House of Commons Hansard Debates for 9 Feb 1994

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necessary consultations could not be concluded in time to have the revamped arrangements in place by April. As we now know, the new proposals to meet the Government's objection to their Lordships' original plan decree that the revised scheme will come into force on 6 April 1995. This will give the Government not two but 14 months to prepare the scheme. Our chief reason for not opposing the Lords amendment is that it will allow for proper consultations to be held with the main organisations that will be affected by it.

One of the merits of the proposed new scheme is that there will be some simplicity in its implementation. There is always the danger, however, now that more and more legislation is effected by regulation, that schemes will become much more complicated when translated into regulations. We want to ensure that the regulations, when they eventually appear, do not cause more bureaucratic and cost complications for small businesses. That would defeat the whole object of the exercise. The Opposition maintain that this is a time when small businesses can ill afford additional cost burdens. I therefore hope that the regulations will ensure that the simplicity of the new system is maintained.

I hope to hear from the Under-Secretary this evening which bodies and organisations he proposes to consult. I hope that the Government will consult not just those who represent small businesses but others who will be affected by the changes. I am, for instance, especially worried about the effects on disabled people.

On Second Reading, we expressed our anxiety lest the changes to SSP led to what might be termed a charter to sack the sick. We wanted to ensure that the fact that small businesses will be denied the chance to reclaim SSP for four weeks did not lead to a reluctance on the part of employers to employ certain categories of people. We were thinking particularly of disabled people.

There is grave concern about this in the Committee scrutinising the Social Security (Incapacity for Work) Bill. We have yet to debate the medical test that the Government intend to introduce, but they seem to assume that about 70,000 people who are on invalidity benefit will become "employable". We have always feared that they may be too sick to be employable--employers may look at their sickness record and be reluctant to employ them given the possible burden that they represent following the changes in statutory sick pay--but not sick enough to be able to claim the new incapacity benefit.

They will fall between two stools, because they will remain on the unemployment register, which the Government claim they are trying to reduce, but the Government are not aware of the difficulties that people with a sickness record experience in seeking employment. I very much hope that the Government's consultation will not only cover bodies that represent firms but will range wider and will consider how the changes that the Government propose will affect particular groups of people.

10.45 pm

Mr. Tim Devlin (Stockton, South) : Is the hon. Gentleman aware that, when the Government limited reimbursement of SSP to 80 per cent., the hon. Member for Oldham, West (Mr. Meacher) said :

"The employers say that, if the Bill is passed into law, they will be extremely careful about who they employ, and will make their decisions on the basis of an applicant's health record.

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Anyone with a poor health record or a poor prognosis of good health for the future will be unlikely to get a job."-- [ Official Report, 26 November 1990 ; Vol. 181, c. 652.]

That is what was said last time. The hon. Member for Manchester, Withington (Mr. Bradley) has said it this time. Have the predictions that the hon. Member for Oldham, West made about the outcome of the Statutory Sick Pay Act 1991 proved accurate?

Mr. Bradley : It is clear from talking to disabled people or to their organisations that they feel a great impediment to employment generally because of their disabilities. I pay tribute to some of the work that the Minister has done to facilitate disabled people entering the employment market, but all the surveys that have been conducted by disabled groups show that great difficulties remain. We want to ensure that there are no further barriers to employers taking on disabled people.

Extra costs and burdens are being placed on small businesses by their having to pay a greater proportion of sick pay. I should be amazed, therefore, if the hon. Member for Stockton, South (Mr. Devlin) does not recognise that small businesses will look even more carefully at the sickness records of people with disabilities. It would be in all our interests to ensure that there is no impediment to disabled people returning to employment. That is the purpose of our seeking assurances tonight that that point will be covered in the report that will be provided to the House. In the other place, amendments were proposed to the principal amendment that we are debating. Assurances were given, which I am sure will be repeated tonight, that we shall debate the report on the new scheme. If the Government's consultation reveals that there may be major difficulties in introducing a scheme, the amendment aims to ensure that it will not be quietly dropped. The details of introducing a scheme, or of not doing so, must be properly debated in the House.

We should not want the issue to slip away, nor would small businesses. The Government have many tried and tested mechanisms which could enable the report to slip off the agenda despite promises having been made in all good faith. Such mechanisms could include the pressure of parliamentary business in which we might be engaged in 14 months' time.

The Minister mentioned the costings of the amendment, which need to be made clear. There is still a debate about the cost of the changes, and the Government's belief that the extra burden of £750 million on businesses will be offset by alterations to the national insurance rate and that the reduction of 0.2 per cent will even out the effects needs careful consideration, as do any changes that result from the Lords amendments.

We should also be grateful for further comments on how the Government regard the provisions concerning a percentage of national insurance being used as the criterion for repayment of statutory sick pay. We should be grateful for some preliminary estimates of how it will work in practice. As the amendment has only just come from another place, I shall be happy for the Minister to write to me with details of the costings, which would be useful in our future deliberations on the report.

I look forward to obtaining the necessary information and assurances from the Government so that we can accept the amendment.

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10.54 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : I found my case on the remarks on the hon. Member for Manchester, Withington (Mr. Bradley), who has covered the most important issues in this debate, which is important but nevertheless constrained in terms of time. The hon. Gentleman made a comprehensive speech and the Minister should pay proper attention to it.

I was disappointed by the intervention of the hon. Member for Stockton, South (Mr. Devlin). If he is looking for extreme statements made recently by the hon. Member for Oldham, West (Mr. Meacher), he picked a mild one. The hon. Member for Oldham, West regularly used to anticipate, even encourage, Armageddon in every speech that he made from the Front Bench.

The hon. Member for Stockton, South should not discourage Labour's new social security Front-Bench team, which is much better than before, and I do not mean to sound patronising. If he is interested, he can meet me outside later and I will show him some truly extreme statements made by the hon. Member for Oldham, West.

Mr. Devlin : I have no doubt that such statements will recur in the speeches of the new Front-Bench team, who seem to be recycling some material.

Mr. Kirkwood : I part company with the hon. Gentleman on that point, but we are straying out of order.

It is worth spending a moment considering how we allow the other place to make important changes, such as this amendment. I welcome the amendment, which is a great improvement as far as it goes. It has already been said that, if the proceedings in this place had been better ordered, we should have agreed something similar. That would have been the right way to proceed.

I know that there were difficulties about the timetabling. I listened carefully to all the arguments about having time to organise ourselves, and I know that improvements have been made, but it is worth stressing that the Government have to ca' a bit canny in future, to use the vernacular, in order to ensure that the House has an opportunity to consider in good time the detailed improvements that can and should be made to Bills such as this.

We should spend time on the process of consultation with small businesses, too. I am not making a party political point, because Governments of all kinds have difficulties with that. The mechanisms in place are perfectly adequate for big business--international companies and world leaders such as ICI and GEC. They have well established contacts with the Government machine, and with Departments at all levels, and they can look after themselves. It must therefore be reasonably easy, so long as one takes the time to go through the process, to collect sensible views from a range throughout industry, and arrive at some idea of what the options are.

That is much more difficult when we are dealing with businesses employing two, 10 or 20 people. It is difficult for those businesses, too, because they are organised across all sorts of different interest groups, from tobacconists to knitwear manufacturers. They themselves find it difficult to arrive at a consensus.

There have been developments and improvements in that direction, through the formation of the Federation of Small Businesses, but it is still difficult for the Department,

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even using its best endeavours, to arrive at a consensus. The Government should work harder at trying to make contact with what they would call very small businesses.

Their definition of a small business is probably one with 100 or 200 employees, but we must not forget that the regulations probably bear down most heavily on the firms that the hon. Member for Withington was talking about when he said that, if a company with 10 employees was hit by a flu epidemic and four of them were sick, it would have a real problem. I realise that it is difficult for Government to cope with such small firms with so few employees, but we always have to work harder to do better in that respect. I understand the function of the report, but what is in the Government's and the Minister's minds about monitoring the process? Ministers will always say that everything is continuously under review, but there is a case for examining the effects on people with disabilities.

It is wrong to over-dramatise the argument, but there is a fair point to be made about the potential and even subliminal discrimination that may take root if the regulations are not carefully monitored. I hope that the Department will set up some systematic monitoring over the next two or three years, so that the Minister can satisfy himself that he is taking all possible steps to examine how the principles work out in practice.

An awful lot can go wrong with the implementation of detailed regulations. With the best will in the world, when simple concepts are put into the hands of the parliamentary draftsmen they can come out looking complicated and difficult to implement. Efforts have been made to simplify the process ; I realise that, and I welcome it. But will the regulations spawned by the amendment be approved on an affirmative or a negative basis? If regulations are to be introduced, the House should know that.

I hope that, by that time, the usual channels will have got back into kilter, so that we shall not have to debate every motion and statutory instrument on the Floor of the House. If that goes on much longer, we shall all end up in lunatic asylums [Hon. Members :-- "You first."] Yes, perhaps I shall be one of the first inmates. It is important to know whether the orders will be affirmative or negative, so that we know what scrutiny of detailed regulations the House faces.

The question of costings, on which the hon. Member for Withington ended his speech, is important too. There has not been time to do much detailed arithmetic, but there must be some ball park figure in the Government's mind. It would be helpful to the House if the Minister would say a word about that matter when he sums up. 11 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. William Hague) : It seems that the proceedings on the Bill can end with some harmony at least. There seems to be all-party agreement on the Lords amendment, if perhaps a little marred by the hon. Member for Manchester, Withington (Mr. Bradley), who still talks about a shift of the burden to industry.

In fact, industry is the net beneficiary of the changes to statutory sick pay and the consequent reductions in national insurance contributions. Since small companies tend to have a lower incidence of sickness and absence than large companies, small companies especially stand to gain from the changes that the Government are bringing about.

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The hon. Member for Withington asked about the consultation process, and especially expressed the hope that great complications and administrative burdens would not arise as a result of any new measures which may arise from the Lords amendment. I agree that extra complications and administrative burdens would be a serious disadvantage. Of course, it is in the mind of the Government to keep such burdens and complications to a minimum.

We intend to consult both sides of industry. We shall consult employers, unions, give especial weight to the opinions of small businesses and their organisations, and we shall also consult disability organisations.

The hon. Member for Withington raised the point about disabled employees. I remind him, as has my hon. Friend the Member for Stockton, South (Mr. Devlin), that no evidence has ever been proffered to justify the charge levelled against the SSP scheme ever since it was first introduced more than 10 years ago, that it would have an adverse effect on disabled employees.

Research carried out by the Centre for Research in Social Policy shows that the reduction in SSP reimbursement from 100 per cent. to 80 per cent. three years ago had no impact whatever on the willingness of employers to recruit employees with disabilities. It confirmed earlier research findings that such employees tend to take less time off through sickness than able-bodied colleagues. My hon. Friend the Member for Stockton, South was right to ask the hon. Member for Withington to recall the forecast of the hon. Member for Oldham, West (Mr. Meacher). As the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) so rightly observed, the forecasts of the hon. Member for Oldham, West could be a most entertaining catalogue, which could keep us here for a long time.

Mr. Bradley : On the question of forecasts, may I assume from the Under-Secretary's comments on the burden that will be placed on small businesses and the way

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in which he says they will be net gainers from the scheme, that he has given a commitment not to increase national insurance contributions in the future?

Mr. Hague : The hon. Gentleman would not expect me to pre-empt the decisions of all future Chancellors and Secretaries of State, any more than he would want to pre-empt those of any future Chancellors or Secretaries of State from his party, remote though that possibility may be. People can look to the record of what has happened to national insurance contributions during our time in office and how it compares with the 13.5 per cent. level reached for employers' national insurance contributions with the surcharge in the 1970s. The record tells it all.

If there are great difficulties in the creation of the new scheme outlined in the Lords amendment, we will be able to consider them in the report to which the hon. Member for Roxburgh and Berwickshire referred. He may also like to know that, assuming that there is not a report but a new scheme, the orders will be affirmative. I am sure that he will be pleased to note that.

The Government will now proceed to consult industry on the proposal. Employers and their organisations will be able to compare the benefits of the new proposal with the existing help for small employers. They will be able to judge whether the loss to those employers who will not benefit under the new scheme is outweighed by the gains of those who will.

We will proceed to collect data on employers' monthly SSP and national insurance contributions payments so that the reimbursement threshold can be set at the appropriate level. I do not yet have any preliminary estimate, but there will be no secret about the estimates when we have arrived at them. We will also--this is most important--consider the monitoring and policing requirements of the proposed scheme to reduce the risk of abuse.

It is good to see that the measure has the support of hon. Members on both sides of the House, and can proceed successfully.

Lords amendment agreed to. [Special Entry.]

Subsequent Lords amendments agreed to. [Some with Special Entry.]

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Assessment of Deficits (European Community)

11.6 pm

The Financial Secretary to the Treasury (Mr. Stephen Dorrell) : I beg to move,

That this House approves the Government's assessment as set out in sections 2, 4 and 5 of the Financial Statement and Budget Report for the purposes of section 5 of the European Communities (Amendment) Act 1993.

It will be within the memory of many hon. Members that section 5 of the European Communities (Amendment) Act, which put the Maastricht treaty into our own domestic law, contains a provision requiring the Government to report to Parliament for its approval an assessment of the medium-term economic and budgetary position in relation to public investment expenditure and to the social, economic and environmental goals set out in article 2 of the treaty of Rome as amended by the Maastricht treaty. That is the occasion of the debate.

When the Maastricht Bill was being discussed in the other place, having been passed by this House, the Lord Advocate gave an assurance that the Government believed that, as a result of the inclusion of that provision, a debate in this House would be required before the information was submitted to the Commission in accordance with the provisions of the treaty as referred to in section 5 of the Act. That is the reason why the debate is taking place in the House this evening. It is a debate occasioned by section 5 of the Maastricht Act.

That bears no direct relationship to the question that the House is now being asked to address, however. Although the occasion is the passing of the information to Brussels under the terms of the treaty, the question that the House is being asked to address--which those on the Opposition Front Bench clearly identify in their amendment--is whether the House approves the contents of chapters 2, 4 and 5 of the Red Book tabled by my right hon. and learned Friend the Chancellor on Budget day. The Red Book has already, on more than one occasion, been considered by the House as part of the Budget debate. As the terms of the Budget have been carried repeatedly in votes in the House, I think it not unreasonable to assume that the contents of the Red Book have been approved by the House. None the less, the debate gives the House the opportunity yet again to endorse the contents of the Red Book.

Mr. Andrew Smith (Oxford, East) : As this is a new procedure, it would be helpful to the House if the Minister could explain what happens under the provisions of article 103. If the Government's motion on these sections is approved and sent to Brussels, what happens to it thereafter? Under what circumstances will we get a report back, bearing in mind the amendment tabled by some Conservative Members?

Mr. Dorrell : Information that is tabled and submitted to the Government following the debate and sent to Brussels to satisfy our treaty obligations is used by the Commission in preparing the reports that it is required to prepare under the multilateral surveillance procedures and under the assessment of excessive deficits. That is the purpose of the submission of the information ; it is not, however, the question that is before the House this evening. The question before the House this evening is whether it will approve again, as it has on several

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occasions, the contents of the "Financial Statement and Budget Report" presented by my right hon. and learned Friend the Chancellor on Budget day.

Sir Teddy Taylor (Southend, East) : While we appreciate that paragraphs 1, 9 and 11 of article 104c do not apply to Britain, does my hon. Friend appreciate that section 7 means that the Council could give instructions to member states, including Britain, and that the recommendations shall not be made public? Paragraph 7 states : "these recommendations shall not be made public".

Therefore, we could have a situation in which the Commission tells the Government to do something, keep it secret and the House will not be aware of it. Does the Minister agree that, if the Commission gives such an instruction under paragraph 7, the Government would tell Parliament what was going on?

Mr. Dorrell : My hon. Friend is usually meticulous in his use of the language. However, he has elided the concept of a recommendation contained in paragraph 7 of article 104c with the concept of an instruction. Those two words are not synonyms. I repeat the point : the House is being asked to approve a document that it has approved on many previous occasions. I commend the Government's motion to the House.

11.10 pm

Mr. Andrew Smith (Oxford, East) : Mr. Deputy Speaker--

Mr. William Cash (Stafford) : On a point of order, Mr. Deputy Speaker. The Select Committee on European Legislation considered these documents today and a severe reprimand was given to the Department and the Ministers concerned regarding the failure to perform this--

Mr. Deputy Speaker (Mr. Michael Morris) : Order. That has nothing to do with the Chair.

Mr. Smith : Looking around the Chamber, I have to say that it is a bit like old times for all of us. The fact that we are debating the motion tonight and that the House has a right to vote on what the Government submit to Brussels is the result of Labour's ingenuity and determination in successfully forcing the Government to incorporate section 5 in the European Communities (Amendment) Act. It is entirely right that the House should have the opportunity to examine and vote on submissions before they are sent to Brussels under the convergence and multilateral surveillance provisions of articles 103 and 104C.

Mr. Nicholas Budgen (Wolverhampton, South-West) : The hon. Gentleman is priding himself on the heroic posture of the Labour party during the Maastricht debate. Perhaps he would be good enough to remind hon. Members of the benefits that the Labour party obtained for itself and the nation by its attitude to the Maastricht treaty, set off against the way in which it supported the Government and made possible the imposition of the treaty on our nation.

Mr. Deputy Speaker : Order. That does not relate to the motion.

Mr. Smith : I was wondering how to work within the surveillance procedures the gains that we made in terms of local authority representation on the Committee of the Regions, the democratic right of the House to scrutinise

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business and, more importantly, the right to stretch the Government on the rack over their failure on the social chapter --denying the people of this country the rights that are taken for granted across the rest of Europe.

The country has a right to expect that the Government, in presenting the motion to the House, would make some effort to address the requirements of section 5 and specifically relate their submission to the goals of article 2 of the Maastricht treaty, which refers to

"harmonious and balanced development of economic activities, sustainable and non-inflationary growth respecting the environment, a high degree of convergence of economic performance, a high level of employment and of social protection, the raising of the standard of living and quality of life".

Instead, what we have in front of us is the same tired and failed message that the Government have been trotting out since last year's Budgets.

That is a message which the country does not believe and which has demoralised the Conservative party's constituency activists--where it has any left. The Budgets broke the Conservative party's election promises on taxation to the extent that fully 69 per cent. of the population say that they will never trust the Conservatives on taxation again.

Mr. Budgen rose --

Mr. Smith : On that point, I give way to the hon. Gentleman. Mr. Budgen rose --

Mr. Deputy Speaker : Order. That does not have much to do with section 5. What is good for the goose is good for the gander. Let us get back to section 5.

Mr. Smith rose --

Mr. Deputy Speaker : Order. The hon. Gentleman may reach for the Red Book, but he knows full well that there is nothing in it about opinion polls. I know my way around that book as well as he.

Mr. Smith : There is a great deal in the Red Book about taxation, and the Government have broken their promises on that.

Mr. Budgen : Will the hon. Gentleman assist the House by explaining what the Labour party's present position is on what has been described as the multilateral surveillance procedure? We would imagine that, as part of its support for getting as quickly as possible towards a single currency, it is in favour of the subordination of the British national interest to foreign economic surveillance. Will the hon. Gentleman be good enough to explain what the Labour party's attitude to that matter is?

Mr. Smith : What the hon. Gentleman presumes to be the Labour party's policy is not. We believe that there is merit in the discussions involved in multilateral surveillance. They would provide co-operation with our European partners for the goals that the Opposition and the people of this country hold dear, which include getting back towards full employment.

Mr. Budgen rose --

Mr. Smith : I shall not give way again to the hon. Gentleman ; I have already done so twice, and I want to make some progress.

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The Budgets that we are invited in effect to approve as our submission to Europe are those that brought up the level of Tory tax increases to £12.50 extra on a typical family from April. Those tax increases, as the Chancellor and Ministers admit, will check the economic recovery, and that will do nothing to rescue the people and the economy from the damage that the Budget increases will inflict. The Budget policies failed to stimulate investment in the face of all of the representations that the Government received from industry. The Budgets leave manufacturing investment languishing at barely one-third of the level of that of Germany. Our manufacturing investment per employee is one of the lowest in the European Union. It is only one third of the level of the Netherlands, it is 46 per cent. lower than in France and 26 per cent. lower than in Germany. No wonder Britain's record on economic growth is so poor.

Whatever comfort may be taken from the present relative growth rates in Europe, what counts is the long-term growth record cancelling out the differential effect of the timing of recession and recovery in each country.

Mr. Dorrell indicated assent.

Mr. Smith : On that important count, Britain lags badly. The Financial Secretary agrees that the long-term growth record is the important criterion. That shows that, between 1979 and 1993, the Japanese economy grew by 63 per cent. and the American economy by 35 per cent. In Europe, the Italian economy grew by 32 per cent., those of the German lander by 32 per cent., the French economy by 31 per cent. and the United Kingdom economy by only 25 per cent.

Mr. Dorrell : The proposition with which I was agreeing was that which the hon. Gentleman advanced to the House and then proceeded to ignore. That proposition is that one compares growth rates by looking across a longer period and comparing performance from similar points in the cycle. The hon. Gentleman's comparison for the United Kingdom economy used 1979, which was the nearest thing to the peak of the cycle that the previous Government ever succeeded in creating, and 1993, which nobody could possibly regard as the peak of any economic cycle. The hon. Gentleman set out precisely the right basis for making long-term economic comparisons and proceeded immediately to ignore it.

Mr. Smith : I fear that, however long a period we take, the Financial Secretary will be disappointed, because Britain has such a poor performance on long-term growth, as a direct result of the low figures on manufacturing investment per employee, which I have just pointed out.

However, that is not the only difficulty that the Government face. We have a large balance of payments deficit for this stage of the economic cycle. The Financial Secretary made the important point that it is necessary to compare appropriate points of the economic cycle. He could not dispute that, for this stage of the economic cycle, the balance of payments deficit that Britain is running is depressingly large and, what is more, is set to get worse.

Mr. Dorrell : The hon. Gentleman is wrong again. He just asserted that the balance of payments deficit is getting worse. It is not. It is getting better.

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Mr. Smith : I said that it was set to get worse. Time will be the test of who is right on that. As I am sure that the Financial Secretary is well aware, many commentators predict, a few years down the road, a terrible problem with the balance of payments deficit as a result of the Government's failure to improve Britain's industrial competitiveness.

Accompanying the balance of payments deficit is the most serious failure of all--the failure to tackle the mass unemployment which drains individuals of hope and the country of the wealth that their energies and talents would create if they were employed. Mass unemployment floods into the public sector borrowing requirement. The Government's record could not be presented to Brussels as one which promoted, in the words of article 2 of the treaty, "a high level of employment". Even as unemployment, on the Government's figures, has started to turn down, levels of employment have fallen even further.

Mr. Cash : The hon. Gentleman referred to western Germany, but did not refer to Germany as a whole. Does he agree that one of the reasons why it is necessary to refer to western Germany, rather than the whole of Germany, is that the whole of the report--every statistic in it--omits to include the whole of Germany? It leaves out the eastern part of Germany, which reduces the value of the report substantially. It means that we have nothing more than a shambles on our hands, and no means of judging whether the convergence criteria have been reached throughout Europe as a whole.

Mr. Smith : The hon. Gentleman said it. He can recognise a shambles over there when he sees one. I was referring to the western lander for the precise reason that, if one compares the period from 1979 to 1993, there is no meaningful comparison that one can make for that period that would include the eastern lander. Of course the statistics will have to reflect fully the position in eastern parts of Germany and include it with the whole. I only wish that the Government made the same determined effort to invest in worn-out infrastructure in depressed parts of Britain as the Germans have made in methodically setting about restoring the eastern part of Germany. I was saying how badly the Government's proposals failed to address the corrosive, serious effect of unemployment in our nation and that levels of employment had fallen even further. Under the social goals to which the Government are supposed to relate their report to the EC, article 2 refers, as I have said, to a high level of social protection.

It is important to ask what social protection there is for those who have seen even basic employment rights taken away, wages councils abolished, sick pay, invalidity benefit and unemployment benefit cut and, tonight in the House, rights to premium pay defeated. This is not so much social protection as social intimidation. It is the exact opposite of the social partnership in the workplace between the community, employers and government at all levels that we need to see for sustained economic success and for the social solidarity referred to in article 2.

In a report which purports, as section 5 and article 2 do, to deal with social solidarity, the Government might have been expected to say something about crime and fraud, both international and domestic. Their poor record has seen crime rocket by 124 per cent. since 1979. British people are the most likely in Europe to be the victims of burglary.

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