HC Deb 15 December 1993 vol 234 cc1155-68

Question proposed, That the clause stand part of the Bill.

9.4 pm

Mr. Keith Bradley (Manchester, Withington)

As you know, Mr. Lofthouse, normally after Second Reading we should reflect quietly on the Minister's views and on his response to the many excellent contributions made and pertinent points raised during the debate. Then we should be able to go in good order into Committee—we would have expected that to take place some time after Christmas —which would have given us the opportunity to consider the clauses in great detail and to move suitable amendments.

It is with great regret that, because the Government are forcing the Bill through with such haste, we are now having to reflect quickly on what was said on Second Reading and move straight on to the Committee stage.

As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said, the Bill has been framed so as to make it effectively a one-clause Bill. To ensure that we can continue to debate in the same constructive way as we debated Second Reading, we have chosen to discuss clause stand part immediately, so that we can pursue some of the crucial questions that were raised on Second Reading but were not well answered by the Government.

The Under-Secretary of State gave an interesting winding-up speech, in which he chose to denigrate the many organisations that oppose the Bill, describing them in the unique phrase "inefficient management". That is how he regards the collective experience of the Institute of Directors, the Confederation of British Industry and the Federation of Small Businesses, all of which were extensively quoted on Second Reading.

For example, we heard how Peter Morgan of the Institute of Directors said that the Bill would impose a heavy compliance burden on employers". The fact that the Under-Secretary of State said that that was a quotation from an organisation representing inefficient management will be well noted by all the organisations of which he chose to speak in those terms.

It is clear from all the representations that my hon. Friends and I have received from small and large businesses throughout the country that there is great anxiety about the Bill. As the CBI has said, it poses fundamental questions about who shall bear the cost of social security provision. On clause stand part, we shall pursue that line of argument.

As we have heard, the Bill transfers a burden of £750 million on to small businesses. Much has been made of the compensation, through the reduction by regulation of the national insurance contribution, but—I am sure that this is what lies behind much of the anxiety of the many organisations that represent business—no one knows what the future may hold.

It is especially relevant that, in response to my hon. Friend the Member for Hartlepool (Mr. Mandelson), who asked about future increases in national insurance, the Minister could not give any assurance that, in future years, more national insurance burdens would not be placed back on small businesses. Not only do they have the burden of paying sick pay, but there is no guarantee that in future additional burdens will not be placed on them.

We already have evidence to suggest that, when the rebate was reduced from 100 per cent. to 80 per cent., many representations were made through the National Audit Office. The National Audit Office report "Statutory Sick Pay and Statutory Maternity Pay" of January 1993 said: Some employers and organisations representing them told the National Audit Office that they believed the 1991 changes to the Statutory Sick Pay scheme had increased employers costs". Their anxieties and fears about the future are well-founded.

It was also interesting to note that, when pressed for guarantees about the future impositions on small businesses—especially having to pay for maternity pay and also for industrial injuries—again the Minister could give no assurance whatever that those businesses would not be expected to bear those burdens.

All those worries which have been expressed through the various organisations are the key to why we are right to press for more clear answers on the clause stand part debate. Would there be extra burdens on the business community as a result of transferring the burden of other benefits? Would the Minister give an assurance about the possible extra costs through the national insurance scheme? When the Minister has a second bite of the cherry in winding up, perhaps he will give clearer answers to those questions.

When we were looking through the Second Reading debate, it became clear that there would be a real cost to small employers. In his Budget speech, the Chancellor gave the impression that there would be no cost to small employers. However, in his statement on the uprating of benefit, the Secretary of State told the House: From April next year, I propose to abolish reimbursement, except to small employers … So far, we have been reimbursing 100 per cent. of statutory sick pay for absences of longer than six weeks. I shall start giving 100 per cent. help after four weeks." —[Official Report, 1 December 1993; Vol. 233, c. 1038.] It is clear from the evidence of relief to small firms that there would be a real burden on them during that four-week period. Evidence shows that three quarters of sick leave cases are shorter than four weeks, so the full costs would have to be borne by those small businesses. They would lose and not be fully compensated by the proposed scheme.

The effect on a company of few employees that are struck down by illness is important to consider. We have already heard whether Peking flu does or does not hit employers. Judging from how many constituents have been laid low recently, my hon. Friends and I know of the devastating impact that such illnesses can have on small businesses. I have my own bitter experience: I recently moved house and employed builders to carry out some renovation work. Since all the builders were struck down with flu, improvements have been dramatically delayed. I hope that they will be finished by Christmas, but I digress.

One of the crucial issues that need to be explored in more detail is the vulnerability of emloyees. In his opening remarks on Second Reading, the Secretary of State said that there was no evidence at all that vulnerable groups of people, especially people with disabilities, would in any way be disadvantaged by the changes in sick pay legislation.

I beg to differ. There is a mound of evidence to support the alternative view that employers look closely at sickness records and the potential sickness of people before they employ them. Millions of people who are at work would be affected by that change. Three million people looking for work at the moment would have to face the fact that employers will obviously take on those who have not been ill recently.

The legislation will mean that thousands of people who are capable of work but not in perfect health will fall into a trap between invalidity benefit and work. They cannot get work because they have poor health, but they cannot get benefit because they are not judged sick enough to be unable to work.

In his Budget speech, the Chancellor said: companies would have a much sharper incentive to improve their management of sick leave and to take a greater interest in the health of their employees."—[Official Report, 30 November 1993; Vol. 233, c. 926.] Although we welcome any improvement in the management of sick pay, in practice it means that employers will look more carefully at the health record of potential employees. People with genuine health problems who also have the ability and need to work may be overlooked because of the imposition of sick pay.

A great deal of evidence has already been brought to hon. Members' attention in reports such as that undertaken by the citizens advice bureaux. That report shows that, far from caring for their employees' health, employers are now more likely to dismiss workers who fall sick. They may also be deterred from recruiting people who are more likely to require time off due to illness.

On Second Reading, the Secretary of State said that there was no evidence to support such claims. I urge him to read the excellent report produced by the citizens advice bureaux—he may then become more knowledgable about the real practices of employers, instead of relying on some rather dubious claims.

9.15 pm

Although this is a clause stand part debate, it is important to consider the interrelationship between sick pay and the changes that will be made to disability benefits, especially the proposed introduction of the incapacity benefit. In determining incapacity benefit, a far more draconian set of considerations, questionnaires and assessments will be used than was the case for invalidity benefit.

The number of people who may be entitled to incapacity benefit will be limited and, at the same time, employers will examine sickness and health records more carefully before taking on employees. At a time of very high unemployment, it is clear that employers have that choice, and that is the way in which they will proceed.

Let us consider a recent survey of employers' attitudes undertaken by Sussex university. It covered 1,000 organisations and showed the damaging impact of the myth that is often propagated and used by employers, that disabled people are likely to be less productive and have bad sickness records. According to the study, 10 per cent. of employers were worried about the sickness levels of disabled people, without any evidence to back their arguments, and despite all the evidence to the contrary.

In fact, 93 per cent. of people questioned in a study in Devon showed that disabled workers performed better than able-bodied workers; 43 per cent. of those questioned reported that disabled workers' attitude to work was better, and 55 per cent. rated it equally; 70 per cent. rated disabled workers' attendance as equally good, and 26 per cent. rated it higher. There are a great many myths about disabled people, and the legislation, coupled with the new provisions for the incapacity benefit, may reinforce them and make it even more difficult for disabled people to obtain work.

When the Minister replies, I hope that he will give an assurance not only that he will consider those studies and the way in which sick pay legislation is enforced but that, before introducing the new proposals on the incapacity benefit, and before rigidly drawing up the criteria on which that benefit will be paid, he will take into account the views that I have described and incorporate them into the system.

If he does not, we shall create a tranche of people who are perceived by employers to be too sick to work but not sick enough by the Government's standards to receive incapacity benefit. That could cause great distress and anxiety to thousands—if not millions—of potential workers.

The Government should not only monitor those issues but consider whether some outside body, such as the Equal Opportunities Commission, should undertake independent research. The Equal Opportunities Commission is justifiably well respected by the Government, and it may be appropriate for it, or an alternative body, to report to Parliament. We could then be satisfied that these issues are being properly addressed, and that employers are not using bad operational practices to limit the number of people with health problems who are taken on.

On Second Reading, one of the crucial issues was the changing of the words "over pensionable age" to "over the age of 65", and how that would work in practice. Women in particular are anxious to know whether they will be able to claim sick pay, which becomes a payment, and a pension, which becomes a benefit. We would welcome a Government assurance on that issue.

We have debated the way in which the Statutory Sick Pay Bill will operate in practice and how individual employees' rights can be enforced. The Minister, winding up on Second Reading, said that the Government had produced pamphlets and posters to publicise employees' rights, and ensure that they were properly identified.

According to a report issued by the National Audit Office, in January 1993, that is part of the problem with the Statutory Sick Pay Bill: Employees do not always receive adequate information. They"— the DSS— need to consider what more can be done to ensure that people working for such employers are informed about their right under the scheme. There is also evidence that many payments of benefit are inaccurate … Inspectors have consistently found monetary errors in 25 to 30 per cent. of the Statutory Sick Pay and Statutory Maternity Pay cases examined". While I welcome the fact that the Department is looking at that aspect of the Bill, what mechanisms and staff resources will be employed to ensure that such errors are stamped out, in addition to publicity posters?

Bad practices also need to be stamped out. Various devices are used by some employers to try to curtail the payment of statutory sick pay, such as dismissal, threats of dismissal and not allowing people proper time off for ill health. Will the Minister assure the House that the Government are taking those issues seriously, and say what action they will take effectively to police the new arrangements?

Many organisations representing disabled and sick people have contacted us to express their great concerns about the Bill. I hope that the Government will not dismiss such representations lightly, as they have in previous debates on the Bill. These are very serious issues, and we will monitor them closely during the next few months.

The House should receive an annual report on how the Bill is operating in practice, and that issue could perhaps be discussed when the regulations are introduced. Otherwise, the anxieties will not go away. We shall feel not only that small firms are right to worry about facing greater burdens at a time when they are trying to increase employment and emerge from the recession, but that they are right to fear that further costs—such as maternity pay—are just around the corner. I hope that the Minister will allay many of those fears.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

I wish that a proper Standing Committee had been set up to deal with the Bill. I would certainly have volunteered to serve on it and to support my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) and his excellent Front-Bench team.

Over the weekend, I spent a good deal of time in my constituency. I had a surgery in Cumnock, and another in Maybole; I visited people in Catrine; I spoke at a meeting in Troon—which, admittedly, is in another hon. Member's constituency—and at another in Ayr. Everyone was outraged by the contempt with which the Government are treating the House of Commons, Parliament and this country's democratic processes. This Bill, and the one that we shall discuss tomorrow, are important and should be dealt with properly in Committee.

Let me identify some items that should have been discussed in more detail and some of the pitfalls that may befall the Department and the Secretary of State in particular. I have nothing against the Minister of State or the Parliamentary Under-Secretary; indeed, I believe that the Minister of State is one of the longest-serving Ministers in the Government. I have seen him in so many guises that I find it difficult to remember which Department he is in.

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

I think that my right hon. Friend the Minister of State, Welsh Office would object to that allegation.

Mr. Foulkes

The Minister is not quite the father of the Government, but he is quite near it.

The Secretary of State is very much a hate figure in my constituency. I am glad that he is ultimately responsible for any action taken against the Government in this regard. The other day—I do not know whether I am out of order in saying this, Mr. Lofthouse, but I am sure that you will correct me if I am—

The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse)

Order. The hon. Gentleman must address his remarks to clause 1 stand part.

Mr. Foulkes

I was coming to that, Mr. Lofthouse. I just wanted to say that I saw the Secretary of State wearing an Adam Smith Institute tie. When I commented that it gave away his true thinking and position in his party, the right hon. Gentleman said, "No, it does not; I am far to the right of the Adam Smith Institute." That shows the truth of what is happening.

Practical problems will arise, because the Bill has not been scrutinised properly. We have excellent civil servants, but—with the best will in the world—although all those civil servants and legal draftsmen produce Bills, Parliament is ultimately responsible for scrutinising them. We have constituency experience: people come to our surgeries and raise practical problems. We understand the difficulties and can draw attention to them in the House.

Let us suppose that an employer challenges the interpretation of part of the Bill in court. As I understand it, normally it has been the practice to refer to proceedings in Committee and to what the Minister said in response to a question from a member or the Opposition spokesman, as being the definitive interpretation of that part of the Bill. We have not gone through the Committee issue by issue, item by item, so it will be vague and difficult to understand exactly what is meant by any aspect if it is challenged in court.

Another issue that should have been explored is the change in age from 60 to 65 years. There are many potential pitfalls with which the Government have not dealt. I tabled a question the other day about the Greenock judgment in the European Court, its interpretation and whether the judgment would have any effect on that aspect. I received a vague reply from the Minister. I do not think that there is an understanding in the Department about whether there will be a practical effect. Perhaps the Minister will answer that.

9.30 pm

Another matter concerns people who work overseas. Increasingly, as we move into what we must now call the European Union, more workers travel overseas. They still work for a British employer and are still on the books in the United Kingdom. We needed to explore particular aspects of that, but we have not had an opportunity to explore them at all.

Questions were raised by the National Association of Citizens Advice Bureaux and by my hon. Friends on the Front Bench about the positive incentive to dismiss workers who are sick. That worries me. I would have enjoyed being on the Committee, especially with my hon. Friend the Member for Garscadden, who, with his legal brain and penetrating mind, has the facility for getting to the essence of a particular issue.

I should have liked to explore what would happen if there was a positive incentive —as we think that there is —for employers to say, "Okay, this guy has been off sick too often. We'll dismiss him." Will it alter the ability of a dismissed worker to raise his case at the industrial tribunal? Will it increase or decrease the likelihood of his getting compensation and reinstatement? We should have had the opportunity to explore that matter.

My hon. Friend the Member for Manchester, Withington (Mr. Bradley), who has just spoken from the Front Bench, raised the question of employment of disabled people in the Community. Although there is no statutory responsibility in relation to specific numbers, there is a requirement on employers to take on a certain percentage of disabled people. I agree with my hon. Friend that employers will be much more reluctant to take on disabled people and are therefore more likely to be in breach of their statutory responsibilities. That raises all sorts of issues.

Recently, half a million people with occupational pensions were literally conned into taking out private pensions. That is the sort of thing that can happen. I worry that such examples will be much more prevalent as we move forward with this kind of Bill. It is astonishing, and it comes from the doctrinaire right-wingers, but the Government are absolutely thirled to changing things. They are obsessed with change. They want to alter what has been accepted—in some cases on a bipartisan basis —for years as being the best thing in this country. As a result of those constant changes, there is greater confusion in the public and among employers. Mistakes are much more likely to be made. My hon. Friend the Member for Withington made that point extremely well. When those mistakes are made, it is the employees in particular who suffer.

For all those reasons, I am infuriated that we have not had an opportunity to discuss those points in Standing Committee. I have telegraphed my comments because I know that we have a time limit—

Mr. John Home Robertson (East Lothian)

No, my hon. Friend has telescoped them.

Mr. Foulkes

Indeed. I am grateful to my hon. Friend. That shows the advantage of a good English public school education. I hope that Hansard will be able to sort all this out. Let us go back 60 seconds. I have telescoped my comments today because I know that some of my colleagues are eager to participate in the debate.

If we had been upstairs in Committee, I would have been able to amplify my comments more and we could have dealt with some of the problems and potential pitfalls. With regard to those potential pitfalls, I have total sympathy, concern and worry for the individual employees and employers who will suffer. If those pitfalls mean that the Secretary of State will once again face court action, I will rejoice and I am sure that most hon. Members will, too.

Mr. Flynn

Many of us have been around this course before. We had a gallop in respect of statutory sick pay in 1991. The Minister for Social Security and Disabled People was present at that debate as he is today and as he has been on many other occasions. We all feel affection for him. His lugubrious and sad aspect reminds me of a remark by an American writer about someone having the guilty look of a vulture who had stolen the wrong eyeball. The Minister of State is the soft man when compared with the hard man.

The hard man image is put on at the Nuremburg-style rallies which the Conservatives hold once a year. At those events, Secretaries of State rant insanely and make the most outrageous statements. They give silly lists and sing songs about what they are going to do and how they are going to find new victims and scapegoats every month of the year to blame for all our ills. However, all that is forgotten by the next year and something else comes along.

The Minister of State is a man of conscience and sensibility. He performs his sad task with a guilty air. However, it is probably better that the Minister of State does that than someone else. The Minister of State fulfils a function similar to that performed in Wales by the Minister of State, Welsh Office, the right hon. Member for Conwy (Sir W. Roberts). The latter Minister of State had the distinction for some time as being the only member of the Tory party in Wales representing Wales who spoke both English and Welsh.

The Minister of State, Welsh Office, has the same air of wistful sadness about him as the Minister for Social Security and Disabled People. I am sure that the Minister of State, Department of Social Security brings to his duties that same burden of guilt as he has borne since he left the job that he loved in Northern Ireland.

When we consider what happened in 1991, this is a story of deja vu and "I told you so." In 1991, my hon. Friend the Member for Oldham, West (Mr. Meacher) made it clear what was likely to happen. At the time, we were talking about only a small reduction to 80 per cent. The CBI made a submission and referred to the measure as a fundamental breach of the partnership agreement between state and employers delivering a vital social security benefit. That has such an old-fashioned ring now. The Government have descended even further from the position in 1991.

Let us consider the national insurance scheme and what we have done to it. Lloyd George introduced that scheme and said that people would be given ninepence for fourpence. That was a very good bargain because the state was going to put the extra money into the scheme. It was regarded as a very civilising, advanced measure. We then had people who could think only in monetary terms and balance sheets.

In 1942, Beveridge said that the reason for introducing a national insurance scheme was that, in respect of the insurance that most of our parents had, which was industrial insurance—people came to the door and collected money—half the contributions were lost in the collection and salesmanship of the scheme. We are in precisely the same position now. The hon. Member for Havant (Mr. Willetts), who is not always perfect in his views, in his publication called "An Age of Entitlement", has nailed the main fallacy of the Government's policy.

During the Division, I had an opportunity to talk to one of the Ministers who spoke to the Treasury Select Committee yesterday. I said that the nonsense is that the Government are telling us that the pensions that were paid in 1948—a time of great poverty, when things were very difficult—were of greater value then in real terms than they are now. They are also telling us that pensions paid out of the national insurance scheme in 40 years' time, when we will be far richer than we are now, will be less than are paid now. Their excuse is demographic change.

I do not apologise for giving the hon. Member for Havant extra publicity for his pamphlet, and my constituency will not receive the £1,000 which three Conservative Members' constituencies will receive after they took part in a publicity stunt for a commercial firm today. The hon. Gentleman's document makes it clear that the demographic change will be far less than anyone is expecting; it will last only for the time that the baby boomers are retiring, a very short period of 10 to 13 years, and then it will be over; it will be a temporary blip; and it should not skew our policies entirely in the way that the Government are saying.

I do not want to destroy the hon. Gentleman's career any more than we have done already, but I am sure that it will affect his career prospects. That man, who is known to be an acute observer of social affairs, has said that the Government have deliberately used and exaggerated demographic change to push their ideological wish in order to take money from a nationally provided insurance scheme and push it to the private sector.

Mr. Dewar

Has my hon. Friend noted the report published today by the Social Security Advisory Committee, which is the official watchdog appointed by the Government? It dealt with the related matter of the Government's theory that the whole budget of the welfare state is out of control and strongly dissented from that, suggesting that it was possible to sustain that theory only if we took the most gloomy view of the economic prospects of the country.

Mr. Flynn

That is absolutely correct. The insurance scheme is part of that. If we look at what has happened to the national insurance scheme under the Government, we will see an enormous increase from 6.5 per cent. in 1979 to 10 per cent.—a 50 per cent. increase in contributions. That is unprecedented. One need not continue that for the next 40 years; one need only continue about a third of that and one could give pensions that represent 40 per cent. of final salary. We could do that not by ruining the economy but by enriching the national insurance scheme and changing it in many ways according to the growth that is likely to take place.

In their 14 years in office, the Government have increased national insurance contributions by a far higher rate than would be necessary to maintain the population throughout the next century, with the kind of pensions—

The First Deputy Chairman

Order. The hon. Gentleman is on to tomorrow's debate. I ask him to return to clause 1.

Mr. Flynn

A few months ago, I had the pleasure of speaking at a seminar organised by the civil service college for civil servants in Wales who suffer from severe disabilities. Many are wheelchair-bound or blind or profoundly deaf. It is a great credit to the Welsh Office that those talented people are doing productive jobs, but there are nothing like enough of them. The Welsh Office has not got anywhere near its quota, but it was an encouraging experience to meet the group.

9.45 pm

One problem is the perception of the capabilities of the disabled. We know that people with severe disabilities have a better record of attendance at work than able-bodied people. I also know that a civil servant who was severely disabled and in a wheelchair could not get into the civil servants' Box in the Chamber. That is a serious bar to their promotion. I know that disabled people find it difficult to get into Committee Rooms in the House—that is, if they have the correct passes, and so on. Those are practical difficulties which are in their way.

When the debate took place in 1991, the fears of the groups representing disabled people were made clear. It was said then, and it was denied by the Minister of State sitting before us tonight, that it would have an effect. We now know from objective evidence that the cut from 100 per cent. to 80 per cent. has had an effect. The CAB has made it clear that that is what is happening and it has given several examples of what will happen in the future.

The Minister of State has a distinguished record of helping the disabled and there is no questioning his sincerity. There is a question, however, about the results in the areas in which he is working and where achievements have been made. There is no question that the Minister of State, who is also Minister with responsibility for the disabled, is sincerely trying to help the disabled. All the cases that have been quoted—I do not want to repeat them because they were mentioned in the document from the CAB—make that point.

In the previous debate, claims were made that many companies provided alternative sick pay schemes and a report from the Institute of Fiscal Studies was brought in to support that. The report showed that the coverage was given usually for short-term sickness and that only a tiny proportion of companies would provide sick pay cover if someone was away for a longer period.

The Government, as in so many other matters, are taking away an efficient national scheme, which is cheap to run and to administer and replacing it with a highly inefficient and administratively top-heavy series of schemes that will provide poor service. We know what is going to happen. People will have an incentive to stay on in work and to risk their health when they are ill.

There are differences in the time people spend off work in different parts of the country because of sickness, and we know the reasons for that. Some hon. Members will know of people who have been crippled by their jobs, and yet have continued in them. We know of people who have been poisoned, deafened and had their lungs destroyed by their jobs. Those people take more days off sick because they are being killed slowly by the occupations that they follow. That continues into old age and into retirement, and there are differences which relate to the geography of the country.

This legislation is mean-minded, and it comes from a Government who have run out of ideas. The Government are vindictive and they are out to punish what they see as scapegoats. They want someone to blame. A person who is sick is clearly idling or malingering—that is the Government's view. They have a new scapegoat every month, be it single mothers or whoever. They have to have someone to blame and they know that the popular and tabloid culture might well go along with them. There is a quarry of popular support which the Government can use to chase the scapegoats and to give them a bad name, and that is what they are doing in this case.

The Government are turning our civilisation back. They are going beyond what the thinking was when this scheme was introduced, not long ago, in 1983. They are going way beyond what happened in 1942 when Beveridge brought out his report. The report received all-party support and those involved wanted to build a society that was more efficient, more kind and more just. This legislation is a retreat from all that.

Mr. Home Robertson

I apologise for missing the opening speeches. I was working at my desk when saw the name of my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) on the monitor and I could not resist the debate. It is quite like old times for my hon. Friend the Member for Carrick, Cumnock and Doon Valley and myself to be supporting my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar).

The Secretary of State has left the Chamber. He has no staying power. Perhaps his PPS could pass on the message that my hon. Friend the Member for Garscadden has driven several Secretaries of State for Scotland to distraction, and there is every chance that the present Secretary of State for Social Security could well go the same way.

My hon. Friend the Member for Newport (Mr. Flynn) referred to that famous nauseating speech by the Secretary of State for Social Security at the Conservative party conference about all the people who are clamouring to come to Britain as it is a land flowing with milk and honey and benefits. That rather squalid speech left out the Italian who came here inquiring, dov'e il mafioso con la faccia di bambino? That meant, "Which one is the Secretary of State for Social Security?"

Perhaps I should declare an interest as an employer. I am happy to see the exclusion affecting small employers' relief. As a small employer on a farm, I may escape the strictures.

Mr. Dewar

I am grateful to my hon. Friend. I should point out that he is falling into the trap laid by the Government. He is assuming that, because there is small firms relief, he will benefit. I am sure that my hon. Friend will accept that many small employers will not be all right.

The National Farmers Union has written to us explaining that the measure may hit small farmers, particularly those who pay more than the minimum agricultural wages. They are likely to be prejudiced. The NFU is strongly opposed to the changes in small firms relief.

Mr. Home Robertson

I am glad to hear that my subscription to the National Farmers Union for Scotland is not wasted. I am horrified to think that there are any farmers who do not pay more than the basic minimum agricultural wage and even more horrified that the Government are planning to scrap the agricultural wages board as that will take the bottom out of the market. I have no doubt that a number of small and medium-sized rural and urban businesses will be adversely affected by the clause.

We all know from constituency experience and dealings with businesses which run into difficulties what a risky business it can be to employ people. In the present climate, surely it is necessary to encourage firms to employ people. Yet here we are debating legislation which represents an employment tax when there should be employment incentives.

As my hon. Friend the Member for Carrick, Cumnock and Doon Valley said, this raises particular concern about the employment of some of the more vulnerable people such as disabled people and those who suffer from sickness.

If employers on the brink have to consider dismissing people who are persistently sick because they have the banks on their backs as well as the Secretary of State for Social Security, it will put extra stress on those with sickness in their families. People with all the financial commitments loaded on by the Government—interest rates, mortgage payments, hire purchase and other debts —could end up without work because their employers find it is too risky to keep them on due to repeated incidence of sickness which are clearly no fault of the individual.

The same point can be made about employing the disabled. Every cloud is supposed to have a silver lining and there may be circumstances in which employers think it advisable not to employ smokers. That would be a good thing. I say that in the presence of my hon. friend the Member for Bradford, North (Mr. Rooney) and no doubt he will see me later. Seriously, that is a diabolical discrimination and it could do great damage to many individuals and small employers.

I am worried by not only the direct application but the principle behind the state unloading responsibility and liability for basic social policy. Employers will have to insure against the risk and meet the administrative cost of doing so. They will have to find other ways of protecting themselves from the risks that flow from clause 1. I imagine that insurance companies will require employers entering such policies to vet potential employees carefully. There will be no question of employing the disabled and that must be bad news. I am not surprised that the Minister for Social Security and Disabled People was looking at his boots just now—

Mr. Flynn

He was looking at his watch.

Mr. Home Robertson

I do not care what he was looking at. The right hon. Gentleman has a reputation for being a comparatively civilised character, yet he is acting on behalf of the absent mafioso—I mean the Secretary of State—in enacting legislation that will have a vicious effect on all employers and many employees. He has a lot of explaining to do.

Mr. Dewar

I will briefly speak on a couple of minor points, because I know that the Minister is anxious to address the Committee in the next minute or two. It may help if I add to the short list of points that the Minister might answer. I will not delay the Committeee long.

I am delighted that the Under-Secretary of State for Social Security is back with us. I learned today not to produce a metaphor in a speech, because the hon. Gentleman seized on it like a terrier seizing a bone and chased it around the Chamber in a fierce manner for a considerable time. I thought that he was transported back to the days when he was a prodigy at Conservative party conferences, but I know that he wants to forget them.

I congratulate my hon. Friend the Member for Newport (Mr. Flynn) on his metaphors. We use them carelessly sometimes, but vultures and scapegoats go together. If a scapegoat is tethered it is extremely likely that vultures will gather round. That possibly explains why the right hon. Gentleman perches in the Department for Social Security as elegantly, persistently and patiently as he does. Clearly the scapegoats are taking a long time to die. We should be grateful.

It is clear that the essence of the Government's case has nothing to do with the £1,000 million a week that they must borrow to balance the books, or with getting to grips once and for all with public sector borrowing requirement problems. If there is a case, it is a flimsy one—and relies on the rather cynical view that there cannot be good management without direct financial incentives.

I do not share that view. In saying that, I am not lining up with inefficient management and asking for its continuation in the heart of British industry. The opposite is true. I have much sympathy—and it is not often that this will be said—with the speech of the hon. Member for Bury St. Edmunds (Mr. Spring), to the extent that he produced a substantial list of remarkable British industry success stories, particularly from the motor industry, and pointed to radical and dramatic changes in the atmosphere in those firms which reflects a sharp and welcome decline in absenteeism because of ill health and other causes.

I absolutely accept that that is something that we want and that it is something that British management should be tackling. The hon. Member for Bury St. Edmunds (Mr. Spring) argued that good management is tackling that and succeeding, but they are doing so without the so-called advantages of clause 1 being on the statute book.

Therefore, I understand the Government's argument, but my understanding it does not mean that I accept it. I genuinely do not think that the case has been made out for the massive reorganisation and restructuring of the system, or for the massive transfer out of the public sector into the private sector. Without it British management will never get off the proverbial backside—and I use that as a figure of speech.

It being Ten o'clock, THE FIRST DEPUTY CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report progress.

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