House of Commons Hansard Debates for 28 Nov 1990

Ms. Short : We tabled amendments independently.

Mr. Newton : Oh, they tabled the same amendment at the same time. I do not wish to dispute who set the precedent. I am sure that the amendments were tabled at exactly the same moment. I certainly do not wish to become involved in an argument about which came first. I accept that both parties had the same idea. Even-handedly, I tell both parties that I cannot accept an amendment that would involve more primary legislation before further change could be made in the light of the changes proposed in the Bill.

The hon. Member for Ladywood reasonably put more weight on amendment No. 10, suggesting that we should at least consider adopting the affirmative rather than the negative procedure. It would not be appropriate to do that in respect of a proposal to increase the percentage. It is highly unlikely that an increase would be thought controversial. This is another rash remark, Sir Paul, but I suspect that if, in the wake of the legislation, I introduced a proposal to increase the percentage, I would be attacked by the hon. Member for Oldham, West for providing a giveaway for our rich friends, the employers. We would then be faced with a totally different argument.

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Mr. Meacher : Perhaps the right hon. Gentleman would like to be my speech writer?

Mr. Newton : I am not volunteering to do that; my style is much too calm, measured and low key to have any chance of qualifying for that post.

There is force in the argument for Parliament to take a positive further decision about any significant reductions in the percentage were such a change to be contemplated.

In the light of recent events, I approach today's proceedings with even greater magnanimity than usual. Although I am not ready to advise the House to accept the amendment, I am willing to give an undertaking that I shall bring forward in another place an amendment to provide for the affirmative procedure were a further reduction in the percentage proposed.

7 pm

Mr. Kirkwood : Can the right hon. Gentleman foresee any circumstances in which, were the rebate reduced, there would not be a corresponding compensatory allowance through a reduction in employers' national insurance contributions?

Mr. Newton : I cannot give the hon. Gentleman the exact assurance he seeks, for practical and legal reasons. My statutory duty, which I hope I have faithfully fulfilled this year, is to look at the rates of contribution in relation to the balance in the national insurance fund. My prime responsibility is to be concerned with the balance in the fund and I must bear that in mind when considering employers' contributions. For that reason, I cannot give the hon. Gentleman the direct guarantee he seeks.

In the light of the experience gained from what I proposed this year, and with a reasonable degree of conviction that I shall carry the hon. Gentleman with me, I should certainly expect, were any further changes to be made to the percentage--we have no such plans now--to take into account the balance in the national insurance fund. I note that the hon. Member for Ladywood is smiling. I accept that that undertaking falls short of the straightforward, clear-cut guarantee which the hon. Gentleman sought. I hope that the hon. Gentleman understands why I cannot give that guarantee.

I always seek to be open with the House about such matters and it is not inconceivable that this Government, or any future one, might make a judgment in particular circumstances that it was reasonable to propose a further change in the percentage without compensation, or whatever, through the national insurance system. After all, the previous Labour Government came to believe that it was right to impose billions of pounds of extra costs on employers with a national insurance surcharge. They did not compensate those employers in some other way. Governments necessarily must make judgments about where the burden of taxation and the like should lie at any given time and where money is to be raised to fulfil particular social or spending objectives. The Government cannot and will not be able to escape that.

I intend to introduce an amendment in the other place to provide for the affirmative procedure where any further reduction in the percentage is proposed. In the light of that and of what I said to the hon. Member for Roxburgh and Berwickshire--I accept that it fell short of the undertaking he sought--I hope that the hon. Gentleman and the Opposition will withdraw the amendments.

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Mr. Kirkwood : Although I am not satisfied with the Secretary of State's reply, it would be churlish not to acknowledge the concession that the right hon. Gentleman made to the hon. Member for Birmingham, Ladywood (Ms. Short). On that basis, I shall withdraw the amendment.

The First Deputy Chairman : Order. Before the hon. Gentleman does that, I believe that the hon. Member for Birmingham, Ladywood (Ms. Short) wants to speak.

Ms. Short : Half a loaf is better than no bread and, on the basis of the Secretary of State's undertaking, I shall not press amendment No. 10.

Mr. Kirkwood : I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.

Mr. Tony Banks : I beg to move amendment No. 11, in page 2, line 1, leave out subsection (3).

The First Deputy Chairman : With this it will be convenient to take the following amendments : No. 6, in page 2, line 4, at end insert in respect of an employer, employing twenty persons or more.'. No. 7, in schedule, page 4, leave out lines 4 to 19.

No. 14, in schedule, page 4, line 5, column 3, leave out paragraph (a).

No. 15, in schedule, page 4, line 6, column 3, leave out paragraph (b).

No. 16 in schedule, page 4, line 12, column 3, leave out paragraph (d).

No. 17, in schedule, page 4, line 17, column 3, leave out paragraph (e).

No. 18, in schedule, page 4, leave out lines 20 and 21.

Mr. Banks : Subsection (3) abolishes employers' entitlement to compensation for the national insurance contributions they must pay on statutory sick pay.

Statutory sick pay was originally paid at three rates and for the first eight weeks of sickness only. In the autumn statement of 12 November 1984, the right hon. Member for Blaby (Mr. Lawson), then Chancellor of the Exchequer, announced that the SSP would, in due course, be extended to 28 weeks. At the same time, he announced that employers would be

"relieved of the burden of contributions on payments under the statutory sick pay scheme".--[ Official Report, 12 November 1984 ; Vol. 67, c. 417.]

The implication was that that would compensate employers for the extra burden and cost of 20 more weeks' payment.

The Social Security Act 1985 provided for the reimbursement of the national insurance contributions on SSP, which came into effect in April 1985 and the extension of the duration of the SSP from eight to 28 weeks, which came into effect in April 1986. Employers are not reimbursed the precise amount they pay in national insurance contributions. The additional compensation is actuarially calculated to reflect the aggregate amount of secondary contributions paid on SSP and, since 1987, on statutory maternity pay. At present, the national insurance contribution compensation rate is 7 per cent. of the gross SSP paid. If it was right to give that compensation in 1985, the onus is on the Minister to explain why it is now right to take it away.

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A number of things have been said tonight about the way in which small businesses in particular believe that the Bill is part of a "salami" approach to change. I used onions earlier, now I am using salami. Those businesses believe that the Government are working towards an undisclosed objective in a hidden agenda.

Although we might be accused of being cynical, we have some basis for it-- for example, the way in which the Government sold the idea of the sale of council houses. Many objections were raised, but the idea was sold to local authorities on the basis that 100 per cent. of the money received would be used to build new accommodation. However, the percentage to be used thus was gradually reduced to 40 per cent. and, most recently, to 25 per cent. The Government advanced a number of supporting arguments to limit the opposition to the sale of council houses, and, once the opposition was out of the way, they proceeded further with their plans. We believe that that is the philosophy behind the Bill.

Since the national insurance compensation is 7 per cent. of the amount of SSP paid by the employer, abolishing it means that, with the reduction of the reimbursement rate to 80 per cent., the total burden falling on employers will be equivalent to 27 per cent. of SSP. When an employee is sick for 28 weeks and is entitled to the higher rate of SSP, the cost to the employer will be £396.90, made up by £294 for the reduction in the reimbursement rate and £102.90 for the loss of compensation for national insurance contributions. It is calculated on the basis of 28 weeks.

I feel sure that the Minister will address a subject that has been mentioned a number of times--the fact that we are talking about an average of three weeks. The National Federation of Self Employed and Small Businesses said that it was worried not about the large company suffering the average three weeks sick pay, but the small businesses with one or two employees which could suffer from someone taking the full 28 weeks' sick leave.

One is always in great danger when talking about averages. There is no such thing as the average person, who is always someone else. If the figure is 28 weeks, a small company with only one or two employees will suffer an horrendous impact. Legislation should take that into account rather than fall back on comforting talk about averages.

The objections to that proposal are precisely the same as those to the reduction of the reimbursement rate. The amendment would simply delete the whole subsection.

Mrs. Gillian Shephard : The hon. Member for Newham, North-West (Mr. Banks) made a lot of play of hidden agendas. In relation to that, and the point he made about additional compensation, I should like to reassure him about the Government's intentions.

On Second Reading, my right hon. Friend the Secretary of State clearly stated that the additional compensation arrangements have been of limited success in relation to statutory sick pay. The intention of the arrangements was to compensate employers for national insurance contributions they have to pay on SSP. However, in the interests of simplicity, compensation is available on all SSP, even where the amount of sick pay payable falls below the lower earnings limit for national insurance contributions and does not attract liability for contributions in the first place. Therefore, people are receiving compensation for national

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insurance payments that they have not made. That is unsatisfactory, and the position was fully described on Second Reading on Monday. As my right hon. Friend made clear on Monday, despite the relative simplicity of the calculation and the extensive publicity given to it, almost 25 per cent. of the additional compensation goes unclaimed. Within the Department, a great deal of work is done with employers, often those in small firms, on statutory sick pay--seminars are held and there are help lines for employers. That work is being elaborated and extended by the new contributions unit that is being set up in Newcastle. The Department makes every possible effort to explain to employers how the system works and, even then, about 25 per cent. of the additional compensation is unclaimed. Given that people are receiving compensation for something for which they have not paid, the scheme is unsatisfactory and we feel it should be changed. The hon. Member for Newham, North-West also made more general remarks about the plight of the small business employer, a motif that has recurred throughout the debates. The changes in the rates of national insurance contributions that employers will pay from April 1991 will go a considerable way towards compensating employers for the measures in the Bill. Obviously, employers will not always come out ahead, because the proposals' effects clearly depend on individual levels of pay and sickness. However, with the proposed reductions in national insurance contributions, the increased costs for individual employers will be modest. That point has been made a number of times this afternoon.

On Monday, my right hon. Friend the Secretary of State described the effect of the changes. He said :

"Those changes will reduce employers' costs by about £250 million and are likely to be especially helpful to employers, often smaller employers, whose employees are among the less highly paid."--[ Official Report, 26 November 1990 ; Vol. 181, c. 642.]

He gave two illustrative examples, which I shall not repeat because the hon. Member for Newham, North-West was present on Monday and will have heard the examples. He will also have heard my right hon. Friend acknowledge clearly that he was giving examples where employers would gain, and there would be other examples, particularly where employees earn more than £185 a week, where some employers would lose. We believe that the compensatory measures in the reduction in national insurance contributions that will come into force in April will go a long way to meeting the concerns of employers and of the hon. Member for Newham, North-West.

7.15 pm

Amendments Nos. 6 and 7 would give employers with fewer than 20 employees a continuing right to additional compensation for SSP. As has been repeatedly said, we have acknowledged that the changes in the Bill might bear more heavily on the small business employer. That was why we structured the reductions in the national insurance contributions as we did. By reducing the employers' national insurance contributions for rates of pay up to £185 by 0.4 per cent., as against a reduction of 0.05 per cent. for those earning above that level, we are trying to weight the contributions reductions in respect of the lower paid. That will mean that the savings to small business employers, who are more likely to employ the less highly

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paid, will be proportionally greater than for other employers and, in some cases, will fully match the extra costs resulting from the changes proposed in the Bill.

It would be inappropriate for me to go further, as the hon. Member for Newham, North-West wishes and give smaller business employers the continued right to additional compensation. That would cost about£18 million a year and would clearly have implications for what has been a carefully constructed package. That would be an unwelcome complication in a scheme which we have been trying to keep as simple as possible. We would have to obtain and keep up to date details of the numbers of employees in the relevant firms. My right hon. Friend the Secretary of State made that point during the debate on the first group of amendments, which have a similar effect. We believe that the amendments could affect the employment patterns of employers with a work force numbering approximately that of the threshold figure. For all those reasons, I urge the Committee to reject the amendment.

Mr. Kirkwood : I am particularly grateful to the Minister for replying to amendments Nos. 6 and 7, which were originally considered to be consequential. The ministerial response provoked one or two thoughts.

I do not think that, in all conscience, the Minister can describe the measure as a carefully considered package, if for no other reason than that the timetable has been so constrained, whereas the Bill's impact will be wide-ranging. Parliamentary consideration of the Bill has taken place with unusual haste. The legislation will create difficulties for organisations seeking to represent small business employers that do not have the benefit of a sophisticated trade union structure or the Confederation of British Industry's resources and expertise. They do their best and do a good job with the professional help that they receive, but they face a mamonth task because they cover so many sectors and different businesses with employees in jobs at various levels. Therefore, given the timetable that the Government have set them to consider the Bill, it is virtually impossible for them to undertake proper consultation and make constructive suggestions on how to alter the measure.

We are all in the hands of the business managers, and the timetable is not necessarily a departmental matter entirely under Ministers' control, but will they give us an absolute assurance in the remaining few days, or indeed hours, left before the Bill goes to the other place and on to the statute book, that, if approaches are made by bona fide organisations representing small businesses, they will be given every conceivable opportunity to meet Ministers and officials, and make the points that are being fed back to them and through Members' postbags? I hope that the ministerial team will consider constructive proposals. That would go some way to reassuring us that there is no nefarious purpose behind the indecent haste with which the Bill is proceeding.

Mrs. Gillian Shephard : Hon. Members have spoken about the timetable. My right hon. Friend the Minister of State has said that monitoring is engraved on his heart. I assure the Committee that bona fide organisations will be welcome when they come to meet the ministerial team and officials. That is always the case, irrespective of the cause.

Mr. Tony Banks : It would have been more useful if discussions had taken place before the proposals came to

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us. Perhaps there were such discussions, but if that is the case why are there so many alarming noises from the National Federation of Self Employed and Small Businesses? The legislation is detailed and technical and we can see that it has not grabbed the imagination of the great majority of our colleagues.

The Minister is reasonable and emollient, but, of course, that is normal. Perhaps we should feel assured, but I have a rather nasty sinking feeling in my heart that, although she is certainly not misleading us, the implications are such that when some small businesses feel the full impact they will be even more angry than they are now. By that time it will be too late. The Minister of State said that he had "monitoring" engraved on his heart. I hope that that is for some good purpose because monitoring is important when the Committee is being asked to agree to technical proposals. We have been assured that the Bill will not have any great implication for small businesses. I suppose that we can all repent at leisure if the Minister is wrong about that. I hope that, if monitoring reveals the difficulties that small businesses have talked about and which we have tried to amplify, there will be changes. In such areas it is perfectly correct for the Government to say that an administrative mistake might have been made.

I was disappointed by the Under-Secretary's reply, even though she put it over in a reasonable way. She said that the compensation scheme had had only limited success and that compensation had been paid on payments that had not been made by employers. She also said that 25 per cent. of additional compensation is unclaimed. That is obviously true, because the Minister said it, but the corollary is that 75 per cent. of it is claimed. Rather than scrapping the scheme because 25 per cent. of compensation is unclaimed, it would be better to get through to those who are eligible to claim and tell them that they are missing something.

The Minister was precise about the percentage of unclaimed additional compensation, but did not tell us in figures how much compensation was paid to employers who had not already made payments. As I understood it, we were being told that they were getting something for nothing. The Minister should quantify that, or we shall be left with generalities that sound all right in debate. We are not responsible for keeping the books of small companies and trying to make ends meet, and they say that they are finding that increasingly difficult.

We are disappointed that the Minister is not prepared to accept the amendment, but we shall not push it to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ms. Short : I beg to move amendment No. 12 in page 2, line 18, at end insert--

(6) in section 22(3) of the Social Security Act 1989, in the definition of "relevant benefits", at the end there shall be inserted the words "but, in the case of statutory sick pay, only such proportion of any payment as is recoverable by virtue of section 9(1)(a) of the Social Security and Housing Benefits Act 1982".'. The amendment seeks to prevent the DSS from recovering the whole of the statutory sick pay from compensation for personal injury when only 80 per cent. of statutory sick pay will be reimbursed when the Bill becomes law. Section 22 of the Social Security Act 1989 provides for the recovery of benefits paid as a result of personal injury by deduction from any compensation

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payments. We debated that issue at great length in 1989 when the Social Security Bill was going through. We felt passionately that it was wrong to reclaim compensation that might have been paid, for example, for pain and suffering in order to reimburse the DSS. That is not the issue contained in the amendment and, therefore, the matter is narrower.

The amount recoverable under the 1989 Act is the

"gross amount of any relevant benefits paid or likely to be paid to or for the victim during the relevant period".

Section 22 leaves the relevant benefits to be defined by regulations, and the Social Security (Recoupment) Regulations 1990 list a wide range of benefits, including some which have little or no connection with personal injury, for example, family credit and unemployment benefit.

The new disability living allowance and disability working allowance may be added to the list in due course. Perhaps the Minister will tell us about that. The list already includes statutory sick pay. Presumably the justification is that although statutory sick pay is paid by employers, they are reimbursed by the DSS. However, in future the reimbursement will be only partial--80 per cent. in 1991-92. It cannot be right for the DSS to recover benefit that it has not paid. That is the point of the amendment, which proposes that only the amount actually reimbursed by the DSS should be recoverable from any compensation payment.

If the long title of the Bill had allowed, we would have tabled an amendment removing statutory sick pay from the list of benefits recoverable under the 1989 Act. The treatment of sick pay for these purposes is chaotic, different parts of sick pay being treated in different ways. However, the long title is tightly drawn and it was not possible to amend it.

We seek to ensure that a minor injustice is put right. It would surely be wrong if the DSS were allowed to claim back 100 per cent. of statutory sick pay when people receive compensation as a result of an accident, even though the DSS had been responsible for only 80 per cent. of that sick pay. I hope that the Minister will concede the point.

Mr. Scott : As the hon. Member for Ladywood said, the amendment seeks to change the amount of statutory sick pay recoverable under the compensation recovery scheme which we discussed at great length during the passage of the Social Security Act 1989. At present, the scheme provides for an amount equivalent to the sum of statutory sick pay paid to be recovered from any compensation payment. As we know, the Bill proposes to reduce Government funding of SSP from 100 to 80 per cent. I listened with great care and attention to the hon. Lady, but I do not think that an amendment on the face of the Bill is the correct vehicle for introducing any change that might be required. Section 22(3) of the Social Security Act 1989 refers to benefits in broad terms and provides that individual benefits covered by the scheme should be prescribed in regulations. The list of benefits is contained in the Social Security (Recoupment) Regulations 1990. For the sake of consistency, therefore, we wish to pursue that line and see whether an amendment to regulations is required. I am advised that there is no need to take any primary powers

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additional to those contained in clause 2 of the Bill. We will therefore undertake to consider the precise implications of the changes, paying close attention to the hon. Lady's comments. I hope that the Committee will accept this assurance of our intention to look at the matter with the utmost urgency, care and sympathy. In the light of that undertaking, I hope that the hon. Lady will withdraw the amendment.

Ms. Short : This is getting better as the night goes on. On the basis of that undertaking, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn .

Clause 1 ordered to stand part of the Bill .

Clauses 2 and 3 ordered to stand part of the Bill .

Schedule agreed to .

Bill to be reported, without amendment .

Order for Third Reading read.--[Queen's Consent, on behalf of the Crown, signified.]

7.30 pm

Mr. Tony Newton : I beg to move, That the Bill be now read the Third time.

In the interests of the time of the House, and on the understanding that if the hon. Member for Oldham, West (Mr. Meacher) says anything to which I should like to respond I shall have the leave of the House to do so, I confine myself to commending the Bill to the House. 7.31 pm

Mr. Meacher : That was the shortest speech commending the Third Reading of a Bill that I have heard for a long time. I do not know whether it is in anticipation of a deluge of words from me or because the Secretary of State can find so little to commend in the Bill. The Opposition are clear about the Bill. Despite the soothing and emollient atmosphere that developed as we went rather rapidly through the Committee stage, problems remain. There is a good argument for having a small group of activists going through the minutiae of the Bill because they do so with a precision and mutual understanding that is often helpful. However, I see no reason not to return to my initial judgment that this is a mean and nasty little Bill, the sole purpose of which is to make one group--the sick and disabled workers--pay for those concessions in social security policy that the Government have been forced to make so as to placate public opinion. After freezing child benefit for three years, the Government were forced this year to make a partial uprating for the first child and, as evictions of elderly residents from private residential and nursing homes increased, the Government were forced to make bigger increases in income support, although nothing like enough to eliminate the shortfall.

It is now clear where the money to pay for these enforced concessions is to come from. Reducing employers' recovery of statutory sick pay from 100 to 80 per cent. will save £80 million in 1991-92, rising to £200 million in 1992-93, although that is offset for some employers by a compensatory reduction in employers' national insurance contribution. On top of that, as part of the package, freezing the higher rate of statutory sick pay and raising the threshold above which it is paid will save £100 million in 1991-92.

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In effect, the Bill makes one poor group pay for the increase in benefits to another. Apart from the Treasury, no one gains from it. It is also a Bill that is uniquely without friends. I cannot recall any recent Bill with the same distinction. The CBI, the National Federation of Self Employed and Small Businesses, the TUC, the trade unions and the voluntary sector do not have a good word to say about it.

No doubt it is a coincidence that the remaining stages of the Bill are going through the House on the first day of the new premiership. Whether the new Prime Minister is son of Thatcher--something that is disputed, although the Opposition have a clear view of it--we can say that this package is son of Thatcher. It is mean in its dealings with the low-paid and sick, particularly women. It is a further whittling away of workers' basic sick pay rights, which even employers agree--the National Federation of Self Employed and Small Businesses argues this--should be undertaken by national insurance. I never thought that I should see the day when smaller employers would argue the case for the welfare state and national insurance. The Bill is being forced on employers and employees alike without consultation, as several Tory Members have pointed out.

The Bill has been rushed through to prevent small employers' organisations from mounting the kind of intensive lobbying that stopped the Government in their tracks 10 years ago. I cannot think of a recent example of a Bill that has had Second Reading on a Monday and its remaining stages two days later. No emergency or external conditions require this haste. It is simply to serve the Government's convenience and to block off the opposition that they know exists. Furthermore, by doing this, the Government have reneged on promises and commitments given by the previous Secretary of State in 1981 when the Government clearly accepted that they should stick to 100 per cent. compensation.

The only rationale that the Secretary of State has been able to offer for this wretched little measure is the alleged spread of occupational sick pay schemes. The survey on which this supposed finding is based has been scoured to elicit the statistic that 91 per cent. of the work force is employed by companies with occupational sick pay schemes. Therefore, cuts in statutory sick pay by adjusting both thresholds and levels of benefit could be justified. It is on that that the Bill depends, and it is closely linked to that figure of 91 per cent.

If the right hon. Gentleman does not yet have the message, I point out again that that 91 per cent. figure has been comprehensively discredited in even these brief proceedings, both on Second Reading and today. The survey showed that 44 per cent. of private sector employers did not offer any form of occupational sick pay and, worse than that, more than half of all firms with fewer than 10 employees have no occupational sick pay provision. With those facts, the rationale behind the Bill collapses. We have had no answer to that point, and that is a critical and decisive judgment of the Bill. The losers under this Bill and this package--I must remember that I should use this wider word, although on Third Reading we keep more closely to the detail of the Bill--are the 3 million employees with earnings of between £125 and £185 a week who will no longer be eligible for the higher rate of statutory sick pay. About one fifth of them

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--more than 500,000--are expected to claim statutory sick pay every year, and they will lose on average £9 a week, and the majority of them are women.

The disabled will also lose, as will those with chronic ill health, and those who have poor health prospects. The last mentioned is a wide group and includes many older workers, all of whom are having an employment warning pinned on them by the Bill. If the Bill is passed, employers everywhere, but I suspect particularly smaller employers, will have a strong financial incentive to be wary of recruiting anyone who has a health risk. The answers given by the

Under-Secretary on this critical point of the Bill were thin and unconvincing. That is an important effect of which we have had no explanation.

Small employers are also losers. We are told that 19 out of 20 businesses employ fewer than 20 people. There are many small employers in Britain now. Many of them will be significantly out of pocket as a result of the Bill when, at a time of accelerating recession, they can ill afford it. The federation made that point clearly. The losers will be those penalised with costs of up to £200 which they can ill afford and which may well entail a significant rise in unemployment. All are losers ; there are no winners except the Treasury.

For all those reasons, we strongly repudiate the Bill. It is based on a selective and grossly misleading interpretation of the evidence that is used to justify it. It creates only losers. It is unanimously rejected by all the relevant parties outside the House. It has been introduced without consultation and it is being propelled through the House--I think that all hon. Members will agree--with unseemly haste. I submit that that is to preclude an offensive, similar to that in 1979-80 when the Government were derailed, being mounted against it. The Bill will undoubtedly pin on hundreds of thousands of chronically sick and disabled people the sign "Employment risk--you have been warned" when they are seeking recruitment in the labour market. Few Bills have less to be said for them than this one. On those extensive and convincing grounds, we shall strongly and unequivocally repudiate the Bill in the Lobby tonight.

7.41 pm

Mr. Kirkwood : I shall concentrate on how the Bill affects employers, particularly small employers, but, in doing so, I do not want in any way to diminish the important points made by the hon. Member for Oldham, West (Mr. Meacher) about its effect on employees, because they are well worth considering.

The Government do not fully appreciate the Bill's impact on businesses throughout Britain. My small rural constituency has thousands of small businesses, all part of the Border economy in south-east Scotland, and the Bill will have a profound impact on their future ability to prosper. The Government have not considered the Bill's full implications and ramifications. If they had consulted the kind of businesses that we have in my constituency they would have come to a different conclusion. I have no doubt that the Bill will be deeply inimical to business interests.

The Secretary of State was at pains to say that only the Labour party takes billions of pounds out of the pockets of business. To a certain extent I agree, but in the fulness of time the Bill will result in a top-line saving of about £250 million. Not too many years have to pass before £250

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million amounts to billions being taken from the pockets of British business, so the right hon. Gentleman is not in such a strong position as he might think.

The Government's defence for proceeding with such speed cannot be believed. People outside will not believe that the Bill has been brought forward in this way for the convenience of small and big businesses which would have found it difficult to make the necessary administrative changes if the Government had waited until after Christmas. It is a bit like sentencing an accused before the case for the defence has been properly heard.

The federation and, to a lesser extent, the CBI, feel that they have not had a proper hearing. Consultation has been inadequate. The Bill is being hung round their necks without a proper consideration of its implications. They tell me, and I have every sympathy with them, that, had more time been available for discussions with the Secretary of State and others in the Department, they might have been able to prevail upon them to mitigate the damage or even to prevent it.

In recent years, the courts have had great difficulty in interpreting social security legislation that has been rushed through the House and the full weight of the appeal procedure has had to be brought into play to remedy the defects in statutes that have not been properly considered. By any objective test, this Bill has been pushed through too fast for its own good, as well as for the good of those whom it will affect.

It is still, at this late stage, open to the Secretary of State to say that he will not push through the remaining stages in another place. If he were to say that he would hasten more slowly, the consultation process could proceed and even at the eleventh hour that would be beneficial.

The Department's package to help small business men become familiar with the Bill adds to the confusion. The 50 per cent. reduction in the rebate is another complication adding to the burdens on small businesses.

Some years ago the Government made great play of the fact that they were reducing the burdens on businesses. They produced glossy publications to show that they were aware of the problems and were doing something about them. Their rhetoric will ring hollow tonight if the Bill receives its Third Reading.

The compliance costs have been largely underestimated by the Government. As the hon. Member for Oldham, West said, nobody is in favour of the Bill, because there is nothing to be said in its favour. The Bill is unfair, damaging and unnecessary. It is a deliberate and calculated move which will damage British business interests. The Secretary of State will never be able to allay that charge and I hope that it comes back time and again to haunt him. If it does, it will be entirely justified.

7.48 pm

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