Statutory Sick Pay Bill

HC Deb 15 December 1993 vol 234 cc1109-71

Order for Second Reading read.

5.53 pm

The Secretary of State for Social Security (Mr. Peter Lilley)

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

I will endeavour to be brief, both because this is a short and simple Bill and because I want to leave the Opposition a full opportunity to spell out their alternative proposals —if they have any. If not, the House can have the pleasure of hearing the Opposition defend the current arrangements for statutory sick pay, even though they have consistently opposed them since they were introduced in 1983.

The Bill will give employers a greater incentive to improve the health, motivation and attendance of their employees. It will reduce and simplify the administrative burden of statutory sick pay. At the same time, we will ensure that employers in general have lower costs. Small employers will be fully reimbursed for the cost of illness after four weeks. The Bill will ensure, from April 1995, that lower-paid employees get the higher rate of sick pay.

Britain has the highest rate of sick leave of any country in the EC except Holland. The total cost to British industry of sickness is enormous. Recent surveys put the total direct costs at somewhere between £9 billion and £13 billion a year.

The extent of sickness and sick leave in a firm is not primarily the result of external factors outside an employer's control. The rate of sick leave varies greatly between firms, even within the same industry. High rates of sick leave often reflect poor motivation, stressful relationships, inadequate working environment, lack of interest in staff well-being and poor monitoring of absence.

Mr. Bob Cryer (Bradford, South)

Does that apply to Members of Parliament?

Mr. Lilley

The hon. Gentleman makes a point about the attendance records of hon. Members. I will tell him that, of the 200 best-attending hon. Members, 191 were Tories and only six were members of the Labour party.

The variations are within the control of management. When managers take an interest in the health, attendance and well-being of staff, they can substantially reduce levels of absence.

For example, an Audit Commission study three years ago criticised London boroughs for their deplorably high level of sick leave. On average, local government workers took 17 days off sick a year—twice the national average. The Audit Commission advised them how this could be improved and they have taken note of that advice. The latest figures show that the average is now reduced to 11 days. That is still high by comparison with private industry, but it shows what can be achieved by better management.

There are considerable variations within the private sector. Japanese companies have put great emphasis on the motivation and the well-being of their employees. As a result, according to the Industrial Society, Japanese-owned companies in Britain lose little more than half as many days through sickness as the British average.

Mr. Alfred Morris (Manchester, Wythenshawe)

Leaving aside small employers, is the Secretary of State aware that many employers do not pay statutory sick pay and that others sack people if they are sick? I ask the right hon. Gentleman to consider two brief cases before he concludes his speech.

First, an employee in the west midlands, who has been employed by a firm for three years, was off work due to an accident at work. The employer made it clear that he never pays statutory sick pay. Secondly, the citizens advice bureau in Greater Manchester reports an increasing number of dismissals from work in connection with illness. Is that not a serious problem and will the Secretary of State comment on those cases before he concludes?

Mr. Lilley

The hon. Gentleman must be mistaken. It is a statutory scheme which employers have a statutory obligation to pay. Some employers do pay occupational sick pay, which is higher and more generous than statutory sick pay. Some do not claim statutory sick pay back from the state, although they pay the amount or more than the amount and are continuing to pay it to their employees. I will get on to the question of the response of companies in recruiting and maintaining in employment people with poor health records later.

Mr. John Carlisle (Luton, North)

My right hon. Friend may have heard of Beijing flu, which is apparently raging in the country at the moment. He may like to know that a constituent company of mine which I visited the other day reported that of the 40 sub-contractors which they use, not one suffered from Beijing flu last month. Of the 10 people whom they employ directly, some seven have, on the basis that the state will pay for their statutory sick pay. Does not that emphasise that people will swing the lead if they think that the taxpayer will pay for it?

Mr. Lilley

My hon. Friend makes a telling point. It is certainly true that there are variations in employment which cannot be explained by medical factors. The prevalence of what the Foreign Office would prefer us to call Peking flu is one of those factors.

Today, a company has welcomed the Government's action in putting responsibility for sick pay back with companies. That company is Unipart, one of our leading manufacturers. It has taken the lead, particularly in improving employee conditions. Absenteeism at one of its factories used to be about 8 per cent. a year. Two years ago, Unipart introduced new working practices. People now work in teams in an improved working environment, with more challenging work and much more control over their own process. As a result, absenteeism has dropped to less than 2 per cent. and it has remained below that level. That is despite improvements in the generosity of the company's own sick pay scheme.

Yesterday, the hon. Member for Southampton, Itchen (Mr. Denham) mocked the idea of employers deciding to expand their occupational health service—perhaps installing a gym."—[Official Report, 14 December 1993; Vol. 234, c. 876.] Unipart's management did just that, because they see employees as stakeholders. They believe that the benefits in employee fitness are self-evidently of value to the firm. Unipart has publicly welcomed the Government's decision to put the responsibility for sick pay back with companies. It sees that as challenging management to search for the root causes of absenteeism and it believes that the net result will improve the performance of the United Kingdom economy.

However, the reimbursement of the cost of statutory sick pay reduces employers' incentive to take positive action to improve the health and attendance of their staff. At the same time, it sends a message that that is not their responsibility, nor within their control. It means that good employers who minimise sick leave are effectively subsidising poor employers who do nothing to tackle the problem.

Moreover, smaller employers in general have a much lower level of absence through sickness than do large employers. The CBI/Percom study, for example, showed that large companies with over 5,000 employees have twice the level of absence through sickness as do companies with fewer than 100 employees. Of the smallest employers with 10 or fewer staff, 37 per cent. had no staff absences through sickness long enough to qualify for statutory sick pay in 1991–92. By abolishing reimbursement, I believe that we will give employers greater incentive to motivate employees, to care for their health and to monitor their absence.

At the same time, I intend to reduce employers' national insurance contributions by more than enough to offset the impact on employers as a whole of ending reimbursement of statutory sick pay. The ending of the 80 per cent. reimbursement of statutory sick pay means that employers would forgo about £695 million in 1994–95, but there will be £25 million of special help for small employers.

The reduction in employers' national insurance rates will cut their national insurance contributions by some £830 million next year. That saving will reach nearly £1 billion by 1996–97. Therefore, employers in aggregate will be some £160 million pounds better off next year as a result of the combined impact of the changes and, as employers respond to the incentive to improve attendance, they will be substantially better off still.

Dr. Keith Hampson (Leeds, North-West)

Let me draw my right hon. Friend's attention to the problem that most people are not sick for four weeks or more, so that the bulk of costs on all sizes of companies will fall on the employer. Could not Peking flu create acute cash flow problems to a small company with a sudden abnormal rate of sickness? Will he consider whether there should be full reinbursement to small companies if a certain percentage of the national insurance contribution is crossed?

Mr. Lilley

Particular harm is caused by the prolonged absence of key employees in small firms. However, small employers usually have lower rates of sickness and absenteeism than larger companies, so they will be net beneficiaries from the change. There may be odd weeks when they suffer because a large number of staff are off sick, but they will be gaining throughout the rest of the year. Overall, they will benefit financially from the change, particularly if they have lower-paid employees. They should also welcome the change because it gives them greater control over their own bills.

Sir Michael Grylls (Surrey, North-West)

It would be extremely helpful if, in the spirit of deregulation, my right hon. Friend would consider whether some of the paperwork and administrative burdens of smaller firms could be simplified. Will he examine the role of the DSS or the social security inspectors who might take a more lenient view if a smaller firm genuinely finds it difficult to understand the complex regulations, and perhaps be slightly more tolerant than in the past? Perhaps the DTI one-stop shops could advise smaller employers on those aspects of book keeping, record keeping and understanding regulations?

Madam Deputy Speaker

Order. An intervention is not a speech, and that was rapidly becoming one.

Mr. Lilley

My hon. Friend has raised some important points about the burden on employers and the opportunities for deregulation.

The changes will reduce the burden on employers and open up scope for further reductions in due course. As for the enforcement of existing rules by inspectors, I shall take account of my hon. Friend's point, but I believe that the actual number of legal cases ever brought under the rules is extremely limited. I recall only one and the fine was £30. Nonetheless, we do not want onerous enforcement measures and I shall take on board my hon. Friend's point.

I propose to reduce the highest rate of employers' national insurance by 0.2 per cent. from 10.4 per cent. to 10.2 per cent. and the three lower rates by a whole percentage point. That will particularly benefit employers of less highly paid staff and make it more attractive for them to take on extra employees.

A firm whose employees all earn £170 a week will save £88 over the year on national insurance for each employee. If the firm has average sickness, it will forgo reimbursement of SSP over the year worth £43 per employee, so on average it will gain £45 per employee per year.

A company with the same pay level but twice the national sick leave will still break even on the two changes.

Mr. Donald Dewar (Glasgow, Garscadden)

May I make a brief point requesting information. When statutory sick pay becomes one level of return for the person who is ill, how will the uprating work? I understand that the upper level, which will now be combined with the others, has been frozen since 1990. It does not fall under the obvious Rossi or RPI machinery. How will it be uprated in future?

Mr. Lilley

I shall make a wise judgment each year on the amount by which it will be uprated.

Small organisations usually have below average sickness levels, but their operations may be harder hit by the prolonged absence of even a single member of staff. I therefore intend to increase the special help that we give small employers and extend it to more of them.

At present, smaller employers receive 100 per cent. reimbursement of statutory sick pay on absences in excess of six weeks. In future, they will receive 100 per cent. reimbursement after only four weeks. At present, firms with total national insurance contribution bills of £16,000 qualify for such help. In future, I shall extend it to firms with bills of up to £20,000.

Yesterday, the right hon. Member for Derby, South (Mrs. Beckett) said that we had attempted to conceal the fact that the abolition of 80 per cent. reimbursement would apply to small employers as well as to large ones. That is absolute nonsense. Let me read the letter that we sent to all the small business organisations on the day of the Budget. On statutory sick pay it said: 80 per cent. reimbursement will cease from 6 April 1994 i.e. there will be no reimbursement of statutory sick pay payable for sickness on or after that date. That could not be clearer. It continues: special help for small employers will be retained and enhanced. Employers remitting national insurance contributions totalling £20,000 or less in 1993–94 will be eligible for 100 per cent. reimbursement of statutory sick pay for illness lasting longer than four weeks.". There was no attempt to conceal that. We have an interest in employers understanding the changes and implementing them rapidly in time for next April.

Our proposals will help 50,000 extra employers, some 750,000 in total—that is two thirds of all employers—at a total cost of £25 million.

Small employers will also benefit more from the reduction in national insurance rates. The reduction is greater for employees on low earnings who tend to form a high proportion of the work force in small companies.

The Budget also included a number of other measures to help small employers and those proposals have been welcomed by industry.

Abolition of reimbursement will also reduce the administrative burden on employers. They will no longer have to work out their total statutory sick pay bill for the year in order to calculate how much national insurance they are due to pay.

The abolition of the lower rate of statutory sick pay will be introduced in the Bill to reform invalidity benefit, with effect from April 1995. It will further reduce the burden on employers. Previously, they had to calculate each employee's average earnings to determine which rate of statutory sick pay applied and how much they could claim. That will no longer be necessary when there is only one rate.

Earlier this year, we set up a working party with employers to examine the scope for cutting red tape in the statutory sick pay scheme. We shall be discussing with that group whether ending reimbursement of statutory sick pay further opens up scope for reducing the burden on employers without affecting employees' rights.

As a result of the changes, British employers will retain their relative advantage over their continental competitors. European Community employers face much greater burdens than we do. For example, German employers must pay full wages for the first six weeks of illness, yet they receive no reimbursement and pay higher social security charges. Dutch employers have to pay sick employees 70 per cent. of their earnings up to £282 per week for up to a year and they bear five sixths of the cost.

The Opposition have claimed that ending reimbursement of statutory sick pay will lead to employers sacking sick employees and being more reluctant to take on disabled staff. They made the same claim when the rate of reimbursement was reduced from 100 per cent. to 80 per cent. in 1991.

There has been no evidence of sick employees being sacked or companies being more reluctant to employ people who have been sick. I will receive soon the Centre for Social Policy Research report examining the effects of the 1991 changes and I will publish it as soon as I do. I understand that it will not help the Opposition's case and that there is no evidence that disabled staff have been affected. In fact, it would be perverse as well as inhumane for employers to reduce job opportunities for the disabled. The evidence is that they have a better than average attendance record. The more that that is widely known, the more we shall be pleased.

We shall continue to promote employment opportunities for disabled people. I was pleased to announce in the social security statement that the disability working allowance will be made more attractive. From April 1995, beneficiaries will be entitled to free prescriptions, free dental treatment and other NHS benefits.

Dr. Robert Spink (Castle Point)

Is my right hon. Friend aware that I am a registered disabled person, yet I returned the joint third best participation rate in the House in the last Session?

Mr. Lilley

My hon. Friend is proof of many great truths and I congratulate him on his record. As I said earlier, he is not joined in the top 200 by many Opposition Members. Last night, we had sad evidence of an outbreak of sickness on the Labour Benches, when the Opposition were unable to muster a quorum to continue their own Consolidated Fund debates. It is a difficult area for the Labour party in respect of attendance records and of previous Labour Governments.

The last Labour Government imposed a surcharge on employers' national insurance that brought the total amount paid by employers to 13.5 per cent. of their pay bill. If that rate applied today, industry would bear an additional burden of .8 billion a year.

The final consequence of our changes is that once employers meet the full cost of SSP, it will become a form of pay and thus be subject to the EC equal treatment directive. Women and men will be entitled to statutory sick pay on the same basis. As a result, women will be entitled to receive it until the age of 65, rather than age 60 at present. That is catered for in the Bill.

Statutory sick pay has been successful in meeting its aim of delivering sick pay through the wage packet rather than requiring employees to collect it at benefit offices. It cuts out wasteful duplication of work by employers and the state and the opportunities for a further reduction of duplication are enhanced by the Bill.

The introduction of SSP cut civil service numbers by 3,700 and ended the anomaly whereby employees received more money when off sick than at work. I shall shortly introduce a new Bill to reform the whole structure of incapacity benefits. It will create a single SSP rate from April 1995, which will help those in lower-paid jobs. The overall structural reform will provide a more integrated set of sickness benefits than ever before and it reflects the first fruits of our sector-by-sector reform of social security. We have now tackled sickness benefits and we are in the process of improving them and providing an up-to-date and well-focused set of sickness benefits.

The Bill will improve incentives to employers for increasing the well-being, attendance and health of their staff; lead to reduced costs for industry; and provide a more rational benefits structure for the future. I commend the Bill to the House.

6.13 pm

Mr. Donald Dewar (Glasgow, Garscadden)

I appreciate the succinct way in which the Secretary of State put his case. His short speech set out the bare essentials of the proposals encapsulated in the Bill. It is part of a package deal offered by the Government and interconnects with a number of interesting arguments.

There is no doubt that this important legislation deserves the proper attention that the House will want to give over the next few hours. I have no intention of re-opening the argument about the timetable motion, but it is important that the House examines what is being offered and its consequences and significance.

One problem is that the unified Budget took some of us by surprise. The new procedures are difficult, for a unified Budget presents a mound of issues. Everything but the kitchen sink was thrown in, in terms of fiscal revenue raising and public expenditure. There is a danger that we shall lose definition and not focus as we should on all the Budget's component parts with the clarity that they deserve. I am glad of this opportunity to put that right.

In yesterday's allocation of time debate, we heard that the Bill has only one effective clause. Clause 1 abolishes for large employers—those that account for 85 per cent. of the work force—the 80 per cent. rebate on statutory sick pay. Clearly, that is of interest to them and to those of us concerned about the way that the system works.

I do not suggest that that comes entirely as a surprise. The Secretary of State reminded the House that the rebate system was introduced just over 10 years ago. Early in its career, it became clear that the Government had reservations about the way that it operated or at least about its part in the social security system. In 1990, a significant change occurred, when the 100 per cent. rebate plus the 7 per cent. to reimburse companies for the administrative charges that they incurred was reduced to 80 per cent.—and now that is being obliterated. It has been suspected for some time that that was the start of a slide into oblivion in terms of both the rebate and Government involvement.

In connection with yesterday's debate on the guillotine motion, to which my right hon. Friend the shadow Leader of the House contributed, there were exchanges between members of the Public Accounts Committee and the Permanent Secretary at the Department of Social Security. I make no complaint that they were slightly "Yes, Minister" in their tone. We were presented with the Government's usual "We have no plans" formula. That kind of response gives plausibility to the theory that in this country, one should believe nothing until it has been officially denied. That was a further warning shot about the likely course of events. Expectations or fears, depending on one's point of view, are amply borne out by the Bill now before the House.

The majority of employees will depend no longer on the subsidy provided by the rebate but on their employers' resources—the scheme will be funded by industry. I hope that the Secretary of State will not think me over-partisan when I say that that is strike one for the Chief Secretary to the Treasury and for his loyal lieutenant at the Department of Social Security. It is at least one area where it has been discovered that it will be possible for the Government to withdraw altogether, which is the proposition we are asked to consider.

I accept that many companies have occupational schemes that incorporate sickness cover. However, a much-quoted 1989 survey suggested that 91 per cent. of employees were covered by such an arrangement. I do not want to debate that point at length, but I enter the fair caveat that that figure of 91 per cent. has been criticised as misleading, partly because many schemes exclude part of the work force from that provision. That is specifically the case with manual workers. The cover is not nearly as impressive on analysis as that headline figure suggests.

Statutory sick pay is still important. It is common ground between myself and the Minister that statutory sick pay is still a foundation of importance to those who are suffering a period of ill-health. In the current year the higher rate—the rate that will become effective—is £52.50. I was interested in what the Secretary of State had to say about the future of that matter. He used a nice phrase —he will "use a wise judgment year by year". There are societies in which wise men are respected. It is probably true in our society as well, but there is unfortunately a preliminary dispute as to who is wise. If we could agree about that, happy unanimity would break out.

There is an important point in the simple question that I asked, which I draw to the Secretary of State's attention. At the end of the day, companies will have to pay the higher rate which, in his wisdom, he decides; they have no control over that. That cost is totally out of their hands.

If there is a rebate system, there is a real discipline—the discipline, perhaps, of the account book—on the Secretary of State when he makes such decisions. He has to weigh all types of factors, but one of them is that the Chancellor has to find the cash, because if he puts up generously the rebate goes up. Now he is in the position in which perhaps he will resist those temptations—I immediately concede that, knowing him—but in which he will be deciding what someone else has to pay. He will not have to foot the bill himself. There is no suggestion, presumably, that there will be a special reduction in the employer's national insurance contribution every year if the Minister is especially generous on the uprating.

I mention that, and emphasise it, because it seems to underline some of the uncertainties that we are building into the system for employers. Although perhaps on occasions it is rather arrogantly assumed that the Labour party does not care about the problems of employers, I am not unconscious of the difficulties that can, and do, confront employers. That is an important short point.

Mr. David Willetts (Havant)

Is the hon. Gentleman arguing against the proposal on the grounds that it will lead to sick pay being higher than it would be otherwise?

Mr. Dewar

No. I must remonstrate with the hon. Member, as I had to earlier this week. He is an alert and precocious child. He sees a point and he cannot resist getting up and making it. It is quite an endearing habit and it adds a bit of variety to sometimes rather dry and arcane debates about the world of social security, but it is not a sensible point or a point of substance. I am merely suggesting to him that there is an instability, and perhaps a potential concern about a looseness in the system. There is a divorce between he who takes the decision and he who is accountable and pays the bills. That might be a principle which commends itself to a gentleman of somewhat dry and right-wing views, generally, in the economic field.

Mr. Paul Flynn (Newport, West)

Has my hon. Friend read a splendid publication called "The Age of Entitlement" by the hon. Member for Havant (Mr. Willetts), who has ridden a coach and horses through many of the claims of the present Government? Specifically, he says that they have vastly exaggerated the effects of the demographic change and have used it as a pretext for many of their damaging policies.

Mr. Dewar

I must confess—probably some of my colleagues may think that it is a confession—that I often read the works of the hon. Member for Havant (Mr. Willetts). [Interruption.] I sometimes wonder a little bit why I do it. I think that it is because, at an early stage in my career when I did not know much about the social security world, someone said that (a) he was clever and (b) he had the ear of Ministers. Those theories live on. On that basis I have tended to read the hon. Member's pamphlets.

I agree that in that publication there is some quite useful corrective copy to the rather excitable view of the demographic time-bomb, the dependency ratio and so on, which tends to be the mark of the Government Front Bench. It would be wrong, however, if I went too far down that road. I know that Second Readings are wide, but I might find myself off a road and into a field if I follow my hon. Friend in that matter, so I shall turn back to the Bill.

I confess that when I first saw the Bill I rather misinterpreted it. My first thought was that it was an enormous transfer of financial burden to British industry at a time when the Prime Minister, as it happened, was daily on my television set telling me about the need to compete and to keep our industry competitive. Having considered the trade figures of only a few days ago, I agree that that is something to which we should give a high priority.

When I realised that nearly £750 million would disappear mysteriously from the public accounts and was to be met by British industry, I was very worried indeed. I accept that that is an over-simplification. Perhaps I swallowed the "one effective clause" theory about the matter because I considered the primary legislation. There are important counter-balancing propositions which appear, not in primary legislation, but, as you will be aware, Madam Deputy Speaker, in regulations that we have not seen and which will no doubt appear before the House at some future date.

I made the argument the other day, so I shall only repeat it in the briefest possible form; I find it rather unsatisfactory that things of so much importance are clone by regulation. The one outstanding characteristic of a regulation is that one has to take it or leave it; one cannot attempt to amend it. One has a brief debate. Sometimes brief debates are mercies, but one cannot have any shade of grey; one cannot try to adapt and improve but can only vote against. That is especially useless, it seems to me, in terms of the job that Parliament should be doing, but no doubt that is an Opposition point of view. I may have a slightly different angle on that in perhaps a couple of years' time.

Mr. Patrick Nicholls (Teignbridge)

Would it now be logical for the hon. Gentleman to follow his concern for employers through to its logical conclusion and say that, now that he has realised that employers get more out of the Bill than they lose, the best thing to do would be to go for a brief debate, support the Bill and let us have an early night?

Mr. Dewar

The hon. Gentleman, who has earned a reputation of being one of the most abrasive members of the House in many ways—[interruption]—often makes a useful contribution, I think especially in social security matters. It is perhaps a result of his experience, or previous experience, on the Social Security Select Committee. I often think that if people know a little about a subject it helps a sense of reason to develop. In any event, I shall have to develop my argument and hon. Members will find out that he has slightly misinterpreted me, but no doubt we can put that right if he remains with me.

Not only do Ministers assert that the Bill will be neutral in its impact because the 0.2 per cent. and the subsidiary cuts in the other classes of employers' contributions will offset the £750 million, but they suggest that it is even a little more generous than neutral. One of the difficulties —I am not in a position personally to test it because there has hardly been time and there has not been time even to investigate in any depth with the various organisations that have an interest—is that it is a proposition that has been met with a unanimity of cynicism by the employers' organisations, with one exception. It is an important exception. The Confederation of British Industry, in a rather tortured press release, managed to be loyal at the end of the day, although with so many caveats and reservations that I am not sure that it did not do more credit to the loyalty than to the rationality. I have the document here.

If we consider the views of other people, whether it be the Federation of Small Businesses or the National Farmers Union—it is not often that I have the opportunity to quote the NFU in that type of context—there is a strong feeling that the situation is not as simplistic or as simple as the Minister has suggested, and that there will be very substantial difficulties for people on the employers' side of the divide in the period ahead.

While Ministers assert and employers doubt, I think that we can agree on certain things. One is that if, as a result of this massive transfer, it will be up to the employer to meet the bill, it is likely to be a permanent situation under this Conservative Government. Who knows, it may be a permanent situation, full stop? The other side of the equation, however, is that although the 0.2 per cent. might be a generous reduction in contribution when it is introduced, once there have been some upratings or variations and a Chancellor comes under pressure and does not want to increase direct taxation but thinks that he can get away with a national insurance hike, I defy anyone to say whether that 0.2 per cent. compensation will survive; it could easily go.

The argument about additionality is similar. Many of us became involved in it and retreated in horror—defeated, confused and bewildered. Is it really additional money or is it something that the Treasury has taken into account in its calculations? Is it substitute money and not additional money? That is the problem for employers. They will certainly have to meet the £750 billion or its equivalent —it may be a little higher year on year—but there is no guarantee that they will receive anything like the same compensation after a year or two.

Mr. Peter L. Pike (Burnley)

I am sure that my hon. Friend is right, but is it not also true that employers whose workers have adverse working conditions that affect their health are likely to lose, even in the first instance?

Mr. Dewar

I am grateful to my hon. Friend, as I certainly should have got round to mentioning that fact. As the Minister will be aware, some employers' organisations have been alarmed about firms operating within the construction industry, for example. There is a fear that the employers who will suffer most are those in industries where there is a lot of wear and tear on the human frame and where, despite improving methods that enable more working under cover, workers have to suffer harsh climatic conditions and destructive work.

The trouble with working on global figures and averaging things out is that many people are not average and they suffer. The National Farmers Union said that. I cannot resist suggesting that the union obviously did not receive the Minister's letter, which described the matter with such clarity, but made the mistake of relying on the Chancellor's Budget statement. I notice that the union's head of parliamentary affairs, in a letter to Members of Parliament—or certainly to me—on 13 December refers to Government statements as "misleading and confusing", quotes the Chancellor and says that neither of the two statements quoted can be considered to be accurate. There is obviously a great deal of anger about the way in which farmers have been treated. I referred to the NFU because it has made some calculations, which I cannot challenge or verify from personal experience as I have never been a farmer or done farming books. The NFU is certainly in a position to do such calculations and states that some farmers will be adversely affected—especially the more generous who pay above the farm worker's minimum wage, who will be penalised for doing so.

I am pointing that out because the information comes from a genuine source and underlines the dangers of taking at face value the assumption that there will be a nice offset, or perhaps something a little more generous. That might be true, but there will be many exceptions—it might be true in year one, but Lord knows whether it will be in years four, five or six.

Mr. Peter Thurnham (Bolton, North-East)

I think that the hon. Gentleman is trying to say that employers should be wary because the Government might increase national insurance contributions to their disadvantage. He commented earlier about the Confederation of British Industry being loyal to the Government. Surely the memories of CBI members will go back to the time of the Labour Government. Were not all sorts of burdens imposed on industry at that time? Perhaps the hon. Gentleman can remind the House what the Labour Government did about national insurance contributions, let alone all those weird and wonderful things such as selective employment tax. Is not that what employers should be wary about?

Mr. Dewar

The hon. Gentleman will have heard the almost ritual reference by the Secretary of State in the earlier part of his speech. I do not object, as it is part of the litany of political debate. I am sure that the hon. Gentleman will also accept that, whatever the basis of their fear, employers are genuinely concerned about what has happened in the Bill and how it has built on the 1990 change in the law and moved so substantially towards a bail-out—or a cop-out, if one likes—by the Government.

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton)

rose——

Mr. Dewar

Oh dear.

Mr. Newton

As the man who introduced and carried through the Statutory Sick Pay Act 1990, which I think is the legislation to which the hon. Gentleman is referring, may I relate what happened then and has happened since to the subject that he has been seeking to develop?

In proposing and carrying through the reduction to 80 per cent. of reimbursement at that stage, I also introduced reductions in national insurance contributions, including the reduced rates for less well-paid employees. Not only have those rates stuck at the reduced level; they are exactly the same as the rates that my right hon. Friend is reducing further. By way of comparison, the Labour Government charged an employer £17.55 for an employee earning £130 per week and the figure next year will be £7.28, according to these proposals.

Mr. Dewar

Yes, I am familiar with those figures because they appear in the Conservative party brief for this debate which was so usefully given to me.

Mr. Lilley

I sent the hon. Gentleman a copy.

Mr. Dewar

What a new and high level of co-operation. I look forward to that continuing and thank the right hon. Gentleman for that courtesy.

The Leader of the House has a little room at the end of the corridor and now the right hon. Member for St. Albans (Mr. Lilley) rules in his place. Perhaps that colours industry's approach to possible future events.

Perhaps I am taking too long. I shall try to make my point in short order. I concede that there is genuine concern that this is the start of a process that is gathering speed, whereby there will be a substantial transfer of responsibility for what have been seen as welfare functions from Government to industry. That is also a matter for controversy in other countries. As the Secretary of State will know, a major argument is raging in Germany, where the view is that the process has perhaps gone too far and has had an unfortunate impact on the German economy.

People fear that, in the interests of what is fashionably called in Conservative party circles "shrinking" the public sector, there will be a substantial transfer of such responsibilities. I am not the only one to have that fear. When the hon. Member for Beverley (Mr. Cran) was talking about the reduction from 100 per cent. to 80 per cent. in 1990 he said, rather engagingly, I think that most hon. Members would accept that I am a trusting soul, but equally I can claim not to be daft"— that is not a matter for debate at the moment, so I shall pass on— and I have an awful feeling, as do the companies in the constituency that I have consulted, that the Government cannot possibly intend to increase the percentage from 80 to 90 or 95 at some point … but it is probable that the 80 per cent. will be reduced at some stage to 60 per cent."—[Official Report, 26 November, 1990; Vol. 181, c. 669.] He was very worried about that, and that feeling of concern was reflected throughout the debate in 1990. I am not surprised that he is not attending this debate, as it would be a distressing experience for him. If he had known that the percentage would not merely decrease to 60 but go down to nil, he would have been very worried indeed.

I suggest to the Secretary of State that, once statutory sick pay has been transferred and becomes the responsibility of industry, with an offset on this occasion, we shall find that maternity pay and perhaps industrial injury benefit will follow.

Indeed, this cross-references nicely to earlier exchanges in the debate. Who has been advocating this in terms of industrial injury benefit? The hon. Member for Havant thinks that it would be a splendid idea. When I suggested it in the Minister's ear, I saw him nodding enthusiastically.

It seems that there is concern about the matter. We are talking about £400 million in terms of maternity pay and £650 million in terms of industrial injury benefit being transferred to industry. There is genuine cause for concern. I know that the Confederation of British Industry has asked for assurances, and the Institute of Directors and the Federation of Small Businesses are worried. It is always difficult for Ministers to commit a Government, even over the next few years, but it would be extremely useful if the Minister could give us a guarantee or an assurance that this will not happen.

There is no more assiduous a critic of the social chapter than the Secretary of State. The rhetoric that is always used when we discuss the social chapter is that it will put burdens on industry that will make it uncompetitive. It would be a tragic mistake. Against that undoubtedly genuine and sincere view—I think that it is an exaggerated view—it should be easy for the Minister to say that he will have no truck with going further down that road and burdening industry with maternity pay or industrial injury benefit.

Mr. Oliver Heald (Hertfordshire, North)

Will the hon. Gentleman give way?

Mr. Dewar

No. I am more interested in the Minister's view than that of the hon. Gentleman. I shall listen to him in a moment.

It would not be unreasonable to expect the Minister to say that that is not his intention. After all, in a rather dramatic interview recently on the Walden show—I think that the Minister will now be known as the "not now, not never" man from this point forward—he made it clear that there would be no opting out of the basic state pension. We got the impression that it would be over his dead body.

This might be a convenient time for the Minister to confirm that, in the same way as he dislikes the social chapter and its implications, he will not make what he sees as the same mistake by dumping maternity pay, industrial injury benefit and other matters on industry. Perhaps the Minister would like to accept that challenge. In any event, we can come back to this point. I think that the Minister is sitting there with a certain stolid, professional phlegm; if I may say so, I know the feeling.

Mr. Heald

The hon. Gentleman referred to the burdens on business. Does he accept that one of the burdens of the statutory sick pay scheme is the complicated nature of the regulations and the administrative burdens that it places on large employers? One of the great benefits of the Bill is that it will remove that burden and compensate employers by cutting their national insurance contributions. Is not that good for business?

Mr. Dewar

I understand the point about the rebate. Employers' federations—in this case I can only reflect their anxieties—feel that they are still heavily burdened, and fear that they will be much more heavily burdened in the future if the present policy continues. [Interruption.] I must push on because I know that other hon. Members wish to participate in the debate.

I have fundamental reservations about the so-called off-set arrangements. For the purposes of the next part of my remarks, let us accept that it is neutral, or perhaps a little better than neutral. When I first saw the proposition —I am sure that many of my hon. Friends made the same mistake—I thought that it was part of the major Budget strategy. I thought that it was all to do with sound money and reducing the public sector borrowing requirement. I suspect that many Tory Members thought that they were gritting their teeth, accepting pain, and battling for those admirable Tory objectives.

Of course, it has nothing to do with that at all, as we now know and as the Minister has made clear. It has nothing to do with any of the objectives. Indeed, we now have to ask why we are getting it at all. The Minister has offered an explanation—I will not pretend that he has not done so. This considerable reorganisation will enable employers to concentrate their minds on the need to tackle absenteeism and to do something about the health problems of their work force. I want to make it clear, simply to avoid doubt, that I accept that the figures in this country are not good. I entirely accept that they should be better.

I must make it clear that I do not want to endorse the Minister's somewhat cynical view that we cannot expect employers to take steps to deal with the matter unless they have a direct pecuniary interest in doing so. The Minister has a rather poor view of humanity. I suspect that he thinks that there is a lot of malingering, and there are many layabouts, behind the figures on absenteeism and ill health. I also suspect that he feels that we cannot expect leadership, control and developments in this field from employers unless we bribe them. I hope that that is not a view that we take of British management in the longer term.

I will not develop this point, but I think that there are many reasons why perhaps we have higher rates of absenteeism and higher ill-health rates in some parts of the country than in others. For example, averages are misleading. Two or three months ago, I happened to look at figures on mobility rates for men between the ages of 16 and 64. The level for the city of Glasgow is 20 per cent. above the Scottish level, and the Scottish level is much higher than that of the United Kingdom.

The view of the Greater Glasgow health board—I have to say that it is not in particularly safe hands at present in political terms—was that the figures for Glasgow could be put down to social conditions, deprivation, poverty and the long-standing factors that were highlighted by the report of the Black committee. There is a danger that, by using averages, we might be hiding the reality of the problem and possibly condoning what is effectively an additional burden on employers operating in those conditions.

Mr. Andrew Rowe (Mid-Kent)

The hon. Gentleman made a long and involved point about the dubiety and uncertainty that is being introduced into the system. He felt that the Secretary of State was making a distinction between those who create the obligation to pay and those on whom the payment falls. It seems that the hon. Gentleman is arguing against himself because he is now saying that, in a specific case where the employer is being handed the obligation to pay the bill, this is a bribe. I do not see the point.

Mr. Dewar

It is not a matter of an obligation. The theory is that employers will take an interest because they will cut their outgoings by so doing. One cannot go to employers and say that it is good management practice. One cannot go to them with the five suggestions that appeared in the Conservative Central Office brief on how to improve these matters, none of which are related to or depend on the sort of reforms which we need and which we are being asked to consider at present.

All the suggestions are simply matters of good management practice. The proposition which I am putting a caveat against is that the reforms will not happen without that financial interest. I understand that there can be a place for a financial incentive, but I think that it is overstated in this way. The argument does not hold up, for the reasons that I have explained.

I know that all these matters are on the margin to some extent, but, as my hon. Friends have said, there is a possibility that the Bill may have an unfortunate effect. Undoubtedly, there are people who through no fault of their own are absent from work because of ill health. It may be that we are providing an incentive for employers to see them as disposable before the point at which perhaps they could have claimed for unfair dismissal. We may possibly be putting a double squeeze on some very vulnerable people. I do not know the views of the hon. Member for Mid-Kent (Mr. Rowe)—I invite him to tell me. Perhaps we will get his view later.

As the hon. Gentleman knows, we are changing from invalidity benefit to incapacity benefit. The point is that a substantial number of people—a figure of 70,000 has been mentioned, which strikes me as rather low—who qualify for invalidity benefit under the old system will not qualify for incapacity benefit. The theory is that they will have to go out and find jobs. After this system has been introduced, if I were an employer I might look long and hard at the possibility of employing such people simply because of the financial squeeze that is being built in by the reforms. That concern was expressed by the National Association of Citizens Advice Bureax in a report recently circulated to hon. Members. It is really an all-party point, because the same fear was expressed during the debates in 1990, and the NACAB material suggests that, to some extent at least, it has been borne out.

The hon. Member for Batley and Spen (Mrs. Peacock) has an honourable record of taking an independent stance on such matters, and on 5 February 1991 she said: There are bound to be people in work who, for whatever reason, need more time off because of their illnesses. There is great worry that they will be discriminated against by a company that decides that it cannot afford to take them on because they would be off work more often than an average employee."—[Official Report, 5 February 1991; Vol. 185, c. 186.] When that view was expressed the 100 per cent. rebate was being reduced to 80 per cent. Now the rebate is coming down in one leap to nil. Arguably, the House is entitled to take account of the fact that that substantial drop may have a bad effect. I am glad that the hon. Member for Mid-Kent interrupted me, since my next analogy may appeal to him because of his social work background.

I spent five years of my life working full time with children in trouble, and I remember well a debate—it probably still lives on with the present Home Secretary —about a great move to make parents responsible for their children's criminal activities. The suggestion was that if a child got into trouble his parents must be fined in his place, to "larn them" to take more interest in their children. There was a general view that that might indeed have been effective, but not necessarily in the right way. It would not necessarily have contributed to an improvement in the quality of family life. There seems to be a danger that the reform before us will have an impact on employers, but not necessarily the impact that the Minister expects. I do not think that he has established his case.

I have taken rather longer than I meant to, but perhaps I may briefly mention a couple of important small points. I shall simply flag them now, and perhaps during the remainder of our debates, when we get Second Reading behind us—assuming that the Government have a majority, as no doubt they will, because of the Whips—we may be able to return to some of those matters.

First, as has already been said by at least one Conservative Member, there is a genuine worry about the small firms relief. I do not say that it was the fault of the Secretary of State or of the Department, but there was a failure to realise that, instead of the six weeks during which small firms were responsible for 20 per cent., small firms would now have to pay 100 per cent. of statutory sick pay costs for four weeks. I acknowledge that there is another part to the sum—the reduction in contributions—but because between 75 per cent. and 80 per cent. of all absences are completed within the first four weeks, there will be a substantial additional burden, even on the small employer.

Many people see the change as a bad bargain. I referred earlier, with some validity, to the views of the National Farmers Union on the matter, and I was intrigued to read what that organisation says about the parliamentary process. I had not seen the letter when I spoke in the debate on the timetable motion, and it gives the House something to think about: As in 1991 … it seems likely that the House of Lords—which cannot be bounced in the same way—will have to take on the burden of examining the legislation in detail. It is bad for the House that the NFU should have reached that opinion. Moreover, sadly, the NFU is wrong, because small firms relief is not in the Bill at all. Again, it will be a matter for regulations, in which no change can be introduced.

I do not want to exaggerate the argument, but I put it to the Minister that there is a slight danger in saying, "If you are a small firm you get relief"—let us assume for the moment that the relief is worth something, although that is a question in itself—"so there will be an advantage in staying within the definition of a small firm, but if your national insurance bill goes above £20,000, you will lose that advantage." We would, in a strange way, be building in an employment trap, equivalent to the poverty trap with which we are so familiar in other parts of the social security system.

Today, with the assistance of the Library, I tried to test out one significant example. A firm with eight employees, assuming a salary of £250 a week per employee, would have a national insurance bill just below the £20,000 threshold. If another employee were added the bill would rise just above the £20,000, and there would be a significant financial differential in the firm's responsibility for statutory sick pay as a result. I put that fact to the Minister as another complication.

The only other matter that I wish to raise concerns the retirement age. That is an interesting question, and I make it clear that I am on the Minister's side on the subject. As the House will know, the entitlement for statutory sick pay, which used to expire at retirement age, is now knocked out when a person reaches 65. That is part of the process of equal treatment for men and women, and I have no objection to it; indeed, I positively endorse it. However, I believe that there may be complications, with which the Secretary of State, or pehaps the Minister of State, may wish to deal in the wind-up or in one of the clause stand part debates.

As I understand it, the Minister has been forced to make the change because the derogation that enabled him to preserve the current situation on the ground that it derived directly from the retirement age system, can no longer be used, as he has now transferred the responsibility for paying statutory sick pay to the employer, so it has passed out of the public sector. I hope that the problem does not arise but, as I said to the Minister of State the other day, there could be endless litigation—I think of the Rose Graham case, litigation concerning invalidity benefit, and so on.

I hope that people will not be able to argue that, until the problem disappears in 2020—that is by no means tomorrow—some women in work will be able to draw both their pensions and statutory sick pay, whereas men will not be able to do the same beyond their retirement age. There may well be complications there. It is an interesting matter for speculation and discussion, and perhaps the Minister of State will tell us—I notice that the Minister of State is pointing straight at the Secretary of State—[Interruption.] No, he was pointing at the Parliamentary Under-Secretary of State, who is apparently to be allowed to trot out. In any event, the Minister who replies may tell us whether the Government have considered those legal matters.

Now I am done. [HON. MEMBERS: "Hear, hear".] I think that the verb that I used is the mot juste, because I know from the correspondence that I have received that many employers feel that they will be done, or diddled, by the change in the system, and there is nothing wrong with having fellow feeling with those whose views I am tying to represent.

The Government are making a massive extension to the system, and it has worried many hon. Members—including, I am sure, many Conservative theorists—who feel that that is not what a Conservative Government should be about. Such a transfer has potential dangers. It has brought uncertainty to industry; the Government will control what industry pays, and they are also in charge of national insurance contributions. As I have said, that is a temptation that they may not be able to resist. I believe that it would be better if they retained the responsibility in the public sector at this stage. There is an element of sleight of hand about the legislation. It opens opportunities for dishonesty by government—I use that word as a concept; I am not making a particular accusation, although possibly I could. The suggested system builds in distortions which I believe may prejudice those who are already vulnerable.

I do not believe that the advantages of the changes have in any way been established. The Government have deliberately rejected an economic case and now talk of a social case and of incentives for better practice in industry. They have laboured to try to justify what they have proposed, but they are labouring in a false cause.

The real explanation goes back to the ideology and the battles in the Department of Social Security and the Treasury over the shape and size of the public sector. The measure is attractive to them because it is seen as one that will shrink the public sector and that will privatise a benefit. It allows a manipulation of the figures to enable those who still have a loyalty to the No Turning Back group, to the hard right and to the memories of Lady Thatcher to say that they are on the march. I do not care about them and their marching. I want legislation that has some relevance to the better government of the country and that creates better conditions under which people can live. I do not want legislation that is based on ideology and that is no more than a victory for faction over common sense. That is why I will vote against the Bill.

7 pm

Mr. Oliver Heald (Hertfordshire, North)

I listened with great care to the comments of the hon. Member for Glasgow, Garscadden (Mr. Dewar). He said that there would be dangerous uncertainty in a situation in which the Minister set the minimum level for statutory sick pay and the employer had to pay. One cannot logically argue in that way, as he did, and at the same time support a statutory minimum wage, as he does, where exactly the same principles would apply. That is totally illogical.

Opposition Members repeatedly made the point, with which I also disagree, that an employer is more likely to dismiss somebody who has a poor sickness record as a result of the changes. If someone has been employed for two years and qualifies for the unfair dismissal legislation, it would not be possible for employers to dismiss out of hand for sickness without a heavy award in a tribunal.

Leading cases suggest that, to justify dismissal, there needs to be an extended absence of an employee of six months to a year or a record of 25 to 50 per cent. of non-attendance on a regular basis. To suggest that dismissal can occur willy-nilly is wrong.

For people who have been employed for less than two years, it is uneconomic for the employer to dismiss them rather than pay statutory sick pay. Four weeks' statutory sick pay is more than £200, and to pay two weeks' wages by way of notice is far more than that. It makes no economic sense, and the employer would pay a heavy price if he took that heavy-handed approach.

Mr. Tony Marlow (Northampton, North)

As has been pointed out, if the measure goes through, the employer will be liable for five times more money than at present. If someone has been employed for two years and they are lead-swingers or become so, the burden on employers will be five times what it was before. My hon. Friend said that it is not difficult to take cases to an industrial tribunal. Does not he have some concern for employers who find themselves in such a situation, because they will have to pay five times as much as before, and will be able to do nothing about it?

Mr. Heald

Conservative Members have always supported good industrial relations. [Interruption.] We have always supported the industrial relations code of practice, and any employer who breaks the law by unfair dismissal should pay the price; we should not derogate from that at all.

However, it is important to remember that a whole series of measures have been added to the contract of employment to protect the weakest in society, and statutory sick pay is one of them. At the moment, an employer can offset his national insurance contributions against statutory sick pay, and does not have to pay the full amount.

We should consider the Government's proposals in that context. They are proposing to cut the national insurance contributions and put more of the burden of SSP on to the employer than at present. There is a neutral effect on cost, but when one considers the burdens on business of administration and regulation, one realises that the Government are proposing to free employers of 85 per cent. of the working population from them, that the measure has a good deal of Conservative sense, and that even members of the No Turning Back group could not possibly disagree. I am not a paid-up member, by the way.

Mr. Marlow

I do not think that my hon. Friend has addressed the specific point that I made. A lead-swinger who is trying to buck the system and who takes three days off every now and then because he wants to go somewhere, but is not an obvious enough case to take before an industrial tribunal, will cost the employer five times as much as before. Does not my hon. Friend have sympathy for the employer under those circumstances?

Mr. Heald

I do not agree that it will cost the employer five times as much, because, on average, a small business with five workers on £190 a week, accounting for the cut in national insurance contributions, would be £400 a year better off. One cannot complain on their behalf.

Mrs. Bridget Prentice (Lewisham, East)

The situation is desperate.

Mr. Heald

The situation would certainly be desperate if the Labour party came to power.

If someone is shown to be absent from work without justification over a period, there is no reason why an employer cannot dismiss that person and it would be fair. However, Conservative Members must never say that we support poor industrial relations practice. It is important that we support the best.

I wish to make three points. First, the changes will remove a layer of unnecessary Government bureaucracy and over-regulation of business, with no effect on the costs of industry. Secondly, the changes will make employers more competitive and create jobs. Thirdly, the changes will be good for the health of employees.

Mr. John Spellar (Warley, West)

Is that from central office?

Mr. Heald

No, these are not the words of central office. This is the real world.

Mr. Spellar

Will the hon. Gentleman describe how the changes will create jobs?

Mr. Heald

I am happy to do that. In the example that I gave a moment ago, the effect on a firm with five employees on an average wage of £190 a week who have average rates of sickness would be to reduce their costs by £400 per annum. Small businesses regularly tell the Select Committee on Employment that, if the burdens on business are reduced, more jobs will be created, because they will be more competitive and sell more goods, and the market will do its work. In my constituency, there are 1,200 small businesses in Letchworth, and I believe that they would accept that challenge whole-heartedly.

The argument is different for the large employer. The scale of the regulation of which we are talking is quite draconian. If one consults the handy guide of D. W. Pollard's book on social welfare law, one sees the problems that large employers currently have, which will be removed.

Mr. Spellar

I cannot follow the logic. We are being told that the changes are broadly neutral financially, so industry will not save money. Therefore, using the hon. Gentleman's logic, some companies will create jobs, while other companies will lose jobs. It will not have the effect he says. The real effect may well rest on those who are applying for jobs, especially those middle-aged workers who have been made redundant and who will find it more difficult to get into work because, statistically, they will be seen as a higher risk. That is exactly what has happened in the United States.

Mr. Heald

The provision is better than neutral; it provides £162 million extra for business, in the sense that its costs will be reduced by that amount. As for the hon. Gentleman's idea that employers do not currently consider the health of the people they take on, it is not true. Every employer already asks employees about their health before taking them on—91 per cent. of workplaces have health schemes for which the insurance companies require them to do so.

It is wrong to suggest that employers will suddenly become conscious of employees' health before taking them on—they already are. However, employers will be far more aware of the health of their existing employees and of those they have taken on, because it is in their direct financial interest to improve health and lower the absentee rate.

Mr. Rowe

As we drive up the training standards on which the future of this country depends, is it not the case that the present balance, which is already in favour of an employer much preferring to keep an employee at work than allowing him to be sick—however much he is likely to be reimbursed—will swing even further in that direction? The more skilled an employee, the more costly it is for him to be away from the business.

Mr. Heald

I am grateful to my hon. Friend for making that point, with which I wholly agree. The average training cost nowadays for someone in manufacturing industry is about £25,000, so £400 for four weeks' statutory sick pay pales into insignificance.

I was about to read from D. W. Pollard's handy guide to social welfare law to give a flavour of the regulations. It states: There will be repaid by the Secretary of State or by the Commissioners of Inland Revenue on behalf of the Secretary of State to an employer the amount, or part thereof, prescribed in D. 1560, provided that the employer has requested the Secretary of State in writing to do so and that the Secretary of State is satisfied that either:

• (i) after the employer had deducted all or part of the amount he or she was entitled to deduct by virtue of D. 1556, the amount of primary and secondary Class 1 national insurance contributions he or she is required to pay is insufficient to enable him or her to deduct therefrom all or part of the amount he or she"—

Mr. Malcolm Wicks (Croydon, North-West)

Regulations are intriguing but, for the sake of history, will the hon. Gentleman tell the House which Government published this regulation?

Mr. Heald

Clearly, these regulations were published by this Conservative Government, but, if there is to be a reimbursement scheme—something for which Labour Members seemed to be arguing barely a moment ago—one must have regulations of this type, because that is the only way to administer the scheme. The Government's view—rightly—is that, if the employers of 85 per cent. of the working population are taken out of the scheme, one can save a huge amount in administrative costs for the Government, the taxpayer and employers.

The hon. Member for Garscadden also appeared to think so, because, during the debate on the money resolution, he said: It would not be unreasonable to expect a reduction in staff responsibilities, so why do we require the money resolution? After all, there will not be the substantial—I am sure that it must be substantial—administrative coming and going and expense which is at present the consequence of paying the 80 per cent. of sick pay reclaimed by the majority of employers. Clearly, that must involve a great deal of paperwork. It must involve the monitoring, processing and satisfying of claims. If all that is to be swept away, that is a big plus which presumably would result in a reduction in the administration expenses for which the Minister is responsible."—[Official Report, 14 December 1993; Vol. 234, c. 791.] [Interruption.] I can hear the hon. Gentleman saying that I have taken his comments out of context, but it is clear that there are savings to be made, and that they could be considerable for the public purse and for large employers.

My second point is that employers need to have the lowest possible costs, so that they can compete. Large employers are for ever saying that to the Select Committee on Employment, of which I am a member, as are the Institute of Directors, and the Confederation of British Industry and various other bodies, but they cannot have it both ways. They cannot ask the Government to remove the burdens and regulations but, when the Government have done so, complain because they would like not only cuts in national insurance but not to have to bear any of the costs. The measure will therefore bring considerable benefits to large employers, and I have already dealt with small employers.

On the question of the sickness and health of the work force, there are lessons to he learned from the experience of the London boroughs which were outlined earlier. It was possible for the level of sickness and absenteeism to be reduced from 17 per cent. to 14 per cent. in a relatively short period, merely by improving management practice.

If one can introduce financial incentives, as the Bill would, one can make considerable inroads into the problem and make Britain one of the best countries in terms of absenteeism, rather than one of the worst. I am led to think that because, apart from the statistical evidence provided by the London boroughs, there is the obvious thought that, if there is money in it for the employer, the scheme is likely to work.

A woman came to my surgery recently to complain that her employer was putting pressure on her to remain off sick because he had a downturn at work and welcomed the fact that the state was paying for what amounted to a lay-off. She said that the same was true for three or four other employees in the same company near my constituency.

Mr. Spellar

Is that the upturn?

Mr. Heald

I hear the criticism.

I was lucky because it turned out that she was not one of my constituents, so I was not put in an embarrassing situation with a constituency company—the company involved was just over the border. The lesson, however, is that it may not simply be a question of someone swinging the lead, as my hon. Friend the Member for Northampton, North (Mr. Marlow) suggested; some employers may to some extent have connived in creating a higher level of absenteeism than is strictly right.

I welcome the Bill, because it will help industry and jobs, and that is why I shall vote for Second Reading tonight.

7.17 pm

Ms Liz Lynne (Rochdale)

I am delighted to be called, because the debate offers me the opportunity to raise many of my fears, especially those for people with disabilities, those with long-term health problems and ex-mental health patients.

Many of the measures in the Bill will debar many such people from obtaining work. Many employers will clearly not want to employ someone who has a bad sickness record and, by the very nature of their problems, people with disabilities often have to take time off work. I stress that that is not true of all people with disabilities, because some do not need to take time off. However, others do, and I believe that they will be strongly disadvantaged.

We have been led to believe that national insurance contributions were supposed to provide money for people when they were unemployed or sick. People have been paying into the scheme for years, but they now find that they are not getting the benefits that they have paid for from the Government.

Mr. Heald

Is the hon. Lady aware that it is not a contributory scheme?

Ms Lynne

Yes, I am well aware of that. The hon. Gentleman may wish to speak later, although he has already had the opportunity to make a speech. He did not make his points very well, so I do not think that it is worth while his intervening on someone else. It is just another example of the games that Conservative Members have played in the past few days. In the Budget, the increase in national contributions was 1 per cent., and a person earning £18,000 a year will have to pay an extra £150 a year. At the same time, the Government are dismantling the advantages of the welfare state. That is despicable—[Interruption.] Conservative Members may laugh, but people in their constituencies will not be laughing quite so much.

The Government are reneging on their side of the deal. It was a swift and deadly Budget, in which unemployment benefit was reduced to six months and statutory sick pay for many has been abolished. The Government attempted to compensate for statutory sick pay by reducing employers' national insurance contributions by 0.2 per cent. for large firms and by 1 per cent. for small firms. How do the Government know how many people will be off sick? How have they calculated that? Do they have a hot line to Russell Grant, or some other astrologer? Are they employing him to tell them how many people will be off sick and for how long?

The Government are saying that the Bill will compensate people, and that the compensation will be adequate. I do not think it will be. The Government have made an assumption that the decrease in employers' national insurance contributions will offset the bill for statutory sick pay. That is ludicrous; it will not. It is not only Opposition Members who believe that, but small firms and larger companies. For example, the Federation of Small Businesses stated that, for well-managed companies with low sickness rates, there will be a reduction in the cost of employing people. That is possible, but what about the people who, through no fault of their own, are employed by not so well-managed companies?

Mr. Andrew Hargreaves (Birmingham, Hall Green)

Will the hon. Lady give way?

Ms Lynne

No, I will get on.

People employed by not so well-managed companies will suffer; they will not receive sickness pay, or they will lose their jobs when companies can no longer afford to employ them.

The Chancellor of the Exchequer claims to be a friend of small businesses, and has said that they will benefit from the Bill. Small businesses with a national insurance contributions bill of less than £20,000 will receive state paid statutory sick pay if an employee is off work for more than four weeks. That is an inadequate measure. Many employees are certainly not off for more than four weeks, in which case the employer has to pick up the entire bill.

The owners of small businesses are extremely worried about these measures, and fear that they will cause them severe financial difficulty. For example, if a company with a work force of eight or 10 people has two workers, 25 per cent. of its work force, off sick for up to four weeks, how will it be able to afford to bring in temporary staff if it does not receive statutory sick pay? It will not, and in those circumstances it will be forced to close.

The Government say that the compensation is high enough. I have had a communication from a company called Goldwood (Moulton) Ltd., which employs 15 people. Last year, its national insurance contributions were £11,449.59; it got back £114, but it paid out £580.20. The true cost to the company will be £464.16 extra.

Mr. Lilley

How much will the company save on NI contributions—or was that included in the hon. Lady's figures?

Ms Lynne

The true cost will be £464.16. I will be pleased to let the Secretary of State see the communication after the debate, if he wishes.

Mr. Lilley

Does that take account of the reductions in national insurance contributions?

Mr. Deputy Speaker (Mr. Michael Morris)

Order. If the hon. Lady is giving way, she should sit down. If she is not, the Secretary of State should not stand up. Is the hon. Lady giving way?

Ms Lynne

No, I have already given way once. I will give the figures to the Secretary of State after the debate, and if he cares to contact the firm, he is at liberty to do so. It will tell him far better than I of the problems that small businesses up and down the country are facing.

Mr. Richard Spring (Bury St. Edmunds)

Will the hon. Lady give way?

Ms Lynne

No, I will not give way. I am fed up with Conservative Members trying to score party political points, as they did last night when they disrupted the business of the House and prevented many hon. Members from taking part in the Consolidated Fund Bill debate. I am not prepared to give way to Conservative Members.

Big businesses have also voiced concerns. IBM is looking into the measures, and has said: We will suffer more from a decision to stop reimbursing sick pay than we will benefit from the reduction in national insurance contributions. It fears that it will have to cut back on perks such as generous occupational pensions.

If IBM, one of the best run and economically sound companies, is contemplating such moves, even with its 0.2 per cent. reduction, the mind boggles about what other companies will do to cope. They are already reeling from the recession that has been caused by this Government's policies.

The Bill will have a prejudicial effect on the work force and society. Many employers are bound to ask about the sickness records of people looking for work, and about how much time they have had off work. If they have had too much time off work, they will not be employed. These measures will have a devastating effect on people with disabilities. Already, 40 per cent. of disabled people are out of work, and the Bill will ensure that that figure will increase.

This is no way to run an economy. In addition to wasting the talents of many thousands of people, the Bill will increase the social security bill by putting people out of work and making them dependent on the state. The Bill is not a radical attempt to reform the welfare state; it is intended to dig the Government out of the PSBR hole that they have dug for themselves.

7.28 pm

Dr. Robert Spink (Castle Point)

I welcome clause 1, because it encourages British industry and commerce to become more effective, improve unit labour costs and become more competitive. The Bill is cost-neutral, as was its predecessor, the Statutory Sickness Payment Act 1991, and contains broadly compensating reductions in employers' national insurance contributions.

The most significant financial impact of the Bill will be to encourage employers and employees alike to reduce sickness absence and improve working conditions. That will reduce the direct cost of absenteeism, and, more significantly, reduce the indirect costs of sickness absence.

Let me explain that for the benefit of the hon. Member for Glasgow, Garscadden (Mr. Dewar). Hon. Members who know British industry will understand that the negative impact of sickness absence is not only lost productivity and the cost of sickness pay for the absent worker. Of equal, or even greater, importance is the disruptive impact on the balanced production line, on delayed and duplicated administrative work, and the learning curve effects.

The disruption impact—the secondary impact on efficiency—is of great financial consequence, greater even than the direct cost of sickness absenteeism. Unlike other forms of absenteeism, sickness absence cannot be planned. Its impact affects the whole organisation, inhibiting the effective achievement of the organisation's objectives, whatever they may be, and drives up the costs to the organisation out of all proportion to the direct costs of the statutory sick pay.

The latest sickness absence statistics are very telling. According to the labour force survey on absenteeism, 170 million working days are lost each year to the United Kingdom economy as a whole: that represents 3.8 per cent. of total working time, and an average of eight days per employee per year. As we have already heard, the duration of sickness absence is typically very low; some 40 per cent. of absentees are absent for fewer than four days.

Internationally, we perform very badly: we have the second highest absenteeism rate in the European Community. I had thought that we were under-performed only by the Netherlands. Our rate of sickness absence is about half as high again as that of the United States of America. That is not acceptable; it is draining our competitiveness, and acting as a permanent leech on our economy. It is therefore right and proper for the Government to make a change that will focus employers and employees on the need to reduce unnecessary sickness.

The CBI states: incentives to reduce the costs of sickness absence are not necessary in the private sector where lost productivity provides sufficient incentive. Members of the CBI are reverists if they really believe that there is no room for improvement in sickness absence rates.

Ms Angela Eagle (Wallasey)

Did the hon. Gentleman read what the CBI said about the Bill in The Independent on Sunday: It would impose costs on the employers which would be partly hidden and would damage competitiveness"?

Dr. Spink

According to a briefing that I received from the CBI today, it supports the Bill. I shall make that material available to the hon. Lady immediately after my speech. The CBI cannot really believe that there is no unnecessary sickness absence in this country; it knows there is.

There are interesting differences in sickness absence in the United Kingdom economy, which serve to highlight the fact that a good proportion of such absence is indeed unnecessary. For instance, in small companies—where management have a closer and much clearer understanding of employees, where the money often comes straight out of the manager's back pocket and where loyalty is strongest—sickness absence is much lower than in larger organisations.

In Japanese companies operating in the United Kingdom, sickness absence is running at about half the average. It is notably lower in the private sector than in the public sector— hon. Members will know the story of the public-sector employee who asked his colleague whether he had managed to save any of his sick leave for Christmas shopping this year. The CBI and Industrial Society surveys do not, however, have large enough sample sizes to distinguish reliably between regions and industries.

It will be clear to all hon. Members that, in bringing pressure to bear on the problem of sickness absence, the Government will drive up competitiveness. Let me point out to the hon. Member for Warley, West (Mr. Spellar)—although, unfortunately, he is no longer in the Chamber—that that pressure will improve employment, reducing the burden on the taxpayer and the size of the bureaucracy.

I see nothing wrong in that; I consider it a great benefit. The moribund nanny state will be pushed further back: I welcome that development, and will ask the Government to go further along the same line. I see the Bill as an element of the virtuous circle that will yield benefits to everyone, and I am delighted to support the Government.

Ms Eagle

In its parliamentary brief, the CBI says that it does not want the Government to go any further. It appears that the hon. Gentleman agrees with one part of what it has said, but not with the other, more crucial, part.

Dr. Spink

The hon. Lady is being very selective. The CBI says that, "in accepting the proposals", it seeks three assurances. I shall deal with those assurances shortly, but it is clear that the CBI accepts the Government's proposals.

Mr. Spring

This is an important point. In its briefing, the CBI says: In the context of the overall Budget package"— which was enormously welcomed by the CBI— and the reassurance provided by the welcome proposals to reduce NI contributions to offset the cost of transferring SSP, the CBI does not wish to oppose the SSP Bill. It could not be put more plainly.

Dr. Spink

I am indebted to my hon. Friend for that clarification.

Mr. Peter Mandelson (Hartlepool)

In all fairness, the hon. Member for Bury St. Edmunds (Mr. Spring) did not do the House the service that he might have done had he read the entire paragraph. The CBI goes on to say: there are real concerns that some employers will not he adequately compensated, for example those in construction or heavy engineering, who face higher absence rates for reasons beyond their control. It may also hurt the small employers with around 20 employees disproportionately". The entire brief should be read in context, not just selective extracts.

Dr. Spink

I agree with one implication of that statement. The construction industry, along with a number of others, needs to examine its working conditions and its safety record very carefully. They are appalling: there are far too many fatalities in our construction industry. Perhaps the Government's move will draw attention to that, and focus employers' minds on improving working conditions.

Of course we must all welcome any move that reduces bureaucracy, as the Bill does. It will greatly simplify the administration of the statutory sick pay system. Only a small business man—or, indeed, a large business man, or rather, a business man in a large organisation —who has had to grapple with the complexity of SSP would fully appreciate the importance of that point. Indeed, a third of small businesses do not even bother to use the system, because it is so complicated.

The CBI says that the measure will increase non-wage labour costs. However, if it works well—as I expect it to —it will reduce overall non-wage labour costs, thus reducing unit labour costs, making us more competitive and helping us around the virtuous circle that the Government are trying to pursue. I am sure that, on reflection, the CBI will accept that.

I agree with the CBI on one key point. It seeks an assurance that there will be a radical overhaul of the present complex and burdensome administrative procedures for the SSP scheme. The present Bill only relieves employers of the burden of claiming compensation! I trust that the Government will give that firm assurance; I also hope that they will give careful consideration to what the hon. Member for Rochdale (Ms Lynne) said about the potential impact on disabled employees.

7.38 pm

Mr. Peter L. Pike (Burnley)

The speech of the hon. Member for Castle Point (Dr. Spink) underlined the problem that the Government have caused by rushing into the legislation. He gave one reason for his belief that the Bill would encourage employers to improve the health of their employees, thus reducing the sick pay bill; his hon. Friend the Member for Hertfordshire, North (Mr. Heald), however, could cite a clear case of an employer's suggesting that, because production was not as good as it should have been, employees should take more time off work in view of the sick-pay subsidy that enabled employers to pay their workers. Two very different reasons were given. The Opposition would welcome genuine measures by employers to improve the health of workers, but I do not believe that that is the purpose of the Bill.

Mr. Heald

Does the hon. Gentleman accept that the point that I was making—at the moment, there is a possibility of fraud occurring of the kind that I was outlining, and this measure will stop that? Does he not agree that Opposition Members, as well as Conservative Members, want to stamp out fraud of that kind so that taxpayers' money is properly spent?

Mr. Pike

We, too, welcome the stamping out of fraud, but I bet that the employer that the hon. Gentleman was speaking about was a Tory voter and was looking at ways that he could abuse the system—tax evasion and the rest. The Opposition do not want to see the system abused. We share with that objective in mind. I do not believe that that is the principal objective of the Bill.

I believe that we must look seriously at the implications of what is going to happen. I have no doubt—my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) made the point, as did other hon. Friends—that the Bill encourages the employer not to employ people seeking employment who are older or perhaps have health problems. Therefore, those people will become permanently unemployable. Employers will be given a licence to get rid of workers who have an above-average record of quite genuine sickness. Many people quite rightly interpret the Bill and the Budget proposals that relate to it as a charter to sack the sick.

Mr. Rowe

The hon. Gentleman must admit that probably one of the most distressing features of the present employment market is the extraordinary difficulty that people over 50 have in even getting seen for jobs, and the Bill would not make any difference to that. What is required is a real understanding among employers that people over 50—or even over 45 these days —are more likely to have a good employment record and are more likely to turn their backs on minor illnesses. If anything, the Bill will highlight the present totally disgraceful situation and not affect the market in the way that he claims.

Mr. Pike

The hon. Gentleman makes a good point. I have no doubt that there is a bar to people above the age of 50 and that many conscientious workers who should be considered for employment at the present time are barred. I believe that the proposal will extend the number of people aged 40 and over who will not be considered for employment because of their sickness record. Although I have some sympathy with part of his contention, I certainly would not go the whole way with what he was saying.

I want now to deal with the 0.2 per cent. reduction in national insurance contributions, which has the same effect as all general reductions on a one-off basis; some employers will gain and some will lose. I must say to the Minister, and to the Secretary of State who is not with us at the moment, that they should give consideration to employers who employ a large percentage of their workers in types of jobs which, by their nature, are prone to creating sickness.

My hon. Friend the Member for Garscadden referred to construction workers, but, as he will know, many industries equate to that one example. People who work outside—people working on the roads, and in many other jobs—are at high risk of having health problems and are more likely to have time off work. Some people work shifts. Shift work creates conditions for health problems. There are a number of situations that need to be taken into account.

I believe that the generalisation of the 0.2 per cent. reduction will penalise some employers. The Secretary of State should consider that position carefully. If the Bill is forced through, it will have unfortunate effects for some employers.

The Secretary of State referred to the situation in Germany and Holland. In some way, he was referring to the situation with regard to employers. If I understood him correctly, he was saying that the workers got a much better deal in Holland and Germany than they do in the United Kingdom. I make no apology for saying that I believe that the Government always fail to take into account the needs of workers. That is why they are opposed to the social chapter and a national minimum wage and why they abolished the wage councils. We must ensure that the right to sick pay is protected.

I want the Minister to look at how we can ensure that when the employer has to meet 100 per cent., bad employers will not try to evade it. I know that these things are covered by previous legislation, but there is a growing trend of employers trying to get away with such things. Unfortunately, many employers fail to recognise trade unions. Many workers dare not complain and will not get the sick pay to which they are entitled.

I want the Minister to assure us about what steps workers can take if they feel that they are not getting their entitlement to statutory pay. The Secretary of State underlined the fact that it is statutory sick pay, and, therefore, I hope that the Minister will accept that, if an employer dodges that responsibility, there is some statutory responsibility on his Department to ensure that that payment is made.

Mr. Hargreaves

I have some sympathy with what the hon. Gentleman has been saying, as I have been part of a large organisation and have had various connections with small organisations, particularly clubs. I ask him to consider that there appear with this measure to be two angles: the first is the medium and large company and the employees thereof; the second is the growing number of much smaller companies which, as my right hon. Friend the Secretary rightly said, find the form filling so horrendous that they dispense with the system altogether. To be honest, they are being very good employers in that they continue paying irrespective and are not reimbursed for it.

Mr. Pike

The hon. Gentleman makes a valid point, but, on the point that I am making, I seek assurance from the Minister that his Department will give assistance to people if they do not get the statutory sick pay, to which they are entitled. Now that the employer will have to pay 100 per cent., I think that we may see a greater evasion of the legal responsibility by the bad employer. However, we must accept that there are good employers as well as some bad employers.

Finally, I shall refer to the rating. Again, the point was made by my hon. Friend the Member for Garscadden. The Secretary of State said that he would use wise judgment in that situation. I hope that we get some assurance from the Minister who is winding up that although statutory sick pay does not have to be increased by the rate of inflation, or any other factor, we will not see it effectively frozen.

I accept that we are moving up from the lower to the higher rate. However, let us not hide from the fact that there will be a problem if that higher rate is not uprated in the years to come. I hope that the Minister will assure us that the Government have no intention of allowing the real value of statutory sick pay to be eroded even though they are shifting responsibility to the employer.

The Government must accept that they have a responsibility, particularly for those workers who depend on statutory sick pay and who do not receive sick pay from their employers. Those people depend on that money and its value must not be allowed to fall in real terms. I hope that the Government recognise that they have a genuine responsibility. It is always said that we have reasonable Secretaries of State, but we all have different views about what is reasonable and about wisdom. I hope that the Government will assure us that they intend the value of SSP to be maintained in the years ahead.

7.49 pm

Mr. Richard Spring (Bury St. Edmunds)

I am aware of the problems of absenteeism, as I have run a business. On a national scale, up to £13 billion a year is lost to British industry in terms of additional costs as a result of absenteeism. That is a truly enormous and frightening figure.

I have also conducted business in the Netherlands. Absenteeism is a particularly endemic problem in that country and it has provoked considerable national discussion there. Happily, we are not as badly off as they are in the Netherlands, although the record in the United Kingdom is not particularly good. On average, we lose eight days a year through sickness.

Smaller companies are easier to manage from a personnel point of view. The level of absenteeism is twice as high in larger companies as in smaller companies. That is indicative of the scale of the problem.

Mr. Rowe

Is my hon. Friend aware of recent research which shows that a surprising number of employees of a whole variety of ages—not just the older employees—would, if given the opportunity, trade hours for pay? In other words, some of them would be prepared to work fewer hours a week if their employers gave them that opportunity. Does my hon. Friend accept that that may be a contributory cause to absenteeism and sickness? Does not that provide a window of opportunity to get people into work and off the unemployment queue?

Mr. Spring

My hon. Friend has made a very important point. Flexibility in the way in which we operate our employment market is important. Flexibility is one of the reasons why we have been so successful as a nation at reducing unemployment in comparison with other countries in the European Union. I value the point made by my hon. Friend the Member for Mid-Kent (Mr. Rowe).

When considering management, we must ask why Japanese companies operating in the United Kingdom are so successful at raising productivity levels and reducing absenteeism. Their productivity is reflected in lack of absenteeism. They have 2.3 per cent. absenteeism, as opposed to the national average of more than 4 per cent. That has not come about as a result of coercion.

My hon. Friend the Member for Hertfordshire, North (Mr. Heald) referred to the Audit Commission study of London boroughs which was undertaken in 1990. The Audit Commission enunciated five principles based on good management practice which included appropriate information, suitably trained managers, attention to staff welfare, clear responsibilities and commitment by senior management.

Absenteeism was running at two and a half times the national norm. However, as a result of the Audit Commission study, there has been a substantial decline in absenteeism as a result of the actions of management. That is an important part of the equation and it is an important element in the philosophy behind the Bill. Management should take responsibility for their employees, including for sickness and days off through absenteeism.

Motivation to make people a part of a team and an enterprise and to feel that they want to be at work and not absent is a clear objective of all good management. It has also been said that 90 per cent. of employees in this country are covered by occupational pension schemes for short-term sickness. Therefore, employers have a significant role to play.

Several hon. Members referred to the difficulties facing small businesses. I fully understand that point. The Federation of Small Businesses has been critical of the Bill. However, it is only fair to say that the federation and the Confederation of British Industry must consider the issue within the overall context of the Budget. After all, the Bill is a budgetary measure. The federation and the CBI both welcomed the Budget for the exceptional help it has provided for small businesses. I am a vice-chairman of the Small Business Bureau which is very much in touch with, and sympathetic to, small businesses.

It is important to make the point that the Budget offers help with cash flow. There has been a dramatic cut in interest rates over the past year. We have also seen an extension of the loan guarantee scheme and the rollover of capital gains reliefs. In addition the Government are rightly considering the question of prompt payment. Small businesses have been greatly encouraged by that. If they are critical of the Bill, they must consider it within the context of the enormous help that the Government have given the small business sector, which it has accepted unanimously, as a result of the Budget.

It goes without saying that individual employers will depend, with regard to absenteeism, on particular levels of pay and sickness. I want to consider the specific point of small businesses and the challenges that they face in the context of the Bill. We must consider whether this is a cost-saving exercise for the Government. The hon. Member for Glasgow, Garscadden (Mr. Dewar) referred to a transfer away from welfare spending. However, a misleading impression has been created that the cost of not reimbursing 80 per cent. of SSP is about £675 million in 1994–95 and £720 million in 1995–96. However, the cut in employers' national insurance contributions is worth £830 million. That is much greater than the change in SSP. It is a saving of £160 million to businesses.

Let us consider the example of a medium-sized company employing staff who earn an average of about £170 a week. It will save £88 a year on national insurance for each employee. If the firm experienced average levels of sickness, it would forgo reimbursement of SSP over the next year of about £44 per employee. That is a gain per employee of £44 a year.

Ms Eagle

Will the hon. Gentleman admit that he is reading directly from the central office brief? Given the information that it provided during the last general election, why should we believe anything in the central office brief?

Mr. Spring

The hon. Lady has made a point on which it is worth reflecting. With regard to what the electorate believe, we know what the electorate did in the last general election and what they will certainly do in the next one. The fact is that reductions in NICs outweigh the higher cost of SSP and improvements in maternity pay which may come about through the EC pregnant workers directive.

I want now to consider specifically the small business situation. At present, any employer whose NIC liability is £16,000 or less—with, say, 10 or fewer employees— can recover 100 per cent. of SSP paid to an employee after the first six weeks of sickness. In effect, that means that raising the threshold to £20,000 is way ahead of inflation. Also, the reimbursement period is cut from six weeks to four weeks.

Two thirds of employees—about 750,000—will be helped. That is an increase of 50,000 employees. All small firms with average levels of sickness will benefit overall. To sum up, there will be 100 per cent. reimbursement for small companies with average sickness rates and where absences are in excess of four weeks.

I particularly wish to comment on what my right hon. Friend the Secretary of State said about the establishment of the working group which includes Department of Social Security officials, employers and employers' organisations to remove or ease the administrative burdens of the SSP. Its review will be completed in April 1994, as part of the Government's resolute determination to reduce red tape and bureaucracy wherever it is found.

At the heart of the matter is the question: can companies be encouraged to manage absenteeism and sickness better? In the Financial Times of 8 December, Angela Baron, a policy adviser at the Institute of Personnel Management, said: The experience of companies that have started monitoring sickness absence is that the very fact that they have started paying attention to it is enough to reduce the absence rates in their companies. That is an extremely important point. In practice, most big companies top up statutory sick pay in different ways. Some companies have introduced a number of measures and bonus schemes to attempt to reduce absenteeism further.

Iveco Ford in Slough did that. Its absence level of 7 per cent. is now down to 2.8 per cent. In 1986, Vauxhall had sickness absenteeism of 8.8 per cent. Today it is down to 4.5 per cent. That was after the company introduced a negotiated incentive scheme which saved employees £4 a week in contributions to the company's sick pay scheme if average levels of sick pay could be kept below 5 per cent. Rover, a great jewel in the manufacturing crown of this country, introduced a return-to-work interview scheme for staff who were frequently off, and it cut absenteeism by no less than half in the past three years.

Those are practical examples of successful management of absenteeism, and they have had an enormous impact on reducing costs to companies. After all, such companies provide employment in this country, and that is partly why companies such as Rover are doing so well capturing markets and are able to provide yet more employment, compared with other companies in Europe.

Can a change in statutory sick pay have even more dramatic effects? There is an extremely interesting example in Sweden. Opposition Members used frequently to cite Sweden as a great example of a model social welfare state. One has only to look at the implosion of the Swedish economy, its rapidly rising unemployment, and the collapse of national morale to see that the social welfare state grew so fast that it literally grew out of control.

Earlier this year, Sweden reformed its sick pay arrangements. For the first time, the payment for an employee for the first two weeks off work had to be borne by the employer. A curious thing happened early in November. The flu vaccine in Sweden ran out, not because of a flu epidemic but because employers saw the wisdom of taking preventative action in the face of a possible epidemic. Swedish companies have taken those steps to try to keep down sick pay costs. No doubt Sweden's soaring unemployment has much to do with that and has played its part, but, in three years, absenteeism has fallen in that country, from three out of 10 workers being on sick pay at any given time to fewer than one in 10 today. That is a remarkable success story of good management which has led to advantageous results for the Swedish economy.

The motivation of people to make the best of their jobs is at the heart of any business enterprise. Of course, motivation is more likely to be in the private sector than in the public sector. It is worth noting that, on average, sickness absence rates are a quarter higher in the public sector than in the private sector.

I particularly welcome the abolition, in April 1995, of the lower rate of SSP. That will be worth £3.70 a week to the lower paid. That harmonisation will remove the time-consuming exercise of establishing whether an employee's average weekly earnings entitle him to the lower or the standard rate of SSP. There will be only one rate, and that will further reduce bureaucracy and administrative burdens. Administration will be cheaper and the system will be easier to understand. Of course, lower-paid employees are less likely to be covered by occupational schemes.

The Bill gives employers an incentive to improve further the health of their staff, while protecting smaller businesses more generously. I very much welcome the Bill.

8.5 pm

Mrs. Bridget Prentice (Lewisham, East)

I begin by congratulating the hon. Member for Castle Point (Dr. Spink) on his use of the word "reverist". It will entitle him to some toys for children in his constituency. I hope that, if I use the word "victrix" in the same way, I will be able to join him in that—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. The hon. Lady was probably not present when Madam Speaker expressed her views about that matter. She was not very happy about such practices in the Chamber. If the hon. Lady would refrain from making such comments, I would be more than grateful.

Mrs. Prentice

I accept what you say, Mr. Deputy Speaker. Unfortunately, I was not present when Madam Speaker made that comment.

The hon. Members for Bury St. Edmunds (Mr. Spring) and for Mid-Kent (Mr. Rowe) seemed to advocate movement towards a 35-hour week. I was most impressed that Conservative Members were beginning to think that such flexibility in working arrangements might be considered. However, the hon. Member for Bury St. Edmunds implied that nurses, for example, seem to be less well motivated than car workers. He implied that people doing such public service jobs are more likely to be absent, deliberately miss work and generally have no incentive to do the quality of work that we know that they do.

Statutory sick pay is not a giveaway—it is not easily obtained. It is a benefit to be received only if a person is sick or disabled and is unable to work as a result. We obtained the impression from Conservative Members that it is a skivers charter. We also know that people on poverty wages do not even qualify for it.

I should like to think that society is at a stage at which we should be working with employers and employees to enhance the world of work rather than to denigrate it, and that we should not make matters more difficult for employers but give them more help and opportunities to expand their work forces. The essence of the Bill contradicts what the Government say is their policy for business and employers. Indeed, they freely admit that it will cost employers at least £100 million. We have figures to suggest that it will be considerably more than that.

The Confederation of British Industry thinks that the measure is a fundamental breach of the partnership agreement between the state and employers delivering a vital social security benefit. That is what statutory sick pay is about. There is a responsibility on the Government, in favour of the citizens of this country, that they ensure that proper statutory sick pay is available to all. The Bill is really about the Government reneging on that policy and on their responsibility to govern and protect communities and individuals, and to act in a responsible and civilised manner.

Mr. Spring

Is the hon. Lady suggesting that the CBI is opposed overall to the Bill?

Mrs. Prentice

The hon. Gentleman will know that we have disputed the position that the Government have taken with regard to the CBI, which is not at all happy with the Bill. The so-called support from the CBI which we heard about from Government Members is a contorted view of what the CBI believes.

The Secretary of State said in his opening remarks that there was no evidence that the Statutory Sick Pay Act 1991 —and, he implied, this Bill—involved discrimination against people who may be off work through illness. I do not know why the Secretary of State has come to that conclusion. At least he does not go as far as the brief from central office, which says that evidence shows that the Labour party got it wrong when in 1991 we predicted increased discrimination.

Let me tell hon. Members that citizens advice bureaux totally and absolutely refute the Secretary of State's position. They are extremely concerned that employers will dismiss sick people as a result of the Bill. We know already of many employees who do not receive the full amount of statutory sick pay, and some who do not receive any at all. The CAB gives examples, such as a client in the west midlands who said that his employer's policy is to issue written warnings for certified absence during sickness. In Avon, a client on sick leave was paid less than the full amount and was told by her supervisor after six weeks off sick that she was to be made redundant and that someone was already doing her job. The CAB provides several other examples.

If the Secretary of State believes that people are not discriminated against as result of being ill, he is not in the world of reality and he does not know what life is really like for employees.

The Government also say that they want to increase occupational sick pay schemes, yet both the CBI and the Federation of Small Businesses believe that the abolition of reimbursement will limit the ability of employers to provide occupational sick pay schemes. There, yet again, is a contradiction of the Government's policy.

The hon. Member for Hertfordshire, North (Mr. Heald) talked about the removal of the administrative burden. The Federation of Small Businesses seems to think something quite different. Its says that, despite the fact that the transfer of sick pay will take place, the administrative record-keeping will still have to go on. Firms must still provide sickness records, and all of the paperwork which is attached to them. They will still be expected to deal with self-certification notes, waiting days, periods of incapacity for work calculations and so on. Firms will still be subject also to Department of Social Security inspections. The federation believes that the administrative burden will not be reduced as a result of the Bill.

Mr. Heald

The point that I was making was that the complete removal of the administrative burden for large employers will be of great benefit to them. I accept entirely that, as far as small businesses are concerned, that has not been removed.

I hope that the review body will be able to cut that administrative burden further. The hon. Lady should not think that I said that small businesses would be better off in that particular way—I did not.

Mrs. Prentice

The hon. Gentleman may have attempted to clarify his speech which was delivered in a fog earlier in the evening. He lives in hope that the review body might do something about it. He should recognise, as others have, that every time the Government set up such a review body, our hopes do not triumph over experience. We do not expect a considerable improvement as a result of the review body. The Conservative party believes itself to be the party of businesses, big and small. Tonight, through the Bill, it has reneged on its commitments to both. It has reneged on its commitments to reimburse employers, as it had promised in previous years. It has reneged on its commitment to support small businesses, because those businesses will tell anyone that the five week period is of little use to them, because most of their work force would have returned to work in a shorter period. It has reneged on its commitment to remove the burden from business.

The Conservative party cannot even get the business organisations to give their whole-hearted support to the Bill. Those of us who believe in a partnership between Government, employers and employees can do no better than to thoroughly oppose the Bill.

8.17 pm

Mr. Peter Thurnham (Bolton, North-East)

I am sorry that I missed part of the speech by the hon. Member for Lewisham, East (Mrs. Prentice), because I was out of the Chamber making inquiries. I declare an interest as I am a small employer. I may declare a further interest of a different sort in that I was fortunate to be winner of the Helping Hands award last year from the Federation of Small Businesses.

While I was out of the Chamber, I took the opportunity to check on what was said during the debate on 28 November 1990, when the House debated the Statutory Sick Pay Bill. I noticed that I welcomed the Bill then, and I said that I thought that the interests of small firms should be considered. I shall quote a sentence which I picked out: I support the Bill as 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." —[Official Report, 28 November 1990; Vol. 181, c. 893.] Of course the Bill went to the other place, where amendments were made, including the removal of what was known as the "Henry VIII clause". The amendment which helps small businesses was introduced in the other place.

I notice that the briefing that has been issued by the Federation of Small Businesses does not entirely welcome the Bill. However, I wonder whether it has picked up on all of the points that the Government have introduced. It seems that the Government have paid particular attention this time to the interests of small firms. In reading the brief from the federation, it seems that it has not picked up the extent to which small firms will benefit from the change from six weeks to four weeks during which employers are liable before they get full compensation.

The Government have paid attention to the needs of small firms. That was the issue the last time we debated it, and it is still the issue now, although we have gone all the way to 100 per cent. payments by employers. The Government have made the right decision, although it may not be immediately welcome by all employers. The Government have, in effect, decentralised decision-making so that the amount of money provided by the Treasury can be allocated to those who need to draw sick pay benefit through the medium of employers. Those employers are able to make a much better judgment than anyone in the Government will ever be able to as to what the circumstances of each case are. Reducing national insurance contributions by 0.2 per cent. will amount to very nearly £1 billion which the Government have ensured will not burden employers.

While listening to the Opposition spokesman, the hon. Member for Glasgow, Garscadden (Mr. Dewar), I had difficulty in understanding what the Opposition are opposing. It almost seemed as if the hon. Gentleman was trying to argue the case for the employers, which seemed to come strangely from a party which imposed a jobs tax when it was last in power. The rate of national insurance contributions was 13.5 per cent. when the Labour party was last in power. Was not that the best part of a jobs tax?

It seems strange that the Labour party should now try to argue that it is looking at the situation from the point of view of industry. When it was in power, the Labour party did its utmost to tax jobs out of existence. I still have the greatest difficulty in understanding why the Opposition are opposing the Bill, and I have heard no argument from Opposition Members which would explain. It is just a knee-jerk reaction—as the Government are doing what is perfectly sensible, the Opposition will oppose it for whatever reason. I do not know whether we will hear any arguments from the Opposition which will stand up. I have not heard anything from Opposition Members worthy of interest. The most interesting points were made by Conservative Members.

My hon. Friend the Member for Surrey, North-West (Sir M. Grylls) spoke about the importance of reducing the administrative burden on firms. The Bill will make a small contribution to that by relieving employers of having to go through the process of reclaiming the 80 per cent. However, employers still have a great deal of record keeping.

The fact that benefit is available for 28 weeks and is paid straight into an employee's bank account makes it easier for the payments to continue. When the Labour party was in power, it was much more difficult as people had to go to the benefit office to get their sick pay. The arrangements are now easier which may make it difficult for employers to judge the circumstances of an absent employee.

When we debated the issue previously, I spoke about the construction industry. I do know know whether my right hon. Friend will be able to say whether there has been any consultation with that industry.

The Electrical Contractors Association is concerned that employers will be more likely to take on 714s—the self-employed—because the traditional role of the Electrical Contractors Association as a self-regulatory body will be destroyed if more and more people become self-employed.

There is concern among the ECA and other construction industries that the Government's measures may lead to more people becoming self-employed. It would be nice to be reassured that the Government have considered that point of view and will consult fully with representatives from smaller firms. There may be an opportunity to participate later in the debate, but that is all I want to say now.

8.21 pm

Mr. Adam Ingram (East Kilbride)

This has been an interesting debate that is worth setting in its historical context. I hope that it will be recognised that it is no exaggeration to say that what Lloyd George started on 4 May 1911 when he moved the National Insurance Bill was ended on 30 November 1993 by the Chancellor of the Exchequer.

We are debating the effective end to state participation in a social welfar benefit pioneered and brought into law by the National Insurance Act 1911. In its historical context, that Bill was the most important involvement by the state in social health care until the creation of the national health service in 1948 under a Labour Government. If the measure goes through tonight, as it undoubtedly will, it will be confining 82 years of state welfare provision to the dustbin of history.

That is all part of the Government's programme to dismantle the welfare state. It is the beginning, not the end, of a process and I hope that, as Conservative Members troop through the Lobby, they are aware of what they are doing. To use an old Scottish saying, "If ye didnae ken before, ye ken noo."

I turn to the more current historical antecedents of the Bill. When the Statutory Sick Pay Bill passed through the House in November 1990, hon. Members on both sides expressed fears that the reduction in reimbursement from 100 per cent. to 80 per cent. would be the thin end of the wedge—the beginning of a steady decline in the Government's contribution to national sick pay costs. It was one of those all too familiar phrases. The Secretary of State of the time assured the House that the Conservative Government had no plans to make further changes. We have become accustomed to such assurances. At the last election, the Prime Minister told the electorate that there were no plans to increase the scope of VAT or national insurance contributions. We know what has happened to those promises—even if they were made, in the immortal words of the Chancellor of the Exchequer, on a wet night in Dudley.

The Labour party and the country at large now know that, when Ministers say that they have no plans to do something, they mean exactly the opposite. We have learnt to read between the lines. [Interruption.] Read my lips, as one of my hon. Friends said from a sedentary position.

There is a certain uniqueness about the debate. I cannot recollect a time when every major business organisation has universally condemned a Government measure. The views of industry are remarkably consistent—that is, consistently opposed.

Peter Morgan of the Institute of Directors—not an organisation which Labour Members would normally call in aid—described it as imposing a heavy compliance burden on employers". The CBI has been quoted earlier in the debate. It said that as a matter of principle it opposed loading these costs onto employers". The Federation of Small Businesses called it a Bill which will prove damaging to many small businesses and their employees". It also accused the Government of having reneged on their earlier commitments regarding statutory sick pay". The Forum of Private Business—another organisation which it is unusual for Labour Members to quote in support of their arguments—has lambasted the Bill by saying: The current proposals, if implemented, are likely to become the principal cause of a significant number of insolvencies". In recent months we have heard much from Conservative Members about the placing of extra burdens on employers in the midst of the currrent recession. They are really saying that they are against anything which adds to the welfare of the working community. By voting for the measure tonight they are saying that they are in favour of those on-costs which undermine employee welfare.

There is no disputing the extra costs being imposed on industry. They have been accepted as £695 million next year and £750 million the year after. Those costs pose the threat of company closures and further job losses. It is a strange and perverse way to assist companies trying to fight their way out of a Government-created recession. We know that large companies will suffer as they have to meet the full costs of all their sick pay provision. We were led to believe that the Secretary of State had spared struggling small companies from a similar fate.

In his statement to the House, the Secretary of State said: I propose to abolish reimbursement, except to small employers". He went on to say that he intended to increase the help to small employers".—[Official Report, 1 December 1993; Vol. 233, c. 1038.] Those were disingenuous words.

Under the old rules small employers had to meet just 20 per cent. of the costs of statutory sick pay for the first weeks; they will now have to meet 100 per cent. of the costs for the first four weeks. Last night the hon. Member for Colne Valley (Mr. Riddick) muttered in a loud voice, "Is that true?" When it was pointed out that it was true, he buried his head in a copy of Hansard and rapidly left the Chamber. That it is why he is not here tonight.

When the Secretary of State was presenting the measures to the House, he conveniently ignored the fact that the introduction of full reimbursement to small employers would be of little assistance in more than 70 per cent. of the cases as the vast majority of employees are fit to return to work well within four weeks. If the Secretary of State has any doubts about that, let me draw attention to the words of his predecessor: The average spell of sickness is probably about three weeks".—[Official Report, 29 November 1990; Vol. 181, c. 639.] The extension of small employers' relief will apply to fewer than a quarter of the cases where sickness benefit is payable. As a direct consequence, all business will suffer.

The Forum of Private Business was perfectly correct to describe small business relief as "fundamentally flawed". The Bill will exacerbate already difficult cash flow problems.

As the Federation of Small Businesses points out, 'The compensating national insurance contribution reduction to employers will only give a nominal weekly or monthly rebate whereas a high incidence of sick leave must be paid in the week or month in which it occurs. As I said, small businesses will be acutely affected. For them, a short period of illness among two or three staff will have a proportionately greater impact on costs. A small firm with 10 employees could easily have to manage without 20 per cent. to 30 per cent. of its staff as a result of a flu epidemic. As most of them may return to work before the four-week cut-off point, the small company would bear all the costs. It is unlikely that a company of 1,000 employees would suffer an equivalent percentage of staff being absent through sickness at any one time.

Ministers may continue to stress the compensatory reduction in national insurance reductions —but if they claim that the direct financial cost to businesses will be almost totally offset by corresponding cuts in employer NICs, what is the point of the Bill? The claim that businesses need the incentive of cutting sick pay entitlement is entirely without foundation. The CBI states: Incentives to reduce the cost of sickness absence are not necessary in the private sector, where lost productivity provides sufficient incentive. The CBI is saying that the legislation will have an effect that industry does not want. The CBI also sought assurances that the Bill is not simply the first step on the road of shifting the burden of legislated social costs on to employers.

Bearing in mind the broken promises of previous Secretaries of State, I repeat the questions asked by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). Will the Minister guarantee that he will not transfer in future the cost of statutory maternity pay or industrial injury benefits to employers? When my hon. Friend the Member for Garscadden asked those questions, there was no response, so I ask them again.

Ministers have achieved a double whammy of pitfalls, with the Bill creating both an employment trap and a business expansion trap. The £20,000 national insurance contribution all-or-nothing threshold will discourage entrepreneurs from expanding business capacity and taking on more employees. The last thing that business needs at present are further disincentives to increase employment. The Bill's effect on employment prospects is clear.

The greatest impact of this mean-minded Bill will be on those already facing discrimination in the labour market. Instead of legislating to help them and those least likely to have occupational sick pay provision, the Government will increase discrimination at the point of recruitment against the potentially sick and disabled. My hon. Friend the Member for Burnley (Mr. Pike) made a particularly valid point on that and other issues.

That has happened since the rebate was reduced in 1991 from 100 per cent. to 80 per cent. The National Association of Citizens Advice Bureaux amassed evidence showing that the number of employers refusing to honour statutory sick-pay entitlement, paying any sick pay or threatening redundancy or dismissal has increased. Such unofficial practices are a symptom of the vulnerability of employees when jobs are scarce. The Bill will impose even more financial pressure on employers and encourage the spread of bad employment practices.

The Institute of Directors is another organisation to which we seldom refer in argument, but its spokesperson stated: Parliament has decided that sick pay is a social benefit, but the Government is trying to make employers bear the cost of providing it. That may well harm the employment prospects of people with pre-existing medical conditions. They should not be penalised because they are disabled or sick—but the Government is making them uncompetitive in the labour market. My hon. Friend the Member for Lewisham, East (Mrs. Prentice) made a similar point.

During the debate on yesterday's outrageous guillotine motion, the Minister for Social Security and Disabled People referred to the report awaited from the Public Accounts Committee on the impact of the 1991 statutory sick pay changes. He had no basis on which to assert that the report's content would support his arguments. In fact, he told the House that he had not even read the report, but still prayed it in aid. That demonstrates that a crucial body of available evidence that could have provided substance for this debate has been ignored in the Government's haste to pass the Bill.

I suspect that the report does not support the Government's case, which is why the guillotine was introduced. The Government want to get the Bill away before the PAC report undermines their case even further.

I would like to make a number of other points, but we shall begin another debate later this evening, so I now ask the Minister to respond to the specific questions raised by my hon. Friend the Member for Garscadden, which I repeated. We await his answers.

8.35 pm

The Parliamentary Under-Secretary of State for Social Security (Mr. William Hague)

This has been an interesting and varied debate, in which a large number of points were raised. We heard the first speech from the hon. Member for East Kilbride (Mr. Ingram) as a member of the Opposition Front Bench, to which I welcome him. I look forward to many more exchanges with the hon. Gentleman across the Dispatch Box.

I have never heard a debate in which so many Opposition Members quoted business organisations, prayed them in aid, and recited Confederation of British Industry briefs and other documents. That is a hazardous tactic when the CBI concluded that the CBI does not wish to oppose the SSP Bill. It is equally hazardous to pray in aid the Institute of Directors, because we are informed that it would welcome the SSP and national insurance changes overall, provided that the Government are prepared to mount a fundamental review of the SSP scheme's compliance burden on business. I am happy to confirm that we will look at that scheme in conjunction with employers, to determine the scope for cutting red tape without affecting employees' rights. We will consider also whether firms offering generous occupational sick pay could opt out of the SSP sick scheme. Quoting employers is a dangerous tactic for Opposition Members.

Mr. Mandelson

Will the Minister give way?

Mr. Hague

I want to develop these points, because I was asked a number of questions. I will give way in a moment.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) asked about the European equal treatment directive. The reason why women must be entitled to SSP until they are 65 is that, once reimbursement is abolished, SSP will become a form of pay and, therefore, outside the scope of the pension age derogation from the EC equal treatment directive. Retirement pension, however, will still be a benefit and thus still subject to the derogation. It will still be possible to pay retirement pension on a different age basis to women and men and there should be no scope for legal doubt about that. We do not expect any of the difficulties that the hon. Gentleman described.

The hon. Member for Rochdale (Ms Lynne) appeared to be under a number of misapprehensions. She spoke of the payments that people have made over many years to the national insurance fund, but statutory sick pay is not a national insurance benefit and so is not met by that fund. I wonder whether the calculation she cited, provided by a small business in her constituency, took account of reductions in national insurance contributions that are part and parcel of the policy and of considerable benefit to businesses of all sizes. The most damning quotation that the hon. Lady could give in respect of large businesses was that IBM is "looking into the measures". She says that the policy is to get the Government out of a public sector borrowing requirement hole, but the policy does not reduce the PSBR, because the reduction in national insurance contributions more than offsets the reduction in statutory sick pay.

Mr. Mandelson

The hon. Gentleman's argument relies on the assumption that the compensating decrease in national insurance contributions will remain just that—decreased. Will he take this opportunity to give a firm and unequivocal undertaking to the House that that compensating decrease will not under any circumstances be reversed in future years? If he were not to do so, his remarks would appear extremely hollow.

Mr. Hague

The hon. Member knows that neither the Government nor the Opposition are likely to give commitments about the future level of national insurance contributions. We can, however, point very clearly to our record on employers' national insurance contributions, which for lower-paid employees will be 3.6 per cent. after the change, compared with 13.5 per cent. in 1979. Any employer who is concerned about that has to do no more than consider the record of each party in office to see what is most likely to happen.

Mr. Dewar

Employers may well be unnecessarily suspicious, but the Minister must accept that the prospect causes them to look forward with fear. The other aspect is the argument made by the Confederation of British Industry and various other organisations about the likely shift of other benefits on to the employer. Industrial injury benefit has been especially canvassed, as has maternity benefit. Can he perhaps help us on that subject, by telling us that there are no plans, and no intention, to move further down that road?

Mr. Hague

I recognise that the hon. Member, in his speech as well as his intervention, would prefer to argue against changes that he imagines and foresees rather than against the Bill. This is the Second Reading of the Statutory Sick Pay Bill. That is the subject of our debate. It may help the Opposition to tilt at all types of targets that have not been presented to them, but those targets are not on offer this evening; I can assure the hon. Gentleman of that.

My hon. Friend the Member for Castle Point (Dr. Spink) asked for an assurance about complexity and I can give him the same assurance that I gave a few moments ago; we will discuss with employers the further scope for cutting red tape.

The hon. Member for Burnley (Mr. Pike) mentioned a number of issues. He especially mentioned the construction industry and asked whether such an industry would be placed at a particular disadvantage. The construction industry has an average of about 3 per cent. of employees claiming statutory sick pay, so it is most unlikely to be disadvantaged in any way. In fact, it should be a net beneficiary of the change in statutory sick pay and national insurance contributions if one takes them together.

The hon. Member for Burnley also asked how the Government will ensure that employees are getting their proper entitlement, and whether there are a large number of cases in which they are not. The abolition of SSP reimbursement will have no effect on an employees' entitlement to SSP, but, should a dispute arise between an employee and his or her employer about entitlement, it can be resolved by adjudication procedures.

Where an employer fails to comply with a decision of the adjudicating authorities within the prescribed time and does not appeal, the Secretary of State will assume responsibility for payment, and legal proceedings against the employer will be considered for his non-payment. Inspectors of the Contributions Agency already operate a system of spot-checking of employers' pay records and that will continue. Officials have discussed with the Trades Union Congress the possibility of displaying a new poster in workplaces, reminding employees of their rights. The design and wording of a poster, together with a leaflet, are being evaluated.

A great deal is being done, therefore, and a great deal of redress is available to employees who think that they may be entitled to statutory sick pay, but are not receiving it.

My hon. Friend the Member for Bury St. Edmunds (Mr. Spring) rightly pointed to the experience of London boroughs in reducing, when they made an effort to do so, the average number of days of absence through sickness in three years from 17 days on average to 11.5. He drew attention—also quite rightly—to the Financial Times article of 8 December, only a week ago, which listed a large number of companies that have taken the initiative, have tried to reduce sickness levels in their companies and have had tremendous success in doing so.

To quote one example from the article, Vauxhall, the UK car maker, has reduced its sickness absenteeism from 8.8 per cent. in 1986 to 4.5 per cent. today. This was after the company introduced a negotiated incentive scheme which saved employees about £4 a week in contributions to the company sick pay scheme if average levels of sick leave could be kept at or below 5 per cent. The article points out: Many factors underlie improved absence records, but whether it is knowing that someone in management cares or fearing that they are watching, both approaches seem more effective than the alternative of managerial neglect. It is managerial neglect of the issue which we are tackling with the Bill. Opposition Members have underestimated the difference that can be made by giving employers an incentive to tackle the problem. It may seem a trivial example, but what happened in Sweden, that paradise of social provision, when they abolished state sick pay for the first two weeks of sickness? Did employers then say, "We are going to sack people who are ill for a short time"? They actually ran out of influenza vaccine in Sweden because employers went on such a campaign of immunising their employees against sickness.

A great deal can be done by employers to help with the health of their employees and a great deal more is being done by some employers. That should be recognised by Opposition Members.

I have already referred to the fact that the CBI says in its much-quoted brief that it does not wish to oppose the Bill. The problem for the hon. Member for Garscadden and his colleagues tonight was that they did not wish to oppose the Bill, but felt that they ought to do so. He said at one point in his speech, when my hon. Friend the Member for Havant (Mr. Willets) had intervened, that he feared that he would go off the road and into a field. When one listened to the hon. Gentleman's speech, one found that, first, he had a principal fear that people might be squeezed from their benefits, but he also feared that we might make the scheme more generous for employees and that employers would have to pay more. He said that at first he was afraid that there was a major transfer of costs to employers, but then realised that there was not. He said that he accepted that sickness absence figures were not good and ought to be improved, but he failed to offer any alternative.

It was rather less like going off a road and into a field than going round an endlessly confusing roundabout, with many signals pointing in different directions and with the hon. Gentleman at the wheel of the car, careering around the roundabout, peering into the distance, looking for something that would come over the horizon which would present a more attractive target than the Bill before the House at the time. He ought to reflect on some of his comments in that speech.

Mr. Dewar

rose—

Mr. Hague

I have only three minutes left, so I think that I should tell the hon. Gentleman that the Bill is an opportunity to improve the sickness record of industry; it is an opportunity to clarify responsibility for sickness rates; it is an opportunity to reduce unnecessary bureaucracy in the future; it is an opportunity to reduce the overall total and burden of public expenditure; it is an opportunity to reduce industry's costs through a major offsetting reduction in national insurance contributions, a reduction to a level which a Labour Government could never have contemplated and which, for low-paid employees, is a fraction of the levels under a Labour Government.

After this change, when the employee's and employer's contributions are added together, the national insurance contribution payable for an employee on a weekly wage of £130 will be £15.72. It would have amounted to £26 a week in 1979. That is a dramatic reduction.

What is the attitude of the Opposition to this proposal? Blindly to oppose, without having a better proposal—without any proposal—to put before the House. They are not doing so in the interests of employees, because their sickness payments will be maintained, or in the interests of the disabled, because they have a better than average sickness record, or in the interests of small businesses, because they will be better off, and they are not doing it in the interests of well-managed, large businesses because they have a great opportunity to reduce their sickness rates.

In this debate, the Opposition have been reduced to being the defenders of weak, complacent and inefficient management—the only people who stand to gain from their attitude. Perhaps, after their performance with parliamentary procedures during the past two weeks, they identify to a certain extent with weak and inefficient management and that is why they have taken that stance tonight. I urge all my hon. Friends to support the Second Reading.

It being three hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question already proposed from the Chair, pursuant to the Order yesterday.

The House divided: Ayes 308, Noes 268.

Division No. 43]	[8.50 pm
AYES
Ainsworth, Peter (East Surrey)	Alison, Rt Hon Michael (Selby)
Alexander, Richard	Allason, Rupert (Torbay)

Amess, David	Evans, Roger (Monmouth)
Arnold, Jacques (Gravesham)	Evennett, David
Arnold, Sir Thomas (Hazel Grv)	Faber, David
Ashby, David	Fabricant, Michael
Aspinwall, Jack	Fairbairn, Sir Nicholas
Atkinson, David (Bour'mouth E)	Fenner, Dame Peggy
Atkinson, Peter (Hexham)	Field, Barry (Isle of Wight)
Baker, Nicholas (Dorset North)	Fishburn, Dudley
Baldry, Tony	Forman, Nigel
Banks, Matthew (Southport)	Forsyth, Michael (Stirling)
Banks, Robert (Harrogate)	Fowler, Rt Hon Sir Norman
Batiste, Spencer	Fox, Dr Liam (Woodspring)
Bellingham, Henry	Fox, Sir Marcus (Shipley)
Bendall, Vivian	Freeman, Rt Hon Roger
Beresford, Sir Paul	French, Douglas
Biffen, Rt Hon John	Fry, Peter
Blackburn, Dr John G.	Gale, Roger
Bonsor, Sir Nicholas	Gallie, Phil
Booth, Hartley	Gardiner, Sir George
Boswell, Tim	Garel-Jones, Rt Hon Tristan
Bottomley, Peter (Eltham)	Garnier, Edward
Bottomley, Rt Hon Virginia	Gill, Christopher
Bowden, Andrew	Gillan, Cheryl
Bowis, John	Goodlad, Rt Hon Alastair
Boyson, Rt Hon Sir Rhodes	Goodson-Wickes, Dr Charles
Brandreth, Gyles	Gorman, Mrs Teresa
Brazier, Julian	Gorst, John
Bright, Graham	Grant, Sir A. (Cambs SW)
Brooke, Rt Hon Peter	Greenway, Harry (Ealing N)
Brown, M. (Brigg & Cl'thorpes)	Greenway, John (Ryedale)
Browning, Mrs. Angela	Griffiths, Peter (Portsmouth, N)
Bruce, Ian (S Dorset)	Grylls, Sir Michael
Budgen, Nicholas	Gummer, Rt Hon John Selwyn
Burns, Simon	Hague, William
Burt, Alistair	Hamilton, Rt Hon Archie (Epsom)
Butcher, John	Hampson, Dr Keith
Butler, Peter	Hannam, Sir John
Butterfill, John	Hargreaves, Andrew
Carlisle, John (Luton North)	Harris, David
Carlisle, Kenneth (Lincoln)	Haselhurst, Alan
Carrington, Matthew	Hawkins, Nick
Carttiss, Michael	Hawksley, Warren
Cash, William	Hayes, Jerry
Channon, Rt Hon Paul	Heald, Oliver
Churchill, Mr	Heathcoat-Amory, David
Clappison, James	Hendry, Charles
Clark, Dr Michael (Rochford)	Heseltine, Rt Hon Michael
Clarke, Rt Hon Kenneth (Ruclif)	Hicks, Robert
Clifton-Brown, Geoffrey	Higgins, Rt Hon Sir Terence L.
Coe, Sebastian	Hill, James (Southampton Test)
Colvin, Michael	Hogg, Rt Hon Douglas (G'tham)
Congdon, David	Horam, John
Conway, Derek	Hordern, Rt Hon Sir Peter
Coombs, Anthony (Wyre For'st)	Howarth, Alan (Strat'rd-on-A)
Coombs, Simon (Swindon)	Howell, Rt Hon David (G'dford)
Cope, Rt Hon Sir John	Howell, Sir Ralph (N Norfolk)
Cormack, Patrick	Hughes Robert G. (Harrow W)
Couchman, James	Hunt, Rt Hon David (Wirral W)
Cran, James	Hunt, Sir John (Ravensbourne)
Currie, Mrs Edwina (S D'by'ire)	Hunter, Andrew
Curry, David (Skipton & Ripon)	Hurd, Rt Hon Douglas
Davis, David (Boothferry)	Jack, Michael
Day, Stephen	Jenkin, Bernard
Deva, Nirj Joseph	Jessel, Toby
Devlin, Tim	Johnson Smith, Sir Geoffrey
Dickens, Geoffrey	Jones, Gwilym (Cardiff N)
Dicks, Terry	Jones, Robert B. (W Hertfdshr)
Dorrell, Stephen	Jopling, Rt Hon Michael
Douglas-Hamilton, Lord James	Kellett-Bowman, Dame Elaine
Dover, Den	Key, Robert
Duncan, Alan	Kilfedder, Sir James
Duncan-Smith, Iain	King, Rt Hon Tom
Dunn, Bob	Kirkhope, Timothy
Durant, Sir Anthony	Knapman, Roger
Dykes, Hugh	Knight, Mrs Angela (Erewash)
Eggar, Tim	Knight, Greg (Derby N)
Emery, Rt Hon Sir Peter	Knight, Dame Jill (Bir'm E'st'n)
Evans, David (Welwyn Hatfield)	Knox, Sir David
Evans, Jonathan (Brecon)	Kynoch, George (Kincardine)
Evans, Nigel (Ribble Valley)	Lait, Mrs Jacqui

Lamont, Rt Hon Norman	Rumbold, Rt Hon Dame Angela
Lang, Rt Hon Ian	Ryder, Rt Hon Richard
Lawrence, Sir Ivan	Sackville, Tom
Legg, Barry	Sainsbury, Rt Hon Tim
Leigh, Edward	Scott, Rt Hon Nicholas
Lennox-Boyd, Mark	Shaw, David (Dover)
Lester, Jim (Broxtowe)	Shaw, Sir Giles (Pudsey)
Lidington, David	Shepherd, Colin (Hereford)
Lightbown, David	Shersby, Michael
Lilley, Rt Hon Peter	Sims, Roger
Lloyd, Peter (Fareham)	Skeet, Sir Trevor
Lord, Michael	Smith, Sir Dudley (Warwick)
Luff, Peter	Smith, Tim (Beaconsfield)
Lyell, Rt Hon Sir Nicholas	Soames, Nicholas
MacGregor, Rt Hon John	Speed, Sir Keith
MacKay, Andrew	Spencer, Sir Derek
Maclean, David	Spicer, Sir James (W Dorset)
McLoughlin, Patrick	Spicer, Michael (S Worcs)
McNair-Wilson, Sir Patrick	Spink, Dr Robert
Madel, David	Spring, Richard
Maitland, Lady Olga	Sproat, Iain
Major, Rt Hon John	Squire, Robin (Hornchurch)
Malone, Gerald	Stanley, Rt Hon Sir John
Mans, Keith	Steen, Anthony
Marland, Paul	Stephen, Michael
Marlow, Tony	Stern, Michael
Marshall, John (Hendon S)	Stewart, Allan
Marshall, Sir Michael (Arundel)	Streeter, Gary
Martin, David (Portsmouth S)	Sumberg, David
Mawhinney, Dr Brian	Sweeney, Walter
Mellor, Rt Hon David	Sykes, John
Merchant, Piers	Tapsell, Sir Peter
Milligan, Stephen	Taylor, John M. (Solihull)
Mills, Iain	Taylor, Sir Teddy (Southend, E)
Mitchell, Andrew (Gedling)	Temple-Morris, Peter
Mitchell, Sir David (Hants NW)	Thomason, Roy
Moate, Sir Roger	Thompson, Sir Donald (C'er V)
Monro, Sir Hector	Thompson, Patrick (Norwich N)
Moss, Malcolm	Thornton, Sir Malcolm
Needham, Richard	Thurnham, Peter
Nelson, Anthony	Townend, John (Bridlington)
Neubert, Sir Michael	Townsend, Cyril D. (Bexl'yh'th)
Newton, Rt Hon Tony	Tracey, Richard
Nicholls, Patrick	Tredinnick, David
Nicholson, David (Taunton)	Trend, Michael
Nicholson, Emma (Devon West)	Trotter, Neville
Norris, Steve	Twinn, Dr Ian
Onslow, Rt Hon Sir Cranley	Vaughan, Sir Gerard
Oppenheim, Phillip	Viggers, Peter
Ottaway, Richard	Waldegrave, Rt Hon William
Page, Richard	Walden, George
Paice, James	Walker, Bill (N Tayside)
Patnick, Irvine	Waller, Gary
Patten, Rt Hon John	Ward, John
Pattie, Rt Hon Sir Geoffrey	Wardle, Charles (Bexhill)
Pawsey, James	Waterson, Nigel
Peacock, Mrs Elizabeth	Watts, John
Pickles, Eric	Wells, Bowen
Porter, Barry (Wirral S)	Whitney, Ray
Porter, David (Waveney)	Whittingdale, John
Portillo, Rt Hon Michael	Widdecombe, Ann
Powell, William (Corby)	Wiggin, Sir Jerry
Rathbone, Tim	Wilkinson, John
Redwood, Rt Hon John	Willetts, David
Renton, Rt Hon Tim	Wilshire, David
Richards, Rod	Winterton, Mrs Ann (Congleton)
Riddick, Graham	Winterton, Nicholas, (Macc'f'ld)
Rifkind, Rt Hon. Malcolm	Wolfson, Mark
Robathan, Andrew	Wood, Timothy
Roberts, Rt Hon Sir Wyn	Young, Rt Hon Sir George
Robertson, Raymond (Ab'd'n S)
Robinson, Mark (Somerton)	Tellers for the Ayes:
Roe, Mrs Marion (Broxbourne)	Mr. Sydney Chapman and
Rowe, Andrew (Mid Kent)	Mr. James Arbuthnot

NOES
Abbott, Ms Diane	Allen, Graham
Adams, Mrs Irene	Alton, David
Ainger, Nick	Anderson, Donald (Swansea E)
Ainsworth, Robert (Cov'try NE)	Anderson, Ms Janet (Ros'dale)

Armstrong, Hilary	Forsythe, Clifford (Antrim S)
Ashton, Joe	Foster, Rt Hon Derek
Austin-Walker, John	Foulkes, George
Banks, Tony (Newham NW)	Fraser, John
Barnes, Harry	Fyfe, Maria
Barron, Kevin	Gapes, Mike
Battle, John	Garrett, John
Bayley, Hugh	George, Bruce
Beckett, Rt Hon Margaret	Gerrard, Neil
Beith, Rt Hon A. J.	Gilbert, Rt Hon Dr John
Bell, Stuart	Godman, Dr Norman A.
Benn, Rt Hon Tony	Godsiff, Roger
Bennett, Andrew F.	Golding, Mrs Llin
Benton, Joe	Gould, Bryan
Bermingham, Gerald	Graham, Thomas
Berry, Dr. Roger	Grant, Bernie (Tottenham)
Betts, Clive	Griffiths, Nigel (Edinburgh S)
Blair, Tony	Griffiths, Win (Bridgend)
Boateng, Paul	Grocott, Bruce
Boyes, Roland	Gunnell, John
Bradley, Keith	Hain, Peter
Bray, Dr Jeremy	Hall, Mike
Brown, Gordon (Dunfermline E)	Hanson, David
Brown, N. (N'c'tle upon Tyne E)	Hardy, Peter
Bruce, Malcolm (Gordon)	Harman, Ms Harriet
Burden, Richard	Hattersley, Rt Hon Roy
Byers, Stephen	Hill, Keith (Streatham)
Caborn, Richard	Hinchliffe, David
Callaghan, Jim	Hoey, Kate
Campbell, Mrs Anne (C'bridge)	Hogg, Norman (Cumbernauld)
Campbell, Menzies (Fife NE)	Home Robertson, John
Campbell, Ronnie (Blyth V)	Hood, Jimmy
Canavan, Dennis	Hoon, Geoffrey
Cann, Jamie	Howarth, George (Knowsley N)
Chisholm, Malcolm	Howells, Dr Kim (Pontypridd)
Clapham, Michael	Hoyle, Doug
Clark, Dr David (South Shields)	Hughes, Kevin (Doncaster N)
Clarke, Eric (Midlothian)	Hughes, Robert (Aberdeen N)
Clarke, Tom (Monklands W)	Hughes, Roy (Newport E)
Clelland, David	Hutton, John
Coffey, Ann	Illsley, Eric
Cohen, Harry	Ingram, Adam
Connarty, Michael	Jackson, Glenda (H'Stead)
Cook, Frank (Stockton N)	Jackson, Helen (Shef'ld, H)
Cook, Robin (Livingston)	Jamieson, David
Corbett, Robin	Janner, Greville
Corbyn, Jeremy	Jones, Barry (Alyn and D'side)
Corston, Ms Jean	Jones, Ieuan Wyn (Ynys Môn)
Cousins, Jim	Jones, Lynne (B'ham S O)
Cox, Tom	Jones, Martyn (Clwyd, SW)
Cryer, Bob	Jones, Nigel (Cheltenham)
Cummings, John	Jowell, Tessa
Cunliffe, Lawrence	Keen, Alan
Cunningham, Jim (Covy SE)	Kennedy, Charles (Ross, C&S)
Cunningham, Rt Hon Dr John	Kennedy, Jane (Lpool Brdgn)
Darling, Alistair	Khabra, Piara S.
Davidson, Ian	Kilfoyle, Peter
Davies, Bryan (Oldham C'tral)	Lestor, Joan (Eccles)
Davies, Rt Hon Denzil (Llanelli)	Lewis, Terry
Davies, Ron (Caerphilly)	Litherland, Robert
Davis, Terry (B'ham, H'dge H'I)	Livingstone, Ken
Denham, John	Lloyd, Tony (Stretford)
Dewar, Donald	Llwyd, Elfyn
Dixon, Don	Loyden, Eddie
Dobson, Frank	Lynne, Ms Liz
Donohoe, Brian H.	McAllion, John
Dowd, Jim	McAvoy, Thomas
Dunnachie, Jimmy	McCartney, Ian
Dunwoody, Mrs Gwyneth	McCrea, Rev William
Eagle, Ms Angela	Macdonald, Calum
Eastham, Ken	McFall, John
Enright, Derek	McKelvey, William
Etherington, Bill	Mackinlay, Andrew
Evans, John (St Helens N)	McLeish, Henry
Ewing, Mrs Margaret	Maclennan, Robert
Fatchett, Derek	McMaster, Gordon
Faulds, Andrew	McNamara, Kevin
Field, Frank (Birkenhead)	McWilliam, John
Fisher, Mark	Madden, Max
Flynn, Paul	Maddock, Mrs Diana

Mahon, Alice	Ross, Ernie (Dundee W)
Mandelson, Peter	Rowlands, Ted
Marshall, David (Shettleston)	Ruddock, Joan
Martlew, Eric	Salmond, Alex
Maxton, John	Sedgemore, Brian
Meacher, Michael	Sheldon, Rt Hon Robert
Michael, Alun	Short, Clare
Michie, Bill (Sheffield Heeley)	Simpson, Alan
Milburn, Alan	Skinner, Dennis
Miller, Andrew	Smith, Andrew (Oxford E)
Moonie, Dr Lewis	Smith, C. (Isl'ton S & F'sbury)
Morgan, Rhodri	Smith, Rt Hon John (M'kl'ds E)
Morley, Elliot	Smith, Llew (Blaenau Gwent)
Morris, Rt Hon A. (Wy'nshawe)	Snape, Peter
Morris, Estelle (B'ham Yardley)	Soley, Clive
Morris, Rt Hon J. (Aberavon)	Spearing, Nigel
Mowlam, Marjorie	Spellar, John
Mudie, George	Squire, Rachel (Dunfermline W)
Mullin, Chris	Steinberg, Gerry
Murphy, Paul	Stevenson, George
Oakes, Rt Hon Gordon	Stott, Roger
O'Brien, Michael (N W'kshire)	Strang, Dr. Gavin
O'Brien, William (Normanton)	Straw, Jack
O'Hara, Edward	Taylor, Mrs Ann (Dewsbury)
Olner, William	Taylor, Rt Hon John D. (Strgfd)
O'Neill, Martin	Thompson, Jack (Wansbeck)
Orme, Rt Hon Stanley	Tipping, Paddy
Paisley, Rev Ian	Turner, Dennis
Parry, Robert	Tyler, Paul
Patchett, Terry	Vaz, Keith
Pendry, Tom	Walker, Rt Hon Sir Harold
Pickthall, Colin	Wallace, James
Pike, Peter L.	Walley, Joan
Pope, Greg	Wardell, Gareth (Gower)
Powell, Ray (Ogmore)	Wareing, Robert N
Prentice, Ms Bridget (Lew'm E)	Watson, Mike
Prentice, Gordon (Pendle)	Welsh, Andrew
Prescott, John	Wicks, Malcolm
Primarolo, Dawn	Wigley, Dafydd
Purchase, Ken	Williams, Rt Hon Alan (Sw'n W)
Quin, Ms Joyce	Williams, Alan W (Carmarthen)
Radice, Giles	Wilson, Brian
Randall, Stuart	Winnick, David
Raynsford, Nick	Wise, Audrey
Redmond, Martin	Worthington, Tony
Reid, Dr John	Wray, Jimmy
Robertson, George (Hamilton)	Wright, Dr Tony
Robinson, Peter (Belfast E)	Young, David (Bolton SE)
Roche, Mrs. Barbara
Rogers, Allan	Tellers for the Noes:
Rooker, Jeff	Mr. Jon Owen Jones and
Rooney, Terry	Mr. Alan Meale

Question accordingly agreed to.

Bill accordingly read a Second Time and committed to a Committee of the whole House, pursuant to the Order yesterday.

[MR. GEOFFREY LOFTHOUSE in the Chair.]

Division No. 44]	[10.00 pm
AYES
Ainsworth, Peter (East Surrey)	Day, Stephen
Alexander, Richard	Deva, Nirj Joseph
Alison, Rt Hon Michael (Selby)	Devlin, Tim
Allason, Rupert (Torbay)	Dickens, Geoffrey
Amess, David	Dicks, Terry
Arbuthnot, James	Dorrell, Stephen
Arnold, Jacques (Gravesham)	Douglas-Hamilton, Lord James
Arnold, Sir Thomas (Hazel Grv)	Dover, Den
Ashby, David	Duncan, Alan
Aspinwall, Jack	Duncan-Smith, Iain
Atkinson, David (Bour'mouth E)	Dunn, Bob
Atkinson, Peter (Hexham)	Durant, Sir Anthony
Baker, Nicholas (Dorset North)	Dykes, Hugh
Baldry, Tony	Eggar, Tim
Banks, Matthew (Southport)	Emery, Rt Hon Sir Peter
Banks, Robert (Harrogate)	Evans, David (Welwyn Hatfield)
Bates, Michael	Evans, Jonathan (Brecon)
Batiste, Spencer	Evans, Nigel (Ribble Valley)
Bellingham, Henry	Evans, Roger (Monmouth)
Bendall, Vivian	Evennett, David
Beresford, Sir Paul	Fabricant, Michael
Biffen, Rt Hon John	Fairbairn, Sir Nicholas
Blackburn, Dr John G.	Fenner, Dame Peggy
Bonsor, Sir Nicholas	Field, Barry (Isle of Wight)
Booth, Hartley	Fishburn, Dudley
Boswell, Tim	Forman, Nigel
Bottomley, Peter (Eltham)	Forsyth, Michael (Stirling)
Bottomley, Rt Hon Virginia	Fowler, Rt Hon Sir Norman
Bowden, Andrew	Fox, Dr Liam (Woodspring)
Bowis, John	Fox, Sir Marcus (Shipley)
Boyson, Rt Hon Sir Rhodes	Freeman, Rt Hon Roger
Brandreth, Gyles	French, Douglas
Brazier, Julian	Fry, Peter
Bright, Graham	Gale, Roger
Brooke, Rt Hon Peter	Gallie, Phil
Browning, Mrs. Angela	Gardiner, Sir George
Bruce, Ian (S Dorset)	Garnier, Edward
Budgen, Nicholas	Gill, Christopher
Burns, Simon	Gillan, Cheryl
Burt, Alistair	Goodson-Wickes, Dr Charles
Butcher, John	Gorman, Mrs Teresa
Butler, Peter	Gorst, John
Butterfill, John	Grant, Sir A. (Cambs SW)
Carlisle, John (Luton North)	Greenway, Harry (Ealing N)
Carlisle, Kenneth (Lincoln)	Greenway, John (Ryedale)
Carrington, Matthew	Griffiths, Peter (Portsmouth, N)
Carttiss, Michael	Gummer, Rt Hon John Selwyn
Cash, William	Hague, William
Channon, Rt Hon Paul	Hamilton, Rt Hon Archie (Epsom)
Churchill, Mr	Hampson, Dr Keith
Clappison, James	Hannam, Sir John
Clark, Dr Michael (Rochford)	Hargreaves, Andrew
Clarke, Rt Hon Kenneth (Ruclif)	Harris, David
Clifton-Brown, Geoffrey	Haselhurst, Alan
Coe, Sebastian	Hawkins, Nick
Colvin, Michael	Hawksley, Warren
Congdon, David	Hayes, Jerry
Conway, Derek	Heald, Oliver
Coombs, Anthony (Wyre For'st)	Heathcoat-Amory, David
Coombs, Simon (Swindon)	Hendry, Charles
Cope, Rt Hon Sir John	Heseltine, Rt Hon Michael
Cormack, Patrick	Hicks, Robert
Couchman, James	Higgins, Rt Hon Sir Terence L.
Cran, James	Hill, James (Southampton Test)
Currie, Mrs Edwina (S D'by'ire)	Hogg, Rt Hon Douglas (G'tham)
Curry, David (Skipton & Ripon)	Horam, John
Davis, David (Boothferry)	Hordern, Rt Hon Sir Peter

Howard, Rt Hon Michael	Patnick, Irvine
Howarth, Alan (Strat'rd-on-A)	Pattie, Rt Hon Sir Geoffrey
Howell, Rt Hon David (G'dford)	Pawsey, James
Howell, Sir Ralph (N Norfolk)	Peacock, Mrs Elizabeth
Hughes Robert G. (Harrow W)	Pickles, Eric
Hunt, Rt Hon David (Wirral W)	Porter, Barry (Wirral S)
Hunt, Sir John (Ravensbourne)	Porter, David (Waveney)
Hunter, Andrew	Portillo, Rt Hon Michael
Hurd, Rt Hon Douglas	Powell, William (Corby)
Jack, Michael	Rathbone, Tim
Jackson, Robert (Wantage)	Redwood, Rt Hon John
Jenkin, Bernard	Renton, Rt Hon Tim
Jessel, Toby	Richards, Rod
Johnson Smith, Sir Geoffrey	Riddick, Graham
Jones, Gwilym (Cardiff N)	Robathan, Andrew
Jones, Robert B. (W Hertfdshr)	Roberts, Rt Hon Sir Wyn
Jopling, Rt Hon Michael	Robertson, Raymond (Ab'd'n S)
Kellett-Bowman, Dame Elaine	Robinson, Mark (Somerton)
Key, Robert	Roe, Mrs Marion (Broxbourne)
Kilfedder, Sir James	Rowe, Andrew (Mid Kent)
King, Rt Hon Tom	Rumbold, Rt Hon Dame Angela
Kirkhope, Timothy	Ryder Rt Hon Richard
Knapman, Roger	Sackville, Tom
Knight, Mrs Angela (Erewash)	Sainsbury, Rt Hon Tim
Knight, Greg (Derby N)	Scott, Rt Hon Nicholas
Knight, Dame Jill (Bir'm E'st'n)	Shaw, David (Dover)
Knox, Sir David	Shaw, Sir Giles (Pudsey)
Kynoch, George (Kincardine)	Shepherd, Colin (Hereford)
Lait, Mrs Jacqui	Sheresby, Michael
Lamont, Rt Hon Norman	Sims, Roger
Lang, Rt Hon Ian	Skeet, Sir Trevor
Lawrence, Sir Ivan	Smith, Sir Dudley (Warwick)
Legg, Barry	Smith, Tim (Beaconsfield)
Leigh, Edward	Speed, Sir Keith
Lennox-Boyd, Mark	Spencer, Sir Derek
Lester, Jim (Broxtowe)	Spicer, Sir James (W Dorset)
Lidington, David	Spicer, Michael (S Worcs)
Lightbown, David	Spink, Dr Robert
Lilley, Rt Hon Peter	Spring, Richard
Lloyd, Peter (Fareham)	Sproat, Iain
Lord, Michael	Squire, Robin (Hornchurch)
Luff, Peter	Stanley, Rt Hon Sir John
Lyell, Rt Hon Sir Nicholas	Steen, Anthony
MacGregor, Rt Hon John	Stephen, Michael
MacKay, Andrew	Stern, Michael
Maclean, David	Stewart, Allan
McLoughlin, Patrick	Streeter, Gary
McNair-Wilson, Sir Patrick	Sumberg, David
Madel, David	Sweeney, Walter
Maitland, Lady Olga	Sykes, John
Major, Rt Hon John	Tapsell, Sir Peter
Malone, Gerald	Taylor, John M. (Solihull)
Mans, Keith	Taylor, Sir Teddy (Southend, E)
Marland, Paul	Thomason, Roy
Marlow, Tony	Thompson, Sir Donald (C'er V)
Marshall, John (Hendon S)	Thompson, Patrick (Norwich N)
Marshall, Sir Michael (Arundel)	Thornton, Sir Malcolm
Martin, David (Portsmouth S)	Thurnham, Peter
Mawhinney, Dr Brian	Townend, John (Bridlington)
Mellor, Rt Hon David	Townsend, Cyril D. (Bexl'yh'th)
Merchant, Piers	Tracey, Richard
Milligan, Stephen	Tredinnick, David
Mills, Iain	Trend, Michael
Mitchell, Andrew (Gedling)	Trotter, Neville
Mitchell, Sir David (Hants NW)	Twinn, Dr Ian
Moate, Sir Roger	Vaughan, Sir Gerard
Monro, Sir Hector	Viggers, Peter
Moss, Malcolm	Waldegrave, Rt Hon William
Needham, Richard	Walden, George
Nelson, Anthony	Walker, Bill (N Tayside)
Neubert, Sir Michael	Waller, Gary
Newton, Rt Hon Tony	Ward, John
Nicholls, Patrick	Wardle, Charles (Bexhill)
Nicholson, David (Taunton)	Waterson, Nigel
Nicholson, Emma (Devon West)	Watts, John
Norris, Steve	Wells, Bowen
Onslow, Rt Hon Sir Cranley	Whitney, Ray
Ottaway, Richard	Whittingdale, John
Page, Richard	Widdecombe, Ann
Paice, James	Wiggin, Sir Jerry

Wilkinson, John	Wood, Timothy
Willetts, David	Young, Rt Hon Sir George
Wilshire, David
Winterton, Mrs Ann (Congleton)	Tellers for the Ayes:
Winterton, Nicholas (Macc'f'ld)	Mr. Sydney, Chapman and
Wolfson, Mark	Mr. Michael Brown.

NOES
Abbott, Ms Diane	Dixon, Don
Adams, Mrs Irene	Dobson, Frank
Ainger, Nick	Donohoe, Brain H.
Ainsworth, Robert (Cov'try NE)	Dowd, Jim
Allen, Graham	Dunnachie, Jimmy
Anderson, Donald (Swansea E)	Dunwoody, Mrs Gwyneth
Anderson, Ms Janet (Ros'dale)	Eagle, Ms Angela
Armstrong, Hilary	Eastham, Ken
Ashton, Joe	Enright, Derek
Austin-Walker, John	Etherington, Bill
Banks, Tony (Newham NW)	Evans, John (St Helens N)
Barnes, Harry	Ewing, Mrs Margaret
Barron, Kevin	Fatchett, Derek
Battle, John	Faulds, Andrew
Bayley, Hugh	Field, Frank (Birkenhead)
Beckett, Rt Hon Margaret	Fisher, Mark
Beggs, Roy	Flynn, Paul
Beith, Rt Hon A. J.	Forsythe, Clifford (Antrim S)
Bell, Stuart	Foster, Rt Hon Derek
Benn, Rt Hon Tony	Foulkes, George
Bennett, Andrew F.	Fraser, John
Benton, Joe	Fyfe, Maria
Bermingham, Gerald	Gapes, Mike
Berry, Dr. Roger	Garrett, John
Betts, Clive	George, Bruce
Blair, Tony	Gerrard, Neil
Blunkett, David	Gilbert, Rt Hon Dr John
Boateng, Paul	Godman, Dr Norman A.
Boyes, Roland	Godsiff, Roger
Bradley, Keith	Golding, Mrs Llin
Bray, Dr Jeremy	Gould, Bryan
Brown, Gordon (Dunfermline E)	Graham, Thomas
Brown, N. (N'c'tle upon[...] Tyne E)	Grant, Bernie (Tottenham)
Bruce, Malcolm (Gordon)	Griffiths, Nigel (Edinburgh S)
Burden, Richard	Griffiths, Win (Bridgend)
Byers, Stephen	Grocott, Bruce
Caborn, Richard	Gunnell, John
Callaghan, Jim	Hain, Peter
Campbell, Mrs Anne (C'bridge)	Hall, Mike
Campbell, Menzies (Fife NE)	Hanson, David
Campbell, Ronnie (Blyth V)	Hardy, Peter
Canavan, Dennis	Harman, Ms Harriet
Cann, Jamie	Hattersley, Rt Hon Roy
Chisholm, Malcolm	Hill, Keith (Streatham)
Clapham, Michael	Hinchliffe, David
Clark, Dr David (South Shields)	Hoey, Kate
Clarke, Eric (Midlothian)	Hogg, Norman (Cumbernauld)
Clarke, Tom (Monklands W)	Home Robertson, John
Clelland, David	Hood, Jimmy
Coffey, Ann	Hoon, Geoffrey
Cohen, Harry	Howarth, George (Knowsley N)
Connarty, Michael	Howells, Dr. Kim (Pontypridd)
Cook, Frank (Stockton N)	Hoyle, Doug
Corbett, Robin	Hughes, Kevin (Doncaster N)
Corbyn, Jeremy	Hughes, Robert (Aberdeen N)
Corston, Ms Jean	Hughes, Roy (Newport E)
Cousins, Jim	Hutton, John
Cox, Tom	Illsley, Eric
Cryer, Bob	Ingram, Adam
Cummings, John	Jackson, Glenda (H'stead)
Cunliffe, Lawrence	Jackson, Helen (Shef'ld, H)
Cunningham, Jim (Covy SE)	Janner, Greville
Cunningham, Rt Hon Dr John	Jones, Barry (Alyn and D'side)
Dafis, Cynog	Jones, Ieuan Wyn (Ynys Môn)
Darling, Alistair	Jones, Jon Owen (Cardiff C)
Davidson, Ian	Jones, Lynne (B'ham S O)
Davies, Bryan (Oldham C'tral)	Jones, Martyn (Clwyd, SW)
Davies, Rt Hon Denzil (Llanelli)	Jones, Nigel (Cheltenham)
Davies, Ron (Caerphilly)	Jowell, Tessa
Davis, Terry (B'ham, H'dge H'I)	Keen, Alan
Denham, John	Kennedy, Charles (Ross, C&S)
Dewar, Donald	Kennedy, Jane (Lpool Brdgn)

Khabra, Piara S.	Purchase, Ken
Kilfoyle, Peter	Quin, Ms Joyce
Leighton, Ron	Randall, Stuart
Lestor, Joan (Eccles)	Raynsford, Nick
Lewis, Terry	Redmond, Martin
Litherland, Robert	Reid, Dr John
Livingstone, Ken	Rendel, David
Llwyd, Elfyn	Robertson, George (Hamilton)
Loyden, Eddie	Roche, Mrs. Barbara
Lynne, Ms Liz	Rogers, Allan
McAllion, John	Rooker, Jeff
McAvoy, Thomas	Rooney, Terry
McCartney, Ian	Ross, Ernie (Dundee W)
McCrea, Rev William	Ross, William (E Londonderry)
Macdonald, Calum	Rowlands, Ted
McKelvey, William	Ruddock, Joan
Mackinlay, Andrew	Salmond, Alex
McLeish, Henry	Sedgemore, Brian
McMaster, Gordon	Sheldon, Rt Hon Robert
McNamara, Kevin	Short, Clare
McWilliam, John	Simpson, Alan
Madden, Max	Skinner, Dennis
Mahon, Alice	Smith, Andrew (Oxford E)
Mandelson, Peter	Smith, C. (Isl'ton S& F'sbury)
Marshall, David (Shettleston)	Smith, Rt Hon John (M'kl'ds E)
Martlew, Eric	Smith, Llew (Blaenau Gwent)
Maxton, John	Snape, Peter
Meacher, Michael	Soley, Clive
Meale, Alan	Spearing, Nigel
Michael, Alun	Squire, Rachel (Dunfermline W)
Michie, Bill (Sheffield Heeley)	Steinberg, Gerry
Michie, Mrs Ray (Argyll Bute)	Stevenson, George
Milburn, Alan	Stott, Roger
Miller, Andrew	Strang, Dr. Gavin
Moonie, Dr Lewis	Taylor, Rt Hon John D. (Strgfd)
Morgan, Rhodri	Tipping, Paddy
Morley, Elliot	Turner, Dennis
Morris, Rt Hon A. (Wy'nshawe)	Tyler, Paul
Morris, Rt Hon J. (Aberavon)	Vaz, Keith
Mowlam, Marjorie	Walker, Rt Hon Sir Harold
Mudie, George	Walley, Joan
Mullin, Chris	Wardell, Gareth (Gower)
Murphy, Paul	Wareing, Robert N
Oakes, Rt Hon Gordon	Watson, Mike
O'Brien, Michael (N W'kshire)	Welsh, Andrew
O'Brien, William (Normanton)	Wicks, Malcolm
O'Hara, Edward	Wigley, Dafydd
Olner, William	Williams, Rt Hon Alan (Sw'n W)
O'Neill, Martin	Williams, Alan W (Carmarthen)
Orme, Rt Hon Stanley	Wilson, Brian
Parry, Robert	Winnick, David
Patchett, Terry	Wise, Audrey
Pendry, Tom	Worthington, Tony
Pickthall, Colin	Wray, Jimmy
Pike, Peter L.	Wright, Dr Tony
Pope, Greg	Young, David (Bolton SE)
Powell, Ray (Ogmore)
Prentice, Ms Bridget (Lew'm E)	Tellers for the Noes:
Prentice, Gordon (Pendle)	Mr. John Spellar and
Prescott, John	Mr. Jack Thompson.
Primarolo, Dawn

Question accordingly agreed to.

1. Clause 1
cc1155-68
1. RESTRICTION OF EMPLOYERS' RIGHT OF RECOVERY 6,984 words
c1168
2. BUSINESS OF THE HOUSE 47 words