficult to gain training places from employers, even though they are key players. Secondly, as the committee suggested, there are problems relating to whether the SSCs are up to the role that will be imposed on them in both enthusing and accrediting. Some SSCs can and undoubtedly will live up to this role, but others may struggle.

Fourthly, there is the unclear role of brokers. This was one of the committee’s main criticisms, which has been mentioned by others. Then there is the problem of standards. The committee detailed the sorry story of the technical certificate, which at one point differentiated those with the ordinary NVQ level 2 from those studying for apprenticeship, but was then dropped in favour of the apprenticeship blueprint. But that still leaves the situation very unclear. It is not helped by the fact that, according to evidence, what constitutes a completed apprenticeship in one sector would be seen as only just the beginning of one in another.

There surely has to be a clear framework on what constitutes completion at the different levels and incentives for young people and others to progress from one level to another. It is an indictment of the present system that so few progress to the advanced apprenticeship and from advanced apprenticeship to foundation degrees. We are told time and again that all will be solved by the new qualifications framework coming soon from the QCA, but it has been a bit like waiting for Godot. Can the Minister tell us when this new qualifications framework will be published? Will it be based on a system of credit accumulation and transfer, enabling those who are half way through a qualification to transfer to a new base if their work is moved? Will it link the SSCs and the new diploma framework?

The story told by this report is a sorry tale of government failures to develop joined-up, coherent initiatives, to think through the consequences of their actions and to carry them through consistently and with consistency over time. As always, part of the blame lies with the inheritance, but after 10 years that argument begins to wear a little thin and much of the inconsistency is of the Government’s own making. Now with the introduction of the new specialist diplomas in schools and with the Leitch agenda for skills dominating the industrial scene, it is argued that we are entering a new era. I have suggested that an apprenticeship ought to be the career of choice for many young people, as it is in Germany, the Netherlands and much of Scandinavia. Is that likely to be the case? Have the Government got it right? I very much doubt it. As I and others have suggested, there are still a lot of questions to be answered and far too many inconsistencies to be ironed out for us to be confident that the future is rosy for apprenticeships.

My Lords, I congratulate the noble Lord, Lord Wakeham, and the committee on an excellent report. It highlighted the many key areas that are in urgent need of attention. The committee found that while the UK has an excellent record in higher education it has a dangerously poor one in the provision of skills and in meeting basic needs in literacy and numeracy for those not choosing a path through higher education. Over a quarter of all employees—approximately 6.3 million people—have less than a level 2 qualification and almost 2 million employees have no qualifications. Of the 7.8 million economically inactive people in the UK working-age population, around 2.2 million people have no qualifications and approximately 3.7 million people lack a level 2 qualification. The Leitch review on skills found that over one-third of adults of working age in the UK do not have basic school-leaving qualifications and 5 million adults have no qualifications at all. I agree with the noble Baroness, Lady Garden of Frognal, who made an excellent maiden speech, that it is unacceptable that around 300,000 young people cannot access apprenticeships because they lack basic literacy and numeracy skills.

While it is crucial that we do not lose sight of the need for young people to be properly skilled, what plans do the Government have to widen access to apprenticeships to adults? The report was clear that apprenticeships need to be demand-led with far greater input from employers and with emphasis being placed on the quality of the apprenticeship rather than on the quantity of apprenticeships. No one doubts that the Government have recognised the difficulties facing employers and the economy and the need for a skilled and qualified workforce to compete in an ever-competitive global market, but introducing initiative after initiative without appropriate monitoring or data collection has led to poor information about what, if anything, is working and where ongoing improvements could be made.

There are a number of areas in the report that I would like to concentrate on, and I look forward to the Minister’s response. It is significant that the UK’s performance in improving skills after the age of 15 is worse than that of other OECD countries and significantly worse than countries such as Germany and Switzerland whose apprenticeship programmes are longer and more employer-led. That has resulted in the UK lagging behind in productivity and in poorer job prospects as the economy demands better qualified people to replace those retiring with lower skills. As has been recognised by other noble Lords, the report identified that in Germany and Switzerland almost all employers, parents and teachers are familiar with apprenticeship programmes. Students are prepared to think about occupational choice and the range of apprenticeships open to them. Around 75 per cent complete their apprenticeships in Germany compared with around 50 per cent in the UK. In Germany and Switzerland, employers are far more involved in the design of the training requirement for apprenticeships in their sectors. The process is managed through trade associations and other professional bodies. In evidence from the IoD, the committee was told that better involvement from employers in delivering apprenticeship would mean better input from employers. The IoD also stressed the need for progression from apprenticeship to advanced apprenticeship. However, due to lack of data, it is impossible to quantify exactly what percentage may want to continue to level 3 apprenticeships.

Although the committee welcomed the Green Paper proposal that all satisfying the criteria for apprenticeship placement will, from 2013, be able to find a placement, there is a worry that the Government's introduction of a much wider variety of work-based training that comes with funding and accreditation will encourage employers to ignore the apprenticeship framework. The CBI has stated that take-up and completion of apprenticeships will improve if bureaucracy is reduced. Can the Minister tell the House why there was nothing in the Government's announcement on 16 November 2007 about cutting bureaucracy and enabling more employers to offer apprenticeships?

Evidence from Connexions stressed the huge gap between what is taught in education and what skills at actually important in the labour market. The response from Connexions to the question, “Are existing training programmes failing to provide young people with appropriate skills?”, was, “Sadly, yes.” It stated that existing programmes are not meeting the needs of young people and that entry-to-employment programmes were not organised, lacked discipline and did not prepare young people for the world of work. However, Connexions itself comes in for criticism in the report. It is criticised for failing to reach a great many of those who need its services. In evidence, Mr West said:

“I must say that it is in a state of disorganisation. I cannot give you chapter and verse ... but everyone I have met says that it is not working terribly well”.

That is Connexions, to which young people look for advice for future career prospects.

As my honourable friend David Willetts has said:

“The real problem in expanding apprenticeships is the limited number of employers who wish to take them on. They are put off by the costs and the bureaucracy, but there is nothing in this announcement to tackle that problem. There is another danger: that the Government may achieve their target by renaming existing provision rather than increasing it. That’s what they’ve been doing for the past 10 years. We need a better approach”.

The Select Committee found that there was no information from the Learning and Skills Council on its most recent marketing initiatives. There are no records of the number of young people seeking apprenticeships. Therefore, it is impossible to know whether there are sufficient places to accommodate those wanting to apply.

It appears that there is no one government agency that has sole responsibility for apprenticeships. Can the Minister confirm which department will take on the committee’s concerns? Does he agree with the committee that a unit that is designed to report to a Cabinet Minister on all matters to do with apprenticeships should be set up?

The committee should be applauded for an in-depth report that has highlighted huge failings in how apprenticeships are delivered, the muddled way in which the Government respond, the confusion within which employers, users and administrators are expected to work, the lack of proper co-ordination with other schemes and their impact on the apprenticeship programme.

Where doubt has been expressed by some partner agencies about the ability of the SSCs to take on the greater responsibility of developing apprenticeships more closely with employers, the option of doing nothing cannot exist. A more co-ordinated approach must be guaranteed by the Government. There is an obvious need to get assurances from the Government that that will not become another headline-grabber that will disappear as quickly as it is initiated.

As my honourable friend John Hayes said:

“We want to see the value of vocational training elevated within society. In any other field, if only half of those people enrolled on courses completed them it would be a national scandal—this is the case with apprenticeships and it is unacceptable. Apprenticeships must be the right vehicle for boosting skills in the economy and adding value to the organisation and individuals involved”.

The noble Lord, Lord Dearing, made a most enlightening point when he was called as a witness to give evidence. He said:

“it is important to make the point that there is so much at stake it should be got right rather than done quickly”.

Finally, we are to encourage, as in the case of higher education having a clearing house, a similar delivery unit to be in place for those wishing to apply for an apprenticeship delivered by the LSC, as it is often argued that there remain some difficulties for those wishing to engage in apprenticeships in knowing how to and where to apply. I look forward to the proposed Bill. It is crucial that we get it right on how skills are delivered, and that those who need reskilling are provided with the appropriate vehicle through which they can properly engage with and meet the challenges that face us all in a fast-changing world. I agree with the noble Baroness, Lady Sharp of Guildford, that, thus far, the Government have disappointed in their response to the issues raised by the Select Committee.

My Lords, first, I sincerely join all noble Lords in thanking the noble Lord, Lord Wakeham, and the Economic Affairs Committee for a painstaking and helpful report. I will try to do justice to it. It is encouraging to know that it was the ninth report and that—taking these two points together—they have all been unanimous. I remember that the first report I did under the auspices of the TUC was carried by four votes to three with 12 abstentions. I am keen one day to emulate that level of success. I have also noted, as I am sure the House will have noted, a number of former apprentices in the House. I suspect that there are a great many more when we are all assembled together. Perhaps there are more in this House than in another place; that may well be true.

Much has been done over the past 10 years to develop the apprenticeship programme. The Government are now determined to accelerate the growth of apprenticeships and to continue to raise the quality of the programme. The point made by the noble Lord, Lord Dearing—that we must remedy something like 130 years of history—may be beyond what I can do this evening, but I will have a go. It is obviously important that this area remains under continued review and constant consideration, not because we need to keep reinventing things but because we cannot afford any further failures.

In July 2007 we published World Class Skills, setting out how we plan to improve the skills of our people in order to compete successfully in the global economy. Apprenticeships are completely vital—central—in the drive to do this. The Prime Minister described them as “keys to the future”. The noble Lord, Lord Macdonald, asked whether the current Administration will do better through the tripartite system. I believe that we will. Diplomas cannot and will not devalue, and must not be allowed to devalue, apprenticeships. The CBI welcomed diplomas for the role that they would play. It is right to say to the noble Baroness, Lady Sharp, that apprenticeships are a third route, and enjoy a considerable amount of employer support in their design. The specific question about the alignment of the different routes leads me to say that the sector skills councils have been involved in the development of the diploma partnerships and also the apprenticeship frameworks. This will provide the synergy necessary for the cross-over required if a young person wants to move from a diploma to an apprenticeship, and it ought to ensure that the routes are secure.

The Government are committed to providing 400,000 apprenticeship places in England as our contribution to the overall aim of 500,000 apprenticeships in the UK by 2020. By 2013, all school leavers who meet the entry criteria will have the right to an apprenticeship if they want one. This brings me to the important and enormously thoughtful points of my noble friend Lord Layard. As part of our preparation for this, the Education and Skills Bill, which was published on 29 November, will amend Section 2 of the Learning and Skills Act 2000 to make it clear that the Learning and Skills Council is under a duty to provide proper facilities for apprenticeships for 16 to 18 year-olds. This is to ensure that apprenticeships are given explicitly equal legal status to other post-16 education and the options that there are in schools or in further education. My noble friend is right to say that we must deal with part-time modes of study because it suits employers and apprentices; it is vital to secure engagement, which is part of the formula; it makes sense of the extension of the education age to 18; and it encompasses the wishes of many people.

I return to the point about a dedicated service, which is under active consideration in the review. I am not able to comment on guarantees, but I am able to tell the House that I expect that the review will report by the end of this month. I hope that that turns out to be an accurate assertion. It will have to take account of the proper balance between on-the-job and off-the-job hours. I completely accept the argument which has emerged from all Benches that we are talking about a high-cost option. It is not a cheap option in any respect. Investment is basic. Should places be available, they will be funded. We are committed in the CSR and we are committed to doing this right the way through. On the question asked by my noble friend Lord Macdonald and the noble Baroness, Lady Sharp, we are committed to doing what it takes. There is no point in arguing that apprenticeships are an apex of skills unless we have something like a Rolls-Royce ambition for making sure that they are delivered.

Apprenticeships are crucial not only for the skills agenda, as the noble Lord, Lord Wakeham, rightly said; they also contribute to the development of a fairer and more inclusive society in which people are not left behind. They help people to secure a better future for themselves and, in due course, for their children. I completely and wholeheartedly agree that we cannot afford to waste anyone’s talent. I hope that some of the programmes running through schools—from Sure Start, at the beginning, to the one-to-one mentoring in numeracy and literacy announced by my right honourable friend Ed Balls in December—will make sure that people have immediate guidance all the way through the process of improving their abilities. These should make a difference.

My noble friend Lord Macdonald hit the nail on the head. Securing the future will rely on both universities and apprenticeships. I strongly support his points on women and ethnic minorities. I know that my right honourable friend John Denham has spoken on this point frequently and recently.

Perhaps I may go through some of the facts. The noble Baroness, Lady Verma, described some of the statistics from the past and the difficulties that they illustrate. I do not accept her view that there are too many initiatives. I believe that the initiatives are proportionate to the task that is now faced. Currently, there are around 240,000 apprentices compared with about 75,000 when the Government came to power in 1997. More than 130,000 employers offer apprenticeships in more than 180 types of business, from construction right through to IT. The proportion of those leaving an apprenticeship having completed the full framework for the apprenticeship has risen from 24 per cent in 2001-02—a lamentably low baseline, which I acknowledge immediately—to 63 per cent now.

The noble Lord, Lord Wakeham, asked about the basis for the figures that I am quoting. The last published statistical report, for 2005-06, showed completion rates of 53 per cent for apprenticeships and advanced apprenticeships, but the latest management information figures that I have to hand, for 2006-07, show an overall rate of more than 63 per cent and similar levels for apprenticeships and advanced apprenticeships. I believe that these figures will be confirmed when the statistics are published in March or April. We will see when the figures are published, but I am reasonably confident that I am providing reliable information.

I think that the noble Lord, Lord Sheldon, was also concerned with the next point. As we looked at the rates of completion and the relatively rapid growth in the rates of completion, I was concerned to know whether it was roughly a straight line rate of growth, but I was told that it was relatively slower in the earlier years and that it picked up speed considerably. The curve looks more or less exponential now. I cannot say how long it will continue on that trajectory, but if it continues on the trajectory we expect, the reality is that the next 12 to 18 months should show considerable rates of improvement. I say to the noble Baroness, Lady Verma, that we will not be far adrift of Germany and Switzerland or the data that she introduced into this debate.

In 2005-06 there were 99,000 completions, and a similar number is expected when the 2006-07 data are published in April. The former wide differences in completion rates between sectors and age groups have been largely eradicated, and as I have said, we are on track to achieving similar completion rates to the best in Europe over the next few years. The number of advanced apprenticeships has fallen since 2001 while the general numbers at level 2 have grown. That is plainly not welcome, and I will not say that it is. We need to bend our efforts to doing something serious about it. However, the number of young people actually completing the full advanced apprenticeship framework has grown from around 17,000 in 2001-02 to some 33,000 in 2006-07. I take heart from that because I am more concerned with outturn data than input data, although there is usually a relationship between the two. I want to know what we have achieved at the end of it all.

I do not want to put words into her mouth, but the noble Baroness, Lady Sharp, said that there is still not enough at the advanced level. That argument has some merit, but the truth is also that the balance between the higher and non-higher levels seems to reflect what employers are saying they want from the system at the moment. The overall number of apprentices in learning has declined slightly in the past year, but that is now more because apprentices are working at the right level, and that is reflected in the rising completion rates.

My noble friend Lord Sheldon was right to detail again the differences between the German and UK systems, and I agree that the anecdotal evidence suggesting that there is greater demand for apprenticeships in the United Kingdom is not as good as having hard data. That is plainly needed and I accept the point. Statistics and monitoring are indispensable and they must be more effective. Overall, there is not a bad story to tell, but the Government and the country cannot afford any complacency, so we aim to do better in a number of areas.

In response to the noble Baroness, Lady Verma, the commitment across government is to reduce bureaucratic burdens. I am a compulsive deregulator by instinct, an attribute which I believe is shared by others, but it is plain that we need to make sure that burdens are wholly proportionate to what they are intended to achieve and do not go beyond that. As I said before, we need to increase the number of advanced apprenticeships. Many employers see their needs being met predominantly at level 2, and that is why apprenticeships at that level have grown since they were introduced in the early part of the decade. For example, Sir Terry Leahy of Tesco has made it clear that that is a level of skill, if properly achieved, that is essential for his business. However, even in these sectors advanced apprenticeships will offer excellent work-based preparation for supervisory roles and more specialised functions. We are working to persuade more employers and learners of their benefits.

The public sector, I am sad to say, although it accounts for 20 per cent of the workforce, still provides only 10 per cent of apprenticeships. We will be working hard to make sure that those figures are changed. We are working with our partners to improve participation rates and to broaden the range of occupations available to women, black and ethnic minorities, and to under-represented groups where it is not only numbers, but also peculiar distributions that we need to overcome. Men are very dominant in some areas while women are almost the only workers in others; hairdressing is an example of that. We aim to ensure that advice and guidance provision for young people in the new advancement service will give them and adults a more comprehensive picture of the range of career options open to them. This will be dealt with in the review. Indeed it has to be addressed, as the noble Lord, Lord Wakeham, said in his introductory speech.

A sentiment also expressed in the debate this evening, and one that I feel as well, is that the school culture itself needs to change. It has been so focused on higher education that it has not hit some of these other targets. I have begun to wonder whether the very many hours that pupils in schools spend with specialist subject teachers much more attuned to working out where the higher education options in their specialist subjects may be is proportionate when compared with the time spent with careers teachers. It may be out of kilter and we shall need to see more done about that. We are for the first time targeting funding specifically at apprenticeships for adults over 25 and 30,000 additional adult apprenticeships will be available over the next three years.

In order to make that work, the Connexions Service needs to be improved. It is currently going through a process of transition and discussions are taking place in all local authority areas to determine future delivery arrangements for services that are funded by the Connexions grant. A transitional fund is in place to assist with reasonable costs. It has features that are quite popular, including its award- winning national website and its helpline, but there is plainly more to do if people are to understand the options that are open to them.

We aim to increase significantly the number of apprenticeships available in order to meet the challenges set out in World Class Skills and the fulfilment of this ambition is dependent on more high-quality employer places becoming available. However, I am confident that employers will want to participate as they become more aware of the benefits to their businesses of apprenticeship. This leads me to a cardinal point: the best advocates of apprenticeships are those businesses involved in the programme. The Government are very fortunate to have the assistance of the Apprenticeship Ambassadors Network, led by Sir Roy Gardner, in promoting apprenticeships to employers of all sizes.

It is in this spirit of seeking to achieve greater things that I welcome the report, which will help guide the further discussion and work which is inevitably needed. The response from the Government so far is of course not the final word; they presented their response in early October but there is much more to do. The Government agree unreservedly with the report in reaffirming the benefits and value of apprenticeships and we have outlined a number of actions being taken which relate to some of the recommendations made in the report.

Let me mention one or two of the recommendations. The clearing house system for apprenticeships, which was one of the key parts of the report, is very important. We are trialling such a service and the national rollout will begin in 2008—a practical response to a very practical proposal. In this context it seems to have a parallel to UCAS: it is the beginnings of something which will place people alongside the opportunities that should be there. Why should that not be the case in this area as it has been in higher education?

It is for those reasons that I say to the noble Baroness, Lady Garden of Frognal, that, like everyone else, I greatly admired her speech. I thank her for it and I look forward to her speaking often. The late Lord Garden was a remarkable man who often gave me a very hard day when I was a Foreign Office Minister; I hope that I am none the worse for that. The noble Baroness’s reach across higher education and further education brings much knowledge, and that reflects the knowledge that the FE sector has. The sector skills councils should draw on that knowledge in FE; there is no question that it is a huge resource. However, identity of the skills needed by the FE or the sector skills councils, or by all of us, is best provided by employers. That was also a sentiment which, if I understood it properly, the noble Baroness emphasised. I should say to her that keeping up with all the acronyms is not easy and I have long since abandoned the effort.

The report asserts that too much emphasis has been placed on the quantity of apprenticeships and not enough on quality and subsequent destinations. For the past six years at least the focus of our attention has shifted towards quality rather than numbers. There has been a rigorous inspection regime; there has been a quality assurance arrangement; and thorough contact management, funding changes and incentives are being used among the mechanisms to drive up quality. The result has been seen principally in the proportions of those who complete the full-time apprentice framework.

Rigorous inspection has also meant that we have reduced the numbers of poorly performing providers. You cannot have a proper inspection regime unless you live with the consequences of having it. It is no coincidence, in my view, that more people in these circumstances complete, because quality predominates. It is no accident that there is more progress from apprenticeship to further courses and qualifications.

We did not accept the report’s recommendation that funding for apprenticeship training should go exclusively to employers. While employers are clearly at the heart of the apprenticeship programme, not all of them wish to contract directly with the LSC. Many do, and the LSC has arrangements in place to satisfy that demand. But our experience is that many employers, especially those in small and medium-sized businesses, prefer to operate through a training provider, who takes on the administrative burden for them. That is a business choice which reflects a business model that they, not we, have chosen. I say to the noble Lord, Lord Cotter, that this is one of the key points about the operation of small and medium-sized businesses. You have to listen to what they say, as he was advocating, and take it seriously. In engineering, the largest of the apprenticeship sectors, some of the smaller firms have been very vociferous.

I have emphasised the role of businesses. The UK’s most successful businesses have been at the forefront of the design of apprenticeships. Firms such as Rolls-Royce, Tesco and many others have set the terms and tens of thousands, going into hundreds of thousands, of young people follow the courses. I celebrate the fact that great British businesses do that. I celebrate the application and achievement of those young Britons who have decided to do that. Since these firms and apprentices are under the spotlight this evening, I invite everybody, on all Benches, to celebrate their accomplishments, rather than feeling that this is almost always a futile effort. Perhaps people will say that I am overstating some of the criticisms that have been made, but I feel that the tenor of our debates does not always acknowledge fully people’s accomplishments and contribution, and I wish to do so.

The noble Lord, Lord Wakeham, argued in a very powerful letter to the Financial Times that successive Governments have not really supported traditional apprenticeships enough and that they have been allowed to wither. I do not wholly accept that view; I look around this Chamber and see my noble friends Lord Sheldon and Lord Macdonald, and think of the Speaker of the House of Commons, who left school at 15 to become a sheet metal apprentice at Rolls-Royce. I understand the standing that apprentices have, because that was their standing when I was in my teens. I have been given one other unhelpful statistic, which means that I should not go too far back alongside the noble Baroness, Lady Sharp, to the guild system. Two-fifths of those hanged at Tyburn in the 18th century were apprentices apparently; I am not sure what that says about the quality of the scheme then.

I share a lot of the sentiment, because I felt it as a young person. There are several causes for the decline of the system. The Government may have played their role; employers have invested too little and decided at one stage that the range of skills was too narrow and inflexible to deal with the sea changes in production and construction and other lines of work, let alone the newly emerging businesses. To be candid, some unions tried to use their influence on apprenticeship schemes to hold on to restrictive practices that flew in the face of modern and efficient forms of employment organisations. So businesses modernised or they went out of business and the old apprenticeship, for all its historic resonance, did not align itself at that time to the changes that were taking place. That is a wide current of economic change.

Businesses looked at this environment and decided that in the new environment, apprenticeships had to modernise. They reach wholly new areas; step by step, they fit people for jobs which employers insist are the jobs for the future. It is they who lead in this, not Whitehall. That is the basis for my optimism this evening.

We are improving numbers and quality, and I think we are improving the relevant levels of preparation for jobs. The character of employment will always change; nothing will be static in the economy; it is the economy, rather than Sir Alan, which finally says, “You’re fired” to any number of people whose skills do not fit the real circumstances of the economic world. The skills have to match what employers demand, and that is why apprenticeships will always be in flux. I do not believe that will ever change. Higher completion rates will also be essential if progression is to be appropriate.

I conclude by stating my belief that more is to be done. That is in the nature of what we are discussing. All in all, there are grounds for optimism rather than the reverse. The Government will take what has been said tonight not only as a set of constructive criticisms but even more as a thoughtful affirmation of an ambition to do vastly better in the area of apprenticeships. My noble friend Lord Sheldon urged greater ambition. I believe that he is absolutely right, and that that is the sentiment of the House.

My Lords, this has been an excellent debate. I congratulate and thank everyone who has played a part in it. I congratulate in particular the noble Baroness, Lady Garden, on an excellent maiden speech. Every time I hear an excellent maiden speech it takes me right back to when I made my maiden speech in the House of Commons many years ago. One of my friends said to me afterwards, “At least it will read well in Hansard”. The noble Baroness need not worry about that; her speech sounded well tonight and will read well tomorrow. It was full of matters of substance, which we appreciate.

I also thank the noble Lord, Lord Triesman. I am not absolutely sure about how timetables work or whether I am saying the right thing at the right time, but if he is off to pastures new in the not-too-distant future then this is the probably the last time he will be replying to a debate that I have started. I think I speak for everyone I know of when I say that he has been highly respected and admired in all the jobs he has done here. I tell him, though, that if he is going where I think he is going, I shall keep an eye on him. I went to one of the very few schools whose old boys have ever won the FA Cup. That was about 130 years ago, around the time when it seems to be the general view of the House that all the problems with apprenticeships started, so that may be a lesson for all of us.

On Question, Motion agreed to.

House adjourned at 9.37 pm.