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The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I say to the noble Lord, Lord Monson, that as I understand the position the provision applies to all businesses.
I wish to speak to Amendments Nos. 1, 2, 3 and 4, as did the noble Lord, Lord Henley. Clause 1 of the Bill establishes the new right to paternity leave. This is part of a package of measures that we are introducing, together with improvements to maternity leave provisions and the introduction of paid adoption leave, aimed at improving choice for working parents and enhancing competitiveness for business. I thank noble Lords for the generally warm welcome that they have given to these new measures. I know that many noble Lords share our view that the introduction of paternity leave is a key step towards recognising that fathers increasingly want to play more of a role when a new child arrives—a crucial time in their family's life.
The right to paternity leave will give fathers more time to care for and build a relationship with their new child and to support their partner in the important first weeks following the birth. Clause 2, which I shall mention shortly, will help fathers to take advantage of the new right to leave by offering a measure of earnings replacement.
As noble Lords will know, Clause 1 provides the fundamental framework of how we envisage the new scheme for paternity leave will look. It will be inserted into the Employment Rights Act 1996 and is similar in construction to existing provisions relating to parental leave.
I say to the noble Lord, Lord Henley, in case he is unaware of this, that we have consulted widely on our proposals for the introduction of paternity leave from a formal 12-week consultation on the Green Paper, Work and Parents, through to a further 12-week consultation specifically on the detailed framework of paternity leave. I believe that on this matter the noble Lord, Lord Henley, is out of touch with public opinion. Our proposals for new paternity rights have been supported by employees and employers alike. Indeed, paternity leave was the second most popular option in the Green Paper. Many employers—possibly covering up to half of employed fathers—already offer some paternity leave; and most fathers able to take time off choose to do so. But decent minimum standards also work to support employers who already offer good working conditions to their employees by enabling them to compete on a level playing field. This clause will ensure that new fathers—around 450,000 each year—have a basic right to time off in the important first few weeks following their baby's birth.
I also say to the noble Lord, Lord Henley, that it is a mistake to say that something will have a very harmful impact and to say at the same time, as another argument against it, that very few people will take it up.
Amendments Nos. 1 and 2 impact on parts of the clause that give us the power to make regulations dealing with these issues. The noble Lord tabled the same amendments in Grand Committee and we discussed them in some detail.
As I said then, the amendments would have the effect of taking the period of paternity leave out of regulations, with a view to stating on the face of the Bill that the period would be of exactly two weeks. As
things stand, the Bill makes it clear that regulations will provide that leave will be a minimum of two weeks. I am happy to offer further reassurance to the noble Lord that it is our current intention that the maximum period of paternity leave will be two weeks. We know, following extensive and exhaustive consultation, that that period represents a reasonable consensus. However, as I said in Grand Committee, I cannot rule out the possibility, over time, that the Government might want to look again at the issue of the length of leave. It could happen. But, I repeat, it is not our current intention.I therefore believe that it is right that the architecture of these provisions follows that of maternity leave, where the length of pay is a matter for primary legislation but where the length of leave is a matter for regulations. I therefore ask the noble Lord to withdraw those amendments.
I turn to Amendments Nos. 3 and 4, which seek to delete Clauses 1 and 2, and would therefore stop the introduction by the Government of paternity pay. I shall begin with the question of the cost to business. Those costs will not be great. As the noble Lord said, businesses will be able to recover most of the money that they pay out in statutory paternity pay in the same way that they can currently recover statutory maternity pay. All employers will be entitled to recover at least 92 per cent of what they pay out and small employers are able to recover 100 per cent plus an additional amount—currently 4.5 per cent—to compensate for employers' national insurance contributions that they may have paid in respect of statutory payments. As from April this year, we have doubled the threshold, so that a further 10,000 small employers are able to benefit from that special help.
I consider those costs across British business to be justified, particularly because I believe that helping fathers to balance their work and family life will be good for business, encouraging employee commitment, motivation and productivity.
The only other point that I should like to make on Amendments Nos. 3 and 4 is that we in government totally believe in paternity pay. We believe that it would be totally wrong not to have it. I draw the attention of the House—and, indeed, all voters—to the fact that the new caring Conservative Party apparently does not believe in paternity pay and would presumably get rid of it if it was ever returned to power.
I doubt whether the noble Lord is interested in any advice from me on the amendment. I suggest that he withdraws the amendment before anyone notices.
Lord Henley: My Lords, I should make it clear that I was not speaking for my party in this regard. The Minister will have noticed distinct silence from the Opposition Front Bench. I suspect that my Front Bench is somewhat in support of the noble Lord rather than of me. The Minister said that I was out of touch with public opinion. I have been told that on a number of occasions previously. I do not mind being out of
touch with public opinion. However, I am not sure whether I am on this occasion. Those members of the public to whom I have mentioned this seem to think that it is a rather silly little measure that is of no purport whatever. There is very little point in bringing it in.I was seeking to raise the matter before a slightly wider audience than that in the Grand Committee. Obviously, the Thursday morning before we break up for the Whit Recess is not a time when a large number of our colleagues deign to stay in the Chamber to discuss important matters, such as the Employment Bill.
I have raised this issue, which was my intention, and I am grateful for the fact that the noble Lord has yet again repeated the fact that the Government's current intention is that the arrangement will be limited to two weeks. Long may it remain so. I hope that they will think long and hard before giving in to any pressure to increase it. He also repeated the fact that there is some easement in terms of costs to small employers, in that they will be reimbursed at a higher rate than that which applies to others through the 92 per cent rate.
Finally, I give the assurance that I have no intention of pressing the amendment to a Division at this stage; nor am I likely to bring it back at Third Reading. I was merely offering it in the spirit of being helpful and hoping that the Government might wish to agree to Amendments Nos. 3 and 4. Obviously, they have not seen fit to do so but they might want to think again about the matter. Perhaps they might table such amendments at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 to 4 not moved.]
Clause 12 [Penalties: fraud etc.]:
Baroness Miller of Hendon moved Amendment No. 5:
- Page 25, line 32, leave out "£300" and insert "£3,000"
The noble Baroness said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 6 and 7. They all cover the same point; namely, the rate of penalty that is applicable in cases of fraudulently or negligently making any incorrect statement or declaration or providing incorrect information or documents in relation to a claim for either statutory paternity pay or statutory adoption pay. There is also a similar penalty in the case of an employer fraudulently or negligently making incorrect payments of statutory paternity pay or statutory adoption pay.
I beg your Lordships' indulgence; my voice is absolutely horrendous. It sounds terrible to me and I cannot imagine what it sounds like to noble Lords opposite.
Lord McIntosh of Haringey: My Lords, it is like music to my ears.
Baroness Miller of Hendon: Like music to your ears, my Lords? Most certainly not!
There is an anomalous discrepancy between the penalties that are payable in the case of such offences relating to statutory adoption pay, where the penalty is up to £3,000, and to paternity pay, where the penalty is up to £300. At the previous stage of the Bill, I proposed that the two penalties should be identical and should be reduced to a uniform £300 penalty in both cases.
Dealing first with the amount of the penalty, the Minister pointed out that in the case of statutory adoption pay, a penalty of only £300 was inadequate in cases where the amount paid over a 26-week period could amount to £2,600 and that small employers' relief would increase it further. In the case of statutory paternity pay, the Minister pointed out that the maximum receivable by a father would be £200 plus 5 per cent in relation to small employers' relief.
That discrepancy between the two penalties is apparently justified by the Government on the basis that the smaller the amount that the fraud could net, the smaller should be the penalty. That, in my view, is a perverse application of letting the punishment fit the crime. The crime is the fraud, not the amount that it involves. If someone burgles a house or commits a mugging in the street, the crime attracts a prescribed maximum penalty, irrespective of the sum that is stolen. That is the point.
In Committee, the Minister said,
- "the £3,000 figure is a maximum".—[Official Report, 13/3/02; col. CWH 37.]
I accept the argument that the Minister put to the Committee—that the figure of £300 that I had previously proposed in the interest of consistency for both types of case—is inadequate; that is certainly so in the case of adoption pay. However, I believe that the need for consistency still remains. There is, I agree, a difference between the total benefit that could be fraudulently or negligently obtained by an employee or underpaid by an employer in the two types of case, but the actual offence is, in principle, essentially the same. Since we are agreed that the smaller sum is inadequate in the one case, the penalty should be increased to one that fits the other; both maximum penalties should be the same.
The question of fixing an adequate penalty, taking into account the size of the fraud and all other relevant circumstances, including any mitigating factors, would continue to be left to the person exercising the judicial function of imposing the fine. It is incongruous to have two widely different and inconsistent maximum penalties for what I have described as essentially the same offence. I beg to move.
Noon
Lord McIntosh of Haringey: My Lords, this is an example of what, in the artillery, we used to call "bracketing". You shoot to the right and shoot to the left and hope that, somewhere in the middle, you hit the target. I am afraid that the right off-shooting is just as bad as the left off-shooting because the target is where the Government have drafted the Bill. The answer is in the word "proportionality". It is right and
proper that the civil penalties that can be awarded for offences in relation to the new schemes should be in proportion to the amounts that may be at risk.The noble Baroness, Lady Miller, anticipated correctly what I was going to say about the matter. Where the offence involves statutory adoption pay, the maximum amount at risk is £2,600—that is, 26 weeks at the maximum rate of pay. A penalty of £3,000 is in proportion to that risk. Where the same offence involves statutory paternity pay, the maximum risk is only £200—that is, two weeks at the maximum rate of pay. Therefore, a penalty of £300 is proportionate to the amount at risk.
The noble Baroness, Lady Miller, raised another issue—that of fraud and a number of false payments. I can reassure her on that point. There may be cases in which an employer manipulates the system and creates a number of false payments of statutory paternity pay. In those circumstances, the maximum penalty could apply for each separate offence. Therefore, if there were 10 false payments, the maximum penalty would rise correspondingly to £3,000. I believe that that preserves the principle of proportionality which, I hope the noble Baroness will agree, is the correct position after the bracketing process.
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