Statutory Sick Pay Bill

HC Deb 26 November 1990 vol 181 cc628-710

Order for Second reading read.

3.59 pm

The Secretary of State for Social Security (Mr. Tony Newton)

I beg to move, That the Bill be now read a Second time.

As right hon. and hon. Members will note, the Bill consists of only three clauses. The House may find that a welcome change from most of the social security and other Bills brought before it. In general, social security Bills cover a wide variety of different social security matters, and their lengths are commensurate with that. This Bill, however, is a one-subject Bill dealing solely with the arrangements under which employers can currently recover, from their remittances of national insurance contributions, the whole of the statutory sick pay that they pay out to their employees when they are sick.

As the House will recall—certainly the hon. Members for Oldham, West (Mr. Meacher) and for Birmingham, Ladywood (Ms Short) will—in my general uprating statement last month, I gave notice of our intention to adjust those arrangements as a continuation of, or a building upon, the restructuring of the SSP scheme that I undertook, to a modest extent, last year.

Before coming to the detailed provisions of the Bill, it might be helpful briefly to remind the House of the background to and the origin of the SSP scheme. Those hon. Members with lengthy memories—that will include the Opposition Front-Bench spokesmen—will recall that, when the Government came to office in 1979, occupational sick pay cover during the 1970s had taken off and begun substantially to expand. However, the state—I would call it the ordinary social security system—was continuing to process some 10 million sickness benefit claims a year, with the result that there was a significant overlap, and sometimes even over-provision, between the state and the employers. Because sickness benefit was not taxed, in effect many employees were better off when sick than when at work. It was against that background, and with a wide measure of consent from both employers and their organisations, that the SSP scheme was introduced.

I doubt whether the House will wish me to dwell too long on the history of the SSP scheme. Despite what I suspect one or two Opposition Members may say, it is fair to point out that the scheme has been a considerable success story. When it began, there was undoubtedly apprehension among employers and employees about its impact. In the event, those fears proved largely groundless, especially after the inevitable initial problems, which arise with any substantial changes, had been overcome. Employers quickly assimilated SSP into their usual payroll arrangements, and the vast majority of them now operate the scheme with very little difficulty. Perhaps a measure of its success could be gauged from the fact that even the trade union movement—if I may put it in those terms—commented favourably on the implementation of the scheme.

I acknowledge that smaller employers, who obviously have less scope for developing expertise in the SSP scheme, may sometimes find its operation more of a chore. That is one reason why I had their interests especially in mind when developing the package, on which I shall elaborate later.

Mr. Michael Grylls (Surrey, North-West)

Has my right hon. Friend had an opportunity to hold full consultations with all the small and medium-sized organisations? At a time when the Government are telling businesses generally that they must keep down their costs, for obvious reasons, and at a time of high interest rates, many of the small and medium-sized firms are in some difficulty. Has my right hon. Friend received any advice from the deregulation unit and from our hon. Friend the Minister with responsibility for small firms about their reaction to the Bill? I have heard a great deal of concern expressed because it is perceived that the Bill will add to costs at a difficult time. Will my right hon. Friend bear that in mind and tell the House what consultations he has had?

Mr. Newton

I will certainly bear in mind my hon. Friend's remarks, and I acknowledge the considerable part that he has played over many years—of which I have had personal experience in various ministerial positions and in other ways—in ensuring that the interests of small businesses in particular are taken fully into account. I hope that my hon. Friend will bear with me, because later in my speech I shall refer to parallel reductions in national insurance contributions, which are geared to take special account of the needs of smaller businesses. They may mean that some smaller employers—although not all, because it will depend to some extent on factors particular to certain businesses—whose employees are not highly paid, as is the case in many service industries, will find that reductions in national insurance contributions will leave them rather better off, taking the package as a whole, than at present.

Ms. Clare Short (Birmingham, Ladywood)

I am sure that the Secretary of State would not want to mislead the House. He must be aware that the National Federation of Self Employed and Small Businesses is passionately angry about his proposals, feels that promises made in the past have been breached, and believes that the new measures will prove very destructive both to sick people and their businesses. That view is on the record. The right hon. Gentleman should not pretend that businesses welcome the legislation, because they certainly do not.

Mr. Newton

I did not make any such pretence. I sought to make a sensible and balanced response to my hon. Friend's intervention. Later in my speech, I shall give examples of the possible effect of the new system on a representative sample of small employers with a typical incidence of sickness, showing how they might gain from the reduction in national insurance contributions for employers, which are specially focused on lower earnings bands below £175 or £185 per week.

Mr. Anthony Nelson (Chichester)

Will my right hon. Friend confirm that some representations were made before his uprating statement, in which he announced significant improvements in social security benefits that might put a different complexion on the representations made to him?

Mr. Newton

The representations to which the hon. Member for Ladywood referred were submitted before the federation had details of the reductions that were to take place in employers' national insurance contributions.

Ms. Short

But I have a copy of the federation's letter.

Mr. Newton

The hon. Lady must be referring to later representations. Those I have seen were dated 6 November, and it was not until 8 November, at the time of the autumn statement, that I gave details of the national insurance contributions re-rating proposals. The reduction for employers is rather larger in both percentage and absolute money terms than I indicated at the time of my original uprating statement. Once I had refined the detail, the final proposals were more generous than those signalled at the time that I announced the SSP proposals.

It may be that certain interests have not yet been able to take into account, to the extent that I would obviously want them to do, the advantages to employers of the reductions that are to be made in national insurance contributions, which will total about £250 million—quite a significant sum, taken over all.

There is no doubt that the interests of small employers in particular should be taken into account, and I have sought to do so. Considerable strides have been made in recent years in improving the presentation of guidance on statutory sick pay, which has done a great deal to increase understanding of the scheme among small employers in particular. Moreover, the development of software packages for those employers with computer payrolls—I accept that this is not true of all employers, but it is true of a growing number—has further eased any operational difficulties which may originally have been experienced.

Earlier in my remarks, I referred to the growth of occupational sick pay coverage which had occurred during the 1970s. Since statutory sick pay was introduced in 1983, and occupational sick pay coverage has continued to grow. At first, coverage was more selective—that may emerge later in the debate—and tended to apply to white collar rather than to manual workers. Gradually, as the expansion of occupational sick pay schemes continues, they have become more comprehensive.

Mr. James Wallace (Orkney and Shetland)

When the former Secretary of State, the right hon. Member for Sutton Coldfield (Sir N. Fowler) introduced the Social Security and Housing Benefits Bill on 23 November 1981, he said that the latest available estimate was that 90 per cent. of full-time employees were in some sort of occupational sick pay scheme. I think that the latest estimate that the Minister has given was 91 per cent.—after a survey done for his Department in 1988. From 90 per cent. to 91 per cent. does not seem to be a great increase in coverage.

Mr. Newton

Certainly the coverage of occupational sick pay schemes is substantial. For example there has been a tendency to bring more part-time workers into such schemes and for schemes to provide more comprehensive coverage. As a result, many of those groups who are sometimes adverted to as people who have missed out in these developments, have been increasingly included.

As I was about to say—this is the point that the hon. Member for Orkney and Shetland (Mr. Wallace) was referring to—research carried out for the Department by an independent organisation, IFF research, in 1988 showed that about 20 million of the work force, or 91 per cent., as the hon. Gentleman said, work for employers with occupational sick pay schemes. As I have said on a number of occasions, for example during the uprating—

Ms. Short

rose——

Mr. Newton

May I finish the sentence before the hon. Lady intervenes again?

That figure reflects the fact that there is a growing acceptance by employers of their greater responsibility for covering short-term sickness among employees, which in my view is right and proper.

Ms. Short

We know that the Secretary of State chose the words in the uprating statement carefully—91 per cent. of the work force work for employers who provide some occupational cover. That does not mean that 90 per cent. of the work force are covered, as the hon. Member for Orkney and Shetland should know. Most low-paid, part-time, short-term workers are not covered. Nearly half the workers in the private sector are not covered. To talk as though 90 per cent. are covered is misleading. At best, probably only half the population are covered.

Mr.Newton

I think that the hon. Lady will find that the figures are higher than that. I hope that I always choose my words carefully. I have no desire to mislead anyone. It is certainly the case that 91 per cent. of employees work for employers with occupational sick pay schemes. As I was seeking to tell the hon. Member for Orkney and Shetland, in practice the schemes have become more comprehensive over the years, and fewer people are now excluded from them. That is the best assessment that we can make.

Mr. Michael Meacher (Oldham, West)

rose——

Mr. Newton

I shall gladly give way to the hon. Gentleman, but first, it may be helpful if I complete the next part of my speech.

A particularly striking feature of the report—commissioned in 1988—is the growth in coverage in manual occupations. That has grown from 62 per cent. of employees in 1974 to 88 per cent. in 1988—only 5 per cent. behind coverage in non-manual grades, at 93 per cent. The report also indicates that the majority of schemes—83 percent. in the private sector—top up SSP to full basic pay, and that, overall, nearly three quarters of all employees receive their full salary when sick. That is a very encouraging development, and it clearly demonstrates the extent to which employers have increasingly accepted responsibilities in the field of short-term sickness.

Mr. Meacher

The Bill is premised on the view that occupational sick pay is wide and is increasing. Will the right hon. Gentleman face up to the point made by my hon. Friend the Member for Birmingham, Ladywood (Ms. Short)—that 44 per cent. of private-sector schemes do not offer occupational sick pay and that 55 per cent. of private employers who employ fewer than 10 employees do not have an occupational sick pay scheme? The 90 per cent. figure that he keeps quoting is totally irrelevant and grossly misleading. Does he accept that there can be no justification for the Bill when that premise simply does not exist?

Mr. Newton

I do not accept that for a moment. The figure of 91 per cent. of employees working for employers who offer occupational sick pay schemes could not be said to be less than striking for almost any other sector. In some of the electoral matters with which the hon. Gentleman and I are concerned, 90 per cent. would be regarded as extremely high. Employers who do not offer what could be described as an occupational sick pay scheme may continue to pay employees for a significant time when they are sick.

Nothing that I have said could be described as misleading. If anything, the way in which the hon. Gentleman is trying to minimise employers' improved acceptance of their responsibilities on short-term sickness among their employees is far more misleading than anything that I have said.

Mr. John Battle (Leeds, West)

I am grateful to the Secretary of State for giving way, because this point is crucial. If the Government are saying that they will change the basis of national insurance because 91 per cent. of people have cover, we must be clear about that figure, because we profoundly disagree with it. The only person covered by a workplace occupational sick pay scheme may be the managing director, and none of his workers may receive any benefit. A workplace may be covered, but not as many people as the Secretary of State is suggesting, on whom he is basing his argument.

Mr. Newton

I draw some encouragement from such a line of argument. If the hon. Gentleman can produce a significant number of examples—I am tempted to say, if he can produce one—of occupational sick pay schemes that are confined to the managing director, I might give some credence to his argument, but I doubt that he could find a single such scheme, let alone a significant number.

Dame Elaine Kellett-Bowman (Lancaster)

Is my right hon. Friend aware that, in agriculture for example, a sick pay scheme cannot be confined to one member but must be given to all members of staff?

Mr. Newton

I note what my hon. Friend says, and I am grateful to her. The trend has undoubtedly been towards wider coverage of groups who previously might not have been part of an occupational sick pay scheme, and we have borne that point in mind.

Mrs. Alice Mahon (Halifax)

This problem is of deep concern to me, as I represent a constituency which, because of the changes to industry, is now a small-firm economy. Has not the Secretary of State missed a golden opportunity to consider employers who employ fewer than 10 people and to give some real statistics? Let us have the truth. Like Labour Members, the right hon. Gentleman knows that many employees are not paid SSP when they should be. Has any research been conducted into how many employers do not pay SSP? The right hon. Gentleman's case is flawed, and there is little statistical evidence to back up this nasty little Bill.

Mr. Newton

Occasionally, as in every part of the social security system, the rules do not work perfectly. A great deal of effort was put into improving the guidance and assistance to employers to help them to operate the system. One aspect of the reimbursement arrangements does not work well. In some circumstances, employers fail to claim what theoretically they are able to claim. People have the right to go to the Department of Social Security if they feel that they are not receiving their full entitlement. In certain circumstances, the DSS will take steps to make sure that they do.

I do not pretend that the system works perfectly in all cases. I do not pretend, either, that the administration of the social security system, through the DSS, works perfectly in all cases. It is incontrovertible, however, that the statutory sick pay scheme is working a great deal better than most Opposition Members forecast at the time that it was introduced. Moreover, it is working a great deal better than it did in the early days. It has settled down and, by and large, is working very well.

Mr. Paul Flynn (Newport, West)

This report, which was debated at some length during the proceedings on this year's Social Security Bill, has been thorougly discredited by the Government. It does not reach the conclusion that the Minister reaches. It states that the majority of occupational pension schemes are very poor compared with the statutory sick pay scheme. Only 19 per cent. of private sector schemes provide cover for the full six months. Many of the other private sector schemes exclude trainee workers. In such dangerous industries as mining and construction, where a statutory sick pay scheme is needed, fewer than 50 per cent. of firms offer any sick pay scheme whatsoever.

Mr. Newton

I have already said that occupational sick pay schemes are widespread, that their breadth and coverage has improved in recent years and that the statutory sick pay scheme as a whole has worked well. It seems to me to be right that employers should accept greater responsibility for short-term sickness among those whom they employ. The Minister for Social Security and Disabled People is sitting beside me. I ought therefore to point out that, when demands on Social Security Ministers are high, we ought to do more for the long-term sick and disabled, for the less well-off pensioners on income support and for those who need help with residential and nursing care. It is right, when we consider how to use social security money, to consider our priorities. That is at the core of my argument.

Mr. Tony Favell (Stockport)

If I may refer to occupational sick pay schemes in the public sector, in particular to civil service and local government schemes, there have recently been a number of horrendous reports of people regarding days off for sickness as though they were extra holidays. Can the Minister say whether the Bill will help to combat that abuse?

Mr. Newton

I had not intended to refer to that issue; I feared that it might inflame the hon. Member for Oldham, West, who is fairly easily inflamed. My hon. Friend may have in mind something to which I had decided not to refer—a recent Audit Commission report suggesting extraordinary levels of above-average absence through sickness in a number of London boroughs. I do not wish either to add or to detract from what the Audit Commission says, or to speculate about the reasons for it, or to suggest what the effect upon the Bill might be. However, my hon. Friend may seek to intervene in order to comment further on the matter.

I was seeking to say something about the pattern of occupational sick pay schemes. Obviously, I recognise that not everyone is covered; we have debated that point in the last few minutes. Under some schemes, some new employees may have to serve a qualification period before becoming eligible for occupational sick pay. A typical qualifying period for short-term sickness cover is three months. However, it is worth remembering that half of all private sector schemes—this follows on from some of the points made by Opposition Members—have no exclusion clauses at all. All employees in those schemes are covered from day one, regardless of length of service, job grade and so on.

As I have said, where there is a qualifying period, it would typically be about three months—perhaps, in some cases, six months—which is substantially less than the qualifying period for state sickness benefit. To receive state sickness benefit, in broad terms—I will not go into all the complications of the national insurance rules—it is necessary to pay contributions for two years, whereas large numbers of those in occupational sick pay schemes qualify for benefit from day one, and the great majority within three or six months.

Ms. Short

Will the Secretary of State help all of us by giving his best estimate of the proportion of the working population who are covered? I do not want him to give the House these false figures relating to employers who cover some of their workers. What proportion of the British work force are covered by an occupational sickness scheme?

Mr. Newton

I have given the hon. Lady the best information that I can give, drawn from the survey that we conducted. If my right hon. Friend the Minister for Social Security and Disabled People can add to that, he will certainly seek to do so later in the debate. What is unarguable is that a substantial proportion of the British work force are covered by occupational sick pay schemes.

There is one other point that I should make. I am not quite sure whether the hon. Member for Ladywood is going to raise the question of those who are earning less than £46 a week, and are therefore below the lower earnings limit at present. If she is including those people in her reference to the proportion of the British work force, hers is a pretty poor point. Admittedly, they do not qualify for statutory sick pay, but in many cases they have deliberately chosen not to enter the national insurance system, and therefore would not qualify for state sickness benefit either. In effect, they have made a choice to stay out of the area of coverage for short-term sickness.

I would be interested to know whether the hon. Lady's implicit attempts to argue that point include those people who are in the work force, but have quite deliberately chosen to keep their earnings below £46 a week in order to stay clear of the national insurance system. We know that a lot of people do that, but that is a decision for them. I am not willing to accept that they should be included in the hon. Lady's statistics to somehow undermine the validity of what I am saying about the growth in coverage of occupational sick pay schemes.

Ms. Short

I am happy to answer the Secretary of State. It is my view that we should extend the coverage for sickness and so on to part-time workers, as well as full-time workers. However, I think he knows that that is not the point that I am making. He keeps quoting the misleading statistic that 90 per cent. of the British work force work for employers who offer some occupational sickness scheme. That could include a tiny number in management positions in a very big work force: the right hon. Gentleman knows that. I am referring to the people within the national insurance scheme, which is being whittled away. I am not referring to those who work very short hours; that is a separate issue. Will he give the House his best estimate of the proportion of the work force who are covered? I doubt that it is half, and I do not want him to mislead the House and say that the figure is 90 per cent.

Mr. Newton

I do not think that I could be accused of having misled the House; I have no intention of doing that. It is clear that the proportion is very substantial. If my right hon. Friend the Minister for Social Security and Disabled People or I can give the hon. Lady any further help on that point later in the debate, we will.

It is a striking fact that so large a proportion of the work force—more than 90 per cent.—work for employers who have occupational sick pay schemes. It is incontrovertible that the spread of those schemes—which formerly excluded rather more people than they do now —has been substantial, and that a sizeable proportion of those in employment are either covered by occupational sick pay schemes or work for employers who, as a matter of practice, will go on paying them—often full pay—for some period when they are sick.

Mr. Meacher

I repeat that this is the absolutely key, hinge point of the Bill. Does the right hon. Gentleman accept, and has his Department not briefed him—I am sure it has—that the IFF survey, to which he refers, involved a sample which was over-stratified in favour of large companies? Large companies are more likely to provide occupational sick pay, but there has been a reduction in their number and a huge increase in small companies with fewer than 20 or even 10 employees. It is precisely because they were under-represented in the survey and they do not offer occupational sick pay that the survey is so fallacious. Is the Secretary of State not therefore basing the whole Bill on a fallacy?

Mr. Newton

No, I am not. There are a number of interrelated points in the argument and we are arguing on one narrow front. The hon. Gentleman will remember from my uprating statement that we are undertaking a variety of steps here, all of which have some relationship to his point. Yes, there has been a large and welcome development of small firms. As I have often said, many of them will have employees who are paid less than £175 a week—or £185 a week, as it will be from next April—at which point they get into the full range of employers' contributions. Those firms are getting a proportionately larger reduction in their employers' contributions.

Equally, a significant number of employees of small firms will qualify not for the higher rate of statutory sick pay but for the lower rate. The lower rate was fully uprated in line with prices precisely because, as I said in my uprating statement, it was more likely to go to employees whose employers were not providing occupational cover.

The package as a whole includes the changes in the reimbursement arrangements, what has been done with the rates of SSP, including the full uprating of the lower rate, and the reduction in national insurance contributions, which is worth some £250 million to employers as a whole. While I am not in any way seeking to dismiss the hon. Gentleman's point about small employers, that very point has been carefully taken into account in the package of proposals with which this measure—the only one in the Bill which requires such legislation—is associated.

Employees who do not yet have any occupational sick pay cover tend to be people in low-paid or part-time employment. As I have said, it is precisely for that reason that the uprating proposals provided for a full uprating of the lower rate of SSP, which is what those groups are most likely to receive.

The summary to the sick pay report, which we have just been discussing—I stress that it was carried out by an independent research company—concludes: Looking to the future, the level of cover is likely to increase further, as employment continues to shift towards industries with more generous schemes (i.e. service and new manufacturing industries); traditional differentials between manual and non manual grades are further eroded; and as part of the continuing improvement in terms and conditions of employment". It is on that record and prospect, derived in part from the report but by no means only from it, that we are seeking to build.

The proliferation of occupational sick pay schemes now means that, for the great majority of those in work, the rates of SSP bear little or no relation to the amount that they receive when sick. It is right that the Government should take account of that in the future development of the scheme and in considering the distribution of available resources within the social security budget as a whole.

Let me now outline the proposals for the restructuring of statutory sick pay which I announced to the House during my uprating statement on 24 October. As has become clear from our exchanges over the past few minutes, the proposals contain two elements. The first comprises the reimbursement arrangements for employers, which are the subject of the present Bill. The second relates to the changes in the rates and earnings thresholds for SSP.

I should make it clear that the latter will be covered in a separate SSP uprating order and will be debated in the House, with the main benefit uprating package, in due course. It would perhaps not be proper for me to anticipate that debate, although it is right—again, as our exchanges have clearly shown—to refer to those changes during this Second Reading debate, because they form part of the general restructuring of SSP.

As hon. Members know, there are two rates of statutory sick pay. At present, the lower rate goes to those employees whose average weekly earnings are between £46 and £125—£46 being the lower earnings level at which national insurance contributions become payable. As I explained to the hon. Member for Ladywood, I propose to increase that rate, in line with the full retail prices index amount of 10.9 per cent., from £39.25 to £43.50—an increase of £4.25 a week. That is in recognition of the fact that those in low-paid or part-time employment are less likely to have occupational sick pay cover when they fall sick.

At the same time, I propose that the dividing line between the two rates, which, as I have said, is set at £125, should be increased to cover the whole range of earnings bands within which employers pay the lower rate of contributions. At present, that covers employees earning less than £175 a week, with an increase to £185 from April 1991 under the proposals that I announced for the re-rating of national insurance contributions following the Chancellor's autumn statement on 8 November. I propose to leave the higher rate of SSP unchanged this year at £52.50. Subject to parliamentary approval, the changes will take effect from 6 April 1991 and I made it clear in my uprating statement that they will reduce public expenditure by about £100 million in 1991–92.

As I have said, this is not perhaps the proper parliamentary occasion on which to discuss those proposals in detail, but I must stress that the vast majority of employees will face no reduction in the total payment that they receive when sick. That is because of the way in which occupational sick pay under employers' schemes interacts with SSP.

It may help if I explain just how the reimbursement arrangements work. Each month, employers deduct from their regular remittances of national insurance contributions to the collector of taxes the gross amount of SSP that they have paid to their employees. If the total contributions clue amount to less than the SSP paid, the employer can similarly adjust his payment of PAYE tax. Should the total of both national insurance contributions and tax be insufficient to allow full recovery, the employer can either wait until the next month's payment to recover the balance or apply to the Inland Revenue for a direct refund.

In addition, since April 1985—some time after the scheme came into operation—an employer has also been able to recover, by deduction from his remittances of national insurance contributions, an amount by way of compensation for the cost of the national insurance contributions payable on SSP itself. That amount is fixed each year and, at present, is 7 per cent. of the total SSP paid.

Having explained the reimbursement arrangements—I hope with reasonable clarity—let me outline the provisions in the Bill. All the substantive provisions are in clause 1. Clause 1(1) reduces the amount of SSP that employers can recover in the way that I have described from 100 per cent. to 80 per cent. Clause 2(2) enables that percentage to be varied by order. Clause 1(3) brings to an end the additional 7 per cent. compensatioin rate. The first of the two remaining subsections enables regulations to be made to cater for rounding to the nearest penny, and the second makes the consequential amendment to the Social Security Act 1975 relating the transfer of funds between the Consolidated Fund and the national insurance fund. Clauses 2 and 3 deal with consequential and supplementary matters and are in the standard format that appears in most Social Security Bills. I do not propose to deal with those clauses in detail, but I want to make two points.

The first point relates to subsection 3 of clause 2, which contains a power to make transitional regulations. Hon. Members may like to know that the intention is for those to provide that all payments of SSP made before 6 April 1991 will continue to be subject to 100 per cent. reimbursement plus the 7 per cent. compensation, even if not recovered from remittances to the Inland Revenue until after that date. Payments of SSP made on or after 6 April will be recoverable at the new 80 per cent. rate, and no additional compensation will apply.

The second point relates to subsection 2 of clause 3, about commencement. As I have just made clear, it is intended that the provisions will come into effect from 6 April 1991. If there are other points about the fairly elaborate detail of those two clauses that hon. Members wish to raise, my right hon. Friend the Minister for Social Security and Disabled People will try to answer them when he replies.

As the explanatory and financial memorandum to the Bill explains, the change from 100 per cent. to 80 per cent. reimbursement will result in public expenditure savings of £181 million in 1991–92, rising to £190 million and £197 million in the following two years. In addition, the ending of the 7 per cent. compensation rate will increase income to the national insurance fund by £71 million in 1991–92, £75 million in 1992–93 and £78 million in 1993–94.

Mr. Peter Thurnham (Bolton, North-East)

To what extent will that be offset by the reduction in national insurance contributions, or is that the net figure?

Mr. Newton

My hon. Friend has raised a good point. That is the total of expenditure saving plus additional income as it were or reduced outgoings to the national insurance fund, which, as my hon. Friend will see from the figures, amounts to about £250 million.

Ms. Short

What?

Mr. Newton

If we add £181 million to £71 million, it amounts to £252 million.

Ms. Short

What if we add together the £197 million and the £78 million?

Mr. Newton

The hon. Lady is adding up the figures for the following years. I am happy if she does that, and if need be, we can set out the three-year figures. However, inevitably they will be subject to uncertainty, because many variables are involved. The figures given are the best efforts that could be made at the time. I believe that the easiest figure to concentrate on at the moment is the combined total of the saving in public expenditure, plus the increased revenue to the national insurance fund, which is of the order of £250 million. As has been noted, that takes no account of the reduction in national insurance contributions, which itself is about £250 million. I said in my uprating statement that it would be more than £200 million. When I gave the details on 8 November, the figure was larger than I had signalled in my uprating statement. In practice, the reduction announced on 8 November is about £250 million.

I do not mean to pretend that there is or can be a direct equivalence for every employer between their reduction in national insurance contributions and the additional amount that they might have to pay for statutory sick pay. However, it is clear from my figures that the offset is substantial when we consider employers as a whole in respect of the reimbursement side of the package.

Mr. Wallace

The Secretary of State has presented a package to the House including the measures in the Bill, the reduction in employers' insurance contributions and the freezing of the higher rate of SSP and the change in the threshold. With regard to the last factor, is there a further £100 million saving to the Treasury? As a package, is there a reduction in public expenditure of £100 million? If that is the Treasury's gain, whose loss is it?

Mr. Newton

I hope that it was clear in my uprating statement and in everything else that I have said that the figures I have given in response to my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) and to the hon. Member for Ladywood relate to the public expenditure saving in the Bill together with increased national insurance revenue, which is not a saving in public expenditure in the Bill as against the reduction in national insurance contributions. None of that embraces the £100 million to which I referred a few minutes ago, arising from the fact that the higher rate of SSP is not being uprated and from the change in the thresholds. That is absolutely clear and I would not wish to risk misleading anyone about it.

As to who has gained, my uprating statement included significant increases in benefit for those in residential care and nursing homes, an improvement in income support for less well-off pensioners, and last Wednesday the House debated a Bill which will steer significant additional money over the next two or three years to the long-term sick and disabled. I do not run away from the fact that Social Security Ministers must face priorities in the way in which they spend and use money. This Bill is part of an assessment of where the weight of state resources should be directed to achieve the best value for the taxpayers' money.

Mr. Richard Alexander (Newark)

Taking the package as a whole, and in view of today's figures, the National Federation of Self Employed and Small Businesses believes that many firms will have to pay up to £11 a week more for up to 28 weeks. If that is the case, it is a matter of concern. Will the Secretary of State deal with that concern?

Mr. Newton

I will refer to examples later against the background of the fact that, while the maximum extension of SSP following changes made around 1985 is now 28 weeks, the average spell of sickness is probably about three weeks. We must take account of the likely expectation and experience and of the reduction in national insurance contributions. I will give some examples shortly which should ease my hon. Friend's anxieties and should also significantly ease the anxieties of the National Federation of Self Employed and Small Businesses, which has not perhaps yet had the fullest opportunity to digest the reduction in national insurance contributions that I announced on 8 November.

Many of the early comments on the proposals have, not unnaturally, centred on the effect on employers. Before I refer to that, I want to refer briefly to the implication for employees and to emphasise that the changes in the Bill —I am not here talking about the other £100 million, for which there could be slightly different arguments—have no direct effect on employees. Their entitlement to particular payments remains entirely unchanged by the change in reimbursement and compensation arrangements for employers.

I am aware that it has been suggested in some quarters that it will in some way disadvantage disabled people by making employers less willing to take them on. Exactly the same was said when SSP in its present form was first introduced, and on the occasion of earlier changes, such as extending the period for which SSP is payable. I believe that those fears proved groundless in the past, and I see no reason to suppose that they are any better founded now. Indeed, we do not expect any change in the pattern of employment of people with disabilities as a result of these changes.

In general, people with disabilities do not have bad attendance records. Their records are likely to be as good as, if not better than, average. The 1984 general household survey showed that half of all people with disabilities in work took fewer than five days a year off work for sickness or treatment, and that, over a five-year period, half of them had not had a spell of sickness or treatment lasting a month. Consequently, there is no reason to suppose that employers' SSP liability for them would be any greater than for the average employee.

My right hon. Friend the Minister for Social Security and Disabled People shares my view that there are many other factors of far greater importance in determining job opportunities for disabled people. Both the Department of Social Security, and perhaps even more importantly the Department of Employment, have developed numerous policies to seek to promote the employment of people with disabilities. Those opportunities advanced in this House only four days ago when we debated the disability working allowance proposals in the Bill that we discussed on Wednesday, which we are hoping to bring into effect in April 1992. That will certainly have more effect on the encouragement of disabled people to work and on the scope for them to work than will the proposals that we are discussing to day.

I come now to some of the points raised by my hon. Friends about the position of employers under the Bill. It is important to see its proposals in the context of the reductions in national insurance contributions, to which I shall shortly refer, and which go a long way towards offsetting any additional costs arising from the reduced recovery arrangements.

Hon. Members who were here when SSP was introduced in 1983—I confess that I was one of them; I think that I was the Under-Secretary serving on the Bill —will recall that employers' organisations argued strongly in favour of the sort of arrangements that we have now.: I would not want to disguise that fact. Their view was entirely reasonable at the time, especially as the scheme was new and an untried departure. After detailed discussions, the Government agreed to provide for the 100 per cent. recovery system.

It is equally and eminently reasonable for us to have taken a fresh look at the system, now that we have nearly a decade of successful practical experience of the scheme and in the light of other developments in and demands on the social security system—that is what we are doing in practice. In particular, we have examined the implications of full reimbursement for employers with occupational sick pay schemes.

Because SSP can be offset against occupational sick pay liability, and because employers can get back all the SSP they pay, in some cases that reduces the amount of sick pay that employers would othewise pay anyway under their own schemes. So in some cases—I do not say in all—the 100 per cent. recovery arrangements provide a positive financial advantage for employers. Now that SSP is well bedded in, it is reasonable that we should examine the extent of that and whether it is right to retain it in its present form.

I know that some employers have argued that it is not the employers' place to provide short-term sickness cover for their employees. As I said earlier, and in my uprating statement, I do not agree. That flies in the face of what has been happening: a growing number of employers accept that it is their responsibility to be concerned with short-term sickness among their employees.

I recognise that it is not always so easy for smaller employers to provide the sort of cover that employers in major companies provide, but many of them do so for short-term, if not for long-term, sickness. Provision of occupational sick pay is now the norm, not the exeception, and as I told the hon. Member for Ladywood, when smaller employers do not operate formal schemes, they often make discretionary payments or continue full pay for short periods of sickness. We cannot quantify that as well as the hon. Member for Ladywood or I would like, but it does show that the hon. Lady was overstating what we might call the occupational sick pay gap.

Mr. Christopher Gill (Ludlow)

Will my right hon. Friend give particular consideration to the thousands of small firms that have been established under this Government's tenure of office? They will be especially affected by the legislation and they would like to think that the Minister will give them some consideration. They will be somewhat taken aback by these proposals.

Mr. Newton

I hope to do precisely that by giving some illustrative examples of what the position would be for a given number of employees earning the sort of sums that we might be discussing, taking account of the reduction in national insurance contributions that they would experience at the same time. I hope that that will be useful.

Somewhat different considerations apply in relation to the 7 per cent. additional compensation rate, which was introduced as part of the legislation which extended SSP from eight to 28 weeks. It was intended to compensate employers for the cost of the national insurance contributions that they pay on SSP. This part of the arrangements has been of only limited success. Despite wide publicity, as many as a quarter of employers do not claim it. Furthermore, in the interests of simplicity it is available on all SSP paid, even when the total SSP is below the lower earnings limit, and so will not have attracted national insurance liability in the first place. I hope that I carry the hon. Member for Ladywood with me.

Now, the lower rate of statutory sick pay is £39.25 a week. The lower earnings limit is £46 a week. No national insurance liability arises on £39.25 a week, therefore, yet the current compensation arrangements compensate employers for a payment that they are not making. So this part of the arrangement is not very satisfactory; it has not been working well; and the justification for at least part of it is far from clear.

Ms. Short

My understanding is that part of the reason for the compensation was the administrative burden associated with reclaiming—especially for small firms. The Minister is talking as though he is recovering money, but are firms no longer to be compensated for the burden of administering statutory sick pay?

Mr. Newton

When the arrangements were first put in place and subsequently modified, a whole variety of arguments was advanced. Employers certainly mentioned the administrative problems that they might be caused, but most of them have discovered that the problem is much smaller than they had thought. Whatever the rationale behind the system at the time, this part of it has not worked very well and has no clear justification. It would certainly be difficult to see its justification in a case in which all the employees concerned were paid the lower rate of statutory sick pay, none of which attracted national insurance contributions. This is certainly not a tidy or defensible arrangement, and although I would not have tried to disturb it for its own sake, we thought it right to do so when drawing up the wider package of changes that I have just described.

Mr. Favell

Is the number of days off taken for sickness increasing or decreasing?

Mr. Newton

I cannot answer that off the cuff, but I shall ask my right hon. Friend and provide what information we have at the end of the debate.

It is important to put the hundreds of millions of pounds that we have been discussing in perspective. The amount involved in the reduction to 80 per cent. reimbursement from what is in effect, if not in legal terms, 107 per cent. now, is about £250 million in the coming financial year. That must be compared with total labour costs in the British economy of about £300 billion. We are talking about little more than 0.05 per cent. of total labour costs in the economy as a whole. We cannot dismiss it on that ground, but it is important to recognise that we are talking about a small sum in relation to the total cost of which it forms a part.

The implications for employers generally will be fairly small. The precise effects will obviously depend on the level of sickness experienced in a work force, but as I said, it should be remembered that, although SSP is payable for 28 weeks, the average spell of sickness lasts for only three weeks, and 90 per cent. of sickness is over within eight weeks. Crucially, whatever the gross effect of the Bill's changes, the net effect will be significantly smaller, perhaps in some case completely eliminated by the significant reduction in employers' national insurance contributions which will come into effect at the same time and are an important part of the context in which the Bill must be seen.

As a result of my annual review of the level of the national insurance fund and the prospective demands upon it, I found it possible to reduce the standard rates of national insurance payable by employers. I propose reducing the standard rate payable by employers from 10.45 to 10.4 per cent. More importantly, I propose to reduce the lower rates, which are currently 5, 7 and 9 per cent. in respect of employees earning up to £175 a week, to 4.6, 6.6 and 8.6 per cent. respectively.

Those changes will reduce employers' costs by about £250 million and, as I said in response to interventions, they are likely to be especially helpful to employers, often smaller employers, whose employees are among the less highly paid. For example, for an employee earning £70 a week, the employer's national insurance contribution will reduce by 28p a week. For an employee earning £120, the reduction will be 48p, and for an employee on £170, it will be 68p.

Those sums may seem small, and it seems sensible to give one or two illustrations of how the SSP and contribution changes interact. Let us look at a small employer with five employees each earning £170 a week. If one of them receives three weeks SSP in the year, which equates to the present average duration of sickness, the extra cost to the employer in SSP would be £82.41, assuming that he makes good the difference between the higher and lower rates of SSP with occupational sick pay. The employer would be making an annual saving on his national insurance contribution liability of £176.80, making him £94.39 better off.

I have taken a case in which only one employee had three weeks off, and that could be said to be an unduly favourable example. If the same employer had two members of his work force of five on three weeks' sickness in a year, he would still make a saving on additional SSP against reduced national insurance contributions of £ 11.98 a week. If an employer with 20 employees all earning £170 a week had four of them off sick for three weeks each, his average saving would be nearly £400—or, to be precise, £377.56

Ms. Short

If some firms gain, it inevitably means that others will lose.

Mr. Newton

The hon. Lady does not need to prompt me about matters that I intend to put to the House in the interests of a properly balanced debate.

The examples that I have given are reasonable illustrations of what will happen to smaller employers, but by definition they cannot represent the position of all employers. I agree that for some employers with rather higher-paid employees, and especially those immediately above the level that takes them into the standard rate of national insurance contributions—what will be the 10.4 per cent.—the position may not be quite like that which I have described. There is no way in which I can say that no employer will have some additional modest costs as a result of the proposals.

What I am seeking to do meets the main thrust of the arguments presented by my hon. Friends about smaller businesses and the National Federation of Self-Employed and Small Businesses. I am trying to show that it is entirely credible to suppose, in the light of the effect of national insurance contribution reductions, that some of the hasty comments by smaller employers are unlikely to be borne out in terms of additional burdens upon them. Some may find that they are better off. I note what the hon. Member for Ladywood said. I certainly do not want to give the impression that employers will always come out on top. My earlier macro-figures, the micro-figures that I gave within the last few minutes and what I said about the £250 million entitle me to say that, overall, any increase in employers' costs will be relatively modest.

Mr. Grylls

I am reluctant to intervene for the second time and run the risk of becoming a bore. Earlier I asked my right hon. Friend a question and he has omitted to answer it, no doubt accidentally. Has he consulted the Minister with responsibility for small businesses? If he had done that, he would have avoided criticism from the National Federation of Self Employed and Small Businesses and other organisations. Has my right hon. Friend had such consultations, and if so, what did the Minister say? Has he considered a two-tier system reducing from 100 to 80 per cent. for large employers and down to 90 per cent. for smaller employers? My right hon. Friend will know of good examples of two-tier systems in legislation.

Mr. Newton

I shall take my hon. Friend's latter point first. I am always reluctant to rule out looking at anything, because, as my hon. Friend and the House know, I am willing to consider constructive suggestions. I hope that I have clearly shown that the way in which we have geared the reduction in national insurance contributions will be particularly advantageous to smaller employers. It would be difficult at the same time to go down the path of gearing the basic reimbursement arrangements so that they would also be especially favourable to small employers. Many of the advantages of a straightforward and simple operation of the scheme are in some ways enhanced by my proposals, especially the one to get rid of the funny 7 per cent. compensation arrangement. Those advantages would be lost if we attempted to have different rates of reimbursement for firms of different types and sizes.

I emphasise to my hon. Friend the Member for Surrey, North-West (Mr. Grylls) that I am not attempting to evade his question about consultation. I hope that I have not given that impression. He will be aware that the proposals were developed during the public expenditure round that led to my uprating statement on 24 October. They were examined in terms of the context, pattern and priorities of social security expenditure as a whole.

I make no apology for that, but it meant that, by the very nature of the way in which the processes work, it was not possible to engage in advance in substantial consultation. We shall be more than willing to listen and respond, as I have done in the debate, to representations on specific issues. In the debate and in future, I shall seek to justify on their merits the general thrust of the proposals and their basic structure and purpose.

We have made sure that all the relevant organisations have been put in the picture about our proposals. They have been sent copies of the Bill. If they want to make particular points to us, whether through my hon. Friend the Member for Surrey, North-West or in any other way, I shall look at them. However, I do not wish to hold out the hope that we shall move away from the basic thrust of these proposals, which I believe are justified on the ground that I have given many times.

Mr. Battle

Does the Bill not include a power for the Secretary of State to enact further reductions without having to come back to the House for the matter to be discussed? Is this not the last chance for us to discuss it?

Mr. Newton

The proposal is that there should be a power to vary the rate, but not in a way that would preclude parliamentary discussion.

Ms. Short

Not on a Government motion.

Mr. Newton

The hon. Lady is making the point that the proposal in the Bill involves the negative rather than the affirmative procedure. The Opposition have never shown any reluctance to use the prayer as an instrument for parliamentary debate. It is unlikely that the Opposition would not wish a debate to take place. One can vote on a negative order, just as one can vote on an affirmative order.

Ms. Short

Give us an affirmative order, then.

Mr. Newton

I do not know whether the hon. Lady will have the chance to make a speech. She has made every point that she could make in interventions in mine. If she ever gets the chance to make them in a connected form, I shall listen to them with proper interest. Fortunately, my right hon. Friend the Minister for Social Security and Disabled People will be the Minister who will reply in a connected form.

Whether in a connected or in an unconnected form, I shall now move reasonable rapidly to bring my speech to a conclusion. [HON. MEMBERS: "No."] Rare is it for the House to demand to hear more of the Secretary of State for Social Security who has been going on more or less for ever on a reasonably complicated and sometimes arcane matter. I should feel guilty if I did not give the hon. Member for Ladywood the chance to make her remarks in a connected form and for once to make them standing rather than sitting.

Ms. Short

I have not done badly.

Mr. Newton

No, the hon. Lady has not done badly. I congratulate her on her self-restraint. Let us see whether it continues for the rest of the debate.

I think that the House will be pleased, although I began to doubt that a moment ago, to know that I am nearing the end of my long speech, or what might be seen as a long series of answers to interventions. Before I reach the end, I must say something about statutory maternity pay, which is another relevant point, although it is not covered by the Bill.

In my uprating statement, I said as part of the background to these proposals, that it was no longer sensible for the development of statutory sick pay and of statutory maternity pay to go hand in hand. There is much less occupational cover for maternity leave than there is for sickness, and in that case, the level of reimbursement will remain at 100 per cent. for SMP, with compensation payable at an appropriate rate for the contributions payable on SP.

As I said in my statement, that separation has the advantage of enabling me to treat the SMP rate differently as well. I propose to increase the Hate rate element of SMP by rather more than the full RPI increase—by £1 a week over the rate of inflation—so that it will go up by £5.05, from £39.25 to £44.50. I have made a parallel increase in the residual national insurance maternity allowance, which will be raised from £35.70 to £40.60.

Looking at what is provided as part of the even wider package—looking at SMP, which is not covered by the Bill, as well as SSP, some of the proposals on which are covered—there is overall the additional ingredient of a real increase in benefit for some 315,000 mothers-to-be, which has been widely welcomed. I have to acknowledge that that is only an incidental advantage of these proposals, although it is an important one.

The main point is the one that I made in the uprating statement and have reiterated today, making it as clear as I can. Against the background of the many demands on social security and the development of occupational cover for short-term sickness, the resources of the taxpayer should be more clearly concentrated on those least likely to have occupational provision or on other areas of social security for which employers cannot be expected to provide. That is the objective of the Bill, and I commend it to the House.

5.14 pm

Mr. Michael Meacher (Oldham, West)

We have just listened to an extremely long and agonised defence of the Bill. I think that I will carry the whole House with me when I say that that speech has not increased the Bill's credibility.

Perhaps the most charitable thing that can be said about this mean, nasty and unnecessary little Bill is that it is a hangover from the Thatcherite era. Like the author of that era, it is harsh on the low-paid, especially women. It bases its rationale on a selective and highly misleading interpretation of the evidence and it ignores facts where they are inconvenient. I have not heard such a dishonest and deceitful defence by a Secretary of State for a considerable time. The length of his speech was in inverse proportion to the credibility of the Bill.

The Bill pushes further still the prejudice of "public sector bad, private sector good", even when the employers passionately disagree. Here we have the authentic mark of Thatcherism, as the Secretary of State, a member of the Cabinet, will agree. It is being foisted autocratically on people, without a shred of consultation. When the right hon. Member says that he will listen to arguments in future, but the remaining stages of the Bill are being rushed through on Wednesday, his assurance does not carry much conviction. It shows how anxious the Government are to push through the Bill before systematic opposition to it can be mounted. If the Prime Minister wanted a squalid little memorial to her reign, this could be it.

The effect of the changes that the Secretary of State has outlined, according to an answer given by the Under-Secretary of State two weeks ago, is that 3 million employees with earnings between £125 and £175 a week will no longer be eligible for the higher rate of statutory sick pay if they fall sick after 6 April next year. About one fifth of that number, or about 600,000 people, are expected to claim statutory sick pay annually, and they will lose an average £9 a week. Because low-paid workers are primarily the victims of these measures, 60 per cent. of all the losers are expected to be women.

I should add immediately that these cuts next year are not new, nor the first. Similar cuts were imposed on sick employees only a few months ago. In April this year, the Secretary of State removed nearly 2 million workers earning between £90 and £125 a week from eligibility for higher rate SSP. Of those, about 300,000 are expected to claim SSP annually, and they are losing an average of £13 a week each week. As many as three quarters of those losers are expected to be women.

The Bill is part of a clear pattern. The number of losers and the amounts that they will lose are even greater this year, but the pattern of whittling down the sick pay rights of those on low incomes has already been set. There is every reason to suspect that the Government will continue the process of erosion each year that they remain in power. The Secretary of State glided over this point, so I invite him, if he wishes to take time from my speech, despite the length of his, to give the House a guarantee that there will be no further cuts. We are interested to know the Government's intentions. Does the right hon. Gentleman wish to intervene? He does not. We can draw our own conclusions from that.

There is another striking fact about the Bill: the Secretary of State has the support of no one in introducing it, which is fairly rare. The Confederation of British Industry, the National Federation of Self Employed and Small Businesses, the Trades Union Congress, trade unions and voluntary bodies such as the Low Pay Unit and the Disability Alliance do not support the Bill. I suppose that it is a true Thatcherite Bill—two fingers to the rest of the country, the Prime Minister is right and everyone else has got it wrong.

The Bill does not even have the support of the Government's adviser, the Social Security Advisory Committee. Because the Government have not consulted about the Bill, the SSAC has not had a chance to comment on these proposals. It gave its view on the April 1990 changes which, as I said, were on almost exactly the same lines as the Bill's provisions. Like the Bill, those changes increased the higher rate pay threshold by much more than inflation. The SSAC opposed that because the majority of the losers were women and "a significant number" of the losers would not have occupational sick pay cover and would be significantly worse off if they had to claim statutory sick pay.

Like the Bill, those changes in April 1990 increased the higher rate benefit by less than inflation. The SSAC opposed that a year ago because it would impose additional financial burdens on businesses, because employers would be less willing to employ disabled people and those with poor health records and because employers who did not have their own sick pay schemes might be deterred from introducing them. Those were comprehensive and compelling reasons for rejecting the April 1990 changes. They are no less comprehensive and compelling reasons for rejecting these further measures in the Bill and, I repeat, they are the reasons given by the Government's advisory body.

As the Secretary of State has no supporters for the Bill—except, of course, the Treasury—I turn to his reasons for introducing it. In his uprating statement and again today, the right hon. Gentleman gave three reasons. He said that statutory sick pay rates were irrelevant because of the expansion of private occupational sick pay coverage—the crucial point about which we had so many exchanges. On 24 October, the right hon. Gentleman said: Occupational sick pay schemes have grown to such an extent that more than 90 per cent. of the work force now work for employers providing this cover … This in turn means that, for the great majority of those in work, the rates of SSP bear little or no relation to the amount that they actually receive when sick."—[Official Report, 24 October 1990; Vol. 178, c. 349.] As the Opposition made clear repeatedly, the right hon. Gentleman was citing a 1988 survey, but in such a selective and grossly misleading manner that his defence of it was extremely deceitful and unworthy of him—[HON. MEMBERS "No."] It was unworthy of him. I have great respect for the right hon. Gentleman's integrity, but today he was trying to defend the indefensible, and it showed. A series of interventions by my hon. Friend the Member for Birmingham, Ladywood (Ms. Short) and others of my hon. Friends completely undermined the basis of his case.

The Secretary of State mentioned the increase in the number of employers offering some sort of private scheme, but he did not say—these are the facts—that substantial numbers of employees are not covered by such schemes. He did not respond to my point. I said that the survey showed that 44 per cent. of private sector employers did not offer any form of occupational sick pay provision. Worse still, it is in the hazardous industries, such as mining and construction, where sick pay provision is most needed, that it is least likely to be available. Moreover, more than half the firms with fewer than 10 employees—these firms are growing the fastest—have no sick pay scheme.

The picture is even more patchy than that. Of those firms that have schemes, half of private sector and two thirds of public sector employers operate exclusion clauses. The Secretary of State said little about exclusion clauses even where there are such things. They limit the coverage to certain groups of employees in terms of their length of service, hours of work, grade of job, age or earnings; a range of exclusions cut the cover that people have. Nearly three quarters of all employees are potentially affected by these exclusions. The Secretary of State continues to use the extremely deceptive figure of 90 per cent. That is unworthy of a Government seeking to defend a Bill when it is the hinge on which to justify their proposals.

All this evidence shows that, when the Secretary of State said again today that 91 per cent. of the work force now work for employers providing occupational sick pay cover, he is being extremely Jesuitical. In fact, a substantial proportion of the work force—the right hon. Gentleman would not hazard a guess, but the percentage is certainly several times larger than the 9 per cent. he implies—are not covered by occupational sick pay provision and have only the state SSP scheme on which to fall back. My hon. Friend the Member for Ladywood hazarded a guess about the number, and I suspect that we may be talking about 10 million to 15 million workers. The Bill is a major erosion of their employment rights.

Mr. Newton

Despite my obvious disagreement with several of the hon. Gentleman's points, I have not sought to intervene frequently in his speech. I do not think that he can mean that the Bill is a major erosion of people's rights. These proposals do not affect the rights of any employee. If I understand the point aright, the remarks which the hon. Gentleman just made—indeed, almost everything that he said—have absolutely nothing to do with the Bill.

Mr. Meacher

The right hon. Gentleman is splitting logic. He knows perfectly well that I am referring to the whole package of measures. I am not talking specifically about clause 1. This is a narrowly drawn Bill. The right hon. Gentleman knows that we are discussing the provision of sick pay for employees and the means by which that is done.

Mr. Newton

It is important to clear up this point. The hon. Gentleman said that I chose my words carefully, as though that were an accusation. I do not think that he would want to mislead anyone. I did not try to avoid referring to other parts of the package in my speech. At the very least, when speaking about the effect of the Bill, it is important that the hon. Gentleman should choose his words carefully.

I advert to a point on which I might have intervened earlier. The hon. Gentleman apparently assumes that, merely because the higher rate of SSP is not being uprated this year, all those who might be affected by that change are somehow losers. Whatever may lie between us, even the hon. Gentleman would have to accept that a large number of those people will not be affected because they will get back in occupational sick pay what they have not received by way of an increase in SSP. The hon. Gentleman needs to weigh some of his words and accusations more carefully.

Mr. Meacher

On the right hon. Gentleman's second point, because he could not give a precise figure for occupational sick pay cover, he cannot be sure that what he says is accurate. We do not know the number of people who will be disadvantaged by the Bill and who can rely on occupational sick pay cover. That is precisely our objection. We have good reason to believe that a large number of people will lose.

In response to the right hon. Gentleman's first point, I shall gladly change the word "Bill" to "package" if he will equally gladly admit that his justification for the figure of 91 per cent. was inaccurate and that the figure needs to be changed. We are talking not simply of a change of word, but of a change of meaning in the background to the Bill. If the right hon. Gentleman will make that change and acknowledge the inaccuracy of what he was trying to convey, I shall gladly change one word.

The right hon. Gentleman's justification for the Bill fell back on his old friend "targeting". Just as most people are suspicious when the generals talk about military intelligence—which many people regard as a contradiction in terms—when the Tories talk about social targeting, we are entitled to react with similar suspicion. The right hon. Gentleman said in his uprating statement: it is better for additional resources from the taxpayer to be concentrated more clearly on those least likely to have occupational provision, or in other areas of social security for which employers cannot be expected to provide."—[Official Report, 24 October 1990; Vol. 178, c. 349.] As so often happens when the Tories talk about targeting, the effect will be the opposite of what they predict. Instead of concentrating more resources on workers least likely to have occupational sick pay provision, the Bill will increase discrimination against the potentially sick and the disabled at the point of recruitment. That is a key point. The net effect of the changes will be to increase the net cost to employers in general if an employee falls sick. Obviously, employers will be all the more wary of recruiting anyone whom they feel, whether rightly or wrongly, may become ill or who may be more frequently ill than the average. There is already clear evidence of that, and it, shows what the effect of the Bill will be. A study carried out for the Spastics Society entitled "An equal chance for disabled people?" found systematic evidence of the most blatant discrimination by employers.

There is other evidence to show that the right hon. Gentleman is wrong to claim that the Bill will target more aid on those most in need. A substantial number of workers are not covered by occupational sick pay schemes, and they are most likely to be the low paid, part-time workers, or low-grade manual workers. That is also the group that is most vulnerable to abuse by employers trying to evade their legal obligations under the SSP schemes. That was revealed by a report published in 1986, which drew on the experience of citizens advice bureaux throughout the country. It concluded: There have been clear instances of deliberate employer abuse of the responsibility to administer SSP. Employees have been told that their firm does not operate SSP, and have been pressurised into becoming self-employed, unemployed, or waiving their right to SSP. There have also been cases of employees being refused statutory sick pay outright, having their medical evidence of incapacity rejected, or simply being dismissed so that the employer can avoid payment. The right hon. Gentleman said earlier that the SSP scheme was firmly bedded in, and that that justified the further changes being made. The report, in 1986—admittedly that is four years ago, but I doubt whether all the problems have been resolved—says that, far from being bedded in, it is still working improperly.

Mr. Alexander

The hon. Gentleman's allegations are serious and they need to be considered seriously. Does he have information about where those instances happened, and does he know whether complaints were made at the time that sick pay was refused?

Mr. Meacher

I was quoting a survey by the National Association of Citizens Advice Bureaux, which I regard as an extremely reputable organisation. It is supported on both sides of the House. It engages in very thorough investigations. It has 900 or more offices throughout the country and it systematically collects data from those who come to its bureaux for assistance. The people who work for that organisation are well trained, and in considerable detail. I know that, because my daughter is one of them. The bureaux do not accept reports or anecdotes at second hand. A NACAB report can be relied upon and must be accepted as true.

I shall cite three typical examples from the report. The first reads: Mrs. J. works for a private employer. She was not told about the procedure for claiming statutory sick pay. Her employer has now refused to pay her statutory sick pay because she had not notified him within seven days. That is one example of an improper and, I suspect, illegal response by an employer.

The second example is: Mrs. N. is an embassy worker earning above the national insurance lower earnings limit and in full-time work. She has been off sick for three weeks and her employers had advised her that she was not entitled to statutory sick pay or any sickness pay from them. In fact, the rights office advised the woman to take up the matter with her employers, and statutory sick pay was then paid. However, we must ask how many cases of that sort of response from an employer do not lead to people seeking advice from the rights office and having the matter put right.

The third example is: Mr. I. was employed as a driver for a small firm. He earned less than £80 for a 45-hour working week. His employer refused to pay holiday pay and no sick pay scheme is in operation. When Mr. I had been off sick for four days, his employer dismissed him. When the right hon. Gentleman seeks to justify the Bill by saying that he is targeting the low paid, perhaps we should take him at his word because it is the low paid who will be the victims of the Bill. The right hon. Gentleman is right on one point. It is ironic that he may be correct in saying that statutory sick pay rates bear little relation to the amount that workers receive, because millions of low-paid workers are getting nothing.

The right hon. Gentleman did no better with his third and last rationale for the Bill. It is a matter of greater concern to Tory Members than to Opposition Members that employers will be compensated for reduced state reimbursement through offsetting reductions in the rate of employers' national insurance contributions. He offered no rationale for reducing state reimbursement to employers from 100 per cent. to 80 per cent. I do not think that there is any rationale, other than the saving to the Treasury of £180 million—a figure that will grow during the next few years.

The right hon. Gentleman also said in his uprating statement that he would reduce employers' lower and standard rate contributions, and concluded that that will go some considerable way in helping employers, particularly smaller employers who tend to have lower-paid employees, to meet any extra costs which might otherwise arise from the new arrangements."—[Official Report, 24 October 1990; Vol. 178, c. 349–50.] The right hon. Gentleman has expanded on those remarks at considerable length today, but, as Conservative Members have said, that is not how it appears to the smaller employers. The National Federation of Self Employed and Small Businesses, in a brief that it has supplied widely throughout the House, said that it was strongly opposed to the proposed changes. It gave eight reasons for that. It may be of some relief to hon. Members if I say that I intend to cite only the first two, but as they come from that source they are worth stating clearly. The first reason is: When statutory sick pay was first introduced in the early 1980s, the national federation won an agreement from the Government that at no time would employers be asked to foot any of the statutory sick pay payments. With this new measure the same Government have broken that new agreement"— and the federation adds in capital letters— WITHOUT CONSULTATION. It is not often that I agree with Conservative Members, but the employers are wholly correct about that. From 1979 to 1981, the Government made a series of different proposals to statutory sick pay, giving less than 100 per cent. compensation to employers. Each of those proposals was unsatisfactory, and was heavily and intensely lobbied against by the employers' organisations. As a result, on 15 October 1981, the right hon. Gentleman's predecessor as Secretary of State announced at the Tory party conference that the Government would provide 100 per cent. compensation, despite their previous opposition to doing so.

That situation has prevailed until now, and—not surprisingly—employers are angry with the Government for reneging on the agreement, and without consulting the relevant parties. Fortunately for the Secretary of State, he does not have to stand for re-election either by social security claimants or employers. Even the gerrymandered rules of the Tory leadership election would not save the right hon. Gentleman from either of those factions venting their spleen.

The second reason of the National Federation of Self Employed and Small Businesses for opposing the Bill is that it sees this measure as the thin end of the wedge. If reimbursement is 80 per cent. this year, then once the precedent is set, Government will find it easier to move to 60 per cent. next year and 40 per cent. the year after until employers foot the whole SSP payment. The same thing happened on redundancy rebates. The same progressive rundown occurred also in the Exchequer contribution to the national insurance fund, from 18 per cent. to nothing. So there are certainly precedents for the Government's current action.

As this is the Second Reading of the Bill and we are examining its full implications, perhaps the Secretary of State can say what are the Government's intentions for a progressive reduction in the reimbursement made to employers.

Mr. Newton

The answer is simple, and the hon. Gentleman could have guessed it for himself. We have no plans to make further changes, but given the way that matters have been developing and the continuing need to examine priorities across the whole spectrum of social security, it seems sensible to have a provision that is capable of being changed. However, there is no plan to make any further change. There is no drawer in my desk containing papers with figures pencilled in for future years. Nevertheless, I will not rule out further consideration of that aspect. It would be foolish for either me or the hon. Gentleman to do so.

Mr. Meacher

Without the right hon. Gentleman admitting that the Government have such an intention, he could not really have gone further.

Mr. Newton

A large part of the social security system, including nearly all the rates of benefit—quite apart from the whole range of other rules—is in a form that does not lock it into primary legislation, so that changes can be made by secondary legislation. Governments of all complexions have acknowledged that that is a sensible way of dealing with social security matters. I say no more than that. I hope that the hon. Gentleman will not try to build some vast, elaborate edifice out of the normal arrangement for dealing with social security matters.

Mr. Meacher

The right hon. Gentleman again chose his words very carefully, for which I do not blame him, and took great pains not to rule out further changes. He says only that he does not have any plans to make such changes. I recall the right hon. Member for Sutton Coldfield (Sir N. Fowler) saying once that he had no plans to make fundamental changes to the pensions system, but a couple of years later he brought forward a proposal that would almost have ended the state earnings-related pension scheme. Such is the lack of credibility that one can attach to Ministers' statements.

Of course, the right hon. Gentleman does not have something hidden in the drawer of his desk, but I am sure that his officials and civil servants will not reveal to him the next stage of their plan until the Bill has been passed. It is clear that the Government have every intention of reducing reimbursement below 80 per cent. and probably quite soon.

The federation makes its threat pretty clear: that if the Bill goes through, employers will look very closely at the people they employ. The health record will be a prime decider in choosing an employee. That is an extremely revealing sentence. The employers say that if the Bill passes into law, they will be extremely careful about who they employ, and will make their decisions on the basis of an applicant's health record. Anyone with a poor health record or a poor prognosis of good health for the future will be unlikely to get a job.

Mr. James Cran (Beverley)

Will the hon. Gentleman take it from me, as one who has been closely involved in industrial representations, that it is not unknown for representative bodies to make relatively extravagant claims about the likely effect of proposed legislation, in order to influence the Government in a very small way? Does the hon. Gentleman concede that extravagant claims have been made in the past by almost every representative body one can think of, and that that will continue to happen? Does not the hon. Gentleman know the difference between such representations and common sense?

Mr. Meacher

The hon. Gentleman clearly speaks from experience. When he says that the representations that he made to the Government on behalf of the northern region's Confederation of British Industry should not have been taken at face value because they somewhat dishonestly exaggerated a point in order to influence Government policy, he is letting the cat out of the bag in a big way.

Dr. John G. Blackburn (Dudley, West)

Will the hon. Member for Oldham, West (Mr. Meacher) confirm the date of the representations to which he refers?

Mr. Meacher

The federation's representations are date-stamped 15 November, which is 11 days ago. Unless the hon. Gentleman is suggesting that the federation has changed its mind, which I doubt, we can assume that they represent the current view of small employers.

The effects of the Bill on prospective employees who have poor health records could hardly be plainer or more worrying. It is no comfort to hear the Secretary of State keep repeating that he will reduce employers' national insurance contributions by one quarter of 1 per cent. The effect could be exaggerated for many small employers if they were confronted by a statutory sick pay payment for up to a maximum of 28 weeks. The National Farmers Union, whose members are probably the largest employers of low-paid workers in the country, stated in a submission dated 14 November: The combination of these changes will increase employers' costs for sickness payments by £26.50 per week for employees earning between £125 and £174.99 per week and by £19.90 per week for employees earning £175 or more. These are very significant additional costs for many hard pressed small employers, and they will only be partially offset by the proposed small reductions in National Insurance contributions. The right hon. Gentleman appears to take a different view, but I quoted the National Farmers Union view, and I look to it for a serious examination of these proposals.

The right hon. Gentleman has achieved a remarkable feat today by creating a unanimous front against the Bill. He has even achieved a situation in which the employers are arguing the case for national insurance—I really did not think that that was possible. If I may quote the National Federation of Self Employed and Small Businesses for the last time, it said that most of Britain's businesses employ less than 20 people, and do not have the resources to take on their employees health insurance, that is why national insurance was first introduced. It is certainly ironic that the Government have chosen to effect this latest erosion of accepted national insurance principles, and to impose a further financial burden of up to £11 or more a week for a maximum of 28 weeks, at the very time when there is an accelerating recession and small businesses are going down like ninepins.

The Bill clearly signals the Government's intention to allow this vital area of social security provision to be removed from the state sector and to be left entirely to the discretion of employers—Opposition Members would say that in many cases it was left to proven abuses by employers.

The right hon. Gentleman's rationale for the measure does not stand up, even to the most superficial analysis. The Bill is unanimously disliked by all the relevant parties, and it has been forced on him by the Treasury. He said that the Bill would pay for other measures, such as residential home charges. I suppose that this is the sick paying for the elderly—the poor paying for the poor. If he does not stand up to that sort of Treasury attack, he should not hold that post. There has been much discrimination by the Government in favour of the rich, and it is quite wrong for the right hon. Gentleman to talk about priorities and to make the poor pay for other benefits for the poor. If he either will not or cannot stand up to the Treasury, we shall certainly stand up to it in the Lobby tonight.

5.52 pm

Mr. Patrick Nicholls (Teignbridge)

When my right hon. Friend the Secretary of State opened the debate some one and a half hours ago, he pointed out that the Bill is extremely short and for that reason he felt that it should be commended. I agree entirely with my right hon. Friend. The Bill is refreshingly short, and as such compares very favourably with other Bills with which I have recently been involved. Given my interest in social security matters, I should like to think that Bills will always be that short, but I suspect that I may be wrong.

The style demonstrated by the Department was also refreshing. My right hon. Friend made a full speech—as was necessary in such a case—yet he knows that any points of detail that might arise can at once be referred to his right hon. Friend the Minister for Social Security and Disabled People. That was splendid. Having been in his position, although in a less exalted post, I wish my right hon. Friend well, and I look forward to hearing his reply to various points of detail at the end of the debate.

The Bill deals with social security matters. One cannot begin to understand its scope without placing it in a general context. My right hon. Friend referred to the general context of the Bill and its perspective. When discussing what is clearly a valuable but also fairly modest measure, it is all too easy to forget what sort of budget we are dealing with. The social security budget approaches £63 billion a year—a truly vast sum of money. One cannot begin to get to grips with the scope of the Bill until one realises the totality of the expenditure involved. It is an extraordinary sum. A Labour Government would have been proud if it had been able to devote such resources to those who are most in need.

In case the hon. Member for Oldham, West (Mr. Meacher) is trying to work out the increase that that figure represents compared with the miserable performance of the Government in which he served as a Minister with responsibility for social security with such a lack of distinction, it amounts to about 41 per cent. in real terms, after taking account of inflation.

That is the context in which we should view the Bill, but what is its contribution? [Interruption.] The hon. Member for Birmingham, Ladywood (Ms. Short) is howling from a sedentary position as usual—obviously one of her disconnected remarks. It will be useful to hear what she has to say later.

We cannot begin to assess the worth of the Bill unless we bear in mind its general context. I do not want to detain the House long, as I know that other hon. Members want to take part in the debate. I can see that the hon. Lady has a series of disconnected remarks that she wants to offer to the House. However, I can usefully point out a number of issues.

Dame Elaine Kellett-Bowman

I hope that my hon. Friend will make it clear that he is referring to the hon. Member for Birmingham, Ladywood (Ms. Short) and not to me, his colleague.

Mr. Nicholls

Let me save both my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) and the hon. Member for Ladywood any embarrassment. I am sure that if I accused either of being the other they would both sue me for libel, were it not for the fact that any remarks that I make are privileged. I accept entirely what my hon. Friend the Member for Lancaster says. I had the hon. Member for Ladywood in mind.

When discussing such expenditure, we must bear in mind the fact that we are not in a position to spend the money until it has been raised. Clearly, we are talking about massive sums. It is interesting that the hon. Member for Oldham, West, in his last few words, could not resist once again presenting our policy in terms of the rich and poor, and talking about the allocation of resources from the poor to the wealthy. That is the constant theme in his remarks. It is deja vu. The last time that I took part in a social security debate was in the previous Parliament. I remember the hon. Gentleman replying on behalf of the Opposition. It is extraordinary that the speech that he gave on that occasion was precisely the same as the speech that he made today. Perhaps one should never accuse a politician of being at fault because he is being consistent, but the trouble is that the hon. Gentleman is consistently wrong.

The hon. Gentleman talks about the rich and the reallocation of resources, but can we bear it in mind that the money that is necessary for social security expenditure—sickness pay or whatever—has to be raised from the taxpayer? Although the idea that one can have Christmas 365 days a year by wrecking the rich is part of the hon. Gentleman's general attitude, the reality of raising money for all the things that we want it to be spent on is that it will not come from the rich. There are simply not enough rich people to get the amount of money that the hon. Gentleman needs. About 90 per cent. of the money raised in income tax by the Treasury comes from basic rate taxpayers, not from rich people paying higher rate tax, such as the hon. Gentleman and myself. When we are talking about social security and about expenditure totalling £63 billion, we have to remember that we owe it to the people from whom we take the money to ensure that expenditure is targeted on those who need it most.

One of the impressive aspects of the Bill, and the policy underlying it, is that it does not shirk the necessity to spend vast sums of the public's money on social security, but it does something about targeting money on those who clearly need help.

The hon. Gentleman made great play of the Bill's effect upon employers. He quoted from various studies, which showed that employers were concerned about the measure. It was remarkable that it had to be pointed out to the hon. Gentleman that the Bill deals not with the amount of sickness pay but with the mechanism for reimbursement—the difference between 80 per cent. and 100 per cent. We are talking about the contributions that employers might be required to make to statutory sickness pay.

It says something about the hon. Gentleman's acquaintance with the day-to-day business of employment that, when he has to consider the rights and wrongs of asking for a fairly modest contribution from employers towards statutory sickness pay, he can offer us only a litany of faults and errors, which he attributes to the employer community. Whether the hon. Gentleman is talking about social security, employment or trade unions, the moment he mentions the employer community, he cites the worst examples that he can think of. The hon. Gentleman's only contribution to the subject is not to talk about the average employer's relationship with the average employee as he does not want to know about that, but merely to talk about bad employers—the employers whom he feels will go out to take advantage of people who cannot fend for themselves because of sickness.

Such employers obviously exist, but it is fallacious to base criticism of the Bill on the fact that it will enable the worst employer to behave worse than he otherwise might. Such prejudice and misunderstanding is unique to the hon. Gentleman.

The hon. Member for Oldham, West attacked my right hon. Friend the Secretary of State for saying that 91 per cent. of employees are employed by employers who offer some form of sickness pay. The hon. Gentleman said, "Don't give us those figures, let us look at some others instead. I am not sure what they are, but let us talk about them instead; they will be much worse." In his usual style, he went through a number of documents that he ill understood, cobbled together a number of figures and found one hard, constant figure that must be derided. One can consider figures, cut them, recut them, amalgamate them, re-present them and make them shape up to anything one wants. That is a measure of the hon. Gentleman's prejudice, but, as my right hon. Friend said, the starting point must be that 91 per cent. of employees are covered by a scheme.

Statutory sick pay covers the first 28 weeks of sickness, but on average it covers not 28 weeks but just three weeks. In the context of whether employers' contributions have improved, it must be asked: what is the state's priority when it is looking after taxpayers' money? Is it right that, for an average of three weeks, the state should step into the relationship between employer and employee and say, "Even for a period of only three weeks, we shall cut the bond between employer and employee and say that this is a matter for the state"?

The hon. Member for Oldham, West does not say that employers have a role to play or that they have certain responsibilities. Time after time, he says that the burden must always be on the state and that it should never be a matter of personal responsibility between one citizen and another.

It is unfair to criticise the hon. Member for Oldham, West for his lack of experience in government or to point out that his experience was more than a decade ago, but if he had recent experience of being a small employer he would realise that it is unreal to think that employers will resent having to make a modest contribution to statutory sick pay for an employee who performs a useful role. That is easy to say when it is considered academically—in some ways, this place passes for an ivory tower—and it makes perfect sense when preparing one's remarks in the cloisters or the Library, but it makes no sense at all when considered against the reality of what happens between an employer and an employee. That again shows that the hon. Gentleman cannot remove the idea of bad employers from his mind.

What is wrong in saying that for a relatively short period—an average of three or four weeks—an employer should be asked to make a contribution? It is too simple to say that, in the past, it was said that under the scheme there would be 100 per cent. reimbursement, but that ignores what can happen in practice and the fact that it is necessary to try to work out where resources must be directed.

It has been suggested that, if the scheme is introduced, it will discriminate against employers who would otherwise employ sick people. I have news for the hon. Member for Oldham, West. I hope that he will remember, as my right hon. Friend said, that the sickness record of disabled people is extremely good. Anyone who considers the figures will find that they have much to offer. The statistics on their average time away from work show that they are an extremely good bet.

The hon. Member for Oldham, West thinks that employers will go out looking for sick people to employ, but as a result of the Bill will suddenly stop employing them. That is simply unreal. Employers do not go out looking for ill people and say to them, "I shall take you on, but if I have to make a modest contribution towards SSP for a short period I shall not have you on my books." That is complete nonsense, but it does not matter to the hon. Gentleman. He finds the fact that it is complete nonsense positively attractive, because once again it panders to his prejudice, and his almost obsession, that employers will always act from the worst of motives.

The Bill makes a modest but worthwhile contribution and points to the direction that we should be taking. Nevertheless, one theme underlies it, on which for a short period—short enough not to embarrass either of us—the hon. Member for Oldham, West and I might be able to share some agreement. In a more general way—it has to be general for the hon. Gentleman—the Bill is about how we care for people who need care. It forms part of the massive process of public expenditure.

Surely we do those who need the help of state benefits a disservice by holding out the prospect of help and assistance on a scale which is completely unreal and which does not take account of the fact that the money to pay for it must be raised, or by painting a picture that in some way far greater benefits are available. Time and again, we hear Opposition Members say that, if they were restored to power, they would restore the earnings link with pensions. Although that point relates to old-age pensions, it is closely tied to this because it is all about promising more than can be delivered.

The hon. Member for Oldham, West must live with the fact that he was a member of the previous Labour Government who introduced the earnings link for retirement pensions but who failed to implement it in three out of four years. What is best—to set modest targets that we can deliver and fulfil, or to set out a stall of benefits and promises which are tawdry in the extreme and which can never be honoured? I know what attitude I feel more comfortable with. I know what disabled people in my constituency need and what those who are in need of assistance prefer—honesty. In the presentation of the Bill, they have honesty, but if they want the alternative they can read the remarks of the hon. Member for Oldham, West.

6.8 pm

Mr. Paul Flynn (Newport, West)

The hon. Member for Teignbridge (Mr. Nicholls) said that this was the first time that he had spoken in this Parliament on social security matters. It is a consolation to realise that the House has lost little by his imposed silence.

The strange conclusion that the hon. Gentleman reached about pensions was unfortunate. When the last Labour Government took office, the amount paid in pensions increased from 17.5 per cent. of average male earnings to 20.5 per cent. Under the Thatcher Government, it has decreased to 16.5 per cent. The Conservative party has a disgraceful record on basic pensions. The more Conservative Members crow about what they did, the more that people become antagonistic towards them.

The hon. Member for Teignbridge completely missed the point on some matters. He spoke of vast sums, but the Secretary of State spoke of the minute sum of money that is involved in the Bill. He said that it amounts to 0.05 per cent. of the wages bill. It sounds a small amount, but for the worst-off it amounts to £181 million.

Many millions of people collected money last weekend for Children in Need. Many of us supported the campaign and contributed towards it. If the campaign is more successful than it was last year, the total sum collected may amount to £30 million. We are talking about six times that figure. However, the public believe that they have done a great deal for children in need, that they have solved the problem and that children do not need social security. It might be a good idea if that day were to be christened Thatcher day, in remembrance of the millions of children whom she has put into need during her years in power.

The Secretary of State made a curious comment about the disabled. He said that they will not be adversely affected by the Bill. Where is his evidence for that assertion? Every organisation that contacted hon. Members told a different story. The Disability Alliance Educational and Research Association, which covers a whole range of groups that look after and lobby for people with disabilities, says: The withdrawal of the full reimbursement of employers for their payments of SSP and the proposed changes in the structure and level of SSP payments mark an unjustifiable retraction of state responsibility"— not that the hon. Member for the middle ages would recognise that; state responsibility is a fairly modern concept, which has been with us since about 1911— resulting in increased hardship and insecurity for many of the most vulnerable workers. The Disability Alliance points to the additional powers that the Secretary of State will take. Statutory sick pay is a Government-initiated scheme, but salami cuts have gone on year after year. A very large cut is now to be made. The Secretary of State refused to confirm that he intends to phase it out and reduce its effect altogether.

The Disability Alliance also says: Two large-scale recent surveys looking at the employment status of people with disabilities revealed that the average earnings of people with disabilities is significantly lower than those of the general population and that disabled workers are more likely to be working part time and in lower grade occupations. The myth peddled today is that employers are looking for people with disabilities. That is far from the truth. The Secretary of State said that people with disabilities have a good attendance record, but that is not the general perception. Disabled people find it very difficult to obtain employment. The Disability Alliance says: These groups are most likely, therefore, to be excluded from private schemes and have to depend entirely on the state SSP scheme. The Disability Alliance fear that increasing the cost to employers of administering SSP will encourage greater discrimination against all workers, particularly those with the most severe disabilities. There was a bold plan a few years ago under which companies, Government Departments and all other employers were to employ at least 3 per cent. registered disabled, but the reality is a disgraceful picture throughout industry. How many disabled people do Government Departments employ? In 1986, the Home Office employed 0.5 per cent., when it should have employed 3 per cent. However, there has been a decrease in the number of registered disabled people employed: from 0.5 per cent. to 0.3 per cent.—one tenth of what it should be. The Government Department average is only a disgraceful 1.3 per cent. Even the Department of Social Security employs only 1.5 per cent. registered disabled. It is a sorry record. If Government Departments believe that the attendance record of disabled people is good, why do they not give them jobs?

The most detailed picture I have of any Government Department is, not surprisingly, the Welsh Office. The percentage of disabled people whom the Welsh Office has employed since 1980 is a revealing figure. The Secretary of State said that there is no shred of evidence that the introduction of the statutory sick pay scheme had had any effect on the employment of disabled people. In 1980, 1981, and 1982, 2.3 per cent. were employed. From that year onwards, there has been a decline: 2.1 per cent., 1.4 per cent., 1.5 per cent., 1.3 per cent. In 1989, it stood at 1.1 per cent. Statutory sick pay was introduced in 1983, which was when the decline began.

The whole point that the hon. Member for the middle ages missed in his cheap and snide diatribe against my hon. Friend the Member for Oldham, West (Mr. Meacher) was that the basis of the scheme has already disappeared, that it is dead and has joined the choir invisible. We made that point twice at least in the Chamber during two stages of the last Social Security Bill. The report—now old, dog-eared and tattered—was published in 1988 and was based on previous research.

I vividly remember the proceedings on the Social Security Bill. After comprehensively going through the report, I pointed to its weaknesses. I was accused unfairly at the time, by the Minister of State, of quoting selectively from the report, but I quoted every possible conclusion in the report to make my point.

The Secretary of State says that he is not deceitful when he uses the figure of 91 per cent. If he is not deceitful, it was extremely fortunate that he should choose to take that figure. He constructed his sentence in such a way as to make it appear that that large percentage of the work force are covered by decent occupational schemes. He failed even to make a guess about the percentage today. If he does not know what it is, nobody knows.

My hon. Friend the Member for Oldham, West pointed out that the report on occupational schemes painted a sorry picture of inadequate schemes that did not cover the most vulnerable. I referred earlier to the fact that, in the private sector, only 56 per cent. of employees are covered by sick pay schemes. Those who are employed in the mining and construction industries, who face the most serious and crippling accidents, are even less well-off. Only 43 per cent. of them are covered by sick pay schemes.

Only 49 per cent. of small employers with 10 employees operate sick pay schemes, but many employees are excluded from them. At least half the employees in the private sector and two thirds of employees in the public sector are excluded. The most common exclusions are recent recruits, since the qualifying period is between three and 12 months. Part timers are also excluded. It is during the first few months in a job, when people are unfamiliar with machinery, that accidents occur. That is especially true in retailing. A large number of the employees are low-paid, part-time women employees.

Only 19 per cent. of private sector schemes and only 22 per cent. of public sector schemes pay sick pay throughout the whole of the six-month period covered by the statutory sick pay scheme. Large numbers of low-paid workers will be asked to rely on inadequate schemes.

Conservative Members are great believers in myths. The hon. Member for Stockport (Mr. Favell) referred in two interventions to his belief that the whole purpose of the Bill is to punish the sick because they go sick. He referred to a report about certain local authorities in London. I suggest that he study it in more detail. If he penetrates beyond the tabloid headlines, he will find that the report has no context: it does not discuss the mass of authorities in the country but confines itself to a limited number—all, coincidentally, Labour-controlled.

The report makes no relevant judgment or comparison. Let us suppose that a comparison was made of absenteeism in the House of Commons. Perhaps this would be an unfair time to do that, but many of us would find that we were doing very badly in relation to our parliamentary salaries.

The Conservative party is consumed by mythology. During one of our debates on a Social Security Bill, we were told about a book called "The Myth of the Scrounger". I have heard one member of the No Turning Back group—the loony right—cite the women who deliberately becomes pregnant in order to obtain a council house; in the 1920s, the current mythology involved a women in a fur coat, travelling in a limousine from unemployment office to unemployment office. The entire political ideology of the Conservatives is fed by such myths, but no one has mentioned that in the context of the Bill.

Although it is brief, the Bill is very nasty. It is as loathsome as any of the other 13 Social Security Bills introduced by the present Government. Let us examine the effect that it will have on various earnings bands. Since SSP was introduced in April 1983, there have been a number of changes, but those proposed in this Bill and the accompanying package will be far the most significant. An example is the SSP rates that will be received by people whose earnings are between £60 and £200 a week in 1991–92, and those received by people with comparable earnings in 1983–84. I am assuming that earnings have doubled in that time. Someone earning £100 a week in 1991–92 will receive 43.5 per cent. of those earnings in SSP; the same person earning £50 a week in 1983–84 would have received 67 per cent. Hon. Members should ponder those figures: they represent an enormous cut.

We are talking about people whose employers have already cheated them with low pay. The biggest losses have been suffered by those who are now earning between £90 and £180 a week, which covers a wide range of low-paid work: average full-time weekly pay is now over £200.

In his October uprating statement, the Secretary of State was rather more cautious. He said: more than 90 per cent. of the work force now work for employers providing this cover"—[Official Report, 24 October 1990; Vol. 178, c. 349.] "The Way Ahead" was a little less discreet. I ask the Minister of State to try, in his reply, to re-establish its credibility—if it ever had any. The rationale has been destroyed.

Contrary to what the Secretary of State has said, SSP is of crucial importance to most employees, especially the low-paid; yet they have been hit hardest by the cuts. For many of them in 1991 SSP, as a proportion of earnings, will be worth little more than half what it was worth in 1983. That makes nonsense of the Government's claims about targeting resources on the low paid: in fact, they are targeting the cuts on the low paid. Every time they target their tax handouts, however, we know that they will hit a bull's eye.

This is a shabby Bill. It continues the theft of money, jobs and self-esteem from people with disabilities and people on low pay. Low-paid workers are being thrown into the insecurity of cut-price schemes, and pushed away from the security of Government schemes.

6.24 pm

Dr. John G. Blackburn (Dudley, West)

Let me begin by paying a warm and generous tribute to my right hon. Friend the Secretary of State for the manner in which he introduced the Bill. Conservative Members feel a great respect for the honesty and brevity that he has exercised within its confines.

I will not sit in the Chamber and hear the Bill described as "theft", "loathsome" and "deceitful". I happen to believe that many of its provisions will, by their very nature, be attractive to the working population. Having listened with much care to what has been said, I also find it difficult to accept that the rights of 15 million workers will be eroded.

I would dispute many of the points made by the hon. Member for Oldham, West (Mr. Meacher), to whom I listened very intently, but I shall centre my comments on that absurdly exaggerated figure of 15 million. I say that as a fully paid-up member of the same trade union of which the hon. Gentleman is a member. The statutory sick pay scheme certainly imposes a considerable burden on employers; it may well be complex and expensive to operate, particularly for small companies. However, it brings stability to small businesses, because the Government reimburse sickness benefits.

We have heard that there is only one winner—the Treasury. What blatant nonsense. It has been agreed on both sides of the House—I am seeking common ground—that SSP savings are being used to give help where it is needed most.

As is clear from the statement made by my right hon. Friend on 24 October, it is without challenge that a further £200 million will go to pensioners, in real terms. Let me say—theologically—"Amen to that." A further £235 million will go to residential care, and an additional £350 million to families. My hon. Friend the Member for Taunton (Mr. Nicholson), who is not in the Chamber now, rightly pointed out that we are talking about a budget that is—within the terms of social security—breathtaking: a budget of £63 billion a year, including the further £3 billion announced in the autumn statement.

For a few moments, I should like to talk not about the Bill but about its effects. I have sat here since the beginning of the debate, and I have heard many figures, a good deal of rhetoric and much scoring of political points.

I am more interested in people than in politics. Once we lose our vision about people we lose everything. I speak soberly from recent experiences. I believe passionately in the concept of more and more benefits and money going to the long-term ill and disabled. I am completely committed to the national health service and I am humbled by the fact that I have been in six cardiac units at six different hospitals in the past year. By the grace of God and by the nursing skills of the health service I stand to speak in this debate. I have seen at first hand the problems of people who have open heart surgery, transplants and other cardiac-related surgery. In the quietness of my soul I know that I have a responsibility to those people to say that the Government should give more. I know that as a result of this small measure resources will go in that direction. It is a testimony to any Government who care about the long-term sick and disabled.

I am entitled to reflect that when I gave what was probably my second speech in this honourable House I was savaged by Labour Members. They reminded me forcefully that the constituency that I have the honour to represent, Dudley in the west midlands, had the highest infant mortality rate of 26.2 per 1,000 live births. I was ashamed to inherit that record. As a result of education, increased medical care, the introduction of a district general hospital and, by tonight, an improvement in maternity benefits, the figure is below the national average. I am grateful to this Government for showing care and compassion to the women in my constituency who are pregnant and giving birth to the next generation. All hon. Members—I make no distinction between us—are here because we have a vision about people, and it is one that I share.

I was simply overwhelmed by the comments of the hon. Member for Oldham, West about the provision of statutory sick pay in the private sector. I listened intently and three times he said that these provisions cover only managing directors. What blatant nonsense.

Mr. Battle

Nobody said that. Will the hon. Gentleman give way?

Dr. Blackburn

I shall most certainly give way.

Mr. Battle

Will the hon. Gentleman reflect on what he has just said? Nobody has suggested that the schemes are only for managing directors. We suggested that the schemes for companies would not necessarily cover all employees, not least because exclusion clauses will rule out most people in firms of fewer than 10 employees. Is not that true?

Dr. Blackburn

I was most happy to give way to the hon. Gentleman, but the suggestion was made three times. I shall not enter into a conflict with him because there is much in what he says about exclusion clauses meaning that provision may not cover all people.

Ms. Short

I am grateful to my fellow west midlander for giving way. May I clarify the point made by my hon. Friend the Member for Leeds, West (Mr. Battle)? In response to my hon. Friend the Member for Oldham, West, the Minister and other hon. Members said that we had made such an allegation. The Government claim that 90 per cent. of British employees work for employers who provide an occupational sick pay scheme. Our point is that, although two or three employees in a firm may be included in such a scheme, the rest may not be, yet they would be included in the Government's figures. My hon. Friend gave the extreme example of a firm that provided only for the managing director, yet the whole firm was included in the Government's statistics. I am sure that the hon. Gentleman would wish to understand that and would not wish to mislead the House on that point.

Dr. Blackburn

Can the House imagine a reputable company engaged in providing these financial services not embracing the whole company, even if it was only for business, never mind anything else? I hold fast to the view that it would be in the company's interests and the interests of the company that produces the prospectus to include the entire company in a comprehensive scheme, rather than to take in two, three or four only.

I can go further. Of the companies with which I have had professional dealings in the west midlands—they are recorded in the Register of Members' Interests—not one does not have a comprehensive scheme for everybody. I readily concede that it is difficult to operate a scheme from the moment a man or woman takes up employment. There is usually a probationary period of three months.

There is tremendous scope for people in industry to make provision through the private sector. That is good, provided that the facility exists and the incentive is given. It is up to the Government to ensure that there is adequate provision of that facility throughout the working population, almost as of right, providing that the finances can stand it.

The Bill is not only commendable but, in the final analysis, will be welcomed. I was delighted that the hon. Member for Birmingham, Ladywood (Ms. Short) paid me the great compliment of saying that I shared with her the honour of representing a constituency in the west midlands.

Let me speak from personal experience. Wherever I go, I want to pay tribute to disabled people who, in some ways, have been attacked tonight. No word against those people will ever escape my lips. The disabled are worthy of more than commendation. I visit many offices and factories in my constituency and in greater Birmingham generally and I am always humbled when I see the achievements of disabled people who have climbed to the very top in their chosen career. To do that requires loyalty, skill and talent, and disabled people have all those attributes, which employers find very attractive.

Mr. Battle

Oh.

Dr. Blackburn

The hon. Gentleman has made his speech and he has made his point and now, in all modesty, I am making mine.

I am impressed by the standing of disabled people in my area. I have seen working at Birmingham airport a disabled man more gifted and talented than many who are marvellously fit. Similarly, I have seen disabled people working at hospitals and for companies who have made me want to salute the disabled people of the west midlands.

One figure that is not in dispute is the average of 15 working days a year lost through sickness, and I have no doubt that that is a perfectly acceptable figure. I do not for one moment depart from the argument that cover should be available. What I have argued—with sincerity, strength and dedication, I hope—is that I have a passionate interest in the welfare of the long-term sick and disabled. I salute both those groups of people and I know that, one day, they will reflect on the Bill and be glad that we passed it because of the extra resources that it will give to those who really need it. That is why I have no hesitation in supporting the Bill. It is the easiest thing that I have ever done in my life. When I walk through the Lobby, I shall have in my mind a vision of the sick and disabled people, as well as the pregnant ladies in my constituency, who will benefit from its provisions. I wish the Bill godspeed.

6.34 pm

Mr. James Wallace (Orkney and Shetland)

I welcome the remarks by the hon. Member for Dudley, West (Dr. Blackburn) about the way in which he has benefited over the past year from the health service. Judging by his comments tonight, he is now in very good health.

The Bill is short and admirably clear, although I fear that its provisions will be damaging both to employees and to employers. The Secretary of State claimed that the Bill did not pose any threat or bring any disadvantage to employees, yet the examples from citizens advice bureaux reports, given by the hon. Member for Oldham, West (Mr. Meacher), clearly showed that, in a number of cases, the operation of the statutory sick pay regime has disadvantaged employees.

The hon. Member for Teignbridge (Mr. Nicholls), who is no longer with us, dismissed those examples by saying that they referred only to bad employers. When the hon. Gentleman was an Employment Minister, we served on two Committees considering Employment Bills, and I can well remember that that was one of his favourite arguments. If one followed that argument to its logical conclusion, however, one would have to say that we did not need the criminal law because murderers were only a small proportion of the population. The measures that the hon. Gentleman introduced in his Employment Bills played into the hands of bad employers and gave them further material and further opportunities. Similarly, many of us fear that the Bill will give those who have not been good employers—especially in the operation of SSP—an incentive to continue as poor employers.

The CABs have not been alone in commenting on the announcement by the Secretary of State in October. The Disability Alliance, for example, said that the cut in reimbursement of statutory sick pay would aggravate the problem of non-payment by small employers. We may be talking about only a small minority, but a growing number of employees have expressed their concern that they have been unfairly treated in the operation of SSP, and the House should not do anything to encourage such unfair treatment.

The hon. Member for Teignbridge argued that employers do not go out in search of sick and unhealthy people. But it is not so much a question of who one brings on to one's books. During a recession, employers may be looking for redundancies and, leaving aside the possibility of unfair dismissal, those with a poor health profile may well be top of the list. That trend will be encouraged if employers are made to pay more for such people when they are sick.

Despite the claims of the Secretary of State, the Bill may have damaging consequences for employees or potential employees. It will also be damaging for employers—particularly those in small businesses. I shall not repeat all the reasons given by the National Federation of Self Employed and Small Businesses for its belief that the Bill will be disadvantageous to those whom it represents, especially as the hon. Member for Oldham, West has already placed a number of them on record.

One of the most important causes for concern is that the provisions have been introduced without consultation. The Government are changing a system agreed after long and hard bargaining in the early 1980s. The Government's original proposals did not envisage any reimbursement. It was only after tough negotiations that the present position was reached.

Ms. Short

Perhaps the speed with which the Bill is being introduced can be explained in terms of the history of these matters and of the employers' campaign which forced the Government to be more generous in their reimbursement arrangements. We are debating the Second Reading on Monday and, on Wednesday, the remaining stages are to be debated—most unusually—on the Floor of the House. That timetable has been deliberately designed to prevent employers' organisations from mobilising to get back what they have won on previous occasions.

Mr. Wallace

That may well be the reason. The timetable is certainly unusual. Whereas we shall have had six hours or more to debate the Second Reading of the Bill, detailed consideration and Report are to be afforded even less.

The president of the National Federation of Self Employed and Small Businesses, Mr. Bill Knox, is reported to have said: On the introduction of SSP we were promised that although we would be obliged to accept the cost of administering the scheme we would not have to fund it. We are bitter that the Government now appears to be reneging on what we considered to be a 'cast-iron contract'. We are concerned not only that—certainly in the eyes of small business men—the Government are going back on an agreement. The Bill will enable them further to reduce the rate at which they will reimburse employers for amounts paid in statutory sick pay. The Secretary of State was pressed on that point, and obviously he would not give an undertaking that it would never happen. If that was the case, he would not have included a provision in the Bill to allow him to alter the rates. Having experienced what they would consider to be a breach of promise or of good faith on the Government's part, employers fear that there will be further such breaches and that the percentage might decline from 80 per cent. to 60 per cent. or to 40 per cent.

I listened carefully to the Secretary of State when he responded to the hon. Member for Oldham, West (Mr. Meacher). The right hon. Gentleman said that other prorities and pressures on the social security budget would have to be taken into account. I would not necessarily take issue about that. However, the Secretary of State made great play of the fact that, in many respects, this proposal could be considered neutral, in that what was being lost by the business community was being made up in terms of relief in national insurance contributions.

If other priorities are to be considered, further cuts could perhaps take place without any compensating changes in national insurance contributions. Although there will be compensating changes on 1 April 1991, how long will that last? It is fair enough to say that there will be an offset in year one, but will that continue into years two, three and four? The financial memorandum refers to the sum of £250 million, comprising £180 million in the first year, as what will not be recovered in compensating payments by employers, and £70 million which cannot be claimed back in terms of the 7 per cent. national insurance contribution when statutory sick pay is paid.

The figures balance out in terms of what is given back as national insurance contributions. If that is the case, why in the world did the Government bother? If one side is to be balanced out by the other, why bother with this proposal, which will obviously cause aggro for small businesses and for the Confederation of British Industry which represents big business? It will place pressure on business at a time when it is being asked to cut costs.

Although the figures appear to balance out in arithmetical terms and the Secretary of State could give us specific examples of business that would benefit, it does not necessarily follow that the proposal will be a general benefit to the business community. The fact that some businesses will benefit means that others will not.

According to the Green Paper entitled "Income during initial sickness: a new strategy", published in the early 1980s, which contained the original proposals for SSP, there was to be a flat-rate scheme of statutory sick pay, and employers were to be reimbursed or at least offset by a reduction of 0.6 per cent. in national insurance contributions liability. There was also to be a 50 per cent. reimbursement for small businesses. That proposal was considered by the Select Committee on Social Services in 1980–81, and it stated: whilst the reduction in national insurance liability will be approximately proportional to payroll costs, the liability to pay ESSP will be far less evenly spread. Industries, occupations or regions with higher than average rates of sickness will have relatively greater costs under ESSP. There are obviously higher rates of sickness and injury in the construction industry, in mining and, regrettably, in agriculture. Regrettably, people in Scotland and the north of England do not have such good health as people elsewhere.

The Government have tried to portray the proposal as neutral for the business community, but it is clear that many businesses will find it damaging. The hon. Member for Surry, North-West (Mr. Grylls) suggested that there should be a two-tier system. If that was the case, small businesses with fewer than 20 employees could continue to have better benefits and a higher rate of reimbursement. In the 48 hours before the Committee stage of this Bill, I hope that the Government will consider that proposal.

Many small businesses that employ a small number of people do not have the resources to adopt private sick pay schemes. Undoubtedly some businesses will be in the "can pay, won't pay" category, but many small businesses are in the "can't pay, won't pay" category. It is not to their discredit that they cannot take on that obligation: they simply do not have the resources to do so. While the Secretary of State made great play of the fact that it is important that the private sector is encouraged to make provision for employees when sick—we would all endorse that as a good objective—many small businesses cannot attain that objective, yet the Government are placing this extra burden on small businesses with regard to the provision of the state insurance sector.

Small businesses have been hit by the uniform business rate and increases in the rate of inflation, and they must administer the arrestment of their employees' wages under the poll tax. They now have this additional burden to bear. A number of studies have shown that the cost of tax compliance bears more heavily in relative terms on small businesses than on big business, which usually has a large personnel organisation to deal with such matters.

The Minister responsible for small businesses has not been present for this debate. When I asked him a question during Employment Question Time two weeks ago about the effect of the uniform business rate, he quite properly said that it was a matter for the Department of the Environment. We are now discussing an issue which affects small businesses, but it appears to be a matter for Social Security Ministers and not a matter for the Minister responsible for small businesses. Many of us regret the fact that there is no co-ordination in the Government over how they treat the small business sector. There should be a Minister of Cabinet rank with overall responsibility for co-ordinating the small business sector, as happened during the Lib-Lab pact in 1977–78.

The Bill is unusual, because it penalises both employers and employees. That is no mean achievement for a small Bill but, because of that, we will oppose it in the Division Lobby tonight.

6.57 pm

Mr. James Cran (Beverley)

I congratulate my right hon. Friend the Secretary of State for Social Security on one of the most lucid expositions of a subject that very few people understand. I have no intention of bandying statistics with my right hon. Friend because he showed the Opposition perfectly well that he knew the logic of his position much better than they did.

The logic of my right hon. Friend's position is perfectly clear to me and I followed it easily. Whether I agreed with all parts of it is another matter. I believe that the proposals in the Bill are relatively innocuous, although, of course, the representative bodies involved would not say that. Those bodies are concerned because if such propositions can be put to us today, they might face a position similar to that which arose over redundancy payments. Consequently, the business community and employees want to know the Government's future intentions. I do not necessarily expect to hear chapter and verse about this tonight, but a nod and a wink from the Minister who is to reply will do.

I know that the very difficult case of small businesses has been outlined in this debate. Hon. Members on both sides of the Chamber have made the case eloquently, although some Opposition Members exaggerated it. When trying to influence any Government it is important not to exaggerate—but that is precisely what the National Federation of Self Employed and Small Businesses has done: exaggerated the effects of the proposals to such an extent that no reasonable person could accept the logic of its position. If such organisations were more reasonable in future when commenting on Government legislation their representations may be more successful.

I want to examine the logic of the position even though it has been outlined before, because repetition is no bad thing when an important principle is involved. I started with the Secretary of State's press release of 24 October. In eloquent and winning language he said that he wanted a sensible new balance between the state and employers. I have heard that before many times—sometimes I have accepted the idea in question, sometimes not.

The alarm bells sounded not when I heard submissions from representative bodies, but when I heard from companies in my constituency. Generally speaking they are not large; there are many small companies there. It is correct that many—generally large—companies are expanding the cover that they provide in the form of occupational sick pay schemes, and we certainly want to encourage that. Once we have encouraged them rather more than we have so far, that will be the time to start extending these proposals. If I concede, however, that they should be brought in now, they should certainly not be extended.

I do not necessarily accept the proposition that occupational sick pay schemes are increasingly used in small companies in my constituency—they are not. How do the Government expect these companies, many of them marginal companies that do not make the sort of profits that financial companies in the City make, to apply the proposals? The Secretary of State could not rule out the possibility that some of them will be adversely affected. Of course they will be——

Ms. Short

Does the hon. Gentleman agree that, as the Government claim that the effect on companies is neutral—they will lose £250 million but get it back in another way—it is unbelievable that they would have brought in the legislation unless they intended over time continually to cut the proportion of rebate paid to employers? They could do that under the Bill without even needing an affirmative resolution of the House.

Mr. Cran

I well understand what the hon. Lady is saying but it would be uncharacteristic of me to allow myself to be dragged into agreeing with her. I do not agree, for the simple reason that I believe that this measure is relatively innocuous; it is what might happen if the Government decide to amend it in future years that worries me. As they stand, the proposals are largely neutral, but they will not remain so if the Government keep developing the policy in the way that I fear they might.

I am moderately surprised—although I may have this wrong—that the Government did not seek representations on this point. In my simple view of life, it is always worth listening to all points of view. Sometimes they are uncomfortable, sometimes they are the opposite of what one believes, but the Government must always seek opinions.

Finance directors in my constituency have told me that if the Government ask companies to spend companies' money, that must be worth representations. I agree. Why was that not done? I heard the Secretary of State say something about it, but I fear that I did not hear it all.

The companies in my constituency are worried because the principle that the Government should reimburse companies 100 per cent. has been broken. Companies pay the cost of administration, and they are perfectly happy to do so, but 100 per cent. reimbursement is necessary because the principle is that companies are not in control of sickness—they do not cause their employees' sickness. Employees become ill for a variety of reasons, usually related to medical factors, not to factors to do with the company. This measure does not recognise that some industries and establishments have higher sickness rates than others, again for a variety of reasons. If I have misunderstood this aspect I shall be more than delighted to be reassured of that later.

It will come as no surprise to learn that what worries me is the movement from 100 per cent. to 80 per cent.—in itself relatively harmless, as I told the hon. Member for Birmingham, Ladywood (Ms. Short). Changes in national insurance contributions, worth about £250 million in 1991–92, cover It. But companies are worried about the signal that that sends about the Government's intentions.

After three years in this place I have started to learn—one learns every day here—to read Bills rather more carefully. That is clearly the secret of success in this place. Clause 1(2) is a case in point. It contains a provision further to vary the 80 per cent. figure. I think that most hon. Members would accept that I am a trusting soul, but equally I can claim not to be daft, and I have an awful feeling, as do the companies in my constituency that I have consulted, that the Government cannot possibly intend to increase the percentage from 80 to 90 or 95 at some point. Again, I am happy to be corrected on that point, but it is probable that the 80 per cent. will be reduced at some stage to 60 per cent.

Perhaps this will parallel the slow death of redundancy rebates—I am sure that we all remember them.

Ms. Short

indicated dissent.

Mr. Cran

The hon. Member for Ladywood nods, but I agreed with the Government about those rebates because companies cause their own redundancies, so it was perfectly logical of the Government to decide that companies should pay for them. However, as I have said, the same does not apply to sickness. The Government must recognise that. If sickness is caused by an employer, the health and safety legislation exists to prosecute the employer for it.

I have discovered that statutory sick pay will cost the Government £955 million in 1991–92, and—if I have understood it correctly, I fear that this Bill will surreptitiously and elegantly, pass this entire burden to companies in the fulness of time. We can all argue about when there will be a downturn or an upturn in the economy. However, such a bill passed over to companies will deter investment when we want to see more. It will also affect the profitability of companies and none of us would like to see that.

If my assumptions are correct, this could be a potentially heavy burden—I emphasise "potentially"—for some businesses, The Government should listen to those businesses. I have attempted to rehearse the downside of the proposals, but I have not exaggerated them. If the Government go no further than 80 per cent. I see no difficulty with the proposals. If the Government hint that they are prepared to move from 80 per cent. and ask employers to carry much more of the burden, and eventually all of it, there will be problems. I hope that I am entirely wrong. I should be delighted to be proved wrong and merely seek reassurance. I hope that I get it.

7.10 pm

Mr. John Battle (Leeds, West)

We have had two interesting and contrasting speeches from Conservative Members. The hon. Member for Dudley, West (Dr. Blackburn) gave us a panegyric, especially on behalf of the disabled, and suggested that the Bill would be celebrated because it marked an increase in resources. That is not the case; the Bill spells out how much will be saved. The hon. Member for Beverley (Mr. Cran) suggested that the proposals should not be lavishly welcomed. I think he said that we should treat them as innocuous and that at present they were at best neutral. He expressed the reservation that they could be damaging in future and he referred to the clause which suggests that the contribution may be reduced even further. If the Bill receives its Second Reading perhaps he will move an amendment in Committee to delete the phrase any greater or lesser percentage. That phrase is ambiguous and means that the contribution could be increased or reduced in future.

We strongly argue that the thrust of the Government's policy in this short Bill is to reduce the contribution by the state and push the burden on to the employer. In the long term employees will have to pay the price for that. Conservative Members say that our claims are exaggerated. We have been here before and been accused of that. We were told that our fears about the poll tax and the uniform business rate were exaggerated. Nearly a year ago to this day there was another social security Bill dealing with the availability for work tests. We were told at that time that our fears were exaggerated.

The Minister for Social Security and Disabled People is in his place. In Committee I suggested to him that the Bill dealing with the availability for work tests would cause great hardship because when people applied for a job they would be forced to accept the lowest rate of pay on offer. The Minister will remember that when I challenged him about that he did not believe the rates of pay being offered in my constituency. He seemed to think that they were much nearer the national average of £268 a week. However, in some jobs people were paid about £1 an hour. I seem to remember that he checked the figures. The effects of that Bill are precisely as we predicted. As unemployment rises in my constituency wage rates are again dropping.

We were accused of exaggerating the reality of poverty until the figures were slipped out just before the summer recess. One of the primary causes of poverty in our society is low pay, and we should read the Bill in that context. The explanatory and financial memorandum to the Bill makes the savings plain. It states: Clause 1 will produce savings in public expenditure of £181m in 1991–92, rising to £190m in 1992–93 and £197m in 1993–94. The word "savings" is a Government euphemism for cuts in public expenditure. Clause 1 will reduce from 100 to 80 per cent. the statutory sick pay that employers can recover from their remittances of national insurance contributions.

This is the second year running that the Government have reduced statutory sick pay for low-paid workers—last year it was by £80 million. As a result, 4.9 million workers lost their entire entitlement to the higher rate of statutory sick pay. That is one in five of the work force. When the changes in the Bill are combined with the decision in October's uprating statement to raise the threshold for the lower rate of statutory sick pay from its current level of £125 to £185 and the proposal to freeze the higher rate at its current level of £52.50, they will bring to the Treasury a saving of a further £100 million.

In the uprating statement, the Secretary of State called this "restructuring". In moving the Second Reading of the present Bill, he used that word again. When we in areas such as Leeds which have depended on a manufacturing base hear such a word, it suggests cuts, reductions and redundancies in the work force. "Restructuring" is a euphemism for cuts.

Perhaps the Secretary of State had to find from somewhere the money for the token increase in child benefit for the first born. It has been taken from statutory sick pay. The Bill is about withdrawing the role of the state. The Government are ambiguous about that and are not quite clear where they stand. They ask whether the state should have a role or whether it should be pushed back to the employer and the employee. That is the thrust of the Bill. They are again pushing forward the make-the-people-pay principle—make them pay 20 per cent. minimum of the poll tax; make them pay at least 20 per cent. of their housing benefit. Now the Government want to make the employers pay 20 per cent. of statutory sick pay.

The impact of this so-called restructuring on employees was spelt out in a reply in Hansard on 12 November. According to the Government, about 3 million employees with earnings of between £125 and £185 a week will be pushed down to the lower rate of statutory sick pay. They will no longer be eligible for the higher rate. A wage of £125 is well below the Council of Europe's decency threshold of £178.91 a week. Will Conservative Members, with their great new approach to Europe under a new leader, acknowledge that Council of Europe threshold? In the meantime, people who fall sick on or after 6 April next year will be pushed to the lower rate if their wages are within that bracket. In practice they will lose £9 a week.

The failure to raise the higher rate will result in a loss of £5.70 a week for those earning £175 or more. As we know, it is estimated that 60 per cent. of such people are women. The Government make much of the fact that families need to have two earners, and we have had debates about it. A woman who works to provide a much-needed second income to pay the family's poll tax or to make up for the reduction in child benefit and who is not covered, will be subjected to means testing. If the husband is working she can apply for income support, but she has no chance of getting it. There will be no cover for the income that is lost. The Government cannot deny that such families will suffer a loss of income.

Those earning below £46 a week are unable to claim statutory sick pay. When people face a shift not simply from employment to unemployment but from relatively secure work to temporary, part-time and low-paid work, the impact of the Bill will be greater than the Government are letting on. People with disabilities are more likely to be working part time and in lower-graded occupations. They are also the ones most likely to be excluded from the private schemes and so dependent entirely on the state scheme. As soon as the Bill passes through the House, it will lead to further withdrawal of state responsibility, with a resulting increase in hardship and insecurity for the most vulnerable people in work. It will force disabled people to work for low wages. Others will stand to lose their long-term incapacity benefit.

Employers will face an increase in administration costs on top of the uniform business rate, high interest rates and the rest. If the Bill goes through, it will encourage discrimination against those with severe disabilities,and employers will stop recruiting them. Too few of them are already employed, so how will the Bill give employers incentives to be more progressive in employing people with disabilities? It will encourage employers to go in the opposite direction.

Conservative Members say that the National Federation of Self Employed and Small Businesses is exaggerating, but I notice that it has said that it opposes the Bill not least on the ground that the Government broke an agreement about consulting it. That should have taken place before Second Reading. Furthermore, the federation said: 96 per cent. of British businesses employ less than 20 people and do not have the resources to take on their employees' health insurance. That is why National Insurance was first introduced. I suspect that that is why the Government are trying to slip out of the system of national insurance. They are trying to privatise the state benefit provision. This is back-door privatisation of the welfare state.

The Government try to justify what they are doing on the basis of the report commissioned by the DSS. They claim that it shows that the vast majority of workers are covered by private occupational schemes. However, the detail of the report shows that 44 per cent. of all private sector firms and 55 per cent. of firms with fewer than 10 employees, which accounts for 75 per cent. of firms, have no scheme. Does that show that 91 per cent. of employees are covered by private schemes?

Furthermore, even in firms where some occupational scheme exists, coverage is far from universal because the employees most commonly affected by exclusion clauses are those working part time in the lower grades and on low wages. Nearly one in two schemes have exclusion clauses relating to the length of service and the hours of work. In other words, 72 per cent. of employees may be affected by those exclusions, so they have extremely limited coverage.

Beveridge wanted the national insurance scheme to provide a fully comprehensive scheme from the cradle to the grave, based on the actuarial principle that people paid in contributions and then got help when they needed it in difficult circumstances. The Government have moved away from that fully comprehensive principle and are trying to enforce on the people a back-door, third party fire and theft coverage, on the basis that the personal premium is the absolute minimum. If one cannot afford the full premium because one is sick or ill—the reason why the system was invented in the first place—one will not get full coverage. We cannot treat people in the labour market like second-hand cars, providing the minimum legal assistance for those likely to break down. What is worse is that, if it is not their fault, they stand to lose out altogether.

There is a group in the Lobby at the moment—the No Turning Back group—which is looking for a champion to defend Thatcherism. The fact that the main architect has been deposed means that there is a danger of the whole project going. That project was spelt out in September in a pamphlet published by the group. A chapter headed "The Withering Away of the State"—says: Our purpose should be to wean people off welfare. We advocate the systematic reform of the welfare system into one based on insurance—run on a private agency system … It should be a privately managed insurance-based system giving people maximum protection and opportunity … Nothing in our proposals would affect the benefits paid as of right to disabled people. The group is obviously a little sensitive about disabled people, but the system and principles are clear. It would dismantle the whole of the welfare state and make people take out private insurance to cover the times when they lose their jobs or are struck down by illness.

At the heart of the Bill, and of the clause to which the hon. Member for Beverley referred, is democracy. When the hon. Member spoke about the potential in the Bill for changing the system to make it even harsher, and reducing the contributions even further from 80 per cent. he did not spell out the way in which the legislation will be changed. The Secretary of State will have the power to alter the percentage rate without a proper parliamentary debate. It is all right for the Secretary of State to say that there has been a shift from affirmative to negative orders. The Bill is paving the way for future detailed reductions in the level of state reimbursement for employees, which can be passed without proper parliamentary scrutiny.

The Bill is a clear signal that the Government are intent on their project of withdrawing from state provision and of dismantling the welfare state. It is not good enough that they have taken money from the poor and redistributed it to the rich. The principles of the national insurance scheme and the welfare state have been fundamentally undermined. Conservative Members may claim that I am exaggerating, but I refer them to what happened when we debated the poll tax, the availability for work test and the poverty figures that Conservative Members denied for months.

This time, it will not be good enough for the Secretary of State to offer, in answer to questions from his hon. Friends, a fundamental review. Three people out in the Lobby are offering fundamental review of the poll tax, but it is too late for that because millions of people have paid the price. Before millions of people pay the price for this Bill, I urge the House to reject it and make the Government change track.

7.28 pm

Mr. Peter Thurnham (Bolton, North-East)

The hon. Member for Leeds, West (Mr. Battle) is worried about the No Turning Back group, but from his speech, it is obvious that he is a member of the no turning forward group. I recommend that he reads The Independent of today, which has on page 3 an article headed: Kinnock seen as liability by colleagues". Until the Labour party gets round to having a leadership election, it is condemned to being a no turning forward group.

The hon. Gentleman's speech was entirely in favour of the nanny state. He said that he was concerned about withdrawal of state responsibility, and he said that without any regard to the fact that people want to have some responsibility for their lives. Employers want to accept more responsibility for their employees. Many more people are self-employed now than there ever were when the Labour party was in office. That is because people want to accept that responsibility. The hon. Gentleman should not condemn people for wanting to do that, but he seems to think that they have to turn to the state for their care because they cannot provide for themselves. He is mistaken to look at it in that way. People want to have more responsibility in their hands and do not want to have to depend on the state to anything like the extent that they had to in the past.

The hon. Gentleman talked about cuts in public expenditure, but there have been enormous increases to £200 billion. He talked about cuts in the work force, but there are 27.5 million people in work. How can he talk about cuts when a record number of people are in work?

Mr. Battle

Does the hon. Gentleman accept that the increase in the work force reflects an increase in part-time, temporary and low-paid work? That is the reason why the Government claim that the employment market has increased. In reality, it is not an increase. Unemployment is rising.

Mr. Thurnham

The hon. Gentleman said that the primary cause of poverty is low pay, but he is wrong. The worst cause of poverty is unemployment. Only the Labour party would prefer people to be unemployed rather than in part-time work if they want to take it. The hon. Gentleman should not condemn people if they want part-time work. People from days of old would probably think that most people now are in part-time work as they work only 40 hours a week. Circumstances change. The hon. Gentleman should look ahead and not imagine that everything is as it was when the Labour party was in power.

Mr. Andrew Rowe (Mid-Kent)

Does my hon. Friend agree that probably the commonest pattern for women with children returning to the work force is that they choose to work a certain number of hours while their children are small, gradually increasing those hours as their children become more self-sufficient, until eventually they are extremely well placed to take a full-time job?

Mr. Thurnham

I could not agree more. One should look at part-time jobs as a way to help people to move into full-time jobs if that is what they are looking for.

I apologise for having missed part of the debate. I am sorry, but I had to leave the Chamber briefly to attend a meeting of the group Exodus, which campaigns for mentally handicapped children to move out of institutional mental hospitals into the community. The thrust of the Bill is about facing up to priorities and reallocating resources where needs are greatest, and that is an example of the way in which one wishes resources to be reallocated.

Ms. Short

I want to take the hon. Gentleman back to when protection for low-paid workers was being reduced. He said that unemployment was the worst possible cause of poverty for anyone. We are going into a period of rising unemployment. Does the hon. Gentleman stand by his statement that, rather than having unemployment, it would be better if Britain were one great big sweatshop, with low pay for virtually everyone?

Mr. Thurnham

If the hon. Lady looks at my speeches, she will see that I spoke about the country being a wealth shop. We should be concerned about the creation of wealth. Only Labour Members would rather that people were out of work than in work. Most people would prefer to be in work and creating wealth rather than out of work. I refer the hon. Lady to my speeches on that subject if she wants to see what I have said. She pressed my right hon. Friend the Secretary of State about the number of people who were included in schemes, rather than merely working for employers who had schemes. That is a spurious line to follow.

Mr. Quentin Davies (Stamford and Spalding)

On the vital matter of unemployment, is my hon. Friend aware that the Labour party has come out with a proposal for a statutory minimum wage? That would inevitably knock many people out of jobs and increase unemployment to a higher level than it might otherwise have been. Is my hon. Friend aware that, according to some calculations, 750,000 people would be needlessly thrown out of their jobs by that pernicious proposal?

Mr. Thurnham

That is typical of what the Opposition say without paying proper attention to what will happen. I refer them to the time when Barbara Castle, now Lady Castle, was Secretary of State for Employment and Productivity. She looked into the matter and produced a report saying that that proposal would lead to massive unemployment, particularly in the regions and Northern Ireland.

Mr. Tony Banks (Newham, North-West)

Will the hon. Gentleman explain why this country, alone of all the EEC countries, does not have minumum wage provisions or standards? Why can the Germans, French and Italians all believe that it is possible to have minimum wage provisions, but this country cannot? If this country were much more successful than all the rest, I could understand it, but as Britain is undoubtedly the sick man of Europe in economic terms, obviously the hon. Gentleman's argument does not bear examination.

Mr. Thurnham

Britain was the sick man of Europe when the Labour party was in power. It is no longer the sick man of Europe because we do not have legislation that stops people working. The legislation about which the hon. Gentleman spoke would stop people working. It is not really applied in those other countries anyway—it is only a fiction—because it stops people working. Only the Labour party wants to put people out of work. I see it as a progression—if people can start at a low rate, they can progress up the ladder. If we stop them starting at that lower rate, we stop them proceeding up the ladder.

The hon. Member for Birmingham, Ladywood (Ms. Short) asked in an intervention in the speech by my right hon. Friend the Secretary of State how many employees were included in schemes, rather than merely employed by firms that provided the cover of a scheme. That is a spurious question. It is illusory. The question cannot be answered in the terms that the hon. Lady wants. New employees are not usually covered by those schemes. A period of three, six or perhaps 12 months must elapse before such people can qualify. Part-time employees are generally excluded—they may be employed by more than one employer.

Most of all, the hon. Lady's question does not stand up because private firms generally use discretion. I declare an interest in that I am a small employer. I am concerned about the Bill and the effect on small employers. The difference between private and public employers is that private employers use their discretion and, where they can see that they should help their employees through a period of sickness, they will generally do so. Only in the public sector and in the local authorities mentioned in the report by the Audit Commission—which the Labour party wants to abolish—are there automatic "free days" when one does not need a sickness certificate. Private firms do not go in for that. They judge each case on its merits, as they should.

Mr. Eric Martlew (Carlisle)

The hon. Gentleman's comments amuse me a little. For more than 20 years, I worked for a private company, which obviously was not like the firm owned by the hon. Gentleman. It did not look at an individual to see whether he had blue eyes in order to decide whether to give him sick pay. My firm negotiated sick pay conditions with the employees and the trade unions, and sick pay was a right for all employees. The hon. Gentleman advocates giving sick pay to the deserving sick, like the policy of giving to the deserving poor. Sick pay is not about charity. It is about entitlements in a civilised country.

Mr. Thurnham

We want to work towards a society in which there is greater responsibility—more individuals are able to accept responsibility and more employers are able to accept responsibility for their employees. We now have 3 million people who are self-employed and who obviously accept that responsibility.

In a recent article in The Sunday Times, the Chancellor of the Exchequer, my right hon. Friend the Member for Huntingdon (Mr. Major)—who may soon be leader of the Conservative party—listed the factors by which he judged new proposals. He said that he asked himself six questions about any proposed legislative change: Would it enlarge freedom and extend opportunity? Would it make producers and providers more accountable and responsive to consumers? Would it encourage people to take more responsibility for their own lives? Would it improve life for the worst-off in society? Would its effects be environmentally sound? Would it enable individuals to make the maximum contribution to society? The Bill stands up well by those yardsticks.

Ms. Short

It does not.

Mr. Thurnham

Yes, it does. It encourages people to be more responsible and helps to allocate resources where the need is greatest.

The Bill's costs have been explained to us. There will be a movement from 100 per cent. to 80 per cent., which will cost employers £250 million. That will be offset by the reduction in national insurance contributions, which my right hon. Friend the Secretary of State said would come close to £250 million. The major change is the £100 million saved by freezing the higher rate of statutory sick pay and raising the threshold. About £100 million is available because of the change.

The change affects those with the higher band of incomes, not those with the lower band of incomes. The Opposition say, wrongly, that it affects people on the lower incomes. However, it makes money available for distribution in areas where the need is greatest. My right hon. Friend the Minister for Social Security and Disabled People is responsible for the independent living fund, which now costs more than £60 million. That is an example of where resources are being reallocated. We must establish priorities and then decide where the need is greatest.

The Opposition are always quick to condemn the Government for doing too little too late, for being mean, and so on. The Government have introduced a Bill that shows where resources can be made available. There must be some limit on resourses. Even if the Opposition were in Government, they would have to accept a limit on resources. It is a question of how those resources are allocated, and the Bill is effective in the way in which it tackles that.

Mr. Battle

rose——

Mr. Thurnham

We are having quite a lively debate.

Mr. Battle

Does the hon. Gentleman seriously believe that £175 a week is a high wage? How does he contrast that with the tax benefits in recent Budgets for people earning more than £2,000 a week?

Mr. Thurnham

We are talking about different bands. The figure that the hon. Gentleman mentioned relates to the higher band. The Bill fully protects those in the lower bands from inflation. The £100 million available because of the changes comes from the higher band—mainly people in firms that have occupational schemes. Cover is provided for the vast majority of employees either through occupational schemes or through the discretion of the employer. The hon. Gentleman is wrong.

The Government should be commended for introducing the Bill. Any change usually results in those who think that they might be losers making loud protests, whereas in general the gainers are either unaware that they are gainers or they tend to remain silent. There have been protests from the small business lobby, half a protest from the big business lobby—on whose behalf my hon. Friend the Member for Beverley (Mr. Cran) spoke—and the disability lobby has expressed concern. They are confused about the impact of the Bill. They should recognise that, within the whole balance of priorities, there are benefits.

Hon. Members on both sides of the House share a genuine concern for the disabled and for those in society who cannot look after themselves; but I am concerned that some people who are not ill take advantage of the £1,000 million a year statutory sick pay. I refer Opposition Members to the Audit Commission's report. The hon. Member for Newport, West (Mr. Flynn) said that the report did not refer to the generality of authorities, only to the London authorities. It is clear that he did not read the report. The very first exhibit refers to all districts. It shows that sickness levels in all local authority direct labour organisations are above the CBI's average national figure. The averages for the shire districts, the metropolitan districts and the London boroughs are all above the national average.

Ms. Short

The hon. Gentleman is making a serious and dangerous point. We all agree that it is wrong when people pretend to be sick, and there should be a tightening of the rules wherever that is happening. However, if the hon. Gentleman is using that to justify cutting the sick pay of low-paid workers who are genuinely sick, that is inexcusable.

Mr. Thurnham

I share the hon. Lady's concern, but it is clear from the report that there are cases of non-genuine sickness. It gives considerable detail of the causes of the problem, including institutionalised sickness that is not genuine sickness. It suggests that there is a lack of proper management. The Bill is good because it brings more responsibility to bear on individual employers, so that if they have higher than average levels of sickness, they have greater reason to question why. I recommend the report, which is very good, to the hon. Lady. It lists many factors that can lead to higher than average sickness rates. It is not simply because the employees are not healthy; it is because the management systems are not adequate.

Mr. Rowe

Somewhat to my embarrassment, I must confess that I have not read the report. I was a civil servant many years ago, and it was commonplace to hear people say, "I have sick leave due to me." Perhaps that is what the report is highlighting.

Mr. Thurnham

My hon. Friend has put his finger on an important point.

Paragraph 55 of the report states that one of the authorities had 12 days uncertificated sickness absence built into its computer printouts as free days. If someone does not take all of those days, no doubt he is asked why. It is an example of where the greater responsibility that is built into the Bill will bring home to all those employed in an organisation the real causes of sickness levels. Is it because employees are generally unhealthy—

Mr. Martlew

When the Government introduced statutory sick pay, they also introduced self-certification. Is the hon. Gentleman admitting that that legislation has been a flop and has increased the number of days lost through sickness?

Mr. Thurnham

I understand that largely the legislation is working very well. Employees can self-certificate for periods up to six days. I suspect that the legislation is working differently in private industry from in the public sector. I refer the hon. Gentleman to the report. My right hon. Friend the Secretary of State, the Opposition and all sides of industry agree that the legislation has worked well since it was introduced, although I do not think that it is working that well in areas of the public sector.

I recommend that the hon. Gentleman reads the report, which lists ways to study the matter, sets target levels for acceptable degress of sickness, and sets trigger levels that would automatically instigate management investigation. It gives a list of key success factors that will enable authorities to study practices in their organisations. For the most part, local authorities have a good reputation as caring employers, and I am sure that they would not wish to lose that. However, there is evidence that in London and in a number of other authorities—such as my authority of Bolton—sickness is above the average rate for industry. That suggests that not all the reported absences can be due to genuine incapacity.

The report states that it is clear that much can be done to reduce the current high levels of sickness absence without introducing burdensome terms and conditions. Many of the authorities reviewed in the report have already implemented recommendations and are now benefiting from the improvements. That demonstrates how a more responsible attitude to sickness can be to the benefit of everyone in industry, and especially to those who are most deserving of the help that we can give them. I commend the Bill to the House.

7.47 pm

Mrs. Alice Mahon (Halifax)

It is ironic that the last Bill to come before the House for its Second Reading under a woman Prime Minister should be one that will have such a bad effect on women. As my hon. Friend the Member for Oldham, West (Mr. Meacher) said, it is a squalid memorial to Thatcher's reign. She might be a woman, but she is certainly no sister.

It is legitimate to ask the three contenders for the Tory crown who are now grubbing about in the Lobbies what they think about the Bill and what they will say in 12 months' time if it has the bad effects that we expect. They have all stated their credentials for the job that they all want. They have all claimed a common touch—the class warrior, the potato planter and the weightlifter. I should be interested to know whether, in a few years' time, the right hon. Member for Henley (Mr. Heseltine) will deny thrice before the cock crows that he had supported the Bill. I shall be interested to know what Lobby he votes in tonight.

The Secretary of State appeared reluctant to accept the reality that low-paid workers in non-unionised workplaces often have difficulty in obtaining statutory sick pay, and there is plenty of evidence of that. The Low Pay Unit has clearly stated the effect of the Bill on women. Female employees having earnings between £125 and £175, and part-time workers—many of whom are excluded from occupational sick pay schemes—will be badly hit by the Bill's provisions.

It is no use the Secretary of State making spurious arguments to the effect that small businesses do not really mean what they say. There is plenty of evidence of opposition to the Bill, if only the Government will listen. The National Association of Citizens Advice Bureaux undertook a survey of employers who do not provide statutory sick pay, but obviously the Government do not want to hear that evidence.

There can be dire consequences for employees who are dismissed because of sickness. They not only risk immediate hardship, but will lose entitlement to unemployment benefits for six months if they cannot prove unfair dismissal if they qualify under the two-year rule. The Government had access to NACAB's reports on SSP, low pay and poor working conditions, but have ignored them.

One citizens advice bureau in Hertfordshire reported seven cases in one month of employers refusing to pay SSP to eligible workers. There is a great deal of evidence that employers cheat on that benefit.

The National Federation of Self Employed and Small Businesses is strongly opposed to the Bill, and rightly accuses the Government of reneging on their earlier promises. The Secretary of State let the cat out of the bag tonight when he was questioned by my hon. Friend the Member for Oldham, West (Mr. Meacher), and refused to reveal the Government's intentions in respect of the future level of reimbursement to employers. The right hon. Gentleman had an opportunity to tell the House what he is about, but refused to take it.

My hon. Friend the Member for Leeds, West (Mr. Battle) is right when he says that the Government's long-term intention is to privatise the scheme and to rid themselves of what they see as a burden, as they go about breaking up the welfare state. The hon. Member for Beverley (Mr. Cran) asked the Secretary of State for a nod and a wink, but he will be bitterly disappointed. We have heard all that we are to hear tonight.

Many other organisations oppose the Bill. If the polls being taken in the Lobby tonight are any indication, we shall see another Prime Minister in the Thatcher mould at the Dispatch Box next week. The Government always refuse to listen and are totally inflexible, whatever the Opposition's arguments may be. Many basic workers' rights have been lost under the present Government. They include maternity benefits, the right to work, action against unfair dismissal, wage protection for young people, benefits for short-time working, and health and safety protection in many areas.

In my own constituency, workers at the Coloroll group were left without protection when it went into receivership. Loyal, long-service workers who were entitled to 12 weeks' notice were unable to claim until that period of notice expired. If they are lucky enough to find work earlier than that—after a month, say—they receive only one month's redundancy pay, and none of the extra severance pay negotiated by their union. The receiver has a duty only to the company's shareholders, and they are his first consideration. That unfortunate group of workers cannot even get their holiday pay. It is scandalous that such a thing should happen to decent people.

The hon. Member for Bolton, North-East (Mr. Thurnham) referred to low pay. Last week, I went to the Halifax jobcentre to see what work was on offer there for textile workers. There were only four textile jobs advertised, and they were all in other areas other than Calderdale. One of the vacancies was for a Volkman twister machine operator, at £99.79 for a 40-hour week. Another was for a security guard dog handler, for pay of £1.50 to £2 per hour. The third job was for a quality controller in a meat processing factory, at a wage of £2.30 per hour. That is what my right hon. and hon. Friends mean by low pay.

A number of workers made redundant by Coloroll have already been to see me. One 56-year-old man was in despair because it is unlikely that he will find other work—at least with a company like Coloroll. The Coloroll tragedy has nothing to do with the Bill, but it highlights what is happening in the real world and illustrates our arguments about low pay. Three hundred Coloroll workers in my constituency face a very bleak Christmas.

John Ashcroft, the high-flying managing director of Coloroll, who wreaked such havoc on the company and the community of Sowerby Bridge, was praised to the rooftops by the Prime Minister as the entrepreneur of the year. He will have a good Christmas, because he gave himself £1.2 million in dividends the year before Coloroll collapsed.

Other Community countries have protective legislation. France helps workers caught in dreadful situations such as that at Coloroll.

The Bill is another attack on low-paid employees, many of whom do dirty, hazardous and boring work, and who can never save for the day when they may face ill health or an accident. I refer to the people at the bottom of the heap, about whom Conservative Members do not have a clue, but who will be penalised still further under the new legislation. It is estimated that 3 million low-paid workers will lose out under the Bill. It has been argued that employers' national insurance contributions will be lower, which will provide some compensation, but many employers will not make that connection. Whatever the Secretary of State claims, the changes will discriminate against employers whose workers fall sick.

My hon. Friend the Member for Oldham, West quoted the clear advice of the Spastics Society that the Bill will discourage employers from taking on people who are disabled or have poor health records. The Government know that that is true. We saw a dreadful performance by the Secretary of State: he was so embarrassed by what he had to tell the House that he went on for about an hour and a quarter, but he could not cover up the fact that the disabled will be worse off.

The Bill is about saving the Government money—getting rid of the existing scheme and having it privatised. It is all part of the Government's attack on the low-paid. It is like a creeping, deadly slime that is suffocating the basic rights of working people. I hope that Conservative Members will feel a twinge of conscience, and will vote against this shabby, nasty little Bill.

7.58 pm

Mr. Roger King (Birmingham, Northfield)

The hon. Member for Halifax (Mrs. Mahon), who spoke with great feeling, said that the Bill is shabby, and claimed that it is another attempt to cut Government expenditure in an area of social welfare provision. She is wrong. This legislation must be seen as part and parcel of the Government's growing commitment to social welfare provision. One cannot consider it in isolation, or without taking into account the significant financial improvements announced for next year, in respect of pensions, residential care and nursing home allowances, family benefits—and in particular, as was mentioned by my hon. Friend the Member for Dudley, West (Dr. Blackburn), benefits for the disabled.

That is a major step forward in the provision of help where it is required, and we all warmly welcome that. It is targeted help. The Government appreciate that that is the only way to put increased financial resources into areas where there are known problems, so that we can tackle them more easily.

Ms. Short

rose——

Mr. King

I have only just started, and I hope that I have not said anything with which any hon. Member would disagree.

Ms. Short

I am grateful to the hon. Gentleman. He is absolutely right that in the uprating statement, when the Government gave a little increase for the first-born child because they were embarrassed about the failure to increase child benefit, something for people in residential homes because elderly, frail people were being evicted and something for poor pensioners—all of which is welcome—the Treasury said that the Department could not have any more money, so something else had to be ripped out of the social security budget. This is it—the low-paid sick are paying for those improvements. Does he agree with that?

Mr. King

No, I do not agree with that. It is a Government Department's task to deal with the Treasury—to wheel and deal within the financial constraints placed upon it—to get the best settlement that it possibly can, and establish a set of priorities as to where that money should be spent.

To my mind, the Bill is a perfectly acceptable piece of legislation, but I make one strong suggestion, which has already been mentioned this evening. The Bill sets out a requirement that national insurance contributions will be reduced from 100 per cent. to 80 per cent., and as a consequence the reimbursement rate can in future be reduced or increased, by order. I am a little unhappy about that, but I can accept the principle contained in the Bill to provide assistance for employers.

If any adjustments are necessary, I hope that my right hon. Friend will consider further assistance for employers to ensure that no great net disadvantage is passed on to them.

If one considers the Bill's financial implications, the reduced amount given to employers is worth about £250 million and is weighted in favour of those employers whose employees are paid less. That is important because, by and large, small businesses pay less than large ones. Therefore, my right hon. Friend has done what he can to help smaller businesses.

The main problem which we face has not been mentioned in the debate—how to resolve the constant difficulty of funding statutory sick pay for about 6 million people. In 1989–90, that amounted to £955 million. One wonders whether such an enormous sum of money—it is growing every year—must necessarily be paid by society to fund the growing incidence of sickness.

There is little incentive for us to stay healthy in this country. The statutory requirements of the health and safety at work legislation are fulfilled by businesses well, but to what extent do companies provide for the health of their work force? Japanese businesses and many continental companies have active health programmes for their employees which reduce the cost of absenteeism and sickness. As a nation, we have been accused of being unhealthy.

Mr. Martlew

I think that the hon. Gentleman will find that those Japanese companies which have occupational health schemes also have the best sick pay policies. The companies with the worst sick pay policies make no provision for occupational health.

Mr. King

To some extent, I do not disagree with the hon. Gentleman. The probable reason why the Japanese can have the best sick pay benefits available is that they are much healthier as a result of the active health programmes that employees enjoy.

Some British companies are beginning to consider following the Japanese idea of physical jerks first thing in the morning. There is no doubt that that seems to have ensured better attendance by workers of Japanese manufacturing companies. Perhaps we should consider that idea in more detail.

As a result of passing on a little more of the commitment to provide funding for statutory sick pay, perhaps companies in this country will pay more attention to the welfare of the work force, at very little cost. It is not a question of having to invest vast sums of money.

The average person in this country has often been accused of having a poor diet, eating the wrong things, drinking too much, smoking and having a poor life style. All that is probably to some extent true and many of us are guilty. The trend cannot be easily reversed. Local authorities have launched a programme to acquaint everyone with the risks of being a lounge lizard, of not doing enough exercise, and of eating the wrong things—they can only lead to heart problems and to stress. Many people lack exercise. Their only sport may be darts or snooker, which is more evidence that we have an unphysical outlook towards recreation and sport.

There is a way forward, if we try to link the sick pay which companies have to provide and their increasingly important role in improving the health of their work force. It should not just be a question of people turning up at work at 7.30 am, starting work and going home in the evening. Companies pay a great deal of attention to their machinery and to the equipment which provides work, but not much to the most vital of production—the employees themselves. I hope that closer attention to the health and welfare of their employees will be a consequence of this legislation. That can be tackled easily.

How many offices have too much heating and are too hot? Some can be found within the Palace of Westminster. Poor ventilation and overheated premises lead to employees becoming unhealthy—they get colds, sickness and flu. Admittedly, it would take a great deal of money to put that right in the Palace, but in many factories, if air conditioning, proper ventilation and heating were introduced, the result would be a saving in carbon dioxide emissions.

Poor lighting is another problem which needs to be considered. Not only too little light, but too much can cause sickness and absenteeism from the work place, with increased costs to the community and the company.

Other, more high-tech, problems are being encountered by visual display unit operators and computer programmers who stare at screens all day long, and more research is being carried out in that area. Such employees are encountering problems with headaches. Companies shrug their shoulders and put it down as a fact of life, because someone else will pick up the bill when employees are off sick. If we pass on a little more of the burden to employers, perhaps they will consider working conditions more carefully. Although working conditions might pass a health inspection, as technology and techniques move on they probably need to be reconsidered.

Mrs. Mahon

Has the hon. Gentleman considered the effect of Government policies and privatisation? For example, domestic workers at the health authority for which I work were privatised. The work force was cut by half but was expected to achieve impossible performance targets. Those people, who were mainly women, suffered from stress, anxiety and sheer tiredness in trying to achieve the impossible targets, and within 12 months there had been a 100 per cent. turnover in staff. Will he consider such problems in speaking on what employers can do for employees?

Mr. King

The hon. Lady makes an interesting point. I would not try to defend any get-rich-quick organisation that sought to undercut an established operation by using labour in the way that the hon. Lady mentioned. There is no doubt that many excesses and problems have resulted from that splurge of privatisation. No management or company director can operate successfully in that way. There is nothing worse than a high turnover of staff or than signing a contract with a health authority or school only to discover that no one shows up because they are not well or because they have walked out. The private sector can operate only if its employees are prepared to work with it. Businesses will not last long unless there is confidence between management and the work force and pay and conditions are right to ensure continuity of commitment.

Employees of the National Freight Corporation and of other business benefited considerably from the Government's privatisation policy. We all welcome the improvement in working standards and pay that privatisation has produced.

Mr. Martin Redmond (Don Valley)

I must correct the hon. Gentleman. He suggested that only private sector employees are capable of continuous work. Many public sector employees give total commitment to their employer, and many, such as nurses, are committed to the care of the elderly. I wish that he would withdraw his slur that public sector employees do not give full commitment.

Mr. King

If I said that, and I am quite sure that I did not, the hon. Gentleman misunderstood me. I have not cast a slur on any national health service workers or on anyone else. I do not doubt that they have the utmost commitment to their jobs. I would not dream of saying that a public sector employee does not work efficiently, but I hope that the hon. Gentleman will accept that private companies are capable of ensuring greater employee loyalty and efficiency than are some parts of the public sector because the profit motive drives that efficiency forward. Nothing better illustrates that than housing repairs, which are carried out in Birmingham by direct labour oganisations and the private sector. Direct labour organisations work less effectively and are paid less than the private sector.

Mr. Battle

On a point of order, Mr. Deputy Speaker. Probably more than most hon. Members, I should dearly like to debate housing policy, which we do not debate sufficiently. Is it in order for the hon. Gentleman to raise housing in a debate on the Statutory Sick Pay Bill?

Mr. Deputy Speaker (Sir Paul Dean)

Second Reading debates lend themselves to fairly wide subjects. I have not yet heard anything out of order, but were the hon. Member for Birmingham, Northfield (Mr. King) to pursue that point I should begin to become worried.

Mr. King

I hear what you say, Mr. Deputy Speaker. I have clearly touched a sensitive nerve. I gave a lucid explanation of the differences between public sector and private sector organisations. I accept that public sector organisations can be, and are, as efficient as private organisations, but the private sector, with its desire to operate efficiently, should not be branded as uncaring and inconsiderate of its work force.

The Bill should result in healthier workplaces. Employers will want to ensure that they provide facilities and opportunities for their employees to turn up every day and to fulfil the duties for which they are employed.

By ensuring that employees are correctly seated at work, we could eliminate one of the most appalling consequences of manufacturing and commercial illness—backache and back trouble. That is the No. 1 problem facing us and is the primary cause of absenteeism. Little is done to address the causes of sickness, but the Bill will make employers redouble their efforts to make the workplace more attractive and healthier for their employees. To that extent, it is a step forward that we should welcome.

8.17 pm

Mr. Frank Haynes (Ashfield)

I am not surprised by the speeches of Conservative Members. The Bill is bent and it has been produced by a bent Government. [Laughter.] That is what it amounts to. The hon. Member for Birmingham, Northfield (Mr. King) can laugh. I listened to what he had to say and I am clear in my mind that I agree with one comment that he made on the workplace: it should be healthy for employees, but he knows as well as me that in the past 11 years the Opposition have been trying to convince the Government that the workplace is not right. One of the reasons for that is the cuts—I am not talking about money, but it relates to money—in Her Majesty's inspectorate, which has been reduced and reduced. How can inspectors do their job in the workplace when those cuts have been made?

I came from the mining industry and know only too well that there were not enough inspectors on the job. Full-time trade union officials, without political interference, told us quite clearly that we must make the Government do something about the mines inspectorate. What did the Government do? They reduced the number of inspectors. We kept banging the Dispatch Box, but the Minister still did not take any notice. The hon. Member for Northfield mentioned backache. That is the worst thing in the mining industry, and it is the same in the factories. If inspectors do not get round to factories, that suffering goes on.

People are sick and are getting injured because in many cases the employer could not care less; as long as he is getting his production and his profit, he does not care about the workers. The hon. Member for Northfield can grin—he sits on the management side. Conservative Members sit there—there are not many here at the moment—and they are all connected to Lloyd's. [ Laughter.] Oh, yes, I hit the nail right on the head there. A number of hon. Members have connections with insurance companies when it comes to sick pay, so there is a rake-off for them.

Members of Parliament do not have to bother about sick pay. It is nice and cushy to sit on these green Benches and talk about what workers should have.

Mr. Quentin Davies

rose——

Mr. Haynes

Hey-up, here comes Stamford and Spalding again; he is always at it, but I shall give way to the hon. Gentleman.

Mr. Davies

I apologise for intruding during the hon. Gentleman's characteristic performance, but does he agree with me in principle that to weight the national insurance system towards the lower-paid so that they derive the greatest benefit from it is a laudable aim? Does he welcome my right hon. Friend's proposal fully to index the lower rate of statutory sick pay, thereby favouring the lower-paid as against other groups of workers?

Mr. Haynes

I do not understand this fellow. When we were considering a Bill in Committee, one day I saw him downstairs in the cafeteria where he was studying share prices to see how much money he had made. He talks about sick pay and the lower-paid, but how does he know what we are talking about when it comes to sick pay and low-paid workers? He and many other Conservative Members have been living off the backs of the low-paid. It is high time we got to power and turned things round the other way.

I am pleased that the Minister for Social Security and Disabled People is still here. He was sitting on the Back Benches just now, but he is down there again. That may be because he wants to hear what I have to say. He ought to be ashamed of himself; he is supposed to represent the disabled. I see that he nods in agreement. He knows that there is a measure on the statute book that states that businesses should employ 3.5 per cent. of disabled people in their work force. He has never done his job. Many firms do not employ any disabled people, never mind 3.5 per cent. The Bill will lead to businesses taking on fewer and fewer disabled people. They will be looked on as a burden. Small businesses have something to shout about, and I am doing that on their behalf.

Mr. Redmond

The Bill will undoubtedly make employers reconsider the number of disabled people they employ. The Minister could announce that he intends to take steps against those employers who do not fulfil their quota. My hon. Friend ought to be aware that the Coal Board does not employ its full quota. Before Ministers look at what happens outside this place, they ought to consider the number of disabled people who are employed here and find out whether we are meeting the quota.

Mr. Haynes

We do not. Months ago, I tabled a question about the number of disabled people who are employed in this building. The Government are not meeting the quota. The Minister for Social Security and Disabled People ought to be ashamed of himself; he is not doing his flaming job. It is time that he came over to this side, or did not even come back to this place. He ought to let someone else get on with the job of looking after the disabled.

We have got this leadership election [HON. MEMBERS: "We have."] There are three of them.

Mr. Quentin Davies

The hon. Gentleman needs a leader.

Ms. Short

The hon. Member for Stamford and Spalding (Mr. Quentin Davies) is trying to cover his own embarrassment.

Mr. Haynes

I will tell the hon. Gentleman—[Interruption.]

Mr. Deputy Speaker

Order. It is very unfair to try to intimidate the hon. Gentleman.

Mr. Haynes

That one there does not intimidate me. With a voice like that, how could he work in a pit?

Mr. Davies

The hon. Gentleman may have detected, from the sound of my voice, that I am suffering from bronchitis, but he may have noticed that I am not claiming statutory sick pay.

Mr. Haynes

The hon. Gentleman knows damned well that he does not have to. I said just now that he already gets his salary, even if he is off work, so it makes no difference. He is as thick as a pudding, and a Christmas pudding at that. Why on earth does he not listen to what is said?

Three Conservative Members are up for the leadership. All three of them, over a period, sat round the Cabinet table with the lady at No. 10 and agreed all the policies. What do we hear now? They want to change them all. How dishonest can that be? It is hypocritical. However, they are trying to cadge votes from their colleagues because they want to be leader of the Conservative party, with a view to becoming Prime Minister. The people outside have already seen through that one. Never mind the opinion polls; they can be forgotten.

The hon. Member for Northfield will go. He will be able to return to one of the jobs that he has already got besides being a Member of Parliament. A whole clique of them sitting over there know what they will do when they lose their seats at the next election. They have covered their backs. The hon. Member for Northfield is one of them. So is the hon. Member for Stamford and Spalding (Mr. Davies).

A number of small business men in my constituency are suffering. They have had to lay people off. Many of them have gone out of business. They are a burden on the state; they have lost everything because of this Government's policies. Here comes another burden that they do not like. It is no use hon. Members such as the hon. Member for Bolton, North-East (Mr. Thurnham) saying that businesses agree and feel that they should be making their contribution. Oh, yes, they will be making their contribution all right by going downhill. What he said was a load of rubbish. Those firms will go out of business if the Government carry on in this way.

The Government have done many other things that have not helped businesses. That is why the nation is in such a mess. We want the Minister of State to say tonight that he intends to withdraw the Bill. It is a complete waste of time. It will also be a complete waste of time to have the Committee stage on the Floor of the House. Let us get on with something that is really important—for example, the leadership campaign for the next Prime Minister. While I am at it, let me point out that we have a first-class leader and I am right behind him. [Interruption.] The hon. Member for Stamford and Spalding really has got a cough; hark at him. He is not at all well. I do not know what he has been doing.

Mr. Martlew

He has been out shooting.

Mr. Haynes

He has been out shooting, has he? It is no wonder, in this weather, that he has bronchitis.

We do not support the Bill. We hope sincerely that it will be withdrawn. I agree completely with what was said by my hon. Friend the Member for Leeds, West (Mr. Battle). Since 1979, the Government have been adamant that they will destroy the welfare state. This is another step towards that destruction. The sooner we have the next election, to turn things around and put my party on the other side of the Chamber so that we can run the country in the interests of all the people in the nation, the better off we shall all be.

8.29 pm

Mr. Andrew Rowe (Mid-Kent)

I anticipate the next election with no anxiety about its outcome, but with some sorrow, because I know that the hon. Member for Ashfield (Mr. Haynes) does not intend to stand. I think that we shall all miss his robust form of pantomime. He expresses, in a way that none of his colleagues can match, the heart of the Labour party's philosophy—the view that at no time and in no manner should a party re-examine the policies that it has devised: indeed, he claimed that it was hypocritical to do so.

Mr. Redmond

That is simply not true. Opposition Members are constantly reviewing policies, on the ground that what is good enough for today may well not be good enough for tomorrow. We are always looking at the problems facing the country. Regrettably, Conservative Members are not doing the same: we see no change of policy until a leadership election, when each candidate names the policies that he would like to alter.

Perhaps the hon. Gentleman could approach the three leadership candidates and ask them to consider whether the Bill is worth passing, in view of the tremendous damage that it will do to industry. I am sure that the hon. Gentleman will agree that the main problem with social security policies is the fact that, since 1979, they have been continually altered.

Mr. Rowe

I shall certainly include that in the list of questions that I shall be asking the three candidates. I should, however, be interested to know how many Opposition Members agree with the hon. Member for Ashfield—who clearly considers it positively hypocritical for Cabinet Ministers, and former Cabinet Ministers, to reconsider policies—and how many agree with the hon. Member for Don Valley (Mr. Redmond). The hon. Member for Don Valley was, of course, right to remind us that Labour's views on nuclear disarmament, membership of Europe and, indeed, the sale of council houses have undergone a number of changes—which we welcome, as they have now adopted in substantial measure the policies that we have consistently advocated.

Ms. Short

Although the Labour view on council house sales has been divided in that some Labour councils have always sold them, there is complete agreement that it is sinful to sell them and not replace them, which is what has been done under the present Administration. We favour council house sales to tenants who want them, but they should always be replaced to avoid the increasing homelessness that we have seen in Birmingham as a result of the Government's refusal to allow councils to build.

Mr. Rowe

There is considerable merit in a policy of increasing the number of houses available to those on low incomes. I welcome the moves to strengthen the housing associations; I do not, however, believe that many councils' record of administration, maintenance and organisation of housing stock is nearly good enough for us to welcome the prospect of their returning to large-scale building and management.

I am sorry to see that the hon. Member for Halifax (Mrs. Mahon) has left the Chamber. I listened to her speech with interest, and found it extraordinary that one of her arguments against the Bill should be the fact that employers constantly cheat on legislation. In my view, there is something inherent in the system of 100 per cent. reimbursement that will encourage malevolent and fraudulent employers to cheat: with or without the connivance of the work force, it will be perfectly possible for them to claim a state payment amounting to 100 per cent. of what has been claimed from them.

Small businesses genuinely fear that another burden will be placed on them, at a time when they are not very well placed to deal with such burdens. I hope that my right hon. Friend will consider carefully before any decision is made to change the 80 per cent. arrangement. Ultimately, however, I think that the whole national insurance scheme should be re-examined. It has never—from the day of its introduction—worked as Beveridge intended: it has never been properly funded, and has therefore always been subject to the vicissitudes of the national economy. Whenever a Government of any colour have found themselves in any kind of difficulty, they have used the national insurance system as a regulator for the economy generally, and the nation as a whole has had a pretty bad deal as a result. Any private insurance scheme that was run in such a way would be regarded by those who paid into it as a pretty duff show. It is high time that the way in which we meet people's needs was radically overhauled.

As many of my hon. Friends know, I have long advocated the introduction of a national minimum income, although I also consider that the national minimum wage is either enormously destructive of Jobs or ineffective. We already have the rudiments of such a system: with the exception of married people who do not work but whose spouses do, not a single group does not receive what could be described as the beginnings of a national minimum income.

Mr. Martlew

The hon. Gentleman appears to be saying that employers can pay very low wages and the state can top them up. I do not think that the state should get into the habit of subsidising poor employers; that militates against the employers who pay a reasonable rate.

Mr. Rowe

One of the difficulties of a national minimum income scheme is exactly that. I believe that we need a system whereby people's incomes cannot fall below a certain level, and any amount that employers contribute above that minimum should not necessarily be accompanied by a 100 per cent. reduction: they should not lose £1 every time they add £1. The country has got itself into a real mess. This is not a party political or partisan point. Any Government must face the fact that it is now almost impossible to organise the paying out of benefits and the meeting of specific needs without a large group of people losing out every time the boundaries are changed.

Mr. Redmond

I thank the hon. Gentleman for clearing up the confusion on that point.

Regrettably, the Government have pursued a policy that has tended to depress minimum rates of pay. One of the problems is that sickness benefit has also been eroded. I understood sick pay to be a safety net to stop people from falling into poverty, but unfortunately that does not appear to be the case. I agree that there should be a national minimum wage and sick pay to match it. Pundits, academics and experts are all agreed on that.

Given the advice from all sides that a minimum rate should be set other than what the Government decree, does the hon. Gentleman agree that there is a vast difference between what the Government state and what people outside state? As the Government are not interested in a safety net for sick pay or in a minimum rate of pay, could the hon. Gentleman convince his colleagues that a safety net is desperately needed to eliminate poverty at the sharp end where people feel it?

Mr. Rowe

The hon. Gentleman misunderstands my point. A national minimum wage would destroy jobs because many individuals and businesses would be unable or unwilling to pay that wage. Either it would be enforced by inspectors, in which case many jobs would go, or, as in many mainland European countries, it would simply be ignored.

I am interested in the definition of a national minimum income.

Ms. Short

Will the hon. Gentleman give way?

Mr. Rowe

If the hon. Lady will forgive me, no.

There should be a sum below which no one, whether in or out of work, should be expected to operate. Clearly, if a person were in work, any contribution that the state had to make would reduce on a taper.

Mr. Redmond

I apologise to the hon. Gentleman. I thought that he was advocating a national minimum wage. If he is saying that there should not be a national minimum wage but that there should be statutory sick pay, which stops people falling to a desperate level of poverty, he is arguing that the state should continue to subsidise firms that pay horrendously low wages. Taxpayers' money should not be used to subsidise bad employers.

Mr. Rowe

I am a great believer in a high-wage, high-skill economy. Good and successful companies have good working conditions, pay good wages, have good redundancy arrangements and so on. That is the way forward. Do not let anybody be under any misunderstanding about that. A national minimum income would remove substantially the danger of subsidising low wages because people would not be forced into taking low wages. I do not want to go too far from the main thrust of the Bill.

The national insurance system does not operate anything like as smoothly as it should. There may well be a great deal of advantage in having a system that is fully funded. The Government may be able to contribute to that funding for those who cannot make their contribution from their low wage. We have a pay-as-you-go system, which is completely sensitive to the Government's handling of the economy and it does not work well. I am anxious to have a contributory system, which would be fully funded. It would probably be operated by a private organisation, although it would not worry me unduly if it were operated by a national organisation that was wholly separate, fenced round and properly audited.

I accept that there is the difficulty of exclusions. There are those whose state of disability or health record is such that a private insurance company will not accept them easily. The Government have a responsibility to help those people make the necessary additional premium contributions that allow them to remain beneficiaries of the insurance system. Hon. Members on both sides have pointed to the real danger that in the short term the Bill may make it harder for disabled people to be employed because many employers do not understand that the loyalty of disabled people frequently outweighs the illness quota that they must have over and above the average. The way to handle that is not to have a national statutory sick pay scheme such as we have now, but for disabled people to be able to lay claim to whatever additional resource they need to make it possible for an employer to take them on. There may be considerable advantages in exploring that line.

I am prepared to accept the measure at its 80 per cent. level now, but before we go much further, we need to incorporate the statutory sick pay arrangements in a much wider review of the way in which we meet national insurance-type needs. The present national insurance scheme has never worked as Beveridge intended. It has never been properly funded. We need a radical review. I am much more willing to talk to the three candidates for the Conservative party leadership about that than about the detail of the Bill.

8.47 pm

Mr. Eric Martlew (Carlisle)

I was impressed by the flamboyance of my hon. Friend the Member for Ashfield (Mr. Haynes) in telling the Minister to come to the Dispatch Box and withdraw the Bill. I can suggest a replacement. Indeed, today I wrote to the Prime Minister on the matter. I addressed it, "To Whom it May Concern" and put a second-class stamp on the envelope. My suggestion is that the Government should replace this Bill quickly with a Bill to eradicate the poll tax. Tory Members are as opposed to the poll tax as we are. If the Government put such a Bill before the House, I am sure that the Labour party would accept it, it would pass through both Houses quickly and be on the statute book just after Christmas. In that way this year's poll tax bills would be the last and we would not fight a fraudulent election on whether the legislation should be amended. As that could be classified as a digression, I shall now turn to the Bill.

The Government introduced statutory sick pay in 1981. I was one of the unfortunate people who had to implement it in industry and it was not a popular measure. It is bureaucratic. The Government's idea was to redeploy 5,000 civil servants. They redeployed 5,000, and probably had to employ a further 2,000 in the private sector to calculate the system of statutory sick pay. There was no saving in manpower. It is just a way of shifting expenditure from the Exchequer to the private sector. That is what the Bill will do. It will not save money; it will merely place the burden on the private sector. Given high interest rates and the number of bankruptcies that we face, it seems ridiculous to place such extra burdens on industry. We should reduce those burdens, principally by reducing interest rates.

The introduction of SSP was partly the result of self-certification which, in turn, was brought about by pressure from the British Medical Association—when it was still speaking to the Government. The doctors said, "It is not our job merely to provide medical certificates." Human nature being what it is, the number of days lost through sickness was bound to increase. The hon. Member for Bolton, North-East (Mr. Thurnham) gave us a disgraceful example which emphasised the point: the number of days lost through sickness has increased, but we are refusing to take responsibility for it.

Self-certification did three things. First, it delayed the moment at which a sick person went to the doctor. In some cases, that delayed the person's recovery. On that point, we must remember the pernicious tax that the Government have levied on sick people in the form of prescription charges. Many low-paid workers cannot afford to pay prescription charges and that, too, delays their recovery.

Secondly, self-certification destroyed confidentiality between doctor and patient——

Mr. Quentin Davies

Will the hon. Gentleman concede that the previous certification procedures sometimes involved wasting a great deal of the GP's valuable time? Doctors could have been treating patients who needed treatment instead of filling in forms for people in respects of whose ailments no medical attention was necessary.

Mr. Martlew

There is no evidence to suggest that we are now a healthier society. The general practitioners argued that, following self-certification, they would be able to spend more time with sick people and so reduce the amount of sickness. The reverse has proved to be the case, although the result probably has more to do with the Government's economic and social policies than with the medical care offered by general practitioners.

Self-certification also destroyed confidentiality. A doctor who did not want to disclose to an employer the ailment from which a person was suffering would merely write on the certificate "debility", and that was good enough for both management and the state. That is no longer the case. The employee has to say what he is suffering from. The word "debility" will not be accepted by management and it will certainly not be accepted by the Department. It would be very difficult for someone suffering from AIDS to say so on his self-certification form, but that is what the rules require; there is no argument about that.

Thirdly, self-certification has enabled people to pretend that they are ill, and there is no doubt that that sometimes happens.

Mr. Redmond

Does my hon. Friend agree that the trouble with self-certification is that someone may diagnose himself wrongly? The beauty of going to a doctor and explaining one's symptoms is that the doctor may be able to detect a severe disabling illness in its early stages. If the person is suffering from nothing more than a hangover, the doctor can say, "I'm sorry: you ain't getting a note." That means that the person will think twice before trying to mislead his employer again. I agree with my hon. Friend that if someone goes to a doctor and explains his problem, his life may be saved.

Mr. Martlew

I could not agree more. Moreover, self-certification may put public health at risk. Under the old system, someone suffering from food poisoning who worked in a food factory could have his problem identified immediately. The doctor would tell the environmental health officers and the person would be excluded from work. That no longer happens and, as we know, there has been a threefold increase in food poisoning since self-certification and the statutory sick pay scheme came into effect.

As I was saying, there is the odd person who will not play the game—who will skive. In my experience, the entrepreneurial people tended to come back with a sun tan because six days' leave plus a weekend had enabled them to spend a week in Spain. They were a small minority, but it happened nevertheless. We have had a perfect example this week. People who are masquerading as Ministers have in fact been running an election campaign. They are not working. I understand that the Chief Secretary to the Treasury, who was here a moment ago, is the campaign manager for one of the contestants in the leadership election. I bet he has not done much work today. If we had self-certification in the House, the right hon. Gentleman would probably have certified himself sick so that he could get on with his other job.

Mr. Rowe

Some of the hon. Gentleman's post hoc ergo propter hoc arguments are a little loose. It seems to me likely that food poisoning has increased because of the widespread use of microwave ovens rather than because of self-certification. The hon. Gentleman's argument is somewhat dangerous.

Mr. Martlew

I am sorry that the hon. Gentleman should say that, as many people's jobs depend on the manufacture of microwave ovens and such a slur could affect them badly. I am a member of the Select Committee on Agriculture, which is looking into the problem of microwave ovens. We have yet to be given any evidence to suggest that that is a major cause of food poisoning.

Mr. Rowe

I did not suggest that microwave ovens were the cause of food poisoning but, rather, that food poisoning is caused by people who do not understand how to use microwave ovens.

Mr. Martlew

I am surprised that Conservative Members should not have learnt the lessons of imprecision. One Minister lost her job because she implied that there was something wrong with eggs. I hope that the hon. Gentleman will not lose any influence that he may have by suggesting that there is something wrong with microwave ovens.

Statutory sick pay was a very bureaucratic system, which transferred the costs to industry. I fear that we shall have a problem with disabled people. At present, we do not meet our quota, although I am not sure that a quota system is the right way to get disabled people into employment. Many companies employ people who are disabled but who are not registered as such because there is no need for them to register. I am saying not that the Government have anything other than a diabolical record on the recruitment and employment of disabled people but that the Bill will encourage employers to sack people who are sick. An employer who does so will make a saving. No civilised Government should create such an incentive, yet that is exactly what the Bill does. It will also transfer the cost to the state.

Mr. Quentin Davies

Will the hon. Gentleman reconsider that allegation? No tribunal would accept a genuine illness as a valid ground for dismissal. To sack someone on that basis would result in the employer having to pay redundancy or other compensation charges far greater than any notional saving under the SSP arrangements contained in the Bill.

Mr. Martlew

The hon. Gentleman should be able to square his conscience about this, but if he votes in favour of the Bill tonight, he will not be able to do that. Many people do not have the right to go to a tribunal. If someone has been employed for less than two years or is working a reduced number of hours, he or she will not have the right to go to a tribunal. Those people will qualify for SSP because they have worked long enough for an employer, but they might be dismissed before they have any real rights.

If someone has been working for an employer for 22 or 23 months and is about to qualify for protection under the industrial tribunal legislation, the employer has a double incentive to sack him. If that person is off sick and the employer does not get rid of him beforehand, the employer will be stuck with him. Unfortunately, some employers take that cold, calculating view. I believe that the Government are aware of it, and that is another reason why I shall be voting against the Bill.

9 pm

Mr. Richard Alexander (Newark)

I am glad to take part in this debate because I was a member of the Standing Committee that considered the Social Security and Housing Benefits Bill in 1982. I was never a great enthusiast of the sick pay scheme. I felt that it imposed an extra duty on employers whose cup was already full. If they had very few staff and one went sick, they had to pay sickness benefit. Of course, they were reimbursed their payment and the national insurance contribution upon it, but I felt, and still feel to some extent, that that was a burden that I was not terribly happy to impose on the employer.

To my recollection—this is also the recollection of those who briefed us on this matter—assurances were given at that time that the scheme would not require employers actually to pay employees' sick pay. On that basis, those of us who believed that we were part of a crusading Goverment on behalf of smaller businesses and were intent on relieving them of the unnecessary burdens imposed on them by the previous Labour Government went along with the proposal. My right hon. Friend the Minister may correct me when he replies, but I believe, as do some people outside this place, that the Government are going back on commitments made and assurances given at that time. There is also widespread concern about it among the organisations which represent smaller businesses.

The National Farmers Union has given the figures. On present benefit figures, according to the NFU, the changes under this Bill will increase employers' costs for sickness payments by £26.50 a week for employees earning between £125 and just under £175 a week and by £19.90 a week for employees earning £175 or more a week. The Bill proposes that the reimbursement should be reduced from 100 per cent. to 80 per cent. and that the 7 per cent. of national insurance reinbursement should be removed.

I listened carefully to my right hon. Friend the Secretary of State and I was impressed by his examples of how the effects would not be adverse for the vast majority of employers. On that basis, I will be supporting my right hon. Friend in the Lobby tonight. However, we have heard from outside bodies which lobby us that there will be adverse effects and that reductions in national insurance will not cover the extra amount that employers must find. That seems to me to mark a fundamental change in the whole ethos of the social security system.

Had I been a member of the Opposition this evening I should have attacked the Government and said that they were introducing this fundamental change suddenly and by the back door without many people realising what was going on; but since I am a supporter of the Government I will not say that. I suggest, however, that either we have a fully funded social security system or we do not. Like my hon. Friend the Member for Mid-Kent (Mr. Rowe) I think that a larger debate is due, in the House and in the country, on the place of social security in our social system, and on the national insurance scheme. Clearly they may be open to reform, but if we are to make major changes we need a more thorough debate on whether that reform is necessary.

My understanding of national insurance, which has been on the go for almost 50 years, is that it was designed to recognise that employers could not always afford to pay for employee's sickness. It should not now be for employers, particularly small ones, to have to insure against their employee's sickness. That is one of my basic worries about the Bill and I hope that my right hon. Friend will deal with it in the wind-up

Opposition Members have said that the proposal will create a problem for people with disabilities or illness, and I agree. I listened carefully to my right hon. Friend the Secretary of State, who said that he did not believe that the measure would have that effect on the disabled. He said that they had a fine employment record, that employers found that they were good employees and that there was no real discrimination against them. Perhaps the Bill will not mean that employers will be reluctant to take on disabled people, but there is a case for doubting whether people with a poor health record will be taken on. Employers, especially those at the margins, may look at a potential employee and say, "What is your health record? Unless you can give me some assurance that you are a fairly fit chap"—even for an unskilled job—"I will not take you on." I hope that these provisions will not have that effect, but I am worried.

All hon. Members know that smaller businesses are fighting for their lives and trading on the margins. We are all, I hope, trying to ensure that we do not impose on them greater burdens which will mean that they are pushed over the cliff. I am advised that there could be a burden of up to £11 a week for as many as 28 weeks. When I put that point to my right hon. Friend he assured me that the vast majority of cases of sickness lasted much less than 28 weeks. Nevertheless, this potential burden exists and I believe that I should articulate it on behalf of smaller businesses.

Smaller businesses are a loyal group—loyal to their employees and to the communities where they trade—and we need this section of industry. I look forward to hearing how the Minister proposes to deal with the anxieties that smaller businesses have expressed in correspondence with hon. Members and in a meeting that I had with my local federation of the self-employed. We have to sell these ideas to our constituents. As I said, some businesses are trading very much on the margins and we have a big selling job to do. The first task in that job is for my right hon. Friend the Minister to sell the ideas to us.

9.10 pm

Mr. Allen McKay (Barnsley, West and Penistone)

The Bill has just three clauses, and clauses 2 and 3 are consequential on clause 1. However, the Minister took some time to introduce it.

I entered the House in 1978 and the hon. Member who replied to my maiden speech said that he was very happy about how things had gone. He said, "The hon. Gentleman has retained his seat, the Conservative has increased his vote, and the Liberal candidate did not lose his deposit." According to the Minister, the Bill is like that, because he said that it would not hurt the employee and does not make any difference to the employer. However, £157 million has to come from somewhere.

There is a Yorkshire saying, "You don't get owt for nowt." That means that we have to look at what is behind something that is seemingly being given away. If the Minister had said that his proposals were part of an overall scheme and would eventually lead to a new social security system, I could have accepted it. I would have welcomed the modernisation of a hotch-potch of welfare benefits in which we alter bits here and there. We are not being honest with ourselves unless we say that there is a plan to get rid of a hotch-potch of a system.

I believe the Minister when he says that there is nothing else in his drawer, because there is no reason why there should be anything. However, the Government's ultimate aim is to move responsibility for the state-funded welfare service to the backs of others. That happened with the poll tax, when the Government moved the burden of taxation from central to local government. The Bill is a continuation of the policy of moving the burden of the welfare state away from central Government and on to the employer: that is what it is all about.

The Secretary of State says that his proposals will not hurt the employer. He has not thought deeply enough about them, because their effect depends on the size of the employer, the number of his employees and his turnover. When we argue for increased wages, the Government tell us that employers cannot stand the expense, but the Bill creates additional expense for the employer. It will bring back to the Government over £150 million and, as I have said, that must come from somewhere. It will come from the employer.

The Government say that the money will be targeted elsewhere, but I am a little fed up with talk about targeting. When targeting takes place, it is always the lowest-paid who are hit. The Bill moves from the poor to strike at the poorer still. The Government are reallocating the money in the system rather than bringing in new money. The explanatory and financial memorandum to the Bill states: Clause 1 will produce savings in public expenditure of £181m in 1991–92, rising to 190rn in 1992–93 and £197m in 1993–94. It is simply taking money from one pocket and putting it into another. There is nothing magic about it. They are trying to create an illusion of being a caring Government looking after the low-paid workers. We have to ask ourselves who created these low-paid workers, the number of whom has increased since 1979. The Government are simply looking after a problem that they have created by creating further problems. That is what the Bill is about.

The Bill will affect the employer and the employee. I am sure that hon. Members will agree that a disabled person in employment gives more because he is disabled and appreciates having a job. I am concerned about people affected by recurring sickness. The Minister knows, because we have talked about this, that in mining areas there is a high incidence of bronchitis and emphysema. Chest diseases manifest themselves with the start of the cold weather. People who have left mining and gone into other employment will often have such illnesses.

An employer will wonder why he should take on such a person when he knows that it will cost him later on. I remember a manager saying to one of his employees who was ill, and who had said that he thought that the manager might have more sympathy, "I have, lad, but I can't run t' pit on sympathy." That is what the feeling of an employer will be when he has to decide whether to employ certain people.

As the recession bites and people have to be laid off, the first to go will be those who add to the running costs of a company, although they are the very ones who should be kept in work. The Bill will not only contribute to such problems, but is part of an overall scheme. During progress towards the completion of the scheme, many problems will be caused for sick people and, without any shadow of a doubt, for the small employer.

Let us not forget that the national insurance scheme was brought in on the understanding that there would be a full rebate and it would cost the employers nothing. It has always cost the employers something, because they have had to administer it, but 7 per cent. never even did that. By saying that they will pay only 80 per cent., the Government have reneged on their promise. There is a sting in the tail as well, in that the level of payment can be reduced through a statutory instrument, without a debate in the House. The Secretary of State has taken that power on himself, and it is no good saying that it will never be used. That was said about the rules and regulations on adopting a leader, but they are being used. The very fact that the power is there will lead a Secretary of State to use it when he thinks fit. That is wrong.

9.18 pm

Ms. Clare Short (Birmingham, Ladywood)

The Secretary of State made it clear that it was impossible to discuss the Bill in isolation, without referring to the package of reforms on statutory sick pay that he announced in the uprating statement. Tory Members of Parliament have talked almost exclusively of their worries about the effects that it will have on employers. We share those concerns, but we are also concerned about the effect on employees.

I am sorry that the hon. Member for Stamford and Spalding (Mr. Davies) is not here, because when he suggested in an intervention that the package protects the low-paid, he was wrong. Some £100 million is being deliberately taken away from low-paid workers when they are sick. Some 3 million people earning between £125 and £175 a week will lose up to £9 a week. That is because the threshold has been moved and they have been deprived of the higher rate of sickness benefit.

The hon. Member for Bolton, North-East (Mr. Thurnham) suggested that it was right that the higher-paid should help other groups in need—taking money from those who are sick to give it to, for example, elderly and frail people in residential homes. That is one poor group funding another poor group, which is the wrong way to go about it. If the hon. Gentleman thinks that people earning up to £175 a week are well paid, I ask him to examine his monthly pay cheques.

It is interesting that in this package the Government recognise the Council of Europe's decency threshold. The aim of all EEC Governments should be that no one should be paid an income below that threshold. For Britain, that would be a little more than £175 a week. The people about whom we are talking are, by definition, low paid. Conservative Members must not talk as if people on less than £175 are well off and can afford to lose out when they are sick in order to help other needy groups.

Under this package, 3 million people earning between £125 and £175 a week will lose up to £9 a week when they are sick. That is in addition to the 2 million people who were deprived in that way last year. Five million people will lose out significantly on the amount that they are paid when sick. Because there was no uprating in line with inflation, those earning more than £175 a week will lose up to £5.70 a week. The Government are hiding behind inflation to impose a cut on sick people. There is also no doubt that the changes will make it more difficult for people who have been sick, who are mentally ill or who are recovering from serious illnesses such as a stroke to obtain employment.

When the Secretary of State quotes studies showing that people with disabilities are reliable workers, and therefore claims that the package will not affect them, he talks as if they are a group with a firmly defined difficulty that does not include all those who have had some sickness and difficulty in their lives and are beginning to join the group of those who are low paid and have difficulty in employment because of sickness. We know that the majority of people with disabilities become sick during their working lives—they do not have a disability at birth that affects them throughout their lives. The National Federation of Self Employed and Small Businesses said that the package will lead to much more difficulty for those people in obtaining employment.

I should like hon. Members to reflect personally on that matter. There is too much of a feeling in the House that it is all about some funny people outside who can live on £175 a week and are well paid. No hon. Members who examined their weekly income and outgoings would talk like that.

We are always pleased to see the return of one of our colleagues who has been sick, as happened tonight. The hon. Member for Dudley, West (Dr. Blackburn) referred to his serious illness. I am sure that we were touched by his comments and are glad to see him back. However, I am glad that, during his illness, he did not have to see his income drop to a third of what it otherwise would have been and that he and his family did not have not only the worry about his illness but the worry about whether they could find the money to pay the bills while he was ill.

We all share these values, but only for us, only for the higher-paid in society. Meanwhile, we vote for a measure that would increase the insecurity and worries of lower-paid people. That is what we have in front of us. There are two nations—a point that should mean something to Conservative Members, especially when they are trying to restore their image and to show that they are not in favour of such a bitterly divided nation. We are talking about people earning only £125 a week being paid £43.50 a week and about people earning more than that being paid £52.50 a week. Imagine keeping one's family on those amounts.

Mr. Newton

rose——

Ms. Short

Let me continue and I shall give way later to the right hon. Gentleman. I am sure that I know what he is going to say.

The Government are deceitful—I repeat the serious word used by my hon. Friend the Member for Oldham, West (Mr. Meacher)—about the evidence on the existence of occupational sick pay schemes. I am shocked that the Secretary of State so often stresses the misleading figure claiming that 90 per cent. of employees work in firms that provide occupational sick pay for some of their workers, and from that tries to hint that most people are covered. We know that that is not the case. A false excuse—a misrepresentation of research—is being used to justify a cut in the income of sick people. I thought more highly than that of the right hon. Gentleman.

As hon. Members will be aware, the Disability Alliance represents a federation of 80 organisations concerned with the interests of people with disabilities. It is its strong view that the Government have grossly distorted the findings of its research. A closer look reveals that 44 per cent. of all private sector firms and over half, that is 55 per cent. of firms with less than 10 employees, which in turn accounts for 75 per cent. of all firms, have no scheme whatsoever. That is the reality.

We know that many firms and organisations that have schemes do not provide for all their workers. The management and the white-collar workers are more likely to be provided for than the low-paid and manual workers. The Bill will cut the income of low-paid workers when they are sick, many of whom will have no other income to support their family. That is outrageous and the Secretary of State should be ashamed of himself.

Mr. Newton

I do not intend to go over the ground that I covered in my speech, although my right hon. Friend the Minister will no doubt say a word or two more about the statistics. I want to pick up the hon. Lady on her assertion that those workers have no other income when they are sick. Surely she realises that people with family responsibilities and no other income are entitled to income support—whether last year, this year, next year or the year after. For a man supporting a wife and two children, at no time during recent years would sickness benefit or statutory sick pay have provided his whole income. He would be entitled to income support at the normal rate. The hon. Lady should at least acknowledge that.

Ms. Short

If the right hon. Gentleman represented a constituency such as mine, he would know that many families with an income as low as £125 to £175 a week do not like being dependent on benefit. That is one reason why many low-income families do not claim family credit. They juggle their child care responsibilities so that both partners can work—usually with an even lower income for the wife—and maintain their family. If one of the working partners becomes sick, they will not be eligible for income support and they will also lose about £80 a week to the family budget at a time of worry and sickness.

Of course, the right hon. Gentleman is technically correct to say that those dependent on low pay, who have no other income and are therefore falling below the level necessary to exist, would be eligible for income support, but there is no doubt that the figures for those claiming it are low. Many families will be faced with both the worry of sickness and a large drop in their income. The Secretary of State's package will make that very much worse.

It is true, as my hon. Friend the Member for Leeds, West (Mr. Battle) strongly asserted, that the changes are part of a process in the constant erosion of the ideas and principles of the national insurance scheme. There is no doubt that the Government and Conservative Members hate—on the basis of ideology, not from any rational examination—the idea of any state provision that cares for all of us. They want to privatise pension provision and sickness provision. That is a much worse system.

We all know and understand that the patterns of employment are changing and that we are all likely to change jobs on a number of occasions during our working lives. We therefore need flexible pension provisions that we can carry with us when we change jobs, and the most flexible is the state scheme. One can take it wherever one works. It covers everyone. It has no holes. Everyone pays into it when they are doing okay, and can afford to do so, and it offers protection if something happens to a neighbour, friend, or to oneself. We are part of a system that provides a basic level of security.

Under SERPS, it is possible to opt out, but the state scheme provides a minimum standard for all. I like such provision, and the same should apply to sick pay. We should all pay into a scheme according to our incomes, and be protected according to our needs. I am happy for there to be opting out or enhancements to that arrangement, but the existing provision offers the most flexible and caring way of providing everyone with insurance—for that is what it is. Why have a lot of competing and inefficient systems when there can be one national scheme that provides a basic minimum for all? However, we are in favour also of private and topping-up schemes that enhance the desirable minimum arrangement.

Conservative Members do not agree with such an arrangement. They hate the national insurance system and the idea of any state provision. They try constantly to erode it and to break it up, and the Bill is part of that ideological destructiveness—quite apart from stealing £100 million from sick and low-paid workers.

It is clear from the contributions of Conservative Members that they have no regard for the points made by, for example, the Low Pay Unit, which is deeply worried about the effect of the changes on low-paid workers. I am surprised that Government Members made no reference to the briefing from the Disability Alliance, which is also deeply opposed to the changes, believing that they will seriously harm the disabled and make it more difficult for those with a record of illness, or who are recovering from a serious illness, to obtain employment. Conservative Members showed little concern also about the submissions made by the National Federation of Self Employed and Small Businesses, which is also strongly opposed to the Bill. We oppose it both for its likely effects on the sick and because of the strain that it will impose on small employers.

The Bill has been introduced disgracefully quickly and without consultation, partly to achieve savings, but they will not begin to be made until next April. Therefore, the legislation could have been dealt with more gracefully. The Government acted in the way that they did to avoid consultation. They were defeated before by business organisations. When there was a previous risk that the SSP scheme would not be fully funded, the business community made such a fuss, and placed so much pressure on people such as the hon. Member for Newark (Mr. Alexander), who served on the relevant Committee, that the Government were forced to give in and to go for 100 per cent. reimbursement.

The Bill is receiving its Second Reading today, and will have its Committee stage on the Floor of the House and Report on Wednesday, so that it can be passed without giving the small business organisations time to mobilise to stop it. As the hon. Member for Newark clearly said, the Government are breaking their word and the promises that they made in the past.

The National Federation of Self Employed and Small Businesses received an undertaking that there would be full funding, but now—and without any consultation—that is being done away with. The federation says that the Government are dishonourable and have broken their word. The federation is also deeply worried that the Bill will reduce reimbursement not only from 100 per cent. to 80 per cent., but down to zero if necessary. It is worried that the intention is to withdraw all state funding of statutory sick pay, and there is no other explanation for the Bill. If the Government simply wanted to save £100 million, they could do so by failing to uprate or to change the thresholds, which would not require the Bill. It is needed to give the Government the power in future to cut the amount that is reimbursed to small businesses.

Currently, the package is neutral, in that businesses will lose £250 million, but will be paid £250 million this year. However, as the Secretary of State acknowledged, that does not mean that individual businesses will not lose out. He gave two examples of ways in which small firms could gain, but that must mean that others will be losers, depending on the types of occupation, the region, different types of small firms, and the different levels of sickness in certain occupations and regions involved, and so on.

There is no point to the Bill, and the Government would not have put it together unless they intended to erode the funding of SSP over the years. We should not go to all that trouble for a neutral package—there would be no point. It would be meaningless. We already have figures that show the extent of Government savings next year and the year after, and they are higher. The Government have given no undertaking that reimbursement to businesses will be equal in future years to the figure in the Bill. Erosion will start next year and will continue the year after, even if there is no change in the reimbursement to business.

There is no doubt that the Government are planning to disengage from sick pay and pass on the burden to employers. There is no other explanation. It is impossible to explain the Bill in any other way. I think that the hon. Member for Beverley (Mr. Cran) understood that very well and stated it in the cautious way that a Conservative Member who supports the Government has to. If any hon. Member thinks seriously, there is no other explanation why the Bill should be before the House.

The National Federation of Self Employed and Small Businesses also said that the measures will hurt the sick and that a national insurance scheme is essential for small businesses. Small organisations cannot possibly organise insurance, firm by firm, to protect their employees. We agree. We think that statutory sick pay is good for people and good for small businesses. The Government are attacking the principle of national insurance.

The hon. Member for Birmingham, Northfield (Mr. King) offered an interesting argument. If he is right, all the assurances that we have been given by the Government are wrong. He said that we should make employers-pay when their employees are sick, because that would make them organise health programmes for their employees.

Mr. Roger King

No.

Ms. Short

I thought that that was the substance of the hon. Gentleman's speech. I also thought that about 90 per cent. of it was out of order, but clearly I was wrong as no one called him to order. His programme depends upon punishing employers, charging them more, to encourage them to develop health programmes for their employees. That was his whole argument. He let the cat out of the bag. He does not support what the Secretary of State says, although he asserts that he does, but he wants to punish employers, to force them to make employees go into health programmes.

That is that package before us, and it is very unappetising. Why do we have it? One reason is the plan for the future, which will punish businesses more and phase out any national system of protection for sick pay, but there are other reasons. That leads us to the uprating statement. The Government were becoming more and more embarrassed by their failure to increase child benefit. They claim to be the party of the family, but they were reducing the value of child benefit—the benefit that demonstrates the costs and value of children that we recognise as a society and pay.

The Government were embarrassed. In the end they came up with a package that contained some increase for the first-born. How were they to pay for it, as the Treasury required a neutral uprating package, with no extra money for social security? By stealing money off the low-paid sick.

The other embarrassment for the Government was high levels of poverty among pensioners dependent upon state pensions, because they have broken the link between earnings and state pensions and such pensioners are falling further and further behind the rest of society. So we got a special little bonus for very poor elderly pensioners, which is to be paid for by the low-paid sick. The third group that will benefit from the cut are poor, frail, elderly people in residential homes, who are in danger of eviction.

Of course, we want to protect the elderly sick, we want to increase child benefit, and we certainly do not want frail elderly people to be thrown out of residential homes. However, we think that it is an outrage and a disgrace that the low-paid sick should be required to pay.

The Government have deliberately made enormous cuts in taxation for the richest people in our society. The figures are shocking. Virtually every time we discuss social security I quote them, and I shall do so again. They are the answer to every Conservative Member who picks up the Conservative central office briefing, and who asks how we can possibly find the money for £900 million in sick pay for the nation—or whatever the figure may be.

Taking into consideration the combined effect of cumulative tax and benefit changes from 1979 to 1988, since the Conservatives came into power—so it is worse than this now—a serious publication by John Hill, which I recommend to any hon. Members who want to check it out, states: Remarkably what has happened has been a virtual zero net cost reform. The cuts in direct taxes have been entirely paid for by cuts in the generosity of benefits. There has indeed been a major redistribution from those on low incomes to the better off. Overall, the bottom 60 per cent. of the income distribution has lost, while the top 30 per cent., especially the top 10 per cent., has gained. The losses for the bottom 50 per cent. average out at nearly £8.50 per family—a substantial proportion of their net incomes—while the top 10 per cent. have gained nearly £40 per family. Overall, the bottom half of the population has lost £6.6 billion, of which £5.6 billion has gone to the top 10 per cent., and indeed £4.8 billion has gone to the top 5 per cent. The figures are worsened by two further years of the erosion of pensions and child benefit and, of course, by the poll tax. There is no money for child benefit or for the frail elderly sick because you have given it all in tax cuts to your very rich friends—

Mr. Speaker

Order.

Ms. Short

I am sorry, Mr. Speaker. The Government have done that.

I understand that in the leadership contest for the Conservative party, the Secretary of State supports the Chancellor of the Exchequer, who keeps forcing all these cuts on him. The Conservative party had to get rid of the Prime Minister because she is disliked by large parts of the British population and because her Government made our society so unequal, so unfair and so divided. The Bill introduces a further package of such unpopular measures. All three candidates for leadership of the Conservative party support the changes. Whoever leads it, we oppose the 11 years of redistribution and inequality. It has damaged our country, made it more unjust and more unequal, and the Bill is a further example of that.

9.41 pm

The Minister for Social Security and Disabled People (Mr. Nicholas Scott)

I doubt that our proceedings will find a place in The Guinness Book of Records, unless it is for the record number of interventions that my right hon. Friend the Secretary of State allowed. Before the hon. Member for Halifax (Mrs. Mahon) leaves, it was bizarre for her to criticise him for speaking for an hour and a quarter of embarrassment. He spoke for that length of time because he was concerned, with his usual courtesy, to allow hon. Members, mainly Labour Members, to intervene. Her charge hardly hits the target.

We have had a long debate on a Bill that has only one substantive clause and two consequent ones. I make no complaint about that. Several themes have emerged to which I shall try to reply.

I must tell my hon. Friends the Members for Mid-Kent (Mr. Rowe) and for Newark (Mr. Alexander) that, in the time available, I do not propose to go down the route that they invited me to tread about a wholly different structure for social security benefits. When I was first told the time that I might have to reply to the debate, I might have been tempted to take that route, but as the time has been filled so satisfactorily it is not necessary.

I shall deal, first, with the important point about whether we propose any change or whether we have broken a pledge made when we moved to the statutory sick pay scheme. I was elsewhere when the scheme was introduced and subsequent changes were made, but I acknowledge that the method of reimbursement was a major factor in discussions with employers and their organisations before SSP was introduced in 1983. I can trace no guarantee that the Government, having launched the scheme on the old basis, would not wish to review the position once employers had experience of operating SSP and in the light of other developments. That is precisely what the Government are doing under the Bill.

My hon. Friend the Member for Beverley (Mr. Cran), the hon. Member for Orkney and Shetland (Mr. Wallace) and other hon. Members sought assurances about our future plans for the reimbursement rate. My right hon. Friend the Secretary of State made it clear that we have no plans for any further changes—up or down. In the 1950s, before becoming a Member, I used to say that the House of Lords was littered with Ministers who had said "never". It would therefore be pretty unwise of me to take that route today. All these matters will have to be considered in the light of future circumstances.

The hon. Member for Orkney and Shetland asked whether, if adjustments are made, changes would be made at the same time in the national insurance contribution. These are two quite separate matters. As my right hon. Friend said, this year we are considering the changes in the context of reductions to be made in national insurance contributions. The two, however, are not linked. The only statutory duty that my right hon. Friend has when looking at the national insurance fund is to consider the incomings and outgoings from the fund and to decide what changes may be necessary.

Of course, it would be desirable further to reduce contributions to the national insurance fund in order to ease the burden of different levels of pay outside, but that has to be considered separately from anything that might hypothetically happen to levels of reimbursement for statutory sick pay.

Mr. Wallace

The Secretary of State made great play of the fact that, although more money will come from employers after the Bill is passed, there are nevertheless compensating features in terms of national insurance contributions. Is the Minister saying that in future years employers will be unable to expect automatic compensatory reductions in their national insurance contributions?

Mr. Scott

The hon. Gentleman has leapt a number of fences. I have already said that we have no plans to alter, either up or down, the rate of reimbursement for statutory sick pay. This year we have looked at the proposed changes in the light of reductions in national insurance contributions. We should have to see where we were if we ever wanted to consider changing the rate of reimbursement either up or down.

Opposition Members have criticised the overall statutory sick pay package because of what I regard as the fairly modest shift in the balance of short-term sickness provision between the state and business which will result from the changes. They got quite excited at times and made, in my view, some totally unjustifiable allegations about the effects of the proposals on employees. I shall return to those accusations later.

I have to disappoint the hon. Member for Ashfield (Mr. Haynes), who, I see, has changed his place, just as I changed mine earlier in the debate, by saying that I shall not seek to withdraw the Bill at this time.

One of the most bizarre accusations in the debate was that made by the hon. Member for Birmingham, Ladywood (Ms. Short), both in an earlier intervention and alluded to in her wind-up speech. She accused the Government of seeking quick passage of the legislation to avoid criticism by the small employers lobby. I believe that to be an absolutely ridiculous accusation. If it were the case, we should not have sent copies of my right hon. Friend's uprating statement to those organisations, nor should we have sent them copies of the Bill—which we did immediately after it was presented to Parliament. We are moving more quickly, simply to give employers time to make arrangements to operate the new rates and prepare for the changes. That is sensible.

Some of my hon. Friends expressed concern about the cost to employers, particularly small employers. I shall seek to deal with their concerns. The House will not be surprised to hear that, as Minister for Social Security and Disabled People, I am particularly concerned about some of the suggestions regarding the impact of the changes on those who are disabled or handicapped. In particular, a number of hon. Members suggested that the result of the proposals will be that employers will be less likely to employ people with disablilities, or those who suffer from bad health.

That is something which is close to my heart. I should be very concerned if it were to turn out to be true. However, I strongly believe that that will not be the case. My right hon. Friend made it clear in his opening speech that charges of that nature have surfaced in the past" both when statutory sick pay was first introduced and later when it was extended to 28 weeks. However, they have never been substantiated. If that were happening, I am confident that I should have heard about it. In fact, what evidence there is points in the opposite direction.

In general, people with disabilities—this point was made by a number of my hon. Friends and also by the hon. Member for Carlisle (Mr. Martlew)—do not have bad attendance records. Often they are better than those of able-bodied people. Patricia Prescott-Clarke, of Social and Community Planning Research, found that half the people with disabilities in work took fewer than five days a year off work for sickness or treatment. Over a five-year period, half of them had not had a spell of sickness or treatment lasting a month. There is no suggestion there that the employment of a disabled person would lead to increased costs for the employer.

It has been the constant endeavour, not just of this Government but of successive Governments in recent years, to make employers increasingly aware of the abilities of disabled people. The Department of Employment continues to work to get employers to see facts such as these and also the advantages and opportunities that the employment of the disabled can provide. In the past year, the Department of Employment spent about £350 million obtaining employment for disabled people and keeping them in employment. I hope that we shall be able to break down progressively any reservations felt by employers about employing them.

As I have said before in the House, the pressures of demography—and, certainly, the application by employers of enlightened self-interest—will increasingly make it imperative for employers to look for the skills that disabled people are able to bring to the job market.

Mr. Flynn

I am sure that the Minister is sincere; however, it has already been pointed out that his Department has employed less than half the quota of people with disabilities. That is slightly better than the record of the other Departments—1.1 per cent.—but should not he and the Government lead by example?

Mr. Scott

I am sorry that the hon. Gentleman has felt it necessary to repeat what he said earlier. I note that the hon. Member for Carlisle (Mr. Martlew) disagreed with him.

The quota is for registered disabled people. Many thousands of disabled people do not want to hang the "registered disabled" label round their necks. If every employer in the country sought to employ a 3 per cent. quota, there would not be enough registered disabled people to go round. I think that it is much better to operate on a broader front, encouraging employers to respond to the skill shortages that will appear increasingly in the economy, improving access to buildings—workshops, factories and so on—introducing new technology to help disabled people to earn their living and, not least, implementing the new benefit that we shall introduce in 1992: the disability working allowance, which will provide immense encouragement for disabled people to earn their own living.

Mr. Haynes

What about the firms which do not take on any disabled people, although they are able to do so?

Mr. Scott

As I said, I believe that the way forward lies in encouragement and example. Many employers not only take on disabled people but communicate their experience of employing them to other employers, encouraging them to follow their good example. That, surely, is a much better approach.

It has been said that some of those who lobby on behalf of small employers sometimes overstate their case. That may be true, but none of them approaches the record of the hon. Members for Oldham, West (Mr. Meacher) and for Ladywood in overstating theirs in successive debates. Much has been said during the debate about the effects that the changes contained in the Bill will have on small employers, and I accept that there is genuine worry on both sides of the House. I have seen the representations made by various organisations, and I understand their concern. It is because we appreciated that the changes might hit smaller employers harder that we have weighted the reductions in national insurance contributions in the way that we did.

By reducing the employers' national insurance contributions for rates of pay up to £185 a week by 0.4 per cent.—not 0.25 per cent., as was suggested by the hon. Member for Oldham, West—as against a reduction of 0.05 per cent. for those earning more than that amount, we are weighting the reductions in respect of employees who will be on the lower rate of SSP. Therefore, the savings for small employers—my right hon. Friend the Secretary of State gave examples in his opening speech—will be proportionately greater than those for other employers and, in some instances, will more than match any extra SSP costs. I am not sure that that has yet been fully appreciated by the small employers' organisations.

The present Government have a good record of pursuing policies that assist small employers. The taxation structure has been dramatically simplified since 1979 for both individuals and small firms; overall rates of taxation are lower, and special rates of corporation and capital tax operate for small employers.

Moreover, the number of special schemes and training services set up by the Government is substantial. Let me mention just a few. There is the loan guarantee scheme which, since its inception in 1981, has issued more than 25,000 guarantees for loans totalling over £837 million. A report by independent consultants has confirmed that the scheme meets a real need in small firms finance. There is also the business expansion scheme, the activities and programmes of the Training Agency, the enterprise allowance scheme and the business growth scheme. No one can accuse the Government of not caring about small firms; quite the reverse. I hope that the small firms' interests and hon. Members who are concerned about their needs will recognise that.

One must take into account the following three factors. First, over half all statutory sick pay spells are over within two weeks and 90 per cent. are over within eight weeks. As my right hon. Friend the Secretary of State said, the average spell is three weeks. Secondly, the savings that will be achieved are only a small fraction—some 0.05 per cent.—of the labour costs over the economy as a whole, which are estimated to be about £300 billion. Thirdly, the reduction in national insurance contributions, which is the important context of these changes, will provide worthwhile savings to employers.

It is clear from this debate that the impact on individual employers will not be as significant as some may have feared. The Government believe that such additional costs as may transfer from the state to employers are not unreasonable.

Some hon. Members, particularly Labour Members, have suggested that many employers cannot cope with SSP and often get it wrong. Even worse, some employers dismiss employees rather than pay SSP which, incidentally, is against the law. Reference has been made to the recent report by the National Association of Citizens Advice Bureaux entitled "Hard Labour".

Mr. Martlew

Will the Minister elaborate on that point? Which law would be broken if a person were dismissed on those grounds?

Mr. Scott

Employment protection legislation.

Mr. Martlew

That does not always apply.

Mr. Scott

So long as a person has been working for a reasonable time for the employer—

Mr. Martlew

Two years.

Mr. Scott

Yes, I accept that point.

My right hon. Friend and I have seen the report. Although it deals mainly with employment protection and wages matters, it includes some references to SSP. The Department has already sent to NACAB a detailed reply on all the recommendations relating to Department of Social Security responsibilities. Despite some individual cases cited, which hon. Members have mentioned tonight, it is certainly not our experience that employers cannot operate the scheme.

Over the past two years we have made considerable efforts better to inform employers about SSP. We have employed outside market research consultants and the SSP guide for employers has been completely revised in both content and presentation. A quick guide has been introduced which employers can use in straightforward cases. A wall chart and a video have also been made available. I can tell the House that the new literature has been widely welcomed by business.

In addition, the Department provides a freeline telephone inquiry service directly for employers about national insurance contributions, SSP and statutory maternity pay, plus a free seminar service. Since January, well-attended seminars have been held in many major towns and cities.

I should also point out that the Department has a representative employers panel, consisting of small and large employers and their organisations. It includes, for example, the National Federation of Self Employed and Small Businesses and the CBI. They are regularly consulted by us.

I accept that there will always be small employers who will be unsure about some aspects of the scheme, mainly because they need to operate SSP only infrequently. I hope that the House will agree that the initiatives that we have taken and will continue to take will greatly reduce any problems.

Finally, if NACAB, the Low Pay Unit or any other organisation uncovers what it believes are either malpractice or mistakes by an employer, it should let the local social security office know immediately. A set procedure is put into operation when an employee considers that he has been wrongly denied SSP or is not being paid the correct amount. The employee should ask for a formal decision from the adjudication officer in his local DSS office. Where an employer fails to comply with a decision of the adjudicating authorities within the prescribed time, responsibility for paying SSP passes to the DSS, which will at the same time consider further action against the employer. The employee is therefore fully protected, if the correct action is taken promptly.

Much has been said during the debate about occupational sick pay coverage, and Opposition Members have called into question the Government's assertion that the majority of employees will have any difference in SSP entitlement made up by occupational sick pay. The research was carried out by a responsible and respectable international consultancy organisation and it is on that information that we base our claims that, although we do not know exactly how many people are covered by sick pay schemes, 90 per cent. of firms have such schemes.

We have had a good debate. The Government have taken the right steps and I commend the Bill to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 231, Noes 119

Division No. 11]	[10 pm
AYES
Aitken, Jonathan	Browne, John (Winchester)
Alexander, Richard	Bruce, Ian (Dorset South)
Alison, Rt Hon Michael	Burns, Simon
Allason, Rupert	Burt, Alistair
Amess, David	Butterfill, John
Amos, Alan	Carlisle, John, (Luton N)
Arbuthnot, James	Carlisle, Kenneth (Lincoln)
Arnold, Jacques (Gravesham)	Carrington, Matthew
Arnold, Sir Thomas	Cash, William
Ashby, David	Chalker, Rt Hon Mrs Lynda
Aspinwall, Jack	Channon, Rt Hon Paul
Atkins, Robert	Chapman, Sydney
Atkinson, David	Chope, Christopher
Baker, Rt Hon K. (Mole Valley)	Clark, Sir W. (Croydon S)
Baker, Nicholas (Dorset N)	Clarke, Rt Hon K. (Rushcliffe)
Batiste, Spencer	Coombs, Simon (Swindon)
Bellingham, Henry	Cormack, Patrick
Bendall, Vivian	Couchman, James
Benyon, W.	Cran, James
Bevan, David Gilroy	Davies, Q. (Stamf'd & Spald'g)
Blackburn, Dr John G.	Davis, David (Boothferry)
Boscawen, Hon Robert	Day, Stephen
Bowden, A (Brighton K'pto'n)	Devlin, Tim
Bowden, Gerald (Dulwich)	Dover, Den
Brazier, Julian	Dunn, Bob
Bright, Graham	Durant, Tony
Brown, Michael (Brigg & Cl't's)	Dykes, Hugh

Evans, David (Welwyn Hatf'd)	MacGregor, Rt Hon John
Fallon, Michael	MacKay, Andrew (E Berkshire)
Favell, Tony	Maclean, David
Field, Barry (Isle of Wight)	McLoughlin, Patrick
Finsberg, Sir Geoffrey	Mans, Keith
Fishburn, John Dudley	Maples, John
Fookes, Dame Janet	Marshall, John (Hendon S)
Forsyth, Michael (Stirling)	Maude, Hon Francis
Forth, Eric	Mayhew, Rt Hon Sir Patrick
Fox, Sir Marcus	Meyer, Sir Anthony
Franks, Cecil	Miller, Sir Hal
Freeman, Roger	Mills, Iain
Gale, Roger	Mitchell, Andrew (Gedling)
Gardiner, George	Mitchell, Sir David
Gill, Christopher	Moate, Roger
Gilmour, Rt Hon Sir Ian	Morrison, Sir Charles
Glyn, Dr Sir Alan	Moss, Malcolm
Goodlad, Alastair	Mudd, David
Goodson-Wickes, Dr Charles	Neale, Gerrard
Gorman, Mrs Teresa	Nelson, Anthony
Grant, Sir Anthony (CambsSW)	Neubert, Michael
Greenway, Harry (Ealing N)	Newton, Rt Hon Tony
Greenway, John (Ryedale)	Nicholson, David (Taunton)
Griffiths, Peter (Portsmouth N)	Nicholson, Emma (Devon West)
Ground, Patrick	Norris, Steve
Grylls, Michael	Onslow, Rt Hon Cranley
Gummer, Rt Hon John Selwyn	Oppenheim, Phillip
Hague, William	Paice, James
Hamilton, Neil (Tatton)	Peacock, Mrs Elizabeth
Hampson, Dr Keith	Porter, David (Waveney)
Hanley, Jeremy	Portillo, Michael
Hannam, John	Powell, William (Corby)
Hargreaves, Ken (Hyndburn)	Price, Sir David
Harris, David	Raffan, Keith
Haselhurst, Alan	Raison, Rt Hon Timothy
Hawkins, Christopher	Renton, Rt Hon Tim
Hayes, Jerry	Rhodes James, Robert
Hayhoe, Rt Hon Sir Barney	Ridley, Rt Hon Nicholas
Hayward, Robert	Roberts, Sir Wyn (Conwy)
Heathcoat-Amory, David	Rowe, Andrew
Heseltine, Rt Hon Michael	Ryder, Richard
Hicks, Mrs Maureen (Wolv' NE)	Sackville, Hon Tom
Hicks, Robert (Cornwall SE)	Scott, Rt Hon Nicholas
Higgins, Rt Hon Terence L.	Shaw, David (Dover)
Hill, James	Shaw, Sir Giles (Pudsey)
Hind, Kenneth	Shaw, Sir Michael (Scarb')
Hogg, Hon Douglas (Gr'th'm)	Shephard, Mrs G. (Norfolk SW)
Howard, Rt Hon Michael	Shepherd, Colin (Hereford)
Howarth, Alan (Strat'd-on-A)	Sims, Roger
Howarth, G. (Cannock & B'wd)	Skeet, Sir Trevor
Howell, Rt Hon David (G'dford)	Smith, Sir Dudley (Warwick)
Howell, Ralph (North Norfolk)	Smith, Tim (Beaconsfield)
Hunt, Sir John (Ravensbourne)	Soames, Hon Nicholas
Hunter, Andrew	Speed, Keith
Hurd, Rt Hon Douglas	Speller, Tony
Irvine, Michael	Squire, Robin
Jack, Michael	Stanbrook, Ivor
Janman, Tim	Stanley, Rt Hon Sir John
Jessel, Toby	Steen, Anthony
Jones, Gwilym (Cardiff N)	Stern, Michael
Jones, Robert B (Herts W)	Stevens, Lewis
Kellett-Bowman, Dame Elaine	Stewart, Allan (Eastwood)
Key, Robert	Stewart, Andy (Sherwood)
King, Roger (B'ham N'thfield)	Sumberg, David
King, Rt Hon Tom (Bridgwater)	Summerson, Hugo
Kirkhope, Timothy	Taylor, Ian (Esher)
Knapman, Roger	Taylor, John M (Solihull)
Knight, Greg (Derby North)	Taylor, Teddy (S'end E)
Knowles, Michael	Tebbit, Rt Hon Norman
Knox, David	Temple-Morris, Peter
Lamont, Rt Hon Norman	Thompson, D. (Calder Valley)
Lang, Ian	Thompson, Patrick (Norwich N)
Latham, Michael	Thornton, Malcolm
Lawrence, Ivan	Thurnham, Peter
Lightbown, David	Tracey, Richard
Lilley, Peter	Trippier, David
Lloyd, Peter (Fareham)	Twinn, Dr Ian
Lyell, Rt Hon Sir Nicholas	Vaughan, Sir Gerard
McCrindle, Sir Robert	Viggers, Peter
Macfarlane, Sir Neil	Walker, Bill (T'side North)

Waller, Gary	Winterton, Mrs Ann
Ward, John	Winterton, Nicholas
Wardle, Charles (Bexhill)	Wood, Timothy
Warren, Kenneth	Woodcock, Dr. Mike
Watts, John	Yeo, Tim
Wheeler, Sir John	Young, Sir George (Acton)
Whitney, Ray
Widdecombe, Ann	Tellers for the Ayes:
Wiggin, Jerry	Mr. Irvine Patnick and
Wilkinson, John	Mr. Tim Boswell.
Wilshire, David

NOES
Abbott, Ms Diane	Kilfedder, James
Allen, Graham	Kirkwood, Archy
Alton, David	Lambie, David
Archer, Rt Hon Peter	Leadbitter, Ted
Ashdown, Rt Hon Paddy	Leighton, Ron
Ashton, Joe	Lewis, Terry
Banks, Tony (Newham NW)	Litherland, Robert
Barnes, Harry (Derbyshire NE)	Lloyd, Tony (Stretford)
Beckett, Margaret	Lofthouse, Geoffrey
Bellotti, David	McKay, Allen (Barnsley West)
Bermingham, Gerald	McKelvey, William
Blair, Tony	Mahon, Mrs Alice
Blunkett, David	Marshall, Jim (Leicester S)
Boyes, Roland	Martlew, Eric
Bray, Dr Jeremy	Meacher, Michael
Brown, Nicholas (Newcastle E)	Meale, Alan
Buckley, George J.	Michael, Alun
Caborn, Richard	Michie, Bill (Sheffield Heeley)
Canavan, Dennis	Morgan, Rhodri
Carlile, Alex (Mont'g)	Morley, Elliot
Clark, Dr David (S Shields)	Morris, Rt Hon J. (Aberavon)
Clelland, David	Mowlam, Marjorie
Coleman, Donald	Mullin, Chris
Corbett, Robin	Murphy, Paul
Corbyn, Jeremy	Nellist, Dave
Cousins, Jim	O'Brien, William
Cox, Tom	Pike, Peter L.
Crowther, Stan	Prescott, John
Cryer, Bob	Primarolo, Dawn
Dalyell, Tam	Quin, Ms Joyce
Davies, Rt Hon Denzil (Llanelli)	Redmond, Martin
Davies, Ron (Caerphilly)	Richardson, Jo
Davis, Terry (B'ham Hodge H'I)	Rooker, Jeff
Dixon, Don	Rooney, Terence
Dobson, Frank	Rowlands, Ted
Eadie, Alexander	Sheldon, Rt Hon Robert
Eastham, Ken	Short, Clare
Field, Frank (Birkenhead)	Skinner, Dennis
Fields, Terry (L'pool B G'n)	Smith, Andrew (Oxford E)
Flannery, Martin	Smith, J. P. (Vale of Glam)
Flynn, Paul	Soley, Clive
Foot, Rt Hon Michael	Strang, Gavin
Foster, Derek	Taylor, Mrs Ann (Dewsbury)
Foulkes, George	Taylor, Matthew (Truro)
Fraser, John	Thompson, Jack (Wansbeck)
Galloway, George	Turner, Dennis
Gilbert, Rt Hon Dr John	Vaz, Keith
Golding, Mrs Llin	Wallace, James
Grant, Bernie (Tottenham)	Wardell, Gareth (Gower)
Griffiths, Nigel (Edinburgh S)	Wareing, Robert N.
Griffiths, Win (Bridgend)	Watson, Mike (Glasgow, C)
Grocott, Bruce	Welsh, Michael (Doncaster N)
Hardy, Peter	Williams, Rt Hon Alan
Heal, Mrs Sylvia	Williams, Alan W. (Carm'then)
Howarth, George (Knowsley N)	Winnick, David
Howells, Dr. Kim (Pontypridd)	Wise, Mrs Audrey
Hoyle, Doug	Worthington, Tony
Hughes, Robert (Aberdeen N)
Hughes, Simon (Southwark)	Tellers for the Noes:
Illsley, Eric	Mr. Frank Haynes and
Jones, Barry (Alyn & Deeside)	Mr. John Battle.
Jones, Martyn (Clwyd S W)

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Sackville.]