Contribution
My Lords, I rise to move Amendment 5 and will speak also to Amendment 124 in this group. I thank the noble Lords, Lord Londesborough and Lord Vaux of Harrowden for adding their names to the amendments. The noble Lord, Lord Vaux of Harrowden, was hoping that we would be progressing rather more rapidly during Committee. Unfortunately, he has now had to leave us, but he has assured me that he remains fully committed to the principles behind these amendments.
Amendment 5 seeks to amend new Section 27BA of the Employment Rights Act 1996 as inserted by Clause 1 of this Bill so that the new right to be offered guaranteed hours will not apply to small and micro businesses. Small and micro businesses should not be dragged into any of the changes made in this part of the Bill, which is why I tabled the more extensive exclusion in Amendment 124. The Public Bill Office would not let me table that amendment at the beginning of Part 1, which is what I wanted to do, but it suggested Amendment 5 as a mechanism to enable us to have an early debate on the impact of the Bill on small and micro businesses. It is such an important issue that it has already arisen in the speeches of several noble Lords on the other two groups that we have debated, so now is a good time to have an initial debate on small businesses.
My blanket Part 1 exclusion—in Amendment 124 —applies to small and micro businesses. I have used the definitions in the Small Business, Enterprise and Employment Act 2015, so that a “small business” is one with fewer than 50 staff and a “micro business” has fewer than 10 staff. The 2015 Act also encompasses other types of undertaking, so small charities et cetera would come under that definition.
I have some considerable sympathy for Amendment 282 in the names of my noble friends Lord Sharpe of Epsom and Lord Hunt of Wirral, which is also in this group. It is similar to mine, but it instead also covers medium-sized companies, which are those with between 50 and 250 employees. I believe that the greatest harms done by this Bill will be to those at the smaller end of the scale, because they have the fewest management resources to cope with the kinds of burdens that the Bill will inflict on large swathes of our business community. I am not opposed to my noble friends’ amendment, but if we could see where the biggest harm would be, it would be at the very smallest end.
According to the latest Department for Business and Trade statistics, there were 5.5 million businesses in total, employing nearly 28 million employees. The micro-business segment—those with up to 10 employees —accounts for 95% of the total number of businesses, 5.2 million. However, 4 million of them do not have any employees. The rest—1.2 million businesses—have over 4 million employees between them. So we are talking about businesses with an average size of three employees; these are very small operations.
The 220,000 businesses that have between 10 and 50 employees have 4.3 million employees in total. The average for this category—small businesses—is around 20 employees, so it is still a very small operation. The rest, large and medium-sized businesses, account for only a bit over 1% of the business population—that is the number of businesses—but they employ 53% of the workforce.
If my amendment—to take Part 1 out of scope for small and micro businesses—is accepted, it would still apply to private sector businesses employing around 15 million employees, plus, of course, the 6 million employed in the public sector. It would not apply to around 1.4 million businesses with around 8.3 million employees.
The Government’s economic analysis cites a figure of 13 million employees who would be excluded for small and micro businesses, but that seems to include the 4 million businesses with no employees, which I have assumed are things such as sole traders, who are not actually employed. If the Minister responding to the amendment has any better analysis of the numbers, I would be grateful if he would write to me, because I find them a little confusing.
The Government’s assessment of small and micro businesses shows that five of the nine largest measures and two of the four medium-sized measures have a disproportionate impact on small and micro businesses. I am genuinely astonished that the Government would even contemplate bringing forward measures which are so disproportionately skewed in terms of harm to small and micro businesses. Those that have the biggest impact are found largely in Part 1 of the Bill.
Several noble Lords have already raised the problems that the Bill will create for those small businesses, and at Second Reading a number of noble Lords spoke to exactly the same issues. At the weekend, I went back to the closing speech of the Minister, the noble Baroness, Lady Jones of Whitchurch, at Second Reading. She did not even refer to the problems for this important sector of the economy; she talked about business more generally, but not about the small and micro businesses, or even the medium-sized businesses, that will be impacted.