Maternity Payments (Hansard, 11 April 1994)

The Parliamentary Under-Secretary of State, Department of Social Security (Viscount Astor)
My Lords, yes. The improvements announced on 8th March will mean increased maternity payments for 285,000 1280 women a year. Employers' national insurance contributions have been reduced by £830 million. This is £125 million more than the combined cost of this change and the change in statutory sick pay. Employers overall will be better off.

§ Baroness Turner of Camden
My Lords, is the Minister aware that that is not the view of the CBI or the Institute of Directors, or indeed of the Equal Opportunities Commission? The CBI has pointed out to me that some sectors have a higher concentration of female workers of child bearing age and that in such cases the overall reduction in national insurance would not provide adequate compensation for the cost borne by the employer. The CBI takes the view that the employment costs of women and men should be the same, all other things being equal. It believes that this change will have an adverse effect upon young female employment prospects. Is this perhaps a ploy on the part of the Government to encourage employers to employ young men in low wage employment rather than young women?

Viscount Astor
My Lords, it is certainly interesting to hear the noble Baroness seemingly speak on behalf of the CBI from the Benches opposite.

§ Baroness Turner of Camden
Why not?

Viscount Astor
My Lords, as I said, employers as a whole will be better off. Employers in this country are better off than their counterparts in most other EC states. They contribute at least 50 per cent. towards the cost of maternity pay. We had detailed consultations before this change. We do not believe that it will affect the numbers of women who are employed. In fact, we believe that the numbers of women who will be employed in future years will go up.

§ Lord Marsh
My Lords, can the Minister properly hypothecate changes of this sort? The reductions in terms of national insurance contribution may be right or wrong; they are not directly related to maternity benefits, which the Government have decided to award and have then put the charge on industry.

Viscount Astor
My Lords, the taxpayer will still meet at least 92 per cent. of the cost of statutory maternity pay. Of course it is not the only change that we have made. It will be easier to qualify for statutory maternity pay; the service test has been reduced; and small businesses, which are two-thirds of all employers, will not pay a penny more, but will receive full compensation.

§ Baroness Dean of Thornton-le-Fylde
My Lords, will the Minister accept that women in Britain are the lowest paid in respect of maternity pay in the EC? Why did the Government not take the opportunity in reviewing maternity pay to eradicate the anomaly that exists whereby 14 weeks' leave for maternity is given against 18 weeks' pay —meagre though it is?

Viscount Astor
My Lords, we feel that the 14-week maternity leave period strikes the correct balance between increasing employees' rights and adding to the 1281 burdens on business. To extend the leave to 18 weeks would add some £50 million to employers' annual costs. In the Government's view, that would be unacceptable. Most EC countries offer fewer than 18 weeks. Some have 16-week periods; some 14 weeks; and Portugal, for example, offers only 12 weeks.

§ Earl Russell
My Lords, the noble Viscount will recall that when he introduced the parallel changes on statutory sick pay, he said that one of the reasons for shifting the costs to employers was to give them an incentive to police sickness absence. Is it the Government's intention that employers should police maternity? If so, how?

Viscount Astor
My Lords, we accept that there is a difference between statutory maternity pay and statutory sick pay. That is why the Government still reimburse employers 92 per cent. of the cost, and reimburse small employers—that is, some 750,000 employers in this country—their full costs.

§ Baroness Lockwood
My Lords, if the Government consulted widely before they introduced these changes, why did they not take into account the representations that were made to them against the changes? Secondly, as this is seen as a deterrent to employing women, can the Government tell me how it fits in with their equal opportunities policies?

Viscount Astor
My Lords, I point out to the noble Baroness that the changes were welcomed by the Maternity Alliance and the Equal Opportunities Commission.

§ Baroness Turner of Camden
My Lords, is the Minister aware that the Equal Opportunities Commission has opposed the idea of passing social costs of this kind on to employers? Is it not a problem for industry, and indeed for the CBI, that this could very well be the thin end of the wedge? After all, when statutory sick pay was first introduced there was a substantial rebate to employers, and later on employers had to bear the whole cost.

Viscount Astor
My Lords, the Equal Opportunities Commission welcomed the changes that we made. Of course I suspect that the Commission would have liked us to go further. But it still recognises that this change represents a better deal for women in the UK. It will encourage employers to take on more women; it will not have the effect suggested by the noble Baroness.

§ Baroness Lockwood
My Lords, can the Minister quote the passage from the Equal Opportunities Commission communication where it welcomes these changes? That does not accord with the press releases that the Equal Opportunities Commission put out at the time that the imposition on employers was made.

Viscount Astor
My Lords, if the noble Baroness reads the first sentence of the Equal Opportunities Commission press release put out on 8th March, she will 1282 see that it welcomes the changes. The commission said that more should be done, but it gave the measures a general welcome.