How not to measure the ‘level of ET claims’. Oh, too late …

Last weekend, Giles Wilkes – who served four years as special adviser to then business secretary Vince Cable – responded to a fairly innocuous blog post of mine, in which I urge new Tory ministers to conduct their long-promised review of the employment tribunal fees regime introduced in July 2013, by tweeting back:

Was there definitely nothing wrong with [the] ex-ante level of claims?

Now, this is uncomfortably close to one of the standard responses to criticism used by political scoundrels throughout public policy history: ‘So, you would have done nothing, huh?’ To which the answer is almost always: ‘No, I just wouldn’t have done what you did’. And my tweeted retort to Giles was indeed that there was “very little” wrong with the level of claims in mid-2011, when Dr Cable and then justice secretary Ken Clarke agreed to introduce hefty claimant fees, not least because claim/case numbers were at that time going down.

However, as one of the good guys in life (and the Coalition government), Giles deserves a fuller response to his question than it is possible to give in one or two tweets. So I promised him this blog post. What a lucky chap he is.

So, what was the ex-ante level of ET claims (or cases) in 2011? Well, the answer to that question is slightly complicated by the fact that there are two different types of ET case: (a) single claims/cases brought by individual workers; and (b) multiple claimant cases involving tens, hundreds or even thousands of workers, each with an identical (or very similar) claim against the same employer. For example, in 2012-13 – the last year before fees – there were 54,704 single claims/cases, and 6,104 multiple claimant cases (involving a total 136,837 claimants), brought against a total 60,808 employers (give or take some single claims brought against the same few recidivist employers). And, as a result, there are two alternative ways of measuring the ‘level of ET claims’.

The first way is to add the number of single claims/cases to the total number of claimants in the relatively small number of multiple claimant cases. This produces the ‘headline’ measure used exclusively (and wrongly) by Coalition ministers in 2011, 2012 and 2013. Giles will know better than me why they chose to use this measure, but the number of claimants involved in a handful of unusually large multiple claimant cases (mostly equal pay claims brought against NHS trusts and local authorities) enabled ministers to make otherwise un-evidenced (and grossly misleading) statements such as:

“Workplace disputes are increasingly being settled through tribunals – over 200,000 claims last year. We are in danger of getting away from the principle that they should be the last resort, not the first option.”

The second – and far more meaningful – way to measure the ‘level of ET claims’ is to total the number of single claims/cases and the number of multiple claimant cases. This is the measure that Dr Cable and Giles Wilkes should have focused on in 2011 and 2012, for two simple reasons: (i) it’s a much more meaningful measure of the workload of the ET system (as, in most multiple claimant cases, the tribunal only has to resolve one or two lead claims, even if there are 50,000 claimants in the case); and (ii) it equates to the number of employers affected. And, if that was obvious to me – a lowly policy officer in an under-resourced charity – in late 2011 and early 2012, it should have been obvious to the business secretary, his SpAD, and the then employment relations minister, Ed Davey.

This measure of the ‘level of ET claims’ is set out in the following chart, from which we can see that, in 2008-9 and 2009-10, the number of ET cases did rise quite significantly. However, as economists, Dr Cable, Giles Wilkes and Ed Davey would have known that this was entirely to be expected, given a little local (and global) difficulty in the economy from late 2008, and the associated wave of job losses and outright business failures. Indeed, in early 2011 a regulatory impact assessment issued by Dr Cable’s department noted that there had been “a clear rise in [the number of ET claims for unfair dismissal] coinciding with the downturn in the economy and particularly the level of redundancies which peaked in the second quarter of 2009”.

annual for GW blog

We can also see that, in 2010-11 – the first financial year of the Coalition government – the number of ET cases fell by 13 per cent, from 78,700 to 68,500. These figures were published in the autumn of 2011 – several weeks before Dr Cable announced the plan to introduce ET fees on 23 November – but they would have been available to, say, a SpAD in the private office of the business secretary or the BIS employment relations minister several months before that.

So, when Dr Cable told that somewhat partisan audience at the EEF in November 2011 that “we are in danger of getting away from the principle that [ETs] should be the last resort, not the first option”, he knew – or should have known – that the level of claims was in fact falling sharply. And, later, he would (or should) have known that this downward trend continued in both 2011-12 and 2012-13, as he and Ken Clarke (later Chris Grayling) finalised the ET fees regime for implementation in July 2013 – by which time the ‘level of claims’ was pretty much back to its lowest level since the turn of the century. In short, Dr Cable and his ministerial colleagues at the Ministry of Injustice could have ‘achieved’ a record low level of ET claims without even going into the office.

Now, Giles might well say that, just because the level of claims was falling, it cannot be said that there was nothing wrong with the level of claims. I cannot actually recall Dr Cable, Ed Davey or Norman Lamb making any speeches along the lines of ‘the level of ET claims is falling to a record low, but that is still far too high so we must take radical action to reduce it by another 65 per cent, and sod access to justice’, but hey. Nor can I recall even the maddest of the employer lobby groups suggesting that two-thirds of all ET claims were vexatious.

So let’s look at that 2010-11 figure of 68,500 ET cases more closely. Only about two-thirds (i.e. 45,000) of the 68,500 employers affected were private sector businesses, as one-third of all cases (and the vast majority of multiple claimant cases) are brought against public or voluntary sector employers. And there are about 1.2 million private sector employers in the UK. Accordingly, at the time Dr Cable rose to his feet at the EEF in November 2011, the average private sector business employer risked facing an ET claim about once every 27 years. Yet, according to a series of speeches delivered by Dr Cable and other ministers, this marginal risk was enough to keep our valiant entrepreneurial classes awake at night as they fretted over whether to take on another employee.

None of which is to say that, in 2011, there was not scope to improve the speed, consistency and efficiency of the ET system (and, to that end, I was later to play a tiny but entirely supportive role in the Underhill review of the ET procedural rules, also announced by Dr Cable in November 2011). But introducing fees of up to £1,200 to bring a claim for unfair dismissal or pregnancy-related discrimination was never itself going to improve the speed, consistency or efficiency of the system. Nor is it to say there was no case for a genuinely fair and reasonable ET fees regime – I argued for such a fees regime in 2012, including in the response of Citizens Advice to the formal consultation on ET fees, and have continued to do so ever since. Was Giles even aware of such alternative proposals for raising the Ministry’s £9-10 million per year?

In short, Vince Cable appears, at best, to have consented to Tory ministers’ proposal for hefty claimant fees on the basis of an entirely false premise about the ‘level of ET claims’, and without any evident understanding of the predictable (and predicted) impact of such prohibitive fees on workers’ access to justice. But then why spend time searching out the (informed) views of lowly third sector policy wonks or employment lawyers when you can spend it hanging out in the grand offices of the Institute of Directors and British Chambers of Commerce?

Throughout the lifetime of the Coalition, the Liberal Democrat ministers at BIS – Vince Cable, Ed Davey, Norman Lamb, Jo Swinson and Jenny Willott – appeared entirely uninterested in what they might learn from those outside the powerful lobby groups with their vested interests. And now, having ignored us, our evidence and our (dire) warnings for five long years, during which they consented (seemingly without much of a fight) to the single most damaging reform ever made to Britain’s system of employment rights – far more destructive than anything proposed by Adrian Beecroft – they blithely assure us we will miss them.

When it comes to employment rights, what’s to miss?

3 thoughts on “How not to measure the ‘level of ET claims’. Oh, too late …

  1. Well said and Cable’s rapid about turn on the issue of Tribunal fees post election tells you all you need to know about the Liberal Democrats. Little wonder the electorate chose to nearly wipe them out. 2020 to complete the job.

  2. Great analysis, and while I don’t think the Lib Dems are exempt from criticism I do think that you are overly harsh. Firstly, Jo Swinson is I believe on record as saying that they only agreed with fees being introduced subject to a review, which the Tories then refused to deliver (something which I think previous Hard Labour posts highlighted). Secondly, you have to take a broader view than just this specific issue. While I obviously wasn’t present at any Coalition negotiations, I’ve done enough union negotiations in my time to know that you give things to gain things. I can well imagine a discussion along the lines of “We’ll let you have your free school meals for infants if you accept employment tribunal fees” between the parties.

  3. Hmm fees? What are the implications?

    Dare one suggest that the present government should introduce Dr’s fees of £150 each time you make an appointment to see your GP ! I’d guess the effect would be very similar? Appointments like et claims would be slashed only the really needy would book appointments and go for surgery or treatment. This is of course political nonsense so are et fees.

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