House of Commons Hansard Debates for 28 Nov 1990

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occupational sick pay schemes, the £294 that small employers will have to pay may be added to the much larger sum that he is already committed to paying.

We dispute the figure given by the Government because we believe that they have been exaggerating, but if they are right--I put it ad hominem to them- -that about 90 per cent. of people are covered, the effect on the small employer is not only when there is a significant period of sickness costing him up to about £300 per employee but also the cost of occupational sick pay, which the Government say will apply in the vast majority of cases.

The effect on employers recruiting disabled and chronically sick people will be all the greater in the future if further reductions in the reimbursement rate are made. All the arguments are premised on the 80 per cent. rate applying, and of course that will be the rate for a time.

Many of us have listened to the Secretary of State choose his words carefully and say that he has "no plans to do so". I admit that my memories of Whitehall are somewhat distant, although they are soon to be refreshed, but I remember that when Governments do not wish to admit to something they say, "We have no plans to do so." Technically, being somewhat economical with the truth, that is probably correct--there are no immediate plans lying about. Ministers have used such phrases but, a few years later, we have been told, "Circumstances have changed", "Different conditions prevail", "There has been a further review". Perhaps there has even been a new face in the Department--these things do happen. What we were assured would never happen has somehow come about. Under the amendment, if there are further reductions in the reimbursement rate, the disadvantageous effect--the deterrent to the recruitment of chronically sick or disabled people--will be all the greater.

I admit that I am not talking to a packed Chamber. I wish that more people were listening to the argument. Under our amendment, whatever changes are made in the reimbursement rate for the third and subsequent weeks, there will still be 100 per cent. reimbursement for the first two weeks. I hope that I have made the case that this is a serious point. I should be the first to admit that Conservative Members are concerned about the employment prospects of disabled people. I therefore hope that they will accept this as a non-partisan amendment. We believe that the Government are putting the employment prospects of disabled people at risk. They are an important section of the work force. We believe that the Government's measure is unnecessary. I hope that they will reconsider the amendment.

Mr. Kirkwood : I support the comments of the hon. Member for Oldham, West (Mr. Meacher). New clause 1, which was tabled in my name and that of my hon. Friends, is another attempt to limit the damage that will be inflicted by the Bill on employers and employees. Estimates have been made of average periods of sickness and so on. The new clause is an attempt to restrict the Bill's provisions to cope with the average periods of sickness in firms and businesses. Any opportunity to limit the damage that will be caused by the Bill is welcome. The new clause is a probing measure to get the Government to justify seeking wide provisions which will damage small and large businesses. I am happy to leave my comments on that basis, and I await with interest the response by the Under-Secretary of State.

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Mr. Flynn : It is difficult to concentrate on this fascinating business when we have information about the remarkable appointments being made by the new Prime Minister, who is proving that at least he has a sense of humour. One of his appointments has been the right hon. Member for Henley (Mr. Heseltine) as Secretary of State for the Environment--one of the most remarkable appointments since Caligula appointed his horse as consul--

The Second Deputy Chairman : Order. I think that we should get on with the business.

Mr. Flynn : Indeed, Miss Boothroyd.

My hon. Friend the member for Oldham, West (Mr. Meacher) referred to a debate on Second Reading which, unfortunately, did not reach a conclusion. The debate concerned the report by IFF Research Ltd. and how many firms had been covered by occupational schemes. We should bear in mind what the report said and find guidance from it. I am sure that hon. Members used their time usefully in the past 48 hours to read that report. Two days ago, the Secretary of State for Social Security said that the Government did not know exactly how many people were covered by sick pay schemes--a nice confession of the ignorance on which the proposition is based. He went on to say that 90 per cent. of firms have such schemes.

The IFF report provides the clearest evidence we have. Paragraph 2.5 states :

"The proportion of private sector establishments offering sick pay schemes cover is as follows".

The report shows that for short-term cover only, it is 42 per cent. ; for short and long-term cover, it is a mere 14 per cent. ; and for long-term cover, it is less than 1 per cent. The key figure is 14 per cent., which would be comparable.

The Secretary of State for Social Security (Mr. Tony Newton) : I cannot see why that is the relevant figure. We are talking about what counts as short-term sick pay. It is clear from the report that the coverage of short-term sickness is much greater than coverage of long-term sickness.

6.15 pm

Mr. Flynn : I said that it is the key figure because it will be important when the Bill comes into effect. The Bill gives the Government greater powers by order to make cuts over a long period until, in effect, the scheme disappears. I could argue at length with the right hon. Gentleman on this point, but I intend to speak briefly. That percentage is a long way from the 90 per cent. figure which Ministers repeatedly trumpet.

Every organisation that represents people with disabilities is genuinely worried that the Bill will harm the job prospects of such people. I should love to hear about any such group that supports the Bill. The opposition from those organisations has not been dulled by Monday's debate. They still vehemently oppose the Bill. I hope that the Under-Secretary will say that the Government have taken this into account.

The only measure that we have of the proportion of people with disabilities in employment is the number of registered disabled. The record of industry and Government Departments is shameful. Half the target of 3 per cent. has been achieved by the Department of Social

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Security, which is presenting the Bill. I should have thought that that Department would blaze a trail by employing at least that target of 3 per cent.

The Parliamentary Under-Secretary of State for Social Security (Mrs. Gillian Shephard) : The Opposition alleged that if 80 per centreimbursement applied for the whole period for which SSP is payable, it would lead to employers not employing or discriminating against people with disabilities or people who suffer from health problems. I should have thought that, on Second Reading, my right hon. Friend the Minister for Social Security and Disabled People laid that argument to rest.

The Opposition quote a report compiled by Patricia Prescott-Clarke entitled "Employment and Handicap" and published in June this year. That report states that, for the majority of disabled people, "The time taken to get a job was relatively short. It was shortest for those not in work at onset-- (64 per cent. got a job within two months of looking compared to 56 per cent. of those having held an onset job.)"

Clearly, it must take some disabled people some time to get a job, but the problem is by no means as widespread as the Opposition have said.

The report to which my right hon. Friend the Secretary of State referred extensively on Second Reading, showed that half the people with disabilities in work took less than five days a year off for sickness or treatment. As my right hon. Friend pointed out then, in general, people with disabilities have work records as good as, if not better than, those of the able-bodied. The figures certainly do not suggest that the SSP liabilities of employers will be any greater in relation to employees with disabilities than they will be for other employees.

Of course, many factors other than SSP are important in the determination of job opportunities for the disabled, and our Department and the Department of Employment have developed policies to promote the employment of such people--not least our own proposals for a brand-new benefit, the disability working allowance, to be introduced in April 1992. Having listened carefully and with interest to Opposition Members' proposed solutions to the problem, I can find little logic in them ; certainly, the administrative complexities that an employer would incur in operating different rules for different employees, depending on how long they had been ill, hardly bear thinking about.

Speaking to the earlier group of amendments, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) complained about the complexity of the SSP scheme, and I am therefore astonished that he should be prepared to support the introduction of yet more complexity. Let us think what the implementation of new clause 1 would mean in practice. Each month, when an employer paid his tax and national insurance contributions to the Inland Revenue, he would need to establish which payments of SSP attracted 80 per cent. reimbursement and which attracted 100 per cent. He would also have to work out whether he could claim additional compensation. In the worst scenario, he might have to try to apportion a monthly SSP payment for an employee between the part on which he could claim 100 per cent. and the part on which he could claim only 80 per cent.

Attempting to enforce the proposals in either the amendment or the new clause would be an administrative

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nightmare for employers. Indeed, the Department and the Inland Revenue would encounter just as many difficulties in trying to ensure that the correct deductions in respect of SSP were being made for employers' national insurance contributions, and that the right amounts were being paid to employees. I accept that some employers may be unhappy about the move from 100 per cent. to 80 per cent. reimbursement--I understand that--but I suspect that they would be even less happy if they had to operate the Opposition's proposed arrangements.

Although I do not want to accuse the hon. Member for Oldham, West (Mr. Meacher) of tabling a wrecking amendment, I am bound to say that he seemed to imply that that was his intention, and I can certainly think of no better way of wrecking the operation of SSP--which does involve some complexities--than the system that he has proposed. Hon. Members have mentioned the problems that small employers may experience, although that was the subject of the first group of amendments. We have costed the proposals in amendment No. 8 and new clause 1 : the costs of the amendment would be about £107 million in 1991-92, and those of the new clause about £89 million. Cost is by no means an insignificant factor, but the main point is that the administrative nightmare proposed by Opposition Members--apparently in all seriousness--is not worthy of consideration, and should be rejected.

Mr. Meacher : I find the Minister's explanation unconvincing. I know that the Opposition are expected to say that every time, but I genuinely mean it : I do not think that the Minister has answered our case at all.

Quoting from a survey from which I, too, quoted, the Minister suggested that it took a relatively short time for most disabled people to obtain a job. I am glad to hear it. She also said that the great majority of disabled people took fewer than five days off for treatment, and, in general, had good work records. If that is true, it is very reassuring, but, as I have said to the Minister of State and repeated today, it really misses the point. We are not discussing whether disabled people take a long time to find jobs under the current arrangements or whether they take only a few days off in a working year ; the point is whether the Bill will act as a strong financial deterrent, dissuading employers from taking on disabled people. The survey from which the Minister quoted is entirely irrelevent in that context.

I said all this on Second Reading, and I hoped that what I said had been taken on board. One likes to think that one's remarks are mulled over in the bowels of Whitehall after Second Readings, but apparently that is not the case ; I am very disappointed. Let me repeat, then, that we are considering the effects of the Bill. The Minister has said nothing that diminishes our anxiety and apprehension : we fear that the Bill will have a considerable effect in reducing recruitment of disabled people. The Minister of State may shake his head, but we need some evidence.

I appreciate that we are talking about a system that will operate in the future--that, to that extent, the scheme is hypothetical, and that it is therefore impossible to produce any factual, empirical evidence. The likelihood is, however, that the scheme will act as a considerable disincentive.

Mr. Scott : All these scares were put about when the SSP scheme was introduced, and exactly the same arguments were advanced at the time of the extension to 28 weeks.

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There is absolutely no evidence that the scheme has had such an effect. Given all the pressures designed to encourage the employment of disabled people that I mentioned on Second Reading, I do not believe that these proposals will make so much as a ripple on the pond.

Mr. Meacher : That is a very complacent forecast. The right hon. Gentleman says--I do not know whether this has been factually verified-- that the introduction of the scheme and the extension to 28 weeks had little effect. Even if that is true, in neither instance was there any disincentive for employers. What we are discussing today, for the first time, is a significant disincentive for a number of employers--not all, but a significant number--particularly small employers. Small employers have to keep a close watch on the margins if they are to survive, especially in today's declining market. The right hon. Gentleman underestimates the probable negative impact of the Bill.

Mrs. Gillian Shephard rose --

Mr. Flynn rose --

Mr. Meacher : I will give way to my hon. Friend first, and then to the hon. Lady.

Mr. Flynn : I drew attention to at least one ripple on Second Reading. I do not claim that my evidence was entirely convincing, as it was based on some questions that I had tabled the previous week. The most detailed answer that I received showed a decline in the number of people with disabilities who were employed by the Welsh Office, coinciding with the introduction of SSP in 1983. I am not suggesting that the two events are necessarily connected ; it is a case of "post hoc, ergo propter hoc". But the Government are trying to make their case, and I feel that we should at least be given the complete picture. That ripple may well be a flood.

Mr. Meacher : I think that that constitutes significant evidence. My hon. Friend has admitted that the decline in recruitment of disabled and chronically sick people may not be solely--or even mainly--a result of the introduction of SSP, but the Minister should accept that, just as I cannot prove a causal relationship, he cannot prove the opposite.

Mrs. Gillian Shephard rose --

Mr. Meacher : I know that the hon. Lady has been desperately trying to get in, so I will give her a chance.

Mrs. Shephard : Most of the hon. Gentleman's comments have been based on the question whether our proposals introduce a disincentive. Does he not accept that the administrative nonsense that he has proposed would be the greatest possible disincentive?

Mr. Meacher : I was coming to the second part of the Minister's argument. At first, she drew an irrelevant analogy when she referred to previous experience with regard to the time taken to get the job and time off. Her other argument against the amendment is that it would be administratively complex and quite costly. She said that it would cost about £100 million.

We are not recommending the ideal solution. We believe that a cost of £100 million as opposed to allowing the Bill to progress without amendment would still be advantageous in net terms. On the other hand, we would be the first to say that it is not ideal to drop to 80 per cent.

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and then to try to protect a vulnerable section of the market by way of an administrative complexity at a cost of £100 million. That is not the ideal solution. Ideally, we should stay as we are with 100 per cent. reimbursement.

6.30 pm

The Minister's arguments about administrative complexity and cost are not the point. She forces us to use the amendment as a device. We have been prevented from negating the Bill as a whole, so we have to produce a second best. I readily admit that, but is not that a great deal better leaving the Bill unamended?

Will the Minister look me straight in the eye and say that she believes that there will be no disadvantage to the recruitment of chronically sick people, the disabled, people with poor health records and older workers who are desperately trying to regain a place in the employment market if the 100 per cent. reimbursement of sick pay is reduced to 80 per cent.? I do not see how she can possibly say that. If she can and she honestly believes it, she deserves to defeat the amendment. However, we believe that the amendment should stand.

Mrs. Gillian Shephard : I agree totally with the points made by my right hon. Friend the Minister of State on Second Reading when assurances were given on that particular point.

Amendment negatived.

Mr. Kirkwood : I beg to move amendment No. 5, in page 1, line 27, leave out or lesser'.

The First Deputy Chairman of Ways and Means (Sir Paul Dean) : With this it will be convenient to consider amendment No. 10, in page 1, line 27, at end insert--

(1ZB) A statutory instrument containing an order under subsection (1ZA) above shall not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House.'.

Mr. Kirkwood : I recognise the unanimity of view on the Opposition Benches about my amendment. Independently, and without collusion, the hon. Member for Oldham, West (Mr. Meacher) and his colleagues and my colleagues and I decided that it would be sensible to table amendment No. 5.

The amendment is designed to leave out two small words, but their omission would make a great difference to the way in which employers and their representatives consider the Bill. The purpose and thrust of the amendment is crystal clear. It will restrict the power that the Government are taking in clause 1 to vary the rebate. The amendment would make it impossible for the Government to reduce the rebate level beyond 80 per cent.

In contemplating that, a number of important points should be made. The fundamental point was raised on Second Reading. Why do the Government need to take this power at all? By virtue of changing circumstances and the extent and complexity of the social security system, we know that the Department faces the prospect of updating, improving and amending social security law on a yearly basis. In relation to another matter the Secretary of State said the other day that he thought that there was a need for consolidation because of the complexity of the numerical labelling of some of the amendments. I do not know whether he meant that as a threat.

The Government have regular opportunities every year to make amendments to primary legislation relating to social security. There is a suspicion that, if they are looking

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for the ability to make those changes by order, they are doing that with a purpose in mind. They are trying to make it easier for themselves. I suspect that they will give themselves an enabling power to introduce secondary legislation and then do just that. If they do that, the Bill gives them the power both to increase and to decrease the rebate. The amendment would remove by statutory instrument their ability to reduce the percentage level of the rebate.

Employers' representatives believe that that power is not in the Bill by accident. They believe that it is designed to be used and that it will be used. They quote precedents like the redundancy rebate schemes which they had to endure in the past. They are deeply suspicious of this part of clause 1. There was some discussion about this on Second Reading. However, the Minister should consider it again and give us specific guarantees, if she will not accept the amendment, that there is no intention now, and no intention in future, to reduce the level of rebate that goes back to employers. I hope that she will go that far, but even if she does, she will know that Ministers, on this day of all days, are transient creatures.

Mr. Newton : It was announced some minutes ago that, for the moment at least, I am not a transient creature.

Mr. Kirkwood : The Secretary of State has put the House out of its collective agony. I am genuinely pleased to hear what the Secretary of State has said, and I look forward to many constructive hours of debate with him and his ministerial team.

There is no linkage between the level of rebate and the level of employers' national insurance contributions. The Government could perfectly properly say that they have tried to balance the effect of the changes in the rebate by making marginal and balancing adjustments to compensate for the extra additional cost for employers. There is no guarantee in any legislation that in future, if the rebate is reduced further--perish the thought-- compensation will be paid in a balancing way by an alteration in the employers' rate of national insurance contribution.

We are looking for clear assurances about that. It is not just a matter of the Government taking powers that we do not think they need and which if they are to use them, they will do so to the detriment of employers. There is no balancing provision or power. I have heard no statements from responsible Ministers to the effect that if the rebate is reduced in future there will be a guaranteed equalisation of the effect through a change in the level of the rate of national insurance contributions.

It is blatantly obvious what the amendment seeks to do. It is glaringly obvious to Opposition Members and to the employers' organisations that the Government will have the power to introduce things in an unnecessary way. The Government have not yet made a case in any statements made by the social security team that the fears that have been expressed to me by employers and their organisations are not well founded on that important issue. I hope that the Government will take the opportunity of this amendment to try to allay some of the fears that are being expressed with great passion and vigour by employers and their organisations.

Ms. Short : I support amendment No. 5. Great minds think alike and both main Opposition parties tabled an

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amendment on the same lines. Amendment No. 10 is less robust, and it will be indefensible if the Government do not accept it. They would then have to admit that the whole structure of the Bill is intended to enable them or any future Government to erode over time and by stealth the statutory sick pay scheme. I hope that this Government will not get the opportunity, but it is dangerous to allow on to the statute book powers that could be misused by any Government.

As we said on Second Reading, when there was agreement between the Opposition and the hon. Member for Beverley (Mr. Cran), who does not seem to be attending to the debate at the moment although he is in his place, it is impossible to understand why the Government should have introduced the Bill unless the thinking behind it is, in the long term, to erode the reimbursement to employers and to privatise sick pay over time, handing the burden over to the employers. I know that the right hon. Member for Chelsea (Mr. Scott) was a little annoyed when I said that I found it difficult to accept his word that there are no such plans. Of course, I accept those words in their tightest and smallest meaning and I know that he would not deliberately mislead the House. However, as my hon. Friends have said, the fact that the Government do not have any detailed plans to implement right now does not mean that they do not have that strategic long-term intention.

On Second Reading, the Secretary of State went to a lot of trouble to stress that the cost to employers--we know that employees will lose £100 million--was neutral. He laid a lot of stress on that, saying that his first statement had suggested that the reimbursement under the new formula for employers might amount to only £200 million, but that since then he had firmed up the details of the national insurance proposals, amounting to £250 million, which meant that the package was neutral.

The right hon. Gentleman said that he thought that all the complaints from small employers would go away once they understood the details of the national insurance compensation. We now know--I think that the right hon. Gentleman accepts this--that the complaints have not gone away and that, as my hon. Friend the Member for Newham, North-West (Mr. Banks) said earlier, the National Federation of Self Employed and Small Businesses has not been reassured by our Second Reading debate and is still angry and deeply hostile to the package. There is no point in the Government introducing this Bill. As we know, they could have saved £100 million by changing the thresholds and the uprating figures relating to the amount of statutory sick pay. The Bill has nothing to do with the saving that the Government were seeking to make from sick pay so that they could fund other needy groups, such as poor pensioners and elderly people living in residential homes. The Government have taken this opportunity to introduce legislation that opens the door to the erosion over time of a state-protected national insurance sickness benefit scheme for people at work.

6.45 pm

I prefer honesty in these matters. There is grave disagreement across the House on social security issues, but I know that the DSS Ministers are honourable people. Nevertheless, I am totally perplexed, because the Bill makes no sense whatsoever, unless what I have suggested

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is the Government's intention. It is unacceptable for the Government to say, "We have no plans, but never say never." The Government have tried this sort of thing before. They have made it clear that they want to move the burden of sick pay on to employers. They had a big fight with the employers' organisations the first time round and were forced to give in.

Although we have been told that this is wrong, I firmly believe that the indecent haste with which the Bill is being handled is designed to prevent that resurgence of opposition from the employers' organisations. I can think of no other reason. It is extraordinary to have a Second Reading on Monday and Committee stage on the Floor of the House on Wednesday. I am sure that that is deliberately intended to prevent the resistance that previous Bills have engendered from building up again.

I cannot see any other reason, although Ministers have said that the Government have moved with such haste because they are anxious to give the employers' organisations the full details in plenty of time for them to prepare for the implementation of the provisions. I cannot believe that. Although I can understand a certain amount of speed, this indecent haste does not make sense. Having analysed what the Government are doing, it is my belief that the intention to erode sick pay provisions by stealth is the whole explanation for the Bill.

We know that when the Secretary of State says that the effect will be neutral this year, it will not be neutral next year or the year after, unless the right hon. Gentleman can give us the assurance that the £250 million reimbursement to employers will increase steadily as the years go by-- [Interruption.] I think that the right hon. Gentleman is seeking to give that assurance.

Mr. Newton : We are talking about figures that are related to a percentage of earnings. We are talking about reductions to 4.6 per cent. and whatever the other figures are--from 5, 7 and 9. The figures are a percentage of earnings, so as earnings rise, the figures will rise.

Ms. Short : Good. That is the logic and we now have another commitment on the record which, I am sure, will be gratefully received.

However, that does not remove from the Bill the power to change the percentage and to reduce it from 80 per cent. over time without the Government even seeking an affirmative resolution in the House. We are seeking two amendments. The first is more robust and is preferable. It seeks to remove that power and to require any Government who wish to change that 80 per cent. reimbursement to come back to the House with new legislation and to argue their case properly. Any such proposal would be so serious that that must be the right course.

If the Government cannot stomach amendment No. 5, we also have a gentler proposal, but that would mean the Government admitting that they are wrong, which is something that Governments rarely do. Indeed, the Government would change Prime Minister rather than do that. Amendment No. 10 could be more easily conceded by the Government because it simply seeks a positive resolution of the House for any change from the 80 per cent. reimbursement. I hope that the Secretary of State will say that he accepts amendment No. 10.

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On Second Reading, the right hon. Gentleman said that a Prayer could be tabled against such a resolution and that, if determined, the Opposition could bring the matter to the Floor of the House, but surely he and the Government will admit that the proposal to move to a lower than 80 per cent. reimbursement is serious and significant to our social security policy and to the way in which we provide for the protection of employees who are sick. Surely, therefore, in the framework of the statute, such a change should be debated in the House as a matter of course.

I hope that the Government can reassure us somewhat. I am not trying to accuse them of having such intentions over time simply out of opposition to their proposals. My intellect can see no reason for the Government taking the trouble to prepare and table the Bill unless that is their intention over time. I hope that, at the very least, the Government will concede amendment No. 10, which would mean that they could not bring about such a change by stealth because it would have to be debated in the House.

Mr. Newton : The hon. Member for Birmingham, Ladywood (Ms. Short) ranged fairly widely over many of the points that were made on Second Reading and which have been reiterated in some of our debates earlier today. In view of the pressure on time, I hope that hon. Members will understand if I do not again go over all the ground covered in my extensive speech on Monday afternoon. Indeed, many of those points have been made by my right hon. Friend the Minister for Social Security and Disabled People.

My next point may seem unduly provocative, but that is not intended to be the case. I find something slightly odd in the spectacle of the hon. Members for Ladywood and for Oldham, West (Mr. Meacher) and their colleagues presenting themselves this afternoon and this evening as defenders of the interests of employers, when the Labour Government invented and introduced the selective employment tax as a major tax on all jobs. When they were finally pushed out of that tax, they invented the national insurance surcharge.

If I remember rightly, by the time that we took office and abolished it, the surcharge amounted to about £3 billion. I have not checked the figure, but my recollection is that £3 billion of additional costs were imposed on employers, both small and large. It had absolutely nothing to do with insurance. It was simply an impost designed to finance the Labour Government's spending ambitions. Yet the hon. Lady and the hon. Gentleman make an interesting song and dance about sums of money measured at about 0.05 per cent. of labour costs throughout the economy. It is extraordinary.

It is important that the hon. Lady should understand that the proposals in the Bill have no effect of any nature on the entitlement of any employee.

Ms. Short : The Minister speaks about a Conservative Government who doubled VAT as soon as they took power and increased inflation massively. Every survey of small business shows that VAT tends to be their biggest problem. In a constituency such as mine, there are many small businesses and small employers. They tend to vote Labour and they prosper when the people who live in Ladywood prosper. It is not the case that small businesses

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belong ideologically with the Government. Their interests lie much more closely with the ordinary people in society, for whom Labour speaks. That is our position.

Mr. Newton : I shall return to a more light-handed mode and simply observe that if the hon. Lady really believes that, she will believe anything.

Mr. Kirkwood indicated assent.

Mr. Newton : I am glad to see that at least on that point I have the support of the Liberal Democrats. I am duly grateful to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood).

I hope that those perhaps unwise remarks have not unduly disturbed the scene, Sir Paul. I see you looking at me with a faint air of disapproval. I shall return more directly to what the hon. Lady said. As reference has been made to it, perhaps I should begin by quoting from my remarks on Second Reading on Monday afternoon. I said : "We have no plans to make further changes, but given the way that matters have been developing and the continuing need to examine priorities across the whole spectrum of social security, it seems sensible to have a provision that is capable of being changed. A large part of the social security system, including nearly all the rates of benefit--quite apart from the whole range of other rules-- is in a form that does not lock it into primary legislation, so that changes can be made by secondary legislation. Governments of all complexions have acknowledged that that is a sensible way of dealing with social security matters."--[ Official Report, 26 November 1990 ; Vol. 181, c. 651-52.]

Similar arrangements apply to national insurance contributions. There are powers to vary them by secondary legislation, subject to certain parameters.

The words that I quoted were not scripted. They were in response to a request by the hon. Member for Oldham, West to comment on that point. To be honest, when I read them I thought that they were rather good and perfectly sensible, so I decided to repeat them in my speech this afternoon.

Mr. John Battle (Leeds, West) : I am not sure whether I prefer the Minister in his ideological or sympathetic mode. It does not seem to make too much difference. Does he accept that there is a crucial difference between simply altering the rate and altering the structural relationship between employer and employee contributions? To level down the percentage from 80 per cent. to 60 per cent. would change the relationship. It is a question not simply of uprating or downrating, but of changing the structural relationship. Why did the Government decide to move away from the affirmative to the negative procedure?

Mr. Newton : It is not a question of moving away from the affirmative to the negative procedure in this case. I shall come to that in a moment. The hon. Gentleman's first point was that it would be appropriate to use a different procedure for a structural change. That is precisely why we are debating the legislation today. A structural change--if that is the phrase that we want to use--is what the Bill proposes. It would create a move away from 100 per cent. reimbursement--for practical purposes the contribution is now 107 per cent.--to less than 100 per cent., or 80 per cent. It is entirely proper that we should come to the House with primary legislation to effect that change. Indeed, that is the primary legislation that we are debating.

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The Bill proposes to make a structural change and introduce a percentage figure. It then seems entirely reasonable to take powers to enable the percentage to be varied in secondary legislation in exactly the same way as across a wide range of provisions in the social security and national insurance systems.

Mr. Meacher : Before the Minister pursues that argument further, I suggest that there is a major difference between changing the national insurance rates--they are often reasonably changed by marginal percentages in the light of increasing benefit levels, increasing costs or the state of the fund--and reducing the reimbursement to the employer from, say, 80 per cent. to conceivably nil, without coming back to the Houses of Parliament under the affirmative procedure. That is an entirely different matter, and there is no precedent for it.

Mr. Newton : Again, I do not wish to prolong the discussion unnecessarily because I hope to say something marginally helpful to the hon. Lady in a few moments. There is not much point in describing changes in national insurance contributions as marginal, and effected by secondary means, when what seem to be small changes in employers' national insurance contributions--which have been adverted to many times during this discussion--can amount to substantial sums. The standard rate of employers' contributions is being reduced only from 10.45 per cent. to 10.4 per cent. That is 0.05 per cent. One cannot get more marginal than that. It is worth about £100 million out of the £250 million overall reduction. Whatever arguments the hon. Gentleman adduces, he should not suggest that we can make only marginal changes by secondary means in the social security and national insurance systems. Some changes are substantial. However, I shall not dwell further on that point.

I cannot advise the House to accept amendment No. 5, tabled by the hon. Member for Roxburgh and Berwickshire, and with which the Opposition Front Bench team has tagged along, if I read the amendment paper correctly.

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