Draft Maternity and Parental Leave (Amendment) Regulations 2002
Draft Paternity and Adoption Leave Regulations 2002
Draft Statutory Paternity Pay and Statutory Adoption Pay (Weekly Rates) Regulations 2002

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Brian Cotter (Weston-super-Mare): If I do have to depart the Committee, I hope that you will forgive me, Mr. Gale, because I have a meeting with Her Majesty the Queen tonight at Buckingham palace where, no doubt, there will be important matters to discuss. I shall add only a few words to what has already been said.

There was much discussion of the Employment Bill in Committee, and many issues were rehearsed. Some are being rehearsed now. We must have reasonable, family-friendly policies in this country and the measures are reasonable. We discussed many issues and I concur with the hon. Member for North-West Norfolk; we must be aware of the impact on business. That matter was discussed at great length in Committee, where myself and many others raised it.

I should like the Minister to clarify the issue of paternity leave. Certain firms, such as ice cream, umbrella or Christmas decoration manufacturers, need employees at a certain time. There should be an opportunity for the employee requiring paternity leave to have a discussion with the employer. I hope that that is still the case.

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I hear what the hon. Member for North-West Norfolk says about companies of five employees or fewer. That is certainly an area of great concern. However, many firms are small, and if too many exclusions were made for them there would be a problem because many people would not get their rights. Nevertheless, it is correct that the issue has been raised.

Small firms have great difficulty in replacing members of staff. That is an on-going problem of which the Government and hon. Members need to be aware. In a small company, one employee might do four or five different jobs, and it is sometimes difficult to find somebody who can do those jobs in the same way. As long as we are aware of that point, which I wanted to put on the record, the regulations should stand. Obviously, small firms must replace employees, but sometimes they find that difficult.

I hope that, increasingly, the impact of future legislation, including the Employment Bill, on business—particularly small business—will be assessed at both the time of its introduction and afterwards. For a long time, Liberal Democrat Members have called for an annual assessment in Parliament of regulations imposed on business to see how those regulations have bedded down. The Small Business Service fulfils that role, but its work is not the whole answer.

Will the impact of the Employment Bill—and, for that matter, other legislation—be monitored by the Small Business Service? I raise that issue because, to put it bluntly, I—along with many other people—initially supported the concept of the Small Business Service, but now have grave concerns about whether it is going to carry out the role that I saw for it, which was to be the arbiter, voice and champion for small businesses. I fully support its keeping an eye on difficulties that may occur when the Bill is implemented.

Mr. Bellingham: Does the hon. Gentleman agree with my suggestion that the new better regulation panel under Stephen Haddrill would be ideally placed to look at the on-going impact of regulations such as these?

Brian Cotter: I agree with the hon. Gentleman's suggestion in theory. The better regulation panel is another organisation that has been seen to be set up, but will it be truly effective? Liberal Democrat Members are greatly concerned by whether the Small Business Service, and the other organisations that have been mentioned, can effectively do the job.

On that basis, I look forward to the Minister's reply. I hope that I do not have to depart before the Committee's end, but I ask for your forbearance if I do, Mr. Gale.

5.03 pm

Alan Johnson: Both Her Majesty's Official Opposition and the party that believes it is Her Majesty's Official Opposition are trying to have it both ways. Respondents to the consultation on

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adoption leave unanimously agreed that it is ridiculous that adopting parents should get no help whatsoever in a society in which we are trying to take children out of institutions and reintroduce them to family life. As far as I am aware, small businesses have not called for adopting parents to be excluded from taking adoption leave.

On Third Reading, Opposition Members said a number of commendable things about part I of the Employment Bill, which they tried to extend to cover the self-employed. If the Bill included the self-employed, many other small business people who are self-employed would be included, which would add an enormous cost, perhaps not to businesses—although that is not certain—but to the Exchequer. However, I praise Opposition Members for examining whether the legislation could be improved.

Opposition Members also came up with another suggestion; why should paternity leave be taken only in lumps of two weeks? They made a real push for leave to be split into separate days or into two separate weeks. Indeed, that was one of the main focal points of the last round of consultation. Businesses, particularly small ones, told us that that would make their lives more difficult. Opposition Members have therefore tried to increase the costs and complexity for small businesses, while saying that they welcome the legislation in general, and then have voted against the whole kit and caboodle on Third Reading. It is one thing to say that the proposals are good and in tune with the Letwinisation of the Conservative party, but it is another to suggest, when push comes to shove, that there should be a ghetto of bad employment practices among small businesses.

Mr. Simmonds: On Third Reading and in Standing Committee we were trying to make the Government—through the Minister—responsible for and aware of the impact that the Employment Bill will have on the small business sector. One of the main reasons why we voted against its totality is that we did not think, and we still do not, that the Government have taken on board the significant impact that the Bill and other regulatory proposals will have on small businesses. I should like the Minister to say that that has been taken on board.

Alan Johnson: The hon. Member for North-West Norfolk made a general point, so I did, too. The meat of his question was whether we had considered the specific effect on small firms during the regulatory impact assessment. Yes, we had. The assessment includes a specific section on the effects on small businesses. That was drawn up for us in consultation with the Small Business Service, which acted as a focus for small business groups.

As a result of consultation, we harmonised the qualifying periods; 28 days is now consistent throughout the regulations. Small businesses had said that, on the one hand, a 21-day notice was required and, on the other, it was a 36-day notice, so they wanted harmonisation. We did that. Originally, average earnings for additional maternity leave were to be calculated over a longer period, but small businesses said that that would give them great difficulty, so we have kept it to a shorter period.

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Hon. Members must appreciate the number of firms that will qualify for the small employers relief scheme. Previously, 100 per cent. of all statutory maternity pay was paid back to all companies, big or small. The Conservative Government got rid of that in the early 1990s, and left a situation in which the smallest companies could still get not just 100 per cent., but an extra 4 per cent. or 5 per cent. for national insurance contributions in the previous year. A business had to have paid, I think, £20,000 in NICs in the previous year to qualify for the 104 per cent. or 105 per cent. reimbursement of statutory maternity pay.

The Labour Government increased—indeed, doubled—the threshold. As a result, 10,000 more small firms will now receive more than a 100 per cent. reimbursement of statutory maternity pay, and the same will be mirrored for adoption pay and paternity pay. That is a concrete example of how we have helped small businesses, the vast majority of which take up the benefit. Last year, 70,000 small employers recovered SMP; many more will now be able to recover that money.

We have tried hard to meet the concerns of small businesses. We are extremely keen to ensure that people have rights not only at work, but to go to work in order to enjoy those rights. I am sure that Opposition Members are not suggesting that women should not get statutory maternity leave. Women cannot work, in a small or large business, when they are about to give birth to a child.

Many small businesses have said that if they have to provide cover for the current periods, which can be anything from 38 and 42 weeks, it is easier to do so for a year, and know that they have 52 weeks to cover. Many small businesses supported the measure, and when we went round the country consulting, we found that small businesses had some of the best employment practices because they did not have the history of being stuck in rigid shift patterns of some larger businesses. The small businesses had the flexibility and imagination to move away from those systems, and many of them gave us the good ideas that we have tried to implant in the regulations.

I do not accept the argument of the hon. Member for North-West Norfolk in this case, just as I did not accept it over the minimum wage, parental leave or measures for part-time workers to receive the same pay as full-time workers. We reject it on an intellectual basis, although I know that the word intellectual sounds a bit ridiculous coming from me. [Hon. Members: ''No!''] I hope that that is recorded in Hansard.

Having such a cut-off point for small businesses would also make the regulations much more complicated.

Dr. Palmer: Does my hon. Friend agree that it would also cause a risk of the equivalent of the poverty trap, which affects people leaving benefits and going into work? It might lead to a small business trap, where it would no longer be in a small business's interest to become a larger business.

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