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Lord Wedderburn of Charlton: My noble friend will appreciate that what he has just said involves all the anomalies put forward by the Law Society. No doubt those have been considered, but he has not explained why they are not anomalies. I refer, for example, to situations where a woman earns additional overtime, where she receives an annual bonus, where she is sick during the eight-week period and where she has irregular pay periods. The Law Society argues—credibly, I believe—that all those situations can produce anomalies and injustices with regard to the amount calculated on an eight-week basis.

I quote the Law Society's opinion. That states:

"By extending the calculation period to one year (or the period of employment or the period of employment where shorter) the amendment will remove the current anomalies identified above".

That is the same amendment as that moved by the noble Lord, Lord Razzall. My noble friend has not said anything at all that addresses those anomalies. Indeed, he suggested that the Government had considered a 26-week period but that was too harsh on some employers. That is my understanding of what he said—he will correct me if I am wrong. He referred to small and medium-sized employers especially, who apparently can divide, multiply or add by eight but whose calculators do not seem capable of dealing with 26 or 52. That is highly improbable. I say to my noble friend that if that is the best that the Government can do in response to a very carefully thought-out attempt by the noble Lord, Lord Razzall—it is supported by the body that supports solicitors, many of whom deal with these problems throughout the land—it does not bode well for the amendments that are to come. Can my noble friend improve on what he has said?

Lord Sainsbury of Turville: I have not said that I can—the case was put so simply and well that there is no need for improvement on it. My point is that there

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is a balance of interests, which will not necessarily work in favour in this context. With the longer period, one will not remove all the anomalies. I made the point clearly. If one has a wage increase towards the end of the period, one will get a situation in which that is averaged over 52 weeks, which will not necessarily produce a fairer result.

The argument about small employers is not to do with the use of calculators; it is to do with the fact that one has to do a great deal of work by going back through the records. If one does not have a computerised system, that is not necessarily easy to do. Therefore, in terms of administration and the fact that one will get anomalies under both systems, it was felt—there was a wide consensus on this—that the way we proposed of sticking with eight weeks was the best approach.

Baroness Miller of Hendon: I do not wish to add to the difficulties of the Minister. I know what it is like when the noble Lord, Lord Wedderburn, with his vast experience, makes comments about difficulties, and I know that it might be difficult to find a suitable answer.

Earlier this afternoon, I moved three amendments relating to the phrase "normal earnings" and I suggested that the word "average" would be better. The Minister said that it was not absolutely necessary or right—I forget the exact phrase that he used. I bring that up in relation to this amendment because the noble Lord, Lord Razzall, has very carefully talked about "the first normal pay day of her employment" and so on and because the word "normal" appears in the amendment. However, the Minister in his reply mentioned "average earnings", but did not use the word "normal", which I find somewhat confusing.

I wish to ask the Minister about a matter of which my noble friend Lady O'Cathain reminded me. For example, the earnings of an air hostess are much higher than the earnings of ground staff but, if an air hostess becomes pregnant, she clearly cannot fly but she can be transferred to work on the ground and may be classified as ground staff. Her earnings would be much less than when she was flying. According to the Minister, it would be difficult for him to come up with criteria relating to her normal earnings in order to work out her entitlement, whereas her average earnings would be very easy to work out from her two salaries. Could the Minister could enlighten us about what would happen in that case?

Lord Sainsbury of Turville: We make no attempt to pretend in this regard. Whichever system is used, it will be advantageous to some but not to others. So far as air hostesses are concerned, I do not know whether they get lower wages when they are pregnant. However, as I understand it, there are clearly winners and losers—we are not pretending otherwise—but there is a general view that there is nothing to be gained from taking the longer period.

Lord Razzall: Clearly, I shall withdraw the amendment. Before doing so, I hope that between now

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and Report the Government will reflect on this matter. There is general consensus that any period longer than eight weeks will be better.

I draw the Minister's attention to the fact that under Sections 220 to 229 of the Employment Rights Act 1996, 12 weeks is taken as the grid for averaging pay. That is applicable for calculating statutory redundancy pay, the basic award for unfair dismissal and pay during parental leave under the working time regulations. All the arguments that the Minister has used in favour of eight weeks would presumably apply also in relation to 12 weeks, which we would all say would be better than eight weeks. The Government's own legislation has provided for 12 weeks for averaging pay and we all accept that eight weeks is too short; anything longer would be better. I ask the Government to look at the issue again before Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 agreed to.

Clause 20 agreed to.

Clause 21 [Funding of employers' liabilities: statutory maternity pay]:

Lord Henley moved Amendment No. 56:

Page 29, line 14, leave out "92 per cent" and insert "105 per cent"

The noble Lord said: In moving this amendment, I shall speak also to Amendments No. 57, 59 and 60. Amendment No. 59 stands in my name and Amendments Nos. 57 and 60 in that of my noble friend Lady Miller.

We come to the reimbursement rates of statutory maternity pay. The two sets of amendments tabled by myself and my noble friend are more or less the same, except that my noble friend is more modest—or more realistic—than I am. She asks only for 100 per cent, whereas, as will be obvious from the amendment, I seek 105 per cent. My proposal is designed to ensure that the employer is reimbursed for the costs that he has incurred and that he receives some compensation for administering what is to all intents and purposes a state benefit.

Before the Minister reminds us, I point out that his colleague said yesterday, at a very useful meeting on the subject, that it was a Conservative government who first reduced the rate from 100 per cent. That was done in relation to statutory sick pay as long ago as 1989 or 1990. I am fully aware of that because I was the Minister who introduced the relevant Bill in December 1989 or 1990. The parliamentary Intranet does not appear to go back as far as that, so I was not able to check up on my own speeches. Our Bill was designed to reduce the reimbursement rate for statutory sick pay. I think that statutory maternity pay came somewhat later.

I remember that Bill—it is seared in my memory. It slipped through another place without any trouble whatever and it was only when it entered this House and was spotted by the eagle eye of my late noble friend, Lord Boyd-Carpenter, that trouble blew up. He

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saw it for what it was—a Treasury saving device masquerading as a social security Bill. Having said that, there was a rationale behind the proposal in relation to statutory sick pay. It was felt that by reducing the reimbursement rate, one could provide an incentive to the employer to look hard at sickness rates and whether people genuinely needed to take time off. Obviously, the same is not necessarily so true in relation to statutory maternity pay, which is less avoidable than sickness.

Treasury saving devices masquerading as social security Bills are not an uncommon occurrence under governments of whatever political persuasion. As I said, I remember that Bill well. I particularly remember the number of defeats we suffered in the then unreformed and allegedly overwhelmingly Tory House. I can assure the noble Lord the Minister that its passage here is seared on my memory.

Lord McIntosh of Haringey: Late at night!

Lord Henley: Not all defeats were late at night, because many were as a result of dependence on my own Benches. As I have pointed out, and I make no defence, Lord Boyd-Carpenter led the opposition through that particular measure.

Nevertheless, concessions were made, in particular to small employers—and I am very glad to see that such concessions are still available to small employers in these measures. That is quite right. I also assure the noble Lord that, since that date, I have seen the conversion. Like St Paul, I now recognise that persecution—and in this case, persecution of employers in general and small employers in particular—is not a good thing.

Paternity pay, maternity pay, whatever they are, all impose burdens on employers. I appreciate that those burdens are not purely financial burdens. I appreciate that the mechanism whereby employers are reimbursed is very efficient, and gets the money back to them as fast as possible. Nevertheless, burdens are imposed on them which go beyond the financial—particularly in the case of a small employer losing a key worker. They can impose pretty drastic measures.

The principal matter is that this is a state benefit that is being provided—statutory maternity pay—and it is the employer who is being asked to reimburse it. Therefore, the employer must pay it and then be reimbursed later on. I therefore believe that the employer should be reimbursed and should also be reimbursed for the costs of administration of this benefit. It is for that reason that I would like to move my own rather optimistic amendment to suggest that they should be reimbursed at a rate of 105 per cent.

I apologise for the digression to explain the past, but since I had been responsible in the past I thought I should explain exactly why I was now moving an amendment which appears rather contrary to what I had done in December 1989 or 1990. I beg to move.

6.45 p.m.

Baroness Miller of Hendon: My noble friend has described my Amendments Nos. 57 and 60 as being

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more modest, because I was asking for 100 per cent, not 105 per cent. I would not describe my amendments as more modest but I would tell my noble friend that politics is the art of the possible. While it might be difficult for the Government to accept the amendment for even 100 per cent, I feel certain that they will find a really good reason why they cannot accept the amendment for 105 per cent. Nevertheless, the intent of both of us is exactly the same; namely, that the employer should not be out of pocket by this particular payment.

Many employers are concerned that, once established, the Government will gradually reduce the employer rebate until it possibly disappears altogether. It has happened in other cases, so the proposal is not totally without foundation.

So long as the rebate is not 100 per cent, the employers are being faced with an extra business burden in having to meet what should be the Government's obligation. It is what amounts to a hidden tax. I would be very interested to hear the reason why the Minister will probably tell us that the Government are unable to meet our request.

I must congratulate my noble friend on his openness and straightforwardness, in saying that his colleague and noble friend, the late Lord Boyd-Carpenter, actually pointed out that this was much more to do with Treasury control than anything else. No doubt that might very well be the case today.

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