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Mr. Alan Reid: The Bill is important and I welcome the rights that it extends to working families, particularly the rights that relate to the clause, concerning maternity, paternity and adoption pay. However, there is a downside to the Bill, as other hon. Members have pointed out—the extra burden of administration that it will place on employers, especially the owners of small businesses.

I shall quote from a document that I am sure the Minister is familiar with, the 2005 Labour party manifesto. It states on page 77:

Norman Lamb: The CD-ROM!

Mr. Reid: My hon. Friend the Member for North Norfolk (Norman Lamb) is correct. The Government made a commitment to simplify the system for employers, but it seems to consist of a CD-ROM and a do-it-yourself guide. That is not simplifying the system for employers and that is not what employers read into the Labour party manifesto.

I hope that the Government accept new clause 1, because we are trying to assist them in implementing their manifesto. New clause 1 would transfer responsibility for the administration of payments for maternity, adoption and paternity pay from a person's employer to Revenue and Customs. The procedures involved are complicated, and they will become even more complicated with the introduction of additional paternity pay, because in most cases parents work for different employers, which introduces an extra level of complexity.

The Government have referred to a cost-benefit analysis produced by HM Revenue and Customs, which claims to show a minimal benefit. However, that cost-benefit analysis considers only statutory maternity pay and does not attempt to examine issues such as adoption pay or paternity pay. Many small business owners challenge the assumptions in the cost-benefit analysis—in particular, they take issue with the time that the report assumes that it will take them to perform the necessary tasks. Employers who have examined the
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report say that it will take them far longer to carry out those tasks than the analysts from Revenue and Customs suggest. It is questionable whether the savings to employers set out by Revenue and Customs will accrue from the transfer of direct payments, and it is also questionable whether the benefits to employers will be as low as the report suggests.

We need to take account of the great burden on small employers who come across new working procedures for the first time. A big employer with large human resources and IT departments will handle the new processes easily, but a small employer who is faced with working out additional paternity pay for the first time will find that it takes a great deal of time, even with the help of the Government's CD-ROM and do-it-yourself guide. As hon. Members have said, that time is often late at night, and if the employer tries to deal with the matter during the day, it distracts them from trying to grow their business and create jobs.

New clause 1 states that companies with fewer than 50 employees should be given the choice between running that part of the payroll themselves or transferring it to HM Revenue and Customs, which should be able to run such procedures more easily given the benefits of scale. That would compensate small employers—the Government are giving small employers more work by introducing new rights for workers, and they should help them by taking on that part of the administration. It is vital that we free up small employers to enable them to grow their businesses, and we can do so by giving them a choice on the burden of administration.

Finally, I remind the Government of their manifesto commitment, which I hope that they honour today.

Mr. John Redwood (Wokingham) (Con): I rise to support my hon. Friend the Member for Epping Forest (Mrs. Laing) and other hon. Members who support new clause 1. I am non-executive director of three companies cited in the register, but I am, of course, not speaking on their behalf or at their request.

The Minister should ask himself two important questions before he asks the House to reject the new clause. The first question has partially emerged in the debate: what has become of the Prime Minister's policy, which is very good, that a regulation should be struck off for every new one that is imposed? No equal and opposite regulation is being struck off to balance today's sizeable one.

The hon. Member for Hastings and Rye (Michael Jabez Foster) asked my hon. Friend the Member for Epping Forest which regulation we would strike off. If he had been present in the House just before Christmas, he would have witnessed my leading for the Opposition from the Front Bench and setting out a wide-ranging deregulatory policy, which includes 63 specific ideas for the Government, and we have sent those ideas to different branches of the Government in the hope that some of them will be incorporated. Indeed, a Minister suggested the beginnings of one such idea in an overnight briefing to the papers, and perhaps the House will have the courtesy of being told whether it is true—it would be nice to feel that as a Member of Parliament, one is sometimes the first to hear such things rather than the last.
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1.45 pm

We have identified plenty of regulations that could be struck off to add to the good workings of the British economy and reduce the burden on people and businesses, but they fall outside the scope of the debate on new clause 1. One sometimes wonders whether Ministers belong to the same Government as the Prime Minister. The Prime Minister has made some extremely good speeches, such as his speech on deregulation, but the opposite of what he has said is happening day by day. As has been said, this provision is a good example of something happening in exactly the opposite direction from that set out by the Prime Minister and without the action to balance the situation enjoined by him. My hon. Friend the Member for Epping Forest has made it clear that she supports the proposal, but on the condition that offsetting deregulation, which has not been introduced, takes place.

The second question about which the Minister should think more carefully concerns cost. It is unsatisfactory that we should debate such an important measure with no credible figures from the Government, and I find it unbelievable that we are discussing a cost of only £400,000. If we examine the Government's assessment of the impact of the legislation, the gross figure for the regulatory impact of the legislation is cited as £575 million a year, if one adds up the highest estimates. The Government say that there could be offsets of £209 million a year against that figure—£196 million of   those offsets are extremely optimistic, but let us give them to the Government. In short, according to the Government's own regulatory impact assessment, we are discussing about £400 million of extra cost.

We are being asked to believe that the important part of the cost imposed on small businesses will amount to some £400,000, so it is not worth exempting small business—although it will cost the Government a mind-blowing £39 million to deal with the problem, it will save small businesses only £400,000. I know that anything that this Government run is considerably less well run than it would be in the private sector—productivity is a far bigger problem in the public sector than the private sector—but it is difficult to believe that they are so monumentally incompetent that they would spend £39 million to save £400,000 a year. I put it to the Minister that the truth of the position is that a bigger element of the £575 million that the Government have identified will be attributable to small business, and that it would therefore be a useful saving for small businesses in implementing the measure to transfer the work burden from them to the Treasury in cases in which small businesses would like that to happen.

I understand that my hon. Friend the Member for Epping Forest and other hon. Friends have in mind an opt-in system, which means that if by any chance the Government are right and there are no real costs to the   measure for small businesses, those small businesses would be happy to administer the measure themselves and the Treasury would not be troubled. However, I   suspect that the measure will involve substantial cost. It would be a very good idea for small businesses for the Treasury to do the work, if we discover that the cost estimates are far from adequate.

It is fundamental that a Government who claim to believe in deregulation should set out accurate and detailed costings that have weight and carry credibility
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both with this House and with those outside who are interested in such matters. This is yet another example in which the regulatory impact assessment is on the whole vague and incredible. Where the regulatory impact assessment is specific, it comes up with some very large numbers, which the Government have passed by and cannot explain. We should not ignore the £390 million cost which the regulatory impact assessment states that the Government must pay, which means that the total cost of the measure taking the Government cost and the net private sector cost in the RIA will be around £800 million.

The Government must remember that they have no money of their own. They have only the money that they collect from us as individuals and from the business community, so the £390 million of so-called Government cost is also a cost on business and individuals who work for those businesses, just as much as the £400 million cost is a direct charge on the private sector.

I urge the Minister to think again. If he will not, and if he remains inclined to tell hon. Members that he does not want new clause 1, will he please explain when we will have proper figures for the costs and a proper off-set under the terms of the Prime Minister's policy?

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