House of Commons Hansard Debates for 5 Feb 1991

Column 173

landlord has fewer than six lodgers, he is not liable to be re-rated as a boarding house. Many liberal measures have been introduced, but the popular terror still exists in the public's mind about being a landlord.

Instead of tackling the causes, we tend to spend more money on providing hostel or bed-and-breakfast accommodation, at enormous expense to the taxpayer.

I talked to many homeless people in the Westminster area when I was a member of Westminster city council and deputy chairman of the housing committee. When I asked people what they wanted, they told me that they did not want a room in a hostel, however nice it might be. They wanted a room in a home--somewhere to leave their belongings, an address, somewhere where they could lock the door and could call home. That is what we should be aiming for, rather than providing more hostel accommodation. The Government are spending £5 million a week on many of those cold and friendless alternatives to homes in the private rented sector.

Although Ministers agree privately that what we are up to is a kind of madness, we are still afraid to tackle the cause of the blockage. I believe that the cause is the caricature of the private landlord as a Rachman--a caricature which the Labour party always drags out as a means of boosting public housing, public spending and public control. The other bogeyman for the would-be landlord is the Treasury, which regards letting rooms as a black economy activity, and wants every last farthing that it can get out of the rent.

The Department has already done a great deal to liberate the housing sector. I want it to go a step further and stand up for homeless people and against the bullyragging nonsense that we hear from the Labour party. I want it to reassure people that if they let their accommodation, they will receive a bonus. They could take in up to two lodgers and make £100 in rent--which is none the less much less than we pay for a hostel or bed-and- breakfast places. If the arrangement did not work out, landlords could part company with their tenants--as they can now--without having to go through the awful trauma of rent tribunals and county courts.

I am sure that that would liberate an enormous amount of housing, without adding a penny to the taxpayer's bill. Moreover, it would provide a surrogate, or alternative, for the young, the not-so-favourably disposed, the unemployed and the friendless, in a warm home where they would receive the support and company that they probably expected originally from their own families.

4.21 pm

Mr. Michael Spicer (Worcestershire, South) : I oppose the Bill presented by my hon. Friend the Member for Billericay (Mrs. Gorman). My hon. Friend's heart is, of course, in the right place ; the problem is that her Bill has been so narrowly drafted that it does not, in my view, adequately address the problem that she has so properly brought to our notice. In my hon. Friend's immortal words, her aim is to bring lodgers back to the bosom of the landlady. That is a laudable aim. We know exactly what my hon. Friend means and exactly what she wants : she wants, as she said, to reduce the pressure on housing, especially for single

Column 174

people. She wants to do that by giving a boost to private renting, which always used to be a major source of accommodation--especially for single people.

I fear--and I know that my hon. Friend shares my view--that the problems of private renting go much deeper and are much more profound than the difficulties faced by those wishing to find private shared accommodation, although their difficulties are, of course, an inextricable part of the wider problem. Private renting in this country--unlike private renting in any other country in the western world--has collapsed. In the 1950s it represented about 50 per cent. of all accommodation ; today it represents about 7 per cent. At the same time, there are about 600,000 empty private sector houses, as my hon. Friend pointed out. Many are not rented out because their owners are literally terrified of the consequences of doing so. Thirty years of socialist denigration of the landlord and landlady has taken its toll. As a result, the potential penalties of renting out their property, or one room of it, are considered by most people far to outweigh the meagre rewards. My hon. Friend stressed that, and the implications for the use of the national housing stock are extremely serious. If even one third of the empty private sector housing were put out for rent many of the present pressures on housing would be removed without a single new building.

I know that in the current mood, we are not really allowed to be confrontational and far be it from me to disturb the tranquillity of the House, but I should like to make one small, innocent, well-meaning observation about the socialist party's policy towards private renting. Its programme, now printed formally in its policy documents, of reintroducing total security of tenure to new as well as to old lodgings, and presumably thus to shared lodgings, would, if implemented, finally kill the private rented sector stone dead with or without the Bill which my hon. Friend the Member for Billericay has brought before the House today.

Labour's policy is already acting as a serious deterrent to new landlords coming forward and it is directly and detrimentally affecting the position of thousands of people looking for homes. I should have liked to see in my hon. Friend's Bill, with all its excellent intentions for the provision of extra accommodation, some mention of something that she herself has championed in recent years--the future deregulation of tenancies. We should at least ensure that people who succeed to existing regulated tenancies should do so through contracts freely entered into by them and their landlords, as is the case now for assured tenancies and for shortholds. It is also necessary to treat the operations of landlords for tax purposes in the same way as any other business would be. Their capital expenditure should certainly benefit from roll-over rules. I believe that it would have been better if my hon. Friend's Bill had addressed that point.

My hon. Friend has done the House a great service by raising the matter of privately rented accommodation. I want her to reapply her genius to the wider context in which lodging must be seen, take this Bill away and bring back an amended version, perhaps more along the lines of the one that she presented to the House some months ago.

Mr. Speaker : The Question is that the hon. Lady be given leave to bring in the Bill. Those in favour say aye ; to

Column 175

the contrary no. The hon. Member who has spoken against the Bill must follow his objection by recording a no call. I think that the ayes have it.

Question agreed to.

Mr. Speaker : Who will prepare and bring in the Bill?

Mrs. Gorman : Mr. David Shaw, Sir Marcus Fox, Mrs. Maureen Hicks, Mr. Christopher Gill, Mr. James Pawsey, Mr. John Greenway, Mr. Michael Spicer, Mr. Barry Field, Mrs. Rosie Barnes and myself, Sir.

Mr. Speaker : Order. I do not think that it is possible for the hon. Member who has just opposed the Bill to be also listed as a sponsor of the Bill. Perhaps his name could be deleted.

Bill ordered to be brought in by Mrs. Teresa Gorman, Mr. David Shaw, Sir Marcus Fox, Mrs. Maureen Hicks, Mr. Christopher Gill, Mr. James Pawsey, Mr. John Greenway, Mr. Barry Field and Mrs. Rosie Barnes.

Domestic Lettings

Mrs. Teresa Gorman accordingly presented a Bill to amend the law to relax certain requirements upon a private householder taking in not more than two lodgers, in respect of taxation, the unified business rate, and the provisions of the Rent Acts ; and for connected purposes : And the same was read the First time ; and ordered to be read a Second time on Friday 15 February and to be printed. [Bill 40.]

4.29 pm

Mr. David Winnick (Walsall, North) : On a point of order, Mr. Speaker. You have often referred to the need to protect our procedure against abuse. Today we have had the introduction of a ten-minute Bill. Normally, those who object do so out of conviction, because they totally oppose what the hon. Member presenting the Bill is trying to do. Not in all cases, but normally, as you know, the opposition comes from the other side. The hon. Gentleman who opposed the Bill today obviously had no real conviction. That was shown by the fact that his name was included as a supporter of the Bill. I put it to you, Mr. Speaker, that what we have witnessed is a mockery and a denial of the opportunity for Opposition Members to oppose the Bill introduced by the hon. Member for Billericay (Mrs. Gorman). That mockery of our procedure should not be repeated.

Mr. Speaker : I agree with the hon. Gentleman that it should not be repeated. The purpose of speaking against a Bill is to raise objections, not to support a Bill that has been put before the House. [Interruption.] I do not know that the hon. Member for Worcestershire, South (Mr. Spicer) was doing that today. It is not an opportunity to have a second bite at a ten-minute motion. Moreover, interruptions are not allowed during proceedings on a ten-minute Bill. The procedure should be kept pure. In future, we should proceed as the hon. Member for Walsall, North (Mr. Winnick) suggests.

Column 176

Orders of the Day

Statutory Sick Pay Bill

Lords amendments considered .

Mr. Speaker : I understand that it is for the convenience of the House that all the Lords amendments should be considered together. 4.30 pm

The Secretary of State for Social Security (Mr. Tony Newton) : I share your understanding, Mr. Speaker, that it would seem to be for the convenience of the House that all the Lords amendments should be discussed together, but in the interests of the rules of procedure perhaps I should move formally that the House agrees with Lords amendment No. 1.

Clause 1

Reduction in the amounts recoverable by employers who have paid statutory sick pay

Lords amendment : No. 1, in page 1, line 12, leave out " "so paid" " and insert " "by making" ".

Mr. Newton : I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Speaker : With this, it will be convenient to discuss the remaining Lords amendments.

Mr. Newton : This small Government amendment is designed to pave the way for others. It was accepted in another place, but it does not form the major focus of our debate. I shall seek to discuss the issues raised by all the amendments, including the Government amendments to one of the Lords amendments.

In setting the case before the House, it is sensible for me to remind hon. Members that the Bill deals with only two aspects of a much wider package of changes, some of which will come before the House in other ways. However, they will need to be discussed and considered as a whole. I am sure that that will seem to be a sensible procedure both to the Opposition and to my hon. Friends.

The Bill proposes to reduce the rate of reimbursement for employers' payments of statutory sick pay from 100 per cent. to 80 per cent. It also-- this is a small matter but it should at least be noted--ends the arrangements whereby employers are able to claim reimbursement of the national insurance contributions paid on statutory sick pay. That arrangement was introduced only in 1985 after the introduction of statutory sick pay and has not worked very well in practice. Some 25 per cent. of the compensation due under that heading does not appear to be claimed, despite the various efforts which have been made to draw it to the attention of employers.

Alongside the proposals in the Bill, we have also proposed to leave the higher rate of statutory sick pay unaltered, at £52.50 per week, while increasing the lower rate from £39.25 to £43.50 and to extend the earnings bands to which the lower rate applies.

Another point--perhaps the most important from the point of view of the balance of our debate, and one that has not been given its due weight in much that has been said and written on these matters in recent weeks--is that

Column 177

we have proposed a significant reduction in the national insurance contributions payable by employers, weighted towards giving greater help in particular to the employers of those who are less well paid, who tend disproportion-ately to be small employers. We shall undoubtedly return to that point.

Taking all three elements together, we have what may broadly be described as about £350 million on one side of the account--mostly through reduced expenditure--and £250 million on the other side, in the form of reduced employers' contribution rates, leading to a net overall effect for employers of around £100 million.

To put that figure in context, I should make two main points. First, total labour costs in our economy are about £300 billion. Thus, the £100 million represents about 0.03 per cent.--less than one twentieth of 1 per cent. of the labour costs of industry as a whole. The second is a rather wider point--that this very limited change should be seen in the light of trends well established over many years. Support for those in employment who are sick for short periods has, as a matter of experience and observation, moved increasingly from being something for which the state alone has been responsible to being a partnership between the state and employers, with the latter taking an increasingly important share.

Mr. Peter Thurnham (Bolton, North-East) : My right hon. Friend has stated the costs as percentages of employers' overall costs. Another way of putting it is to say that the average cost to an employer is only £5 per annum per employee. Does my right hon. Friend agree that it is surprising that, as the cost is so low, there has been so much opposition to the Bill? Does not the director of the CBI seem to be arguing about mere bantam feed?

Mr. Newton : I have not done precisely the calculation that appears to underlie my hon. Friend's point, but I think that its basic thrust is right. Of course, one must allow for the fact that a significant number of employees--I am thinking, in particular, of part-time employees who deliberately keep their earnings below the lower limit--will not qualify for statutory sick pay at all. Perhaps that affects my hon. Friend's figures to a small extent.

Mr. Richard Shepherd (Aldridge-Brownhills) : We should be very careful about using averages. As the incidence is unequal, the burden on companies will be disproportionate. That is the essence of the Bill and of the opposition to it.

Mr. Newton : My hon. Friend is seeking to lead me on. I promise that it will not be long before I come to discuss the small employers, who, obviously, are less able to be certain that the averages will apply to them. On the whole, it is true that the larger a firm or undertaking, the more likely it is that the averages will apply in its case. I understand well that that is the cause of some of the concern about small employers that has led to a number of the proposed amendments. At an earlier stage the Government gave a clear-cut undertaking that we would try to meet the concern expressed on behalf of small employers about averages not applying to them. I am seeking, with some amendments to the Lords amendments, to fulfil that undertaking.

Column 178

Sir Robert McCrindle (Brentwood and Ongar) : Before the Secretary of State moves on to what I know will be the kernel of the debate--the effects of these measures on small companies--will he take on board the fact that some large companies, for which, I understand, there may be less sympathy, are faced with a very considerable additional bill? I am told that Marks and Spencer will have to pay £600,000 extra. I think it is fair to say that there was a clear implication that Government reimbursement of 100 per cent. of the cost was the basis on which the original scheme was introduced. Does not my right hon. Friend think that it would be wise to say just a few words about the movement away from that basic principle, which caused some of us to support the original scheme some years ago?

Mr. Newton : I am very happy to say a few words about that matter. Perhaps I should preface my remarks by saying that a point along the lines of that which my hon. Friend has just raised was made by a number of people in business. Naturally, as a consequence, I have had a very careful search made of everything that was said in the House and of any other traceable comments that were made when these proposals were being discussed very nearly a decade ago. I have been quite unable to find any commitment of the kind that my hon. Friend implies existed. Moreover, during that decade there have been two changes of Parliament.

It is well understood that Governments must take a new look at circumstances as they change. Two of the changes in circumstances to which I was about to refer are the spread of occupational sick pay schemes and the rising pressure of other demands. My hon. Friend is noted for his support for demands for expenditure on forms of social security which employers cannot possibly be expected to provide.

Mr. Michael Meacher (Oldham, West) : The Secretary of State says that he has checked the sources of this commitment. Has he examined the proceedings of the Conservative party conference? Is he aware that on 15 October 1981 the right hon. Member for Sutton Coldfield (Sir N. Fowler), his predecessor, gave a clear and unequivocal commitment that there would be 100 per cent. reimbursement ? As the hon. Member for Brentwood and Ongar (Sir R. McCrindle) said, that was the basis on which the original scheme was introduced. Is he unaware of that, or is the Conservative party conference not a serious public body?

Mr. Newton : My right hon. Friend's remarks were directed to the outcome of the negotiations on the original statutory sick pay scheme. My noble Friend Lord Jenkin, who was responsible for most of the negotiations prior to the introduction of SSP, has not suggested any express or implied commitment that there would never be a stage at which, regardless of developments surrounding occupational sick pay schemes or other demands on the social security system, a future Government would consider the balance of provision. Indeed, it would not have been possible to make such a meaningful commitment that would stand for ever.

Mr. Frank Field (Birkenhead) : Is not the Secretary of State trying to confuse two issues to his own advantage--first, whether a commitment was given and where it was given and, secondly, whether events have moved on since and whether other developments have overridden the

Column 179

original commitment? Will the right hon. Gentleman answer the point that my hon. Friend the Member for Oldham, West (Mr. Meacher) put to him? Was that commitment given to the Conservative party conference?

Mr. Newton : I have already answered the point made by the hon. Member for Oldham, West (Mr. Meacher). I cannot add to what I have said.

Mr. Frank Field : Yes or no.

Mr. Newton : The hon. Gentleman asked whether there had been developments in the intervening period. One of the developments, to which I have referred several times, has been the continuing growth of occupational sick pay schemes. The latest survey in 1988 showed that they are used by employers responsible for more than 90 per cent. of the work force. At the same time--the hon. Member for Oldham, West has tended, not to disguise, that would be unfair, but not to acknowledge this point significantly clearly--there has been particularly rapid growth in occupational sick pay schemes for manual workers. The old caricature was that staff had occupational sick pay schemes but manual workers were left to cope for themselves. There has been a significant change in that respect since the mid 1970s.

Ms. Clare Short (Birmingham, Ladywood) : I wish to take the Secretary of State back to the point made by the hon. Member for Bolton, North-East (Mr. Thurnham), who claimed that the cost to employers is small because although there is a drop in reimbursement from 100 per cent. to 80 per cent. there is an offsetting cut in national insurance. Will the right hon. Gentleman confirm that that is a one-off and that there is no promise for future years? This is an insidious proposal which, in time, will cost employers more and more. Will he put that on the record?

4.45 pm

Mr. Newton : I do not see how it can cost more. Contribution rates are calculated as a percentage of earnings. As earnings rise, the value of the reductions in national insurance contributions will rise. I am not in a position to speculate about decisions on future rates of statutory sick pay, or on what employers would do if they chose to go further in the development of occupational sick pay schemes. The Bill seeks to fix a proportion of the amount of statutory sick pay which employers would be expected to shoulder for themselves rather than pass on to the state and a reduction in national insurance contributions, which, as long as percentage rates of contributions remain unchanged, will rise in value to employers with the natural growth in earnings. I hope that that is reasonably clear.

Mr. Allen McKay (Barnsley, West and Penistone) : Employers' organisations calculate that it will cost employers £100 million to implement the scheme. Is the Secretary of State saying that that is untrue?

Mr. Newton : On the contrary. A fairly substantial paragraph in my speech, which I probably read some minutes ago because I willingly accepted several interventions, related that to the total of employers' labour costs in the economy. There is roughly a £100 million gap between one side of the account and the other. That is equivalent to less than one twentieth of 1 per cent. of labour costs in the economy.

Column 180

Mr. Paul Flynn (Newport, West) : The Minister has repeated the claim that was made in the last debate that 91 per cent. of the work force are covered by occupational pension schemes. The IFF Research Ltd. report says something quite different--that 91 per cent. of employers have sick pay schemes that cover some employees in some circumstances. That is all, and the percentage covered is nearer 48 per cent. or 50 per cent.

Mr. Newton : I think that my remarks were accurate and reflected what the hon. Gentleman has just said.

Ms. Short : The Secretary of State is being economical with the truth.

Mr. Newton : If the hon. Lady, from a sedentary position, is accusing me of being economical with the truth I shall do my best to restrain what would normally be my natural irritation.

Some of the points towards which the hon. Member for Newport, West (Mr. Flynn) seems to be edging run the risk of being somewhat misleading. Of course there are exclusions from occupational sick pay schemes, but they are not, on the whole, exclusions of the old-fashioned gentleman versus players kind. There is increasing coverage of those in manual occupations. The exclusions from occupational sick pay schemes usually relate to a brief period at the start of a new job. There may be a qualifying rule that an employee must be with the firm three or six months before qualifying. That is not unreasonable, and as a matter of established record people tend to experience little sickness in the early months of a new job. The other main exclusion is part-time employees. The Opposition have tended to place too much weight on this point--I can see where their argument is leading-- because, by and large, the earnings of part-time employees qualify them only for the lower rate of statutory sick pay, which is being fully uprated and which was fully uprated last year. If I get the drift of where the hon. Member for Newport, West is seeking to take me, which is a bit aside of the main thrust of the debate, he will see that I do not really agree with what he is trying to say.

Mr. Richard Shepherd : My hon. Friend seems to be linking the reduction in national insurance contributions with the statutory sick pay proposal. As I understand what my right hon. Friend the Minister for Social Security and Disabled People said in earlier discussions, there is no link : they stand independently of each other. It is therefore misleading of my right hon. Friend the Secretary of State to link them together as though it is a cost reduction. He might just as well cite those who have saved on the uniform business rate as being better able to make a payment on a different account. That link is misleading.

Mr. Newton : That is a little unfair of my hon. Friend., I have made it quite clear on this and on several other occasions that distinct judgments must be made. The Bill does not cover national insurance contributions. The House will be invited to discuss a national contributions order in due course. The judgment that I made on what it is sensible to do in respect of SSP--this should already be clear--was informed by a parallel judgment that I had made about what I could do for employers on national insurance contributions. That was a perfectly sensible way for me to have approached the matter, and one which most hon. Members would support.

Column 181

Mr. Gerald Howarth (Cannock and Burntwood) : We acknowledge the difficult task which my right hon. Friend has in trying to juggle the social security budget, particularly in dealing with the Treasury. That is well understood. Is my right hon. Friend aware that it is not simply the additional cost about which my constituents are concerned but the fact that, when statutory sick pay was introduced, they were required to administer what was essentially a Government system on behalf of the Government, and that that imposed burdens on industry? Had they been told then that they would not get 100 per cent. reimbursement, I suspect that their answer would have been, "You can stuff your scheme and do it yourselves."

Mr. Newton : This is another area about which there has been prolonged argument. I have already referred to the rather strange and not particularly effective arrangement for compensation for national insurance contributions paid on SSP itself. That is the nearest that anyone has ever come to compensating employers directly for their administration of the scheme. My hon. Friend will find that at the outset there was not any form of direct compensation. That was one of the points at issue. In retrospect, the majority of employers have found the SSP scheme easier to administer than they had originally expected. All the evidence is that it is now generally working well, with relatively little burden for employers. I do not seek to say this in a bland way, but in some respects what I am proposing, with the elimination of the rather strange compensation for the NICs bit of the scheme, will make it simpler than it is at present.

Mr. Michael Grylls (Surrey, North-West) : As I have said before to my right hon. Friend, it seems an extraordinary time to introduce added burdens for business, and above all for small business. My right hon. Friend will be able to draw away some of the criticism if he can tell us what the net effect will be on a firm with five or six employees, on average earnings, if one employee is off sick for six months. Will there be a net added cost to the firm, or will it gain? There is concern about the danger of added cost to a very small firm. If my right hon. Friend can assure the House that the new proposals sort out that problem, he will have answered quite a lot of criticism.

Mr. Newton : I shall be coming in a few moments to the case of small firms, both of the kind mentioned by my hon. Friend and others. He has referred to an employee being sick for six months. The main purpose of a significant concession in one of the rather complex Government amendments, relating back to an earlier amendment in another place, is to provide that small employers, defined on a fairly generous basis, can go back to 100 per cent. reimbursement in respect of any employee who is sick for more than six weeks. That is a significant end-stop safeguard for exactly the kind of problem that my hon. Friend has raised.

Mr. James Wallace (Orkney and Shetland) : The Secretary of State has introduced a complex Government amendment referring to six weeks. Can he give us an insight into Government thinking on this? My understanding is that all the discussions in another place were based on studies which showed that the average length of sickness was three weeks. It seems that the period of six weeks has been plucked out of the air without any

Column 182

principle behind it. If the Secretary of State is making a serious attempt to be helpful to small businesses, why does he not make the period three weeks?

Mr. Newton : In a nutshell, the position is that quite a number of small businesses will still be in pocket overall as a result of my proposals, because the national insurance contribution rate reductions have been geared especially to smaller employers, via being geared to lower paid employees. There will still be a large number of employers who will be better off on a straightforward calculation of the balance between the extra SSP which they have to pay and the reduced contributions from which they benefit, even up to twice average sickness, which would be one employee being sick for six weeks in the case which the hon. Gentleman seems to have in mind. We have chosen a number of weeks which we think will safeguard those employers who might otherwise be affected by rates of sickness significantly above average. I hope that I will be able to make the point clearer later in my speech.

Miss Emma Nicholson (Torridge and Devon, West) : Does my right hon. Friend agree that sickness management is an employer responsibility, that the Government have gone far enough in offering assistance to employers to look after the sickness management of employees, that any responsible employer already takes care of sickness management and that more employers should do so? I support the Bill.

Mr. Newton : That point has been made by a number of commentators, including most recently The Times in an editorial today, and the Financial Times in an editorial a week or two ago ; certainly the point should not be overlooked in the argument. Indeed, I find it mildly ironic that the CBI has published a survey suggesting that British industry is cost many billions a year by absenteeism and pointing to the more determined methods to keep absenteeism under control which are used in some other countries. I have not sought to put great weight on that argument, and I do not want to mislead my hon. Friends or anybody else. There may be some force in it but it is not the reason for the proposals being brought before the House, and I do not pretend that it is.

I want to come briefly, I hope--otherwise there will be no opportunity for anyone else to speak--to the major reason why the proposals have been brought before the House. As I have said, against the background of the continued expansion of occupational sick pay schemes, not least into the manual work force, we felt that it was right to make a limited further adjustment in the balance of provision as between the state and employers. I must underline that point. We have taken account of the many understandable demands pressed upon the social security budget for purposes for which employers certainly cannot be expected to provide--for example, the less well-off pensioners for whom I found nearly another £100 million in the uprating, following £200 million in the form of extra premiums in October 1989,for those who need help in residential care or nursing homes, for whom the uprating statement brought nearly another £250 million, and for those who are long-term sick and disabled. Certainly there has been a very wide welcome for the measures which I was able to announce to help precisely those groups and, indeed, for the earlier announcement of major improvements in disability benefits worth some £300 million, which the House will debate on Thursday.

Column 183

Mr. Tony Speller (Devon, North) : No one can disagree with the wish of my right hon. Friend to help the disadvantaged. But why does he do that by disadvantaging small business? That is where I do not see the logic.

Mr. Newton : I am coming to small business. I think my hon. Friend will find that many small businesses are on balance advantaged rather than disadvantaged by the proposals which I have brought before the House.

I seek to conclude this part of my speech by saying simply--this is directly related to the point which my hon. Friend has raised--that the first question the House must address in considering the amendments is whether, in relation to the improvements in social security which we are making, which are worth many hundreds of millions of pounds for purposes commanding universal support, which have been pressed on me by many of my hon. Friends and by many Opposition Members, and on which I am constantly pressed to go further, it is reasonable to ask for a modest contribution from industry amounting to a small fraction of the improvements and amounting to less than one twentieth of 1 per cent. of their labour costs. The purpose of the main Lords amendment--amending 80 per cent. to 91 per cent.--is to eliminate even that very small contribution from employers to the improvements in social security to which I have referred. It is not realistic for that to be the position and I cannot, therefore, advise the House to accept Lords amendment No. 3. 5 pm

Sir Robert McCrindle : I have listened carefully to what my right hon. Friend has said in response to the intervention by my hon. Friend the Member for Devon, North (Mr. Speller). Is he telling us that as we evaluate the desirable advances in social services provision--over which he has presided and for which I give him full credit--we must offset against that the possibility that employers, whether small or large, will have to make some contribution? Should we be wise to assume that it is no longer correct to take as sacrosanct other schemes, such as statutory maternity pay? Is my right hon. Friend telling us that an occasion may arise when, as he is doing today with statutory sick pay, he may find it necessary to make the employer additionally responsible for the maternity scheme, if that is the price that we have to pay for improving social benefits?

Mr. Newton : There are two separate points in my hon. Friend's intervention. If significant improvements in social security, or in any other form of spending on welfare or for other purposes, are undertaken, there is no way in which employers collectively--industry as a whole--can be insulated from the effects. The costs will have to fall somewhere. If the hon. Member for Oldham, West were allowed the chance--and we all devoutly hope that he will not be--he would raise the overall rate of employers' national insurance contribution, he would raise the rate of corporation tax and he would almost certainly raise the rate of income tax in a way that would cause a great deal more difficulty to many small businesses than any of my proposals in the Bill.

Mr. Meacher : I did not think that I needed to make this point to the House. However, what the Secretary of State has just said is wholly groundless. There is not a single shred of evidence in anything that I have ever said or

Column 184

written that would justify his comment. If that is the only basis on which he can justify these impositions on small businesses, it shows his arguments totally lack support.

Mr. Newton : Only this weekend, I saw in one of the Sunday newspapers a reiteration by one of the hon. Gentleman's colleagues who has recently joined the Opposition Front Bench of what purported to be a Labour promise to pay additional pensions. Would the hon. Gentleman like to say how that will be paid for?

Mr. Meacher : That question is wholly irrelevant to our discussion today. But as the right hon. Gentleman has raised it, I will answer. We made it perfectly clear in our policy document--there was no great revelation in a Sunday newspaper--that, unlike the Government, we believe that older pensioners who are aged over 75 or 80 are completely without extra support, bearing in mind the way that the Government have cut the earnings relation when uprating pensions. We believe that those older pensioners need extra assistance. We intend to provide that, partly through the state earnings-related pension scheme and, if necessary, through some additional pension.

Mr. Newton : I may have evaded one or two questions in my time, but I have never heard a question so wholly and hopelessly evaded in response to an entirely reasonable request. If one makes promises of several billion pounds of additional expenditure from the national insurance fund--

Mr. Meacher : No.

Mr. Newton : The hon. Gentleman seems to be going round the country- -and some of his hon. Friends certainly are--promising several pounds a week extra to 10 million pensioners. If he can explain how he will fund that without a major increase in national insurance contributions, either at the expense of employees or, far more likely, at the expense of employers, I should be happy to listen. The point that I want to make to my hon. Friend the Member for Brentwood and Ongar (Sir R. McCrindle) is that none of that could be cost free. I do not want to turn this debate into a wrangle with the Opposition. However, I must make the point that in one form or another, the business community and individuals, according to the balance of judgment that particular Governments take, would have to find the cost of improvements to social security.

I do not ask my hon. Friends to say that they think that we have got the balance of judgment right in everything that we have done over the past 10 years, but I ask them--and I address this especially to my hon. Friend the Member for Brentwood and Ongar, who has a commendable track record in urging various improvements--to accept that it is difficult for the Secretary of State for Social Security to make all the improvements and then not to receive support for some of the ways in which one has to find room to manoeuvre to make them. I ask for understanding at least in that respect and I suspect that I have it from my hon. Friend the Member for Brentwood and Ongar, who is not only honourable, but an old friend from Essex in many other ways.

Ms. Short : But not Essex man?

Column 185

Mr. Newton : The phrase "Essex man" had not come into my mind either as a description of myself or of my hon. Friend, but it cannot be denied that we both come from Essex.

I have explained the strategic background to the proposals, so I want to come directly to the position of small employers, which has been the subject of particular concern, as has been clear this afternoon, even among those--and there are many--who accept the general approach that I have described. I turn now to Government amendments (a) to (e) to Lords amendment No. 7, which set out the Government's proposals for assisting small employers who experience abnormal levels of sickness in their work force on the basis of enabling them to revert to a 100 per cent. reimbursement after an employee has been sick for a specified time.

Many hon. Members who have studied the debate in another place will know that my noble Friend Lord Henley tabled an amendment on Report on the Government's behalf. The Government had already clearly shown that they were listening to that concern. The amendment formed the basis of the new clause today. It was further amended on Third Reading in another place when more specific proposals were written in, to which I shall return in a moment.

I want to say a word or two about the background. It is again important to recognise that the effects of the changes in statutory sick pay in the Bill are not sensibly seen in isolation from the proposals that I have announced for reductions in employers' national insurance contributions. To repeat a point that I have made in response to several interventions, although the reductions go right across the spectrum of employers' contributions, they have been weighted deliberately in favour of small employers who are more likely to have employees on the lower contribution rates. For employees earning up to £185 a week, the proposed reduction in the employers' contribution is 0.4 per cent. against 0.05 per cent. where the employee earns above that sum.

If the small employer suffers average sickness levels in his work force, the contribution reductions will more than offset the reduced SSP reimbursement rate. I gave a number of examples when we last debated the Bill in this House, as did my noble Friend the Under-Secretary of State in another place. However, in the light of this afternoon's discussion, it may be helpful for me to give one or two further examples.

If an employer has five employees all earning £170 a week and one of those employees is away for a total of three weeks in the year, which is the average incidence of sickness, there will be a net gain to the employer of £94.39. That assumes not only the 80 per cent. reimbursement, but that the employer tops up the difference between the lower and higher rate of statutory sick pay under an occupational sick pay scheme. That will not be true in all cases and, where it is not, the gain to the employer will be larger. Even on the least good basis that I can take, there will be a gain of almost £100 a year to the employer. Even if the employee is away for six weeks in the year--that is, twice the average incidence of sickness --there would still, on the relatively unfavourable basis from my point of view, be a modest gain of £11.98.

If the employer had 10 employees in that earnings range and experienced the same incidence of sickness, the savings would be £188.78 and £23.96 respectively, while an

Column 186

employer with 20 employees all earning £170 would gain £377.56 with four employees sick for three weeks, and just under £48 if the four were away for six weeks.

I hope that I have said enough, because, clearly, those examples can be multiplied almost indefinitely, to indicate that, in a number of perfectly reasonable representative cases, even allowing for above-average sickness, a large number of employees and employers would gain from my proposals taken as a package, although not, of course, if we look only at the proposals in the Bill, but they are integral with the reductions in national insurance contributions. It is very important that I should underline that point with all the emphasis at my command.

Next Section

Home Page