Employment Bill

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Mr. Hammond: I am largely satisfied with the Minister's answer, but I am unsure whether I have understood how the regulations are intended to apply to people on ships. Ships would present a problem case if someone were on a long voyage. Am I to understand that the Minister does not have a scheme, but he recognises that it will be necessary to apply the rules differently?

The Minister mentioned consultation, and I hope that we can take it as read that there will be extensive consultation with shipowners and shipping management. Further regulations that impact on the operation of UK-flagged merchant shipping can only have a negative effect on what is already a difficult situation. It is in all our interests that we do not drive UK-registered vessels away from the UK flag registration by piling on employers obligations that they find it difficult to meet.

With those reservations, I am satisfied by the Minister's comments and grateful to him for clarifying the matter. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Hammond: I beg to move amendment No. 139, in page 11, leave out lines 43 and 44.

I want to probe the Minister about subsections (9) and (10), which deal with a specific situation in the national health service. I served on the Standing Committee of the Bill that became the Health Act 1999, when the events that led to the contract-splitting arrangement in the NHS took place. We spoke then about the confusion and the problems that the

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arrangement would create, and here the chickens are coming home to roost.

My basic problem is that the Government, as an employer, are quick to see a problem that their legislation creates for themselves as an employer and for their employees. They have the power to put a lengthy provision of half a page into a Bill to deal with a wholly exceptional situation that they have created in relation to their own employer status in dealing with their own employees. No other employer could expect to get primary legislation drafted to deal with a peculiar circumstance that had arisen in his industry or his business. It seems to me a bad way to proceed generally that the Government, in special situations that have been created, solve their problems as an employer by inserting provisions into primary legislation.

The amendment leaves out lines 43 and 44 on page 11—which means that I am slightly missing the point here. I am sorry, Mr. Benton; I have gone off the track. I am trying to address two issues in two separate amendments and I fear that I am speaking to the wrong one. If lines 43 and 44 were omitted, the requirement for regulations under any of these subsections to be made with the concurrence of the board would be removed. [Laughter.] Just testing, as they say, Mr. Benton. I shall return to the national health service later and I shall not repeat what I have said, so if the Minister would hit the save button and, unlike me, retrieve at a later date what he has just saved, that would be useful.

The amendment to which I should have been speaking simply removes the requirement for regulations to be made with the concurrence of the board—the Commissioners of Inland Revenue. I have tabled the amendment to probe the Minister about the extent to which that requirement limits the power of Parliament. The normal procedure for regulations is that the Secretary of State lays them and Parliament considers them and approves or rejects them. The idea that the Commissioners of Inland Revenue must approve them first seems restrictive of Parliament's powers. Presumably the Secretary of State would not be able to bring a regulation before Parliament that the Commissioners of Inland Revenue had rejected. Can the Minister explain why an appointed body should have this power of veto over a draft regulation that the Secretary of State would normally bring before Parliament to consider?

Alan Johnson: The hon. Gentleman nearly sent some people in the Room into the care of the national health service then. We were perplexed by the reference to the NHS.

The amendment seeks to remove the right of the Board of Inland Revenue to agree to regulations in respect of statutory paternity pay before they are made. I welcome the opportunity to discuss why we think that that right is important. Hon. Members will be aware that we shall have detailed discussions on the role of the Inland Revenue when we discuss clauses 5 to 16 on the administration of the new statutory schemes. However, it will be useful to cover some of

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that ground now so that the Committee may be aware of the detailed thought that we have put into the role of employers in relation to the payments.

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First, we want the new schemes to mirror as closely as possible the arrangements for statutory maternity pay. That is what employers are used to. Since April 1999, the Inland Revenue has been responsible for the operation of statutory maternity pay. It works with employers by providing them with the guidance and support that they need to pay employees when payments are due and to recover the payments made from the Inland Revenue. The Bill enables the same arrangements to be put in place for the new schemes.

Secondly, the Inland Revenue has considerable experience of working with employers. It regularly discusses payroll-related matters with employers and provides extensive guidance for all employers dealing with them. It also has a network of business support teams that provide free training seminars and one-to-one educational visits to employers. The Inland Revenue is an important partner in putting together the rules for the new schemes. It will work with employers to help them administer the right payments, in the right amounts, to the right employees at the right time. We want it to scrutinise the rules that employers will be asked to follow, to help us to ensure that they are sensible and straightforward.

That is an example of joined-up government, bringing together Department of Trade and Industry skills in dealing with employment and Inland Revenue skills in dealing with employers and payroll-based schemes. I suggest that, having heard that explanation, the hon. Gentleman asks leave to withdraw the amendment. I do not see that the provision interferes in any way with the role of Parliament.

Mr. Hammond: It would help if the Minister would tell the Committee where in legislation generally such provision is used. Is it used in every case in which payments are made to employers through the pay-as-you-earn system?

Alan Johnson: I am not sure about that, as the provision relates to the particular regulations that cover the relevant subsections.

Mr. Hammond: I was seeking to clarify whether it was common practice, in legislation concerning the reimbursement of employers through the Inland Revenue, for the concurrence of the Board of Inland Revenue to be required for any regulations in such areas of legislation.

Alan Johnson: It is standard practice for that to happen. That is not a veto on Parliament. The board and the Secretary of State need to concur before the arrangements are laid before Parliament. In discussion on a previous clause on employment tribunals, we mentioned the role of the Advisory, Conciliation and Arbitration Service in the three-step procedure. It is advisable to make it absolutely clear that we shall consult in this case with the Board of Inland Revenue, which has a very important role, so that its views may be taken into account. I hope that, with that

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explanation, the hon. Gentleman will seek leave to withdraw his amendment.

Mr. Hammond: The hon. Gentleman has many years' experience of negotiating, so I would have expected him to recognise that when two parties have to concur, that gives each a veto. This provision, therefore, is a veto for the board over any of the regulations.

There is nothing wrong with drawing on experience and I would expect all Government Departments to try to draw on that held by other Government Departments. I have not had the privilege of being there yet, but I am not overly optimistic about the extent to which Departments and agencies of Government are willing to allow their experience to be drawn on by other Government Departments. However, it does not seem to me that that perfectly sensible practice needs to be enshrined in the Bill by giving the Commissioners of Inland Revenue a veto.

It occurs to me that the Commissioners of Inland Revenue are wholly beholden to the Treasury and the Chancellor of the Exchequer. A conspiracy theorist, which I am not, could see the ever-extending tentacles of the Treasury reaching out, with a Treasury agency being required to approve in advance any regulations that the Secretary of State for Trade and Industry might wish to lay before Parliament. That is the aspect that I am probing. We are all aware that the Treasury is powerful and that, almost by the week, it is becoming more powerful and reaching into the affairs of every other Department. The Department of Trade and Industry has been described, perhaps unkindly, as a wholly owned subsidiary of Treasury plc. It certainly seems to operate in that way much of the time and this rubs salt in the wound. I had hoped that the Minister might have something to say about that, but he may have private thoughts on the broader issue.

I want to speak about the NHS and I thought that I had tabled an amendment on it, which is why I became slightly confused, but I shall return to the matter, without repeating myself, on clause stand part.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr. Hammond: I want to summarise some of the issues that we have discussed and to raise some points that have not arisen in amendments. The Minister made two commitments during our discussion of clause 2. First, he said that he would consider the question of symmetry between the conditions that must be met for entitlement to statutory paternity leave and payment of statutory paternity pay, one being in the Bill and the other to be prescribed in regulations. The Minister undertook to consider whether it would be more appropriate to have symmetry between them.

The Minister also undertook to examine some of the language used in this part of the Bill, including the phrase, ''ceased to work'' and the reference to

    ''a person who is, or has been''

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employed, which I maintain could be confusing. I am grateful to him for agreeing to consider those matters and look forward to hearing from him in due course whether he will be able to address them or whether we shall need to revisit the matter.

On new section 171ZE(5), can the Minister give some examples of cases in which there will be no liability to pay statutory paternity pay

    ''in respect of a week''?

It is not immediately obvious what that provision is driving at and it would be helpful if the Minister could give some examples to reassure us that there is a reason for it and that the Government have something reasonable in mind.

The Minister touched on new section 171ZF(1) when replying to an amendment but I did not refer to it when speaking to the amendment. It prevents any requirement for an employee or former employee to make a contribution towards any costs incurred by his employer or former employer under this part of the Act. Any agreement requiring people to contribute to their own statutory paternity pay would be unlawful. That sits uncomfortably with the clause about contractual entitlement to paternity pay and what the Minister told the Committee during our proceedings last week. If I have understood correctly, a contract stating that someone is entitled to £300 a week and to continue receiving that during any leave that is taken around the time of the child's birth will subsume the statutory paternity pay of, say, £100 a week, and the employer will claim it back from the Inland Revenue. However, the employee will be contributing indirectly to payment of that statutory paternity pay. He is already entitled to £300 a week, and statutory paternity pay constitutes an additional £100 a week. In effect, his employer will therefore pay him a net £100, plus £100 reclaimed from the Inland Revenue.

There is no disagreement about the purpose of the provision, which is to ensure that the employee continues to receive that to which he is contractually entitled, of which statutory paternity pay is regarded as part. I ask the Minister to reflect, however, on terminology that specifies that it is void to require an employee to contribute, whether directly or indirectly, to payments under this part of the legislation. I can think of examples where the boot is on the other foot, as it were, and one would argue that such an arrangement amounted to an indirect contribution to pay.

In respect of the relationship between contractual remuneration and statutory paternity pay, subsection (3) of new section 171ZG refers to the provision of

    ''payments which are, and . . . are not, to be treated as contractual remuneration''.

Can the Minister explain what is, and is not, to be treated as contractual remuneration? He has already touched on special classes of people, with which new section 171ZI deals.

Subsection (4) of new section 171ZJ deals with situations in which

    ''two or more employers are to be treated as one'',

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    ''two or more contracts of service . . . are to be treated as one.''

We touched on this matter earlier, when the hon. Member for North Norfolk pointed out that, in certain cases, it might be appropriate for someone to draw statutory paternity pay in respect of one contract while continuing to work under another. Of course, the new section empowers the Minister to treat two contracts as one. If that is simply an anti-avoidance provision, I have no problem with it, provided it works solely in that way. However, are there specific and substantive cases that he intends to address through it?

Finally on new section 171ZJ, I shall avoid taking up any more of the Committee's time by reminding hon. Members of what I said 10 minutes ago about special provisions dealing with the NHS. It would seem entirely inappropriate to include in primary legislation a special provision that deals with a situation arising from the Government's role as an employer, and which is entirely of their own making. During consideration in Standing Committee of the Health Act 1999, we told them that such a provision would lead to problems later.

It also seems bizarre to include in subsections (9) and (10) provisions that deal with a specific case relating to one, albeit large, employer—the NHS—only to state in subsection (11):

    ''The powers under subsections (9) and (10) are without prejudice to any other power to make regulations under this Part of this Act.''

Why include those provisions in the Bill? The matter could have been dealt with in regulations. Although I am not often heard to say such things, a case involving a specific employer or employee should be dealt with through secondary legislation; it is entirely inappropriate to deal with it through an Act of Parliament. In time—probably not very much time—the matter will become redundant. It essentially concerns NHS split contracts that arose from reorganisation in the NHS following the 1999 Act.

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