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Rehabilitation Leave

John Robertson accordingly presented a Bill to provide a statutory right to rehabilitation leave for newly disabled people, and for people whose existing impairments have changed; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 10 March, and to be printed [Bill 114].

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Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) and Order [15 December 2005],

Question agreed to.

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Orders of the Day

Work and Families Bill

As amended in the Committee, considered.

New Clause 1

Administration of statutory leave payments

'The Secretary of State shall make regulations providing that any employer employing fewer than 50 persons may transfer to the Secretary of State responsibility for the administration of payments to that person's employees of—

(a)   statutory maternity pay,

(b)   adoption pay,

(c)   additional statutory paternity pay, and

(d)   ordinary paternity pay.'. —[Norman Lamb.]

Brought up, and read the First time.

12.44 pm

Norman Lamb (North Norfolk) (LD): I beg to move, That the clause be read a Second time.

Although we strongly support the purposes of the Bill as a package, we must recognise its impact on employers, especially small employers. It is incumbent on us all to ensure that its impact on employers is kept to a minimum. That has clearly been the Government's view, which they have expressed at various times.

The Government's 10-year strategy for child care, published at the same time as the pre-Budget report in 2004, made a commitment to consider the case for what the Revenue document, with which the Government have provided us, described as "direct payment"—a term I shall use in making the case for the new clause. Their starting point suggests that they saw the possible benefits of direct payment. Indeed, Labour's manifesto repeated the commitment to help employers. It made a commitment to increase paid maternity leave

That commitment has been constantly stated.

The paper from Her Majesty's Revenue and Customs, which the Government have helpfully supplied, refers to   the consultation that took place in the run-up to publication of the Bill. It talks about meetings with a consultation panel to discuss the issue; the panel included payroll experts and representatives from small and large employers. Interestingly, the Government's paper confirms that the employer representatives on that panel, in essence, support the new clause. They recognised that concern was greatest among small employers and that large employers did not want to introduce direct payment, as it would cause them unnecessary complexity and they would prefer to administer the system themselves. They recognised that there would be benefits for some small employers. The paper and common sense suggest that the benefits would be felt most by employers who still use manual payroll systems, where the process for making payments is more time-consuming than in an automated system.

The paper confirms that if a system were introduced based on the provisions of the new clause, or something akin to them, the cost of its introduction would be reduced. It gives a figure for start-up costs of £38 million—rather than £75 million—for a simple
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system, directed to assist small employers who choose to transfer responsibility to the Government. The paper accepts that the ongoing yearly costs would inevitably be substantially less than the £50 million it cites.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): If we accept the figure of £38 million that the hon. Gentleman gives, what benefit to small business would accrue each year?

Norman Lamb: The paper refers to a total net benefit of £1.1 million. The figure for small employers, defined by the national insurance contribution threshold of £45,000 a year, would be about £400,000 a year, but the benefit would be focused on employers whose costs are much greater than average—those who decide that it is in their interests to transfer the administration to the Government, presumably because they have manual systems that they judge will take too much time to administer themselves. So the paper nowhere identifies how much that would benefit those employers whom the new clause would help.

Helen Jones (Warrington, North) (Lab): What estimate can the hon. Gentleman give of the number of   employers who would wish to transfer their responsibilities in the way that is suggested in the new clause?

Norman Lamb: I cannot give an estimate of the number, and it is not necessary to do so to make the case. The HMRC document confirms the fact that the employers' representatives on the Government's consultation panel advocated a system that would allow the right to transfer responsibility to the Government to   be focused particularly on small employers. In essence, the new clause builds on the case put by the employers' representatives on the Government's panel and recognises the fact that large employers see no benefit in the proposed system. They are left out of the equation. The focus is simply on those employers who would benefit by transferring the system to the Government.

According to the HMRC paper, small employers said that they would benefit. The paper also correctly recognises that every employer is different—employers have different payroll methods—so rather than simply seeking to transfer the responsibility for all payments to the Government, the new clause would give employees the power to decide whether they want to take advantage of the right. Under the new clause, we seek to recognise the facts that are set out in the HMRC document by excluding large employers, who would not benefit, from the right to transfer.

The paper also confirms that approximately 40,000 women employed by small employers—those employers who make national insurance contributions of up to £45,000 per annum—are in receipt of statutory maternity pay. I cannot begin to estimate the cost of the Government employing an administration to operate on the opt-in principle dealt with in the new clause, but if we are talking about a total of 40,000 women and only a proportion of their employers choose to transfer, I can imagine that the size of the unit that would be required to administer the system for the Government could be
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very limited and therefore could be provided at vastly lower cost than that set out in the HMRC paper. The paper itself concedes that the costs would be significantly lower when dealing with an opt-in system of the sort that we recommend.

I have already dealt with the net savings, but I want to say a word about whether we can rely on the figures set out in the Government's paper. We all accept that any regulatory impact assessment is inevitably only an estimate, because it considers what would happen in the future. There must inevitably be doubt about how accurate those estimates are likely to be in practice. The concern of many in the small business community is that the paper underestimates the time taken to administer those arrangements, particularly by small employers who operate manual systems.

The paper obviously considers average times for employers, but the new clause focuses on those small employers with manual systems who are trying to cope with everything, who do not have a director dedicated to   dealing with payroll and staff issues and where a one-man or one-woman operation is trying to keep the whole show on the road, as well as dealing with all this. In those cases, learning and understanding what is involved in the payment of maternity or paternity pay, when the employer may not have had someone in that situation for some years, is a time-consuming operation. It is very easy to underestimate the burden that that imposes on employers. If that burden can be lifted and transferred to the Government—as they clearly envisage would be appropriate, provided that the costs are not too high—it seems right to do so.

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