House of Commons Hansard Debates for 5 Feb 1991

Mrs. Elizabeth Peacock (Batley and Spen) : My right hon. Friend will know that I have made representations to him about all the extra money that he has already announced. I support his long battles with the Treasury, although I am not sure whether I agree with this one. However, will my right hon. Friend reassure the House and many other people that the scheme will not discriminate against those who have more sickness than others? There are bound to be people in work who, for whatever reason, need more time off because of their illnesses. There is great worry that they will be discriminated against by a company that decides that it cannot afford to take them on because they would be off work more often than an average employee.

Mr. Newton : I shall refer later to the main thrust of what my hon. Friend says because it is related to the amendments. Her general point has been raised on several occasions. It was a main argument for not opting for a statutory sick pay scheme in the first place. There has been no evidence of which I am aware that the introduction of statutory sick pay, or any of the changes that have been made in it, have had the effect that my hon. Friend fears, often relating to disabled people in particular. Indeed, a recent survey suggests that disabled people in general have less sickness than many other people in the population. There is no need for employers to have that anxiety. There is no evidence that that anxiety has had a significant effect.

Obviously, there are difficulties for disabled people in gaining employment. Those difficulties need to be tackled in other more specific and direct ways. My right hon. Friend the Minister for Social Security and Disabled People has some responsibility, and my right hon. and hon. Friends in the Department of Employment have a wide variety of schemes. I am sure that the effect of those is much more significant than anything contained in the proposals. Several Hon. Members rose --

Mr. Newton : In one of the increasingly numerous intervals in which I have been sitting rather than standing, I have gathered that there is some concern about the little time that will be left for other hon. Members to take part in the debate. In view of the extent to which I have given way, it would be sensible for me to make some progress.

I have just given some examples of small firms--

Ms. Short : Will the right hon. Gentleman give way?

Mr. Newton : The hon. Member for Birmingham, Ladywood (Ms. Short) or her hon. Friend the Member for

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Oldham, West will no doubt have an opportunity to make a substantial speech. It would be sensible now for me to make progress.

Ms. Short : The right hon. Gentleman is misleading the House.

Mr. Newton : I knew that it would be a mistake to give way to the hon. Lady. The trouble is that, when one does not give way to the hon. Lady, she simply falls back on interventions from a sedentary position.

Ms. Short : It is an important point.

5.15 pm

Mr. Newton : I have acknowledged persistently and repeatedly that there is a balance of £100 million--a tiny fraction though that is--of labour costs as a whole and that, therefore, not everybody can be gainers. However, the points of concern that have been mentioned by hon. Members and that have come in profusion from other quarters as well are being addressed in particular to the position of small businesses. [Interruption.] I cannot say for all small businesses, although we certainly hope to make sure that it will be virtually all small businesses. On any reasonable assessment of what they will be required to pay in SSP and what they will gain in reduced national insurance contributions, taken with the safeguard to which I am about to refer, very large numbers of small businesses are likely to be gainers from the proposals, and not losers. That is clear whichever way one looks at the statistics.

Mrs. Margaret Ewing (Moray) : Will the right hon. Gentleman give way?

Mr. Newton : In fairness to Scotland, I shall give way.

Mrs. Ewing : Will the Secretary of State give a statistical analysis of the number of gainers and losers? That point is vital, particularly in rural communities such as my own, where we are dependent upon small businesses to retain local work forces.

Mr. Newton : Each intervention now demonstrates that it would be more sensible if I got on with my speech.

The concession that the Government are proposing, which is contained in the admittedly rather complicated amendments, is estimated to cover 700,000 employers. That is more than half the employers who submit national insurance returns to us. Those 700, 000--a very large number of small employers, because the definition that we chose is generous--will have not merely the regular advantages of the national insurance contributions set against an average expectation of having to pay some SSP ; they will have the safeguard that, if any employee is sick for more than six weeks, they will go back to 100 per cent. reimbursement. In those cases, there is a strict limit to the amount of extra SSP that they can be expected to pay in respect of any employee. I hope that that will reassure the hon. Lady for Moray (Mrs. Ewing). The measure is specifically designed as a safeguard for the employer who experiences an above-average record of sickness in a member of his work force. I must try to curtail my speech.

We acknowledge that the operation of averages is easier to apply the larger the firm is. It is precisely for that reason that we have brought forward the amendments directed to the position of small firms in the way that I have described. Our efforts have been concentrated on designing a scheme that will help small employers whose experience departs

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from the average, and that is the basis on which we seek support for the concession that is contained in the amendments.

Different approaches to the problem have been urged on us. Originally, in another place we put forward an amendment in broad terms that would have allowed us scope for different ways of defining who was to count as a small employer for this purpose and different ways of seeking to cope with above- average sickness. However, their Lordships expressed a clear preference for one particular way of doing that, and it is that method of achieving that, rather than the exact details of what was passed in another place, that I am recommending to the House.

As is self-evident, the amendments are complicated. I shall do my best to pick my way through the key provisions and explain them as carefully as I can.

Mr. Robin Maxwell-Hyslop (Tiverton) : Without giving way.

Mr. Newton : I am grateful to be urged in that respect by my hon. Friend, as he has been known to intervene on Secretaries of States' speeches on earlier occasions. I shall take that remark as a self-denying ordinance, for the time being at least.

The first key issue is how we define a small employer. The most obvious way is by the number of employees--five, 10 or 20. However, that method is open to some obvious difficulties. For example, it does not cope with the problem of an employer who has a fluctuating work force, and there are several other difficulties on which I shall not elaborate to the House. We concluded that it would be fairer and simpler to define a small employer by reference to his contribution payments in the preceding tax year. That focuses the definition of his actual wage bill. I am glad to say that, on a matter which has not been free from controversy, that approach to defining a small employer seems to have met with universal agreement.

In practice the method would work as follows. All employers are already required, within 14 days of the end of the tax year, to complete a return to the Inland Revenue giving the total tax and national insurance contributions during that year. So employers should have the information readily available. If the total contributions are within a specified figure, the employer will qualify as a small employer during the whole of the succeeding year. Our original proposal and our amendment set the level at £15,000 of national insurance contributions in a year. That corresponds precisely with what the other place wished.

It will make things clearer to people and enable them to judge the meaning of the definition if I say a word about the scale and size of firms which will come within it. I have already said in response to the hon. Member for Moray that we estimate that some 700,000 employers will potentially be eligible, ranging from an employer with four employees who all are on the upper earnings limit of £350 a week--fairly well paid people--to an admittedly unlikely set-up at the opposite end of the spectrum of 90 employees all on the lower earnings limit of £46 a week. The definition would cover both a large firm of low-paid people and a smaller firm of rather better paid people. It is a much more satisfactory definition than the alternative of counting heads.

To give a few other examples, the definition would cover a firm of 22 employees all earning £100 a week or of

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12 employees all earning £150 a week. As I said, we believe that that is a flexible system. I am sure that it is the right way to proceed. There is common agreement on that in both this House and another place.

Another point which we have accepted is contained in our amendments. It is that the concession and safeguard to employers defined on that general basis should be related to the number of weeks for which an individual has been sick. At various stages in another place there was considerable argument about whether it was better to go for a relatively simple and straightforward approach or one that rested on an aggregated amount of SSP paid in a particular period.

The Government originally hoped to consult on which method industry would prefer but, in the event, another place made it clear that it preferred a solution based on the number of weeks. We thought it right to accept that. However, its proposal was rather complicated. It suggested that one tranche of employers should have 100 per cent. reimbursement throughout, another should receive 100 per cent. reimbursement after three weeks and another 100 per cent. reimbursement after six weeks. We believe that it is right to go for a simpler system and that a proposal which secured 100 per cent. reimbursement for employers of any size went rather too far in view of the contribution reductions to which I have referred. Therefore, we tabled amendments which go beyond our original intention, which was a threshold of eight weeks, to the significantly more generous basis of six weeks, which, as I said, will apply to individual employees and will affect about 700,000 employers. We believe that that is about the right level at which to pitch the measure. To return to my example of an employer with five employees earning £170 a week who had one employee away for six weeks, the employer would have a total extra cost of £164.82 in SSP but his saving in national insurance contributions over his work force as a whole would be £176.80. So he would still be almost £12 to the good. He would begin to go into deficit if the SSP lasted for more than six weeks. That is when the Government propose that the small employers' relief and a return to 100 per cent. reimbursement should apply to prevent him from going into deficit.

I have necessarily spent some little time on the proposals, not only as a result of interventions but because I thought it right to explain the proposals as fully as possible. I shall explain as briefly as possible some of the other points covered by the Government amendments.

Mr. Meacher : Will the Secretary of State give way?

Mr. Newton : It would be more sensible if the hon. Gentleman allowed me to get on. I understand that he will make his own speech afterwards.

Our amendments to subsection (1B) of Lords amendment No. 7 set out the formula for determining whether a small employer is entitled to small employers' relief. There is an algebraic formula, which is not as complicated as it might appear. It ensures that all days of SSP, including odd days, count in the calculation. Another improvement on the Lords amendments is that by relating the provision to periods of incapacity for work, linked spells--spells of SSP not separated by more than eight weeks-- can be taken into account in calculating the six

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weeks. That is a refinement which is not in the Lords amendments. Indeed, it is a further useful safeguard for businesses which experience above-average sickness in an employee.

Subsection (1C) of our amendment (a) to Lords amendment No.7 retains for possible but not certain use in future some of the flexibility which we originally sought to gain. Whether it is appropriate to use it will depend on events. We shall take very much into account early experience of our proposals. We have maintained, at the cost of some additional complexity in drafting our amendments, the scope to adopt a different approach, what I would call an aggregation, rather than an individual employee approach, if that seems the sensible course. Several noble Lords in another place, including my noble Friend Lord Jenkin, attached particular importance to such an approach and we were anxious to retain the flexibility to adopt it if it seemed sensible.

Subsection (1D) contains the power which enables regulations to define a small employer on the basis of contribution payments. The power is sufficiently flexible to allow us to define the prescribed period to which the contribution threshold relates to a period other than the preceding tax year. That makes provision for the new employer who does not have a full year's national insurance record on which he can be judged.

The only other significant point which must be made is that subsection (1E) meets a point pressed on us fairly hard in another place by setting into the primary legislation the scope for reviewing the £15,000 contribution threshold. The subsection requires the Secretary of State to consider each year whether the threshold should be increased in the light of various points referred to in the amendment.

I have said as much as I need to say about the drafting of the amendment, which represents a significant additional safeguard for small businesses which experience above-average sickness. Such employers would be likely--I cannot say certain--to be gainers from the basic structure of our proposals.

Before I conclude, I should make a few remarks about Lords amendment No. 5.

Mr. Richard Holt (Langbaurgh) : How much will the proposals for large employers such as Cleveland county council affect the community charge? Any extra cost will have to be passed on by large employers but employers such as councils do not have customers to whom they can go, only community charge payers.

Mr. Newton : I have necessarily used illustrative examples. Clearly it is not possible for me to work out, certainly not on my feet, the precise affect on Cleveland county council or any other employer, without any knowledge of the mix of its employees and the wages paid to them. However, such employers will benefit from the reduction in national insurance contributions, which applies at every level of earnings and to employers of all sizes.

5.30 pm

Lords Amendment No. 5 removes from the Bill scope for making further changes in the reimbursement rate by means of secondary rather than primary legislation. Without by any means accepting everything that was said on that matter in another place--perhaps it has been overlooked that there is power under secondary legislation to raise employers' national insurance contributions by no

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less than about £1 billion--I readily accept that it was a point of concern to the business community which, despite what I said on Second Reading, continued to express fears lest there was some settled plan for going further than what was contained in the Bill. I am happy to advise the House in that respect to agree with the Lords in the amendment so that were any change to be contemplated at any future stage it would be necessary to bring primary legislation before the House, rather than to act on the basis of secondary legislation.

I appreciate that I have delayed the House for some time, I hope for reasons which the House will understand. In everything that I have said is implied the view, which I hold strongly, that what we have proposed strikes a fair and reasonable balance--a new and slightly adjusted balance--in the provision for short-term sickness in circumstances where the small shift that it proposes makes an important contribution to progress on other social security objectives which are widely supported.

My view that that is a fair and reasonable balance, in the context of social security spending as a whole, is greatly strengthened by the additional safeguard that we have built in for small businesses, responding to representations made by many of my hon. Friends and others, and I seek the support of the House for those changes, modified as they have been, as a whole.

Mr. Deputy Speaker (Mr. Harold Walker) : I must advise the House that the amendment and Lords amendments Nos. 2 to 7 involve privilege.

Mr. Meacher : It is an unhappy day for parliamentary democracy when the Government impose a heavy Whip, as we are led to believe, to try to marshal their full majority over amendments made in another place which merely soften, but do not in any way strike out, what must be one of the most unpopular Bills in modern times. But I am encouraged by the number of Conservative Members present for the debate, which I hope will be a genuine and open debate on the issues involved. It is not unfair to say that the Bill does not have a friend anywhere, except the Treasury and the occupants of the Government Front Bench. It is comprehensively repudiated by the CBI, the National Federation of Self Employed and Small Businesses, the Engineering Employers Federation, the Building Employers Federation and by any and every small business and organisation one cares to name, as well as by the TUC, the trade unions and the voluntary sector.

Indeed, the business community and all major business representative groups are united--I cannot recall when this has previously been the case--in still demanding that the Government withdraw the whole Bill, even after the damage limitation achieved in another place.

Mr. Holt : Is the hon. Gentleman also aware that the Institute of Personnel Management is opposed to this legislation, being the practitioners who would have to put it into practice?

Mr. Meacher : I am glad to accept the point that the hon. Gentleman makes, which I hope was heard by the Minister. It adds to my point that the right hon. Gentleman would find it impossible to find any reputable body outside which favours the Bill. I cannot recall a time when I was able to say that to the Government.

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Mr. Patrick Nicholls (Teignbridge) : Will the hon. Gentleman give way on that point?

Mr. Meacher : No, because it is a side issue and I am anxious to make progress with my speech.

The Minister's palpable embarrassment at defending the indefensible was exposed in his Third Reading speech, which must have been the shortest I have witnessed in 20 years in Parliament. It occupied a mere five lines in Hansard, the right hon. Gentleman simply saying that he might decide to say something later, which in the event he did not. In view of that obvious and manifest embarrassment, I hope that the right hon. Gentleman does not come to our proceedings today with a closed mind and that he will not treat Parliament with the contempt that a heavy Whip might suggest, for we are faced with serious issues that must be debated seriously.

The central issue today is whether the Lords amendment to make the whole new Government package completely cost neutral should be allowed to stand. The original Bill was, as the Minister said, intended to cut the reimbursement of SSP from 100 to 80 per cent. It also removed the 7 per cent. additional handling charge which employers could claim for administrative cost.

That would have cost employers about £250 million in 1991-92. That was roughly balanced--it was fair for the Secretary of State to make the point- -by reductions in employers' national insurance contribution rates which would have saved them about £250 million a year. But those changes were heavily slanted in favour of employers paying below average wages, and they are not necessarily small employers. But the Government have offered no compensation to employers for the increased cost that they will have to bear as a result of the changes in SSP rates announced in the right hon. Gentleman's annual benefit uprating statement. Because of the rise in the earnings threshold, from £125 to £185, which determines entitlement to the higher rate of SSP, about three million workers will lose eligibility, of whom about 600,000 who might be expected to claim this year will lose about £9 a week.

In many cases, employers would have to make up the shortfall and their costs would rise by as much as £100 million, according to the Government's figures. It was that shortfall which the Lords amendment was designed to rectify. It would increase the employers' reimbursement rate to 91 per cent. That percentage is fine tuned to increase the amount reimbursed to employers by £99 million, which is virtually exactly the loss to employers from the change in the SSP threshold. So the overall effect of the amendment is cost neutral in the Government's calculations.

Three central questions are at issue today ; first, why are the Government resisting the amendment and going to such lengths to overturn it ; secondly, why are they so determined, in the face of a triple rejection in another place and when the business community is screaming for the withdrawal of the Bill, to push ahead with a measure that is cost neutral in its basic structure ; and, thirdly, why are they being so excessively mean and niggardly, as I shall show, towards small employers and going out of their way to deny them the smallest relief already agreed in another place?

The answers to those questions will reveal much about the Government's intentions. Why are they refusing to accept an overall cost neutral package? The answer seems

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clear. Indeed, the right hon. Gentleman virtually said as much today. He is having to make cuts in the package to recompense the Treasury for the minor concessions that he has already obtained from the Treasury on tick, in particular for the increase in child benefit.

So the first reason to oppose the Government today is that that part of the Secretary of State's argument is wholly objectionable. It is not right to try to justify cuts in provision for one vulnerable group on the ground that more is being spent on another. A separate point is that the argument is also tantamount to the state advocating its well-established responsibility to protect the welfare of employees during periods of sickness.

Mr. Nicholls : The hon. Gentleman loves to present himself to the House as the scourge of the employing classes. Why is he not prepared to accept the proposition that employers have a responsibility to their employees when they are sick? There is nothing wrong with requiring them to make a modest contribution to the care of sick employees. The hon. Gentleman does not answer that question because the point he makes is completely bogus.

Mr. Meacher : I am happy to answer the hon. Gentleman's question. I agree that employers have a responsibility towards their employees when they are sick. The problem is that the survey from which the Government like to quote on the highly spurious 91 per cent. figure shows that only 44 per cent. of private sector employers provide occupational sick pay for their employees. For small firms, the figure is only about half that. That is why the state still has a clear responsibility, and it is foolish of the hon. Gentleman not to recognise that.

It is not as though the extra £1 for the first child is much of an increase after a four-year freeze. The Secretary of State tried to outline the great improvements that the Government are making and said that, of course, employers must bear some of the cost. However, an increase of £1 a week for only the first child after a four-year freeze, when the shortfall is £2.30 a week, does not amount to much. The Secretary of State needed to make some improvement as a figleaf before the forthcoming election, but the Treasury would not fund it and forced the right hon. Gentleman to find the money by making cuts elsewhere. That is why the Government are so adamant that they will not accept the 91 per cent. overall cost-neutral compromise and insist on returning to their original 80 per cent.

I think it was the hon. Member for Devon, North (Mr. Speller), who is otherwise engaged at the moment, who hit the nail on the head : how can the Government justify asking small employers to subsidise child benefit? That was an accurate observation. The Treasury's fingerprints are all over the Bill, but nowhere more clearly than in overturning the 91 per cent. proposal made by Lord Mottistone, a Tory peer in another place.

Why are the Government so determined to press ahead with the main structure of the Bill when there is no net gain to the Exchequer--any savings on the Consolidated Fund are cancelled out by reduced income from national insurance contributions--and when all the business organisations demand that, in the light of the defeats

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inflicted in another place, the Bill should be withdrawn to allow for the consultations that should have taken place when the Bill was first drafted?

Mr. Newton : I shall try not to intervene too much, but there are echoes in the hon. Gentleman's speech of an earlier exchange that we had. Will the hon. Gentleman give an undertaking that, when he has to put up employers' national insurance contributions to fund his expensive promises, he will yield to the blandishments of employers should they protest about what he is doing and try to stop it?

Mr. Meacher : We have no intention of increasing employers' national insurance rate contributions, so the problem does not arise. As the Secretary of State is so extremely keen to press the point, we have said that we believe that there should be improvements for the pensioners, who have had such a lousy past decade, and in child benefit, which would be financed by removing the upper threshold of national insurance contributions, so that the rich, who have had such a bumper decade, would contribute a bit to help those at the bottom of the pile.

Before I was led aside by that intervention, I was about to give a telling quote from a document from the Association of British Chambers of Commerce, the Association of Independent Businesses, the Confederation of British Industry, the Forum of Private Business, the National Federation of Self Employed and Small Businesses, the Institute of Directors, the National Chamber of Trade, the National Farmers Union and the Union of Independent Companies. Apparently, the Institute of Personnel Management is not represented, but it was probably not told about it and would have wanted to put its name to it. The document states :

"We are unanimously agreed that, despite the important amendments incorporated during the House of Lords debates, the best course would be for the Government to withdraw the Bill and maintain existing arrangements for the present That would allow full discussion before any major changes in this area are introduced."

It could not be any clearer than that, so why is the Secretary of State digging in his heels? The answer is clear. The real purpose behind the wretched little Bill is gradually to transfer the whole of the cost of paying SSP to the employer. In effect, it will privatise the payment of sickness benefit. By transferring 20 per cent. of the cost, the Government save, on their own figures, £250 million and by transferring the rest the Government have their eyes on a further £1 billion. That is the real aim, which is why the Government are determined to stuff the Bill down the employers' throats come what may.

5.45 pm

However, that is not the end of the story. I shall return to the perceptive intervention of the hon. Member for Brentwood and Ongar (Sir. R. McCrindle) : the transfer of statutory sick pay could well set a precedent for statutory maternity pay, giving a further saving of £270 million, and for industrial injury compensation, when the savings might be more than £500 million. Let no one be unaware of the fact that we are setting that precedent today. The bottom line is that the Bill will dismantle the welfare state. That is why we, and I suspect the great majority of people in this country, strongly object to it. The Bill also involves shifting huge costs of up to, over future years, as much as £2 billion on to employers. That is why they object to it so strongly.

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It would have made it much easier for the Government if they could have overturned the Lords amendment that requires that any further changes in the percentage of reimbursement should be through primary, not secondary, legislation. That is not what the Government wanted or intended. In the original Bill, the Government proposed that any change would require only a negative resolution of the House, not even an affirmative resolution. They wanted changes to be carried out quietly behind closed doors, if possible without embarrassing discussion in the open. However, in accepting the amendment adopting the primary legislation requirement, moved and passed in another place--I welcome the fact that the Secretary of State did so--the Government display no real change of heart. If they had overturned the amendment, the nakedness of their purpose--gradually reducing the percentage reimbursement towards zero--would have been too transparent, and so they did not.

The Government, quite remarkably, refused to accept even the small concession on behalf of small employers that was moved and passed in another place. That was extraordinary, given the litany of damning screams from the Government's corporate supporters. I am sure that other hon. Members will have heard some of the complaints. The Confederation of British Industry said :

"No one wants the Bill, but fear of its impact is widespread. The Government's tabled response does not meet the case. The best course would be withdrawal of the Bill."

The Forum of Private Business said :

"The timing of the SSP Bill could hardly be worse for the small business community because of the current recession. The Government clearly does not understand small businesses--or does not care." -- [Interruption.] I am simply quoting the words of the Forum of Private Business. It goes on :

"The Bill was rushed through the House of Commons at breakneck speed allowing insufficient time for small business groups to put forward positive solutions. As members of the DSS Employers Panel and the Contributions Unit, Specialist Group, the Forum of Private Business is aggrieved that it was not consulted. The proposals in the SSP bill fly in the face of the aims of the Deregulation Unit, a Government body which seeks to simplify rules and regulations affecting small firms."

The National Federation of Self Employed and Small Businesses says :

"The provisions will add substantially to the costs of some businesses, amongst them many small businesses, and do so at the worst possible time, when they are coping with a deep recession." The Association of British Chambers of Commerce says : "This is one further burden which could push many struggling businesses into closure, supposedly in a period of deregulation when the private sector is expected to play a more prominent role." The West Yorkshire Council of the National Chamber of Trade says :

"It would place intolerable burden upon employers at a time of high interest rates, the impact of the uniform business rate and escalating high street rents. This would be a deathblow to many local small businesses and a sharp reduction in employment, also discouraging the employment of disabled and those suffering repetitive sickness."

None of those organisations is known as having crypto-leftist sympathies. But, despite all that, the right hon. Gentleman is still not prepared to accept the modest concessions for small employers agreed in another place.

It is important to be clear just how niggardly the Government are being. When the Bill was first before the House the Government offered no concessions to small

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employers ; but when the business organisations, beginning to alert their members, had had enough time to stir up some palaver in another place--I am glad that they did--the Government jumped in with a concession which they hoped would quieten their Lordships. It did not.

The Government proposed a small employers' exemption after eight weeks of sickness where the annual aggregate of national insurance contributions in 1991 was less than £15,000, as the right hon. Gentleman stated. It was too little too late, and it was rejected out of hand--not surprisingly, since the number of sickness spells that exceed eight weeks is extremely small. The right hon. Gentleman did not tell us the exact number. I am not even sure that he knows, but it is certainly extremely small.

In other words, the Government were trying to buy off the Opposition with a concession which, on the best evidence given to me, was worth a paltry £1 million to£2 million. It was rejected, as it deserved to be, and instead the triple concession was

passed--exemption after six weeks' sickness where contributions are under £15,000, after three weeks where contributions are under £10, 000 and exemption immediately where contributions are under £5,000. It is important to realise how extremely modest that exemption package is.

National insurance contributions of less than £15,000 imply--the right hon. Gentleman had the grace to admit this--a firm with only five employees where those employees are on national average earnings. The cost of the concession, according to my best estimates, would be only about £15 million. That would still leave an overall gain from the Bill of £85 million to the Exchequer. Despite the fact that that would clearly focus help at the point where the need was greatest for small employers, would obviate administrative complexities, for which the Government are always arguing in small businesses, the Government are trying to overturn it.

In drafting prose in Government amendment (a)--algebra or otherwise, I found it some of the most impenetrable that I have ever had to wade through --the Government are now seeking to knock out the two lower thresholds : exemption after three weeks where contributions are under £10,000, and immediate exemption where contributions are under £5,000. I make it clear that in the latter case the companies that will lose the concession already granted in another place if it is overturned tonight will be overwhelmingly those employing one or two persons only--unquestionably those who have the greatest need ; the companies that surely cry out for full exemption.

The sole concession that the right hon. Gentleman is now prepared to contemplate is confined to cases where sickness exceeds six weeks, which is not quite as few as where it exceeds eight weeks but it is still unusual, and where the total cost to the Exchequer is, I believe, a miserly £5 million. That is what the right hon. Gentleman is presenting to the House as a generous concession which he hopes the House will back.

I hope that Conservative Members who, perhaps justly, like to see themselves as the champions of business, particularly small business, will ask themselves tonight whether that is the action of a Government devoted to enterprise or the action of a Government who are cheese-paring and over- concerned with public expenditure cuts in the face of all common sense and reasonableness.

The effect of the Government's obstinacy will be felt most in small companies, but it will be spread across the

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whole of industry. The Building Employers Confederation, which embraces, as the House will know, many large and small firms, said : "The industry has an average manual wage of £260 per week." I make no apology for giving the figures because the right hon. Gentleman gave many figures. It goes on :

"For an employee on average wages of £260 per week the reduction in employers' National Insurance Contributions will be £6.24 for the year for one employee. It can be seen from this figure that only if such a worker qualifies for Statutory Sick Pay for less than three days a year will his employer be a winner' or break even under the legislation. In an industry where much of the work is done in all weathers and is very physically demanding this level of sick leave is unlikely to be met in any company, large or small. The industry contains a large sector of firms employing less than twenty men, where at break even levels such as illustrated, the prolonged sickness of only one or two individuals could result in a heavy deficit under the scheme."

In the light of that and so many other representations that I and I am sure many other hon. Members have received, it is difficult to see how Conservative Members can support the Government tonight when the voice from industry and commerce is unanimously condemnatory. Many have been put off the Bill by its assumed technicality and by the speed with which the Government pushed it through the House in order to avoid debate. But now that it has returned to the House, the issues are plain. They are not technical ; they are political. They concern the state's responsibilities to employees who are sick, the right of employers not to be saddled, at extreme cost, with obligations that are not their function, and the need for the smallest businesses to be properly protected from unnecessary administrative burdens.

For those reasons, I call on hon. Members on both sides of the House, if the Government will not withdraw the Bill as they should, at least to preserve and build on the important amendments moved and passed in another place.

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