HC Deb 07 July 1981 vol 8 cc252-3
7. Mr. McCrindle

asked the Secretary of State for Social Services if he is satisfied that both alternatives outlined in "Compensating Employers for Statutory Sick Pay" are satisfactory to smaller businesses.

The Minister for Social Security, (Mr. Hugh Rossi)

I am satisfied that each of the new options for compensating employers described in the document referred to by my hon. Friend goes a long way to meet the criticisms of earlier proposals made by the small business sector. The document will be the subject of consultation over the next two months and we shall be paying close attention to the views of all sectors of industry, including small businesses, before reaching any firm conclusion on what method of compensation to adopt.

Mr. McCrindle

Is it not a fact that, of the alternatives placed before employers, one of the schemes offers an additional reduction in the contribution rate of 0.4 per cent. to smaller businesses? Is it not also true that that second scheme offers an additional saving of 1,300 civil servants? In the light of those two advantages, does not my hon. Friend think that considerable care should be taken before proceeding with the alternative, no matter what representations he may receive from other quarters?

Mr. Rossi

In the scheme mentioned by my hon. Friend, the total amount of compensation that will be received by small businesses will be 0.9 per cent. That has been carefully calculated, and to increase it would mean taking away some benefits from other sectors of industry.

Mr. James A. Dunn

Can the Minister tell us what truth there is in the rumour that negotiations are now being undertaken to increase the compensation, and the amounts that would therefore be available to all businesses, not only small businesses, that applied the scheme? There is mention of a sum of about £100 million.

Mr. Rossi

I am unaware of the rumour to which the hon. Gentleman has referred. I assure him that we are receiving many representations on the consultation document, all of which we are taking into account. Our proposals will be announced in due course.

Mr. Buchan

Was not a major comment on this matter made in The Times a few weeks ago, suggesting that the employers will receive about £130 million over and above the amount that would be required to operate the scheme? Is not that at the expense of those who should be receiving sickness benefit, who will lose about £100 million? Is it not nonsense to argue that the scheme will make public savings to any extent? Is not the truth that the scheme, which will unscramble one of the basic planks of the Welfare State, will save only about £20 million to £30 million?

Mr. Rossi

I do not accept the hon. Gentleman's conclusion. The reduction in public expenditure overall will be about £400 million. That will be debated in due course when the final scheme comes before the House. I assure the hon. Gentleman that that is so. The employees will be put in exactly the same position as if their current benefits were subject to taxation, which is the basis that the Opposition tried to achieve when they were in Government.