HL Deb 13 March 2002 vol 632 cc1-68GC

Wednesday 13th March 2002.

The Committee met at half-past three of the clock.

[The Deputy Chairman of Committees (Lord Ampthill) in the Chair.]

The Deputy Chairman of Committees (Lord Ampthill)

Before I put the Question that the Title be postponed, it may be helpful to remind your Lordships of the procedure for today's Committee stage. Except in one important respect, our proceedings will be exactly as in a normal Committee of the Whole House. We shall go through the Bill clause by clause; noble Lords will speak standing; all noble Lords are free to attend and participate; and the proceedings will be recorded in Hansard. The one difference is that the House has agreed that there shall be no Divisions in the Grand Committee. Any issue on which agreement cannot be reached should be considered again at the Report stage when, if necessary, a Division may be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.

I should explain what will happen if there is a Division in the Chamber while we are sitting. The Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Title postponed.

Clause 1 [Paternity leave]:

Lord Henley

moved Amendment No. 1: Page 2, leave out lines 12 and 13. The noble Lord said: Before moving Amendment No. 1 in my name and Amendment No. 2 also in my name and that of my noble friends Lady Miller and Lord Rotherwick, perhaps I may say a word about the Bill being in Grand Committee. When I was part of the usual channels, I was part of the process whereby agreements were done under which Bills of one sort or another were sent to the Moses Room or, rather, into Grand Committee. The original idea behind that process was that certain Bills might be dealt with more appropriately in Grand Committee rather than on the Floor of the House. I understand that this was the case particularly where the Bill was very complicated, or highly technical, but the process was also designed for those Bills that were not controversial. It was always understood that it was not designed simply to make life easier for the Government, or for the Government to get their own legislation through and to get more of it through.

I am no longer part of the usual channels but the procedure does not seem to apply to this Bill. First, it is a big Bill with five clauses, eight schedules and a total of 82 pages. I do not believe it is an uncontroversial Bill, particularly, dare I say it, on the Minister's own Benches, where there is a degree of controversy about it.

I understand that deals have been done and it is right and proper that that is the case in certain circumstances. I also understand that all of us have benefited from that in that it has allowed us to have that extra bit of paternity leave to spend more time with our families over half term. That was part of the deal that was done through the usual channels to ensure that the Bill went into Grand Committee. I put on the record—I imagine that there will be others who will agree with me—that the Bill is not particularly appropriate for a Grand Committee. I appreciate that it is difficult to get it right and that we all make mistakes. I remember an education Bill with which my noble friend Lady Blatch was involved that went into Grand Committee; again, I suspect that that was not appropriate for that Bill.

Moreover, if a Bill is to be in Grand Committee it is an improvement for us to sit in this Committee Room rather than in the Moses Room. Others might have different views on that.

I shall speak to Amendments Nos. 1 and 2 together. The amendments relate to the new provisions in the Bill for statutory paternity leave and statutory paternity pay, about which I expressed sonic concerns at Second Reading. Before I turn to the amendments themselves, perhaps I can go back a little and say what I said at Second Reading. I ask the Government to say a little more about why those measures are being introduced. What is the need and where is the demand? Are there potential fathers up and down the country demanding that they must have two weeks or whatever of paternity leave so that they can bond with their new children? Are these not matters that are far better and more sensibly left to informal arrangements between employer and employee? For example, an employee might ask if he can take the afternoon off to take his wife home from hospital after the birth of the child, or whatever. Is not that preferable to having the heavy hand of the law saying that the employer must give the employee at least two weeks off, whether it is convenient to the employer or not, simply because the father wants to? The convenience of the employer is something that can be taken into account, as we shall see in relation to later provisions of the Bill.

Can the Minister tell us on what basis the Government are introducing this proposal and what research and consultation preceded it? Exactly what was the reaction of employers to the measure? Will he also say something about the extra burden that is being imposed on business, particularly small businesses? As I said at Second Reading, big employers can often cope very easily with such matters. It is no hardship to them at all. They have no objection to taking on such measures, but for a smaller employer losing one key worker at a crucial stage can be very difficult.

Secondly, can the Minister say what research the Government will do in the future into the effectiveness of this measure? How many fathers will take it up and at what cost? I believe that the figures for average earnings are around £18,000 or £19,000 per year, or £400 per week. If they are at about that level, how many fathers will want to take two weeks off on greatly reduced pay at a time when household expenses have dramatically increased? They are more likely to be asking the employer for overtime, rather than time off.

Amendment No. 2, to which my noble friends have also signed up, is designed to achieve one thing. We are told that fathers are being given two weeks. Mothers now have a year's maternity leave—six months paid and then six months unpaid. With the Bill drafted as it is, the two-week period could be extended bit by bit. No doubt there are bodies and organisations that represent fathers. I am sure that they do not represent fathers, but that will not stop them claiming to do so and demanding on grounds of equality or parity with mothers an extension of that two-week period. Gradually demands will be made for two, three and four weeks and, finally, dare I say it, for 26 weeks' paid leave and 26 weeks' unpaid. What was originally intended as a minor and, in my view, totally unnecessary, irritant becomes a major burden on the employer. I believe that if the period is to be extended beyond two weeks, it should be done by primary rather than secondary legislation. Therefore, perhaps I may have an assurance from the Government that there is no present intention to extend the two-week period and that they will not extend that period unless they can show that there are seriously good reasons for doing so and a serious demand from outside, both from potential parents and employers.

As I understand it, new Section 80A(4) mentions the period of 56 days—that is, eight weeks. Does that mean that a power exists only to extend the period from two weeks to a maximum of 56 days and that there would not be a power to extend it beyond that limit? I am not sure whether that is a correct interpretation of the subsection, but no doubt the Minister will reassure me on that point.

While on the subject of this new section, perhaps I may ask whether the Minister will take the opportunity to explain two subsections to me. Subsection (5) states: Regulations under subsection (1) may … (a) specify things which are, or are not, to be taken as done for the purpose of caring for a child or supporting the child's mother". I wonder whether the noble Lord can tell me what that means and what exactly he intends the regulations to cover in relation to that section. It is not clear to me.

The same is true of subsection (5)(c), which makes, provision about how leave under this section may be taken". Again, when we are talking about two weeks' leave, I am not sure why it is necessary for provision to be made about how that leave should be taken. I understand that the two weeks' leave, which we shall come to later when we deal with the subject of paternity pay, is to be taken either in a two-week block or in two sections of one week. With those questions, I beg to move.

Baroness Miller of Hendon

My noble friend knows that we do not support his amendment, although we agree with the concept of paternity leave. The amendment is grouped with Amendment No. 2, to which I was happy to put my name. In particular because this is an enabling Bill, I believe that it is important that there should be some element of precision. When the Bill states "at least two weeks", it means that the Secretary of State could fulfil the requirements if she stipulated in the order a period of three weeks, four weeks or even two months. It is important that that is clear and that people know exactly what we are talking about. The idea of issuing a blank cheque like this is taking the blank cheque system a little too far. That is why I should like to restrict it by removing the words "at least".

The Bill was first presented to Parliament over four months ago, having been preceded by fairly extensive consultation, including with the unions. I believed that by now the Government would have formed a view as to what they expected the period to be. If they have not done so, that seems rather vague. In particular, the Bill cannot be left with one of its major provisions— indeed, this is the number one provision—remaining very vague. Unless and until the Government can make up their mind and enlighten us what their intentions are in primary legislation, it may be better if we try to help to concentrate their mind by limiting the leave to two weeks.

3.45 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

First, we did consult extensively, including a formal consultation of 12 weeks on the Green Paper, Work and Parents. We also consulted specifically for a further 12 weeks on the detailed framework for paternity leave. It turned out that many people wanted to have paternity leave and to be present during the early stages of their children's life. He may even have felt, during his children's early days, a faint twinge that he might like to be with them some time.

Let me deal with some specific points. The amendments would have the effect of taking the period of paternity leave out of regulations and making it fixed on the face of the Bill for a period of exactly two weeks. As things stand, the Bill makes it clear that regulations will provide that leave will be for a minimum of two weeks.

If the noble Lord is concerned that we may regulate to allow a period longer than two weeks, let me reassure him that that is not our intention. We have consulted extensively and exhaustively on this subject, both in the Work and Parents Green Paper and subsequently. I will not say that the proposal for a two-week period met absolutely universal approval—inevitably, some wanted a longer period and others wanted a shorter period, but we needed to strike a balance and two weeks represents a reasonable consensus.

Having said that, we could of course fix the period firmly on the face of the Bill and leave ourselves no possibility of ever changing it by regulations. I do not see the need for that. As so often, in this aspect of the paternity provisions we are mirroring the architecture of the maternity provisions. In those provisions, the length of pay is a matter for primary legislation but the length of leave is a matter for regulations. I do not say it could not he done differently but, historically, it has not been clone differently and I do not believe that causes problems—provided, of course, that we are clear what those regulations will say, so that employers know the extent of their liability and employees know the extent of their entitlement well in advance.

I cannot rule out the possibility, over time, that the Government might want to look again at the issue of the length of leave. It could happen, but it is not our current intention. The period of paid paternity leave will be two weeks and, with that assurance, I hope that the noble Lord is prepared to withdraw his amendment.

Lord Henley

I shall not withdraw the amendment just yet because I have a number of concerns that have not been addressed. I think that I am right in understanding that I have had an assurance from the Minister that the length of pay is a matter for primary legislation. If the noble Lord would extend that by primary legislation, the length of leave could be extended by secondary legislation.

The Minister has not addressed my concern about the 56-day period. In the provision, the noble Lord will see that leave must be taken before the end of the period—at least 56 days is involved—beginning with the date of the child's birth. If that is the case, that would mean that he could not extend the two-week period beyond 56 days without primary legislation. So two weeks' leave could, by secondary legislation, only be extended up to eight weeks' leave. Any extension of leave beyond eight weeks would therefore have to be done through primary legislation.

Moreover, the Minister has not addressed my concerns about the meaning of the regulations in subsection (5), particularly paragraphs (a) and (c). I would he very grateful if he would take say exactly what can he expected in the regulations under paragraphs (a) and (c) in particular.

Lord Sainsbury of Turville

We have put 56 days on the face of the Bill but, as I understand it, we could by regulation extend it beyond that period in particular circumstances, if we so wished.

Lord Henley

I cannot accept that. If the requirement was that leave had to be taken before the end of a period of at least 56 days beginning with the date of the child's birth, that would mean that they would not be able to complete an extension of the period of leave beyond eight weeks in a period of 56 days. In other words, either the Bill is badly drafted or there is a limit on what the Government can do by means of regulation. Obviously, the 56-day period cannot be changed by means of secondary legislation because that was there in the Bill, unless it was shown in some other part of the Bill as something different. I want to ensure here that the Government know what they are doing, in terms of the power they are trying to give themselves to extend that particular period.

Lord Sainsbury of Turville

The situation is as I explained to the noble Lord; that we could in regulations extend the period further. However, I shall take this point away and check whether there is confusion in the drafting.

Lord Henley

I am grateful to the noble Lord and perhaps between now and Report stage he could write to me and take advice from his lawyers about the drafting of that particular point. Before we leave, perhaps the noble Lord might address my questions about subsection (5)(a) and subsection (5)(c) in terms of the precise meaning of those pages and what is intended to be in the regulations under subsections (5)(a) and (5)(c).

Lord Sainsbury of Turville

Paternity leave is for the purpose of caring for the mother and supporting the child and subsection (5)(a) allows us o detail what we mean by that. We do not expect to make use of powers, as stated in our memorandum to the Delegated Powers and Regulatory Reform Select Committee. However, we have left ourselves with the opportunity, in case we discover over time that abuses are occurring and we need to be more precise about that point.

Lord Henley

It seems extraordinary that the regulations might, for instance, provide that someone could go home to look after his wife or partner but that he cannot go to watch Arsenal play at wherever. I would have thought that it was not necessary for the heavy hand of the state come into it. If you are going to give someone parental leave, why can they not just go home and take it? No doubt, however, the noble Lord can consider that and let me know any further thoughts he may have. Having said all that, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Baroness Miller of Hendon

moved Amendment No. 3: Page 2, line 35, at end insert "(in which case reference in this section to the date of the child's birth shall mean the date of the still birth) The noble Baroness said: Amendment No. 3 is intended to clarify an omission or an ambiguity in the Bill. It was previously proposed in the other place by my honourable friend, the Member for Runnymead and Weybridge. As he pointed out, at the same time as referring to the date of the birth of the child, subsection (7) of the new Section 80A refers to a stillborn child. Although paternity leave is provided for in such a tragic case, it is not to enable the father to help care for the child, but to enable him to support the bereaved mother. It is, however, not absolutely clear that the reference to the date of the child's birth also includes the date of the stillbirth.

In response to the probing amendment of my honourable friend, the Minister for Employment and the Regions referred at my honourable friend's request to the Social Security Contributions Act 1992 and specifically to Section 171. It states, and I precis, that confinement means labour after 28 weeks of pregnancy resulting in the birth of a child whether alive or dead.

The Minister admitted, after further questioning from my honourable friend, that he was "fairly confident" that maternity pay for the full period under that Act would apply in the case of stillbirth. Presumably, by analogy, the Minister would be "fairly confident" that the date of the stillbirth would be taken as the same as the date of a live birth. However, "fairly confident" is not enough.

The Minister promised to review the matter but in the intervening stages in the other place, no clarification has emerged. That is why it is necessary for me to bring this amendment back for your Lordships to consider. This is not a controversial matter. We are all agreed on the objective and support the inclusion of the case of a stillborn child in the right to paternity leave.

What is required, however, is absolute clarity on the face of the Bill. This Bill will be referred to by both employers and employees to ascertain the employees' rights. Often, indeed usually, they will not have the benefit of expert advice. It is important that an employer or an employee, acting alone, should be able to go to their local library, or gain access to the Internet, or in some other manner to look at a copy of the Act and see what their rights are.

Acceptance of the amendment does not involve any changes whatever in the Bill. It does not diminish the Bill or parental rights in any way at all. It is not acceptable for the Minister to say, if that is what he has mind, that the amendment is not necessary. It may not be necessary for him, for lawyers, trade union advisers or other experts who have expertise at construing statutes. It also has to be clear to the owner of a corner shop or to the director of a small manufacturing business, without the time or the money to spend on professional advice. Above all, it also has to be clear to the father of a stillborn child who will have quite enough to contend with without his having to hunt around at such a distressing time to find out what his rights are. My amendment is simply to clarify the Act without altering it in any way. I beg to move.

Lord Sainsbury of Turville

A similar amendment was tabled in the Commons where the Minister for Employment Relations and in the Regions said with some confidence that it was not needed, but promised he would double-check. We have double-checked and we still believe the amendment is not needed.

I understand the concern that lies behind the amendment. We all agree that it is right that the entitlement of paternity leave should not be lost in the event of stillbirth where the need for the father to take time off, if only to support the mother, is very clear.

However, the amendment is not necessary. The Employment Rights Act 1996 into which the relevant provisions on paternity leave are inserted states at Section 235(1) that in the Act, 'childbirth' means the birth of a living child or birth of a child whether living or dead after twenty-four weeks of pregnancy. The birth of a child after 24 weeks of pregnancy will therefore count as the "birth of a child" for the purposes of eligibility, whether that child is born living or dead.

In those circumstances, the situation is clear because of where it fits into the Employment Rights Act 1996. I therefore hope the noble Baroness will withdraw her amendment.

Baroness O'Cathain

As a point of clarification, what happens if the child dies after three weeks? Would that be covered by this provision?

Lord Sainsbury of Turville

It has to be after the 24 weeks of pregnancy.

Baroness O'Cathain

But what if the child went to full term and died after three weeks of being born?

Lord Sainsbury of Turville

Yes, in those circumstances, entitlement would continue.

Baroness Miller of Hendon

I was quite hopeful at the beginning of the Minister's reply when he said the amendment was not needed. That is a different word from "not necessary". I thought he would continue to say that as it does not alter the Bill we might as well leave it out. I never yet had the pleasure of such a problem with the Minister. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

4 p.m.

Clause 2 [Statutory paternity pay]:

The Deputy Chairman of Committees

This is a vast grouping, and I might mention them all in one breath. If Amendment No. 4, a government amendment, is agreed, I cannot call Amendment No. 5. If Amendment No. 8, again a government amendment, is agreed to, I cannot call Amendment No. 9. If government Amendment No. 14 is agreed to, I cannot call Amendment No. 15.

Lord Sainsbury of Turville

moved Amendment No.4: Page 5, line 31, leave out "who is, or has been, an employee The noble Lord said: The group of amendments we are considering here reverts in the main to an issue which we discussed at some length in the other place, and which was left unresolved. That issue is the circumstance in which an employer is liable to pay paternity pay to an employee, and whether that liability continues even when the employee has moved on and left that employer's employment at some point before the child is born and any payment comes to be made.

There is no disagreement about the fundamental policy intention; namely, that it would not be right for an employer to be responsible for making payments to a former employee who had left his employment some time ago. The issue under discussion was whether the Bill as currently drafted gave proper effect to that intention and the Government undertook to go away and examine whether amendments were needed to give effect to that policy.

Given our policy intention, several Members expressed concern about the phrases in the Bill that seemed to them ambiguous or even misleading; namely, that the employee should have "ceased to work" for his employer and there might be circumstances where a person not just who is an employee, but who "has been" an employee, could qualify for paternity pay from the employer. I am not surprised that the noble Baroness has returned to the charge by laying amendments to delete or modify these phrases.

Now that we have examined the Bill closely in the light of the concerns raised earlier in the other place, she will see that we agree with her. In this case, we believe that some amendments are necessary to correct the situation. Indeed, as she can see, we go rather beyond her in our view of the amendments that are needed. I hope that, once I have explained matters a little further, she will therefore agree to withdraw her amendments and agree to the Government's, which effectively subsume those she has tabled.

The package of amendments tabled in my name establishes unambiguously that an employee will be entitled to statutory paternity pay from an employer only if he is working for that employer up to the date of birth or placement of the child, and not if he has left his employment at some point beforehand. In making this crystal clear, various consequential amendments are required to maintain internal consistency, and I would like now briefly to go through the amendments in turn.

Amendments to lines 31, 37, 42, 44 and 45 on page 5 and lines 2, 5 and 6 on page 6 make clear that, in the case of paternity pay on the birth of a child, an employee must continue to be employed by his employer between the end of the "relevant week" and the date of birth itself. In this case, the relevant week is the week immediately preceding the 14th week before the expected week of childbirth, in other words the week when he must give his employer notice of his intention to take paternity leave. Amendments to lines 27, 28 and 32 make equivalent provision for paternity leave in the case of adoption, where the relevant week is necessarily expressed differently.

Amendments to line 31 on page 5 and line 13 on page 6, as with those tabled by the noble Baroness, delete references to a person who "has been" an employee qualifying for paternity pay, since, as I have said, at the time his entitlement crystallises he will necessarily still be in employment.

Amendments to line 37 on page 5, lines 19, 23, 33 and 45 on page 6 remove references to an "expected" child, since entitlement for paternity pay will crystallise on the birth or placement of a child, not beforehand. This does not, of course, affect the fact that notice of intention to take both leave and pay must be given in advance.

Amendment to line 33 on page 8 ensures that the requirement that pay (like leave) should be available only where the employee is taking time off work for the purpose of supporting the mother or caring for the child, which would otherwise have been lost from the drafting, is reinstated elsewhere.

Amendments to line 36 on page 6, line 15 on page 7 and line 2 on page 8 make consequential amendments to cross-references.

Amendments clarify that payment is by reference to a clearly defined "statutory pay week", where the current draft of the Bill might otherwise be seen as slightly confusing in that it refers in one place to a pay "week" and in another to a pay "period".

Finally, the amendment to lines 34 to 36 on page 8, which subsumes the noble Baroness's amendment to line 34 on page 8, tidies up subsection (4) of the new Section 171ZE. The policy intention is to regulate in a way which mirrors the existing statutory maternity pay legislation in this area. The relevant statutory adoption pay provisions (subsections (3) to (5) of new Section 171ZN) achieve this and we propose amending the statutory paternity pay provisions in Section 171ZE(4) to make them similarly consistent.

The noble Baroness may have noted that the government amendments do not take account of her proposed amendment to line 15 on page 15, to the adoption provisions of the Bill in Clause 4. This is because I do not think the amendment is right. The policy intention in respect of adoption pay is different from that in respect of paternity pay, but is consistent with that in respect of maternity pay.

We believe that once an employee's entitlement to adoption pay has crystallised at the point of matching with a child, that entitlement should not be lost, even if he or she leaves employment—for example, resigning to become a full-time parent. In these circumstances, a mother does not lose her maternity pay and I do not think that an adopter should lose their adoption pay. The words "ceased to work", which the amendment seeks to remove, perform the double function of covering both this sort of situation and the perhaps more usual circumstance where the employee merely takes leave from work with the intention of returning. The words are therefore appropriate as they are in the equivalent provisions for maternity pay. On that basis, the amendment is subsumed in the general position.

Lord Wedderburn of Charlton

Before my noble friend sits down, perhaps he could help me on one matter. We are dealing with a very large number of proposed amendments, and especially government amendments, which are likely to be written into the Bill. I refer to Amendments Nos. 4 to 26, 28 to 32, and 36. Those who are interested in the matter—and many people are interested in the progress of this Bill, such as employers and representatives of workers too—will be interested especially in what my noble friend said about adoption pay. That struck me as being most important. Those who have not ventured into the Himalayas and climbed to hear the proceedings of this Grand Committee, and who do not have this document which sets out all the amendments, will be quite mystified. Would he arrange to have all these amendments printed in Hansard— to have all of the amendments printed in Hansard? Then those who are trying to follow his speech on this and subsequent matters will be able to read the public instrument of the proceedings of the Committee and be able to put the Bill together.

Lord Sainsbury of Turville

I believe that Hansard will have these automatically and immediately and people will be able to see them.

Baroness Miller of Hendon

I am most grateful to the Minister, for those new amendments, which certainly have dealt with most of the amendments that I have put down in this group. The Minister may be interested to know that, through a technical hitch, and it is no more than that, I asked for Amendments Nos. 5, 9, 15 and 36 to be withdrawn, but somehow that was not done and they are still on the Marshalled List. I have no intention of moving them.

However, in this group, I still have Amendment No. 30. Unless I am very mistaken, I do not think the Minister has quite dealt with that problem for me. With the leave of the Committee, I would like to mention my concern about Amendment No. 30. This is a probing amendment to enable us to find out exactly what the Government mean by a phrase. On page 8, line 34, we have asked them to leave out: Except in such cases as may be prescribed I really wanted some information as to what those cases might be.

My honourable friend the Member for Runnymede and Weybridge asked the identical question in the other place, but no answer came there at all. We believe that clarification is needed on the issue of when the Secretary of State expects to prescribe what statutory paternity pay should be payable to a person who works under a contract of service. Conversely, perhaps the Minister can explain why statutory paternity pay will therefore not be payable in those circumstances, whatever they might happen to be. That is not at all clear.

The Minister for Employment Relations and the Regions said that the Government have an amendment on that issue somewhere down the line. I have not been able to find it. It may very well be there and would make my amendment unnecessary. I would therefore agree with the noble Lord, if that is what he said. However, I have to say that I have not seen it and, looking at the clause, it is still in its original state with those words.

The Minister said that a person cannot work and receive benefit at the same time. Precisely. So why are the Government asking for power to make an exception to that common sense statement by the words, in such cases as may be prescribed"? The Minister suggested that there was some analogy with maternity leave, but there is no indication of what happens in that case. Lastly, the Minister said that we are trying to keep our options open for exceptional circumstances that may arise. That is definitely the most blank of blank cheques.

The Government want powers to make exceptions against the financial interests of employers in certain circumstances but they cannot even give us the most fanciful examples that the entire department's fertile imagination could dream up; such examples might have indicated to us in some way what that was supposed to mean. I believe that the truth is that the draftsman let his pen run away with him when he put these words in the clause without specifically knowing what he had in mind. There is enough waffling on this subject in the other place—it went on for quite some time—and I was hoping that in this House we might have a little more precision from the Minister.

The Government did not come up with the amendment that they predicted, presumably by way of clarification, perhaps because they cannot. Two months have passed since the debate in the other place and the time has come for the Government either to come up with something else or to drop these words.

Lord Henley

Perhaps I may pick up the point made by the noble Lord, Lord Wedderburn. The Minister said that all the amendments in this group would be printed in Hansard together with Amendment No. 4. The normal form would in fact be that Amendment No. 4 would be printed just before the Minister's speech. Amendments Nos. 5 to 26, excluding those that are not going to be moved by my noble friend, would appear when they were moved; that is, after the debate on this amendment. Amendments Nos. 28 to 32 would then have to be moved after our debate on Amendment No. 27; that is when they would appear. Amendment No. 36 would obviously come after the debate on Amendment Nos. 33 and 35. Is he suggesting that he will depart from the usual procedure and, as the noble Lord, Lord Wedderburn, asked, print them together, before they were moved, with Amendment No. 4? That would be helpful and make the position much easier to understand. That is the relevant procedure. Is that what he was implying?

Lord Sainsbury of Turville

No, I said that those employers who wanted to look through Hansard and see what had been said would be able to go through the amendments and see them in that context. That was all.

Lord McCarthy

Employers will not be able to do that unless we do not do what my noble friend Lord Wedderburn was told would be done and the Government also do not do what the noble Lord, Lord Henley, suggested. Is the Minister saying that the amendments will be moved at the end of this debate, as is done in the other place?

Lord Sainsbury of Turville

Yes, is the answer.

Lord Henley

The answer is that the amendments will appear in Hansard but that they will be quite difficult to find. They will not appear in the easy manner that was asked for by my noble friend Lord Wedderburn although we seemed to get a response suggesting that they would all appear with Amendment No. 4.

Lord McIntosh of Haringey

Within two weeks the Bill will be reprinted for Report with the amendments as agreed in Committee. That is what people outside will be looking for and that will be much easier to understand.

Lord Henley

We were seeking clarity for those listening to the question of the noble Lord, Lord Wedderburn, to make sure that we all understood exactly what was going to appear in Hansard.

Lord Sainsbury of Turville

The drafting is entirely consistent on this point. The noble Baroness referred to the maternity provisions, which relate to a woman who has two part-time jobs and qualifies for pay from both. In some circumstances she is able to work for an employer while getting maternity pay from the other, and we are replicating that point here.

On Question, amendment agreed to.

4.15 p.m.

[Amendment No. 5 not moved.]

Lord Sainsbury of Turville

moved Amendments Nos. 6 to 8: Page 5, line 37, leave out ", or expected, Page 5, line 42, leave out from first "the" to end of line 43 and insert "relevant week; Page 5, leave out lines 44 and 45. On Question, amendments agreed to.

[Amendment No. 9 not moved.]

Lord Sainsbury of Turville

moved Amendments Nos. 10 to 14: Page 6, line 2, leave out from first "the" to "are" in line 3 and insert "relevant week Page 6, leave out lines 5 and 6 and insert "at the end of the relevant week; Page 6, line 6, at end insert"; and (da) that he has been in employed earner's employment with the employer by reference to whom the condition in paragraph (b) above is satisfied for a continuous period beginning with the end of the relevant week and ending with the day on which the child is born. Page 6, line 6, at end insert— ( ) The references in subsection (2) above to the relevant week are to the week immediately preceding the 14th week before the expected week of the child's birth. Page 6, line 13, leave out "who is, or has been, an employee On Question, amendments agreed to.

[Amendment No. 15 not moved.]

Lord Sainsbury of Turville

moved Amendments Nos. 16 to 26: Page 6, line 19, after "child" insert "who is". Page 6, line 19, leave out or expected to be placed,". Page 6, line 23, leave out ", or is expected to be,". Page 6, leave out lines 27 and 28. Page 6, line 32, after "week;" insert— (da) that he has been in employed earner's employment with the employer by reference to whom the condition in paragraph (b) above is satisfied for a continuous period beginning with the end of the relevant week and ending with the day on which the child is placed for adoption; and". Page 6, line 33, leave out ", or is expected to be,". Page 6, line 36, leave out "paragraphs (b) and (d) of". Page 6, line 45, leave out ", or expected placement,". Page 7, line 15, leave out "(c) or". Page 7, line 15, after "(d)" insert "or (da)". Page 8, line 2, after "(2)(b)" insert "and (da)". On Question, amendments agreed to.

Lord Henley

moved Amendment No. 27: Page 8, line 23, at end insert "if agreed with the employer". The noble Lord said: We can deal with this amendment briefly. I wish to seek some assurances from the Government, but I also want to point them in another direction. First, now that we are dealing with the section of the Bill concerned with paternity pay, am I correct in saying that it can only be paid, as the Bill sets out, for a period of either two weeks or one week, as the employee wishes? If that is true of statutory paternity pay, I presume that the same must he true of paternity leave. I also presume that that leave can be taken only at the same time as the paternity pay is given and that it cannot be taken, as was suggested earlier, in a series of 10 days spread out over 56 days. I should be grateful for an assurance from the Minister on that point because we need to have it on the record.

The second point behind the amendment is that this is another extra, and I would argue unnecessary, burden on the employer. It is one of those occasions where one might give the employer a little back in return and suggest that his agreement be sought if paternity leave and paternity pay were to be taken over two non-consecutive weeks rather than two weeks at a time. That might make a difference to him. Again, I am thinking of a small employer who may lose a key employee. It is one of those occasions where a degree of consultation between employer and employee might be the answer. If the words "if agreed with the employer" were included, that might at least give the right message about how this new burden should be interpreted in terms of relations between employer and employee. I beg to move.

Lord McCarthy

Perhaps I may clarify what the noble Lord is asking us to do. At this point in the Bill, we are not talking about periods of leave but about amounts of pay. I do not see why the employer, who is not paying the money—it is statutory paternity pay—should have a veto on when it is paid.

Baroness O'Cathain

Perhaps I may clarify that point. When we talk about two weeks' pay, it is actually two weeks' pay, not three days, then four days, another three days and then another two days or whatever. The early part of the Bill states "a week or seven days". I take it that the option is between 14 days or seven days. Thus, the employee's pay would be for a week of seven days or a period of 14 days. That is not clear in the Bill.

Lord Henley

Before the Minister responds, in reply to the noble Lord, Lord McCarthy, my understanding is that statutory paternity pay can be paid to an employee who either takes two weeks off at a particular point or takes a week off followed by another week some time later. If that extra burden is to be placed on the employer—that is, of an employee taking not only two weeks off but two separate periods of one week—there should be a degree of consultation with the employer. I should like to see even greater consultation with the employer. However, this small amendment asks the Government to think about allowing the employer to consult a little more with the employee. It is possible that I have misunderstood that point. If that is the case, no doubt the Minister will advise me and I shall return to it at a later stage.

As I implied, the amendment was also designed as a probing amendment in order to obtain an assurance from the Government that pay and leave would cover a period of only two weeks, taken either as one two-week block or as two single weeks at separate times but not as a series of days taken off according to whether Arsenal were playing away or whatever.

Lord McCarthy

The amendment states "if agreed", not "after consultation". "After consultation" is one thing; "if agreed" is a veto.

Lord Henley

It might be a veto. If the noble Lord does not like it, perhaps I could bring in some degree of consultation with the employer and then a whole range of arbitration as appropriate. You can lengthen the Bill yet further; I am not sure that the noble Lord, Lord McCarthy, would like that. I believe this is one occasion where the employee is getting something—he is getting a right to two weeks—so why not at least say that the employer can say, "I am terribly sorry, you cannot take it as two one-week blocks but you can have your right of two weeks all at once if you so wish"?

Lord Sainsbury of Turville

We need not debate too much where the provision appears, although the noble Lord, Lord McCarthy, is probably right because we simply do not agree with the amendment. Let me explain why.

This amendment seeks to institutionalise discussion and agreement between the employer and employee over some of the ways in which it may be possible for paternity pay to be taken.

I am not unsympathetic to the thinking behind the amendment. I believe it is absolutely right that there should be discussion in the workplace well before the leave is taken, so that employer and employee have the best possible common understanding of the position. I know that such discussions are already common in many workplaces where paternity benefits are provided as a contractual matter, and I would not want to see any lesser emphasis placed on such discussions in respect of the new statutory rights.

However, it would be immensely difficult to provide that a particular potential flexibility which we have now introduced into the Bill—namely the possibility that regulations will allow an employee to be able to take a period of statutory pay in a form other than a simple two-week block—in other words either a one-week block or two discontinuous periods of one week—should only be available where it is agreed with the employer.

In the first place, it is by no means certain that final regulations will allow for discontinuous pay periods of this sort. The initial draft of the Bill did not allow for it. But the Bill was amended as a result of long discussion in the other place, where many Members felt that it would be wrong to tie our hands irrevocably on the issue by enshrining the "single block" approach in primary legislation.

However, the Government are yet to be convinced that the case has been made to allow for discontinuous pay periods in practice. There are strong arguments, which were powerfully made to us in earlier consultation, for providing that leave and pay should remain available only in a single block. Of course, we will be consulting on the draft regulations, so people will have the chance to make the case to us. And the advantage of the Bill, as it now is, is that we do not rule out being able to make this change relatively simply, in secondary legislation, if experience of the new right once implemented suggests that it would be either helpful or at least painless for all concerned at some point in the future. But as things stand, I would not expect the Government to regulate in this way.

Even if we were to regulate to allow for the possibility of two discontinuous weeks, it would be very difficult also to provide that such periods are only available if agreed with the employer. What would happen if the employer delayed considering the matter, or unreasonably refused his agreement? I am not saying this would be common but we would need to consider the issue. We would need to provide for it in regulations—perhaps with a formal appeal mechanism and so on. We would risk building into what is meant to be a simple and easily-administered right a new layer of complexity and regulation, and I do not believe that it is needed.

Over and over again, employers have told us that they do not want some sort of veto over their employees' ability to take paternity leave and pay; what they want is the greatest possible certainty—advance notice and simple administration. This is what I believe we have provided for, and I fear that the amendment, while in many ways understandable, would risk departing from that approach. I, therefore, ask the noble Lord to withdraw the amendment.

Lord Wedderburn of Charlton

Before my noble friend disposes of this obviously undesirable amendment to give employers a veto, I understood him to say that consultation on the matter at the place of work would be very sensible and that the Government intend to promote that in one way or another, which presumably will also be reflected in the regulations. Was he placing emphasis particularly on the fact that the relevant paragraph begins, "if regulations permit", because, if he was, this is one of the very large number of occasions when it would be very difficult to read this Bill before all the regulations are printed and know just what it means? Do the Government envisage that regulations might not permit this paragraph to operate? There are cases later where the scope of regulation powers to alter what appears to be the meaning of the Bill is vast.

The Minister should consider, before Report stage, whether all these powers are necessary. It might be worth knowing what the Government have in mind with regard to the phrase "if regulations permit". Do they have in mind the possibility that they may not permit this to operate? I shall ask my noble friend the same sort of question at later stages but my noble friends and I believe it to be worth raising a general point in the particular matter to see what the Government's position is.

Lord Sainsbury of Turville

I was merely making the point that it is clearly sensible for people to consult in this. That is not to say that the suggestion has to be a regulation, merely that it would be desirable and that people would be encouraged to consult in these circumstances. As regards how this would take place, I made our position clear: we are minded at the moment to have one period of two weeks and not to split it. We were, however, pushed as to whether we would put the flexibility in the primary legislation, which seemed a sensible move, and we have done it. Equally, I have made clear our current thinking on how that would operate. As regards powers in the regulations, the Delegated Powers Committee has looked at this and given us a clear bill of health.

Lord Henley

Obviously, my amendment has not received universal support and I will have to think carefully about how I pursue it at later stages. The noble Lord stressed the importance of advance notice and one of the great strengths of maternity leave is that you know fairly clearly when the event is going to happen.

That brings me on to the point that paternity is not always quite so simple and there are occasions when people do not discover about their new paternal rights until long after the event. I therefore suggest that possibly further amendment should be put down as to what would happen to someone who discovered he was the father some years after. Therefore, 56 days would have denied him his entitlement—but I am being flippant!

I am grateful to the noble Lord in that he has given fairly good assurance that the Government do not intend the regulations to do anything other than provide a two-week period. However, he felt that it was right that there should be a degree of flexibility to allow two separate periods of one week to be brought in later if after consultation that was felt to be desirable. I suspect I will not be coming back to this but I shall look carefully at what he said and if I do so, I shall follow the remarks of the noble Lord, Lord McCarthy, and look carefully at where it ought to be introduced in the Bill. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Lord Sainsbury of Turville

moved Amendments Nos. 28 and 29: Page 8, line 33, at end insert— ( ) Statutory paternity pay shall not be payable to a person in respect of a statutory pay week if it is not his purpose at the beginning of the week—

  1. (a) to care for the child by reference to whom he satisfies the condition in sub-paragraph (i) of section 171ZA(2)(a) or 171ZB(2)(a) above, or
  2. (b) to support the person by reference to whom he satisfies the condition in sub-paragraph (ii) of that provision.".
Page 8, leave out lines 34 to 36 and insert— (4) A person shall not be liable to pay statutory paternity pay to another in respect of a statutory pay week during any part of which the other works under a contract of service with him. (4A) It is immaterial for the purposes of subsection (4) above whether the work referred to in that subsection is work under a contract of service which existed immediately before the statutory pay week or a contract of service which did not so exist. (4B) Except in such cases as may be prescribed, statutory paternity pay shall not be payable to a person in respect of a statutory pay week during any part of which he works for any employer who is not liable to pay him statutory paternity pay. On Question, amendments agreed to.

Baroness Miller of Hendon

moved Amendment No. 30: Page 8, line 34, leave out "Except in such cases as may be prescribed, The noble Baroness said: I would not like to think that the atmosphere in here is such that I dozed during those few moments! All I was interested in—and it was quite short and quite easy—was what is meant by "such cases as may be prescribed as the exception". I beg to move.

Lord Sainsbury of Turville

I covered this point: the drafting is entirely consistent with the maternity provisions. It relates to the circumstances in which a woman has two part-time jobs and qualifies for pay from both of them and in some circumstances is able to return to work for an employee while receiving maternity pay from the other. We are replicating that situation here. If it would help the noble Baroness, I shall write to her and cover in detail the rather complicated situation to which this applies.

Baroness Miller of Hendon

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.30 p.m.

Lord Sainsbury of Turville

moved Amendments Nos. 31 and 32: Page 8, line 39, after "a" insert "statutory pay Page 9, line 3, after "section" insert— "statutory pay week", in relation to a person entitled to statutory paternity pay, means a week chosen by him as a week in respect of which statutory paternity pay shall be payable; The noble Lord said: I beg to move.

On Question, amendments agreed to.

Baroness Miller of Hendon

moved Amendment No. 33: Page 11, line 11, leave out "normal" and insert "average The noble Baroness said: Amendment No. 33 is a very short amendment which requires an equally short and, I trust, simple explanation. While speaking to it, I would like also to speak to the identical amendments, Amendments Nos. 34 and 37, at line 18 on page 11, and also to Amendment No. 260, on page 55 line 41. I would also like to speak to Amendments Nos. 38 and 39.

The Bill talks about a person's "normal weekly earnings" and the first batch of my amendments seeks to alter the meaningless word of "normal" to "average". What are "normal" earnings? If a person is on a variable wage scale—say, hourly or piece rate, or in a job where overtime is sometimes payable—then who is to say what his "normal" wages are? Using the meaningless phrase "normal" will provide work for the court and for whole teams of lawyers. The clause, as drafted, attempts to define "normal", but how does it do so? It does it by reference to the "average" earnings, which is the intention in my amendment in any case.

I suspect that the draftsmen were simply trying to use the same word twice in the same sentence, but I am sure that we do not want to create a whole new legal concept of "normal" wages, simply because of some imaginary rule of syntax.

In Amendment No. 38, I propose to leave out the words: subject to subsection (8) below and in Amendment No. 39, I propose that we should delete the whole of subsection (8). This is because, if my first amendment were accepted—and I hope it will be, because this is a very sensible amendment—the whole of subsection (8) would be redundant. I beg to move.

Lord Sainsbury of Turville

I shall talk to Amendments Nos. 33 to 39. A number of these amendments to the pay and adoption clauses replace the word "normal" with "average" in relation to the way in which earnings are calculated, to work out how much statutory pay someone is entitled to.

Baroness Miller of Hendon

The noble Lord referred to Amendments Nos. 33 to 35, but the group includes Amendments Nos. 33 and 34, and then 37 to 39.

Lord Sainsbury of Turville

I shall speak to all of them.

Baroness Miller of Hendon

The Minister will speak to the amendment before I have actually—

Lord Sainsbury of Turville

I am sorry—I have got the headings wrong. I shall speak simply to the ones in the group.

A number of these amendments to the pay and adoption clauses replace the word "normal" with "average" in relation to the way in which earnings are calculated for working out how much statutory pay someone is entitled to.

I am tempted to ask "what's in a name?" because the effect of these amendments is to replace one undefined word with another. The language of the relevant clauses follows the language of the statutory maternity pay legislation in Section 171(4) of the Social Security Contributions and Benefits Act 1992. The very important question is how "normal earnings", or whatever we call them, are defined. That is what this part of Clause 2 does: it provides for "normal earnings" to be defined in regulations.

This brings me to the noble Baroness's second set of amendments to these clauses—those which have the effect of removing the ability to define "normal weekly earnings" in regulations. I note that the noble Baroness has not tabled an amendment to place a definition of "normal weekly earnings" on the face of the Bill. The cumulative effect of these amendments would be to leave both employers and employees with no clear understanding of what "normal" or "average" weekly earnings might be.

A definition of "normal weekly earnings" will inevitably be highly detailed and it will have to be included in the regulations. It cannot simply be reduced to the layman's word "average" without departing significantly from the maternity precedent. We believe that that detail is best set out in regulations, following the maternity precedent.

We must have a formula which is fair to the employee in properly reflecting what he receives from his employment and fair to the employer because it is straightforward to calculate. We intend here that "normal weekly earnings" for both paternity and adoption purposes should follow the model of the existing provisions for statutory maternity pay. The calculation of a person's normal weekly earnings for statutory maternity pay purposes is set out in Regulation 21 of the Statutory Maternity Pay (General) Regulations 1986. We intend to mirror that calculation for both statutory adoption pay and statutory paternity pay.

I hope that the noble Baroness, Lady Miller, is happy with this approach. Some of her amendments would change simply names and not substance, and others would prevent us placing the detail in regulations—a significant departure from the statutory maternity pay precedent.

I now turn to the final amendment in the group which we are discussing in respect of Clause 22. We have considered "what's in a name", and I should say that there is no great significance in the use of the terms "average weekly earnings" for maternity allowance and "normal weekly earnings" for statutory maternity pay. As I shall explain, the calculations are different in a number of respects, reflecting the different nature of the payments in question. However, the key to both is hat the calculations involve averaging amounts of pay in order to arrive at a fair amount on which to base entitlement.

Having said that, the draftsmen may well have felt that "average" was a more appropriate term to use in the context of maternity allowance because earnings from more than one job can be used to work out a woman's entitlement to maternity allowance, and the woman may well not have "normal" earnings as such in the same way as she might have "normal" weekly earnings from just one employer.

Let us take the example of a woman who has three jobs. Her earnings vary in each job depending on how many hours she puts in, but generally she earns £20 a week in job one, £40 a week in job two, and £5 an hour for the few hours she occasionally puts in for job three. As her wages vary, what is "normal" for her? The important concept for maternity allowance is to be able to add all her earnings together and average them out to arrive at her weekly rate of maternity allowance.

Noble Lords may find it helpful if I explain how maternity allowance works. In 2000, we improved maternity allowance by extending entitlement to pregnant women on low earnings who did not earn enough to pay national insurance contributions. We did that by basing entitlement on the level of a woman's average weekly earnings from all sources rather than on the payment of national insurance contributions.

To obtain maternity allowance, a woman must satisfy two tests. First, she must have been employed or self-employed in at least 26 weeks out of the 66-week period ending with the week before the week when she expects her baby to be born. That is known as the test period. Secondly, she must earn on average at least £30 a week. Under the current scheme, that average is then compared with the lower earnings limit for national insurance in force at the beginning of her test period. If the average is at least equal to that lower earnings limit, she will receive standard rate maternity allowance. If the average is less than that but at least £30 a week, she will receive a weekly rate of maternity allowance worth 90 per cent of her average weekly earnings. From 2003, she will simply receive £100 a week, or 90 per cent of her average weekly earnings if that is less.

Average weekly earnings for maternity allowance are worked out over a 13-week period. The woman may choose the 13-week period in which she received her best earnings; for example, she can take account of any period where she may have been paid a bonus or other payment which boosts her earnings in order to maximise the maternity allowance paid to her. I should say that this is in line with the statutory maternity payment calculation where account is taken of any payments made, including bonuses, when working out the average weekly earnings for statutory maternity pay. From 2003, we intend that a woman will have even more flexibility in the maternity allowance scheme to maximise her average weekly earnings, reach the qualifying maternity allowance threshold of £30, and thus get the best rate of maternity allowance that she can. From 2003, she will be able to average out her earnings from the best 13 weeks in her test period.

Maternity allowance is intended to help pregnant women who work close to or during their pregnancy but who cannot qualify for statutory maternity pay because they are low paid, have more than one job, have broken work records or have recently left employment. By enabling those women to choose the best 13 weeks' earnings from different sources and average out their earnings, we are helping more women to obtain the financial help that they need in order to stop work for a period around the time of their babies' birth. Therefore, we believe that "average earnings" and not "normal earnings" is the correct expression. We believe that it more exactly describes a process by which relevant earnings are set for maternity allowance.

For completeness, I should explain that the rules for maternity allowance are rather different from those for SMP, which take the average of earnings over an eight-week period ending with a fixed point in the fifteenth week before the expected birth. The reason for the different approach is that for SMP we need to have a method of establishing earnings close to the start of maternity leave which achieves a balance between fairness to the employee and simplicity of operation for the employer. However, with regard to maternity allowance, we are dealing with women who may not be in employment at the end of their pregnancy, who may have a broken record of employment or for whom it is fairer to look at earnings over a longer period.

I appreciate that the different use of the terms "normal earnings" and "average earnings" may seem puzzling. However, the way in which the terms are used in the Bill simply carries forward a difference in terminology in the existing legislation on maternity allowance and statutory maternity pay. What matters is what happens in practice. Now that I have explained the maternity allowance rules, I hope that your Lordships will understand why they work in the way that they do and agree that they are entirely reasonable. Therefore, I invite the noble Baroness to withdraw the amendment.

Baroness Blatch

I rise to support my noble friend. I have lost count of the number of times the Minister used the word "average". Am I right in saying that the speech which the noble Lord has just made would win no prizes whatever from the Plain English Campaign? The response given to my noble friend was incredibly complex. Does the Minister also agree that employers—in particular, small employers—will hold their heads in despair if they have to spend time unravelling and sorting out the meaning of what the noble Lord has just said?

Lord Wedderburn of Charlton

My noble friend is to be congratulated on making very clear the need for the concept of normal weekly earnings to be used here. The difficulty that I have is not quite that of the noble Baroness who moved the amendment, which I hope will be resisted. "Normal weekly earnings" is a fundamental concept in various areas of employment protection law. A definition in Section 234 of the Employment Rights Act 1996 will not apply. A definition in Regulation 21 of the Statutory Maternity Pay Regulations, which, by chance, I have before me, is extremely complex but, when it is worked out, it is very clear.

As I understood my noble friend the Minister, the Government want to apply that notion with one or two minimal changes. I do not understand why we have to wait for a regulation in order to say so. If the Government know how they want to define "normal weekly earnings", why cannot they say so in the Bill? I have given notice on a number of occasions that I shall raise this kind of point with my noble friends. It seems to me that this is a perfect occasion on which to inquire why they need to ask officials to draft a regulation and leave everyone in suspense. The world is waiting to know what "normal weekly earnings" means in this section of the Bill. In some places that I know of, they speak of little else.

Lord McIntosh of Haringey

Not in my town.

Lord Wedderburn of Charlton

My noble friend Lord McIntosh may not hear it spoken of in Hampstead, but it will seriously engage the attention of employers. However, I do not believe that noble Lords should concentrate only on employers. There will be a number of advisers in trade unions who will try to help women workers in relation to maternity pay and male workers in relation to paternity pay. I cannot for the life of me think why the Government cannot put on the face of the Bill a definition of national weekly earnings in the light of what my noble friend said. If the only reason is that they have not yet made up their minds, perhaps they had better say that, because I do not believe it. I believe that they know perfectly well what they mean by normal earnings here. I urge my noble friend to adopt a new and, with a little help, liberal approach to this matter and tell us what the Bill means as much as he possibly can.

Baroness Gardner of Parkes

When I used to sit on an industrial tribunal, it was a regular discussion as to whether the word "normal" included overtime and whether it only included overtime if you were obliged to do it as opposed to it being voluntary. The same complication comes in with the word "average". These are points that should be clarified.

Lord Sainsbury of Turville

Having given the long answer, may I give the short answer now? The provision seems to me sensible given that you have to work out average earnings which inevitably involves pages of complicated calculations. The Bill refers to normal earnings which are defined in the regulations. You cannot sensibly put that amount of regulation on the face of the Bill, not least because if there are changes in tax or anything else, that may affect it. You must sensibly put that matter in regulations. Of course, the regulations will not be exactly the same as those for maternity pay. You cannot sensibly put all that information, which covers all kinds of situations, part-time workers and others, onto the face of the Bill.

4.45 p.m.

Lord Wedderburn of Charlton

I am sorry to press my noble friend on this but I have in front of me regulation 21 of the 1986 regulations to which he referred. As I understand it, that is the pattern that the Government wish to adopt in this part of the Bill. I have not been able to add up the lines, and he will forgive me if I am wrong, but I estimate that there are 30 or 40 lines. Is he saying there is no room in the Bill for another 40 lines, or that he does not know which line will apply? Do we not know what the regulation will say? If we do know what the regulation will say, why cannot he put the 40 lines in the Bill?

Lord Sainsbury of Turville

We could do so but you lose the flexibility to change that if there are very good reasons for doing so.

Lord Henley

On that point, have the 1986 regulations which the noble Lord, Lord Wedderburn, cited been changed since 1986, or are we still dealing with the same regulations? If they have not been changed in 16 years, it seems unlikely that there will be a frequent need to change them. Therefore, why cannot they be added to the Bill?

Baroness Miller of Hendon

Some 10 minutes or so ago, I started by saying this is a very short amendment which required only a simple explanation. I added the words "I trust", and I see that my trust is somewhat misplaced, because it turned out to be an extraordinarily complicated matter when I listened to the Minister. I agree with my noble friend Lady Blatch. I lost count of how many times he described average earnings in describing the term "normal". At the beginning of the Minister's answer to me, "normal" was not defined and "average" was not defined and I have tried to point out that they are defined in some way by the term "average earnings". I believe that that really is a complication.

I take note of what the noble Lord. Lord Wedderburn, says. I shall read very carefully what the noble Lord said and see whether the matter becomes more simple and more understandable as I read it. However, while I wish we were in Office and I were standing at the Dispatch Box and the Minister were in my place, I am very glad I did not have to read out his reply because I thought it was totally convoluted and very unclear. It may be that that is one of the reasons why the matter is not properly defined at this stage. But there is no reason why, when the Government define it in regulations, they will not be able to find a simpler way of putting it. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 34 not moved.]

Clause 2, as amended, agreed to.

Clause 3 [Adoption Leave]:

Baroness Miller

moved Amendment No. 35: Page 14, line I0, at end insert— ( ) Regulations under section 75A or 75B shall provide that a person suffer no detriment by virtue of taking adoption leave, but shall not be protected from any detriment that he would have suffered had he not been taking adoption leave. The noble Baroness said: This is an identical amendment to that proposed by my honourable friend the Member for Runnymede and Weybridge in Standing Committee in the other place. However, it was withdrawn by him after the response of the Minister for Employment Relations and the Regions. I have read that short debate but felt it necessary to bring the amendment back today for some further consideration. For the sake of completeness and clarity I have reproduced the entire amendment, even though the Minister gave a technically satisfactory but entirely legalistic explanation of the first half of that amendment.

As this Bill is going to be relied upon by ordinary people, employers and employees alike, their rights and obligations should be entirely clear to them if they try to look up things themselves without having to employ a lawyer or consult an expert. These are important matters and the answers should be easily found and simple to understand. It ought to be possible for an employer and employee to sort out a potential problem or answer a simple question without having to go from one Act to another and so on. It is difficult enough when we are dealing with legislation ourselves. We are becoming more experienced at going from one Act to another but in the world of employment relations—the whole purpose of this Bill appears to be to make those relationships easier— simplicity and clarity are important.

The amendment is in two halves. The first provides that a person who takes adoption leave should suffer no detriment. It is to that half that the Minister gave the technically correct answer, which I would like to quote: Detriment is dealt with in Schedule 6, subsection 24, which will amend Section 47(c)(2) of the Employment Rights Act 1996. So for an employee to check that he is not to suffer a detriment for taking adoption leave, he has to find paragraph 24 of the sixth schedule to this Bill, which inserts an extra five words of amendment to another measure, which he would also have to read to find out what the draftsman is talking about. In the interests of the persons who are supposed to be the beneficiaries of this legislation on the one hand and those who are supposed to comply with it on the other, what possible harm is there in repeating in plain language, complete on the face of it and complete in itself, that a person taking adoption leave is to suffer no detriment for doing so? Never mind that the same thing is said elsewhere in the Bill.

However, the second part of the amendment expressly stipulates that a person shall not be protected from a detriment that he would have suffered, whether he had adopted a child or not. I regret that on that part of the amendment, the Minister's reply in the other place was not satisfactory. It was factually correct but that does not make it satisfactory. The Minister said there, Issues on which they cannot suffer detriment are in the Bill. Matters such as whether an employee should be treated in the same way as every other employee do not have to be in the Bill. I disagree. For the reasons I have already given, there is no reason why the facts should not be clearly spelled out that an adoptive father may not be protected from a deserved or inevitable detriment merely because he is involved in the adoption.

In 1925, Parliament passed the workmen's compensation Act, which was deliberately drafted in non-legal language so every workman would clearly be able to understand his rights. The workmen may well have understood the Act but the truth is that the lawyers did not. In consequence, it became one of the most litigated pieces of legislation that Parliament has ever passed. That does not, however, make the sentiment wrong. The sentiment is right: there is no reason why anyone should have to trawl through this Bill, even assuming that he knows where to begin looking, only to find that his rights are defined by an extension to a section in another Act when the whole problem is resolved by the elegant 42 words drafted by my honourable friend in the other place. I am not even pretending that I drafted them! I have just lifted them and it looks very good and it would be very clear if it were in the Bill. They may be repetitive of what is said elsewhere, buried in the thick schedule which is difficult to find for someone who is not conversant with this kind of matter. Saying it twice, once very clearly, does no harm. It is only belt and braces. T beg to move.

Lord Wedderburn of Charlton

I wanted to ask the noble Baroness, Lady Miller—and no doubt she can reply to this in due course when she responds to the debate—whether what she called this clear and elegant amendment really means what it says. It says that there is to be no detriment by virtue of taking adoption leave—most previous precedents against victimisation. Of course the word "detriment" is a polite word in employment protection legislation for "victimisation" of a worker who takes his rights or indeed proposes to take his rights. I do not notice any element of proposing.

Even more importantly, the amendment goes on to say that a worker is not to be protected from any detriment that he would have suffered if he did not take adoption leave. Does the amendment mean any lawful detriment or does it mean any detriment? There is, of course, a raft of legislation protecting workers from employers who victimise them for taking or proposing to take their employment protection rights.

However, not in this Bill; it is defective on victimisation, even in the schedules. It is a bad employer who does it, but anyone who thinks it does not happen should look at the law reports every month and he will find these sections being the subject of enforcement, since employees are not yet barred from access to the tribunals. If the amendment means any detriment, including those covered by sections of other statutes, its elegance mystifies me.

Baroness Miller of Hendon

I suggest that, as the noble Lord, Lord Wedderburn, said, I can leave my response until after I hear what the Minister has to say.

Lord Sainsbury of Turville

I deal first with those two points. The first is whether one should in these cases refer back to something in a previous Act. We would not, of course, expect employers to have to refer to Acts themselves. What they do in reality is to refer to guidance and we will provide that. The approach of the noble Baroness, Lady Miller, would mean endless copying out of previous legislation into the new legislation, making it lengthier and wordier and doubtless attracting criticism accordingly.

On the substance of her amendment, as the Minister in the other place explained to the honourable Member for Runnymede and Weybridge, the question of detriment is dealt with in paragraph 24 of Schedule 7 to the Bill. This provision will amend the Employments Rights Act 1996, Part V, Section 47C(2) so that employees who exercise their right to ordinary or additional adoption leave do not suffer detriment as a result of taking or seeking to take that leave. The detriment treatment in question must relate to adoption leave. This includes the intention to take it. For example, it would protect an employee from detrimental treatment if he were selected for redundancy on grounds of his being on adoption leave or the intention to take adoption leave.

On the other hand we should be absolutely clear that it will not protect an employee from suffering the consequences of any of his actions that are not related to his taking or intending to take adoption leave. It does not provide the employee with some generalised protection from being disciplined simply because he happens to be on adoption leave at that time. I therefore invite the noble Baroness, Lady Miller, to withdraw her amendment.

Baroness Miller of Hendon

I listened very carefully to what the Minister had to say and I hoped that he would comment on the point about lawful detriment in the second part of my amendment, which would have made it somewhat easier for me.

I should like to say to the noble Lord, Lord Wedderburn, that I would not pretend to debate with him anything of this ilk in employment law, because I know that he is an authority. In view of what he has said about a number of other things that could be causing the problem when they were not lawful, which I did not know about, I would certainly beg leave to withdraw this amendment. I shall look very carefully at that particular part to see whether I consider it worthy to add that provision and perhaps to make it, in the noble Lord's words, "not elegant"—I described it as elegant—and bring it back at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clause 4 [Statutory adoption pay]:

[Amendments Nos. 36 to 39 not moved.]

Clause 4 agreed to.

Clauses 5 and 6 agreed to.

5 p.m.

Clause 7 [Funding of employers' liabilities]:

Baroness Miller of Hendon

moved Amendment No. 40: Page 22, line 28, leave out "may" and insert "shall The noble Baroness said: I speak to Amendments Nos. 40 and 41 together. Although these two amendments are for two consecutive clauses, Clauses 7 and 8, on two different subjects, they both deal with the contents of yet more regulations to be made by the Secretary of State.

Clause 7(1) requires the Secretary of State to make regulations concerning the funding of employers' liability to statutory paternity and adoption pay. The subsection begins: The Secretary of State shall". Since the clause requires the Secretary of State to make regulations, it is logical that the clause should specify the content of those regulations. It is not as though the content of subsection (4) is some long, esoteric shopping list. The use of the word "may" here, as distinct from "shall", is also, in a way, objectionable, because subsection (4) relates to funding which should be mandatory and not at the discretion of the board or, even more importantly, the Secretary of State.

The straightforward contents of subsection (4) are matters which logic, good government and sensible drafting make mandatory. I would not want to accept an answer that my amendment is too prescriptive, if that is what the Minister might be minded to say in response—as he sometimes does. If the Minister will not accept this amendment, I would like him to tell me what is wrong with his own menu in subsection (4), and to tell me which of the three simple and logical provisions—(a) or (b) or (c)— the Government might not include in any regulation. If they were not going to include them, why not?

I now turn to Amendment No. 41. Clause 8(1) is permissive about whether the Secretary of State makes the regulations or not. The subsection begins: The Secretary of State may make regulations", and that is why the amendment begins: If the Secretary of State makes regulations". However, the amendment goes on, as in the case of Clause 7, to prescribe that they shall contain the provision set out in subsection (2). Once again, there is nothing exceptional in the list in subsection (2) and I can see no reason why the Secretary of State would not wish to include the complete set of these items which the Government have selected in the regulations, if she decides to make any. Indeed, in our opinion, the Secretary of State should be obliged to make regulations on the very points that they have put into that subsection, which is why I have brought this particular amendment forward.

I would appreciate an explanation of which of the specified amendments the Minister thinks there is even a remote possibility of not including, and his reasons for that. I beg to move.

Lord McIntosh of Haringey

We have had many happy hours on "may" and "shall" in legislation over the years. Parliamentary counsel will not thank me if I depart from the standard line—which I never believed when I was in Opposition and I do not expect the noble Baroness, Lady Miller, to believe now.

The principle of "may" and "shall", so far as this case is concerned, is that this is a clause about administrative arrangements. It is right that the power to make regulation should be broadly permissive, and that has been observed in legislation for many years. The administrative arrangements may need to change as the scheme develops, either because they become too complex or because they do not do the job for which they were intended. We do not think we intend to make changes but we may have to do so.

I turn to the particular case now. Clause 7 is all about the way in which statutory paternity pay and statutory adoption pay will be recovered by employers. We have made it clear from the start that employers will be able to recover a proportion or all of the statutory payments they make, following the precedent of statutory maternity pay. Indeed, I think we would come under legitimate criticism if we departed from statutory maternity pay. The provision for recovery is on the face of the Bill and the detail will be in regulations.

Subsections (1) and (2) of Clause 7 set in place the same system for recovering statutory paternity and adoption pay at the same rate as applies for statutory maternity pay. All employers will be entitled to recover at least 92 per cent and it also provides for small employers.' relief.

We see no circumstances in which we would withdraw the employer's right to recover, and indeed in Clause 7(1) in line 2 of the page we say that the Secretary of State shall make those regulations and that those regulations shall deal with the amount that an employer may recover. The amount in percentage terms is fixed on the face of the Bill, as it is for statutory maternity pay.

The amendment asks us to commit ourselves to regulations under subsection (4). There is no difference here. The subsection sets out the things that will be in regulations but it does not set out everything. As the noble Baroness rightly quoted, it sets out for funding in advance, for funding to come from monies that the employer is due to pay over to the Inland Revenue and for the Inland Revenue to recover any amount overpaid.

If the noble Baroness is looking for a commitment that we will do those things, we gave that commitment in the other place and I give it now. The regulations under subsection (4) of Clause 7 will do a couple of very important things.

They will enable employers to recover what they pay out in statutory paternity pay and statutory adoption pay from amounts that they owe to the Inland Revenue. The most important thing that the clause does is to provide for a new right for employers to be able to ask for a payment in advance from the Inland Revenue to cover statutory paternity or adoption pay payments where the money the employer is due to pay is greater than the total amount due to the Inland Revenue in the same period.

That is better than statutory maternity pay and we introduce a similar right to claim advance payments in Clause 21 of the Bill. Making this change will bring the statutory payment schemes in line with what already exists for tax credits and is an important step in easing the burden of these schemes for employers, especially for small employers who will most often he in the position of requesting funding.

I turn now to Clause 8 and the amendment to page 23 line 6. Again, the noble Baroness is asking what the regulations cover here. I think that is clearly set out in the Bill and I do not think there is any need to go into any further detail. The difficult part is the word "shall", and it is drafting procedure that we are dealing with, administrative arrangements that should be made. As I said at the beginning, it is governed by the "shall" which is in subsection (1) of Clause 7.

Baroness Miller of Hendon

I was grateful to the noble Lord for the undertaking he gave when he was speaking to my amendment to Clause 7. I was not commenting particularly on the items in Clause 8, other than to say would there be any of them that he would not include, because it seems to me that they should be included. Perhaps I misunderstood whether the undertaking covers that one also.

Lord McIntosh of Haringey

Both Clause 7 and Clause 8.

Baroness Miller of Hendon

Then I am satisfied with that answer and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 agreed to.

Clause 8 [Regulations about payment]:

[Amendment No. 41 not moved.]

Clause 8 agreed to.

Clause 9 agreed to.

Clause 10 [Powers to require information]:

Baroness Miller of Hendon

moved Amendment No. 42: Page 24, line 24, leave out "has been" and insert "was at the time of claimed entitlement The noble Baroness said: I would like to speak to Amendments Nos. 42 and 43 together as they are identical. The first alters the description of a person in the regulations from, any person who … has been, the spouse or partner of", any person entitled to statutory paternity or adoption pay to, any person who … was at the time of claimed entitlement the spouse or partner of", any person entitled to statutory paternity or adoption pay"; in other words, it changes the entitlement from "a person who has been a spouse or partner" to "a person who was the spouse or partner when the entitlement was claimed".

The reason for that change is obvious—it is intended to clear up a manifest anomaly. As the Bill is drafted, a spouse or partner could have left the domestic home and yet could still have claimed the benefit of statutory paternity or adoption pay. The object of those benefits, as stated in the notes and as enshrined elsewhere in the Bill, is to enable a spouse or partner to take time off work in order to lend support to his spouse or partner. They are not intended to finance him if he has deserted his spouse or partner and has abandoned those obligations together with his obligations to the new child, having perhaps run off and set up home with a new partner.

Amendment No. 43 has a similar purpose. Clause 10(2)(c) refers to a person who is, or has been, an employer of a claimant. There is no reason why a former employer should have a continuing obligation to fund so-called paternity leave when the father or adopter is no longer in his employment. What is he on leave from? It could be argued that the provision seeks to cover the case of a person whose employment has terminated without thought on the part of the employee some time before the birth or adoption.

How far back does the right to claim go? Does it go back to the date of conception of the child or the date when the adoption process began? The Bill does not say how "former" the former employee must be; nor does it cover the situation where an employee is dismissed for a good cause. Neither of those omissions are suitable for inclusion in a regulation which the Secretary of State may or may not make. They should be dealt with in the Bill itself.

I had previously tabled an amendment to Clause 2 in which I proposed that an employee should not be entitled to statutory paternity pay from an employer if he no longer worked for that employer. However, in a letter to me dated 6th March, which was kindly copied to the Front Bench of the Liberal Democrats and to the Convenor of the Cross Bench Peers, the Minister of State said: It would generally be the case that an employee will not be entitled to statutory paternity pay from his employer if he no longer works for that employer. The Government tabled a group of amendments to Clause 2 which rectified that position. The Minister spoke to it at length earlier. I am grateful to the Minister for having addressed those problems.

However, as your Lordships will see, precisely the same problem arises in relation to Clause 10(2)(c). I am confident that, in the interests of consistency, the Government will accept this amendment and that, in the interests of further consistency, they will agree to apply the principle to spouses or partners who, for whatever reason, have departed from the amendment. I beg to move.

Lord McCarthy

I am glad that the noble Baroness has explained the position. At first I could not believe it, but it seems that it is so. Paternity leave, paternity pay and paternity benefit are being turned into a form of moral policing. If a man leaves his wife or if his wife leaves him, they do not receive the money. One only looks after a person if one lives in a home with that person. Millions of parents do not live with their ex-spouses, but they still support them and are entitled to statutory leave and statutory pay, which plays an important part. Why must we have such morality?

Baroness Miller of Hendon

Morality has nothing to do with my amendment. If the noble Lord, Lord McCarthy, believes that it has, then obviously I did not explain it as clearly as I thought. One reason for paternity pay, which, unlike maternity pay, is a new idea which we thoroughly accept, is that a new father should have time off in order to help his spouse. The point I am making is that, if he has now separated from his spouse and is not living with her, he will not be there to help his spouse—at least, I do not imagine that he will be. I am surprised that the noble Lord, Lord McCarthy, believes that a person should be given the pay under those circumstances. The payment is not made simply because a man has fathered a child; it is made because he has a role and has time off in order to help with the child. That is my very simple view. If the noble Lord believed that the amendment concerned a matter of morality, then I am afraid that I did not explain it clearly. It does not concern morality.

Lord McCarthy

The noble Baroness tries to explain the position but she makes it worse. Simply because a person leaves the nest does not mean that he does not help. Millions of ex-spouses—some who never married—are absent and perhaps far away, but they do help. Unless one is going to be a moral policeman, one cannot try to distinguish between one group and another.

Lord Henley

Perhaps these matters will be dealt with ultimately by the section which I asked about during debate on the first series of amendments but in response to which I did not receive a proper explanation. The regulations referred to in new Section 80A(5), specify things which are, or are not, to be taken as done for the purpose of caring for a child or supporting the child's mother". However, like my noble friend, I am not sure what support of the child's mother the father can offer if he has left the child's mother. As my noble friend said, this has nothing to do with morality. But what is the point of giving someone paternity leave if they will no longer be one of the caring parents?

5.15 p.m.

Lord McIntosh of Haringey

I say to all noble Lords who have taken part in this debate that they are talking about entitlement. Whether they believe that the father should be entitled if he does not live with the mother, or whether they believe that it should be the other way round, they are still talking about entitlement to paternity pay. This clause is not about entitlement; it concerns powers to require information. Therefore, if I may respectfully say so, both sides of the argument are misconceived.

Clause 10 is very important in that it provides the necessary backstop for dealing with that small minority of individuals or employers who do not wish to co-operate. In the experience of the Inland Revenue, most employers, and most individuals, comply voluntarily with their obligations. However, sometimes that does not happen; sometimes things go wrong and need to be looked at more closely. When that happens, the Inland Revenue will need to ask people for information in order to sort things out. This clause enables the Inland Revenue to do just that.

The amendments concern the use of the phrase "has been" when referring to a former partner or employer respectively. I understand that none of us wants to give Inland Revenue officers the power to dig around and ask questions of people who are not relevant to the matter in hand, whether they are partners or employers. I quite agree with that concern. It would be a great infringement of privacy to go back to, say, an ex-wife and ask questions about her former husband's new relationship. That is not the intention of the power and there is a safeguard on the face of the Bill to prevent that. I shall explain how that happens.

The overriding principle set down in subsection (1) of Clause 10 brings in the word "reasonable". The information must be "reasonably required" in order to check whether there is entitlement to statutory paternity or adoption pay. This provides an important safeguard in that an Inland Revenue officer must have very good grounds for supposing that the person from whom he wishes to obtain information has information relevant to the matter in hand—indeed, that it is critical to the matter in hand.

However, if the Bill were drafted in the way set out in the amendments, an additional and unnecessary step would be imported into the process. The officer would have to prove the former partner's or employer's status at a specific time. That would simply be unworkable and, indeed, it could form part of the dispute. An employer could argue that an employee left his employment on a date before the entitlement to statutory paternity pay started, or the employee could say that he was still employed. In order to sort that out, the Inland Revenue officer would need to look at payroll and personnel information. However, the employer could refuse to co-operate by maintaining that he was not the employer at the time of the entitlement. Members of the Committee can see the circularity that one might get into if these amendments were included in the Bill.

Therefore, the amendments are neither necessary, because the effect is already achieved by the drafting of the clause, nor workable, because they would import this additional complexity into the Bill. I hope they will not be agreed to.

Lord Henley

If my noble friend's amendment and the intervention of the noble Lord, Lord McCarthy, are completely irrelevant, I hope that the Minister will answer a very brief question. This matter might be relevant in relation to further amendments that might need to be tabled at Report—doubtless, however, the noble Lord, Lord McCarthy, will oppose them. Would it be possible to get paternity leave although one was no longer one of the caring parents; that is, if one had left the mother of the child before the birth of the child, and one was therefore not going to be looking after the child? Is it possible to get paternity leave in those circumstances?

Lord McIntosh of Haringey

I am reluctant to reply because we are debating Clause 10, which is about powers to require information. However, to help the noble Lord, Lord Henley, in deciding what to do at Report, the answer is yes—under certain circumstances, paternity pay could be given to somebody who was not living with another. That is what the noble Lord, Lord McCarthy, said, and he was right.

Baroness Miller of Hendon

I am sorry if I have tabled the amendment to the wrong clause. I shall reconsider it. I have listened carefully to what the Minister said. I shall certainly think about the matter and see whether I want to table it in relation to the appropriate clause. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 43 not moved.]

Clause 10 agreed to.

Clause 11 agreed to.

Clause 12 [Penalties: fraud etc]:

Lord Razzall

Before the noble Baroness, Lady Miller of Hendon, moves Amendment No 44, I want to raise a procedural issue. The noble Lord, Lord McIntosh of Haringey, is about to leave—his reasons for doing so are exactly those that I wish to discuss. Without any advance warning, a Statement will be made in the Chamber which the noble Lord, Lord McIntosh of Haringey, has to deliver. I have to respond to it on behalf of the Liberal Democrats. That is of course one of the disadvantages of taking the Bill in Grand Committee. I am due to move Amendments Nos. 54 and 55. Unless I can rely on the noble Baroness, Lady Miller of Hendon, or the noble Lords, Lord Wedderburn and Lord McCarthy, to filibuster on my behalf on an earlier amendment, it is quite likely that Amendment No. 54 will be arrived at while I am still trying to deal with the Statement in your Lordships' House.

Is there any way in which this matter can be dealt with? If necessary, I could move Amendments Nos. 54 and 55 slightly later, on my return. I do not think that that is the answer, in which case I suspect the only alternative will be to ask if somebody could move them on my behalf formally. I should have to return to them and withdraw them, and then move them at Report. That seems to be a strange procedure to have to follow.

Lord Henley

Is it possible for the Committee to be adjourned during pleasure in such circumstances? Obviously, we would be adjourned if we were downstairs because we would have adjourn to hear the Statement.

Lord Razzall

In which event, would the Committee be prepared— if I have not returned by the end of Amendment No. 53—to adjourn during pleasure until I return, when I could move Amendment No. 54?

Lord Sainsbury of Turville

We would be very happy with that arrangement if it would help our proceedings. I have no idea whether that is allowed procedurally or not.

Lord Razzall

As the noble Lord, Lord Henley, indicated, that is exactly what would happen were this Committee sitting in the Chamber.

Lord Henley

The Deputy Chairman of Committees said at the beginning of proceedings that the proceedings in the Committee would be identical to proceedings on the Floor of the House, with the one exception that we would not he voting on anything. If the Committee had agreed on something, I suspect that the Committee can do what has been proposed.

Lord McIntosh of Haringey

May I say a word? It is clearly possible within the rules for the Committee to adjourn. If that met the wishes of the Committee generally, we could try to do that.

Lord Razzall

In which case, I suggest that that Motion could be moved at the end of Amendment No. 53, if I have not returned at that stage.

Baroness Miller of Hendon

moved Amendment No. 44: Page 25, line 33, leave out "£3,000" and insert "£300 The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 45, 46 and 47.

Clause 12 provides for penalties for fraud or negligence. In the case of fraud or negligence, or the provision of incorrect information relating to statutory paternity pay, under Clause 12(1) the penalty is not to exceed £300. In the case of an identical offence in relation to statutory adoption pay under subsection (2), the penalty is not to exceed £3,000. That is 10 times the amount of the fine in respect of an identical offence relating to paternity pay.

Similarly, under Clause 12(3), the penalty for an incorrect payment of paternity pay is £300 whereas, under Clause 12(4), the penalty for incorrect payment of adoption pay is £3,000—again, that is 10 times as much.

I might have assumed that the discrepancy between the two types of case was a mere typographical error—perhaps something went wrong and a typist held down the zero key for a little longer than she should have done. However, in Clause 12(5) there is a clear statement on this matter. That subsection makes it clear that for some reason the Government want the power for whoever adjudicates to exact a penalty in cases relating to adoption pay that is 10 times that for cases relating to paternity pay. That subsection is dealt with in Amendment No. 47. Why is one employee more deserving of seeing his employer have to pay a greater penalty than another? Why is one employer who commits what, after all, is an identical offence, to be liable to receive a more draconian penalty than another? I cannot think of a single reason—even a fanciful or implausible one—for such discrimination between natural fathers and adoptive fathers who have been badly treated by their employers. I await, with very rapt interest, to hear what the Minister has to say on this subject. I beg to move.

Lord Bassam of Brighton

The noble Baroness's amendments to Clause 12—they relate to lines 33, 37 and 44 on page 25—turn on the amount of the penalty being imposed for fraud or negligence in respect of statutory adoption pay.

Before I deal with those issues, I turn to the noble Baroness's amendment to page 25, line 43, which also concerns fraud and negligence. Perhaps I should say at the start that, by emphasising that penalties will not be applied lightly, there will be no penalty where someone has taken reasonable care but has simply made a mistake—whether they are an employee or an employer. That is clearly stated in the opening lines of subsections (1) to (5) of the clause— fraud or negligence must be involved.

I understand from the noble Baroness's amendment to page 25, line 43, that she is understandably keen to ensure that someone who made an error and then notified the board of that error so that it could be rectified would not be in danger of being penalised for that. That situation would of course be looked at in any investigation and, if it was clear that no fraud or negligence was involved, there would be no penalty.

I am happy to reassure the noble Baroness on that point, in particular because the amendment to page 25 line 43 would impose an extra step in the process, which was quite unnecessary. It would appear to enable someone who has already fraudulently or negligently obtained wrong payments to escape sanctions, simply by notifying the board that he had done so within the required time. It would also make it imperative that a fraudulent or negligent failure to notify had also occurred, which would, in effect, mean having to prove that two actions had taken place for one offence. The single important point is whether incorrect payment had been obtained fraudulently or negligently.

I move on to the other amendments tabled by the noble Baroness to Clause 12, at lines 33, 37 and 44 on page 25. However, before I continue I would like to stress that in all cases we are talking here about the maximum penalty that may be imposed, not the actual amount in every case. In practice, penalties apply in the same way whether the error results from fraud or negligence, although the amount of the penalty imposed will, of course, reflect the seriousness of the offence. In addition, the maximum level of penalties is the same for employers and for employees.

A key determinant of the seriousness of an offence is the amount of money falsely claimed and obtained. The amount that could be lost to the Exchequer in a fraudulent statutory adoption pay claim could be very significant. The amount paid over a 26-week period could be £2,600 and the small employers' relief would raise it further. A penalty of only £300 for fraud of this magnitude would be quite inappropriate and, I would argue, no deterrent at all. It would clearly be unfair if someone who fraudulently obtained over £2,000 incurred the same penalty as someone who obtained £200.

Clearly, for statutory paternity pay, where the maximum possible obtained for one person would be £200 plus the small employers' relief, which is currently five per cent, there is no need to set a maximum above £300 as for each offence the amount lost would be within that figure.

These examples are at the top end of the scale—the situation where the highest sum of money in each case has been falsely obtained. I suspect the noble Baroness is more concerned about what would happen at the other end of the scale, where an employer or employee fiddled statutory adoption pay for a week or so over and above the entitlement. As I explained, the £3,000 figure is a maximum. The Inland Revenue officer would look at various factors in deciding the level of the penalty. This would include looking at how much was obtained falsely and whether fraud or negligence was involved. In general, the Inland Revenue officer would normally impose a heavier penalty for fraud than negligence.

In addition, there will be—as always with such penalties —the right of appeal against both the imposition of the penalty itself and the amount incurred. If the employer or employee felt they had been treated too harshly they would be able to ask the independent Tax Appeal Commissioners to look at the position.

To sum up, I feel that we have got it right in terms of the amounts of penalties that could be imposed. We need to have a maximum figure which is appropriate to the seriousness of the offence, and I have explained why £3,000 is an appropriate figure to penalise fraud or negligence in respect of statutory adoption pay. We also need to build in safeguards to ensure that the amounts actually imposed are proportionate. These safeguards are in the guidance that the Inland Revenue officers will follow and in the right of appeal to the appeal commissioners where the person penalised thinks they have got it wrong.

5.30 p.m.

Baroness Miller of Hendon

I am not sure if the Minister made an inadvertent mistake, but I think he spoke about paternity pay and I was talking about paternity and adoption. It may have been a slip of the tongue. I do understand that people can use discretion, and I do understand that when the words "not exceeding" are used that is absolutely the maximum, whether it is £300 or £3,000. I understand that very well.

Having listened to the Minister, I have to confess that I still do not understand why, for an adoptive parent, the maximum—whether it is discretionary or not—is £3,000, and for a natural father it is £300. That is the point I am making, not that I think there is anything peculiar about the way the matter is handled. It is just the difference between the two that I find completely inexplicable. I understand exactly what the Minister is saying about maximum figures and the use of discretion. That is stated quite clearly in the statute itself. However, from his answer I did not understand why there is such a difference—that is, why one figure is ten times more than the other as between adoptive and natural parents.

Lord Bassam of Brighton

The point that the noble Baroness, Lady Miller, has missed is that in one instance an individual employer is capable of defrauding more; that is why the penalty is greater. That is the point—it has to be a disincentive. That is why the penalties are fixed at the relevant level for each offence.

Lord Wedderburn of Charlton

I do not understand the position of the noble Lord, Lord Bassam, on this matter. In each case there is fraud. One involves a paternity case and the other involves an adoption case. Is my noble friend advancing the argument that as a general principle of criminal law the extent of the fraud must govern the maximum penalty that is available to a court? Is that the principle? If so, I suppose that there is a distinction, but to make it 10 times larger in the case of a fraud on each side of the table seems rather large.

Lord Bassam of Brighton

That involves a civil penalty. That point needs to be understood. It is to do with the amount that can be defrauded. That is why we need an active disincentive to be built into the legislation.

Lord McCarthy

The real argument is not about the £3,000 but about the £300. I see the point that is being made—there is a difference between £300 and £3,000, but I do not see how £300 will deter anybody.

Baroness Miller of Hendon

I thank the noble Lords, Lord Wedderburn and Lord McCarthy, for coming gently to my aid. They have perhaps not quite adopted the direction that I pointed out, but they are certainly somewhere along that line. I think that the differential between the two sums is too great. I understand what the noble Lord, Lord Wedderburn, said about the amount that one could defraud. Perhaps that is supposed to be reflected in this regard, but the matter needs to be looked at again. I hope that the Minister will reconsider the differentials. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 45 to 47 not moved.]

Clause 12 agreed to.

Schedule 1 [Penalties: procedure and appeals]:

Baroness Miller of Hendon

moved Amendment No. 48: Page 61, line 21, after "insufficient" insert ", or is or has become excessive The noble Baroness said: Paragraph 1(5) of the schedule provides for the board or its authorised officer to increase the penalty when it is considered that it has "become insufficient". The power to increase a penalty after a case is over and judgment has been given is not one that is open to the civil and criminal courts. The phrase is that the judge had become functious officio, which sounds pretty awful but means only that the judge's part in the process has become defunct. It is only in exceptional cases that in a criminal case the prosecution can ask for a sentence afterwards to be increased. The judicial parts of the Bill do not readily render themselves open to appeal or review. I suppose that that is the reason why the Government have decided to give the tribunal the chance to have a second bite of the cherry.

However, the scales of justice are supposed to be held on an equipoise, as Members of the Committee would see if they looked at the statue of Justice in the Prince's Chamber, if only someone had not removed them altogether because the weights were always being stolen!

I suppose that it is theoretically possible that a tribunal might come to the conclusion that it had been a bit too hard on an employer and that it should reduce the penalty. I say that more in hope than in expectation. If the tribunal wants for whatever reason to reduce the penalty, it should have the power to do so in exactly the same way as the Bill gives it power to increase the penalty. That therefore is the aim of Amendment No. 48 and of consequential Amendment No. 49.

I have to confess that on re-reading Amendment No. 48, which was drafted for me by one of my advisers, I would have preferred to have used the phrase, "has been found to be excessive" because that would have been better phraseology. However, assuming that the Minister agrees to this very modest amendment as stands on the Marshalled List, we could deal with its wording at a later stage.

Amendment No. 50 calls for the total deletion of subsection 5(5). Section 5, as the marginal note tells us, deals with penalty proceedings before a court. Subsection (1) makes it clear that it applies to cases: Where in the opinion of the Board the liability of any person for a penalty…arises by reason of the fraud of that or of any other person". We are talking about cases of fraud. However, subsection (5) states: If…the court does not find that fraud is proved but considers that the person concerned is…liable to a penalty, the court may determine a penalty notwithstanding that, but for the opinion of the Board as to fraud, the penalty would not have been a matter for the court". What sort of justice is that? The board launches what, to all intents and purposes, is a prosecution alleging fraud. The court, in its wisdom, decides that there was no fraud. In other words, the person is not guilty. Nevertheless, the court is still to have the power to impose a penalty, because the board—mistakenly, as it happens—thought that one should have been imposed.

It is reported that a Scottish judge once told a defendant—I regret that I am unable to speak with the sort of accent that would make this story so much better—"Maybe you did it and maybe you didn't, but we think you would be none the worse for a hanging, so we will have you hanged!" This clause strikes me as being well up to the standard of the kangaroo court in Alice in Wonderland—sentence first, verdict afterwards.

I seriously doubt whether a law that enabled the court, which had just acquitted a defendant of the charge against him, to inflict a penalty on him none the less because the prosecution thought he must have done something to deserve it would stand up for as long as one minute before the European Court of Human Rights.

I am absolutely convinced that this provision is at variance with the certificate of the noble Lord, Lord Sainsbury of Turville, that the provisions of the Bill are compatible with the European Convention on Human Rights. I beg to move.

Lord Bassam of Brighton

I shall try to plead mitigation having heard the noble Baroness's case. The amendments are to Schedule 1 of the Bill, which sets out the mechanics dealing with the penalties described in Clauses 11 and 12. The schedule applies to procedures that are in common with the procedures that are already used by the Inland Revenue when dealing with penalties for tax, national insurance contributions and tax credits. There is nothing new in the schedule—that is the way in which that happens now in relation to most other areas of the Inland Revenue's business and services.

As the noble Baroness noted, paragraph 1(5) of the schedule allows an Inland Revenue officer to increase a penalty. It states that the officer can look again at a penalty that he has determined if he discovers new information that leads him to believe that the offence leading to the penalty was more serious than was originally supposed and that the penalty should therefore be increased. For example, the amount of statutory adoption pay that is fraudulently obtained may be found to be greater than was previously calculated.

However, the noble Baroness quite reasonably concludes that that should work both ways. If something comes to light that shows that the original offence was less serious, the penalty should decrease. For example, the amount of statutory adoption pay that is fraudulently obtained may be found to be less than was previously calculated.

I am happy to reassure the noble Baroness that the arrangement works both ways—that is already provided for in the Bill. I direct her to paragraph 6 of the schedule on page 63 at line 22. That paragraph contains a general power for the board to mitigate any penalty. The board can decrease the penalty if it feels that the circumstances warrant a lower amount. There is no such general power for it to increase the amount of a penalty. That is why the specific provisions in paragraph 1(5) are included.

It is also important to note that the general power to mitigate does not rely on the discovery of new information—the amendments of the noble Baroness would do so. The provision for increasing the penalty is much more tightly drawn than the provision to reduce it. Not only does any increase rely on new information but the increased amount will also carry a further right of appeal, because it is a new determination by the officer. That is quite a significant fact to take into account. In any case, the original penalty notice will have carried a right of appeal, too.

Turning to the noble Baroness's amendment at page 63, lines 17 to 21, as I started to say inadvertently earlier, this is a standard piece of drafting in tax penalty legislation, although I admit it is not the easiest for the lay person to understand. It might help if I explain what the subsection does. It permits the High Court to determine a penalty for negligence if it finds that fraud is not proved but considers that the defendant is still liable to a penalty for negligence. This prevents the need for penalty proceedings to be started again—so, if you like, it cuts through bureaucracy.

1 said earlier that provisions in the schedule were based on tried and tested procedures common to other areas of the Inland Revenue's business and services—tax, national insurance contributions and tax credits. There are good reasons for making sure that we replicate them as far as possible for these new statutory payments. They have been thoroughly examined and tested by a whole phalanx of tax experts who monitor what the Inland Revenue service does and they are familiar to the employers, who deal daily with the Revenue in a wide variety of contexts. I understand that this is not a simple matter and I have tried to explain to the noble Baroness's satisfaction why the amendments are unnecessary, since the safeguard she seeks is already provided for in the legislation. In those terms, I would invite the noble Baroness to withdraw the amendment.

5.45 p.m.

Baroness Miller of Hendon

I am comforted by what the Minister has said in directing us to paragraph 6 of the schedule, which points out that they can decrease as well as increase. I am content with that.

With regard to Amendment No. 50, the Minister said it is quite complicated and that not everybody understands it, and I have to say that I still do not. I react very carefully what the Minister said. I did not realise that in respect of the negligence in this case, where no fraud at all has been found because the idea of the penalty is against fraud, the court can say that there is no fraud, but that it will fine the person for being negligent. I did not realise there was the possibility that that could happen.

Lord Bassam of Brighton

It is important to understand that negligence is an act or omission in itself, so that there will be an element of deliberate activity by the person involved. That is why there is the separate offence.

Baroness Miller of Hendon

I must still say to the Minister that I do not understand that. These clauses are dealing with fraud, and I thought fraud was when you had the mens rea to know that you were doing something absolutely wrong. In negligence, it may be that you did not know, but I am not sure that it is right that the High Court can then impose a fine. I would like the Minister to look at that again and I will certainly speak to my own legal advisers on that because I do not feel that this is the correct approach.

I am concerned about the matter. Somebody accused by the board of fraud may go through a whole High Court trial and be found not to have committed fraud, but be found to have been negligent. The Minister did not elaborate on what kind of negligence was involved. Was it related to the way he presented his case, or what he did or did not do? It may very well be that there will be facts that will prove that what the Minister is saying is the correct approach but, from where I stand, without a very deep knowledge of the law, I find it confusing. I would like some more information.

I am sorry that I interrupted the Minister.

Lord Bassam of Brighton

I seek only to be helpful and perhaps to put into the record something on the issue of negligence itself. Negligence is different. It covers the situation where perhaps an incorrect document or incorrect information has been supplied by someone who has failed to take reasonable care to ensure its accuracy. It is that duty of reasonable care which is important, and I would direct the noble Baroness to focus on that issue. Reasonable care must be exercised in providing information and providing documentation. That the core of the issue.

Baroness Miller of Hendon

I beg leave to withdraw Amendment No. 48.

Amendment, by leave, withdrawn.

[Amendments Nos. 49 and 50 not moved.]

Schedule 1 agreed to.

Clause 13 [Supply of information held by the Board]:

Baroness Miller of Hendon

moved Amendment No. 51: Page 26, line 10, leave out "or the Department The noble Baroness said: I would like to speak to Amendments Nos. 51 and 52 together. These are very simple identical amendments and I believe they need only a simple explanation. I become nervous when I say that because when I said previously that it is a simple amendment which needs a simple explanation it became extraordinarily complicated. This is a simple matter.

Clause 13 enables the board to supply information it or its agents hold to a third party described in subsection (2) as being, for use for the purposes of functions relating to social security, child support or pensions". Clause 14(2) enables the board to provide the information for the purposes of functions relating to statutory paternity pay or statutory adoption pay.

On the basis that proceedings before the tribunals should be as much a matter of public record as proceedings before an ordinary civil court, this does seem reasonable. On the basis that it would assist the departments receiving the information to carry out their duties of assessing an individual's rights and obligations more accurately than the system of guesswork, which is quite often indulged in when detailed information is not available, it also seems to be a very useful tool.

It is, however, the question of who should receive the information which is of some concern. In Clause 13(2), at the top of the list of recipients is, the Secretary of State or the department", and Clause 14(1)(a) makes the same provision. It is the words "or the department" to which we object.

The Secretary of State must take full responsibility for what happens within his department. We cannot have a situation where a Secretary of State can disclaim any personal responsibility for what happens in his department by saying that it is all the fault of the officials, or that he does not personally involve himself in such matters. Exercising your Lordships' great restraint, which I often do not do, I am not going to draw any analogies with some recent events.

Of course, we all know perfectly well that the data will not be personally handed to the Secretary of State in his Red Box. Everywhere in legislation, in the Bill, we see that "the Secretary of State shall" do this or "the Secretary of State shall" do that, and in at least one case "the Secretary of State may". We do not see "the Secretary of State or the Department shall" do this or that. I cannot see any valid reason why in these two clauses there should be a departure from the time-hallowed phraseology.

Your Lordships will notice that I do not propose to remove the words "or the department" from subsections (b) in the two clauses because there it is quite clear that the information is to be passed to a person, not to a department, and that such a person is the responsibility of the Secretary of State.

The object of the amendment is to make the Secretary of State take full and total responsibility for the actions carried out in his name by his department. I beg to move.

Lord Bassam of Brighton

In drafting the Bill the words "Secretary of State" mean the Secretary of State for the relevant department, and through the Secretary of State, his department itself; the DTI or DWP as the case may be. The word "department", however, means something different. It is defined in Clause 16 of the Bill and is defined to mean the department in Northern Ireland which has responsibility for the relevant issues. It is, I believe, the convention in legislation to cover Northern Ireland's interest in this way; for example, in the Social Security Administration Act 1992. So against this background I am afraid that the amendments of the noble Baroness, Lady Miller of Hendon, in deleting references to "the Department" would remove that possibility. They would mean that people in Northern Ireland would not get what one might describe as a connected-up, or joined-up service from the government departments handling their statutory paternity and adoption pay matters.

I am sure the noble Baroness, Lady Miller of Hendon, does not intend such a disparity to exist, and following this debate she will happily withdraw, or perhaps less happily, withdraw her amendments.

I turn to the Government's amendment, drawing together the data-sharing provisions of the Bill. We did not include the equivalent of the Department of Trade and Industry in Northern Ireland, the Department for Employment and Learning. This I willingly concede is an oversight on our part. In the same way as the Department of Trade and Industry as well as the DWP will have an interest in the schemes in Great Britain, so too will their Northern Ireland equivalents. As I said, the term "department" is defined in Clause 16, and our amendment to this clause simply includes the Department for Employment and Learning, as well as the Department for Social Development within the data-sharing provisions.

With an apology, I would like to invite noble Lords to accept the amendment to Clause 16, which will ensure that departments in Northern Ireland are able to take a joined-up approach to statutory paternity and adoption pay just as departments in Great Britain can. I beg to move.

Lord McCarthy

May I return to the amendment of noble Baroness, Lady Miller of Hendon, because that is where I believe we are. I cannot understand why, if she does not like "or the Department" in Clause 13(2)(a), she leaves it in in Clause 13 (2)(b). Again, she does not like it in Clause 14(1)(a) where she takes it out, but she leaves it in in Clause 14 (1)(b). It is there twice and it disappears twice. Why is this?

Baroness Miller of Hendon

I thought I made that clear, though perhaps I will come back to that bit again. The point I was making was that I was not proposing to remove the words "or the Department" from subsection (b) because it is quite clear in subsection (b) that the information is to be passed to a person, not to the department. It makes that quite clear. Such a person would obviously then be the responsibility of the Secretary of State. That was the difference that I saw and I hope the noble Lord, Lord McCarthy, can see the difference that I thought I was making, and was making perfectly clearly.

I have listened carefully to what the Minister said in response to my amendments, and indeed what he said to the Government's own amendment, Amendment No. 53. At one stage he said, "I hope the noble Baroness, with apology". I am not sure whether he was apologising for his amendment, or telling me that I should be apologising for having put my amendments down. Without any apology whatever, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Clause 14 [Supply of information held by Secretary of State]:

[Amendment No. 52 not moved.]

Clause 14 agreed to.

Clause 15 agreed to.

Clause 16 [Interpretation]:

Lord Bassam of Brighton

moved Amendment No. 53: Page 27, line 7, after "Development" insert "or the Department for Employment and Learning". On Question, amendment agreed to.

Clause 16, as amended, agreed to.

Lord Sainsbury of Turville

I beg to move that the Committee be adjourned until 6.20 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 5.59 to 6.20 p m.]

Clause 17 [Rights during and after maternity leave]:

Lord Razzall

moved Amendment No. 54: Page 27, line 40, at end insert— ( )Any shortfall in the employee's contributions to a defined contribution pension scheme during a period or periods of ordinary maternity leave, ordinary adoption leave or statutory paternity leave attributable to statutory pay during that leave will be paid by the employer. The noble Lord said: Perhaps I should start by thanking the Commit tee for bearing with me.

The purpose of this amendment is to remove the ambiguity over the interpretation of existing rules for ordinary maternity leave. Under the current provisions for ordinary maternity leave, an employee is entitled to benefit from her usual terms and conditions, save remuneration, under the Employment Rights Act 1996. When an employee is on a period of ordinary maternity leave, the employer has to contribute to any defined contribution pension scheme as if the employee were at work and receiving normal pay. The employee, however, under Schedule 5 of the Social Security Act 1989, can only be required to contribute in proportion to the actual amount of money she receives. As a consequence, unless an employee is receiving her full contractual pay during her ordinary maternity leave, there will be a difference between the rate at which the employee would normally contribute and the contribution she makes during her ordinary maternity leave.

I understand that when the provisions of Schedule 5 of the Social Security Act 1989 were implemented, the original advice from the DSS was that the employer had to make up the shortfall. This advice, however, has subsequently been retracted but the legal position on the point is not clear. The purpose of this amendment is to clarify that employees' contributions have to be matched up to the defined limit, notwithstanding the reduction in the salary received during ordinary maternity leave. However, it should be clear that in circumstances of unpaid family leave, such as additional maternity leave and, presumably in future, additional adoption leave, employers should not be required to make any contributions since, in those circumstances, there are no obligations on them to continue to provide the benefits of contractual terms and conditions. The amendment is strongly supported by the Law Society. I beg to move.

Lord Sainsbury of Turville

I am not aware that there is any ambiguity in the current law. Under the Employment Rights Act, women on ordinary maternity leave are entitled to their normal terms and conditions of employment, except for remuneration.

This means that employers are obliged, in respect of all other terms and conditions of employment, to continue providing the employee with the same benefits as they did before the period of maternity leave began. This includes access to, and contributions to, occupational pension schemes. Employers must contribute to these schemes, or indeed to personal pension schemes where appropriate, in the same way as before.

I believe this is both readily understandable, and right, in that it keeps pensions in line with all other terms and conditions of employment. The effect of the amendment would instead be to put an additional obligation and burden on the employer; namely, to make good any shortfall, and thus to take pensions provision out of line with other aspects of employment. I do not believe that it would be right to impose this additional burden.

1 do not know whether the DSS advice in 1989 was different from the current advice, but there is no ambiguity about the current advice which the DWP gives to employers and it is as I set out above.

On that basis, I would ask the noble Lord, Lord Razzall, to withdraw the amendment.

Lord Razzall

Before the Minister sits down, would he not accept that there is ambiguity in the Employment Rights Act 1996, Section 71(4), which he quoted, which states that under the current provision for ordinary maternity leave an employee is entitled to benefit from her usual terms and conditions save for remuneration? Any normal reading of those words would indicate that a temporary drop in salary or wages under the ordinary maternity leave provisions would not affect the pension contributions which the employer was making. That would have been the normal assumption from that wording. It has not been appreciated by a number of people that that meant that an individual during this period would receive lower pension contributions and that the employer would not simply cough up the shortfall that the employee would otherwise suffer.

Lord Sainsbury of Turville

It is quite clear that in this case what the employer does continues to he the same. I refer to employers undertaking to provide a defined contribution. They would go on providing that, but they are not required to make up the balance of costs. They are obliged to pay the appropriate contribution rates set out in the scheme rules, and that continues to apply in respect of women on ordinary maternity leave. The question is: do they make it up? The answer is no.

Lord Razzall

I shall reflect on the Minister's words. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 17 agreed to.

Clause 18 agreed to.

Clause 19 [Rate of statutory maternity pay]:

Lord Razzall

moved Amendment No. 55: Page 28, line 23, at end insert— () For regulation 21(3)(b) of the Statutory Maternity Pay (General) Regulations 1986 (S.I. 1986/1960) there is substituted— (b) the last normal pay day to fall at least 52 full weeks earlier than the normal pay day mentioned in paragraph (a) or, where there is no such pay day, because the woman has not been employed for at least 52 weeks prior to the normal pay day mentioned in paragraph (a), the first normal pay day of her employment. The noble Lord said: The purpose of the amendment is to extend the period of calculating entitlement to existing and new categories of statutory payments from eight weeks to one year. The purpose of this is to remove anomalies that would otherwise distort the calculations.

The calculation of normal weekly earnings determines two things for the purposes of statutory maternity pay. First, it is one of the criteria for entitlement to statutory maternity pay. So assuming that she meets all the other qualifying criteria, a woman will be entitled to statutory maternity pay if her normal weekly earnings for the eight weeks ending with the qualifying week are at least the lower earnings limit for paying national insurance contributions. The qualifying week is the fifteenth week before the expected week of confinement.

The second criteria for which this is relevant is that if a woman qualifies under this earnings condition, the rate at which her statutory maternity pay will be payable during the first six weeks will be 90 per cent of her normal weekly earnings.

A number of noble Lords will already have had experience of the anomalies that can be created by the eight-week definition. First, if a woman works additional overtime during the period in question, or, more commonly, reduces her hours prior to taking her statutory maternity leave, this distorts the calculation of her normal weekly earnings. Secondly—this can be significant when manipulation sometimes takes place—if an annual bonus becomes payable during the eight-week period, it will count as earnings and significantly inflate the calculation.

If, as is more likely, any such bonus does not become payable in the eight-week period, conversely the woman would be under-compensated in relation to the calculation. By extending the calculation period to one year, or the period of employment when shorter, the amendment would remove the current anomaly identified above. I should also say that this amendment is supported by the Law Society. I beg to move.

6.30 p.m.

Lord Sainsbury of Turville

The amendment seeks to extend the period over which a woman's average weekly earnings are calculated, from eight weeks to 52 weeks. The noble Lords, Lord Razzall and Lord Sharman, wish to ensure that a woman's earnings-related statutory maternity pay entitlement is a fair reflection of her earnings so that she receives neither less nor more SMP than she might have expected to get because of temporary dips or increases in her earnings over the calculation period.

I want to reassure the noble Lords that we, too, want to achieve the same result. But it is important to do so in a way that is fair to the individual woman and at the same time fair to the employer, who has to administer the scheme, by ensuring that the formula used is as straightforward and as simple to operate as possible.

When we considered ways of simplifying SMP, we looked very carefully at the rules dealing with the calculation period of average weekly earnings. In our consultation we explored the possibility of assessing pay over a 26-week period. However, the consultation revealed the consensus view that the existing method of establishing average weekly earnings provides the best balance between a representative reflection of a woman's earnings and a straightforward calculation for employers.

That was particularly true for small employers who were perhaps not supported by elaborate payroll systems and were extremely concerned that they would have to interrogate pay records for a longer period than the existing eight weeks. The suggested change to 52 weeks would lengthen by a considerable margin the relevant period for calculating earnings. That period is currently eight weeks. While I sympathise with the motives of the noble Lords in putting forward the amendment, I have strong reasons for not going down such a path.

First, perhaps I may explain what the calculation is all about. The aim of the average-earnings calculation is to arrive at a reasonable reflection of a woman's earnings during her pregnancy in order that she may receive earnings-related SMP, which is paid as a proportion of those earnings. The aims of the SMP scheme are that it should be as simple as possible for employers to operate and that it should be as easy as possible to understand, so leaving the minimum room for disputes.

The amendment proposed by the noble Lords would mean that, in practice, employers would have to examine pay records going back to a point at least 15 months before the expected week of childbirth. Members of the Committee will see that the suggested 52-week period ends with the last normal pay day to fall before the start of the 14th week before the expected week of childbirth.

I believe it is doubtful whether such a period could be used because it is outside the maximum period laid down in the Pregnant Workers Directive—that is, the EC directive on the protection of pregnant workers and workers who have just given birth. That directive prevents member states taking account of periods of employment which are more than 52 weeks before the date of expected birth.

Of course, the eight-week period produces winners and losers. Some—those who are paid more than usual during the calculation period—gain from this system and some lose. A 52-week calculation period would also result in gainers and losers compared with the current system and might not produce a result that is a fair reflection of recent earnings. For example, a pay rise awarded in the latter part of the period would be averaged over the whole 52 weeks.

For all its faults, the current system is at least clear and avoids the need for difficult judgments. That is important in minimising disputes and delays in payments. I fear that the approach put forward by the noble Lords is not desirable or possible for the reasons I have explained. Therefore, I invite the noble Lords to withdraw the amendment.

Lord Wedderburn of Charlton

My noble friend will appreciate that what he has just said involves all the anomalies put forward by the Law Society. No doubt those have been considered, but he has not explained why they are not anomalies. I refer, for example, to situations where a woman earns additional overtime, where she receives an annual bonus, where she is sick during the eight-week period and where she has irregular pay periods. The Law Society argues—credibly, I believe— that all those situations can produce anomalies and injustices with regard to the amount calculated on an eight-week basis.

I quote the Law Society's opinion. That states: By extending the calculation period to one year (or the period of employment or the period of employment where shorter) the amendment will remove the current anomalies identified above". That is the same amendment as that moved by the noble Lord, Lord Razzall. My noble friend has not said anything at all that addresses those anomalies. Indeed, he suggested that the Government had considered a 26-week period but that was too harsh on some employers. That is my understanding of what he said—he will correct me if I am wrong. He referred to small and medium-sized employers especially, who apparently can divide, multiply or add by eight but whose calculators do not seem capable of dealing with 26 or 52. That is highly improbable. I say to my noble friend that if that is the best that the Government can do in response to a very carefully thought-out attempt by the noble Lord, Lord Razzall—it is supported by the body that supports solicitors, many of whom deal with these problems throughout the land—it does not bode well for the amendments that are to come. Can my noble friend improve on what he has said?

Lord Sainsbury of Turville

I have not said that I can—the case was put so simply and well that there is no need for improvement on it. My point is that there is a balance of interests, which will not necessarily work in favour in this context. With the longer period, one will not remove all the anomalies. I made the point clearly. If one has a wage increase towards the end of the period, one will get a situation in which that is averaged over 52 weeks, which will not necessarily produce a fairer result.

The argument about small employers is not to do with the use of calculators; it is to do with the fact that one has to do a great deal of work by going back through the records. If one does not have a computerised system, that is not necessarily easy to do. Therefore, in terms of administration and the fact that one will get anomalies under both systems, it was felt—there was a wide consensus on this—that the way we proposed of sticking with eight weeks was the best approach.

Baroness Miller of Hendon

I do not wish to add to the difficulties of the Minister. I know what it is like when the noble Lord, Lord Wedderburn, with his vast experience, makes comments about difficulties, and I know that it might be difficult to find a suitable answer.

Earlier this afternoon, I moved three amendments relating to the phrase "normal earnings" and I suggested that the word "average" would be better. The Minister said that it was not absolutely necessary or right—I forget the exact phrase that he used. I bring that up in relation to this amendment because the noble Lord, Lord Razzall, has very carefully talked about "the first normal pay day of her employment" and so on and because the word "normal" appears in the amendment. However, the Minister in his reply mentioned "average earnings", but did not use the word "normal", which I find somewhat confusing.

I wish to ask the Minister about a matter of which my noble friend Lady O'Cathain reminded me. For example, the earnings of an air hostess are much higher than the earnings of ground staff but, if an air hostess becomes pregnant, she clearly cannot fly but she can be transferred to work on the ground and may be classified as ground staff. Her earnings would be much less than when she was flying. According to the Minister, it would be difficult for him to come up with criteria relating to her normal earnings in order to work out her entitlement, whereas her average earnings would be very easy to work out from her two salaries. Could the Minister could enlighten us about what would happen in that case?

Lord Sainsbury of Turville

We make no attempt to pretend in this regard. Whichever system is used, it will be advantageous to some but not to others. So far as air hostesses are concerned, I do not know whether they get lower wages when they are pregnant. However, as I understand it, there are clearly winners and losers—we are not pretending otherwise—but there is a general view that there is nothing to be gained from taking the longer period.

Lord Razzall

Clearly, I shall withdraw the amendment. Before doing so, I hope that between now and Report the Government will reflect on this matter. There is general consensus that any period longer than eight weeks will be better.

I draw the Minister's attention to the fact that under Sections 220 to 229 of the Employment Rights Act 1996, 12 weeks is taken as the grid for averaging pay. That is applicable for calculating statutory redundancy pay, the basic award for unfair dismissal and pay during parental leave under the working time regulations. All the arguments that the Minister has used in favour of eight weeks would presumably apply also in relation to 12 weeks, which we would all say would be better than eight weeks. The Government's own legislation has provided for 12 weeks for averaging pay and we all accept that eight weeks is too short; anything longer would be better. I ask the Government to look at the issue again before Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 agreed to.

Clause 20 agreed to.

Clause 21 [Funding of employers' liabilities: statutory maternity pay]:

Lord Henley

moved Amendment No. 56: Page 29, line 14, leave out "92 per cent" and insert "105 per cent The noble Lord said: In moving this amendment, I shall speak also to Amendments No. 57, 59 and 60. Amendment No. 59 stands in my name and Amendments Nos. 57 and 60 in that of my noble friend Lady Miller.

We come to the reimbursement rates of statutory maternity pay. The two sets of amendments tabled by myself and my noble friend are more or less the same, except that my noble friend is more modest—or more realistic—than I am. She asks only for 100 per cent, whereas, as will be obvious from the amendment, I seek 105 per cent. My proposal is designed to ensure that the employer is reimbursed for the costs that he has incurred and that he receives some compensation for administering what is to all intents and purposes a state benefit.

Before the Minister reminds us, I point out that his colleague said yesterday, at a very useful meeting on the subject, that it was a Conservative government who first reduced the rate from 100 per cent. That was done in relation to statutory sick pay as long ago as 1989 or 1990. I am fully aware of that because I was the Minister who introduced the relevant Bill in December 1989 or 1990. The parliamentary Intranet does not appear to go back as far as that, so I was not able to check up on my own speeches. Our Bill was designed to reduce the reimbursement rate for statutory sick pay. I think that statutory maternity pay came somewhat later.

I remember that Bill—it is seared in my memory. It slipped through another place without any trouble whatever and it was only when it entered this House and was spotted by the eagle eye of my late noble friend, Lord Boyd-Carpenter, that trouble blew up. He saw it for what it was—a Treasury saving device masquerading as a social security Bill. Having said that, there was a rationale behind the proposal in relation to statutory sick pay. It was felt that by reducing the reimbursement rate, one could provide an incentive to the employer to look hard at sickness rates and whether people genuinely needed to take time off. Obviously, the same is not necessarily so true in relation to statutory maternity pay, which is less avoidable than sickness.

Treasury saving devices masquerading as social security Bills are not an uncommon occurrence under governments of whatever political persuasion. As I said, I remember that Bill well. I particularly remember the number of defeats we suffered in the then unreformed and allegedly overwhelmingly Tory House. I can assure the noble Lord the Minister that its passage here is seared on my memory.

Lord McIntosh of Haringey

Late at night!

Lord Henley

Not all defeats were late at night, because many were as a result of dependence on my own Benches. As I have pointed out, and I make no defence, Lord Boyd-Carpenter led the opposition through that particular measure.

Nevertheless, concessions were made, in particular to small employers—and I am very glad to see that such concessions are still available to small employers in these measures. That is quite right. I also assure the noble Lord that, since that date, I have seen the conversion. Like St Paul, I now recognise that persecution—and in this case, persecution of employers in general and small employers in particular—is not a good thing.

Paternity pay, maternity pay, whatever they are, all impose burdens on employers. I appreciate that those burdens are not purely financial burdens. I appreciate that the mechanism whereby employers are reimbursed is very efficient, and gets the money back to them as fast as possible. Nevertheless, burdens are imposed on them which go beyond the financial—particularly in the case of a small employer losing a key worker. They can impose pretty drastic measures.

The principal matter is that this is a state benefit that is being provided—statutory maternity pay—and it is the employer who is being asked to reimburse it. Therefore, the employer must pay it and then be reimbursed later on. I therefore believe that the employer should be reimbursed and should also be reimbursed for the costs of administration of this benefit. It is for that reason that I would like to move my own rather optimistic amendment to suggest that they should be reimbursed at a rate of 105 per cent.

I apologise for the digression to explain the past, but since I had been responsible in the past I thought I should explain exactly why I was now moving an amendment which appears rather contrary to what I had done in December 1989 or 1990. I beg to move.

6.45 p.m.

Baroness Miller of Hendon

My noble friend has described my Amendments Nos. 57 and 60 as being more modest, because I was asking for 100 per cent, not 105 per cent. I would not describe my amendments as more modest but I would tell my noble friend that politics is the art of the possible. While it might be difficult for the Government to accept the amendment for even 100 per cent, I feel certain that they will find a really good reason why they cannot accept the amendment for 105 per cent. Nevertheless, the intent of both of us is exactly the same; namely, that the employer should not be out of pocket by this particular payment.

Many employers are concerned that, once established, the Government will gradually reduce the employer rebate until it possibly disappears altogether. It has happened in other cases, so the proposal is not totally without foundation.

So long as the rebate is not 100 per cent, the employers are being faced with an extra business burden in having to meet what should he the Government's obligation. It is what amounts to a hidden tax. I would he very interested to hear the reason why the Minister will probably tell us that the Government are unable to meet our request.

I must congratulate my noble friend on his openness and straightforwardness, in saying that his colleague and noble friend, the late Lord Boyd-Carpenter, actually pointed out that this was much more to do with Treasury control than anything else. No doubt that might very well be the case today.

Lord Sainsbury of Turville

This amendment seeks to amend the reimbursement rate of statutory maternity pay payable to large employers. The current rate of reimbursement is 92 per cent. By replacing that rate with 105 per cent, the noble Lord wants to ensure that all employers can get back all the statutory pay they have paid out, plus a little extra. The noble Baroness would be a little less generous but, as she said, politics is the art of the possible, or perhaps the impossible in this case, and her amendment would extend reimbursement to just 100 per cent.

It may be helpful if I start by explaining that when the SMP scheme was first introduced in 1987, all employers received full 100 per cent plus compensation for the employers' share of any national insurance paid on SMP. As the noble Lord said, the 92 per cent reimbursement for larger employers was introduced in 1994. However, we see no reason to change that.

It is perfectly reasonable to expect larger employers to demonstrate their commitment to employees taking leave to care for new families by funding a small amount of payments made to them while on maternity leave from work. After all, those employees who qualify for statutory maternity pay from their employer will have started work for that employer before their pregnancy began and many employees will have worked for the employer and contributed to the success of his business for some years before starting a family.

The contribution employers make to maternity pay is an investment for the future as mothers will be more likely to return to work if they have had an adequate period of time to recover from childbirth and arrange suitable childcare. Many of the best employers recognise this by topping up the statutory scheme and are happy to bear the cost of so doing.

Perhaps it would be helpful if I were to give you an idea of the kind of money we are talking about here. Let me focus on an individual woman earning £255 a week on average. She will be entitled to SMP worth £229.50 for the first six weeks of her maternity leave and then 20 weeks at £100 a week, a total of £3,377 in SMP. The employer is also liable to pay employer's national insurance contributions of £143.54 on those payments so, altogether, he pays out £3,520.54. Currently, he can recover 92 per cent of the SMP paid out, so he gets back £3,106.84. If he could claim back 100 per cent as under the amendment of the noble Baroness, he would get £3,377—an additional £270. If he could claim back 105 per cent, he would get back £3,545.85, more than he has paid out in SMF and national insurance.

We feel that to enable all employers to recover their payments in this way is not right. It is different for small employers whose cash flows may be sensitive to even a modest additional cost. We believe it is right to protect them and that is why we are extending small employers' relief from April 2002 to bring in another 10,000 small and medium-sized employers a year. From 2002, 60 per cent of the employers who pay SMP in a year (or 40,000 out of 70,000 employers who pay SMP in a year) will qualify for small employers' relief and be entitled to receive 100 per cent reimbursement plus compensation for employers' national insurance.

You will note that the recovery rate for small employers is divided into two elements—100 per cent reimbursement of the SMP paid out and additional compensation which is intended to compensate the employer for the employer's share of national insurance contributions paid out on SMP. At the moment, the compensation rate is 5 per cent but in April 2002 is being amended to 4.5 per cent. This rate is reviewed annually and, if appropriate, adjusted in line with a long-standing formula that is set out in regulations.

The noble Lord's amendment is in fact flawed. By replacing 92 per cent with 105 per cent, the amendment would ensure that larger employers would be able to recover more than smaller employers whose reimbursement would still depend on the two separate elements of 100 per cent reimbursement of SMP plus an additional amount which is subject to annual review. I do not believe that this is the effect which the noble Lord wishes to achieve.

The amendment of the noble Baroness still leaves employers somewhat out of pocket by ignoring the national insurance costs. I am not sure if that is her intention. However, the real issue is whether or not a larger employer should be expected to make a contribution to help their own employees. I believe they should.

Overall, with the improvements we are making to both statutory maternity pay and maternity allowance, the Government will be investing an additional £355 million a year in payments to pregnant working women. In total each year we will spend nearly £1 billion on maternity payments. The additional cost to a large employer in extra SMP and national insurance is around £25 million. Overall we are asking them to meet around 7 per cent of the costs of SMP payments for their employees.

As I have explained, we think this is reasonable—as did the previous Conservative government—for employers to meet a small amount of the costs of supporting their employees on maternity leave. I therefore invite the noble Lord to withdraw the amendment.

Lord Henley

I am sorry that my amendments were protective and I will certain have a further look at them to see how they can be made non-protective before I come back to the subject again on Report. I am grateful to the noble Lord for spelling out just how much the amendment would cost, and I take it that last figure of the cost to the employers of about £25 million indicates what the cost to the Government would be if the amendment of my noble friend, Lady Miller, were to be accepted. Therefore, I presume that the costs of my amendment being accepted would probably be something like half as much again.

It is always important to know what the costs of any amendment would be. Certainly back in my days in social security when the Lords seemed not to believe me—I did seem to suffer defeat after defeat—one used to keep a tally of the costs of all the amendments of the Opposition, so that one could point out occasionally how irresponsible they were being in terms of the expenditure of public funds. Similarly, on this occasion I will consider this very carefully before I come back to it. I am grateful for the explanation given to me by the noble Lord.

Lord Sainsbury of Turville

Can I just point out so that everyone understands, the £25 million is really just the result of the improvement in the terms that we are talking about. If the noble Lord's amendment were accepted, it would in fact cost £120 million.

Lord Henley

I understand. I appreciate that £120 million is a much bigger sum than £25 million, and I am always highly responsible about use of government funds. Nevertheless I will consider this amendment and that of my noble friend very carefully to see where and how they are defective before I make any decision as to whether to come back to them at a later stage. With that in mind, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 57 not moved.]

Baroness Miller of Hendon

moved Amendment No. 58: Page 30, line 25, at end insert— "167A REQUIREMENT ON THE SECRETARY OF STATE TO ASSESS IMPACT ON EMPLOYERS (1) The Secretary of State shall, prior to the laying before Parliament of regulations under section 167(1), publish an assessment of the impact on—

  1. (a) employers in general,
  2. (b) employers of five or fewer employees, and
  3. (c) employees in general, of the provisions of Part 7.
(2) The Secretary of State shall, on each anniversary of the date of publication of an assessment under subsection (1), publish a revised and updated assessment under subsection (1). The noble Baroness said: The Bill introduces a large number of additional burdens on employers, particularly small employers, because the Government do not seem to realise the difference between what the Americans call a "momma and poppa" business and giant firms such as Tesco, Ford and Zeneca, for example. The Bill also confers additional rights and some additional responsibilities on employees. Nothing comes free in this field, such as the provisions that are included in the Bill.

I would like to remind Members of the Committee that the Opposition have in general terms welcomed the principles of the Bill, and in both Houses promised the Government their support. It does not detract from that support when we ask for an accounting of the cost to commerce and to workers of the new measures. I am not detracting from that support when I point out to the Committee some of the consequences that will or may ensue from the implementation of the provisions of the Bill.

Those consequences could include: greater wage expense to employers, with consequential loss of international competitiveness and trade; reduction in the number of jobs or even the potential and possibly unprovable discrimination against employing certain categories of people; an increase in administrative costs to employers; an increase in the number of officials and staff at ACAS to administer and enforce the new regulations—I will be returning to the ACAS situation later—and a rash of increased litigation before tribunals engendered by the currently growing compensation culture, although on the plus side the conciliation procedure proposed in the second schedule may head off some of that, as may my amendment to Clause 23 if the Government or the Committee accept it.

Of course, this list is not exhaustive. I simply wanted to illustrate the point that I have just made; namely, that the benefits of the Bill will not come free of cost and consequences. The Government have introduced the Bill without, I believe, any idea of what the cost will be to employers and employees alike; nor do they have any idea of what the benefits will be in cash terms. The personal social benefits to employees are perhaps much more easily discernible.

The amendment seeks simply to require the Government to account for what is happening and to show that the benefits obviously outweigh any of the disadvantages—in short, to show that, overall, the consequences of the Bill will be a price well worth paying. I beg to move.

7 p.m.

Lord McCarthy

I support a subsequent amendment tabled by the noble Baroness, Lady Miller, which relates to ACAS because at least it is relatively precise. I am not against attempts to try to work out the cost of Bills. In fact, we are now supposed to do that. However, she and the Government should understand that these assessments cannot be made with any degree of accuracy, and not only because the Treasury cannot count—we all know that that is true.

If one looks, for example, at the lunatic attempts in Routes to Resolution to assess what would happen if we managed to get rid of 40,000 cases, one will find that it is absolute nonsense. The figures are all based on averages of averages of guesses. Those assessments are quite silly. The figures—even more exaggerated—produced by the CBI do not fit with those produced by other employers' associations. Those figures always look on the downside because, in principle, they should be measurable. The data are not available but they should be measurable. They never look a t the upside because no figures are available. One cannot compute what that might do for the welfare, security, morale or productivity of workers. It is an act of faith. We can rearrange the figures, but we really must not believe in them.

Baroness Miller of Hendon

I am glad that the noble Lord, Lord McCarthy, agrees with the principle and that he has nothing against trying to work out the cost of things. It seemed to me that his difficulty lay with the list of items which I said might have to be considered. It may well be that an altogether different list will be produced. I was simply making the point that, if it were possible to obtain some costs from this, that might be worthwhile.

Lord Sainsbury of Turville

Before I begin, I shall assume that the amendment refers to the provisions of Part XII of the Social Security Contributions and Benefits Act 1992. That is the part which deals with statutory paternity pay, rather than Part VII, which deals with income support.

The amendment has two interpretations. It might require an assessment of the impact of regulations made under Section 167(1)—that is, the reimbursement of employers—to be published and revised annually. Alternatively, it might require an assessment of the impact of all the regulations concerning SMP made within Part XII to be published and revised annually. The placing of the amendment within Clause 21 suggests the first interpretation. Therefore, I shall respond directly to that, but the points that I make will apply to both.

The Government's policy is to regulate only when necessary and to ensure that such regulation is both necessary and effective. It is established government policy that new legislation affecting business must be accompanied by a full regulatory impact assessment unless the costs or savings are negligible or where statutory fees are increased by a predetermined formula.

The purpose of the assessment is to provide an analysis of the costs and benefits of proposals for regulation and a detailed assessment of any impact that regulatory changes will have on businesses—in particular, small businesses.

The regulatory impact assessment for the SMP measures in the Bill was published at the same time as the Bill. However, a preliminary assessment of the costs was published in December 2000, alongside the Green Paper, Work and Parents: Competitiveness and Choice. It covers in full the effects of the two major proposed changes to SMP; namely, the increase in the rate of payment and the extension of the payment period on both small and large employers. There are no plans to add anything further to that assessment.

While these two significant changes to statutory maternity pay receive detailed attention in the assessment, the same detail is not required for Clause 21. The clause is largely a reworking of existing maternity legislation, but the changes it makes are undoubtedly positive for employers. First employers will be able to recover their statutory maternity payments from tax and other allowable payments due to the Inland Revenue, not just from contributions payments. Secondly, employers will be able to apply for advance recovery of their statutory maternity payments.

These changes have no negative impact on employers and are comparatively minor in comparison with the increase in the rate and payment period for statutory maternity pay. That is why they do not appear in the accompanying impact assessment.

Since departments already produce regulatory impact assessments, introducing a requirement for additional, annual assessments would be superfluous and time-consuming. However, we are fully committed to monitoring the effects of the new maternity package on employers and employees. For that purpose, we have commissioned a survey of parents and employers to establish a baseline against which the changes in maternity legislation can be properly evaluated. We envisage undertaking a further survey in 2005 to ascertain the effects of the changes made in 2003. Whereas the proposed amendment would limit annual assessment exclusively to the effect of changes to statutory maternity pay, the use of a more general survey will provide a broader picture of the effects of the changes to the pay and leave arrangements available to parents.

Finally, Members of the Committee will be aware that a change to the small employers' relief scheme will take place in April 2002. Regulations were laid before Parliament on 8th February and a full regulatory impact assessment was placed in the Library. That assessment details the effects of the changes to the small employers' scheme. It also gives a full account of the impact of change to the compensation rate from 105 per cent to 104.5 per cent, which was announced on 19th December 2001. Thus, the effects of employers' recovery of statutory maternity pay—the subject of Clause 21—are fully covered within this separate regulatory impact assessment.

I hope that that assures Members of the Committee that there is no need to regulate for the Secretary of State to provide further impact assessments. Government departments are already committed to assessing the impact of new legislation on employers, so the amendment would add nothing to what is already established practice. I therefore invite the noble Baroness, Lady Miller of Hendon, to withdraw the amendment.

Baroness Miller of Hendon

I thank the Minister for that lengthy and clear exposition. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 59 and 60 not moved.]

Clause 21 agreed to.

Clause 22 [Employment tribunals]:

Lord Wedderburn of Charlton

moved Amendment No. 61: Page 32, line 10, at end insert "where in the opinion of the tribunal a party has in bringing the proceedings acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by a party has been misconceived The noble Lord said: In view of what has been done earlier, it may be convenient if I suggest that, in relation to the amendments, we refer to Part 2—my noble friends and I have tabled amendments to Parts 2 and 3—because it will avoid saying such things when we come to the cases.

Three comments need to be made in light of our debate at Second Reading. The basis of our criticisms did not involve the Government's objective of settling cases at the workplace—who could object to that?—but the way in which the Government set about attempting to decimate applications to tribunals as a necessary part of that. The three comments have become more relevant in view of our proceedings today in Grand Committee.

First, our amendments attempted to take account of what was said by my noble friend, Lord McIntosh of Haringey, who we are all happy to see restored to us here in Committee. He said: If we are doing it in the wrong way, I have no doubt my noble friends Lord Wedderburn and Lord McCarthy will seek to show us how to do it better. We shall listen with respect, as we always do, and we shall seek to come to a proper judgment".—[Official Report, 26 February 2002; c.1405] We understood that to mean—I hope that this is true—that the Bill is not set in stone. Whatever pacts and deals have been done about the Bill, I hope that the Government will listen and seek to come to a proper judgment in a constructive way.

Secondly, at Second Reading, we showed that the statistics—or alleged statistics—that the Government relied on to form the basis of their case, were in fact not sustained. They were not even sustained by their own research, which was finally published just before the debate. I mention the horrendous model of wicked applications to the tribunals, which my noble friend, Lord McIntosh, will remember especially, and whose vital statistics were 64, 62, 37. Huge proportions of workers rushed to the tribunals without any attempt to reach a settlement, and their employers made no attempt to reach a settlement. That was not justified by the research and it is certainly not justified in real life. That led us to introduce, in parts of the Bill to which we shall come, a series of probing amendments, which touch on the unfair way in which the Government are aiming to reach their stated objectives.

Thirdly, we are very conscious in our amendments of the procedure in Grand Committee. I quote from the House's Companion to the Standing Orders. At page 122, it states: The proceedings in Grand Committees are identical to those in a Committee of the whole House save that no votes may take place. It continues: The principle followed is that amendments may be agreed to in a Grand Committee only without dissent". The following section states: If there is opposition to an amendment, it should be withdrawn in Grand Committee, to enable the House to decide the matter on report. We take this objective and statement seriously and we shall of course withdraw amendments where there is a single murmur—let alone voice—of dissent. The objective that we shall keep in mind, as stated in the Companion, is that we shall enable the House to decide any controversial matter on Report.

I hope it will not be thought that I have exceeded the bounds of order by introducing those three thoughts. I now come to Amendment No. 61. This amendment deals with the replacement of the power to make regulations for provision of the award of costs or expenses—"expenses", of course, is the Scottish term—in employment tribunals. That exists at the moment and, in our submission, there is a perfectly good regulation in the Employment Tribunals (Constitution and Rules of Procedure) (Scotland) Regulations 2001, which deals with the matter. Regulation 14 provides that, where in the opinion of the tribunal a party has in bringing proceedings, or a party or party's representative has in conducting proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing and conducting of proceedings by a party has been misconceived". It also provides that the tribunal shall consider making and, if it so decides, may make an order containing an award against that party in respect of the costs incurred by another party. That, of course, is quite different from the principle in the ordinary courts. It is different in a way that is measured and matched in all the labour tribunals and labour courts of Western Europe. It is one of the basic principles of justice in industrial tribunals, as they were called, or employment tribunals, as we now call them; moreover, in research people tend to refer to labour courts. A worker who is faced with the possibility that costs will be awarded against him if he happens to fail, albeit that he had a reasonable case—and laymen as well as lawyers know that reasonable cases do not always succeed—will be prevented in real life from bringing cases which it is quite reasonable to bring on the basis of injustice at the place of work.

This principle should not need to be restated, lit was stated by the Donovan commission in 1968, and it has been accepted everywhere else, including in the Leggatt report, to which I hope the Minister will refer in his reply. The Leggatt report was on tribunals generally, and it includes extensive passages relating to employment tribunals.

Again and again, in Committee in another place, the Minister, my honourable friend Alan Johnson, said— it is better in his own words— To avoid doubt and bearing in mind our curious exchange about the explanatory notes, I should say that we are clear on the fact that the cost awards will not change".—[Official Report, Commons, Standing Cttee F, 11/12/01; col. 58.] Indeed, he went on to point out: We must not get carried away with the idea that a large proportion of applications are vexatious or unreasonable. That is not the case. On anyone's assessment, the percentage is tiny".— [Official Report, Commons, Standing Cttee F, 11/12/01; col. 59.] The percentage is tiny as shown by the fact that there were only 247 cases last year in which any costs were awarded. That is not to say that some other cases may not have been unreasonable, but in that case they frequently did not survive a pre-hearing session. We come to pre-hearing reviews later in the Bill.

There are few cases where the tribunals have decided that the ability to award costs is inadequate, or even that the existing power should be frequently used. I refer to the figure of 247 out of 130,000 applications last year, which was less than in previous years.

Why do I stress that? First, the Minister said that the Government did not want to change the basis on which costs are awarded in these industrial employment tribunals. If I may quote him again, he said at col. 60 of Hansard that, We are dealing with the basis on which costs are now awarded, not extending it". The Government have been clear that costs awards will be made on the same basis as they are now. The question that arises from that is not whether we can rely on the present Secretary of State. If the Minister says that in another place, that is what we expect our Secretary of State to do, but why take power to give the tribunals the competence to award costs on a wider basis? Why replace Section 13(1) of the Employment Tribunals Act 1996? They are basically the same words, but why put it in without making it clear on the face of the Bill that the Government are secure in their understanding, as was stated again and again in another place, that they do not intend to increase the incidence of costs in these employment tribunals?

Some people may say that that is a very suspicious approach. That ignores the fact that there has been a great deal of pressure to extend the ability to award costs. Indeed, we shall hear from the Conservative Opposition, as was argued in another place, that workers should pay more costs, should pay special deposits and make all sorts of payments before they have access to justice which is untrammelled in the ordinary principles of labour tribunals. Secondly, I refer to the pressure to expand the competence to award costs and, indeed, in some cases for tribunals to explain why they do not award costs. That is a quite extraordinary idea for anyone with any experience at all of comparative industrial jurisprudence.

The matter was also extensively examined by the Leggatt committee. The Leggatt report, Tribunals for Users, dealt with employment tribunals. At page 147 it said the following: We recommend a joint study by the DTI and the LCD on costs…In the absence of detailed research and a systematic review of the policy options in the light of it, we would not recommend the introduction of a general costs regime"— I pause to say that that is in employment tribunals. The report continues, that should be risked only in the light of clear evidence that there is a substantial problem and that change in the costs regime is the only effective answer". It is widely known among lawyers, laymen and trades union representatives of those who have to enforce their rights in employment tribunals that some people want to impose costs upon applicants beyond the present rules.

The Government have said in another place they do not wish to change the basis of the award of costs. All that this amendment does—and if 11 may say so it is characteristic of our amendments in that it is a most modest amendment—is say to the Government, "Put your words where your money and your mouth are and let us have it on the face of the Bill. If you will not put it on the face of the Bill, why are you replacing Section 13 of the Employment Tribunals Act 1996? What do you want to do with these regulations for the award of costs or expenses? You cannot mean to have new regulations. Are you just going to print Regulation 14 out again and, if so, let us have a guarantee that that is what you will do"?

It is difficult to understand the necessity of wasting a little tree to print Clause 22(1) of the Bill in that case. The Government have that power already. However, if all they have to do is reprint it, then let us say so. If not, why not clear the fog of doubt away and say to a future Secretary of State—and I am not concerned with the present Secretary of State for the moment—"If you want to exclude the possibility that tribunals cannot award costs other than on a vexatious basis, if I may put it that way, then you must come up with primary legislation"? Why are the Government so afraid of leaving to a future Secretary of State the obligation to come to this House and the other place and explain in primary legislation any extension of competence to award costs? The replacement of Regulation 14 is quite unnecessary; it is undesirable and the Government say they do not wish to do it. I beg to move.

7.15 p.m.

Baroness Gardner of Parkes

I am particularly interested in this section of the Bill as I have sat for 23 years as a member of an industrial tribunal. I support the amendment although I wonder whether it is necessary because in my experience we would always have abided by the rules suggested in the amendment.

I wish to ask the Minister a technical question. In the Explanatory Notes and in the Bill itself the Employment Tribunals Act 1996 is referred to in three different places. I spent quite a long time this afternoon trying to obtain that Act from the Printed Paper Office. Finally, I discovered that there was no such thing. It is called the Industrial Tribunals Act 1996. I wonder whether the Minister has already covered that point and replied to it. Perhaps I may ask him by what procedure an Act which has been passed and enacted is suddenly renamed in this Bill on page 32 and again on pages 76 and 80, possibly as well as in other places. Does a procedure exist by which one can rename an Act retrospectively? If so, can the Minister explain to me how and when that procedure was brought about?

Lord McIntosh of Haringey

I do not want to curtail the debate, but I should like to answer the point raised by the noble Baroness, Lady Gardner, while it is in my mind. The Act was called the Industrial Tribunals Act 1996. It was amended in 1998 and, when that happened, the title was changed to Employment Tribunals Act. Therefore, it is now properly called the Employment Tribunals Act 1996.

Baroness Gardner of Parkes

I thank the Minister for that explanation. As I understand it, the date of the Act did not have to be changed to 1998. The date, 1996, could have been retained and the name of the Act altered.

Lord McIntosh of Haringey

That is right.

Baroness Gardner of Parkes

Therefore, why is the Act not available in the Printed Paper Office? I had great difficulty in obtaining it. Eventually the staff managed to uncover it, but it is still issued from the Printed Paper Office as the "Industrial Tribunals Act 1996".

Lord McIntosh of Haringey

I do not want to criticise them, but people in the Library would look up the Act in a book listing the statutes in force and would find the 1996 Act, as amended, including the change of title.

Lord McCarthy

They have some old copies.

Baroness Gardner of Parkes

That may be, but they had great difficulty in finding the Act. Perhaps the problem was that the staff in the PPO went through their list of 1996 Acts and did not find it. If an Act is subsequently amended, it should perhaps at least be cross-referenced to the year 1996 so that the authorities can trace it more easily.

Lord McIntosh of Haringey

The Reading Clerk has noted that point.

Baroness Gardner of Parkes

I thank the Minister for that reply. I return to Amendment No. 61. I support the sentiment behind the amendment and believe that it is common practice for costs to be awarded in that way.

Perhaps I may make a slight digression. I was pleased to see the proposal to insert new Section 13A, which relates to compensation for preparation time. I conducted a case against someone on behalf of a charity. That person lost the case, but it cost our charity a great deal of time and many thousands of pounds in preparing the case. There is a point to be made here. Perhaps that could be taken into consideration in deciding whether or not to award costs. The situation in relation to a charity is rather different. People who sit on an industrial tribunal, in whatever capacity, have less sympathy for a huge corporation than they have for a charity.

Baroness Miller of Hendon

Without responding to comments made by the noble Lord, Lord Wedderburn, in relation to what amendments I or other Conservative Members might table later or in relation to what we believe or do not believe, the noble Lord might like to know that I support the amendment. I took note of what he said with regard to the standing orders and how, if there were one word of dissent, the amendment could not be agreed. I hope—perhaps without much expectation—that the noble Lord does not feel the need to be that one voice of dissent.

Lord McIntosh of Haringey

As we are moving on to Part 2, my noble friend Lord Wedderburn properly introduced the amendment with some general comments about Part 2. I shall not be as ambitious as that, but I want to say something about Clause 22 because we shall be debating a whole series of amendments on it—most of them tomorrow.

There has been a great deal of misunderstanding about Clauses 22 and 23. Clause 22 is not in any way radical; it makes very few changes. It is in four parts. The first part is subsection (1), which substitutes the words for those in Section 13 of the Employment Tribunals Act 1996. My noble friend Lord Wedderburn said that it is generally the same. It is not generally the same; it is precisely the same. There is no change whatever in the wording of Clause 22(1)(1). Subsection (1A) is new, and all that does—and we will come on to this with future amendments—is remedy a defect whereby costs in the past could be awarded only against a party and not against the representative of a party. It recognises the case—and this came up in the consultation after the consultation document last year—where it is the representative who is at fault and it is the representative against whom costs should be awarded.

Subsection (1B) is about taxing or otherwise settling the costs, and that is identical to the existing legislation.

Clause 22(2) is indeed new because it is compensation for preparation time.

I wanted to make that clear because the point that I want to make about Amendment No. 61 is that, in addition to the fact that no change is proposed in primary legislation proposed—and this has been going for many years perfectly successfully; I do not know whether it goes back as far as the noble Lord, Lord Wedderburn, would take us into the Donovan commission, but it certainly goes back over many years—no change is proposed in the regulation.

I can say without any qualification whatever that I agree with the principle which this amendment seeks to enshrine. The regulations which support the Bill will limit the cases in which costs are awarded and the circumstances set out in the current regulations are repeated in this amendment. What has survived for a number of years over more than one government without it being on the face of the Bill will continue both in primary legislation and in regulation. I put it to the Committee that this amendment is not necessary.

7.30 p.m.

Lord Gladwin of Clee

I want to be clear. Is my noble friend saying that reference in subsection (1A) to a representative's conduct of proceedings—

Lord McIntosh of Haringey

We are not debating that.

Lord Gladwin of Clee

I do not understand why the amendment to subsection (1) is being resisted. If I could have an assurance that what we are talking about is what both the noble Baroness, Lady Gardner, and I know about, which are cases that a tribunal decides are misconceived, then this provides a way of dealing with that process, awarding costs against a party. As I understand it, this provides a facility for awarding costs against a representative of the party. Perhaps we can try again.

Lord McIntosh of Haringey

I gave an introduction to the whole of Clause 22 because I thought it might be helpful. This amendment is not about subsection (1A) and it is not about representatives. It comes in line 10, it is about subsection (1). What I am saying about Amendment No. 61 is that the Bill does not change, and I give a flat guarantee that the regulations will not change. It works now; why change it?

Lord McCarthy

It works both ways. If it be the case that nothing is intended to change, why are we putting something in the statute book which already exists in primary legislation? What is the point of putting it in if we are not going to change it? It is bound to make people suspicious, especially if you do not put what is in the regulations on the face of the Bill. I do not see why, if the Government want to reassure us at the beginning of the debate on Part 2 that they cannot accept this amendment.

Lord McIntosh of Haringey

I asked that question myself because it seemed a sensible question to me. The answer I have been given is that it is easier to understand if we have both the original legislation repeated here together with the changes that are proposed to it in subsections (1A) and (2). Then it is all in the same place. It is not a matter of very great significance, but that is the explanation.

Lord McCarthy

With respect, it is not all in the same place. If you took our amendment, what is now in another place—namely, "vexatiously, abusively, disruptively or otherwise unreasonably"—would be in the sentence.

Lord McIntosh of Haringey

The amendment uses the wording of the regulation.

Lord McCarthy


Lord McIntosh of Haringey

Nobody has said it does not work. Nobody has complained that there has been any misuse of this provision in the regulations. Why change it?

Lord Wedderburn of Charlton

I am utterly mystified. I had hoped that the Bill was not set in stone. I seem to be hearing stonemasons all over the place who have thrown away their tools!

I thank all Members of the Committee who have spoken to the amendment. The Minister introduced the question of representatives and the amendment is not concerned with that. It is not about Clause 22(1A); it is about Clause 22(1)(a) in line 10. It is true that the Donovan report was not published at a time when such regulations applied. The Donovan report recommended that this rule should apply. The Minister rejoices in his support for this principle. He says it is the answer he has been given. I suspect I would rather have the answer he wants to give me.

Lord McIntosh of Haringey

No, I asked a question, I was given an answer, which seems to me to be a perfectly legitimate one. You will not drive a wedge between me and officials on this matter. There is a perfectly good argument for saying that Clause 22 makes sense as a whole, including both the old parts and the new parts.

Lord Wedderburn of Charlton

I thank the Minister for his explanation and I shall look at Hansard with interest. I am not addressing Clause 22 as a whole—I shall argue in the next sitting of the Committee that other parts of it not only do not make sense but that they are unjust and in one case in breach of the European Convention on Human Rights. However, I am not addressing that at the moment and, with great respect, that is confusing and has already confused one of my noble friends who mistook "A" for "a"—we do not want to get into that sort of thing. This is a very simple point.

The Minister says this rule has been basic. I believe he said it has survived more than one government and that is absolutely true. However, he cannot guarantee that it will survive every government who are to come in the next five years and he cannot guarantee even that a government in the near future will have to make a good argument to change it. What he is doing is refusing to put the rule in primary legislation. We cannot do more than put rules in primary legislation, I appreciate that; we cannot bind our successors nor would we wish to do so. However, if we have it in primary legislation, the Government have to make an argument.

We all know perfectly well that regulations sometimes get through, without very good arguments, by vote and we do not want to leave this matter to regulations. We do not want the power in regulations to change the basis on which costs are awarded in our employment tribunals. We say there is a risk of that— and we say it albeit that the Minister's advisers appear to treat it with some levity—because there is a very strong body of pressure not least from certain groups of employers, not all by any means, which the Government know perfectly well, to change the rules in tribunals so that more workers have to pay costs. Indeed, you 'do not need to be particularly suspicious about the Bill. The power to award more costs and higher costs in the future under these regulations would be one way of cutting down applications to the tribunals. The Government want to cut out 40,000— good, bad or indifferent, 40,000 have to go. How much better than to threaten costs against workers who dare to assert their rights in industrial tribunals. I do not for a moment think the Minister thinks that—he understands perfectly well that that would be an atrociously unreasonable thing to do. He knows the real world, as we all do, and he surely understands that there is great pressure on the Government to do that. The Secretary of State would only have to pass some regulations the year after next—that is what we are against.

My noble friend, Lord Gladwin, suggests that we want to stay where we are and that we want the rules not to change. The Minister in another place assured us that the rules would not change. The Minister today said that he also agrees that the rules should not change. Why not put that in primary legislation? This is not the last time that I will say that during the passage of this Bill—this Bill is extremely dangerous. It is taking powers to make regulations that are wider than the objectives that the Government set themselves. There is absolutely no case for reenactment—similar words are used, although they are not put in exactly the same order, in paragraphs (a) and (b). There is no place at all for Clause 22(1).

That is all that I am addressing. I ask my noble friend to reconsider this matter with his advisors. If he does not, we will begin to believe that this Bill, even on the most reasonable points and the most modest amendments, has been set in stone by some pact or agreement at a higher level, which allows ministers no flexibility in Committee.

Lord McIntosh of Haringey

I am sorry, but I must resist the proposal. Motives are now being suggested and officials are being accused of treating matters with levity, which I resent because it is quite untrue.

The full cost rules were not raised in Routes to Resolution. There was no question of that and no intention of introducing any change, whatever the pressure there might be; moreover, I give the assurance that there is no pressure.

Lord Wedderburn of Charlton

With respect, two points arise from what my noble friend has said. First, the Government may not have outlined plans to increase costs, but the Minister seems to have forgotten that they revived what we may call "The Lord Young of Graffham" principle from 1986 in their first proposal. That involves imposing charges on workers for going near the tribunals.

Lord McCarthy

The Government are the victim of their own announcements. If the Government are suspected, it is because they have said in the consultation document and throughout the Committee stage in another place that they want to get rid of one-third of tribunal cases. The whole thing is aimed at getting rid of 40,000 cases. How is that to be done?

Lord Wedderburn of Charlton

My noble friend is right. I cannot forget the historical fact that the Government even began with a proposal to impose charges. Call it a charge, call it costs—I do not care what it is called. Later on in this clause it is called a payment; we shall come to that. Nevertheless, however that is disguised in words, more money will be taken from a worker or there will be the threat to take money from a worker, whose objective is to enforce his rights in an industrial tribunal. That is absolutely indefensible.

I said at Second Reading that a right that cannot be enforced, and a right against which people threaten one with measures so that one cannot enforce them, is an exercise in rhetoric. It is not a right at all.

I had a second point, which I have entirely forgotten, in view of the interruptions. I shall read Hansard and make it on Report. I cannot think that my noble friend the Minister will wake up tomorrow morning and be convinced. I appreciate that the Government, as so often, it seems, are unable to say "Yes" to amendments to the Bill.

I have now remembered my second point. I am not suggesting that my noble friend would not be flexible—he is the most reasonable of men. However, it looks as though this Bill is set in stone because no argument is accepted, even on the basis that Ministers will go away and think about the matter again. Usually in Committee, Ministers say, "All right, we don't agree with you, but we'll go away and think about the matter again". It appears that we are never told that; if we are not going to be told that tomorrow, I wonder whether we will be here later than we should be—we are already here tonight later than we should be; we were given an assurance that Grand Committee sittings ended at 7.30 p.m. The rules are that I must withdraw the amendment, but we do not intend to drop it—we shall return to it on Report, as the Companion advises. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey

I believe that this may be a convenient moment for the Committee to adjourn until tomorrow at four o'clock.

The Committee adjourned at fifteen minutes before eight o'clock.