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Column 627

Moss, Malcolm

Mudd, David

Neale, Gerrard

Nelson, Anthony

Neubert, Michael

Newton, Rt Hon Tony

Nicholls, Patrick

Nicholson, Emma (Devon West)

Onslow, Rt Hon Cranley

Oppenheim, Phillip

Paice, James

Patnick, Irvine

Raison, Rt Hon Timothy

Renton, Rt Hon Tim

Ridley, Rt Hon Nicholas

Rossi, Sir Hugh

Rowe, Andrew

Sackville, Hon Tom

Sainsbury, Hon Tim

Scott, Rt Hon Nicholas

Shaw, David (Dover)

Shaw, Sir Giles (Pudsey)

Shelton, Sir William

Shephard, Mrs G. (Norfolk SW)

Shepherd, Richard (Aldridge)

Shersby, Michael

Skeet, Sir Trevor

Smith, Tim (Beaconsfield)

Speed, Keith

Speller, Tony

Squire, Robin

Stern, Michael

Sumberg, David

Summerson, Hugo

Taylor, Ian (Esher)

Taylor, John M (Solihull)

Taylor, Matthew (Truro)

Tebbit, Rt Hon Norman

Thompson, D. (Calder Valley)

Thompson, Patrick (Norwich N)

Thornton, Malcolm

Tracey, Richard

Twinn, Dr Ian

Viggers, Peter

Walden, George

Wallace, James

Walters, Sir Dennis

Ward, John

Wardle, Charles (Bexhill)

Watts, John

Wheeler, Sir John

Whitney, Ray

Widdecombe, Ann

Wilshire, David

Wood, Timothy

Yeo, Tim

Tellers for the Ayes :

Sir George Young and

Mr. Tim Boswell.

NOES

Abbott, Ms Diane

Allen, Graham

Barnes, Harry (Derbyshire NE)

Bidwell, Sydney

Dalyell, Tam

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Hoyle, Doug

Lambie, David

Leighton, Ron

Livingstone, Ken

Mahon, Mrs Alice

Molyneaux, Rt Hon James

Pendry, Tom

Redmond, Martin

Thompson, Jack (Wansbeck)

Winnick, David

Wise, Mrs Audrey

Tellers for the Noes :

Mr. Teddy Taylor and

Mr. Dennis Skinner.

Question accordingly agreed to.

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Column 628

Orders of the Day

Statutory Sick Pay Bill

Order for Second reading read.

3.59 pm

The Secretary of State for Social Security (Mr. Tony Newton) : I beg to move, That the Bill be now read a Second time.

As right hon. and hon. Members will note, the Bill consists of only three clauses. The House may find that a welcome change from most of the social security and other Bills brought before it. In general, social security Bills cover a wide variety of different social security matters, and their lengths are commensurate with that. This Bill, however, is a one-subject Bill dealing solely with the arrangements under which employers can currently recover, from their remittances of national insurance contributions, the whole of the statutory sick pay that they pay out to their employees when they are sick.

As the House will recall--certainly the hon. Members for Oldham, West (Mr. Meacher) and for Birmingham, Ladywood (Ms Short) will--in my general uprating statement last month, I gave notice of our intention to adjust those arrangements as a continuation of, or a building upon, the restructuring of the SSP scheme that I undertook, to a modest extent, last year.

Before coming to the detailed provisions of the Bill, it might be helpful briefly to remind the House of the background to and the origin of the SSP scheme. Those hon. Members with lengthy memories--that will include the Opposition Front-Bench spokesmen--will recall that, when the Government came to office in 1979, occupational sick pay cover during the 1970s had taken off and begun substantially to expand. However, the state--I would call it the ordinary social security system--was continuing to process some 10 million sickness benefit claims a year, with the result that there was a significant overlap, and sometimes even over-provision, between the state and the employers. Because sickness benefit was not taxed, in effect many employees were better off when sick than when at work. It was against that background, and with a wide measure of consent from both employers and their organisations, that the SSP scheme was introduced.

I doubt whether the House will wish me to dwell too long on the history of the SSP scheme. Despite what I suspect one or two Opposition Members may say, it is fair to point out that the scheme has been a considerable success story. When it began, there was undoubtedly apprehension among employers and employees about its impact. In the event, those fears proved largely groundless, especially after the inevitable initial problems, which arise with any substantial changes, had been overcome. Employers quickly assimilated SSP into their usual payroll arrangements, and the vast majority of them now operate the scheme with very little difficulty. Perhaps a measure of its success could be gauged from the fact that even the trade union movement--if I may put it in those

terms--commented favourably on the implementation of the scheme. I acknowledge that smaller employers, who obviously have less scope for developing expertise in the SSP scheme, may sometimes find its operation more of a chore. That is

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one reason why I had their interests especially in mind when developing the package, on which I shall elaborate later.

Mr. Michael Grylls (Surrey, North-West) : Has my right hon. Friend had an opportunity to hold full consultations with all the small and medium -sized organisations? At a time when the Government are telling businesses generally that they must keep down their costs, for obvious reasons, and at a time of high interest rates, many of the small and medium-sized firms are in some difficulty. Has my right hon. Friend received any advice from the deregulation unit and from our hon. Friend the Minister with responsibility for small firms about their reaction to the Bill? I have heard a great deal of concern expressed because it is perceived that the Bill will add to costs at a difficult time. Will my right hon. Friend bear that in mind and tell the House what consultations he has had?

Mr. Newton : I will certainly bear in mind my hon. Friend's remarks, and I acknowledge the considerable part that he has played over many years- -of which I have had personal experience in various ministerial positions and in other ways--in ensuring that the interests of small businesses in particular are taken fully into account. I hope that my hon. Friend will bear with me, because later in my speech I shall refer to parallel reductions in national insurance contributions, which are geared to take special account of the needs of smaller businesses. They may mean that some smaller employers--although not all, because it will depend to some extent on factors particular to certain businesses--whose employees are not highly paid, as is the case in many service industries, will find that reductions in national insurance contributions will leave them rather better off, taking the package as a whole, than at present.

Ms. Clare Short (Birmingham, Ladywood) : I am sure that the Secretary of State would not want to mislead the House. He must be aware that the National Federation of Self Employed and Small Businesses is passionately angry about his proposals, feels that promises made in the past have been breached, and believes that the new measures will prove very destructive both to sick people and their businesses. That view is on the record. The right hon. Gentleman should not pretend that businesses welcome the legislation, because they certainly do not.

Mr. Newton : I did not make any such pretence. I sought to make a sensible and balanced response to my hon. Friend's intervention. Later in my speech, I shall give examples of the possible effect of the new system on a representative sample of small employers with a typical incidence of sickness, showing how they might gain from the reduction in national insurance contributions for employers, which are specially focused on lower earnings bands below £175 or £185 per week.

Mr. Anthony Nelson (Chichester) : Will my right hon. Friend confirm that some representations were made before his uprating statement, in which he announced significant improvements in social security benefits that might put a different complexion on the representations made to him?

Mr. Newton : The representations to which the hon. Member for Ladywood referred were submitted before the federation had details of the reductions that were to take place in employers' national insurance contributions.

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