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Alan Johnson: We have been at pains to explain to the CBI and others that the paternity leave proposals will introduce precisely what would have applied under interchangeability. European and domestic law is tight on protecting the rights of women, so providing for some interchangeability and for them to be allowed to give up some of their leave was difficult legally. We have
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found another way to achieve that: the woman must be back at work for her partner, the father, to pick up the remaining leave. We always intended—because it was the result of the consultation—for that to happen in the second six months of the baby's first year. The actual outcome is therefore exactly as we pledged it in the manifesto. It is simply not interchangeability, which we originally envisaged, because of the legal problems.

Mrs. May: I am grateful for that clarification and I accept that an element of transferability remains in the Government's introduction of the additional paternity leave. However, the way in which it is being done in the Bill creates a new right to paternity leave and many employers are concerned about that. They are not necessarily worried about the transferability element but about the potential requirements for the paternity leave further down the line. I remain attracted to the concept of interchangeability. Indeed, we proposed that for consideration more than a year ago. The hon. Member for Burnley set out some of the circumstances in which a family may feel that it makes sense for them for the transferability to happen earlier than at the end of the first six months. I am sure that we shall revert to transferability and its legal aspects when we consider the Bill in more detail in Committee.

Earlier, I referred to the comments of my hon. Friend the Member for Havant. One of his suggestions to the Government related to the central administration of maternity benefits. Small employers in particular find the statutory maternity pay calculation and the paperwork involved complex. As has been widely discussed in the past, small firms should focus on winning new business, not filling in forms for the Government. They would greatly benefit if the administration of statutory maternity pay were handed back to the Revenue, assuming that a simple procedure for supplying the information to the Government could be developed.

Many larger firms are happy to continue to administer statutory maternity pay because they are more aware of the rules and more likely to pay occupational maternity pay and they have already invested in the systems that enable them to do that easily. However, many small businesses would perceive the central administration of maternity pay as a significant opportunity to reduce the burden of maternity leave. I continue to believe that it would make sense for the Government to allow firms to choose whether they hand back the administration of statutory maternity pay to the Revenue, providing employers, especially small businesses, with much-needed extra support to help them cope with the significant extra and unexpected burdens.

Alan Johnson: I accept that Opposition Members have not had time to absorb the figures but does the right hon. Lady agree that, if direct payments cost the taxpayer £75 million for a saving to business of £1.1 million and only £400,000 to small businesses—those figures are the outcome of extensive discussions with businesses—it is not worth proceeding with the idea?

Mrs. May: I have only recently heard those figures. I have not seen the calculation and I do not therefore
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necessarily accept them. I acknowledge that the Government wish to make a balanced judgment on the cost to the taxpayer and that to small business. However, I find it surprising that the benefit to small business is as small as the Secretary of State suggests. Business organisations have asked questions about the validity of the Government's figures.

Mr. Prisk: I accept that the figures are recent and that the Secretary of State's offer to make the process more transparent is welcome. However, does my right hon. Friend agree that it is a shame that the regulatory impact assessments appear to make several omissions? Indeed, no calculation is made for time loss. For businesses, time equals money. Does my right hon. Friend agree that Government regulatory impact assessments make a huge mistake in not including the cost to business of the loss of time?

Mrs. May: I agree with my hon. Friend's analysis of the problems with the figures that the Government provide. That is precisely why I am reluctant to accept the figures that the Secretary of State cited at the Dispatch Box today.

Mr. Peter Bone (Wellingborough) (Con): It strikes me that the Secretary of State's statement clearly shows that private business can do things a lot better than the Government. However, it probably also shows that the Government have grossly underestimated the cost to small businesses. There must be some mechanism whereby small businesses get additional payments if they are to continue to do the administration.

Mrs. May: My hon. Friend makes some valid points about the genuine impact of legislation on small businesses. Our debate is about getting the balance right between the need to encourage greater ability for families to find the work-life balance that will suit them and to ensure that, in doing so, we are not restricting the competitiveness of British business.

Peter Luff: The Secretary of State produced a fascinating set of figures. If they are accurate, it is difficult to argue with his case. However, it might help us to form a judgment if we knew whether the figures had come from the Treasury or the Department of Trade and Industry. That would colour my interpretation of them.

Mrs. May: My understanding is that the Treasury, not the Department of Trade and Industry, did the major work on the figures. That may colour both the figures and my hon. Friend's view of them.

Although we support measures that make parents more able to spend time with their children, we remain to be convinced that the Government can introduce a system for managing paternity pay that allows the necessary checks to prevent abuse but is not overly bureaucratic for employers to administer. On past form, we are doubtful that the Government will deliver.

We also seek greater clarification of the proposals, to which my hon. Friend the Member for Buckingham and the hon. Member for North Norfolk (Norman Lamb) referred, for introducing regulations to give the Government the power through secondary legislation to bring in new rules on leave entitlement.
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In his responses to interventions, the Secretary of State made it clear that the Government intended to introduce powers to ensure that the annual leave entitlement for employees did not include the UK's eight bank holidays. If my hon. Friend the Member for Buckingham is correct, the House authorities will have to pay some attention to that proposal.

I am sure that most employers want to ensure that their staff have adequate paid holiday and will support the need to provide it for their employees, but that move will impose a substantial cost on some businesses and I doubt that many will relish the thought of giving the Government carte blanche to change the rules. Although the Secretary of State was specific about the intention of clause 13, the provision is vague and simply gives the Secretary of State the power to introduce secondary legislation that can affect the rules on leave entitlement. We will want to press the Government on that. If they have a specific intention, it should be in the Bill. Many employers might accept what the Government and the Secretary of State say about bank holidays as part of annual leave entitlement, but they would be worried about giving the Government a simple power to introduce—at some stage in the future—other regulations on leave entitlement.

John Bercow: As a general principle, there should be even-handedness between the treatment of the private sector and the public sector. Or, to put it another way, it is certainly not reasonable to impose on the private sector financial costs that it is not judged proper to impose on the public sector. In that context, does my right hon. Friend agree that it would be useful to know, in regard to clause 13(4), whether the Government intend to apply the provisions to persons in Crown employment?

Mrs. May: Perhaps the Minister will clarify that point for my hon. Friend when he winds up the debate. The power in clause 13 would certainly give the Government the right to do that. I accept my hon. Friend's overall point about the need to ensure that we strike a balance between the public and private sectors. Indeed, many people are exercised at the moment about the balance between public and private sector pension entitlements. There is a significant and growing gap there, and the Secretary of State has recently made decisions that will encourage that gap to grow. It is incumbent on the Government to look upon themselves as an employer, and to ensure that their house is in order. Another area in which I am afraid they do not come up to the standard that we would expect is that of equal pay. I understand that, while the pay gap in this country is generally between 17 and 18 per cent., it is 21 per cent. in the civil service. The Government really need to look at these issues, and to put their house in order.

On the regulations that the Government will use to introduce the rules on leave entitlement, it is important that they should discuss with business the impact that any sudden change would have, and that they ensure that any change is introduced in a way that would reduce the severity of that impact on business. A balance needs to be struck between meeting the needs of
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employees and ensuring that any new provision does not have a detrimental impact on keeping the business environment competitive.

Families are increasingly looking to us in Parliament to provide a framework to help them cope with the pressures of modern life. Businesses are looking to us to ensure that we do not tie their hands and make them unable to compete in a fiercely competitive global market. It is up to us in this place to ensure that we strike the right balance between being family friendly and business friendly. We on this side of the House will work constructively to achieve that.

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