Mr. Hammond: You will not find one.
Alan Johnson: No.
If they do that, they will not qualify. It is important to make that clear.
Rob Marris: I did appreciate that that appeared to be the Government's intention, but it is not what the Bill says.
Alan Johnson: That raises a whole new problem. My hon. Friend suggests that we have resolved one element of it, anyway. We believe that we have kept to the principle of the lower earnings limit as it currently applies, for reasons that I shall now explain.
Amendments Nos. 91, 92 and 90 seek to remove the earnings requirement, whether in relation to a newborn child or a child newly placed for adoption. I share the concern that parents should benefit from financial support to take time off to care for their newborn baby or newly-placed child regardless of their income group. There is no difference between us on that. In the case of paternity pay, they should have the right to take additional time off to support the mother or adoptive parent.
Why is the lower earnings limit there? Obviously, the major element of the LEL is that people whose earnings are below it do not pay NICs. The clause inserts new text into the Social Security Contributions and Benefits Act 1992, which has the effect of ensuring that the criteria for qualification for statutory paternity and adoption pay are in this respect entirely consistent with the criteria for statutory maternity pay. We have been anxious wherever possible to ensure that all three systems run in parallel. The introduction of
Column Number: 347statutory paternity and adoption pay is entirely new, and we tried to make them consistent with maternity measures for that reason. It is important that both employees and employers, who will be responsible for administering the schemes, find them as easy to understand and administer as possible.
The lower earnings limit exists for statutory and maternity pay for several compelling reasons, which include preventing disproportionate administrative burdens being placed on employers, who do not have to keep payroll records for people earning less than the lower earnings limit. That also applies to statutory adoption pay, and the need to prevent disproportionate administrative burdens falling on employers applies, arguably with even greater force, to statutory paternity pay.
Helen Jones: Government Members have been listening carefully to the Minister's remarks. With regard to maternity leave, if one falls below the lower earnings limit one gets maternity allowance, but there is no equivalent where paternity leave and adoption leave are concerned.
Alan Johnson: My hon. Friend makes an important point to which I shall refer, but I am discussing statutory and maternity pay. We had to find a different way in which to approach the issue, and we did not just take maternity pay and apply it across the board to people on the lower earnings limit. We introduced a different way of resolving the problem, namely the maternity allowance, and extended it to groups who were previously excluded, which explains why we are mirroring the provisions for statutory and maternity pay.
The requirement for employers to keep detailed payroll records is not insignificant. My hon. Friends know that it is rubbish that we do not understand the burdens on business, which is why we took a proportionate approach to deal with the problem. In the Equal Opportunities Commission's response to the public consultation, it estimates that under the new scheme up to 5,000 fathers each year would qualify for paternity leave but not for paternity pay. The number of adopters qualifying for adoption leave but not for adoption pay is likely to be no more than 200 each year. The amendment would introduce new requirements for employers to keep records on all employees who earn less than the lower earnings limit, which would cover more than 2 million employees. If we adopt the amendment the only way around the issue would be to adapt payroll records covering 2 million employees because of 5,000 potential fathers and 200 potential adopters.
The hon. Member for Runnymede and Weybridge asked about the potential cost, which would not be especially significant for the Treasury, but that is not the point because as far as the Exchequer is concerned the money must be provided in some way. The potential cost to employers is difficult to gauge but, as hon. Members will appreciate from those figures, it could be horrendous.
Column Number: 348
Mr. Hughes: I have a simple question, but it may not be simple to answer. Will employers not already keep records for reasons such as the minimum wage, the working families tax credit, stakeholder pensions if they employ more than X amount of people or tax issues? I should have thought that the detail to which the Minister referred would already be there.
Alan Johnson: Not to assess the entitlement to statutory and maternity pay or to the statutory requirements under the legislation. We are discussing two different things: the records to which my hon. Friend referred and the records required to operate this scheme. The lower earnings limit is attached to national insurance contributions, so NICs determine the records that need to be kept.
Mr. Hammond: I share the doubts of the hon. Member for Doncaster, North. Excuse my ignorance if I am wrong, but I find it difficult to imagine that there are classes of people whom one can employ and pay, but for whom one need keep no records. How, for example, does one demonstrate to the Inland Revenue that one is not supposed to be deducting contributions or tax on their behalf? In this day and age, the vast majority of employers use a computerised or mechanised payroll system, so they keep records for all their employees, whether or not they earn more than the lower earnings limit. Is the Minister saying that an employer who employs someone on the lower earnings limit is not required to keep payroll records for that employee? If so, I should be most astonished.
Alan Johnson: I am advised that, in relation to this particular payment, and certainly in terms of the working families tax credit and the national minimum wagerecent innovations that we have introducedthe records that employers will need to keep are not the same as those that they are required to keep to pay benefits under the NICs system to those who do not qualify for NICs.
Mr. Lloyd: It is clear that, under the equivalent maternity provisions, those below the LEL qualify not for maternity pay but for maternity allowance. I suspect that my hon. Friend is right to say that the matter has been dealt with before, but I share the astonishment of other members of the Committee that we have been unable to devise a suitable system. Even if there are technical barriers to small firms employing such employeesI guessed that there are about 25,000 of them, but my hon. Friend's estimate is some 6,200is it not possible to devise a system equivalent to maternity allowance that is operated through, say, the Benefits Agency? It surely would not be very expensive to administer, particularly given that we are talking about a self-certifying scheme.
Alan Johnson: The nub of the issue, which was central to the contributions of not only my hon. Friend but all members of the Committee, is how to tackle this problem, and that is the question to which I now turn.
Brian Cotter (Weston-super-Mare): I gathered from the Minister's comments that he intended to look at the adoption issue. As I have already explained to you,
Column Number: 349Mr. Conway, I had to be absent from the Committee due to an announcement of 300 job losses at Westland, in my Weston-super-Mare constituency. I am therefore largely unaware of what has been discussed, and I apologise publicly to the Committee for not having been here to debate a key issue. I did hear the Minister say that there are not many adoptions, but encouraging more adoptions forms part of the policy of ensuring support for children, and I shall listen with interest to his further comments.
Alan Johnson: The hon. Gentleman was kind enough to write to me stating that he could not be here because of an urgent constituency matter. I shall deal with his point, which has also been raised by other members of the Committee, but I should first point out that in respect of the working families tax credit, employers have no obligation to keep records for those who work fewer than 16 hoursprecisely the group that we are talking about.
I am not trying to be difficult, but I should be surprised if the burden were disproportionate in terms of the payroll argument. It was suggested that we introduce maternity allowance instead of statutory maternity pay, and I shall explore that issue. However, let us first consider whether we can find a different solution that imposes no burdens on small businesses, but which still ensures receipt of the necessary assistance. We consider that the most appropriate approach is to scrutinise the existing benefit system and ensure that it is geared up to work for low-paid fathers in respect of paternity leave. Those will include fathers earning just above the lower earnings limit who may otherwise receive less financial support during paternity leave than a father earning just below that limit. Support should be extended to fathers who are at the margin and earn only a few pounds more than the limit.
The Department for Work and Pensions is working on the detail of that to ensure that parents taking paternity leave, whether for a new born baby or a newly-placed child, have, as a minimum, the same access to benefitsincome support, housing benefit and council tax benefitas if they had taken parental leave. That requires changes to social security regulations such as extending the scope of income support to cover fathers on paternity leave. Although the precise level of income support that fathers receive will depend on individual circumstance, standard rates of income support for a couple will ensure a total income of at least £130 per week, which is in excess of the proposed rate of statutory paternity pay. The income support rules are a matter for the Department for Work and Pensions, and it will need to look at the details further, but we do not expect difficulties in securing an extension of income support rules on parental leave to introduce paternity leave. As that will involve amendments only to secondary legislations, it does not necessitate a change to the Bill.
Column Number: 350
|©Parliamentary copyright 2002||Prepared 10 January 2002|