REDUCTION IN THE AMOUNTS RECOVERABLE BY EMPLOYERS WHO HAVE PAID STATUTORY SICK PAY

HC Deb 28 November 1990 vol 181 cc888-935 4.39 pm

Mr. Archie Kirkwood (Roxburgh and Berwickshire)

I beg to move amendment No. 1, in page 1, line 11, leave out from 'payments' to 'and' in line 15, and insert 'after the words "prescribed circumstances", there shall be inserted the words "and in the circumstances in paragraph (aa) below.".'

The Second Deputy Chairman of Ways and Means (Miss Betty Boothroyd)

With this it will be convenient to discuss the following amendments: No. 2, in page 1, line 15, after 'payments,' insert— (aa) there shall be added, after paragraph (a), the following provision: (aa) entitling, except in prescribed circumstances, any employer employing twenty or more persons, who has made one or more payments of statutory sickpay in a prescribed period to recover an amount equal to 80 per cent. of the aggregate of these payments.";'.

No. 3, in page 1, line 21, leave out from 'made' to the end of line 23 and insert 'there shall be added at the end, the words, "or, where applicable, the amounts which they are entitled to recover by virtue of paragraph (aa) above.".'.

No. 4, in page 1, line 26, leave out '1(a)' and insert '1(aa)'.

Mr. Kirkwood

I know that some of the arguments about the Bill were rehearsed on Second Reading, but I cannot understand why it is necessary to complete the Bill with such speed. Second Reading took place on Monday, when, unfortunately, I was unable to attend, but my hon. Friend the Member for Orkney and Shetland (Mr. Wallace) spoke. Why is it necessary for the Bill to be considered in Committee today?

The speed with which we are proceeding with the Bill has caused some suspicion, to put it mildly, among those who will be directly affected by it. They believe that the Government's undue haste is suspicious. The Minister furrows his brow at that, but the story behind the argument goes back before my time to 1982 when the old sickness benefit was changed into the statutory sick pay scheme. I am told that those changes led to hard-fought arguments that continued for many months. Although small businesses, the Confederation of British Industry and other interested parties were not entirely happy with the final result, they felt that their arguments had been heeded and that they had had a fair crack of the whip.

I do not believe that the current consultation has been satisfactory in terms of the changes that were first brought to the attention of the House in the uprating statement made a few weeks ago. I do not use unmeasured language often, but it is deplorable and a matter for the House if the Government proceed with the Bill—admittedly it is small and technical, but the changes are far-reaching—at such speed. There are only 15 Bills in the Queen's Speech, and I cannot understand why we should proceed with such haste. Since we are discussing the first group of amendments I hope that it will be in order for the Minister to say something about that. It would be helpful if he could reassure those interested parties that there was no untoward reason for such indecent haste.

I know that hon. Members have urgent business to attend to in other parts of the House and I accept that the Bill is small and technical, but it is disappointing that more of our colleagues are not present to consider the issues. The statutory sick pay scheme, however, in common with other parts of the social security system, is now so complex that it takes experts to work out the implications of any changes for small businesses, employers and employees. Surely that is another reason for moving slowly on the Bill. It is important to remember that the Bill will have far-reaching effects for businesses and employees.

The Second Reading debate made it clear that the function of the Bill is to reduce the statutory sick pay rebates from the current level of 100 per cent. to 80 per cent., which is a big jump in one go. It will also remove the additional rebate for national insurance contributions that are paid on statutory sick pay, and it gives the Government the power to cut the rebate again without primary legislation. The Bill also increases the threshold for the higher level of statutory sick pay from £125 to £185, but that higher level will not be uprated, but frozen at £52.50.

The net effect of the changes will be to put a disproportionate burden on those businesses with a much higher incidence of sickness. That is bad news for small businesses, which will see them as the thin end of the wedge.

4.45 pm

In the uprating statement, the Secretary of State spoke about a new partnership between the Government and employers, but in reality it is a new partnership between the treasury and the Department of Social Security. The Treasury required cuts to be made and the Department has found a mechanism for offloading those cuts and their impact on to employers' shoulders.

An important principle that is buried in the Bill should not go unnoticed. If employers are to be directly responsible for the provision of sick benefits in the future, it should not happen piecemeal. If the Government are intent upon that, they should say so openly, so that we can discuss it properly. The withdrawal of redundancy rebates is an obvious example of what can happen by default. I hope that that change is not part of a trend.

The amendments are designed to exclude from the Bill firms that employ fewer than 20 people; after all, the proposed changes will have a far greater impact on small businesses than on larger ones. There are precedents in employment law for distinguishing among companies based on their size. That principle should be accepted as there are compelling reasons for questioning whether the full-blown provisions of the Bill should be visited on small businesses that employ fewer than 20 people.

The general economic climate faced by small businesses is much harsher than that faced by larger businesses. That factor should also be taken into account.

Mr. Tony Banks (Newham, North-West)

I am sorry to interrupt the hon. Gentleman, but I hope that he will bear with me, as I am new to this. The hon. Gentleman referred to businesses with fewer than 20 employees, but amendment No. 2 speaks of any employer employing twenty or more persons". I assume that either a mistake has been made or I am missing something—probably the latter—so perhaps the hon. Gentleman can enlighten me.

Mr. Kirkwood

I asked the same question this morning. My hon. Friend the Member for Orkney and Shetland (Mr. Wallace) is a distinguished advocate at the Scottish Bar and has chosen to draft the amendments so that the Bill's provisions affect those who employ more than 20 people. Therefore, by implication, they exclude smaller firms with fewer than 20 employees. However, the question of the hon. Member for Newham, North-West (Mr. Banks) was perfectly fair.

Do not ask me what motivates advocates. If I had had more time, I think that I could have drafted the amendments more simply—that sounds like a direct and vicious attack on my hon. Friend the Member for Orkney and Shetland, and I withdraw it. The Minister is such a generous soul and I know him so well, that I am certain that he would not let the legislation founder on such petty technicalities. Having said that, it was a perfectly proper question to ask. As I said, I asked the same question this morning; I am glad that I did because otherwise I could have been completely floored by the hon. Gentleman's intervention.

There is a case for considering the special circumstances in the economic climate. The uniform business rate provisions, changes in business rates and interest rates, and the administrative impact of VAT have all had a disproportionately hard effect on smaller businesses. Some of the research undertaken by the Government on the provision, extent and incidence of occupational sick pay schemes is flawed. Will the Minister say something about that? I know that a study was produced which is now in the Library, but it is vigorously contested by the organisations representing small businesses. They believe that the research was selective and produced results that do not reflect reality. I make no comment on that, but merely put the question to the Minister. Had there been proper consultation in advance of the Bill's introduction, we might have been able to deal with such issues.

People who run and work in small businesses have told me repeatedly that they were given a clear undertaking that additional costs would not be visited on them any more than they were under the scheme introduced in 1982. That is as valid now as it was then. I know that that point was made at some length on Second Reading, but I repeat it because it is of particular relevance to small businesses which employ fewer than 20 people.

About 96 per cent. of United Kingdom businesses employ fewer than 20 people. Such businesses simply cannot afford statutory or other occupational sick pay schemes. It is not economically feasible for them to do so. The figures that I have been given show that the cost can be anything up to £11 a week, and can run for 28 weeks under the Bill's provisions. If such costs were visited on a one or two-person business, it could face difficulties.

If one or two of the people involved in a one or two-person business are sick for 28 weeks, they cannot reclaim national insurance contributions because they are not paying any contributions to recover. What are the people in business at that sort of level expected to do in the context of the new provisions? It is all very well if one is running a major company with professionals to advise on such matters, or if one's national insurance contribution of £1,000 or £2,000 is billed each week so that one can deduct and divvy up and, in the fulness of time, everything works out in the wash. The arguments are fairly suspect even at that level, but when applied to businesses that are self-owned or have a sole proprietor, the Bill's provisions have some frightening consequences.

The Parliamentary Under-Secretary of State for Social Security, the hon. Member for Norfolk, South-West (Mrs. Shephard), provided a useful answer to a parliamentary question tabled by the hon. Member for Coventry, South-East (Mr. Nellist) on 24 January. The question involved the number of changes in the statutory sick pay scheme and its administration since its introduction—there have been 19. I shall not detain the Committee by reading out the list, but they are all of some significance. That is all very well for someone who works in the accounts department of ICI because he or she can cope with it very well—I do not complain about that. But it must have been difficult to keep up with that pace of change since March 1985. I concede that the changes included uprating of statutory sick pay rates, so we can subtract five from the total of 19, but that still leaves a significant number of changes for a small business confronting the Bill's provisions. I see that the ministerial brow is again furrowed.

The changes will have major effects on employers, particularly those in small businesses. They will encourage the small number of businesses which perhaps do not play to the rules as they should and are guilty of malpractice, to opt out. That will have a direct adverse impact on the employees of the small firms. I read the debate on Second Reading carefully and it contained well-rehearsed arguments about the Bill's impact—which will be big enough—on part-timers, women and disabled employees. However, it will have a particularly great impact on people in smaller firms. The employees in such firms are totally reliant on statutory sick pay and the Bill will have serious consequences for them.

This is an important debate and I could go on at great length, but I do not want to repeat points made on Second Reading. This is one of the most crucial amendments and unless I receive some fairly convincing answers, I reserve the right to invite the House to divide on it. I shall be grateful if I have some support. It is often a lonely furrow to plough in the modern Liberal Democrat party and I am grateful for support from wherever it comes. If I may be facetious, the three Conservative Members present. should look carefully at the Bill's impact because the Conservative party often beats its chest about what it has achieved for small businesses. To use fighting talk, if they are not careful, the Government will get beaten in the jaw at the next election, and will not be easily forgiven. They must be cautious if they want to introduce such a measure with impunity. I say that with some passion, because the argument has been put to me with great force.

I shall encapsulate my argument by giving a quote from Mr. Ian Handford, the employment affairs chairman of the National Federation of Self Employed and Small Businesses. I know that the briefing was probably sent to other Members. It states:

The Government is shifting the welfare state onto the backs of the business community. Small businesses just cannot take on board state benefits out of their present meagre profits. The sting is in the document's tail, which states: If only 10 per cent. of all businesses take evasive action to defend themselves from this attack then there will be a loss of some 350,000 jobs. Rather than take on the additional hassle of the financial and administrative burden of the Bill, companies may simply divest themselves of employees. If that happens it will be a tragedy, not just for the employees and the firms, but for the British economy. Those are the stakes involved in the group of amendments. I hope that the Minister will seriously consider the arguments put to him before he decides to rule out the amendment.

Mr. Peter Thurnham (Bolton, North-East)

The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) spoke about dividing the Committee. He does not need to go that far, but he is right to put down a marker, because the Bill makes a change to the arrangements that were originally agreed. People would be worried if there were further changes. I spoke on Second Reading, but I had to leave the Chamber before the end of the Minister's opening speech and did not hear his comments about the Bill's effect on smaller businesses. I was concerned when I read in Hansard that he said: it was not possible to engage in advance in substantial consultation."—[Official Report, 26 November 1990; Vol. 181, c. 644.] If there is any intention to move further down this road, I hope that there will be time fully to consult small businesses on all the issues raised by the hon. Member for Roxburgh and Berwickshire.

5 pm

When I spoke on Monday, I declared an interest as a small employer. I consulted my company about the effect of the Bill and received a fax just before the debate, saying that the effect would be insignificant. My arithmetic suggests that it will mean £5 per annum for each employee. That means that, for a firm employing 10 people, the cost would be £50. Of course, all firms will pass on the cost in order to survive and that may have a small inflationary effect. I hope that no more such costs will be imposed, because they could lead to price rises. The swings and roundabouts effect does not always work for small employers, and it will be necessary to see to what extent employers will need to have insurance to cover the costs.

Yesterday I attended a meeting with members of the Electrical Contractors Association. They are worried about the Bill's effect on smaller employers and especially about the way in which it could encourage such employers to use self-employed people who work on 714 certificates. They were not happy about the effect of the changes on the structure of the industry; it would encourage some companies to put their work in the hands of self-employed people. That can have an effect on the relationship between the trade association and the industry as a whole.

Britain is almost unique in having no statutory regulation of the electrical industry in the way that such regulation works abroad. Generally speaking, electrical contracting abroad is subject to statutory regulation. However, in Britain the trade association polices standards. If that association's standing were to be eroded by legislation that would change its structure, such legislation would be viewed unfavourably. If the Government intend to move further down this road, I hope that they will allow proper time to consult representatives of industry and that the electrical contracting industry will be included because of its responsibility to ensure standards.

Britain is different from other countries in the Common Market in that it does not have the statutory regulation that I have mentioned, and that creates difficulties for British companies trying to compete in the Community on equal terms. At the moment, foreign companies can compete in Britain because we do not have statutory regulations to prevent them from setting up here. However, overseas countries have restrictions that make it impossible for British companies to compete there. There is no comparability enabling a British company automatically to be accepted in France, Germany or Italy.

Electrical contractors would like to see the industry regulated, but the Government do not like to regulate and prefer arrangements to be voluntary. Such arrangements are threatened by the changes in the Bill. I support the Bill as a whole, but I should like to be assured that there will be full consultation before there are any more changes. Those consultations should be with representatives of smaller firms and with industries that are affected by the Bill.

The hon. Member for Roxburgh and Berwickshire was right to table his amendment, but I hope that he will not press it to a Division, because in its present form the Bill has a de minimis effect on employers.

Mr. Paul Flynn (Newport, West)

The speech by the hon. Member for Bolton, North-East (Mr. Thurnham) showed modest courage. Unfortunately, it did not last until the end of his speech. We can understand that, because these are dangerous times for the Conservative party and they are fraught with many anxieties. The Secretary of State is not in his place, but we hope that he will rejoin us before the end of the debate. Who can tell?

The National Federation of Self Employed and Small Businesses in Wales contacted me and no doubt it contacted hon. Members in other parts of the country. It fully studied our deliberations on Monday and has returned with greater vehemence against the Bill. The federation has not accepted any of the Government's assurances. It says: The Government is shifting the wefare state onto the backs of the business community. That is right, and the process is being carried out in small ways.

A regulation about welfare milk was debated in the House and it was discovered that precisely the same process was going on. All six or seven Conservative Members who spoke in the debate derided the change. One went so far as to describe it as crazy. The Government proposed to push on to the milkman, who is a small business man, £80 million which had previously been provided by the state. The Bill is another move in that direction.

A series of small moves, regulations and changes, passing through Parliament with hardly any attention from outside, are an attempt to privatise the welfare state. Costs have been moved on to the backs of various other agencies. It is good to see that small business men—there is little else in the country except small businesses now —are fighting back. Small business men have had a rough deal from the Government. We are in an economic recession and have high interest rates, and industry is rightly warning us that one of the consequences of this nasty little Bill could be another cascade of unemployment.

Even at this late stage, the Government should reconsider the Bill. In a modest, persuasive way, the hon. Member for Bolton, North-East said gently to the Government—we shall speak with a stronger voice—that there should have been consultation. He said it is too late now, but perhaps there will be consultation in future. The whole process has been a disgrace. It is quite right for all organisations representing small businesses to rise up against a Government whom they see as representing them and say that this is not government by reason or argument but the policy of an elected tyranny.

On Second Reading, the Government's case for the Bill collapsed, but still they forge ahead regardless of the arguments. That is not the way that Governments throughout the century until the last dark decade of Thatcherism have behaved. There have been dramatic changes in the past 24 hours. There is a new face, but the Government continue to pursue the same old depressing and tyrannical policies. I hope that in the winding-up speech we shall be given some hope that the changes will be postponed or subjected to major modification.

Mr. Ian Bruce (Dorset, South)

As a former small business man, I should like to speak about the difficulties faced by small businesses over statutory sick pay. When I was running an employment agency in Yorkshire, the transfer of the administration of statutory sick pay from the DHSS, as it was then, to the employer was a horrendous business, because there was difficulty in understanding the regulations. In a business employing several hundred people, it is almost certain that at all times somebody is drawing statutory sick pay.

Every time the part-time employee who calculated the wages in my firm had to deal with statutory sick pay, he came to see me, the managing director, so that we could go through the regulations again to see whether we were applying them correctly. I ask my right hon. Friend the Minister to grab a little booklet on this subject and try to work out how much statutory sick pay has to be paid if somebody has had a few days of sick, or has been sick and then come back and then gone off sick again.

I know that we are examining the Bill to see whether it needs amending, but I ask my right hon. Friend to be more fundamental in his approach. The Tory party is looking at revision of many aspects of life. It is strange that we have a statutory sick pay scheme that provides only a small amount of the money that somebody in employment who has been sick would normally receive. The person who is working out, at the end of the week, what somebody should receive, would normally, if there were no statutory sick pay scheme, pay the usual £100 a week, deducting the normal tax and national insurance contributions. Instead, the Government provide a contribution in the form of statutory sick pay, the firm makes a complicated calculation, ensuring that all the paperwork is correct, and makes the wages up to the normal level from that basis. The Ministry can examine all the paperwork on SSP.

The amount of money that the Government give the employer is probably less than the cost of the administration of the scheme. I suspect that knocking only 80 per cent. of SSP off national insurance, rather than all of it—yet another calculation problem and cause of error —will result only in more difficulties. If we go down this route—European legislation may be pushing us this way—employers may be forced to bring in a form of sick pay insurance for all their employees. Perhaps we should go a step further and make all employees have some form of insurance that pays all their wages if they are sick or off work on maternity leave or for some other reason.

I know that Labour Members may be upset about the thought of fully comprehensive insurance schemes, but the Government insurance scheme is an insurance scheme only for a small part of what people expect when they are in employment. Therefore, we have the worst of all worlds instead of the best of all worlds. People should know what they are paying for, rather than, as they do with the employers' national insurance, piling in the money and——

The Second Deputy Chairman

Order. I hate to interrupt the hon. Member, but he is going very wide of the amendments.

Mr. Bruce

I am sorry that you interrupted me, Miss Boothroyd, because I was about to finish, and then I would have stopped being out of order.

I started by addressing my remarks to the specifics of the small business, but began to go far wider. To attack this problem in its minutiae may be the wrong approach. Perhaps we should be looking at the way that the business works. I hope that my right hon. Friend the Minister will take note of what I am saying. Many of the small business men whom I know are upset; perhaps because they have got hold of some incorrect publicity about what the scheme will cost them. We should look at SSP provisions again. If the Government want to move this away from being an additional Government expenditure and towards loading it on small businesses, we should perhaps go the whole hog and go for a private insurance scheme rather than a statutory sick pay system.

Mr. Allen McKay (Barnsley, West and Penistone)

The thrust of Government policy, in general and in the particular with this Bill, is towards private insurance schemes for everybody. That is what it is all about and it would be better if the Government came out and said so. Both the Labour party and small businesses have long been asking for consultations, but the Government have adopted a drip, drip, drip approach, introducing Bills such as this. In my constituency, small businesses are unhappy about the Bill because they are running on a shoestring.

The Government repeatedly tell us that the rise of small businesses is important. If that is so, why are they loading these extra burdens onto small businesses? The Government say that small businesses will increase in number and employ more people, but Bills such as this make small businesses look again at the bottom line of their costs and decide either not to take on more people or that they have too many people already, and so spend too much on employees. Furthermore, they are uncertain about the future.

5.15 pm

There should have been consultations about the Bill, but there was not, because last time the Government introduced such a Bill, there was a great furore, which forced the Government to retract what they intended That is why we have had a two-day debate on the Bill—to make sure that the furore, which has started, will be too late when its get going.

The Government should look seriously at the effect that the Bill will have on businesses. It is bad enough to load on them administration of a sick pay scheme, which rightly belongs to the state benefit system, because there are so many different employers, different sizes of employers and different possibilities. Now, the Government are going a little bit further and making firms bear not only the cost of administration but part of the cost of paying sick pay. Firms should be reimbursed 100 per cent., because, unless we adopt the Japanese idea of manufacturing, with all the benefits that go with that, piecemeal changes such as this should not be introduced. If there is to be an employers' sick pay scheme, there should be full consultation and it should be introduced properly.

Mr. Tony Banks

I thank the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) for explaining the thinking behind the amendments. I was slightly confused when I looked at them, but I now understand everything, as he has explained that they were drafted by a Scottish advocate. I suppose that the theory that, by mentioning large firms, only one automatically excludes small firms has a certain logic. Perhaps the hon. Member, as an advocate, submits his bills by sending the client the change and allowing him to deduce from that how much the bill would be. That is a strange way to do it.

I agree with the hon. Gentleman's comments about the haste with which the Bill is being pushed through. It is rather perverse that we shall have less time for the Committee stage, when we are supposed to look at the clauses in great detail, than we did for Second Reading, the debate on which included repetition of a number of points. We do not understand why there should be such haste, and I hope that the Minister, in his usual courteous way, will explain that to the House.

The Minister must excuse us for feeling rather suspicious, because we have seen the way in which the Government, under the previous Prime Minister, were wont to deal with opposition by riding roughshod over it. We are about to have a rerun of this, although we have a new Prime Minister. It is clear from the speeches of the hon. Members for Bolton, North-East (Mr. Thurnham) and for Dorset, South (Mr. Bruce) that they are unhappy about the Bill.

When the hon. Member for Roxburgh and Berwickshire puts the amendment to the vote, the Opposition will support him, but Tory Members will come flooding in from outside, not knowing what the arguments are, and will be whipped through the No Lobby. The Minister should pay heed to debates in the Committee dealing with a Bill. As all the speeches so far have, to some extent, shown concern, ranging through to outright opposition, the Minister should reconsider his position and introduce amendments at a later stage. However, as the Bill's remaining stages will be taken tonight, it will be difficult for him to do that. He seems to have boxed himself into a corner, but I suspect that that is a position into which he wanted to be put.

The hon. Member for Roxburgh and Berwickshire said that it takes experts to work things out in this area, and I do not pretend to be an expert. However, I had some sympathy with the hon. Member for Dorset, South when he was explaining the problems that small businesses experience as more and more administrative burdens are laid upon them while they try to get on with making some money.

For the Opposition to come in so heavily in support of small businesses may seem rather strange to Conservative Members, but we do support initiative and enterprise, particularly among those who, by the efforts of their hands and brains, are trying to make a decent living. When I try to complete my tax return at the end of the year and have to look at all my office accounts, I realise what it is to be a small business man. If I had wanted to be a shopkeeper, I could have aspired to being one. I find it tedious dealing with all the invoices and I can well imagine why, with all these changes, small business people feel so frustrated.

The hon. Member for Roxburgh and Berwickshire said that we must rely on experts and when it comes to the Bill's impact we must rely on the National Federation of Self Employed and Small Businesses. On Second Reading, it was said that, when making their submissions to the Government, many organisations tend to overstress the difficulties as a negotiating position from which to try to pull the Government back a bit. But the federation is not exaggerating; it is being straightforward. I am reinforced in that belief by the contributions by the hon. Members for Bolton, North-East and for Dorset, South. They made a number of good points.

If I recall correctly, when the views of the federation were dealt with on Second reading, the Secretary of State said that perhaps it did not know the full extent of the proposals and that when it knew the full extent of the national insurance contributions it might feel happier. The federation has sent further details to most hon. Members who took part in that debate, so it has had a chance to study the points made by Ministers on Second Reading and it is still not happy. Indeed, it is even more unhappy than it was on Second Reading.

It may be that Mr. Handford, speaking on behalf of the federation, is being over-alarmist, but I do not think that he would be happy with such an accusation. In his press release, he says: The Government is shifting the welfare state onto the backs of the business community. Small businesses just cannot take on board state benefits out of their present meagre profits. If only 10 per cent. of all businesses take evasive action to defend themselves from this attack then there will be a loss of some 350,000 jobs. I should like to know exactly what that means because it is a rather threatening note to put in a press statement. Does it mean that 10 per cent. of small businesses will lay off workers who are sick? If so, that is alarming. It is surely not something that the Government want to happen. I hope that there will be some reconsideration of the matter.

Labour Members and small businesses suspect that this is part of an onion-peeling exercise which the Government so often adopt when making changes, particularly in social welfare, and that this is one small step which will be followed by other small steps. The Bill clearly gives the Government the opportunity to make even further reductions. There is a great deal of suspicion that the payment of workplace benefits will, in the end, be moved on to the backs of all businesses. If that is the objective, the Government should come clean and tell us, but I suspect that they will not. I am sure that the Minister realises, and often believes passionately, that honesty is the best course, but at times he is not prepared to give in to the temptation.

In those circumstances, we are right to table the amendments and to pay attention to the opinions expressed by the federation. I hope that the Minister has received them because the federation makes a number of points with which he should deal when he replies. He does not appear to have done so, so let me tell him about the various points.

The document says that the federation estimates that if only 10 per cent. of the small business sector were to take defensive action against the new SSP regime there will be a loss of some 350,000 jobs. Secondly, it says: An extra 350,000 unemployed would cost considerably more in benefits than the Government's estimated saving of £100 million not to mention the social cost. Thirdly, it says: The NFSE is not concerned about the large company that suffers the average three-week sick pay. We are concerned about the small business with one or two employees that could suffer the full 28 week sick leave. Lastly, it says: Such a business would suffer costs under the new SSP scheme of over £300. The reduction in employers national insurance will only save the small business £100. A cost to small businesses of over £200. The federation represents the sort of people to whom the Government are often pointing to show where the real economic miracle is happening. The Opposition never believe them, and nor, it would appear, do the small business people.

I hope that when the Minister replies he will direct his reply specifically to the points made by those who will suffer the most—the small businesses.

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

The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) complained, I think twice, that my brow was furrowed. He should try being Minister with responsibility for social security. As my right hon. Friend the Foreign Secretary said, other things being equal, I expect that my brow will continue to be furrowed for some time to come as I deal with what is essentially a complex area of Government policy. Social security can never be simple and straightforward, because it seeks to respond to a range of different needs of individuals in society who, one way or another, fall upon hard times.

The hon. Gentleman asked why we were proceeding so quickly. I do not want to bore the House by reiterating what my right hon. Friend the Secretary of State and I said on Second Reading only about 48 hours ago, but our main reason for proceeding quickly was to give employers the maximum possible notice so that they could make arrangements, adjust their software or whatever they have to do, to ensure that all the arrangements can be implemented by April 1991.

We had no ulterior motive and we have gone out of our way to alert employers, their organisations and so on to what we were proposing. I cannot remember how many letters I have signed in reply to hon. Members who forwarded to me the concerns of the small employers' organisations and other bodies so that they will have time to consider those replies and, if necessary, come back to me.

It is only tangential, but I was asked why, since there were only 15 Bills in the Queen's Speech, we could not proceed at a slightly more relaxed pace. I must remind him that there were only 15 Bills in the previous Queen's Speech, but about 40 reached the statute book that Session. The Queen's Speech does not necessarily cover every contingency that arises during the parliamentary Session.

5.30 pm

The hon. Gentleman suggested that the Bill will result in savings, and of course that is true. Government and Social Security Ministers will have to reassess their priorities constantly, and the savings that flow from the Bill will play some part in meeting the cost of the special provision for poorer pensioners and of uprating residential care and nursing home limits in the coming year. There is nothing wrong with asking businesses to accept a modest increase in the contribution they make to meet the sickness costs of their employees.

Mr. Kirkwood

Does the Minister have any information about the cost of limiting the measure according to the size of the firm? That calculation may be almost impossible to make, but it would help the Committee if the right hon. Gentleman could say what the cost of the amendment would be.

Mr. Scott

I will deal shortly with the specific impact of the Bill, but I shall first answer some of the more general points that have been made.

The hon. Member for Newham, North-West (Mr. Banks) used the phrase "onion peeling" and other hon. Members asked whether, by introducing this measure in the current Session, we are embarking on a process of steadily reducing the percentage of sickness pay that will be met by the Government. On Second Reading, both my right hon. Friend the Secretary of State and I said that we have no plans to go down that route.

Ms. Clare Short (Birmingham, Ladywood)

indicated dissent.

Mr. Scott

The hon. Lady may not take my word for that, but I assure her that I am speaking the truth. I say the same to my hon. Friend the Member for Bolton, North-East (Mr. Thurnham.

Mr. Thurnham

The point has been made to me that firms which cover their sickness costs by an insurance scheme will now face higher premiums, so the Bill will contribute to inflation—although I accept that the amount involved will be quite tiny.

Mr. Scott

That money will be spent one way or another, either by the Government or by businesses.

The assumption is often made that sickness payments are always for a period of 28 weeks, but as was made clear on Second Reading, the average spell of sickness is only three weeks. Ninety per cent. of absences end within eight weeks, and many end earlier, after only one or two weeks.

I dispute any suggestion that the IFF survey was slanted towards larger firms. It covered a range of businesses, from small to much larger firms, and the patterns of sickness that occurred in them all were taken into account.

The Department gives maximum assistance to employers in helping them to cope with the undoubted burden of administering statutory sick pay, in the form of videos, seminars, wall charts and other aids, so that they can make their calculations as simply and accurately as possible. The help given by the Government to small firms in a variety of ways far outside the scope of my Department has encouraged the growth in small businesses over the past few years.

My hon. Friend the Member for Bolton, North-East asked about the electrical contracting industry. My recollection of that industry, from long before I entered the House, is that it was in the forefront of providing sick and holiday coverage to small contractors. I imagine that that continues. I have a great deal of admiration for the industry's innovations in that respect, and if my hon. Friend will convey to me the detail of the concern that he expressed, I will give him a considered reply.

The amendments seek a restriction on the reduction in reimbursement from 100 per cent. to 80 per cent. to employers with 20 or more employees. They would create two reimbursement rates—one for firms with fewer than 20 employees, which would recover all the SSP they paid, and another of 80 per cent. for the remaining firms. It will not surprise the hon. Member for Roxburgh and Berwickshire that, while appreciating the concerns that he has expressed, the Government are unable to accept the amendments.

When my right hon. Friend the Secretary of State examined the national insurance fund to establish whether its ingoings and outgoings were in balance, and whether contributions could be reduced in any way, he was aware of the intention to follow the route that we have followed in respect of SSP, and consciously made extra and special provision within the alterations to national insurance contributions, to devise a package that would give particular help to smaller employers.

The reductions are specifically geared to contributions payable by employers in respect of employees subject to the lowest rates—that is, earning £185 or less a week. From April 1991, the lower rates of 5, 7 and 9 per cent. will be reduced by 0.4 per cent. to 4.6 per cent., 6.6 per cent. and 8.6 per cent. respectively. That compares with the much smaller reduction of 0.05 per cent. in the employer's contribution in respect of employees earning more than £185 a week. Concentrating reductions on the lower paid will give extra help to small employers in particular.

The precise implications for individual employers will vary considerably, according to the rates of pay that their employees enjoy and the level of sickness experienced in their work force. Assuming the normal incidence of sickness, in many small firms any extra SSP costs will he offset by reductions in the employers' national insurance contributions. On Second Reading, my right hon. Friend gave examples of the positive savings that will accrue to at least some employers. Therefore, we do not believe that the amendments are either justified or necessary.

Mr. Tony Banks

The Minister describes what he believes will happen, but it might not turn out like that. To what extent will the new arrangement be monitored by the Department, so that if some of the claims made by hon. Members prove to be true, amendments can be produced?

Mr. Scott

Elizabeth I said that when she died, they would find Calais engraved on her heart. When I die, "monitoring" will be found engraved on my heart. We constantly monitor every aspect of the social security system, and that is often done by independent research organisations that the Department commissions to monitor the impact of social security changes.

Mr. Ian Bruce

As someone who has argued that employers' national insurance contributions should be lower, I ask my right hon. Friend to say whether employers as a whole will incur less cost under the new arrangements. The note on the financial implications of the Bill says that it will save my right hon. Friend's Department £250 million each year, but will the national insurance fund stand to lose that £250 million—or an even higher sum?

Mr. Scott

Broadly, the savings that employers will gain as a result of reductions in national insurance contributions will offset a large part of the extra costs that they will incur because of the reduction in their reimbursement for statutory sick pay. There will be a saving which will help to fund other improvements in the social security system. Many small employers will find that, because of the way in which we have altered the structure of national insurance, there is no cost to them. Some may see some savings as a result of the changes that we are making.

There are two other reasons why I do not believe we should accept the amendments. It is quite common for Ministers to stand at the Dispatch Box and to plead administrative difficulties with any changes. In this case there will not merely be administrative difficulties for the Department of Social Security and the Inland Revenue in operating a dual system of reimbursement. There would be practical problems and increased costs for employers were we to go down that route.

Many companies, especially small businesses, have fluctuating work forces they may employ 20 people one week and take on 20 people the following week. Different levels of reimbursement for statutory sick pay would severely complicate the employer's work. Also, monitoring checks have to be carried out by the Department of Social Security and the Inland Revenue to ensure that the right contributions were being paid by employers and that the correct amount of statutory sick pay was being paid to the employees. Administrative difficulties would look quite large in the public sector and for the employers.

The hon. Member for Newham, North-West asked me to cover the question of additional costs. I do not think that the Committee would expect me to overlook that point. The latest figures suggest that about 85 per cent. of businesses—2.5 million firms operating in this country—have under 20 employees. It is estimated that, if we went down the road proposed in the amendment, the public expenditure savings that we will make because of the Bill would be reduced by about £45 million, which is a far from insignificant sum.

For all the reasons that I have outlined, we do not believe that that is the right course. Bearing in mind the fact that the average absence of sickness is only three weeks and that 90 per cent. of absences are over within eight weeks, we do not believe that the implications for employers will be significant.

As I said in response to an earlier intervention, we shall of course monitor the position, but I have to invite the Committee to reject the amendments.

5.45 pm

Mr. Kirkwood

That was a genuinely disappointing response. I get a clear impression—although I do not necessarily put the blame on the Minister—from the Minister's reply that he has no idea of the difficulties which are being thrust upon small businesses. He may say, quite reasonably, that it is a matter not of his Department but of the Department of Employment and other people. I get no impression that he understands the difficulties that the Bill will cause.

At the end of his speech he helpfully said that if we excluded businesses with fewer than 20 employees as we do in the amendment, it would cost £45 million. The change is not worth a candle—it is not worth the trouble, hardship and administrative inconvenience and difficulty that it will cause. Out of a departmental headline total of £52 billion — £55 billion next year—£ £5 million is insignificant when compared to the stress, anxiety and anger that will be felt throughout the country in small businesses because of this measure.

I warn the Minister that I shall send copies of his speeches to people who send complaints to me. I am glad that he is writing to organisations representing small businesses. However, they have difficulty communicating with their membership. By the time that reality filters down to the shop floor or to the corner shop, the damage will have been done and the anger will be great. I do not blame them for being angry. The House should be angry and I urge hon. Members to reflect that anger by dividing on the amendment and voting against the Government's refusal to accept the amendments.

Question put, That the amendment be made:—

The Committee divided: Ayes 128, Noes 180.

Division No. 13]	[5.46 pm
AYES
Allen, Graham	Fields, Terry (L'pool B G'n)
Alton, David	Fisher, Mark
Anderson, Donald	Flannery, Martin
Archer, Rt Hon Peter	Flynn, Paul
Ashdown, Rt Hon Paddy	Foot, Rt Hon Michael
Banks, Tony (Newham NW)	George, Bruce
Barnes, Harry (Derbyshire NE)	Gilbert, Rt Hon Dr John
Barron, Kevin	Gordon, Mildred
Battle, John	Grant, Bernie (Tottenham)
Beckett, Margaret	Griffiths, Win (Bridgend)
Beggs, Roy	Grocott, Bruce
Benton, Joseph	Hardy, Peter
Bermingham, Gerald	Hattersley, Rt Hon Roy
Boyes, Roland	Haynes, Frank
Bray, Dr Jeremy	Heal, Mrs Sylvia
Brown, Nicholas (Newcastle E)	Hinchliffe, David
Buckley, George J.	Hogg, N. (C'nauld & Kilsyth)
Caborn, Richard	Home Robertson, John
Callaghan, Jim	Howarth, George (Knowsley N)
Campbell, Menzies (Fife NE)	Howells, Geraint
Campbell, Ron (Blyth Valley)	Hughes, John (Coventry NE)
Campbell-Savours, D. N.	Hughes, Robert (Aberdeen N)
Carl Me, Alex (Mont'g)	Hughes, Roy (Newport E)
Clay, Bob	Hughes, Simon (Southwark)
Clelland, David	Janner, Greville
Clwyd, Mrs Ann	Jones, Barry (Alyn & Deeside)
Coleman, Donald	Jones, Martyn (Clwyd S W)
Corbett, Robin	Kilfedder, James
Corbyn, Jeremy	Lambie, David
Cousins, Jim	Leadbitter, Ted
Cox, Tom	Leighton, Ron
Crowther, Stan	Lestor, Joan (Eccles)
Cryer, Bob	Lewis, Terry
Cummings, John	Litherland, Robert
Davies, Ron (Caerphilly)	Livingstone, Ken
Davis, Terry (B'ham Hodge H'l)	Livsey, Richard
Dixon, Don	Lloyd, Tony (Stretford)
Doran, Frank	Lofthouse, Geoffrey
Dunwoody, Hon Mrs Gwyneth	Loyden, Eddie
Eadie, Alexander	McAllion, John
Eastham, Ken	McFall, John
Evans, John (St Helens N)	McKay, Allen (Barnsley West)
Ewing, Harry (Falkirk E)	McWilliam, John
Field, Frank (Birkenhead)	Mahon, Mrs Alice

Marek, Dr John	Richardson, Jo
Meacher, Michael	Rooker, Jeff
Meale, Alan	Rooney, Terence
Michael, Alun	Sheerman, Barry
Michie, Bill (Sheffield Heeley)	Sheldon, Rt Hon Robert
Michie, Mrs Ray (Arg'l & Bute)	Shore, Rt Hon Peter
Molyneaux, Rt Hon James	Short, Clare
Morley, Elliot	Skinner, Dennis
Morris, Rt Hon A. (W'shawe)	Taylor, Mrs Ann (Dewsbury)
Mowlam, Marjorie	Taylor, Matthew (Truro)
Mullin, Chris	Thomas, Dr Dafydd Elis
Murphy, Paul	Turner, Dennis
Nellist, Dave	Wareing, Robert N.
Oakes, Rt Hon Gordon	Williams, Rt Hon Alan
O'Brien, William	Williams, Alan W. (Carm'then)
O'Hara, Edward	Wilson, Brian
Owen, Rt Hon Dr David	Winnick, David
Pike, Peter L.	Wise, Mrs Audrey
Prescott, John
Primarolo, Dawn	Tellers for the Ayes:
Quin, Ms Joyce	Mr. Archy Kirkwood and Mr. A. J. Beith.
Redmond, Martin

NOES
Alison, Rt Hon Michael	Fox, Sir Marcus
Allason, Rupert	Franks, Cecil
Amos, Alan	Fry, Peter
Arbuthnot, James	Gale, Roger
Arnold, Jacques (Gravesham)	Glyn, Dr Sir Alan
Ashby, David	Goodlad, Alastair
Atkinson, David	Goodson-Wickes, Dr Charles
Baker, Nicholas (Dorset N)	Grant, Sir Anthony (CambsSW)
Beaumont-Dark, Anthony	Green way, Harry (Ealing N)
Bellingham, Henry	Greenway, John (Ryedale)
Bennett, Nicholas (Pembroke)	Griffiths, Peter (Portsmouth N)
Benyon, W.	Ground, Patrick
Bevan, David Gilroy	Hamilton, Neil (Tatton)
Blackburn, Dr John G.	Hanley, Jeremy
Body, Sir Richard	Hargreaves, A. (B'ham H'll Gr')
Boscawen, Hon Robert	Hargreaves, Ken (Hyndburn)
Bottomley, Peter	Harris, David
Bowden, A (Brighton K'pto'n)	Haselhurst, Alan
Bowden, Gerald (Dulwich)	Hayhoe, Rt Hon Sir Barney
Bowis, John	Hayward, Robert
Brandon-Bravo, Martin	Higgins, Rt Hon Terence L
Brazier, Julian	Hill, James
Bright, Graham	Hind, Kenneth
Brooke, Rt Hon Peter	Hordern, Sir Peter
Brown, Michael (Brigg & Cl't's)	Howard, Rt Hon Michael
Browne, John (Winchester)	Howarth, G. (Cannock & B'wd)
Bruce, Ian (Dorset South)	Howell, Ralph (North Norfolk)
Buck, Sir Antony	Hunt, David (Wirral W)
Budgen, Nicholas	Hunt, Sir John (Ravensbourne)
Burns, Simon	Hunter, Andrew
Butcher, John	Irvine, Michael
Carrington, Matthew	Jack, Michael
Carttiss, Michael	Janman, Tim
Chapman, Sydney	Jones, Gwilym (Cardiff N)
Churchill, Mr	Jones, Robert B (Herts W)
Clark, Sir W. (Croydon S)	Kellett-Bowman, Dame Elaine
Colvin, Michael	King, Roger (B'ham N'thfield)
Conway, Derek	Kirkhope, Timothy
Coombs, Simon (Swindon)	Knapman, Roger
Cormack, Patrick	Knight, Greg (Derby North)
Couchman, James	Knight, Dame Jill (Edgbaston)
Cran, James	Knox, David
Critchley, Julian	Lawrence, Ivan
Day, Stephen	Lester, Jim (Broxtowe)
Dickens, Geoffrey	Lightbown, David
Dunn, Bob	Lloyd, Peter (Fareham)
Durant, Tony	Luce, Rt Hon Richard
Eggar, Tim	Macfarlane, Sir Neil
Evennett, David	MacGregor, Rt Hon John
Favell, Tony	McLoughlin, Patrick
Field, Barry (Isle of Wight)	Madel, David
Fishburn, John Dudley	Mans, Keith
Forman, Nigel	Maples, John
Forsyth, Michael (Stirling)	Marshall, John (Hendon S)
Forth, Eric	Marshall, Sir Michael (Arundel)
Fowler, Rt Hon Sir Norman	Martin, David (Portsmouth S)

Mates, Michael	Shepherd, Richard (Aldridge)
Meyer, Sir Anthony	Smith, Tim (Beaconsfield)
Mills, Iain	Speller, Tony
Mitchell, Andrew (Gedling)	Stanbrook, Ivor
Mitchell, Sir David	Stern, Michael
Montgomery, Sir Fergus	Stevens, Lewis
Morrison, Sir Charles	Stewart, Andy (Sherwood)
Moss, Malcolm	Taylor, Ian (Esher)
Mudd, David	Taylor, John M (Solihull)
Neale, Gerrard	Tebbit, Rt Hon Norman
Neubert, Michael	Temple-Morris, Peter
Newton, Rt Hon Tony	Thompson, D. (Calder Valley)
Nicholson, David (Taunton)	Thompson, Patrick (Norwich N)
Nicholson, Emma (Devon West)	Thornton, Malcolm
Norris, Steve	Thurnham, Peter
Onslow, Rt Hon Cranley	Townend, John (Bridlington)
Oppenheim, Phillip	Tracey, Richard
Page, Richard	Twinn, Dr Ian
Pawsey, James	Viggers, Peter
Peacock, Mrs Elizabeth	Waddington, Rt Hon David
Porter, Barry (Wirral S)	Walden, George
Porter, David (Waveney)	Ward, John
Powell, William (Corby)	Watts, John
Price, Sir David	Wheeler, Sir John
Raffan, Keith	Widdecombe, Ann
Raison, Rt Hon Timothy	Wilkinson, John
Renton, Rt Hon Tim	Wilshire, David
Roberts, Sir Wyn (Conwy)	Winterton, Nicholas
Rossi, Sir Hugh	Wood, Timothy
Sackville, Hon Tom	Woodcock, Dr. Mike
Scott, Rt Hon Nicholas	Yeo, Tim
Shaw, David (Dover)	Young, Sir George (Acton)
Shaw, Sir Giles (Pudsey)
Shaw, Sir Michael (Scarb')	Tellers for the Noes
Shelton, Sir William	Mr. Tim Boswell and Mr. Irvine Patnick.
Shephard, Mrs G. (Norfolk SW)

Question accordingly negatived.

Mr. Dave Nellist (Coventry, South-East)

On a point of order, Miss Boothroyd. Do you know whether the House is to receive a statement later today? Now that the right hon. Member for Henley (Mr. Heseltine) has been made Secretary of State for the Environment, he may like to take this opportunity of making real the promises he made in the dying hours of yesterday morning's contest when he said that he intends to abolish the poll tax.

The Second Deputy Chairman

The House is always happy to be kept abreast of the news, but that has nothing to do with our Standing Orders or the Statutory Sick Pay Bill, discussion of which we shall continue.

Mr. Michael Meacher (Oldham, West)

I beg to move amendment No. 8, in page 1, line 14, leave out from 'of' to 'and' in line 15 and insert 'so much of each of those payments as was made in respect of the first two weeks of

1. (a) a period of incapacity for work, or
2. (b) two or more such periods separated by a period of not more than two weeks, and 100 per cent. of the remainder of those payments.'.

The Second Deputy Chairman

With this it will he convenient to consider new clause 1—Limitation on restricted reimbursement of statutory sick pay.— 'The provisions of this Act, insofar as they amend section 9 of the Social Security and Housing Benefits Act 1982 (recovery by employers of amounts paid by way of statutory sick pay) shall only have effect to the extent of amount paid by an employer in respect of statutory sick pay paid to an employee during the first three weeks of his absence from employment.'.

Mr. Meacher

One of the worst aspects of the Bill is that it puts at risk the employment prospects of those with poor health records. In his reply to the Second Reading debate, the Minister of State said that he acknowledged the importance of that point, but he sought to reassure the House about the work of the Department of Employment in trying to promote the job opportunities of the disabled.

That misses the point. All that work, such as it is, is undermined by the Bill. The Bill will act as a greater deterrent to employers taking on disabled or chronically sick people than all the positive efforts of the Department of Employment taken together. That is what we are trying to redress, and it is the reason why we have tabled the amendment.

The amendment will retain the 100 per cent. remimbursement rate for any sick pay period after the first two weeks of sickness. For that purpose, we propose that two spells separated by an interval of two weeks or less will be treated as a single spell—a reasonable proposal—so that the 80 per cent. reimbursement rate would apply for only two weeks.

The amendment does not imply—one must always be careful to meet the procedures of the House, and although we cannot table an amendment to negate the purpose of the Bill we must get as close as possible to doing so while keeping within the rules—that we would be in favour of reducing the reimbursement rate to below 100 per cent. for any period. To prevent that, Parliament would have had to have rejected the whole Bill, but, unwisely, it did not do so on Second Reading.

Therefore, we tabled the amendment to draw attention to one of the Bill's worst effects—the fact that employers will be unwilling to employ not only people who have had prolonged or repeated periods of sickness but those whom they believe, rightly or wrongly, may have poor health prospects. In future, such people will clearly be at risk.

6 pm

There is plenty of evidence of job discrimination against disabled persons or those who suffer from poor health. On Second Reading, I quoted the study carried out by the Spastics Society entitled "An Equal Chance for Disabled People? A Study of Discrimination in Employment". I said that its findings were that there was systematic evidence of the most blatant discrimination by employers."—[Official Report, 26 November 1990; Vol. 181, c. 649.] Although I did not say this on Second Reading, in the further analysis of this debate I shall quote its report more fully: Employers were sent identical pairs of applications to jobs advertised, the only difference being that one application was a non-disabled person and the other from someone who mentioned that they had a disability of some kind. It was found that able-bodied applicants were 1.6 times more likely than disabled applicants to be offered an interview. On the basis of these tests, the researchers concluded that 'disabled applicants had far less than an equal chance.' Those are the facts about employers being prepared to offer an interview to disabled persons or to those with chronic ill health. The disparity in offering jobs to disabled or chronically sick people is far greater.

On Second Reading, the Minister of State mentioned a survey entitled "Employment and Handicap" by Patricia Prescott-Clarke of Social and Community Planning Research, which was published this year. It found that there was strong evidence that people who become sick or disabled while in employment are already in a very vulnerable position. For example, nearly one third of those who had to leave their job for health reasons had been dismissed or had felt pressurised into leaving because of impairment.

The study found: Employers appear to be more likely to dismiss employees of short acquaintance who had acquired an impairment that affects their work than those who have worked for them for several years. If that is the attitude of employers to disabled or chronically sick people already in their employment, what will be their attitude to those applying for jobs? That is the issue that the amendment addresses. There is clear evidence of substantial discrimination against those already in employment. We believe that the Bill will create a much higher and more difficult recruitment hurdle for disabled people.

Another vulnerable group whom we do not discuss as much as we should is those with a record of mental illness. Many people who have a degree of mental illness are capable of entering at least the fringes of the job market if they have support. Responding to the Government's proposed extension of the statutory sick pay scheme to 28 weeks, the National Association for Mental Health gave this warning:

Shifting the payment of SSP to employers will add to discriminatory practices and make employees vulnerable to dismissal if the employer chooses to investigate the health records of those with a history of mental illness. I could go on giving much more evidence, but the picture is perfectly clear: disabled people are at a considerable disadvantage.

It was inveighed on Second Reading that I have it in for employers and that I think that all employers are bad. Many employers take their responsibilities seriously and try to employ people who have a measure of disability, but many are reluctant to do so, and if given any incentive, encouragement or excuse not to do so will be only too pleased to take it. We must give employers an incentive to employ people with chronic health or disability problems, not a disincentive. That is the force of the amendment.

I have been commenting on the position as it is now, but what will be the position for those highly vulnerable people when the Bill gives employers an added real financial deterrent to employing them? Perhaps the Under-Secretary's reply will be along the lines of what the Minister for Social Security and Disabled People said on the last amendment. She may argue that having to bear 20 per cent. of any sick-pay cost will not make very much difference to employers' recruitment practices.

The Minister for Social Security and Disabled People seemed to be saying that the effects of the Bill would be fairly minimal and would not act as much discouragement, even to small employers. We dispute that. It is true that the effect will be fairly small for many employers. One can quote averages, but for every favourable case quoted by the Minister or the Secretary of State on Second Reading, there are many employers who will clearly suffer significant cost disadvantages, and one must take account of the less favourable cases.

The Secretary of State is always fair when he makes these points, so I admit that I am quoting one extreme —the last 10 per cent. for whom sickness lasts more than eight weeks. Adding 20 per cent. of 28 weeks' statutory sick pay at the highest rate comes to £294, which for a small employer is certainly not a negligible sum. Moreover —this is an important point—if the Government are right about a high proportion of employees being covered by occupational sick pay schemes, the £294 that small employers will have to pay may be added to the much larger sum that he is already committed to paying.

We dispute the figure given by the Government because we believe that they have been exaggerating, but if they are right—I put it ad hominem to them—that about 90 per cent. of people are covered, the effect on the small employer is not only when there is a significant period of sickness costing him up to about £300 per employee but also the cost of occupational sick pay, which the Government say will apply in the vast majority of cases.

The effect on employers recruiting disabled and chronically sick people will be all the greater in the future if further reductions in the reimbursement rate are made. All the arguments are premised on the 80 per cent. rate applying, and of course that will be the rate for a time.

Many of us have listened to the Secretary of State choose his words carefully and say that he has "no plans to do so". I admit that my memories of Whitehall are somewhat distant, although they are soon to be refreshed, but I remember that when Governments do not wish to admit to something they say, "We have no plans to do so." Technically, being somewhat economical with the truth, that is probably correct—there are no immediate plans lying about. Ministers have used such phrases but, a few years later, we have been told, "Circumstances have changed", "Different conditions prevail", "There has been a further review". Perhaps there has even been a new face in the Department—these things do happen. What we were assured would never happen has somehow come about. Under the amendment, if there are further reductions in the reimbursement rate, the disadvantageous effect—the deterrent to the recruitment of chronically sick or disabled people—will be all the greater.

I admit that I am not talking to a packed Chamber. I wish that more people were listening to the argument. Under our amendment, whatever changes are made in the reimbursement rate for the third and subsequent weeks, there will still be 100 per cent. reimbursement for the first two weeks. I hope that I have made the case that this is a serious point. I should be the first to admit that Conservative Members are concerned about the employment prospects of disabled people. I therefore hope that they will accept this as a non-partisan amendment. We believe that the Government are putting the employment prospects of disabled people at risk. They are an important section of the work force. We believe that the Government's measure is unnecessary. I hope that they will reconsider the amendment.

Mr. Kirkwood

I support the comments of the hon. Member for Oldham, West (Mr. Meacher). New clause 1, which was tabled in my name and that of my hon. Friends, is another attempt to limit the damage that will be inflicted by the Bill on employers and employees. Estimates have been made of average periods of sickness and so on. The new clause is an attempt to restrict the Bill's provisions to cope with the average periods of sickness in firms and businesses. Any opportunity to limit the damage that will be caused by the Bill is welcome. The new clause is a probing measure to get the Government to justify seeking wide provisions which will damage small and large businesses. I am happy to leave my comments on that basis, and I await with interest the response by the Under-Secretary of State.

Mr. Flynn

It is difficult to concentrate on this fascinating business when we have information about the remarkable appointments being made by the new Prime Minister, who is proving that at least he has a sense of humour. One of his appointments has been the right hon. Member for Henley (Mr. Heseltine) as Secretary of State for the Environment—one of the most remarkable appointments since Caligula appointed his horse as consul——

The Second Deputy Chairman

Order. I think that we should get on with the business.

Mr. Flynn

Indeed, Miss Boothroyd.

My hon. Friend the member for Oldham, West (Mr. Meacher) referred to a debate on Second Reading which, unfortunately, did not reach a conclusion. The debate concerned the report by IFF Research Ltd. and how many firms had been covered by occupational schemes. We should bear in mind what the report said and find guidance from it. I am sure that hon. Members used their time usefully in the past 48 hours to read that report. Two days ago, the Secretary of State for Social Security said that the Government did not know exactly how many people were covered by sick pay schemes—a nice confession of the ignorance on which the proposition is based. He went on to say that 90 per cent. of firms have such schemes.

The IFF report provides the clearest evidence we have. Paragraph 2.5 states: The proportion of private sector establishments offering sick pay schemes cover is as follows". The report shows that for short-term cover only, it is 42 per cent.; for short and long-term cover, it is a mere 14 per cent.; and for long-term cover, it is less than 1 per cent. The key figure is 14 per cent., which would be comparable.

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

I cannot see why that is the relevant figure. We are talking about what counts as short-term sick pay. It is clear from the report that the coverage of short-term sickness is much greater than coverage of long-term sickness.

6.15 pm

Mr. Flynn

I said that it is the key figure because it will be important when the Bill comes into effect. The Bill gives the Government greater powers by order to make cuts over a long period until, in effect, the scheme disappears. I could argue at length with the right hon. Gentleman on this point, but I intend to speak briefly. That percentage is a long way from the 90 per cent. figure which Ministers repeatedly trumpet.

Every organisation that represents people with disabilities is genuinely worried that the Bill will harm the job prospects of such people. I should love to hear about any such group that supports the Bill. The opposition from those organisations has not been dulled by Monday's debate. They still vehemently oppose the Bill. I hope that the Under-Secretary will say that the Government have taken this into account.

The only measure that we have of the proportion of people with disabilities in employment is the number of registered disabled. The record of industry and Government Departments is shameful. Half the target of 3 per cent. has been achieved by the Department of Social Security, which is presenting the Bill. I should have thought that that Department would blaze a trail by employing at least that target of 3 per cent.

The Parliamentary Under-Secretary of State for Social Security (Mrs. Gillian Shephard)

The Opposition alleged that if 80 per cent. reimbursement applied for the whole period for which SSP is payable, it would lead to employers not employing or discriminating against people with disabilities or people who suffer from health problems. I should have thought that, on Second Reading, my right hon. Friend the Minister for Social Security and Disabled People laid that argument to rest.

The Opposition quote a report compiled by Patricia Prescott-Clarke entitled "Employment and Handicap" and published in June this year. That report states that, for the majority of disabled people, The time taken to get a job was relatively short. It was shortest for those not in work at onset—(64 per cent. got a job within two months of looking compared to 56 per cent. of those having held an onset job.) Clearly, it must take some disabled people some time to get a job, but the problem is by no means as widespread as the Opposition have said.

The report to which my right hon. Friend the Secretary of State referred extensively on Second Reading, showed that half the people with disabilities in work took less than five days a year off for sickness or treatment. As my right hon. Friend pointed out then, in general, people with disabilities have work records as good as, if not better than, those of the able-bodied. The figures certainly do not suggest that the SSP liabilities of employers will be any greater in relation to employees with disabilities than they will be for other employees.

Of course, many factors other than SSP are important in the determination of job opportunities for the disabled, and our Department and the Department of Employment have developed policies to promote the employment of such people—not least our own proposals for a brand-new benefit, the disability working allowance, to be introduced in April 1992. Having listened carefully and with interest to Opposition Members' proposed solutions to the problem, I can find little logic in them; certainly, the administrative complexities that an employer would incur in operating different rules for different employees, depending on how long they had been ill, hardly bear thinking about.

Speaking to the earlier group of amendments, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) complained about the complexity of the SSP scheme, and I am therefore astonished that he should be prepared to support the introduction of yet more complexity. Let us think what the implementation of new clause 1 would mean in practice. Each month, when an employer paid his tax and national insurance contributions to the Inland Revenue, he would need to establish which payments of SSP attracted 80 per cent. reimbursement and which attracted 100 per cent. He would also have to work out whether he could claim additional compensation. In the worst scenario, he might have to try to apportion a monthly SSP payment for an employee between the part on which he could claim 100 per cent. and the part on which he could claim only 80 per cent.

Attempting to enforce the proposals in either the amendment or the new clause would be an administrative nightmare for employers. Indeed, the Department and the Inland Revenue would encounter just as many difficulties in trying to ensure that the correct deductions in respect of SSP were being made for employers' national insurance contributions, and that the right amounts were being paid to employees. I accept that some employers may be unhappy about the move from 100 per cent. to 80 per cent. Reimbursement—I understand that—but I suspect that they would be even less happy if they had to operate the Opposition's proposed arrangements.

Although I do not want to accuse the hon. Member for Oldham, West (Mr. Meacher) of tabling a wrecking amendment, I am bound to say that he seemed to imply that that was his intention, and I can certainly think of no better way of wrecking the operation of SSP—which does involve some complexities—than the system that he has proposed.

Hon. Members have mentioned the problems that small employers may experience, although that was the subject of the first group of amendments. We have costed the proposals in amendment No. 8 and new clause 1: the costs of the amendment would be about £107 million in 1991–92, and those of the new clause about £89 million. Cost is by no means an insignificant factor, but the main point is that the administrative nightmare proposed by Opposition Members—apparently in all seriousness—is not worthy of consideration, and should be rejected.

Mr. Meacher

I find the Minister's explanation unconvincing. I know that the Opposition are expected to say that every time, but I genuinely mean it: I do not think that the Minister has answered our case at all.

Quoting from a survey from which I, too, quoted, the Minister suggested that it took a relatively short time for most disabled people to obtain a job. I am glad to hear it. She also said that the great majority of disabled people took fewer than five days off for treatment, and, in general, had good work records. If that is true, it is very reassuring, but, as I have said to the Minister of State and repeated today, it really misses the point. We are not discussing whether disabled people take a long time to find jobs under the current arrangements or whether they take only a few days off in a working year; the point is whether the Bill will act as a strong financial deterrent, dissuading employers from taking on disabled people. The survey from which the Minister quoted is entirely irrelevent in that context.

I said all this on Second Reading, and I hoped that what I said had been taken on board. One likes to think that one's remarks are mulled over in the bowels of Whitehall after Second Readings, but apparently that is not the case; I am very disappointed. Let me repeat, then, that we are considering the effects of the Bill. The Minister has said nothing that diminishes our anxiety and apprehension: we fear that the Bill will have a considerable effect in reducing recruitment of disabled people. The Minister of State may shake his head, but we need some evidence.

I appreciate that we are talking about a system that will operate in the future—that, to that extent, the scheme is hypothetical, and that it is therefore impossible to produce any factual, empirical evidence. The likelihood is, however, that the scheme will act as a considerable disincentive.

Mr. Scott

All these scares were put about when the SSP scheme was introduced, and exactly the same arguments were advanced at the time of the extension to 28 weeks. There is absolutely no evidence that the scheme has had such an effect. Given all the pressures designed to encourage the employment of disabled people that I mentioned on Second Reading, I do not believe that these proposals will make so much as a ripple on the pond.

Mr. Meacher

That is a very complacent forecast. The right hon. Gentleman says—I do not know whether this has been factually verified—that the introduction of the scheme and the extension to 28 weeks had little effect. Even if that is true, in neither instance was there any disincentive for employers. What we are discussing today, for the first time, is a significant disincentive for a number of employers—not all, but a significant number—particularly small employers. Small employers have to keep a close watch on the margins if they are to survive, especially in today's declining market. The right hon. Gentleman underestimates the probable negative impact of the Bill.

Mrs. Gillian Shephard

rose——

Mr. Flynn

rose——

Mr. Meacher

I will give way to my hon. Friend first, and then to the hon. Lady.

Mr. Flynn

I drew attention to at least one ripple on Second Reading. I do not claim that my evidence was entirely convincing, as it was based on some questions that I had tabled the previous week. The most detailed answer that I received showed a decline in the number of people with disabilities who were employed by the Welsh Office, coinciding with the introduction of SSP in 1983. I am not suggesting that the two events are necessarily connected; it is a case of "post hoc, ergo propter hoc". But the Government are trying to make their case, and I feel that we should at least be given the complete picture. That ripple may well be a flood.

Mr. Meacher

I think that that constitutes significant evidence. My hon. Friend has admitted that the decline in recruitment of disabled and chronically sick people may not be solely—or even mainly—a result of the introduction of SSP, but the Minister should accept that, just as I cannot prove a causal relationship, he cannot prove the opposite.

Mrs. Gillian Shephard

rose——

Mr. Meacher

I know that the hon. Lady has been desperately trying to get in, so I will give her a chance.

Mrs. Shephard

Most of the hon. Gentleman's comments have been based on the question whether our proposals introduce a disincentive. Does he not accept that the administrative nonsense that he has proposed would be the greatest possible disincentive?

Mr. Meacher

I was coming to the second part of the Minister's argument. At first, she drew an irrelevant analogy when she referred to previous experience with regard to the time taken to get the job and time off. Her other argument against the amendment is that it would be administratively complex and quite costly. She said that it would cost about £100 million.

We are not recommending the ideal solution. We believe that a cost of £100 million as opposed to allowing the Bill to progress without amendment would still be advantageous in net terms. On the other hand, we would be the first to say that it is not ideal to drop to 80 per cent. and then to try to protect a vulnerable section of the market by way of an administrative complexity at a cost of £100 million. That is not the ideal solution. Ideally, we should stay as we are with 100 per cent. reimbursement.

6.30 pm

The Minister's arguments about administrative complexity and cost are not the point. She forces us to use the amendment as a device. We have been prevented from negating the Bill as a whole, so we have to produce a second best. I readily admit that, but is not that a great deal better leaving the Bill unamended?

Will the Minister look me straight in the eye and say that she believes that there will be no disadvantage to the recruitment of chronically sick people, the disabled, people with poor health records and older workers who are desperately trying to regain a place in the employment market if the 100 per cent. reimbursement of sick pay is reduced to 80 per cent.? I do not see how she can possibly say that. If she can and she honestly believes it, she deserves to defeat the amendment. However, we believe that the amendment should stand.

Mrs. Gillian Shephard

I agree totally with the points made by my right hon. Friend the Minister of State on Second Reading when assurances were given on that particular point.

Amendment negatived.

Mr. Kirkwood

I beg to move amendment No. 5, in page 1, line 27, leave out 'or lesser'.

The First Deputy Chairman of Ways and Means (Sir Paul Dean)

With this it will be convenient to consider amendment No. 10, in page 1, line 27, at end insert— '(1ZB) A statutory instrument containing an order under subsection (1ZA) above shall not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House.'.

Mr. Kirkwood

I recognise the unanimity of view on the Opposition Benches about my amendment. Independently, and without collusion, the hon. Member for Oldham, West (Mr. Meacher) and his colleagues and my colleagues and I decided that it would be sensible to table amendment No. 5.

The amendment is designed to leave out two small words, but their omission would make a great difference to the way in which employers and their representatives consider the Bill. The purpose and thrust of the amendment is crystal clear. It will restrict the power that the Government are taking in clause 1 to vary the rebate. The amendment would make it impossible for the Government to reduce the rebate level beyond 80 per cent.

In contemplating that, a number of important points should be made. The fundamental point was raised on Second Reading. Why do the Government need to take this power at all? By virtue of changing circumstances and the extent and complexity of the social security system, we know that the Department faces the prospect of updating, improving and amending social security law on a yearly basis. In relation to another matter the Secretary of State said the other day that he thought that there was a need for consolidation because of the complexity of the numerical labelling of some of the amendments. I do not know whether he meant that as a threat.

The Government have regular opportunities every year to make amendments to primary legislation relating to social security. There is a suspicion that, if they are looking for the ability to make those changes by order, they are doing that with a purpose in mind. They are trying to make it easier for themselves. I suspect that they will give themselves an enabling power to introduce secondary legislation and then do just that. If they do that, the Bill gives them the power both to increase and to decrease the rebate. The amendment would remove by statutory instrument their ability to reduce the percentage level of the rebate.

Employers' representatives believe that that power is not in the Bill by accident. They believe that it is designed to be used and that it will be used. They quote precedents like the redundancy rebate schemes which they had to endure in the past. They are deeply suspicious of this part of clause 1. There was some discussion about this on Second Reading. However, the Minister should consider it again and give us specific guarantees, if she will not accept the amendment, that there is no intention now, and no intention in future, to reduce the level of rebate that goes back to employers. I hope that she will go that far, but even if she does, she will know that Ministers, on this day of all days, are transient creatures.

Mr. Newton

It was announced some minutes ago that, for the moment at least, I am not a transient creature.

Mr. Kirkwood

The Secretary of State has put the House out of its collective agony. I am genuinely pleased to hear what the Secretary of State has said, and I look forward to many constructive hours of debate with him and his ministerial team.

There is no linkage between the level of rebate and the level of employers' national insurance contributions. The Government could perfectly properly say that they have tried to balance the effect of the changes in the rebate by making marginal and balancing adjustments to compensate for the extra additional cost for employers. There is no guarantee in any legislation that in future, if the rebate is reduced further—perish the thought—compensation will be paid in a balancing way by an alteration in the employers' rate of national insurance contribution.

We are looking for clear assurances about that. It is not just a matter of the Government taking powers that we do not think they need and which if they are to use them, they will do so to the detriment of employers. There is no balancing provision or power. I have heard no statements from responsible Ministers to the effect that if the rebate is reduced in future there will be a guaranteed equalisation of the effect through a change in the level of the rate of national insurance contributions.

It is blatantly obvious what the amendment seeks to do. It is glaringly obvious to Opposition Members and to the employers' organisations that the Government will have the power to introduce things in an unnecessary way. The Government have not yet made a case in any statements made by the social security team that the fears that have been expressed to me by employers and their organisations are not well founded on that important issue. I hope that the Government will take the opportunity of this amendment to try to allay some of the fears that are being expressed with great passion and vigour by employers and their organisations.

Ms. Short

I support amendment No. 5. Great minds think alike and both main Opposition parties tabled an amendment on the same lines. Amendment No. 10 is less robust, and it will be indefensible if the Government do not accept it. They would then have to admit that the whole structure of the Bill is intended to enable them or any future Government to erode over time and by stealth the statutory sick pay scheme. I hope that this Government will not get the opportunity, but it is dangerous to allow on to the statute book powers that could be misused by any Government.

As we said on Second Reading, when there was agreement between the Opposition and the hon. Member for Beverley (Mr. Cran), who does not seem to be attending to the debate at the moment although he is in his place, it is impossible to understand why the Government should have introduced the Bill unless the thinking behind it is, in the long term, to erode the reimbursement to employers and to privatise sick pay over time, handing the burden over to the employers.

I know that the right hon. Member for Chelsea (Mr. Scott) was a little annoyed when I said that I found it difficult to accept his word that there are no such plans. Of course, I accept those words in their tightest and smallest meaning and I know that he would not deliberately mislead the House. However, as my hon. Friends have said, the fact that the Government do not have any detailed plans to implement right now does not mean that they do not have that strategic long-term intention.

On Second Reading, the Secretary of State went to a lot of trouble to stress that the cost to employers—we know that employees will lose £100 million—was neutral. He laid a lot of stress on that, saying that his first statement had suggested that the reimbursement under the new formula for employers might amount to only £200 million, but that since then he had firmed up the details of the national insurance proposals, amounting to £250 million, which meant that the package was neutral.

The right hon. Gentleman said that he thought that all the complaints from small employers would go away once they understood the details of the national insurance compensation. We now know—I think that the right hon. Gentleman accepts this—that the complaints have not gone away and that, as my hon. Friend the Member for Newham, North-West (Mr. Banks) said earlier, the National Federation of Self Employed and Small Businesses has not been reassured by our Second Reading debate and is still angry and deeply hostile to the package.

There is no point in the Government introducing this Bill. As we know, they could have saved £100 million by changing the thresholds and the uprating figures relating to the amount of statutory sick pay. The Bill has nothing to do with the saving that the Government were seeking to make from sick pay so that they could fund other needy groups, such as poor pensioners and elderly people living in residential homes. The Government have taken this opportunity to introduce legislation that opens the door to the erosion over time of a state-protected national insurance sickness benefit scheme for people at work.

6.45 pm

I prefer honesty in these matters. There is grave disagreement across the House on social security issues, but I know that the DSS Ministers are honourable people. Nevertheless, I am totally perplexed, because the Bill makes no sense whatsoever, unless what I have suggested is the Government's intention. It is unacceptable for the Government to say, "We have no plans, but never say never."

The Government have tried this sort of thing before. They have made it clear that they want to move the burden of sick pay on to employers. They had a big fight with the employers' organisations the first time round and were forced to give in.

Although we have been told that this is wrong, I firmly believe that the indecent haste with which the Bill is being handled is designed to prevent that resurgence of opposition from the employers' organisations. I can think of no other reason. It is extraordinary to have a Second Reading on Monday and Committee stage on the Floor of the House on Wednesday. I am sure that that is deliberately intended to prevent the resistance that previous Bills have engendered from building up again.

I cannot see any other reason, although Ministers have said that the Government have moved with such haste because they are anxious to give the employers' organisations the full details in plenty of time for them to prepare for the implementation of the provisions. I cannot believe that. Although I can understand a certain amount of speed, this indecent haste does not make sense. Having analysed what the Government are doing, it is my belief that the intention to erode sick pay provisions by stealth is the whole explanation for the Bill.

We know that when the Secretary of State says that the effect will be neutral this year, it will not be neutral next year or the year after, unless the right hon. Gentleman can give us the assurance that the £250 million reimbursement to employers will increase steadily as the years go by—[Interruption.] I think that the right hon. Gentleman is seeking to give that assurance.

Mr. Newton

We are talking about figures that are related to a percentage of earnings. We are talking about reductions to 4.6 per cent. and whatever the other figures are—from 5, 7 and 9. The figures are a percentage of earnings, so as earnings rise, the figures will rise.

Ms. Short

Good. That is the logic and we now have another commitment on the record which, I am sure, will be gratefully received.

However, that does not remove from the Bill the power to change the percentage and to reduce it from 80 per cent. over time without the Government even seeking an affirmative resolution in the House. We are seeking two amendments. The first is more robust and is preferable. It seeks to remove that power and to require any Government who wish to change that 80 per cent. reimbursement to come back to the House with new legislation and to argue their case properly. Any such proposal would be so serious that that must be the right course.

If the Government cannot stomach amendment No. 5, we also have a gentler proposal, but that would mean the Government admitting that they are wrong, which is something that Governments rarely do. Indeed, the Government would change Prime Minister rather than do that. Amendment No. 10 could be more easily conceded by the Government because it simply seeks a positive resolution of the House for any change from the 80 per cent. reimbursement. I hope that the Secretary of State will say that he accepts amendment No. 10.

On Second Reading, the right hon. Gentleman said that a Prayer could be tabled against such a resolution and that, if determined, the Opposition could bring the matter to the Floor of the House, but surely he and the Government will admit that the proposal to move to a lower than 80 per cent. reimbursement is serious and significant to our social security policy and to the way in which we provide for the protection of employees who are sick. Surely, therefore, in the framework of the statute, such a change should be debated in the House as a matter of course.

I hope that the Government can reassure us somewhat. I am not trying to accuse them of having such intentions over time simply out of opposition to their proposals. My intellect can see no reason for the Government taking the trouble to prepare and table the Bill unless that is their intention over time. I hope that, at the very least, the Government will concede amendment No. 10, which would mean that they could not bring about such a change by stealth because it would have to be debated in the House.

Mr. Newton

The hon. Member for Birmingham, Ladywood (Ms. Short) ranged fairly widely over many of the points that were made on Second Reading and which have been reiterated in some of our debates earlier today. In view of the pressure on time, I hope that hon. Members will understand if I do not again go over all the ground covered in my extensive speech on Monday afternoon. Indeed, many of those points have been made by my right hon. Friend the Minister for Social Security and Disabled People.

My next point may seem unduly provocative, but that is not intended to be the case. I find something slightly odd in the spectacle of the hon. Members for Ladywood and for Oldham, West (Mr. Meacher) and their colleagues presenting themselves this afternoon and this evening as defenders of the interests of employers, when the Labour Government invented and introduced the selective employment tax as a major tax on all jobs. When they were finally pushed out of that tax, they invented the national insurance surcharge.

If I remember rightly, by the time that we took office and abolished it, the surcharge amounted to about £3 billion. I have not checked the figure, but my recollection is that £3 billion of additional costs were imposed on employers, both small and large. It had absolutely nothing to do with insurance. It was simply an impost designed to finance the Labour Government's spending ambitions. Yet the hon. Lady and the hon. Gentleman make an interesting song and dance about sums of money measured at about 0.05 per cent. of labour costs throughout the economy. It is extraordinary.

It is important that the hon. Lady should understand that the proposals in the Bill have no effect of any nature on the entitlement of any employee.

Ms. Short

The Minister speaks about a Conservative Government who doubled VAT as soon as they took power and increased inflation massively. Every survey of small business shows that VAT tends to be their biggest problem. In a constituency such as mine, there are many small businesses and small employers. They tend to vote Labour and they prosper when the people who live in Ladywood prosper. It is not the case that small businesses belong ideologically with the Government. Their interests lie much more closely with the ordinary people in society, for whom Labour speaks. That is our position.

Mr. Newton

I shall return to a more light-handed mode and simply observe that if the hon. Lady really believes that, she will believe anything.

Mr. Kirkwood

indicated assent.

Mr. Newton

I am glad to see that at least on that point I have the support of the Liberal Democrats. I am duly grateful to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood).

I hope that those perhaps unwise remarks have not unduly disturbed the scene, Sir Paul. I see you looking at me with a faint air of disapproval. I shall return more directly to what the hon. Lady said. As reference has been made to it, perhaps I should begin by quoting from my remarks on Second Reading on Monday afternoon. I said: 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. … 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."—[Official Report, 26 November 1990; Vol. 181, c. 651–52.] Similar arrangements apply to national insurance contributions. There are powers to vary them by secondary legislation, subject to certain parameters.

The words that I quoted were not scripted. They were in response to a request by the hon. Member for Oldham, West to comment on that point. To be honest, when I read them I thought that they were rather good and perfectly sensible, so I decided to repeat them in my speech this afternoon.

Mr. John Battle (Leeds, West)

I am not sure whether I prefer the Minister in his ideological or sympathetic mode. It does not seem to make too much difference. Does he accept that there is a crucial difference between simply altering the rate and altering the structural relationship between employer and employee contributions? To level down the percentage from 80 per cent. to 60 per cent. would change the relationship. It is a question not simply of uprating or downrating, but of changing the structural relationship. Why did the Government decide to move away from the affirmative to the negative procedure?

Mr. Newton

It is not a question of moving away from the affirmative to the negative procedure in this case. I shall come to that in a moment. The hon. Gentleman's first point was that it would be appropriate to use a different procedure for a structural change. That is precisely why we are debating the legislation today. A structural change—if that is the phrase that we want to use—is what the Bill proposes. It would create a move away from 100 per cent. reimbursement—for practical purposes the contribution is now 107 per cent.—to less than 100 per cent., or 80 per cent. It is entirely proper that we should come to the House with primary legislation to effect that change. Indeed, that is the primary legislation that we are debating.

The Bill proposes to make a structural change and introduce a percentage figure. It then seems entirely reasonable to take powers to enable the percentage to be varied in secondary legislation in exactly the same way as across a wide range of provisions in the social security and national insurance systems.

Mr. Meacher

Before the Minister pursues that argument further, I suggest that there is a major difference between changing the national insurance rates—they are often reasonably changed by marginal percentages in the light of increasing benefit levels, increasing costs or the state of the fund—and reducing the reimbursement to the employer from, say, 80 per cent. to conceivably nil, without coming back to the Houses of Parliament under the affirmative procedure. That is an entirely different matter, and there is no precedent for it.

Mr. Newton

Again, I do not wish to prolong the discussion unnecessarily because I hope to say something marginally helpful to the hon. Lady in a few moments. There is not much point in describing changes in national insurance contributions as marginal, and effected by secondary means, when what seem to be small changes in employers' national insurance contributions—which have been adverted to many times during this discussion—can amount to substantial sums.

The standard rate of employers' contributions is being reduced only from 10.45 per cent. to 10.4 per cent. That is 0.05 per cent. One cannot get more marginal than that. It is worth about £100 million out of the £250 million overall reduction. Whatever arguments the hon. Gentleman adduces, he should not suggest that we can make only marginal changes by secondary means in the social security and national insurance systems. Some changes are substantial. However, I shall not dwell further on that point.

I cannot advise the House to accept amendment No. 5, tabled by the hon. Member for Roxburgh and Berwickshire, and with which the Opposition Front Bench team has tagged along, if I read the amendment paper correctly.

Ms. Short

We tabled amendments independently.

Mr. Newton

Oh, they tabled the same amendment at the same time. I do not wish to dispute who set the precedent. I am sure that the amendments were tabled at exactly the same moment. I certainly do not wish to become involved in an argument about which came first. I accept that both parties had the same idea. Even-handedly, I tell both parties that I cannot accept an amendment that would involve more primary legislation before further change could be made in the light of the changes proposed in the Bill.

The hon. Member for Ladywood reasonably put more weight on amendment No. 10, suggesting that we should at least consider adopting the affirmative rather than the negative procedure. It would not be appropriate to do that in respect of a proposal to increase the percentage. It is highly unlikely that an increase would be thought controversial. This is another rash remark, Sir Paul, but I suspect that if, in the wake of the legislation, I introduced a proposal to increase the percentage, I would be attacked by the hon. Member for Oldham, West for providing a giveaway for our rich friends, the employers. We would then be faced with a totally different argument.

Mr. Meacher

Perhaps the right hon. Gentleman would like to be my speech writer?

Mr. Newton

I am not volunteering to do that; my style is much too calm, measured and low key to have any chance of qualifying for that post.

There is force in the argument for Parliament to take a positive further decision about any significant reductions in the percentage were such a change to be contemplated.

In the light of recent events, I approach today's proceedings with even greater magnanimity than usual. Although I am not ready to advise the House to accept the amendment, I am willing to give an undertaking that I shall bring forward in another place an amendment to provide for the affirmative procedure were a further reduction in the percentage proposed.

7 pm

Mr. Kirkwood

Can the right hon. Gentleman foresee any circumstances in which. were the rebate reduced, there would not be a corresponding compensatory allowance through a reduction in employers' national insurance contributions?

Mr. Newton

I cannot give the hon. Gentleman the exact assurance he seeks, for practical and legal reasons. My statutory duty, which I hope I have faithfully fulfilled this year, is to look at the rates of contribution in relation to the balance in the national insurance fund. My prime responsibility is to be concerned with the balance in the fund and I must bear that in mind when considering employers' contributions. For that reason, I cannot give the hon. Gentleman the direct guarantee he seeks.

In the light of the experience gained from what I proposed this year, and with a reasonable degree of conviction that I shall carry the hon. Gentleman with me, I should certainly expect, were any further changes to be made to the percentage—we have no such plans now—to take into account the balance in the national insurance fund. I note that the hon. Member for Ladywood is smiling. I accept that that undertaking falls short of the straightforward, clear-cut guarantee which the hon. Gentleman sought. I hope that the hon. Gentleman understands why I cannot give that guarantee.

I always seek to be open with the House about such matters and it is not inconceivable that this Government, or any future one, might make a judgment in particular circumstances that it was reasonable to propose a further change in the percentage without compensation, or whatever, through the national insurance system. After all, the previous Labour Government came to believe that it was right to impose billions of pounds of extra costs on employers with a national insurance surcharge. They did not compensate those employers in some other way. Governments necessarily must make judgments about where the burden of taxation and the like should lie at any given time and where money is to be raised to fulfil particular social or spending objectives. The Government cannot and will not be able to escape that.

I intend to introduce an amendment in the other place to provide for the affirmative procedure where any further reduction in the percentage is proposed. In the light of that and of what I said to the hon. Member for Roxburgh and Berwickshire—I accept that it fell short of the undertaking he sought—I hope that the hon. Gentleman and the Opposition will withdraw the amendments.

Mr. Kirkwood

Although I am not satisfied with the Secretary of State's reply, it would be churlish not to acknowledge the concession that the right hon. Gentleman made to the hon. Member for Birmingham, Ladywood (Ms. Short). On that basis, I shall withdraw the amendment.

The First Deputy Chairman

Order. Before the hon. Gentleman does that, I believe that the hon. Member for Birmingham, Ladywood (Ms. Short) wants to speak.

Ms. Short

Half a loaf is better than no bread and, on the basis of the Secretary of State's undertaking, I shall not press amendment No. 10.

Mr. Kirkwood

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Tony Banks

I beg to move amendment No. 11, in page 2, line 1, leave out subsection (3).

The First Deputy Chairman

With this it will be convenient to take the following amendments: No. 6, in page 2, line 4, at end insert 'in respect of an employer, employing twenty persons or more.'.

No. 7, in schedule, page 4, leave out lines 4 to 19.

No. 14, in schedule, page 4, line 5, column 3, leave out paragraph (a).

No. 15, in schedule, page 4, line 6, column 3, leave out paragraph (b).

No. 16 in schedule, page 4, line 12, column 3, leave out paragraph (d).

No. 17, in schedule, page 4, line 17, column 3, leave out paragraph (e).

No. 18, in schedule, page 4, leave out lines 20 and 21.

Mr. Banks

Subsection (3) abolishes employers' entitlement to compensation for the national insurance contributions they must pay on statutory sick pay.

Statutory sick pay was originally paid at three rates and for the first eight weeks of sickness only. In the autumn statement of 12 November 1984, the right hon. Member for Blaby (Mr. Lawson), then Chancellor of the Exchequer, announced that the SSP would, in due course, be extended to 28 weeks. At the same time, he announced that employers would be relieved of the burden of contributions on payments under the statutory sick pay scheme".—[Official Report, 12 November 1984; Vol. 67, c. 417.] The implication was that that would compensate employers for the extra burden and cost of 20 more weeks' payment.

The Social Security Act 1985 provided for the reimbursement of the national insurance contributions on SSP, which came into effect in April 1985 and the extension of the duration of the SSP from eight to 28 weeks, which came into effect in April 1986. Employers are not reimbursed the precise amount they pay in national insurance contributions. The additional compensation is actuarially calculated to reflect the aggregate amount of secondary contributions paid on SSP and, since 1987, on statutory maternity pay. At present, the national insurance contribution compensation rate is 7 per cent. of the gross SSP paid. If it was right to give that compensation in 1985, the onus is on the Minister to explain why it is now right to take it away.

A number of things have been said tonight about the way in which small businesses in particular believe that the Bill is part of a "salami" approach to change. I used onions earlier, now I am using salami. Those businesses believe that the Government are working towards an undisclosed objective in a hidden agenda.

Although we might be accused of being cynical, we have some basis for it—for example, the way in which the Government sold the idea of the sale of council houses. Many objections were raised, but the idea was sold to local authorities on the basis that 100 per cent. of the money received would be used to build new accommodation. However, the percentage to be used thus was gradually reduced to 40 per cent. and, most recently, to 25 per cent. The Government advanced a number of supporting arguments to limit the opposition to the sale of council houses, and, once the opposition was out of the way, they proceeded further with their plans. We believe that that is the philosophy behind the Bill.

Since the national insurance compensation is 7 per cent. of the amount of SSP paid by the employer, abolishing it means that, with the reduction of the reimbursement rate to 80 per cent., the total burden falling on employers will be equivalent to 27 per cent. of SSP. When an employee is sick for 28 weeks and is entitled to the higher rate of SSP, the cost to the employer will be £396.90, made up by £294 for the reduction in the reimbursement rate and £102.90 for the loss of compensation for national insurance contributions. It is calculated on the basis of 28 weeks.

I feel sure that the Minister will address a subject that has been mentioned a number of times—the fact that we are talking about an average of three weeks. The National Federation of Self Employed and Small Businesses said that it was worried not about the large company suffering the average three weeks sick pay, but the small businesses with one or two employees which could suffer from someone taking the full 28 weeks' sick leave.

One is always in great danger when talking about averages. There is no such thing as the average person, who is always someone else. If the figure is 28 weeks, a small company with only one or two employees will suffer an horrendous impact. Legislation should take that into account rather than fall back on comforting talk about averages.

The objections to that proposal are precisely the same as those to the reduction of the reimbursement rate. The amendment would simply delete the whole subsection.

Mrs. Gillian Shephard

The hon. Member for Newham, North-West (Mr. Banks) made a lot of play of hidden agendas. In relation to that, and the point he made about additional compensation, I should like to reassure him about the Government's intentions.

On Second Reading, my right hon. Friend the Secretary of State clearly stated that the additional compensation arrangements have been of limited success in relation to statutory sick pay. The intention of the arrangements was to compensate employers for national insurance contributions they have to pay on SSP. However, in the interests of simplicity, compensation is available on all SSP, even where the amount of sick pay payable falls below the lower earnings limit for national insurance contributions and does not attract liability for contributions in the first place. Therefore, people are receiving compensation for national insurance payments that they have not made. That is unsatisfactory, and the position was fully described on Second Reading on Monday.

As my right hon. Friend made clear on Monday, despite the relative simplicity of the calculation and the extensive publicity given to it, almost 25 per cent. of the additional compensation goes unclaimed. Within the Department, a great deal of work is done with employers, often those in small firms, on statutory sick pay—seminars are held and there are help lines for employers. That work is being elaborated and extended by the new contributions unit that is being set up in Newcastle. The Department makes every possible effort to explain to employers how the system works and, even then, about 25 per cent. of the additional compensation is unclaimed. Given that people are receiving compensation for something for which they have not paid, the scheme is unsatisfactory and we feel it should be changed.

The hon. Member for Newham, North-West also made more general remarks about the plight of the small business employer, a motif that has recurred throughout the debates. The changes in the rates of national insurance contributions that employers will pay from April 1991 will go a considerable way towards compensating employers for the measures in the Bill. Obviously, employers will not always come out ahead, because the proposals' effects clearly depend on individual levels of pay and sickness. However, with the proposed reductions in national insurance contributions, the increased costs for individual employers will be modest. That point has been made a number of times this afternoon.

On Monday, my right hon. Friend the Secretary of State described the effect of the changes. He said: Those changes will reduce employers' costs by about £250 million and … are likely to be especially helpful to employers, often smaller employers, whose employees are among the less highly paid."—[Official Report, 26 November 1990; Vol. 181, c. 642.] He gave two illustrative examples, which I shall not repeat because the hon. Member for Newham, North-West was present on Monday and will have heard the examples. He will also have heard my right hon. Friend acknowledge clearly that he was giving examples where employers would gain, and there would be other examples, particularly where employees earn more than £185 a week, where some employers would lose. We believe that the compensatory measures in the reduction in national insurance contributions that will come into force in April will go a long way to meeting the concerns of employers and of the hon. Member for Newham, North-West.

7.15 pm

Amendments Nos. 6 and 7 would give employers with fewer than 20 employees a continuing right to additional compensation for SSP. As has been repeatedly said, we have acknowledged that the changes in the Bill might bear more heavily on the small business employer. That was why we structured the reductions in the national insurance contributions as we did. By reducing the employers' national insurance contributions for rates of pay up to £185 by 0.4 per cent., as against a reduction of 0.05 per cent. for those earning above that level, we are trying to weight the contributions reductions in respect of the lower paid. That will mean that the savings to small business employers, who are more likely to employ the less highly paid, will be proportionally greater than for other employers and, in some cases, will fully match the extra costs resulting from the changes proposed in the Bill.

It would be inappropriate for me to go further, as the hon. Member for Newham, North-West wishes and give smaller business employers the continued right to additional compensation That would cost about £18 million a year and would clearly have implications for what has been a carefully constructed package. That would be an unwelcome complication in a scheme which we have been trying to keep as simple as possible. We would have to obtain and keep up to date details of the numbers of employees in the relevant firms. My right hon. Friend the Secretary of State made that point during the debate on the first group of amendments, which have a similar effect. We believe that the amendments could affect the employment patterns of employers with a work force numbering approximately that of the threshold figure. For all those reasons, I urge the Committee to reject the amendment.

Mr. Kirkwood

I am particularly grateful to the Minister for replying to amendments Nos. 6 and 7, which were originally considered to be consequential. The ministerial response provoked one or two thoughts.

I do not think that, in all conscience, the Minister can describe the measure as a carefully considered package, if for no other reason than that the timetable has been so constrained, whereas the Bill's impact will be wide-ranging. Parliamentary consideration of the Bill has taken place with unusual haste. The legislation will create difficulties for organisations seeking to represent small business employers that do not have the benefit of a sophisticated trade union structure or the Confederation of British Industry's resources and expertise. They do their best and do a good job with the professional help that they receive, but they face a mamonth task because they cover so many sectors and different businesses with employees in jobs at various levels. Therefore, given the timetable that the Government have set them to consider the Bill, it is virtually impossible for them to undertake proper consultation and make constructive suggestions on how to alter the measure.

We are all in the hands of the business managers, and the timetable is not necessarily a departmental matter entirely under Ministers' control, but will they give us an absolute assurance in the remaining few days, or indeed hours, left before the Bill goes to the other place and on to the statute book, that, if approaches are made by bona fide organisations representing small businesses, they will be given every conceivable opportunity to meet Ministers and officials, and make the points that are being fed back to them and through Members' postbags? I hope that the ministerial team will consider constructive proposals. That would go some way to reassuring us that there is no nefarious purpose behind the indecent haste with which the Bill is proceeding.

Mrs. Gillian Shephard

Hon. Members have spoken about the timetable. My right hon. Friend the Minister of State has said that monitoring is engraved on his heart. I assure the Committee that bona fide organisations will be welcome when they come to meet the ministerial team and officials. That is always the case, irrespective of the cause.

Mr. Tony Banks

It would have been more useful if discussions had taken place before the proposals came to us. Perhaps there were such discussions, but if that is the case why are there so many alarming noises from the National Federation of Self Employed and Small Businesses? The legislation is detailed and technical and we can see that it has not grabbed the imagination of the great majority of our colleagues.

The Minister is reasonable and emollient, but, of course, that is normal. Perhaps we should feel assured, but I have a rather nasty sinking feeling in my heart that, although she is certainly not misleading us, the implications are such that when some small businesses feel the full impact they will be even more angry than they are now. By that time it will be too late. The Minister of State said that he had "monitoring" engraved on his heart. I hope that that is for some good purpose because monitoring is important when the Committee is being asked to agree to technical proposals.

We have been assured that the Bill will not have any great implication for small businesses. I suppose that we can all repent at leisure if the Minister is wrong about that. I hope that, if monitoring reveals the difficulties that small businesses have talked about and which we have tried to amplify, there will be changes. In such areas it is perfectly correct for the Government to say that an administrative mistake might have been made.

I was disappointed by the Under-Secretary's reply, even though she put it over in a reasonable way. She said that the compensation scheme had had only limited success and that compensation had been paid on payments that had not been made by employers. She also said that 25 per cent. of additional compensation is unclaimed. That is obviously true, because the Minister said it, but the corollary is that 75 per cent. of it is claimed. Rather than scrapping the scheme because 25 per cent. of compensation is unclaimed, it would be better to get through to those who are eligible to claim and tell them that they are missing something.

The Minister was precise about the percentage of unclaimed additional compensation, but did not tell us in figures how much compensation was paid to employers who had not already made payments. As I understood it, we were being told that they were getting something for nothing. The Minister should quantify that, or we shall be left with generalities that sound all right in debate. We are not responsible for keeping the books of small companies and trying to make ends meet, and they say that they are finding that increasingly difficult.

We are disappointed that the Minister is not prepared to accept the amendment, but we shall not push it to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ms. Short

I beg to move amendment No. 12 in page 2, line 18, at end insert— '(6) in section 22(3) of the Social Security Act 1989, in the definition of "relevant benefits", at the end there shall be inserted the words "but, in the case of statutory sick pay, only such proportion of any payment as is recoverable by virtue of section 9(1)(a) of the Social Security and Housing Benefits Act 1982".'. The amendment seeks to prevent the DSS from recovering the whole of the statutory sick pay from compensation for personal injury when only 80 per cent. of statutory sick pay will be reimbursed when the Bill becomes law. Section 22 of the Social Security Act 1989 provides for the recovery of benefits paid as a result of personal injury by deduction from any compensation payments. We debated that issue at great length in 1989 when the Social Security Bill was going through. We felt passionately that it was wrong to reclaim compensation that might have been paid, for example, for pain and suffering in order to reimburse the DSS. That is not the issue contained in the amendment and, therefore, the matter is narrower.

The amount recoverable under the 1989 Act is the gross amount of any relevant benefits paid or likely to be paid to or for the victim during the relevant period". Section 22 leaves the relevant benefits to be defined by regulations, and the Social Security (Recoupment) Regulations 1990 list a wide range of benefits, including some which have little or no connection with personal injury, for example, family credit and unemployment benefit.

The new disability living allowance and disability working allowance may be added to the list in due course. Perhaps the Minister will tell us about that. The list already includes statutory sick pay. Presumably the justification is that although statutory sick pay is paid by employers, they are reimbursed by the DSS. However, in future the reimbursement will be only partial—80 per cent. in 1991–92. It cannot be right for the DSS to recover benefit that it has not paid. That is the point of the amendment, which proposes that only the amount actually reimbursed by the DSS should be recoverable from any compensation payment.

If the long title of the Bill had allowed, we would have tabled an amendment removing statutory sick pay from the list of benefits recoverable under the 1989 Act. The treatment of sick pay for these purposes is chaotic, different parts of sick pay being treated in different ways. However, the long title is tightly drawn and it was not possible to amend it.

We seek to ensure that a minor injustice is put right. It would surely be wrong if the DSS were allowed to claim back 100 per cent. of statutory sick pay when people receive compensation as a result of an accident, even though the DSS had been responsible for only 80 per cent. of that sick pay. I hope that the Minister will concede the point.

Mr. Scott

As the hon. Member for Ladywood said, the amendment seeks to change the amount of statutory sick pay recoverable under the compensation recovery scheme which we discussed at great length during the passage of the Social Security Act 1989. At present, the scheme provides for an amount equivalent to the sum of statutory sick pay paid to be recovered from any compensation payment. As we know, the Bill proposes to reduce Government funding of SSP from 100 to 80 per cent. I listened with great care and attention to the hon. Lady, but I do not think that an amendment on the face of the Bill is the correct vehicle for introducing any change that might be required.

Section 22(3) of the Social Security Act 1989 refers to benefits in broad terms and provides that individual benefits covered by the scheme should be prescribed in regulations. The list of benefits is contained in the Social Security (Recoupment) Regulations 1990. For the sake of consistency, therefore, we wish to pursue that line and see whether an amendment to regulations is required. I am advised that there is no need to take any primary powers additional to those contained in clause 2 of the Bill. We will therefore undertake to consider the precise implications of the changes, paying close attention to the hon. Lady's comments.

I hope that the Committee will accept this assurance of our intention to look at the matter with the utmost urgency, care and sympathy. In the light of that undertaking, I hope that the hon. Lady will withdraw the amendment.

Ms. Short

This is getting better as the night goes on. On the basis of that undertaking, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clauses 2 and 3 ordered to stand part of the Bill. Schedule agreed to.

Bill to be reported, without amendment.

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]

7.30 pm

Mr. Tony Newton

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

In the interests of the time of the House, and on the understanding that if the hon. Member for Oldham, West (Mr. Meacher) says anything to which I should like to respond I shall have the leave of the House to do so, I confine myself to commending the Bill to the House.

7.31 pm

Mr. Meacher

That was the shortest speech commending the Third Reading of a Bill that I have heard for a long time. I do not know whether it is in anticipation of a deluge of words from me or because the Secretary of State can find so little to commend in the Bill.

The Opposition are clear about the Bill. Despite the soothing and emollient atmosphere that developed as we went rather rapidly through the Committee stage, problems remain. There is a good argument for having a small group of activists going through the minutiae of the Bill because they do so with a precision and mutual understanding that is often helpful. However, I see no reason not to return to my initial judgment that this is a mean and nasty little Bill, the sole purpose of which is to make one group—the sick and disabled workers—pay for those concessions in social security policy that the Government have been forced to make so as to placate public opinion.

After freezing child benefit for three years, the Government were forced this year to make a partial uprating for the first child and, as evictions of elderly residents from private residential and nursing homes increased, the Government were forced to make bigger increases in income support, although nothing like enough to eliminate the shortfall.

It is now clear where the money to pay for these enforced concessions is to come from. Reducing employers' recovery of statutory sick pay from 100 to 80 per cent. will save £80 million in 1991–92, rising to £200 million in 1992–93, although that is offset for some employers by a compensatory reduction in employers' national insurance contribution. On top of that, as part of the package, freezing the higher rate of statutory sick pay and raising the threshold above which it is paid will save £100 million in 1991–92.

In effect, the Bill makes one poor group pay far the increase in benefits to another. Apart from the Treasury, no one gains from it. It is also a Bill that is uniquely without friends. I cannot recall any recent Bill with the same distinction. The CBI, the National Federation of Self Employed and Small Businesses, the TUC, the trade unions and the voluntary sector do not have a good word to say about it.

No doubt it is a coincidence that the remaining stages of the Bill are going through the House on the first day of the new premiership. Whether the new Prime Minister is son of Thatcher—something that is disputed, although the Opposition have a clear view of it—we can say that this package is son of Thatcher. It is mean in its dealings with the low-paid and sick, particularly women. It is a further whittling away of workers' basic sick pay rights, which even employers agree—the National Federation of Self Employed and Small Businesses argues this—should be undertaken by national insurance. I never thought that I should see the day when smaller employers would argue the case for the welfare state and national insurance. The Bill is being forced on employers and employees alike without consultation, as several Tory Members have pointed out.

The Bill has been rushed through to prevent small employers' organisations from mounting the kind of intensive lobbying that stopped the Government in their tracks 10 years ago. I cannot think of a recent example of a Bill that has had Second Reading on a Monday and its remaining stages two days later. No emergency or external conditions require this haste. It is simply to serve the Government's convenience and to block off the opposition that they know exists. Furthermore, by doing this, the Government have reneged on promises and commitments given by the previous Secretary of State in 1981 when the Government clearly accepted that they should stick to 100 per cent. compensation.

The only rationale that the Secretary of State has been able to offer for this wretched little measure is the alleged spread of occupational sick pay schemes. The survey on which this supposed finding is based has been scoured to elicit the statistic that 91 per cent. of the work force is employed by companies with occupational sick pay schemes. Therefore, cuts in statutory sick pay by adjusting both thresholds and levels of benefit could be justified. It is on that that the Bill depends, and it is closely linked to that figure of 91 per cent.

If the right hon. Gentleman does not yet have the message, I point out again that that 91 per cent. figure has been comprehensively discredited in even these brief proceedings, both on Second Reading and today. The survey showed that 44 per cent. of private sector employers did not offer any form of occupational sick pay and, worse than that, more than half of all firms with fewer than 10 employees have no occupational sick pay provision. With those facts, the rationale behind the Bill collapses. We have had no answer to that point, and that is a critical and decisive judgment of the Bill.

The losers under this Bill and this package—I must remember that I should use this wider word, although on Third Reading we keep more closely to the detail of the Bill—are the 3 million employees with earnings of between £125 and £185 a week who will no longer be eligible for the higher rate of statutory sick pay. About one fifth of them —more than 500,000—are expected to claim statutory sick pay every year, and they will lose on average £9 a week, and the majority of them are women.

The disabled will also lose, as will those with chronic ill health, and those who have poor health prospects. The last mentioned is a wide group and includes many older workers, all of whom are having an employment warning pinned on them by the Bill. If the Bill is passed, employers everywhere, but I suspect particularly smaller employers, will have a strong financial incentive to be wary of recruiting anyone who has a health risk. The answers given by the Under-Secretary on this critical point of the Bill were thin and unconvincing. That is an important effect of which we have had no explanation.

Small employers are also losers. We are told that 19 out of 20 businesses employ fewer than 20 people. There are many small employers in Britain now. Many of them will be significantly out of pocket as a result of the Bill when, at a time of accelerating recession, they can ill afford it. The federation made that point clearly. The losers will be those penalised with costs of up to £200 which they can ill afford and which may well entail a significant rise in unemployment. All are losers; there are no winners except the Treasury.

For all those reasons, we strongly repudiate the Bill. It is based on a selective and grossly misleading interpretation of the evidence that is used to justify it. It creates only losers. It is unanimously rejected by all the relevant parties outside the House. It has been introduced without consultation and it is being propelled through the House—I think that all hon. Members will agree—with unseemly haste. I submit that that is to preclude an offensive, similar to that in 1979–80 when the Government were derailed, being mounted against it. The Bill will undoubtedly pin on hundreds of thousands of chronically sick and disabled people the sign "Employment risk—you have been warned" when they are seeking recruitment in the labour market.

Few Bills have less to be said for them than this one. On those extensive and convincing grounds, we shall strongly and unequivocally repudiate the Bill in the Lobby tonight.

7.41 pm

Mr. Kirkwood

I shall concentrate on how the Bill affects employers, particularly small employers, but, in doing so, I do not want in any way to diminish the important points made by the hon. Member for Oldham, West (Mr. Meacher) about its effect on employees, because they are well worth considering.

The Government do not fully appreciate the Bill's impact on businesses throughout Britain. My small rural constituency has thousands of small businesses, all part of the Border economy in south-east Scotland, and the Bill will have a profound impact on their future ability to prosper. The Government have not considered the Bill's full implications and ramifications. If they had consulted the kind of businesses that we have in my constituency they would have come to a different conclusion. I have no doubt that the Bill will be deeply inimical to business interests.

The Secretary of State was at pains to say that only the Labour party takes billions of pounds out of the pockets of business. To a certain extent I agree, but in the fulness of time the Bill will result in a top-line saving of about £250 million. Not too many years have to pass before £250 million amounts to billions being taken from the pockets of British business, so the right hon. Gentleman is not in such a strong position as he might think.

The Government's defence for proceeding with such speed cannot be believed. People outside will not believe that the Bill has been brought forward in this way for the convenience of small and big businesses which would have found it difficult to make the necessary administrative changes if the Government had waited until after Christmas. It is a bit like sentencing an accused before the case for the defence has been properly heard.

The federation and, to a lesser extent, the CBI, feel that they have not had a proper hearing. Consultation has been inadequate. The Bill is being hung round their necks without a proper consideration of its implications. They tell me, and I have every sympathy with them, that, had more time been available for discussions with the Secretary of State and others in the Department, they might have been able to prevail upon them to mitigate the damage or even to prevent it.

In recent years, the courts have had great difficulty in interpreting social security legislation that has been rushed through the House and the full weight of the appeal procedure has had to be brought into play to remedy the defects in statutes that have not been properly considered. By any objective test, this Bill has been pushed through too fast for its own good, as well as for the good of those whom it will affect.

It is still, at this late stage, open to the Secretary of State to say that he will not push through the remaining stages in another place. If he were to say that he would hasten more slowly, the consultation process could proceed and even at the eleventh hour that would be beneficial.

The Department's package to help small business men become familiar with the Bill adds to the confusion. The 50 per cent. reduction in the rebate is another complication adding to the burdens on small businesses.

Some years ago the Government made great play of the fact that they were reducing the burdens on businesses. They produced glossy publications to show that they were aware of the problems and were doing something about them. Their rhetoric will ring hollow tonight if the Bill receives its Third Reading.

The compliance costs have been largely underestimated by the Government. As the hon. Member for Oldham, West said, nobody is in favour of the Bill, because there is nothing to be said in its favour. The Bill is unfair, damaging and unnecessary. It is a deliberate and calculated move which will damage British business interests. The Secretary of State will never be able to allay that charge and I hope that it comes back time and again to haunt him. If it does, it will be entirely justified.

7.48 pm

Mr. Battle

When the House debated the introduction of the "next steps" agencies by the Treasury, the Secretary of State for Social Security was keen to distance himself from any idea that the method of providing social security would be privatised in any way. The Bill might not privatise the method, but it is a classic case of the privatisation of the provision of social security.

This measure is another example of enforced privatisation, pushing responsibility for statutory sick pay on to the employer. The Government are only a tiny step away from returning to the House to argue that SSP is no longer necessary because it merely duplicates private provision. That argument has been made before, when we debated pensions and the shift away from SERPS. I expect that the Government will be back to reduce the percentage reimbursement still further.

The very nature of SSP is being changed from a state benefit to a mixture of state and employer provision. As hon. Members on both sides of the Chamber have pointed out, ultimately low-paid workers will pay the price for the Bill. The Social Security Advisory Committee pointed out that SSP is intended to replace lost earnings and performs an income maintenance function for those unable to work through sickness. That should be a basic function of the welfare state, provided by the taxation and national insurance system.

It will be interesting to see whether in these new days there will be talk of collective responsibility again. We have endured 10 years in which words such as "collective", "common provision", "public", "society" and "social" have become pejorative terms and been banished from the political vocabulary. It will be interesting to discover whether the Government will start to believe again in collective responsibility. We say that the state has a collective responsibility for providing a comprehensive maintenance system for all workers, regardless of their level of pay and the nature of their work.

Far from SSP being an important and vital source of income for low-paid workers who, through no fault of their own, are unable to work, under the present Government those benefits will be winnowed out and chipped away at until they provide only a minimum form of third party, fire and theft coverage—rather than be part of a comprehensive actuarial plan.

The Government claim that cover is already given by the private sector, but I invite the Secretary of State to examine who will be affected by exclusion clauses on hours and rates of pay. Guess who is excluded, as usual—part-time workers and manual grades receiving low wages.

West Yorkshire traditionally has the lowest rates of pay in the whole of the British Isles. They are even on a par with those in Northern Ireland. Leeds has 4,500 medium and small-sized firms. It does not have one large industry, such as coal and steel, nor is its employment centred on one large company. Instead, Leeds owes its prosperity to a myriad of small and medium-sized firms, many of which do not pay high wages. We have seen the shift from employment to unemployment—and, matching that, the shift from comparatively secure work to part-time, temporary and low-paid work, particularly for women.

We are seeing a further shift to means testing. The Government call it targeting, but it is just another structural step away from universal benefits. There are not many of them left. Child benefit has already been frozen to death, and we now have another quiet cut in the social security budget to save the Treasury money, with the costs passed over to employers.

I am not convinced by the Government's argument that the disabled will not be penalised and that the Bill cannot possibly contribute to positive discrimination against disabled and long-term sick people. One group of poor people will again be axed from benefit so that assistance can be given to another. We have seen that happen before, with housing benefit.

It is clear that the Bill is being squeezed through the House during an interregnum for the change of Tory leadership. We are told that the Government are changing their policies, but the Bill proves that they are not pulling back from a Thatcherist approach. The Bill demonstrates that Thatcherism remains intact and is on course. It is a further step in the Government's plans for privatisation and for making the poorest pay.

7.54 pm

Mr. Flynn

My hon. Friend referred to the interregnum, black hole or news vacuum in which we find ourselves at this moment. New benefits—and there are some—are being introduced by the Government with a great fanfare of trumpets and trombones, while they make cuts elsewhere.

I will be generous to the Secretary of State because he has been re-employed in his old job. The kindest interpretation that we can place on the right hon. Gentleman's actions is that he does not understand the basis of the report on which the Bill is founded. The Secretary of State laughs. I will not draw any conclusions from that, because I refuse to be sidetracked. Nevertheless, the right hon. Gentleman has tonight admitted his unabashed admiration for some of his own extempore words during the Second Reading debate. He quoted them with some satisfaction. However, he may find some of his other statements less admirable on reflection.

When we hit on the great misconception behind the Bill, and when we question the figure of 91 per cent., relating to the number of employers offering sick pay schemes, the Secretary of State said: 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 all private-sector schemes … have no exclusion clauses at all. The original IFF survey qualifies that argument: However, those schemes which are more likely to have exclusion clauses are the larger private establishments, (72 per cent.) and public sector organisations (67 per cent.). Thus, almost three quarters (72 per cent.) of employees working in establishments offering short-term cover are potentially affected by eligibility factors. Schemes in the finance business services sector are least likely to have any exclusion clauses. Occupational schemes do exist, but many are far from adequate.

On Second Reading, the Secretary of State said also: where there is a qualifying period, it would typically be about three months—perhaps, in some cases, six months". He gave the impression that three months is the norm, but that in some instances a six-month term might apply.However, the IFF report states: The factor which most frequently affects employees' entitlement to short-term sick pay is length of time with the company. The qualifying period is typically between 3–12 months. It is the larger employers … who are more likely to have this exemption clause. As a result, about half (50 per cent.) of the work force is potentially affected. The Secretary of State was wrong, because a typical exclusion is not three months but between three and 12 months.

Arguing that the qualifying period should be compared with state sickness benefit, the Secretary of State 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."—[Official Report, 26 November 1990; Vol. 181, c. 633–34.] That comparison is totally meaningless. State sickness benefit entitlement does not depend on length of service with a particular employer.

From day one of their employment, everyone is qualified, provided that they have enough national insurance contributions credited to them in the past two years and regardless of whether they have been working for that employer or not. A more relevant comparison would be with statutory sick pay, which is payable from day one of the period of employment, with no contribution conditions.

Those misunderstandings by the Secretary of State strike at the root of the Bill and the justification for it. I was recently speaking to a total stranger who happened to read the deliberations of the meetings of the Standing Committee that considered the Social Security Bill last year. He identified me by a label I was wearing—as we often do. He told me that he had read the proceedings on the Social Security Bill and—as a student of history—he thought that it was similar to an account of what had happened in the Reichstag in the 1930s. The Opposition are constantly attacking Bills, in good faith. We undermine the rationale of the Government's case, but we do not get a reply. We merely have the Government's steamroller, bulldozing through legislation, using the muscle of their majority.

Social security legislation has followed two main trends in the past decade. That is the way that people see it. Year after year we have been copying the Americans and repeating the mistakes made by the Reagan regime. The result of all the myths that fed the Reagan mythology is that 3 million homeless people are now on the streets of America—the people whom Bush has described as "America's shame". Visitors to the most prosperous cities in the United States see—side by side with obscene riches—groups of people, many of whom are mentally ill, camping out. We are progressing blindly and stupidly in that direction year after year.

The second trend is a return to the last century. We are being compelled in that direction by the falsely named No Turning Back group. Much of what has been argued in the debate would take us back to the era before 1911, when the social welfare programme started in this country for very good reasons. Perhaps we should return to the justification for our social welfare programme, which has been built up over that long period of time. We are gradually tearing it down and turning back to a cruel and unfair past.

The Bill will re-establish all the uncertainty and anxiety of sickness, made worse by the knowledge that one does not have a secure income. The Bill is mean, malicious and ill-conceived, and it hits most strongly at the people who have been short-changed by life—those who have been cheated by disability or who are daily under-rewarded with low pay. The Bill is a disgrace.

Madam Deputy Speaker (Miss Betty Boothroyd)

Will the Secretary of State make it clear that he has signified the Queen's Consent?

8.4 pm

Mr. Newton

I am glad to confirm that I have signified giving the Queen's Consent—[Interruption.] If the hon. Member for Birmingham, Ladywood (Ms. Short) wants an explanation of the Queen's Consent, I invite the Chair to give it because I cannot remember it. I know that it is not lese-majesté, and that I have to do it, and I think that I have satisfied the Table that I have done so.

I am glad that I am not the speech writer for the hon. Member for Oldham, West (Mr. Meacher) but I am even more glad that I am not the speech writer for the hon. Member for Newport, West (Mr. Flynn). After I had listened to the former, I thought that it would be impossible to incorporate any more exaggeration, hyperbole and general overstatement into a speech, but then I heard the hon. Member for Newport, West, who took the biscuit.

In the interests of brevity I shall not seek to answer all the nonsense trotted out in the past few minutes. I merely observe that it is mildly ironic that—in view of the new-found European enthusiasm sometimes to be found on the Opposition Benches—on a number of occasions Opposition Members urge us to go in the direction of the more generous provisions of this kind in Europe. The remarks of the hon. Member for Newport, West about returning to the 19th century should be considered against the background that Denmark is the only European country that provides a cash benefit for sickness which is solely funded by the state, and that, of the other 11 EC countries, six provide no state subsidy and in most countries, the major payment comes from the employer.

The Low Pay Unit report, which I suspect is the source of much of the stuff that we have heard in the House in the past few days, quotes Luxembourg where employees get 100 per cent. of earnings for a year when they are sick. That is fine. Compare that rhetoric which has been used in the debate. One discovers that that benefit is paid entirely by the employer. The only state involvement is 50 per cent. of the administration costs.

Mr. Allen McKay

I am sure that the right hon. Gentleman does not wish to mislead the House. When he quotes information like that, he should also take into consideration the employees' work contracts and the salaries that they receive to make up for it.

Mr. Newton

I am also taking employers' rights here into consideration, as well as the fact that a large part of the work force is covered not only by the sort of arrangements that we are talking about tonight, but by occupational sick pay schemes.

I am not going to return to that argument. I merely point out that anyone who reads the IFF report and its clear-cut conclusions about the growth in coverage of occupational sick pay schemes, would have grave reservations about some of the remarks made in the debate. I shall not return to that subject because it is largely irrelevant to the Bill, which—as is common consent between the Front Benches—does not affect the rights of any employee. No-one's entitlement to statutory sick pay will be affected by the Bill. All that will be affected is the way in which statutory sick pay is funded, and the balance between funding it by the state and by the employer—it is a change in balance.

That change, which amounts to about £250 million, is accompanied by reductions in employer national insurance contributions of broadly the same amount. Although that is not in the Bill, it is clearly associated with the argument for it. In that context, against the background of those figures, and the fact that no employees' rights are affected by the Bill, I reject many of the arguments put to me in the past few minutes out of hand. I reject the accusations made, and I commend the Third Reading of the Bill to the House.

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

The House divided: Ayes 156, Noes 114.

Division No. 14]	[8.07 pm
AYES
Adley, Robert	Hayhoe, Rt Hon Sir Barney
Alison, Rt Hon Michael	Hayward, Robert
Allason, Rupert	Heathcoat-Amory, David
Amess, David	Hind, Kenneth
Amos, Alan	Hordern, Sir Peter
Arbuthnot, James	Howard, Rt Hon Michael
Arnold, Jacques (Gravesham)	Howarth, G. (Cannock & B'wd)
Arnold, Sir Thomas	Howell, Ralph (North Norfolk)
Ashby, David	Hunt, David (Wirral W)
Atkins, Robert	Hunt, Sir John (Ravensbourne)
Atkinson, David	Hunter, Andrew
Baker, Rt Hon K. (Mole Valley)	Irvine, Michael
Baker, Nicholas (Dorset N)	Jack, Michael
Beaumont-Dark, Anthony	Janman, Tim
Bellingham, Henry	Jones, Gwilym (Cardiff N)
Bennett, Nicholas (Pembroke)	Jones, Robert B (Herts W)
Benyon, W.	Kellett-Bowman, Dame Elaine
Bevan, David Gilroy	King, Roger (B'ham N'thfield)
Blackburn, Dr John G.	Knapman, Roger
Boscawen, Hon Robert	Knight, Greg (Derby North)
Boswell, Tim	Knight, Dame Jill (Edgbaston)
Bowden, Gerald (Dulwich)	Knox, David
Bowis, John	Lang, Ian
Bright, Graham	Lawrence, Ivan
Brown, Michael (Brigg & Cl't's)	Lennox-Boyd, Hon Mark
Bruce, Ian (Dorset South)	Lightbown, David
Burns, Simon	Lloyd, Peter (Fareham)
Butcher, John	Lyell, Rt Hon Sir Nicholas
Carrington, Matthew	Maclean, David
Carttiss, Michael	McLoughlin, Patrick
Chapman, Sydney	Madel, David
Chope, Christopher	Mans, Keith
Churchill, Mr	Maples, John
Clark, Sir W. (Croydon S)	Marshall, John (Hendon S)
Coombs, Simon (Swindon)	Marshall, Sir Michael (Arundel)
Cormack, Patrick	Martin, David (Portsmouth S)
Couchman, James	Mates, Michael
Cran, James	Meyer, Sir Anthony
Curry, David	Miller, Sir Hal
Davis, David (Boothferry)	Mills, Iain
Day, Stephen	Mitchell, Andrew (Gedling)
Dunn, Bob	Mitchell, Sir David
Eggar, Tim	Moate, Roger
Evennett, David	Morrison, Sir Charles
Favell, Tony	Moss, Malcolm
Field, Barry (Isle of Wight)	Neale, Gerrard
Fishburn, John Dudley	Neubert, Michael
Forman, Nigel	Newton, Rt Hon Tony
Forsyth, Michael (Stirling)	Nicholson, David (Taunton)
Forth, Eric	Norris, Steve
Freeman, Roger	Page, Richard
Fry, Peter	Paice, James
Gale, Roger	Pawsey, James
Glyn, Dr Sir Alan	Peacock, Mrs Elizabeth
Goodson-Wickes, Dr Charles	Porter, David (Waveney)
Grant, Sir Anthony (CambsSW)	Portillo, Michael
Greenway, Harry (Ealing N)	Price, Sir David
Greenway, John (Ryedale)	Raffan, Keith
Gregory, Conal	Raison, Rt Hon Timothy
Griffiths, Sir Eldon (Bury St E')	Rhodes James, Robert
Griffiths, Peter (Portsmouth N)	Rifkind, Rt Hon Malcolm
Hamilton, Neil (Tatton)	Roberts, Sir Wyn (Conwy)
Hanley, Jeremy	Sackville, Hon Tom
Hargreaves, A. (B'ham H'll Gr')	Shaw, Sir Giles (Pudsey)
Hargreaves, Ken (Hyndburn)	Shephard, Mrs G. (Norfolk SW)
Harris, David	Shepherd, Richard (Aldridge)
Haselhurst, Alan	Smith, Tim (Beaconsfield)

Speller, Tony	Walden, George
Spicer, Sir Jim (Dorset W)	Waller, Gary
Stevens, Lewis	Ward, John
Taylor, John M (Solihull)	Wardle, Charles (Bexhill)
Tebbit, Rt Hon Norman	Wheeler, Sir John
Temple-Morris, Peter	Widdecombe, Ann
Thompson, D. (Calder Valley)	Wood, Timothy
Thompson, Patrick (Norwich N)	Yeo, Tim
Thornton, Malcolm	Young, Sir George (Acton)
Thurnham, Peter
Tracey, Richard	Tellers for the Ayes:
Twinn, Dr Ian	Mr. Irvine Patnick and Mr. Timothy Kirkhope.
Waddington, Rt Hon David

NOES
Allen, Graham	Hughes, Robert (Aberdeen N)
Alton, David	Hughes, Roy (Newport E)
Anderson, Donald	Jones, Barry (Alyn & Deeside)
Ashdown, Rt Hon Paddy	Jones, Martyn (Clwyd S W)
Banks, Tony (Newham NW)	Kilfedder, James
Barnes, Harry (Derbyshire NE)	Kirkwood, Archy
Barron, Kevin	Leighton, Ron
Beith, A. J.	Lestor, Joan (Eccles)
Bellotti, David	Lewis, Terry
Benton, Joseph	Litherland, Robert
Bermingham, Gerald	Livingstone, Ken
Blunkett, David	Livsey, Richard
Boateng, Paul	Lloyd, Tony (Stretford)
Boyes, Roland	Lofthouse, Geoffrey
Bray, Dr Jeremy	Loyden, Eddie
Buckley, George J.	McAllion, John
Caborn, Richard	McKay, Allen (Barnsley West)
Campbell, Menzies (Fife NE)	McWilliam, John
Campbell, Ron (Blyth Valley)	Mahon, Mrs Alice
Campbell-Savours, D. N.	Marek, Dr John
Carlile, Alex (Mont'g)	Meacher, Michael
Clay, Bob	Meale, Alan
Clelland, David	Michael, Alun
Clwyd, Mrs Ann	Michie, Bill (Sheffield Heeley)
Coleman, Donald	Michie, Mrs Ray (Arg'l & Bute)
Cook, Robin (Livingston)	Morley, Elliot
Corbett, Robin	Mowlam, Marjorie
Cousins, Jim	Mullin, Chris
Cox, Tom	Murphy, Paul
Cryer, Bob	Nellist, Dave
Cummings, John	O'Brien, William
Davies, Ron (Caerphilly)	O'Hara, Edward
Davis, Terry (B'ham Hodge H'l)	Pike, Peter L.
Dixon, Don	Prescott, John
Doran, Frank	Primarolo, Dawn
Dunwoody, Hon Mrs Gwyneth	Quin, Ms Joyce
Eadie, Alexander	Redmond, Martin
Evans, John (St Helens N)	Rooker, Jeff
Ewing, Harry (Falkirk E)	Rooney, Terence
Ewing, Mrs Margaret (Moray)	Ruddock, Joan
Field, Frank (Birkenhead)	Sheerman, Barry
Fields, Terry (L'pool B G'n)	Short, Clare
Fisher, Mark	Skinner, Dennis
Flannery, Martin	Smith, J. P. (Vale of Glam)
Flynn, Paul	Steel, Rt Hon Sir David
Foot, Rt Hon Michael	Taylor, Rt Hon J. D. (S'ford)
Foster, Derek	Thomas, Dr Dafydd Elis
Galloway, George	Thompson, Jack (Wansbeck)
Gilbert, Rt Hon Dr John	Turner, Dennis
Golding, Mrs Llin	Wallace, James
Gordon, Mildred	Wareing, Robert N.
Griffiths, Win (Bridgend)	Williams, Alan W. (Carm'then)
Hardy, Peter	Winnick, David
Heal, Mrs Sylvia	Wise, Mrs Audrey
Hinchliffe, David	Young, David (Bolton SE)
Hogg, N. (C'nauld & Kilsyth)
Home Robertson, John	Tellers for the Noes:
Howarth, George (Knowsley N)	Mr. Frank Haynes and Mr. John Battle.
Howells, Geraint
Hughes, John (Coventry NE)

Question accordingly agreed to.

Bill read the Third time, and passed.