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Mr. Sutcliffe: That is recognised in the 104.5 per cent. that can be returned to small businesses. That percentage contains an element to meet those costs.
Norman Lamb: I am grateful to the Minister for making that point. Page 2 of the HMRC paper states that the additional 4.5 per cent. is intended to compensate businesses for the employers' national insurance contributions.
Norman Lamb: The point is that that part of the scheme will not do what the Minister says it will do: it is not intended to cover the cost of administering the scheme. Given that he clearly understands that there is a case for ensuring that an element of the payment covers the administration costs, if he rejects the new clause will he consider increasing the percentage repayment as an alternative? I am happy to give way if he would like to intervene.
Mr. Sutcliffe:
I do not want to take all the hon. Gentleman's time, and we will have a great deal of time for the debates this afternoon. I want to emphasise the point that the Government acknowledge the position of small businesses. I think that a lot of the hon. Gentleman's information relies on the brief issued by the CBI, and we have told the CBI that we will be prepared to talk to small businesses and to ask them how we can help them to administer what we know is a culture change in the Bill.
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Norman Lamb: I am grateful to the Minister for those comments. If we can take them as a willingness to consider the possibility of increasing the percentage repayment, I am sure that small business would be delighted to hear that. I am not entirely convinced that he has that in mind, even though he has indicated that he thought that the payment included something to cover the cost of administration.
Mr. Alan Reid (Argyll and Bute) (LD): Does my hon. Friend agree that, because the 104.5 per cent. figure is based on a certain level of employers' national insurance contributions, it will often apply to employers with about 15 or 16 employees, whereas the extra money will not apply to those employers with between 15 and 50 employees who would be covered by the new clause?
Norman Lamb: Yes. A very limited benefit will apply to only the very smallest employers. As my hon. Friend rightly says, many employers in the category caught by the new clause, who would benefit from the right to transfer responsibility back to the Government, will get no assistance in covering NI contributions and only 92 per cent. of statutory maternity pay back from the Government. If the Government are not prepared to go down the route that we suggest, they should consider whether they are prepared to increase the percentage repaid to employers.
I am not sure whether HMRC's assessment adequately takes into account the cash-flow benefits for small employers in not having to make the payment in the first place. At the moment, every week, they must pay the woman on maternity leave or the man on paternity leave. If the responsibility were transferred to the Government, those payments would not come from small employers' systems at all. I am not sure of the repayment time at the moment—it would be helpful if the Minister could confirm it—but a cash-flow burden is imposed on businesses for the period that the money is out of their systems. Those businesses would be assisted if the Government took over responsibility for making the payments. I do not think that the assessment made by HMRC adequately takes that into account.
HMRC's calculation takes account of the fact that many employers have complex remuneration packages because of pension contributions and so on. It says that all those burdens remain with the employer, but the remuneration packages of most small employers are much simpler than those of large employers, so the burdens would not be relevant if they were not part of the remuneration package in the first place.
1 pm
The Government's response is to try to solve everything by handing out a CD-ROM to employers—that is their get-out-of-jail card. They will also provide employers with a "teach yourself" package that will give them everything that they need to administer the system. However, the Government do not understand that the voluminous guidance that comes out of the Department of Trade and Industry in itself puts an administrative and regulatory burden on employers. In my previous life as an employment lawyer, I was constantly aware that employers were swamped by "teach yourself" guides and guidance notes on how to interpret regulations,
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such as the working time directive. Small companies are struggling to maintain their businesses, let alone do all the administration that goes with that, but the Government want to give them yet another "teach yourself" guide and burden. The proposal is not the panacea that the Government think that it is.
I have outlined the thinking behind new clause 1. I realise that the Government have stated an intent to help businesses, especially small businesses, to deal with the new burdens on them. However, we have seen little action to back up that intent. The Minister looks distressed by what I say, but it is the truth. Little has been done through the Bill to ease the burden on employers. In a nutshell, the assessment by HMRC understates the costs for employers. If we had the opt-in system about which we are talking, the cost to the Government would be significantly less. I know that the Minister is a reasonable man, so I hope that he will accept our arguments and that there will be no need to divide the House.
Mrs. Eleanor Laing (Epping Forest) (Con): We want the Bill to work, which is why we have joined the Liberal Democrats in tabling new clause 1. The hon. Member for North Norfolk (Norman Lamb) explained eloquently and thoroughly the reasoning behind it, and we also discussed the matter at some length in Committee. He has cited all the statistics and arithmetical reasons that explain why we think that the Bill would be considerably improved with the addition of new clause 1 and I will not repeat his arguments—I agreed with what he said.
We understand that if the Bill is to work, its measures must have the confidence of those who will be affected by it. I am especially worried, as ever, about burdens on small businesses. Again and again, the Government bring forward ideas. Those ideas are sometimes good in principle, as is the case with the Bill. The Bill's intention of improving the work-life balance not only for parents—both mothers and fathers—but for people with caring responsibilities is good, but as ever, the Government will not take responsibility for administering their proposals. They expect, and indeed require, others to do so, and in this case, as in so many other cases, those others will be small businesses.
Mr. Mark Prisk (Hertford and Stortford) (Con): I hate to interrupt my hon. Friend's flow, but does she realise that the people to whom she just referred are also parents? The irony of the Government's position is that self-employed parents might be able to spend less time with their families because of the administrative burden that we are debating.
Mrs. Laing: My hon. Friend is correct. It is undoubtedly true that when we talk about helping parents and carers, and thus improving matters for children, we are talking about all families in the country. Some families consist of employees, while others consist of employers. No one is suggesting that they should be treated differently. We want to improve matters for all families, so my hon. Friend makes a pertinent point.
As ever, the matter comes down to a question of balance. New clause 1 would help small businesses considerably by taking away from them the burden of administering maternity and paternity leave and pay. It
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would thus be easier for small businesses to concentrate on the matter on which they should concentrate: in a nutshell, making money. Time is money for a small business person. If employers have to spend more time than is necessary on administrative matters, they are, by definition, spending less time on running the business and making a profit. If a business makes a profit, it allows more jobs to be created and, perhaps, the payment of bonuses to employees. It is in everyone's interest that businesses run efficiently and well. The days of employers taking everything out of a business and employees putting in all the effort are gone—well, we hope that it does not happen any more, at least in 99 per cent. of cases. Most good employers know that if they treat their employees well, they will have a better work force and thus better businesses.
We return to the question of balance. Most people in Britain today are employed not by large businesses and multinationals, but by small businesses. What happens to small businesses thus has a knock-on effect on most employees. If employers spend too much time on administration, their businesses suffer and become less profitable, which might mean that they have to make employees redundant, or not take on more employees. A successful business will create employment and provide better conditions for employees, and a business is more likely to be successful if the administrative burden is removed from it.
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