Lord Lucas (Con)

My Lords, I thank Tim Leunig for drawing my attention to this proposal. The standard in the UK when a person has a job and contracts for a new one is that he or she has to serve a three-month notice period. In the United States, notice periods are typically two weeks. There is no legal requirement, but that is the convention and any longer is considered unreasonable. It is quite clear, looking at things in the round, that three months is not necessary to run a dynamic and effective economy—it is inefficient. Shifting the notice period down would be a contribution to productivity and a benefit to workers. Most people get a pay rise when they move jobs. Getting it 11 weeks earlier would mean a direct rise in the individual’s income, as well as a rise in GDP and tax revenues. It is of all-round economic benefit. The most important effect is indirect. If notice periods are short, a dynamic company can scale up more quickly and easily than is currently possible. It can go out and bid for contracts knowing that it can get the staff in time to honour them. If an entrepreneur has a good idea, they can make it happen. If demand rises for one firm, it can respond more easily. Making it easier for dynamic firms to grow quickly is definitely an economic benefit. Finally, knowing that employees can leave more quickly would give firms an incentive to think more carefully about them. If their leaving is a big nuisance, firms will want them to stay, and will therefore have an incentive to think more about pay rises, promotions, new training opportunities and other things that make the employee feel that his current job is worth having. In contrast, allowing firms to set long notice periods helps incumbents, particularly firms not seeking to grow and that do not want to respond to growth opportunities. That is not a productivity-enhancing strategy. My amendment suggests a gentle way of seeking to change current practice in the UK—to incentivise a change without requiring anything. If the Government can see a better way of getting to the same outcome, I should be delighted to support them. I beg to move.