§ 3.8 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Viscount Astor)
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Viscount Astor.)885
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES in the Chair.]
§ Clause 1 [Restriction of employers' right of recovery]:
Lord Jenkin of Roding moved Amendment No. 1:
Page 1, line 5, leave out subsection (1) and insert
("(1) In section 158(1) of the Social Security Contributions and Benefits Act 1992 (recovery by employers of amounts paid by way of statutory sick pay) paragraph (a) shall be repealed and replaced by a new paragraph (a) as follows—
(a) entitling, except in prescribed circumstances, any employer who has made one or more payments of statutory sick pay in a prescribed period to recover an amount equal to the amount by which such payments exceed a specified percentage of the employer's contributions payments for the same period by making one or more deductions from his contributions payments and" ").
§ The noble Lord said: The amendment stands in my name and that of two other noble Lords from the Front Benches opposite. That indicates that the amendment which I foreshadowed in my speech on Second Reading has attracted a wide measure of support. As well as the two noble Lords who have added their names to my amendment, the proposal which the amendment embodies is supported firmly by the CBI; it has the tacit support—I have to say—of the Institute of Directors; and it has the support of the British Payroll Managers' Association, and I shall be referring to that organisation later. I am told that none of the employer representatives on the Department of Social Security's employers' panel on SSP is opposed to the amendment. I believe that my noble friend the Minister will wish to take note of that as he listens to the debate.
Put simply, the purpose of the amendment is to provide a better targeted relief for small firms against the cost of exceptional sickness absence. Under the Bill, the Government propose to give relief to small firms, first, by identifying the firms which come—if I may put it this way —within the charmed circle: those with annual national insurance bills of under £20,000; and, secondly, by paying 100 per cent. of the SSP for any individual employee's period of sickness of four weeks or more.
I rehearsed briefly on Second Reading the disadvantages of that proposal, and this may be the moment to look at them in rather greater depth. First, the concept of the charmed circle: the idea that there is a cut-off point. Any firm below that point qualifies for the relief, while any firm above it is outside it.
Here I must draw the Committee's attention to an interesting document entitled Deregulation Task Forces Proposals for Reform. Page 1 states:
Proposals affecting several or all Departments".
The heading is, "Small Businesses", and it states (right at the top of the first page):
The representatives of small businesses on the Task Forces met as a separate group and unanimously agreed the following proposals which were subsequently ratified by all the Task Forces.
1. Do not create exemptions, barriers and thresholds for small business regulation. Regulate only where essential—and then universally".
Yet, within days of the proposals of my noble friend Lord Sainsbury of Preston Candover being presented to the Government, we are debating precisely a measure providing for a threshold.
Any threshold is bound to be an arbitrary cut off. It must inevitably create unfairness, and so, at the margin, undesirable incentives. Inside the charmed circle, a firm will receive 100 per cent. of the relief for sickness of over four weeks; outside, it will receive nothing. My noble friend Lord Dean of Harptree suggested on Second Reading that that situation might be dealt with by a taper, but I agreed with my noble friend the Minister that tapers make the matter infinitely more complex. We are looking for simplicity for employers and for the people in the department who have to administer the scheme. That is the first flaw in the Government's scheme.
The second flaw is that the scheme fails to provide relief if a large number of staff are off sick for periods of fewer than four weeks; for instance, if there is a 'flu epidemic or a bus accident. Let me give an example of a firm of contract cleaners whose workers reach their place of work in a mini-bus. They travel together, and the mini-bus is involved in a serious accident in which all the workers are injured. They may all be off sick for three weeks. The total level of sickness is far in excess of the average. It is no fault of the employer. The employer is liable to pay them SSP, but under the Government's scheme there is no reimbursement to that employer because no one is off for more than four weeks.
I shall describe what the figures might be in such a case. Let us suppose that those cleaners earn about £100 per week, and they have a supervisor who earns twice that sum. The employer has a monthly national insurance bill of about £410 and a monthly turnover of about £5,000. The 1 per cent. cut in national insurance contributions saves that firm about £40 a month. It is a worthwhile saving for average sickness. The employees then have their crash and are off work for less than a month—let us say three weeks—and the firm has to pay SSP totaling £1,291. The employer will obviously have to find substitutes for the people off work, because he has to fulfil his contract. He has to hire temporary staff to do that, and yet he receives no help under the reimbursement scheme. It is the type of situation in which one would have thought the employer should be helped: it is something out of the ordinary which gives rise to a substantial bill for the employer. But, lo and behold, he receives nothing. In those circumstances, that business might face considerable difficulties.
Thirdly, even if there is a firm which is within the charmed circle, which would qualify for relief, it can receive considerable relief when common sense would say that it does not need it. One can take at the other end of the scale a small professional firm with a few highly paid employees and a substantial turnover which may run into hundreds of thousands of pounds. Because it is small, its national insurance bill is lower than £20,000 and therefore it is within the charmed circle. If that firm had a member of staff off even for as long as 12 weeks SSP would amount to £630 and it would receive back 887 £420. That is ludicrous for a firm with a turnover running into hundreds of thousands of pounds. That is one of the effects of the Government's scheme.
As well as conflicting with the Sainsbury recommendation by having a limit of £20,000, the government scheme does not give help in ordinary cases —they may be exceptional, but they are easy to understand—where help is clearly needed. Yet the scheme shells out substantial sums of money to firms which do not need it.
Those three objections arise because the government scheme is targeted on the wrong target. It targets small firms as such and the individual length of sickness of the individual employee. What is needed is a system targeted to protect firms against exceptional sickness. It is the exceptional sickness which should trigger the relief and not whether the firm is of a particular size or an individual employee is off sick for a given number of weeks. What is looked for is compensation where the bill to the firm comes to substantially more than the relief offered by the 1 per cent. reduction in national insurance contributions.
The amendment proposes that each month—it is a simple system—a firm tots up its total national insurance contribution payments. It has to do that anyway, because it has to pay them. It then totals its SSP payments for that same month. If the payments amount to more than a given percentage—for the moment we have been talking about 5 per cent.—of the national insurance contributions, there should be full reimbursement of the excess. In that way, the target of exceptional sickness is hit—I was going to say fairly and squarely—accurately and effectively.
It does not depend upon a firm being within a charmed circle. It will therefore have the approval of the Sainsbury Report. There is no cut-off point, but common sense dictates—I touched upon this point on Second Reading—that almost by definition it is only relatively small firms which will have a significant number of people off at any one time. To have five members of staff out of a firm of 10 would not be unusual during a 'flu epidemic, but 500 out of 1,000 would be wholly exceptional. Perhaps, as I said, if there were an incident such as Bhopal and a large number of people were seriously injured in a massive explosion, the Committee might feel that some relief would be appropriate. However, it is mostly the small firms that would receive it. In short, the scheme is a universal form of disaster relief.
I said earlier that the CBI has come round to supporting the scheme. Perhaps I may quote from a letter which I received this morning. It states:
Our members welcome your amendment, designed to provide more effective assistance for smaller firms who may experience excessive sick pay costs, for example, in the case of a 'flu epidemic. The proposal should provide help for those companies which really need it, without setting thresholds which create disincentives for small companies to employ more people".
As regards the example I gave of members of a small firm involved in a minibus accident, under the Government's scheme the firm will receive nothing. However, under the scheme proposed in the amendment, if the firm's monthly national insurance
contribution is, say, £410—a figure which would be perfectly reasonable—and eight employees were off work for three weeks, its statutory sick pay would come to just under £1,300. Instead of receiving nothing it would receive about £1,270 back. That incident would be a disaster, and it would need disaster relief. Perhaps we may take the example of those employed in the highly-paid professional firm with one employee off for 12 weeks and the government scheme paying £420 to a firm with a turnover of hundreds of thousands of pounds. Depending on where the percentage figure is pitched the firm might receive something back but I suspect that it would be so small that it would not bother.
I turn to the cost of the amendment, because with a proposal of this kind one must have some idea about that. Members of the Committee will have seen that I tabled a string of parliamentary Questions to by to obtain the information on which we could do the sums. My noble friend and his officials have done their best but, surprisingly, the department does not have the information I seek. Therefore, out of kindness and an anxiety not to disappoint, my noble friend has answered a whole lot of different questions which I did not ask and which may or may not be helpful. I am reminded of the case of the examination candidate who was asked to describe the principles of the Archimedes pump. He said, "I know nothing about the Archimedes pump but here is a list of the kings of Israel and Judah".
My noble friend's answers are also obscure and inconsistent with some of the information we have been given. The Government have always argued that average sickness records may be four or five employees out of 100 off sick at any one time. When asked to give the figures for the estimated average number receiving benefit at any one time we were told that it was 330,000 people. The employed population is 24.2 million, which gives a figure not of 4 or 5 per cent. but of 1.3 per cent. One is left with doubts about how much value one can place on these figures. Other questions aimed at quantifying the cost of the Government's scheme have produced answers which cannot be reconciled with each other, and so with reluctance I have had to abandon them.
I take instead the figures provided by the Forum of Private Business. In my experience it knows what it is talking about and some reliance can be placed on what it says. If one assumes that average pay of a firm's employees is £1,000 a month—that is £250 a week, which technically would be the "mean monthly salary" —a 5 per cent. trigger for the reimbursement would not be activated until at least 11 people out of 100 were off for a full week, or half that number for two weeks. The figure of 11 can be compared with the figure of 1.3, derived from the Written Answer to which I referred a moment ago.
If one is dealing with lower paid people with a mean salary of, say, £600 per month the trigger level is lower because the monthly national insurance contributions are lower. A 5 per cent. trigger would be activated if 4.5 per cent. were off sick in any one week for a full week. That is still well above the figure of 1.3 per cent.
889 But there remain uncertainties and the amendment therefore leaves the percentage figure to be fixed by order. My noble friend, with the resources at his disposal, will, I believe, be able to ascertain the figure which produces a fair compensation for exceptional sickness without imposing a burden he would be unable to persuade his colleagues in the Treasury to accept.
Is it all practical? On Second Reading my noble friend gave a number of reasons why he thought there may be difficulties. I conclude by quoting from the letter I received from the British Payroll Managers' Association. That is the professional body of those who will be responsible for implementation and who operate SSP. It states that,
there is certainly much to commend the scheme you put forward. It would certainly be simple to operate, requiring only one calculation per accounting period. The proposed Government scheme would require an individual calculation in respect of each potentially qualifying period of absence".
The letter mentions another point. My noble friend has been good in listening to us since Second Reading. He raised the problem of the time constraint because of the late Budget and the short timescale. On this the association states that,
the imposition of a bad scheme on the pretext of time constraints is not an acceptable basis for rejecting a potentially good scheme".
We may need regulations to prevent abuse; for instance, employers shifting the claim from one month to the next so as to bring them within the 5 per cent. trigger, or whatever the figure may be. However, it cannot be beyond the wit of my noble friend's department to do that. Yes, it will have to move fast because the legislation is due to take effect from the beginning of April. I refuse to believe that with good will it cannot be done. A measure of support has piled up behind this vastly improved scheme compared with what is currently in the legislation. That is a good incentive for my noble friend and his officials to make the effort. The scheme targets relief where it is needed: exceptional sickness—not long individual spells —among employees of small firms. I beg to move.
§ The Chairman of Committees (Lord Ampthill)
Perhaps I may remind the Committee that if the amendment is agreed to, I shall be unable to call Amendments Nos. 2 and 3.
§ Earl Russell
I wish to congratulate the noble Lord, Lord Jenkin of Roding, not only on his speech but also on winning the race to be the first to put his name to the amendment. Often we find amendments in search of Peers. Since Second Reading it has been clear that we have had Peers falling over each other to put their names to this amendment. The noble Lord succeeded, and I congratulate him. He has presented the case well. I have little to add.
Those Members of the Committee who are aficionados of election results may be familiar with the name of Dixville Notch in New Hampshire. Dixville Notch announces its election results for a presidential election at one minute after midnight on the day polls open. So everyone wanting to see which way the vote has gone waits anxiously for the results from Dixville 890 Notch. But if, as often happens, all 12 voters of Dixville Notch happen to vote Republican that does not prove that the Republicans will get a landslide vote. It does not even prove that they will win. And if, unusually, the vote turns out to be 11 Republicans to one Democrat that does not prove that the Democrats will win. The inhabitants of Dixville Notch are not a statistically significant sample. That is the basic principle with which we are dealing in this amendment—
§ Lord Carter
The noble Earl said that the town announces the result one minute after the polls open. Surely he means one minute after the polls close.
§ Earl Russell
No. That is, in fact, correct. The inhabitants of Dixville Notch go to the polls en bloc one minute after they have opened. Since there is a 100 per cent. poll there is no need for further waiting. But it does not tell us what the results will be.
One can do anything with a small sample. I once proved that in a department of which I was then a member one's chances of admission were trebled if, as an entrance candidate, one's surname happened to begin with "W". I do not believe that that is evidence of bias. In the same way a small businessman may have either exceptionally high or exceptionally low levels of sickness. It will not prove anything about your competence as an employer. It may prove something about the nature of your business, and thought should be given to that. For example, if you own one fishing trawler and you happen to hit a tremendous freak wave off Land's End, you can easily have all your crew laid up and unable to carry on earning at all. In that situation, some form of relief is rather important.
The noble Lord, Lord Jenkin, is surely right. What matters is not the size or the number of employees of the firm but how exceptional is the level of the sickness bill. I agree that this provision will apply normally to small businesses, but that will not always be the case. I have known of businesses whose staff have been affected by infections carried in the air conditioning ducts. Where that happens an exceptional level of sickness can occur in a large firm. I agree with the noble Lord, Lord Jenkin, that such a case could be seen to be worthy of an exceptional level of relief.
As the noble Viscount said on Second Reading, it is true that this proposal will involve work in the contributions agency—record keeping and monitoring —which is not of itself desirable; bureaucracy never is. But the alternative is that we shall take away the relief from firms with an exceptional level of sickness. That will mean that the cost will come all at once, thus creating cash flow problems. We should not forget that aspect. It may cause business bankruptcies.
We have here a straight question of priorities. We have record keeping and paperwork, which are undesirable, or we have business bankruptcies which, in my opinion, are more undesirable. As a country we need to earn our living. It is our businesses, large and small, which do that. Everything else is built on the backs of the profits which they make. Because the avoidance of bankruptcy is the highest priority, this amendment is right and I very much hope that it will be accepted.
§ 3.30 p.m.
§ Lord Carter
Like the noble Earl, Lord Russell, I was pleased to add my name to the amendment. When I read it I had the feeling that we had been here before. We all remember the debates that we had on the 1991 Act when we attempted, with some success, to introduce amendments, which were eventually accepted by the Government, to protect small businesses. When we dealt with that legislation we felt that eventually the Government would return with another Bill, although at the time they said that they thought that that was unlikely.
Although, as the noble Lord, Lord Jenkin, said, the amendment applies to any employer, it is likely to have the greatest effect on small businesses because, as the noble Lord explained so well, an abnormal level of sickness hits a small business much harder and, indeed, has a disproportionate effect. We know also that most absences due to sickness are for fewer than four weeks. I believe that 76 per cent. to 78 per cent. of absence is for fewer than four weeks, as was shown in a very useful paper produced by the Commons Library.
This is an ingenious approach. I congratulate the drafters of the amendment on it. The argument has been largely made so that there is no need to speak at length. A similar approach was adopted in 1991, and again with the help of the formidable Mr. Mendham. I hope that on this occasion the Government will be able to accept the amendment or at least take it away and come back with their own version of it. I hope that the Minister will not say that there is not enough time because I am sure that his department will be able to find an answer to that problem. There is an interesting article in this week's edition of The House Magazine by Sir Robert McCrindle, a former Member of another place. In it he says:Take the ongoing debate on the degree to which the State should look to the private sector to provide welfare benefits. The City is distinctly cool other than in areas where money can be made, which does not include those who are likely to be ill frequently".That makes the point extremely well. There is a need for the protection which is sought by this amendment. The scheme will be easy to administer. It involves a specified percentage. The matters can be implemented by regulation. We shall await with interest the Minister's reply, but I hope that he will not say that there is insufficient time for the implementation of this measure, because it can be dealt with by way of regulation. I believe that this is an ingenious approach to the problem which deserves the support of the whole Committee.
§ Lord Reay
Smaller firms will always be more vulnerable to sickness and to the need to make sickness payments than larger firms. As Members of the Committee have already pointed out, in a small firm it is quite possible either for none of the workforce to go sick or for 50 per cent. or more to go sick at one time. The larger the firm, the less likely it is either to gain or to lose disproportionately. Therefore, with most sickness occurring within the four-week period, the reduction of the reimbursement rates from 80 per cent. 892 to zero for the first four weeks of sickness harshly exposes small businesses to the risk of large statutory sickness payments.
The amendment has the merit of setting a cap on firms' liability to pay SSP, based not on the length of individuals' sickness leave but on the total cost of sickness payments for a firm expressed as a percentage of total national insurance contributions. The smaller the firm, the greater the likelihood that that percentage will be high.
I think, and the CBI thinks, that that is a fairer method of protecting small businesses than that provided in the Bill. As my noble friend Lord Jenkin of Roding pointed out, the amendment has the further merit of dispensing with the need for the national insurance threshold above which firms would abruptly cease to be eligible for relief. Such a threshold would surely have an effect, on the margin, of discouraging firms from expanding their workforce, in particular if firms consider themselves exposed to having to make sickness payments.
The amendment leaves it to the Government to set the percentage of national insurance costs to which SSP payments should amount before firms become eligible for reimbursement. The CBI accepts that the Government may have only a certain sum of money available for the relief of small firms. If that is the case, it suggests that the Government should select a percentage which results in a cost to the Government equal to that of the proposal currently contained in the Bill.
I do not see why the proposals contained in the amendment should be considered to be too complicated, although I have heard them so argued. The calculation which firms will have to make seems to me relatively simple and straightforward. It may well be simpler than the scheme currently in operation which is modified by the Bill and which involves firms in tracking the cumulative total of their individual employees' absence before making a claim. That has apparently proved too complicated for many small firms. In any event, many small firms, to judge from what their representatives say, seem generally to prefer the solution embodied in the amendment.
Nor do I see why there should not be time to incorporate this alternative scheme into the Bill. In 1981 the SSP reimbursement rates were reduced from 100 per cent. to 80 per cent. The Government then introduced the small business relief, which we now have. That was designed to persuade noble Lords to accept the reimbursement rate reduction which they had previously rejected. That small business relief was proposed in February, to be implemented in April. Perhaps the Minister will remind his officials of their sterling efforts on that occasion and ask them kindly to repeat them. I hope that my noble friend will indicate in his reply a readiness to continue to explore that avenue.
§ Lord Dean of Harptree
I have much sympathy with the amendment moved by my noble friend Lord Jenkin of Roding. It seems to me to have many attractions. Above all, it provides a direct link as regards the amount of sickness, the number of employees sick and full reimbursement of statutory sick pay. As. my noble friend 893 and other speakers have stressed, it would give particular help to small firms suffering from exceptional sickness due, for example, to a flu epidemic or an accident in a minibus which affected a large proportion of the workforce in a factory. Indeed, many other examples have been given.
However, it seems to me that the proposal does not get away from a threshold or a trigger. The Forum of Private Business has suggested that the figure might be 5 per cent. of national insurance contributions. In his amendment, my noble friend has left the percentage to be specified by order. As I see it, there is one difficulty here in that there is no obvious trigger. Moreover, I suspect that there is insufficient information available for a meaningful figure to be given. It would be largely a matter of judgment. If the trigger was fixed too low, it could well mean that some small firms which benefit from the existing scheme would be excluded. On the other hand, if the figure was fixed too high, the scheme might well become more expensive than would otherwise be the case and might let in the employer who really does not need such reimbursement.
The latter seems to me to be a critical practical weakness in a scheme which otherwise appears sound in principle. It would also of course be new and unfamiliar to employers and, as a result—despite what my noble friend said—I suspect that the cost of administration, of record keeping and of monitoring the scheme so that abuse is prevented, would be somewhat higher than the administrative and other costs involved in the existing scheme. Therefore, on balance, I believe that the scheme as improved in the Bill is preferable to the amendment moved by my noble friend.
§ 3.45 p.m.
The noble Earl, Lord Russell, took us to New Hampshire. I rather thought that he would explain what would happen when all his 12 voters came down with the flu. But, instead, he used the situation to explain a statistical point. I shall seek to use his argument to explain why I believe that the Government's proposed scheme is statistically better. I agree with the noble Lord, Lord Carter, that it is an intriguing amendment. My noble friend Lord Jenkin of Roding has made a strong case. Of course, I expected nothing less from someone so closely connected with the SSP scheme.
No one could deny that employers are in trouble when a large part of the workforce goes sick, however rarely that might happen. The cost of paying SSP may seem a trifle compared with the problem and cost of replacing absent workers, but any cost is unwelcome in such circumstances. My noble friend's amendment seeks to compensate those employers when SSP exceeds a prescribed percentage of their monthly national insurance payments. That seems an attractive idea. I have considered the proposal carefully but have reluctantly concluded that it would not work as presently drafted. I will try to explain why.
There are three main flaws in what is proposed. The first is the scope it would create for unscrupulous employers to abuse the new scheme. They could delay 894 their SSP payments so as to build up a larger sum to pay in a later month. That larger than usual sum would have a better chance of crossing the threshold for compensation. There is an argument that employers would not find it worth their while to fiddle the figures in that way, but I am afraid I cannot accept it. Either the compensation is worth having or it is not. I take it that my noble friend thinks it worth while, otherwise he would not have tabled the amendment. If it is, it could attract some employers to concentrate as much of their SSP as possible into one payment so as to maximise their chances of getting compensation.
We could not prevent that abuse by requiring employers to pay SSP always in the month in which the employee falls sick. Payroll systems could not cope with last minute adjustments to take account of sick spells occurring towards the end of the month. Such eleventh-hour adjustments would delay wages payments beyond the end of the month to no one's advantage. Instead, pay records are adjusted in the following month to take account of those absences. That is a sensible procedure which we would not wish to change.
To counter the risk of abuse under the scheme proposed by my noble friend Lord Jenkin, we would have to require a separate and complex exercise whereby employers who wish to claim compensation would have to apportion SSP paid each month between the months in which the relevant sick absences occurred. Compensation would be payable if the total SSP paid for the month (as opposed to in the month) exceeded a prescribed percentage of the monthly national insurance bill.
I believe that many employers would ignore the compensation scheme, preferring to forego compensation than adopt such a cumbersome procedure, especially as it would benefit them only rarely. For those employers who altered their pay systems and performed the necessary calculations, there would be the further burden of additional checks by the Contributions Agency which would quite properly wish to establish that the employers had recovered the compensation payment correctly.
We would also have to consider the risk of employers deliberately reducing their national insurance contributions. The lower the national insurance payments in a particular month, the easier it would be for SSP to cross the compensation threshold proposed in the amendment. Employers paying more than the average SSP in a particular month might delay that month's salaries until after the last day of the month. Delaying salary payments is not unheard of, especially when employers find themselves in difficulties at the end of a financial year. I fear that it could become more widespread if employers were attracted by the new compensation scheme.
The amendment's second problem is the timescale envisaged. It is frankly impossible for all concerned to implement the arrangements in little more than two months from now. Employers would not be able to adapt their pay systems and train their staff to operate the new procedures. Payroll firms which we consulted told us that they could not rewrite payroll software in 895 time. We do not have the statistics that we need in the form that is necessary to implement the proposed scheme. A special data collection exercise would be needed which could not be completed in time for introduction this April. My noble friend has no doubt noticed my struggle to answer his Written Questions. We do not have the data in the form that he requires.
The third important drawback is that the amendment could encourage employers to cut back their occupational sick pay. The less occupational sick pay they provide, the lower their national insurance contributions for the month and thus the easier it would be for their SSP payments to cross the compensation threshold. It is not for the Government to lay down how much employers' own schemes should pay when an employee is sick. But we would not wish to give a perverse incentive to business to reduce or abandon existing occupational schemes which have become so widespread that over 90 per cent. of employees work for employers that provide them.
We should not forget that we already have a scheme for helping small employers. Members of this Chamber persuaded the Government to adopt it in 1991. Employers paying £16,000 or less in contributions in the previous tax year get full reimbursement of any SSP paid after six weeks' illness. We have undertaken to enhance that help by making more employers eligible and giving full reimbursement sooner. Once the Bill has completed its passage through Parliament, we will lay regulations to raise the threshold defining eligible employers from £16,000 to £20,000. In addition, full reimbursement will be available after four instead of six weeks. About 750,000 employers will thus be brought within the scope of the scheme.
My noble friend has pointed out that the present system of small employers relief was crude. Crude it may be, but it is simple and certain, unlike the plan embodied in this amendment. Better, I believe, to improve what we have and be confident that it works rather than to rush into the dangerous uncertainties of a completely new approach without all the data and statistics that we need.
Indeed the National Federation of Small Business opposes this amendment precisely because it prefers the existing system of helping small employers. It also opposes the amendment because it is intended to cost no more than the existing small employers relief scheme which it replaces. But as the new system, as proposed by this amendment, would not be confined to small employers and covers a different set of circumstances, without spending more money, some small employers would lose out. Not surprisingly, the federation sees improving the existing system as the best way to help small business.
As I have explained, I cannot support this amendment. But I recognise the anxieties that have prompted my noble friend Lord Jenkin of Roding to move his amendment. This amendment seems attractive at first sight but fails on closer examination. In practice, it would be a burden. It could not be implemented in the time available. It gives employers a perverse incentive to reduce occupational sick pay provision. The Government plans improve the present small employers 896 relief scheme. Added to the financial gains flowing from the cut in employers' national insurance contributions, enhancing this help is the safest, simplest means of protecting small employers. Should our monitoring and contacts with employers reveal problems, we are always ready to consider.
If, having listened to my serious concerns, my noble friend still thinks his plan is practicable, I would be more than happy to discuss any further thoughts he may have between now and Report stage. However, I hope my noble friend will understand that we have serious anxieties that the scheme proposed in the amendment is simply not workable.
§ 4 p.m.
§ Earl Russell
Before the noble Lord, Lord Jenkin of Roding, replies to the amendment, I wish to say a few words. I thank the noble Viscount for the spirit in which he has answered this amendment. His answer was helpful in spirit and was, I believe, informed by a real desire to get at the truth. I shall try to reply to him in the same spirit. There are two sets of argument here; one is technical and concerns means; the other concerns priorities. I wish to think aloud about both of them and perhaps be put right if necessary.
I understand the argument about the danger of abuse through delay in reporting of sickness. Am I correct that that is limited in scope by the fact that one cannot delay reporting sickness until one has the sickness to report. and therefore that at least the scale of that risk, even if not its fact, is perhaps rather less than it might be? As. regards priorities, the proposed scheme might be abused. If it is to be brought in, we must do everything we can to prevent it from being abused. However, the question is about priorities. Suppose we were in the government of Albania, where until recently the motor vehicle was effectively illegal, and people proposed to bring it in, it might well be argued that it should not be brought in because it might be abused in that it might be driven dangerously and that it might cause accidents. I think we might decide in those circumstances that in spite of the truth of those arguments, it was better to bring it in nonetheless for the sake of the greater good. When we consider the risk of business bankruptcies, I wonder whether we might consider that there is a case of this sort to be made in favour of this amendment.
I take the point of the noble Viscount on the difficulty of making last minute adjustments to payrolls and the problems of apportioning sick pay between month and month. I can see the problems of that; but we are dealing at the moment with absences of longer than four weeks, and even if there were to be some retreat on that principle of four weeks, I believe that we would still be dealing with absences long enough to require certification. There will be a date on that certification. That is already a record. Doctors do not normally sign documents without putting dates on them, assuming at least that one can read those documents. If a date is recorded, is it possible that we might be able to use that to apportion the statutory sick pay to the month in which the sickness happened? Is there any way forward in this direction?
§ Lord Carter
Before the noble Lord decides what to do with the amendment, I must inform the Minister that I either misheard or did not understand a point which he made in his reply. I believe the Minister said that salaries could be delayed—to fiddle the system, as it were. I have a contract of employment with the employees of the companies I am involved with which states they will be paid monthly in arrears. Is the Minister suggesting there will be a mass outbreak of breaches of contract to fiddle the proposed system?
No, I am not suggesting that. What I was saying was that if an employee is off sick on the last day of the month for example, the employer will probably not make an adjustment to the pay until the following month. Therefore, under the terms of the amendment that is proposed, employers would have to adjust the pay of the specific month when the sickness occurred, whereas what actually happens is that someone looks back to a previous month and then adjusts the pay.
The noble Earl, Lord Russell, asked whether the risk of abuse was reduced by the requirement to report sickness as it happens. However, it is not a matter of the scope for abuse but rather when sickness benefit is paid. I should make the point—this is an important point and I have already mentioned it briefly—that not all employers' organisations support this amendment. Some of them have reservations about it. However, the most important point I should make is that we have not really consulted the industry on this intriguing amendment as there has not been time to do so. I do not believe that we should take this radical departure from the existing scheme without seeking employers' views. We cannot risk getting this matter wrong especially as we already have a scheme to help small employers which works and which we plan to improve.
§ Lord Jenkin of Roding
I cannot say I am over-enthusiastic with my noble friend's reply. As he knows, I have been Secretary of State in the department which he now graces and I am familiar with the, in some senses, admirable tendency of officials to try to block every conceivable loophole. There is an ever more common view that as government and, inevitably, life become more complex, such a tendency is not the right way to prevent abuse. A much better way of preventing abuse is to let everyone know that there will be a few rigorous, statistically significant checks—that is to say, there will be enough checks for them to count—and that anyone who is found fiddling the system will suffer some condign penalty. That is a much cheaper way to tackle the matter.
It is quite obvious that the penalty for this kind of abuse should be no reimbursement for a period of years. If someone has cheated the system, he should be placed outside it. The vast majority of employers in this country comply with the complicated law on PAYE and with the complicated laws on employers' and employees' national insurance contributions in a perfectly honest way. I do not believe my noble friend would deny that. I suspect that in the contributions 898 departments officials know—under the rules which allow an exchange of information with the Inland Revenue—where the risks lie.
I believe that we need to explore the matter further. My noble friend said at the beginning that the amendment would not work as presently drafted. I take that as an invitation to have another go. I believe that we need to look at the question of abuse. It is suggested that it would require a massive new system of record-keeping by employers. That is not my advice. The advice that I have received is that it would be simpler than the present scheme. I take issue with my noble friend Lord Dean of Harptree who seemed to think that it would be more complicated. It would not. It would be simpler, involving two calculations which employers already make—their national insurance contributions for the month and their statutory sick pay for the month. There is no question of having to deal with individual employees and calculating how long each employee has been off sick. That is what employers have to do under the Government scheme. Therefore, I cannot accept that argument.
I accept that the Government will need to fix a figure. It is not beyond the wit of man to be able to arrive at a sufficient degree of accuracy in order to do that.
To return to the point with which I opened, my amendment hits the target, which is exceptional sickness. The Government's proposal hits some of it but misses at both ends. It misses, as my minibus example shows, in that a small employer suffering a serious accident can receive nothing because nobody is sick for more than four weeks. On the other hand, a wealthy employer with few employees can be entitled to reimbursement of a sum which is wholly inconsequential in relation to the total turnover of the firm. That does not seem to be a sensible way of proceeding.
The amendment has attracted a great deal of support. Of course the Bill has not attracted the support of small businesses. As my noble friend knows, the federation is totally opposed to the Bill. It wants none of it and is highly suspicious of the Government's good faith in maintaining the 1 per cent. cut in the national insurance contribution. If the scheme set out in the amendment became part of the law there would be built-in protection against a change in the national insurance contribution. Therefore, it seems to me that that argument can be turned on its head. The benefit of the reimbursement would remain and the national insurance denominator in the fraction would be changed.
I shall come back to my noble friend, as he invited me to do. I shall return to the matter at Report stage. With support in all parts of the House and from most major organisations, as my noble friend Lord Reay said, I do not believe that we should let the matter go. We must find ways round the difficulties and persuade my noble friend that there are ways round the difficulties. I believe that that can and should be done. With those remarks, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Earl Russell moved Amendment No. 2:
Page 1, line 8, leave out ("cease to have effect") and insert ("continue to have effect with the substitution of the words "75 per cent." for the words "80 per cent." ").
§ The noble Earl said: State relief for sickness has always been one of the pillars of the welfare state. At Second Reading the noble Viscount rather pooh-poohed the idea that any dismantling of the welfare state was involved here. He pointed out, perfectly correctly, that employees are still supposed by law to receive statutory sick pay. Whether they will receive it is another question, to which I hope to return on the Question whether the clause shall stand part of the Bill. In putting that argument the noble Viscount will not have given any comfort to employers, and I have never been one of those who believed that the welfare state was not supposed to be of any benefit to employers.
When the noble Lord, Lord Jenkin of Roding, said that the proposals in this Bill were not targeted he hit the nail on the head. The national insurance relief is across the board. It has nothing to do with levels of sickness or with times of sickness. It does not spread the risk. In fact, here the risk for the employer is concentrated at the one moment when the sickness happens. That is an instance where private insurance cannot match national insurance. It cannot spread the risk as widely. In actuarial terms it cannot do as well.
I also have very profound doubts about the objective of reducing sickness absence. On many occasions that may actually serve to increase sickness. Coming into the office with flu is an obvious case. Coming into work which involves heavy lifting with a back injury is another. If we could reduce sickness that would be very welcome indeed. But reducing sickness absence, which this taking away of the relief tries to encourage, is not likely to reduce sickness. For that reason it will produce more people who are not capable of being employed. For that reason also it will cost the state more because people with long sickness records will be concentrated on benefit and will become a charge on the Exchequer when they could perhaps, with a little sickness absence and with a decent recovery, have got back into work.
I suspect that the noble Viscount may be preparing to say that the amendment is a rather bigger one than he is happy to see. Members of the Committee may remember an amendment moved by the noble Lord, Lord Graham of Edmonton—who was in his place a few moments ago—proposing to leave out Part I of the football supporters' Bill. The noble and learned Lord, Lord Taylor of Gosforth, may on some occasion tell us that we would have saved him a great deal of hard work had we been sufficiently courageous to carry that amendment when we had the chance to do so. That amendment was no smaller than this one. It was one that we could have carried. It is one that I wish we had carried. If we do not carry this one I expect in three or four years to be standing here saying what a pity it is that we did not. I beg to move.
A reduction in the reimbursement rate to 75 per cent. instead of abolition for all but small employers in prescribed circumstances would considerably reduce employers' incentives to improve the well-being and motivation of their employees. It is widely accepted that we have one of the worst sick absence rates in the EC. Research proves that.
900 Absenteeism through sickness costs British industry anything between £9 billion and £13 billion annually. The Government believe that employers need to be prompted to help themselves by cutting that cost. SSP reimbursement of 80 per cent. or even 75 per cent. of employers' SSP costs, as proposed in the amendment, acts as a disincentive to them to improve the well-being, motivation and attendance records of their employees. As my noble friend Lord Reay said during the Second Reading debate, there is widespread acknowledgment that the Government's case has merit. That includes support from organisations such as the CBI and the Institute of Directors, which do not oppose the abolition of the 80 per cent. reimbursement rate. They have welcomed the Government's proposals to offset employers' extra SSP costs by an even higher reduction in their national insurance contributions liability; so much so that employers as a whole will be well over £100 million better off as a result of these reductions. All employers will be able to benefit from the reductions, but employers who respond positively to the incentive to improve sick absence levels will be better off still.
If the amendment were to be accepted, and I hope that I have explained why it should not succeed, the Government would seriously have to consider whether to proceed with the proposed reductions in employers' national insurance contributions. Those reductions are clearly associated with and are intended to compensate employers for the extra SSP costs arising from the abolition of the 80 per cent. reimbursement rate. The Government could not reasonably be expected to continue to fund the lion's share of SSP costs while at the same time reducing the national insurance contributions by some £800 million during the corning year. We believe that the SSP and national insurance contributions reductions package—and I have to tell the noble Earl, Lord Russell, that it is a package—is a generous one which has been welcomed by employers and their representative organizations. Employers will make substantial savings from their contribution reductions and could save even more by improved control and monitoring of sick absence rates where they are above average.
The amendment does nothing to help employers improve sick absence rates in British industry. I do not believe the argument that it will help those who are sick and sick absence rates, as the noble Earl suggests. That distinction is not valid when one considers the importance of employers improving the sickness absence rates of their employees, improving conditions and being more responsible.
It is important that British industry retains the advantage over our foreign counterparts which we shall continue to have if the Government's overall statutory sick pay and national insurance contribution reductions proceed as planned. Therefore I urge the Committee to reject the amendment.
§ Earl Russell
I thank the noble Viscount for that reply. He will hardly be surprised that the points about sickness absence do not appear to me to be entirely persuasive for this among other reasons: employers are 901 not doctors. If they start trying to discipline absence on grounds of sickness, they will often not know whether they are dealing with an actual back injury, a genuine case of depression—something very hard for a layman, and often a doctor, to recognise—or malingering. The effect of the proposals will be to cause people to go to work when they are not well. I do not believe that that is a good thing.
I heard what the noble Viscount said about the CBI. The CBI's brief is not quite as unhesitant as he suggested. I also read the brief sent by the CBI on the subject in 1991. I found the 1991 briefs entirely clear and persuasive; and I still do.
I listened to what he said about the advantage to employers as a whole. But, of course, no individual employer is "employers as a whole".
The noble Viscount may remember that in the Bill in 1991 there was originally a clause which would have allowed the department to bring in this change by regulation. That would have deprived us of the opportunity to vote on it. It is a change of such substance that it would have been wrong to deprive us of the right to vote on it. Having sweated blood to preserve that right, I should like to exercise it. I commend the amendment to the Committee.
§ 4.13 p.m.
§ On Question, Whether the said amendment (No. 2) shall be agreed to?
§ Their Lordships divided: Contents, 95; Not-Contents, 153.903
|Division No. 1|
|Acton, L.||Hardwicke, E.|
|Airedale, L.||Harris of Greenwich, L.|
|Archer of Sandwell, L.||Haskel, L.|
|Ashley of Stoke, L.||Healey, L.|
|Aylestone, L.||Hilton of Eggardon, B.|
|Barnett, L.||Hollis of Heigham, B.|
|Bath, M.||Holme of Cheltenham, L.|
|Beaumont of Whitley, L.||Hooson, L.|
|Birk, B.||Howell, L.|
|Bonham-Carter, L.||Hughes, L.|
|Brooks of Tremorfa, L.||Hunt, L.|
|Bruce of Donington, L.||Jay of Paddington, B.|
|Carmichael of Kelvingrove, L.||Jenkins of Putney, L.|
|Carter, L.||Judd, L.|
|Cledwyn of Penrhos, L.||Kintore, E.|
|Cocks of Hartcliffe, L.||Lawrence, L.|
|Cudlipp, L.||Listowel, E.|
|Dahrendorf, L.||Longford, E.|
|Dean of Beswick, L.||Lovell-Davis, L.|
|Donoughue, L.||Lytton, E.|
|Dormand of Easington, L.||Macaulay of Bragar, L.|
|Eatwell, L.||McIntosh of Haringey, L.|
|Ezra, L.||Mallalieu, B.|
|Falkender, B.||Mason of Barnsley, L.|
|Falkland, V.||Mayhew, L.|
|Fisher of Rednal, B.||Milner of Leeds, L.|
|Fitt, L.||Morris of Castle Morris, L|
|Foot, L.||Nicol, B.|
|Gallacher, L.||Ogmore, L.|
|Gladwyn, L.||Peston, L.|
|Glenamara, L.||Plant of Highfield, L.|
|Gould of Potternewton, B.||Prys-Davies, L.|
|Graham of Edmonton, L. [Teller.]||Rea, L.|
|Greene of Harrow Weald, L.||Redesdale, L.|
|Gregson, L.||Richard, L.|
|Grey, E.||Ritchie of Dundee, L.|
|Hanworth, V.||Robson of Kiddington, B.|
|Rochester, L.||Thomson of Monifieth, L.|
|Russell, E.||Tordoff, L. [Teller.]|
|Sainsbury, L.||Turner of Camden, B.|
|Sefton of Garston, L.||Wallace of Coslany, L.|
|Serota, B.||Whaddon, L.|
|Shepherd, L.||White, B.|
|Stallard, L.||Williams of Crosby, B.|
|Stoddart of Swindon, L.||Williams of Elvel, L.|
|Strabolgi, L.||Wilson of Rievaulx, L.|
|Taylor of Blackburn, L.||Winchilsea and Nottingham, E.|
|Taylor of Gryfe, L.|
|Abinger, L.||Harmar-Nicholls, L.|
|Addison, V.||Harmsworth, L.|
|Alexander of Tunis, E.||Harvington, L.|
|Allenby of Megiddo, V.||Hayter, L.|
|Alport, L.||Henley, L.|
|Archer of Weston-Super-Mare, L.||HolmPatrick, L.|
|Arran, E.||Hood, V.|
|Astor, V.||Howe, E.|
|Bellwin, L.||Jenkin of Roding, L.|
|Beloff, L.||Johnston of Rockport, L.|
|Blatch, B.||Knutsford, V.|
|Blyth, L.||Lauderdale, E.|
|Boardman, L.||Lawson of Blaby, L.|
|Borthwick, L.||Lindsey and Abingdon, E.|
|Boyd-Carpenter, L.||Liverpool, E.|
|Brabazon of Tara, L.||Lloyd-George of Dwyfor, E.|
|Braine of Wheatley, L.||Long, V.|
|Braybrooke, L.||Lucas, L.|
|Brookes, L.||Lyell, L.|
|Brougham and Vaux, L.||Mackay of Ardbrecknish, L.|
|Bruntisfield, L.||Mackay of Clashfern, L. [Lord Chancellor.]|
|Burnham, L.||Macleod of Borve, B.|
|Butterworth, L.||Macpherson of Drumochter, L.|
|Cadman, L.||Mancroft, L.|
|Campbell of Alloway, L.||Marlesford, L.|
|Campbell of Croy, L.||Marsh, L.|
|Carnegy of Lour, B.||Merrivale, L.|
|Carnock, L.||Mersey, V.|
|Chalfont, L.||Middleton, L.|
|Chalker of Wallasey, B.||Miller of Hendon, B.|
|Charteris of Amisfield, L.||Milverton, L.|
|Chelmsford, V.||Montgomery of Alamein, V.|
|Clanwilliam, E.||Morris, L.|
|Clark of Kempston, L||Mottistone, L.|
|Colwyn, L.||Moyne, L.|
|Constantine of Stanmore, L.||Murton of Lindisfarne, L.|
|Cornwallis, L.||Napier and Ettrick, L.|
|Crathorne, L.||Nelson, E.|
|Cumberlege, B.||Norfolk, D.|
|Davidson, V.||Norrie, L.|
|Dean of Harptree, L.||Orkney, E.|
|Denham, L.||Orr-Ewing, L.|
|Denton of Wakefield, B.||Oxfuird, V.|
|Derwent, L.||Park of Monmouth, B.|
|Dixon-Smith, L.||Peel, E.|
|Dormer, L.||Pender, L.|
|Downshire, M.||Peyton of Yeovil, L.|
|Dundonald, E.||Platt of Writtle, B.|
|Ellenborough, L.||Plummer of St. Marylebone, L|
|Elles, B.||Prentice, L.|
|Elliott of Morpeth, L.||Pym, L.|
|Ferrers, E.||Quinton, L.|
|Forbes, L.||Radnor, E.|
|Fraser of Carmyllie, L.||Rankeillour, L.|
|Fraser of Kilmorack, L.||Reay, L.|
|Gainford, L.||Renton, L.|
|Geddes, L.||Renwick, L.|
|Gilmour of Craigmillar, L.||Rippon of Hexham, L.|
|Gisborough, L.||Rodger of Earlsferry, L.|
|Goschen, V.||Rodney, L.|
|Granard, E.||Romney, E.|
|Gray of Contin, L.||St. Davids, V.|
|Grimston of Westbury, L.||Seccombe, B.|
|Haig, E.||Shannon, E.|
|Hailsham of Saint Marylebone, L.||Sharples, B.|
|Harding of Petherton, L.||Simon of Glaisdale, L.|
|Hardinge of Penshurst, L.|
|Skelmersdale, L||Thomas of Gwydir, L|
|Stewartby, L.||Torrington, V.|
|Stodart of Leaston, L.||Trefgarne, L.|
|Strange, B.||Trumpington, B.|
|Strathclyde, L.||Ullswater, V. [Teller.]|
|Strathcona and Mount Royal, L.||Vivian, L.|
|Strathmore and Kinghorne, E. [Teller.]||Wade of Chorlton, L.|
|Sudeley, L.||Wakeham, L [Lord Privy Seal.]|
|Swansea, L.||Westbury, L.|
|Swinfen, L.||Wynford, L.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 4.21 p.m.
Baroness Hollis of Heigham moved Amendment No. 3:
Page 1, line 9, at end insert:
(" except where an employer is liable to make a payment of statutory sick pay to an employee who has in the preceding two years been entitled to receive sickness benefit or invalidity benefit or incapacity benefit, when sub-paragraph 158(1) (a) (ii) shall continue to have effect.").
§ The noble Baroness said: In moving the amendment, I am not confident about the wording and if, on behalf of the Government, the Minister feels that there is merit in the proposal, we would be delighted to take the amendment back and submit a subsequent one. The proposal touches on a real problem presented by the Bill. Put simply, larger firms now have to pay 100 per cent. of statutory sick pay and that means that in future, anyone who is out of the labour market and who has a record of disability or ill health will find it that much harder to be employed. The amendment tries to address the problem that the changes in the statutory sick pay presented by the Bill mean that someone who is disabled will enter the labour market with a negative dowry, so to speak, in the perceptions of employers.
In his speech on the Bill in another place, the Secretary of State made much of the fact that the measures would act as a positive incentive to employers to promote employees' health. However, in practice, as the Conservative Party briefing shows, the primary reason for it is disciplinary. It is stated that in Britain absence from work due to sickness is relatively high compared with other European countries. The Government presume that that is evidence of malingering and they are therefore encouraging employers to strengthen their policing role vis-à-vis sick employees by giving them a clearer financial interest to do so.
The belief behind that and behind the incapacity Bill, which is currently going through the Commons and, I imagine, will arrive in a few weeks at your Lordships' House, is that the sick, the chronically sick and the disabled must be assumed to be fraudulent in their ill health and in their claims for right to benefit unless proven otherwise. As the Disablement Income Group has said, that represents a character assassination of the disabled.
We have already heard at Second Reading—and we shall return to this with the final amendment today—that people fear that one of the side effects or consequences of the Bill will be the dismissal of staff in employment who become sick. As we shall report, the CAB already has well attested cases to that effect. No one in this 904 Committee—and certainly not on our side of it—countenances fraud. But it is clear that British employers are already overzealous in removing their chronically sick from the labour force. We believe that they are already over-hesitant about re-employing anyone with a disability history and taking them back into employment.
That evidence is well attested to by several quite sturdy research reports on disability—commissioned by the DSS longitudinal studies of recipients of disability allowances. Those studies show that three-quarters of employers now do nothing to keep someone who is suffering sickness or disability in work. They do not offer lighter work or more flexible hours and they do not modify their equipment, even though in a third of cases for those employees their illness, sickness or disability was caused by or contributed to by their work situation. The employers walk away from it. When, as well, we have recently heard that employers will in future be required to pay 50 per cent. of the costs of equipment for disabled members of their staff who have been employed by them for six months, we regard it as yet another inducement by employers to sack the sick.
All the evidence suggests not only that British employers are quick to sack the sick but also that they are extremely reluctant to re-employ the disabled once they have left work. Once, out of the labour market, the chronically sick or disabled find it hard to re-enter. In an Answer to a Parliamentary Question only a couple of days ago, we were told that most firms could not meet their quota of 3 per cent. registered disabled. Only the Department of Employment manages to do so; local authorities and public bodies have as much difficulty in meeting the quota as do private companies. Yet, something like 22 per cent. of the disabled are unemployed—three times the average for those who are fit.
Why would anyone wish to employ someone with a dubious health record? I know, and the Minister may tell us—and he would be right to do so—that most disabled people who return to work are conscientious to a fault. But employers who have dismissed someone because they were sick, or released someone because they were disabled, would not believe that. When employers consider whether to take on someone with a disablement history, they are likely not to do so, especially because the vast majority have fluctuating and therefore unpredictable health records.
For example, of those whose invalidity benefit ended because they were fit to work, only 12 per cent. were able to find work, even though all the research shows that they were attached to the labour market and were flexible in what they sought in terms of wages, skills, hours and closeness to their homes. Only 12 per cent. could find work; and of that 12 per cent., two-thirds who returned to work could only do so with their previous employer. In other words, if employees are fit to return to work and their previous employers not take them back, almost no one else will.
The Spastics Society's research quoted last night in another place showed that employers are six times as likely to turn down for interview a person with 905 disabilities as to turn down persons without such disabilities, even though they have identical qualifications.
We shall soon see the purpose of the Bill. At the very time when the Government are requiring disabled people to be available for any work for which they are functionally competent, with this Bill the Government are increasing disincentives for employers to employ or re-employ the disabled. All the evidence shows that the main growth in the invalidity benefit is not because there are more claimants but because people are staying on the benefit longer because they cannot get off it in order to re-enter the labour market. When they do re-enter it, they cannot get work because they are disabled.
Disabled people, as I said, already have three times the unemployment rate of the able-bodied. They are seldom retained by their employers and unless their existing employer re-employs them they will almost certainly otherwise never find work. With this Bill we are making the situation even harder for someone with a history of disability to re-enter the labour force and find work. The Bill requires larger employers to meet the whole bill, and it therefore adds to the negative dowry, if I may use that phrase, that the disabled already carry when they seek to re-enter the labour market.
Already, 95,000 of those who would have got invalidity benefit, we are told, will not be eligible for incapacity benefit next year, rising to something like 190,000 people. It looks as though there may be something like 200,000 people who will lose invalidity benefit because they are fit to work but who will not perhaps be eligible for unemployment benefit or income support because they are not fully available for work.
If the Government are right in saying that disabled people have a better work record—and I believe that that may well be true—then the refunding of the cost for anybody who comes into the labour market with a history of invalidity benefit during the last two years will be trivial. It will be a cost that we can well afford to pay. However, if the Government are wrong and a person's health or disability remains a real obstacle to steady work, it is even more important that we and the Government should help disabled people and employers, who cannot be expected to act charitably in the circumstances, to bring people back into the labour market even though they may then go on to seek disability working allowance. After all, we shall be saving one and a quarter billion pounds in year two of the incapacity Bill currently going through the other place.
To accept this amendment would cost, I suspect, very little money indeed. But it would help the disabled to re-enter the labour market. The problem over disability, as we know, is not the problem of the disabled and their motivation. The problem lies with the employer and his perception, and also with the Government and their statutory disincentives as carried by this Bill.
The Secretary of State said yesterday in another place:
I want those who are fit enough to work to be helped back to work by the benefits appropriate to them". [Official Report, Commons, 24/1/94; col. 36.]
Precisely. That is why we are moving the amendment today.
§ 4.30 p.m.
§ Earl Russell
In supporting the amendment, I declare an interest. I once had three months off work as the result of a back injury. The medical advice I received was that I had a straight choice: either I took three months off work and enjoyed a complete and permanent recovery or I returned to work and the effects of the injury would recur for the rest of my life. Your Lordships will therefore see why I am so concerned. It is a mistake to confuse reducing sickness absence with reducing sickness.
Having a generous employer, I took the advice I was given and remained for three months flat on my back. In a period of about 30 years—touch wood—the effects of the injury have not recurred. If, as the noble Baroness put it, I had come before an employer under the conditions of this Bill I would have been carrying a form of negative dowry. I would have a label on me saying "This person is expensive to employ: be careful of him". I may be in error, but I believe that if I had been looking for a new job with this Bill in force my chances of being re-employed would have been very much diminished. I cannot help believing, possibly mistakenly, that that would have been a pity.
The points made by the noble Baroness about the disabled are also simple and clear. I think we are all agreed that the disabled have a better record than the rest of us as employees. Of course, that does not prove that employers perceive the fact. There is a great deal of reason to believe that they do not. There are certain beliefs so ingrained in public consciousness that they are capable of surviving a great deal of evidence to the contrary. Let me take, for example, the belief that the Conservatives are a low-tax party—
I agree with a great deal of what the noble Baroness said. There is a lot to be done in encouraging companies to behave better towards the disabled and those with long-term ill health, but I would say that statutory sick pay has very little to do with the reasons why employers do not employ such people. The reasons are based in the disruption that employers believe such people cause. To take an example, if you are looking at employing a teacher with multiple sclerosis, £50 a week possible sick pay is neither here nor there. What you are concerned with is the effect on the children of the teacher's absences on days when he has not the energy to work fully. What you are concerned with is the cost of £100 a day that is needed to get a supply teacher. However much I agree with the overall arguments of the noble Baroness, I feel that the change the Government are making will not have any effect on those employers who take the right attitude towards employing the disabled.
§ Lord Carter
If there are people with the attitude that has been described, it is our job to persuade them that they are wrong. I have been involved in disability issues for a long time and I can assure the noble Lord opposite that the attitude he speaks of is held by a few people. However, it is remarks such as those he has just uttered which make people feel that those views are held by a large number of people.
I think that my noble friend Lord Lucas was explaining that while we all have concerns about the employment of disabled people, the amendment does not help them. That is a fair argument. The noble Baroness, Lady Hollis, claimed that the incapacity Bill, I believe she said, charges that the chronically ill are fraudulent unless proved otherwise. That is a massive distortion of the incapacity Bill which had its Second Reading in another place yesterday. She quoted my right honourable friend the Secretary of State. It is a pity that she did not bother to quote the following sentence where he said that it is wrong to give people who are able to work benefits which can eventually lead to their becoming unable to work because of unfamiliarity, lack of motivation and the staleness of skills caused by their being on benefits for some time.
We will have a chance to discuss the aims of that Bill when it comes to your Lordships' Chamber. I am sure that all your Lordships will want to look at the Bill closely. I listened carefully to the reasons given by the noble Baroness for introducing the amendment. I have to tell her that the complexities of administration which would follow for employers operating different reimbursement rules for different employees, depending on whether they had been sick and in receipt of an incapacity benefit such as sickness benefit or invalidity benefit, would be extremely daunting.
However, I want first to address the important issues that the noble Baroness raised about the effect which abolition of the 80 per cent. reimbursement rate will have on an employer's willingness to recruit people with disabilities or those with a poor health record. The noble Baroness claimed that as a direct result of the proposals in this Bill employers will be reluctant to employ such people. If this were true, I should also be concerned. But I have to say that the Government believe that that is not the case.
Similar charges were levelled at the SSP scheme when it was first introduced more then 10 years ago and again three years ago when the reimbursement rate was reduced from 100 per cent. to 80 per cent. Those fears proved groundless and we believe the result will be no different this time.
We do not expect there to be any changes in the pattern of employment of people with disabilities as the result of the abolition of the 80 per cent. reimbursement rate. People with the right attitude to work and who have the necessary skills will always be attractive to employers because those attributes are more important than their disabilities or their past health record. I do not believe that employers' recruitment practices are determined, or even influenced, by whether or not they 908 receive 80 per cent. reimbursement for their SSP costs when an employee goes sick. There is no evidence to support such a suggestion.
Recent research reveals that employers see the costs of sick absence more in terms of lost production and the cost of employing a replacement worker than either their actual SSP costs or even their occupational sick pay costs. If employers were concerned about their potential SSP costs for people with poor health records they would have changed their hiring policies or would have instigated action to reduce their SSP or occupational sick pay costs. That has not happened and the Government do not believe that the April 1994 SSP changes, accompanied as they are by the reduction in employers' national insurance contributions, will have any knock-on effect on the employment prospects of people with disabilities or poor health records.
§ Baroness Hollis of Heigham
As this is the Committee stage, will the Minister be kind enough to comment on the two pieces of research evidence I put forward—one coming from the DSS research and the other from the Spastics Society. According to the DSS research, only 12 per cent. of those who come off invalidity benefit and are attached to the labour market can find jobs. According to the Spastics Society, six times as many people with disabilities are not called to interview as those without disabilities but with the same qualifications. That makes it six times harder for them to gain access to an interview. How does the Minister explain that if what he is saying is correct?
I have not seen the research to which the noble Baroness refers. But even if I had, I am sure that it does not affect the reimbursement of SSP. The noble Baroness is talking about statistics that affect people with disabilities for employment, adding that to the reimbursement of SSP and making a connection where we believe there is none.
The existing scheme already has a provision which protects the state benefit entitlement of those people with recurring bouts of sickness who take up employment while at the same time ensuring that employers do not have to take on the responsibility of having to pay SSP if that employee falls sick again within eight weeks of a previous sickness spell. The Government believe that eight weeks is a reasonable period after which an employer should become liable to pay SSP to a new employee who has previously been entitled to sickness or invalidity benefit.
The practical effects of operating the system proposed by the amendment would result in the imposition of an elaborate and costly scheme for the exchange of information between the Benefits Agency, which administers the state incapacity benefits, and individuals; between individuals and their employers, and even between employers themselves where the individual has changed employers during the period concerned. That seems to me to be a recipe for disaster. It would add significantly to employers' costs and could act as a deterrent to the recruitment of those workers which the amendment is aimed at helping. Even if 909 employers were not deterred from recruiting such employees, the system would stigmatise them as people with poor health records.
It will also complicate the reimbursement arrangements. Each month when the employer paid over his national insurance contributions and income tax to the Inland Revenue he would have to calculate the SSP payments which attracted the 80 per cent. recovery rate and those payments for which no reimbursement was due. In some cases, he could find himself having to apportion monthly payments of SSP during a month for a specific employee between that part of the payment for which he was due 80 per cent. and, if he was a small employer, that part on which he could revert to 100 per cent. recovery.
The amendment is unnecessary for protecting the employment prospects of those less healthy people who may be more prone to sick absence. It would also result in an administrative nightmare and add to the costs of administering the scheme without helping the employees it is intended to help; it could even damage their job prospects.
We are all concerned with the employment of people with disabilities; there is no disagreement on that. But the amendment does not help them; it does not aid their case.
§ 4.45 p.m.
§ Baroness Hollis of Heigham
I am disappointed by the Minister's reply. No one is suggesting that the amendment will transform the situation of someone who is disabled from being among the least eligible in the labour market to being among the most eligible. We are saying that somebody who has been disabled in the past couple of years—has had disability, invalidity or sickness benefit—enters an already difficult labour market situation with even more of a burden.
The Bill makes it even less attractive for employers to employ somebody with a poor health record. That is undeniable. If, in future, an employer will have to pay 100 per cent. of the Bill whereas in the past he paid only 80 per cent., it stands to reason that it will be less attractive to him to employ somebody with a question mark over their health. I do not say that that would be the sole or main reason; but it is a reason for not employing somebody. I make no bigger claim than that.
If the Committee accepts that argument—that it is a reason for making it less likely that a disabled person will be employed—then we can meet and address that situation today.
Perhaps the noble Baroness will allow me to interrupt. I do not believe it is accepted that that is a reason for employers not to employ people with a disability. That is not the case. The noble Baroness is making a case based on a false premise.
§ Baroness Hollis of Heigham
Neither of us has hard evidence. But the evidence we have that comes from the DSS report—I am sorry and disappointed that the Minister did not acquaint himself with it—together with 910 the research evidence from the disability associations, shows that it is one factor. It is not the main factor but it is a factor that is presented by the Bill.
This is not the place for a widescale debate on disability. However, it is common sense that if an employer has to pay the full costs of someone's ill-health then, all things being equal, he will not employ somebody with a record of ill-health over somebody with a record of good health. That is obvious. I cannot understand why the Minister challenges that. That is what the Bill encourages.
Given that the position of the disabled in the labour market is so precarious, as we know from the Government's own research, and if the Bill makes their position even more precarious—as it undeniably does —then we should seek to remedy it. The cost will be trivial. We know that disabled people are extremely conscientious, though fluctuating conditions of sickness may produce a different pattern. But if we can help the disabled to enter the labour market and come off benefit, and if we can encourage the employer to employ such people, we should do so. That is what we are asking.
The procedure is simple. The amendment provides that somebody with an existing record of benefit can carry that, so to speak, as a passport, if they wish, into work. That would therefore trigger the possibility for the employer to reclaim sickness benefit for that person. We have passports of benefits across the whole realm of social security, so why not here for a few people who carry an immense burden on re-entering the labour market? I suspect that the costs will be trivial, certainly compared with the savings that will come from the incapacity Bill. I take the point of the noble Lord, Lord Lucas. But even if it helps an employer to only a modest degree to employ somebody with a disability record so that he is not taking a financially bad risk, that must be sensible; that must be humane and it must be civilised.
Before I sit down, is the noble Viscount—in the light of my comments—willing in some way to reconsider his answer? Will he take the matter away and address the position? I am not interested in winning or pushing or pressing a point; I am interested in seeing whether, together, we can help the disabled not to be further penalised by the clauses of the Bill. That is all.
Before I sit down, I invite the Minister to say whether he feels he can take the amendment away, in a worthwhile sense, with a view to helping the disabled not to carry a further burden on re-entering the labour market.
I am very keen to help the disabled enter the labour market but this amendment does not do that. I am happy to discuss with the noble Baroness at any time proposals she may have to help those people with disabilities enter the labour market. However, I have to make it clear to the noble Baroness that I cannot accept the amendment. I cannot consider the amendment because I do not believe that it achieves her very laudable aim. I am quite happy to discuss any points the noble Baroness has, but I must make it clear that I do not believe that the amendment achieves her aim.
§ Earl Russell
Does the Minister accept that it is a basic principle of market economics that if you increase the cost of something you create a disincentive to using it? Therefore, if you increase the cost of employing those with a long sickness record, you create a disincentive to employing them.
I believe that employers look at the whole picture when they employ someone. They look at the person, they look at his record, they look at his abilities and they look to see whether they are employing the right person for the job. Those are the most crucial factors that employers look at.
§ Baroness Hollis of Heigharn
I am extremely disappointed. I had hoped that the Minister could have accepted that there must be some connection between asking firms to pay the entire bill of statutory sick pay and their willingness to re-employ someone with a history of poor health. That is our assertion. I am not saying that it is the overriding explanation of whether or not they will employ someone but it is a contributory factor. We should not be weighting the scales against them.
The Minister said that he was not willing to consider the amendment. Those were his words. I did not want to press it but if the Minister is not willing even to consider it he has left me with no alternative but to seek the opinion of the Committee.
Before the noble Baroness sits down, if I had said to her that I was willing to consider the amendment that would have been giving her some encouragement that I would bring forward my own amendment at Report stage. I said to the noble Baroness that cannot do that. I cannot offer to bring forward an amendment at Report stage on that basis. I said that I would be very happy to discuss between now and Report stage any ideas that she has. It would be a little unfair of her to push me too hard because if I said "consider" she would be quite rightly expecting me to come forward with my own amendment at Report stage. She must realise that I am not in a position to do that.
§ Baroness Hollis of Heigham
I heard the Minister perfectly well. I understand and appreciate the candour with which he has put his position. He is willing to help the disabled in general but not in particular; he is willing to discuss them in general but not in particular. In the light of that, I wish to seek the opinion of the Committee.
§ 4.53 p.m.
§ On Question, Whether the said amendment (No. 3) shall be agreed to?
§ Their Lordships divided: Contents, 84; Not-Contents, 152.913
|Division No. 2|
|Acton, L.||Beaumont of Whitley, L.|
|Airedale, L.||Bonham-Carter, L.|
|Archer of Sandwell, L.||Boston of Faversham, L.|
|Ashley of Stoke, L.||Brooks of Tremorfa, L.|
|Aylestone, L.||Bruce of Donington, L.|
|Barnett, L.||Callaghan of Cardiff, L.|
|Bath, M.||Carmichael of Kelvingrove, L.|
|Carter, L.||Mason of Barnsley, L.|
|Cledwyn of Penrhos, L.||Mayhew, L.|
|Cocks of Hartcliffe, L.||Merlyn-Rees, L.|
|Donoughue, L.||Milner of Leeds, L.|
|Eatwell, L.||Milverton, L.|
|Ezra, L.||Molloy, L.|
|Falkender, B.||Morris of Castle Morris, L.|
|Falkland, V.||Nicol, B.|
|Fisher of Rednal, B.||Ogmore, L.|
|Fitt, L.||Pitt of Hampstead, L.|
|Foot, L.||Plant of Highfield, L|
|Gallacher, L.||Prys-Davies, L.|
|Gladwyn, L.||Rea, L.|
|Glenamara, L.||Redesdale, L.|
|Gould of Potternewton, B.||Ritchie of Dundee, L.|
|Graham of Edmonton, L. [Teller.]||Robson of Kiddington, B.|
|Grey, E.||Rochester, L.|
|Hanworth, V.||Russell, E.|
|Hardwicke, E.||Russell of Liverpool, L.|
|Harris of Greenwich, L.||Sefton of Garston, L.|
|Healey, L.||Serota, B.|
|Hilton of Eggardon, B.||Shepherd, L.|
|Hollis of Heigham, B.||Stoddart of Swindon, L.|
|Holme of Cheltenham, L.||Strabolgi, L.|
|Hooson, L.||Taylor of Gryfe, L.|
|Howell, L.||Thomson of Monifieth, L.|
|Hughes, L.||Tordoff, L. [Teller.]|
|Hunt, L.||Turner of Camden, B.|
|Jenkins of Putney, L.||Wallace of Coslany, L.|
|Judd, L.||Whaddon, L.|
|Kintore, E.||White, B.|
|Listowel, E.||Williams of Crosby, B.|
|Longford, E.||Williams of Elvel, L.|
|Lovell-Davis, L.||Wilson of Rievaulx, L.|
|McIntosh of Haringey, L.||Winchilsea and Nottingham, E.|
|Abinger, L.||Dixon-Smith, L.|
|Addison, V.||Dormer, L.|
|Alexander of Tunis, E.||Downshire, M.|
|Allenby of Megiddo, V.||Dundonald, E.|
|Alport, L.||Elibank, L.|
|Archer of Weston-Super-Mare, L.||Ellenborough, L.|
|Arran, E.||Elliott of Morpeth, L.|
|Astor, V.||Fanshawe of Richmond, L.|
|Birdwood, L.||Ferrers, E.|
|Blatch, B.||Forbes, L.|
|Blyth, L.||Fraser of Carmyllie, L.|
|Boardman, L.||Fraser of Kilmorack, L.|
|Borthwick, L.||Geddes, L.|
|Boyd-Carpenter, L.||Gisborough, L.|
|Brabazon of Tara, L.||Goold, L.|
|Braine of Wheatley, L.||Goschen, V.|
|Brigstocke, B.||Granard, E.|
|Brookes, L.||Gray of Contin, L.|
|Brougham and Vaux, L.||Gridley, L.|
|Bruntisfield, L.||Grimston of Westbury, L.|
|Burnham, L.||Haig, E.|
|Butterworth, L.||Hailsham of Saint Marylebone, L.|
|Cadman, L.||Harding of Petherton, L.|
|Campbell of Alloway, L.||Hardinge of Penshurst, L.|
|Campbell of Croy, L.||Harmar-Nicholls, L.|
|Carnegy of Lour, B.||Harmsworth, L.|
|Carnock, L.||Harvington, L.|
|Chalker of Wallasey, B.||Henley, L.|
|Charteris of Amisfield, L.||Holderness, L.|
|Chelmsford, V.||HolmPatrick, L.|
|Chesham, L.||Hood, V.|
|Clanwilliam, E.||Howe, E.|
|Clark of Kempston, L||Huntly, M.|
|Colwyn, L.||Ironside, L.|
|Constantine of Stanmore, L.||Jenkin of Roding, L.|
|Cranborne, V.||Johnston of Rockport, L.|
|Crathorne, L.||Knutsford, V.|
|Cumberlege, B.||Lauderdale, E.|
|Davidson, V.||Lawson of Blaby, L.|
|Dean of Harptree, L.||Lindsey and Abingdon, E.|
|Denham, L.||Liverpool, E.|
|Denton of Wakefield, B.||Long, V.|
|Derwent, L.||Lucas, L.|
|Lyell, L.||Renwick, L.|
|Mackay of Ardbrecknish, L.||Rippon of Hexham, L.|
|Mackay of Clashfern, L. [Lord Chancellor.]||Rodger of Earlsferry, L.|
|Macleod of Borve, B.||Rodney, L.|
|Mancroft, L||Romney, E.|
|Marlesford, L.||St. Davids, V.|
|Marsh, L.||Seccombe, B.|
|Merrivale, L.||Selborne, E.|
|Mersey, V.||Sharples, B.|
|Miller of Hendon, B.||Shrewsbury, E.|
|Montgomery of Alamein, V.||Simon of Glaisdale, L.|
|Morris, L.||Skelmersdale, L.|
|Mottistone, L.||Stewartby, L.|
|Mowbray and Stourton, L.||Stodart of Leaston, L.|
|Moyne, L.||Strange, B.|
|Munster, E.||Strathclyde, L.|
|Murton of Lindisfarne, L.||Strathcona and Mount Royal, L.|
|Nelson, E.||Strathmore and Kinghorne, E. [Teller.]|
|Norfolk, D.||Sudeley, L.|
|Norrie, L.||Swansea, L.|
|Onslow, E.||Swinfen, L.|
|Orkney, E.||Thomas of Gwydir, L.|
|Orr-Ewing, L.||Torrington, V.|
|Oxfuird, V.||Trefgarne, L.|
|Park of Monmouth, B.||Trumpington, B.|
|Peel, E.||Ullswater, V. [Teller.]|
|Pender, L.||Vinson, L.|
|Peyton of Yeovil, L.||Vivian, L.|
|Prentice, L.||Wakeham, L. [Lord Privy Seal.]|
|Pym, L.||Wise, L.|
|Radnor, E.||Wyatt of Weeford, L.|
|Rankeillour, L.||Wynford, L.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 5.2 p.m.
§ On Question, Whether Clause 1 shall stand part of the Bill?
§ Earl Russell
Perhaps I may hasten to reassure the noble Viscount that I am not attempting to remove the clause. I have had one bite at that cherry already. But as the noble Viscount explained extremely clearly to us a moment ago, we are dealing with a package involving statutory sick pay and national insurance. I understand that the national insurance changes are coming before us by regulation. It seems that this is a convenient opportunity to address some of the elements in that package and to consider whether in fact we have got the proposals right.
If I had spoken in this House some 70 years ago, and I had said the words "three weeks" I believe that I would have been taken to be referring to what was then a very famous novel describing a love affair of the most sensational intensity, capable of being described as the experience of a lifetime. Maybe we are not speeding up so much as we think we are because nowadays the job takes 9½ weeks. Three weeks —even if that may be long enough for the experience of a lifetime—is not long enough to be able to qualify one's employer for reimbursement for statutory sick pay. Earlier on, the noble Lord, Lord Carter, gave us some figures for the facts which we all know—that is, that the vast majority of sickness lasts fewer than four weeks. That means that even for the small employer the vast majority of sickness will not be reimbursed. Where one has an epidemic a very high proportion of the workforce may be ill for a shorter period than four weeks.
914 The noble Lord, Lord Dean of Harptree, suggested at Second Reading the possibility that the Government may be prepared to consider being flexible about this period of time. He suggested the possibility that they might be asked to consider two weeks. I am using the opportunity of clause stand part to raise that possibility now and to ask the Minister whether he has given this matter any further thought since Second Reading and, if so, what his thoughts are.
My second point is raised as a question and not as an answer and concerns the future of self-certification. I do not necessarily want to insist that every sickness should be certified by a doctor. It would be extremely inconvenient for me if that were necessary every time I had flu. I can imagine what my GP would say to such a proposal. Therefore, the argument here is not all on one side. But we are dealing with arguments which have been put forward on the Government's side of the House for labour discipline and the management of absence. That necessarily must mean some invitation to take disciplinary action or at least warning action, against those absent on the ground of sickness.
There will be inevitably some cases where employers will clamp down on people who were absent for medical reasons or for those kinds of reasons which count as health reasons even if they are not illness—for example, drink problems which are very often unknown to the employer. If employers are to be invited to exercise this kind of discipline over those who are sick, it may be a good idea for them to know that the people they are dealing with are actually sick. I do not see how they can possibly know that except by having the opinion of a doctor. So although I can see a strong argument against this proposal—which I imagine the noble Viscount will develop and he may say things with which I agree—there is an argument on the other side as well. I want to take the chance and invite the Committee to consider it.
The third point that I wish to raise is one that I shall not develop at length because the noble Viscount has very kindly agreed to arrange a meeting. In that regard he has been extremely helpful and I would like to thank him for it. I refer to the question of the right of employees actually to obtain statutory sick pay. The noble Viscount was insistent that an employee's right to get statutory sick pay is undiminished. The problem is how to make that right effective. There are a number of cases where the employers do not pay it, or where they only pay part of it or where they pay it only for a shorter period than that for which it is due. There is another case where they say that they do not pay it for anyone on shift work. These cases are legion. We need some further form of discipline to deal with that.
The noble Viscount will of course say that people may go to the benefit office; they have a legal recourse. That is true, but in the general atmosphere of labour discipline which we are now getting, especially for people in part-time jobs, on short-term contracts and possibly not enjoying employment protection the fear of dismissal is a very real one. I understand that there is a case before the Appellate Committee of this House at the moment involving employment protection which I 915 shall not pursue because it is sub judice. It is a cold breath at the back. It is not a good world in which to be dismissed from one's employment at the moment.
So there is a very real risk of people not getting their statutory sick pay and simply not feeling that it is safe for them to go ahead and make a claim. I was encouraged by what the noble Viscount said as regards Amendment No. 2 today. He said that he regarded the employer's national insurance relief and statutory sick pay as part of one and the same package. In fact, the relief to employers as regards national insurance is pretty well a contractual obligation to go with pay and sick pay.
I suggested at Second Reading that since this is a contractual obligation and a mutual one, if the employers do not discharge their side of it and do not pay statutory sick pay, I do not see why they should get national insurance relief which is designed to finance it. The Minister did not reply to that suggestion at Second Reading. He may well have felt, very properly, that he needed to take advice on it. If he has taken such advice, I should be grateful to know the result of it on the technical question of how and in what procedural form could this question be addressed. Does it need to be a Motion to resolve on the regulations on national insurance or is there any way in which it can be brought within the Long Title of the Bill? Does the Minister see any practical advantages or disadvantages in doing that? On the practical side, I shall listen to what he has to say very carefully. I beg to move.
§ Baroness Turner of Camden
I rise also to oppose the Motion that Clause 1 should stand part of the Bill. This is the clause that imposes the whole burden of statutory sick pay upon employers. Although we had what I might call some "hopeful" exchanges on Amendment No. 1 in regard to the possibility of there being an alternative scheme for small employers, nevertheless, as it stands, the whole burden is to be imposed upon larger employers anyway.
On Second Reading, we went into the history of statutory sick pay when the obligation was first imposed upon employers. My own doubts about what was imposed at that time were somewhat stilled because of the guarantee about full reimbursement. Worries that employees might not get their sick pay entitlement were set aside because of that guarantee. Then we had the 1991 Act which reduced the guarantee by 20 per cent., with some protection for small businesses following protests in this House. Now we are back again—and this time round the guarantee has disappeared altogether.
We face the total privatisation of what is essentially a social benefit. There are a number of reasons why my noble friends and I regard that as unacceptable. First, there is the concern that employees may not get the sick pay to which they are entitled. A number of instances were quoted by the noble Earl, Lord Russell, on Second Reading, from a briefing provided by the National Association of Citizens Advice Bureaux to the effect that many people are not getting their entitlement now when there is 80 per cent. reimbursement. Indeed, NACAB said: 916Many employees do not receive the full amount of sick pay and some do not receive any sick pay at all. In many cases, the employees will have no other form of income as they are not always eligible for other benefits".The briefing from NACAB quoted a number of cases to prove the point.
The Minister may say that that happens in only a small minority of cases, but we need legislation to protect the minority. There is no need to legislate for good employers. They will provide occupational sick pay schemes because that is the right thing to do and often will do so as a result of union negotiations. It is the job of legislators to protect the vulnerable.
There is also the possibility that people who are more vulnerable than others—people with a poor sick record, those who are disabled, those who have been injured or perhaps even those who are older—may find it harder to get employment because they will be regarded as a sickness risk, a risk which employers will now have to bear in full. We had some discussion of those issues on Amendment No. 3, moved by my noble friend Lady Hollis. I regret very much the fact that the Government did not see fit to accept that amendment.
It was suggested on Second Reading that discrimination against the more vulnerable was unlikely since it was well known that disabled people were better risks in relation to absences than more fit employees. However, as we have heard, the Spastics Society says that the level of unemployment among disabled people capable of, and willing to, work is 22 per cent. That has recently been confirmed by government figures. If employers are now more willing to give disabled workers a chance, that is not showing up in the figures. I do not believe that this Bill will help.
There is also the question of the cost to employers. We dealt with that point at some length earlier. As is clear from the brief of the Confederation of British Industry, employers are concerned about what the Bill represents. I have a letter from the CBI dated 24th January stating its concern that the Bill shows that the Government are withdrawing more and more from social provision and leaving it all to the private sector.
Employers received assurances that their full SSP costs would be met. They are now to be given some form of incentive not to make too much fuss about the Bill through a decrease in the amount of national insurance contributions they will have to pay. But for how long, they ask, will that continue? Can they be sure —can the Minister give any assurances—that the Government will not remove that incentive in some future piece of legislation? Can employers be sure that they will not be asked to bear the cost of other social benefits, such as maternity pay and industrial injury benefit? Clearly, the CBI sees the Bill as setting an unfortunate precedent and employers are likely to feel dubious about government assurances in that direction. I should like to hear from the Minister what assurances the Government can give employers on these very important issues.
In case the Minister seeks to chide my noble friends and myself on the ground that we have not previously concerned ourselves with employers' costs, let me say that we are very much aware of them, as is the TUC which has raised the same point. The Government are 917 loading the costs onto employers in a way that did not occur under Labour governments. There is not only this Bill; other costs which are also in the pipeline represent a tax on employment. We have been advised, for example, that there will be a tax on insurance premiums. All employers must carry employers' liability insurance. In future, premiums for that cover will carry a 3 per cent. tax. That is an employment tax if ever there was one.
Employers are now being asked to bear the full weight of SSP on the grounds that somehow or other that will enable them to manage sickness absences better. I share the views of the noble Earl, Lord Russell, when he opposed the Motion that the clause should stand part of the Bill. Even if absence records are higher than they used to be, the causes of such absences cannot be dealt with simply through the administrative procedures set out in this legislation. The causes of absence often go very much deeper.
I welcome the assurance that the Minister will look again at this provision in relation to small businesses although he was not terribly precise about it. However, this is such an unacceptable measure that we have no alternative but to oppose the Motion that the clause should stand part of the Bill.
§ 5.15 p.m.
§ Lord Boyd-Carpenter
This clause embodies the whole purpose and effect of the Bill. The Committee has discussed it for some hours, so it is not necessary for me to add more than a word. However, I should like to point out to certain noble Lords who have spoken that whereas in one way a burden is placed on employers, the placing of that burden coincides with a very substantial reduction in the national insurance contributions they will pay. On balance, as I understand it, employers will benefit quite considerably. That is a very important point. I appreciate that there may be exceptional and difficult cases. Your Lordships have explored the possibility of covering some of those. I refer, for example, to whether the period of four weeks is sacred or whether a shorter period might be contemplated.
The noble Baroness, Lady Turner, also touched on the question of whether the same principle of transferring the direct burden to employers while relieving them of some of their general payments is likely to be applied in future in respect of maternity benefit. I hope that that is not the case. The situation is totally different. I do not believe that it would be a wise, humane or sensible thing to do.
On the main issue as embodied in the Bill, Clause 1 puts it into effect and I hope that we shall put it into law as soon as possible.
My noble friend Lord Boyd-Carpenter is absolutely right when he says that employers' extra statutory sick pay costs will be more than offset by the accompanying reduction in their national insurance contributions liability. Those reductions will be worth about £800 million in 1994–95, rising to almost £1 billion a year in 1996–97. The 918 reductions will exceed employers' extra SSP costs by well over £100 million, and business as a whole will not be out of pocket.
Businesses need to plan for any eventuality; for example, normal sickness rates. They can do so by taking out insurance. Firms with low sickness absence rates—many small companies fit into that category—will have the extra cash from their national insurance contributions reductions to meet the cost of that insurance.
The noble Baroness, Lady Turner, made much of fears that we might increase employers' national insurance contribution rates in future years. No government can give guarantees about the future levels of those rates, but we can point to an impressive record from which employers can draw their own conclusions. In 1979, employers' contribution rates were 13.5 per cent. They now range from 4.6 per cent. to 10.4 per cent. They will be reduced to 3.6 per cent. and 10.2 per cent. respectively from next April. Some of those reductions were made in 1991 when the SSP reimbursement rate was reduced to 80 per cent. The reduction has held, and the process of reduction will continue next April.
The noble Earl, Lord Russell, used the debate to ask about small employers' relief. That was probably the only way we could discuss that matter in the context of the Bill. He asked why we will not give full reimbursement after two weeks. Giving full reimbursement after two weeks reduces employers' incentives to tackle high sickness absence rates. That is perilously close to 100 per cent. reimbursement immediately. That is not in keeping with the Bill's main objectives. Abolition of the 80 per cent. reimbursement rate in no way affects the rights to SSP of individual employees. They will continue to be entitled to a prescribed minimum amount of sick pay provided that they are sick and absent from work for at least four days in a row, and provided that they satisfy the other qualifying conditions. In fact, the vast majority of employees will have their SSP topped up to full pay by occupational sick pay.
Reports recently have highlighted some examples of where employers have failed to pay SSP when it appears to have been due, or where they have threatened to sack the sick employees. We should put those examples in perspective. I condemn such practices, as I said on Second Reading. An employee who considers that he has been wrongly denied SSP, or is not being paid the correct amount, can seek a formal decision from the adjudication officer at his local DSS office. Where an employer fails to comply with such a decision within the prescribed time, the responsibility for payment passes to the department. Therefore the employees' SSP rights are protected fully if the matter is brought to our attention.
The noble Earl asked me also about self certification. Employees were allowed themselves to certify short absences in 1982 before the introduction of SSP. That change was made on the advice of the BMA which pointed out that it was nonsense to clog up doctors' waiting rooms with people wanting certificates to the effect that they had the flu. However, employers are not required to accept employees' certificates if they have grounds for suspicion. Equally, if an employee is not 919 happy with the employer's refusal to pay SSP, he can seek independent adjudication at his local DSS office. When it comes to self certification, we should be careful to take the BMA's concerns seriously.
The noble Earl offered an interesting idea about denying the reduction in national insurance contributions to an employer who had wrongly denied SSP to an employee. I am afraid that the idea would not work. National insurance rates are announced and implemented for the year as a whole. It would be impossible to unpick those arrangements in the year and to police whether the new rules had been applied correctly. I hope that with that explanation the noble Earl will allow the clause to stand part of the Bill.
§ Baroness Turner of Camden
Before the Minister sits down, will he give an assurance of the kind for which the CBI is asking, and which I mentioned: that the Bill will not set a precedent for transferring statutory maternity pay in the same way as SSP is being transferred? It is a matter of grave concern.
We have issued a consultation document on statutory maternity pay which gave two options. We are presently studying all the replies that we have received. When we are ready, we shall make an announcement about our proposal and, of course the matter will come before this place.
§ Clause 1 agreed to.
§ Clause 2 [Transitional and other supplementary provisions]:
Baroness Hollis of Heigham moved Amendment No. 4:
Page 1, line 27, leave out subsection (3) and insert:
(" (3) A statutory instrument which contains (whether alone or with other provisions) any regulations made under subsection (1) shall be laid before and approved by a resolution of each House of Parliament.").
§ The noble Baroness said: The amendment requires that any statutory instrument should be brought before this place under the affirmative resolution procedure. The Committee will appreciate that this is a sensitive subject, because during discussion on the Statutory Sick Pay Bill 1991, which reduced reimbursement from 100 per cent. to 80 per cent. it was this place which defeated the Henry VIII clause which would have allowed the Secretary of State to have reduced that 80 per cent. to 70 per cent., 60 per cent., 50 per cent., down to today's nil figure, without the Government bringing primary legislation before this place. Had it not been for the defeat of that clause then by this place, today's Bill would not have been necessary. That is why the Committee will understand that this is something of a sensitive issue. Behind it lies a wider concern that too much social security legislation is targeted, fixed and determined by regulation and not by primary legislation. The tendency we have seen is that the shorter the Bill, the more discretion it tends to give to the Secretary of State to make regulations on matters intimately affecting the lives of many hundreds of thousands of people.
Whereas with primary legislation we can oppose, amend or delay clauses, and invite the other place to think again, we have no such powers, as I understand it, 920 in respect of statutory instruments, whether affirmative or negative. Convention does not allow us to reject them. We have no powers to amend them. All we can do is scrutinise them. That is why it is so important that, wherever possible, Parliament's intentions should be brought within the framework of primary legislation rather than for it to be left to departmental policy to be handled by regulation. When it comes to this Bill, as was noted in the other place, words such as, "savings", "transitional" and "consequential" all need to be defined. In particular, as the Bill stands, it apparently gives the Secretary of State power to make by regulations such savings as he considers necessary or expedient for the operation of any enactments repealed or amended by Clause 1. Those are wide-ranging powers, but at least the affirmative resolution procedure requires the Minister automatically to bring such powers to this place for scrutiny, for discussion, so that the views not just of Members of this place but of the wider pressure groups intimately associated with disability can be heard.
But with negative resolutions, the onus is largely, but not invariably, on Opposition Members to draw such resolutions to the attention of this place, but to do so within a time limit of 40 days. We have to do that without the resources that the Minister has: four civil servants in the Box and a whole department behind him. Our Box is usually empty. That is why we seek, wherever possible, to ensure that the Secretary of State's powers should be determined by primary legislation and not by statutory instrument. Where they are to be determined by statutory instrument, they should wherever possible be by affirmative resolution, so that the onus is on the Minister to bring them forward, explain them, and seek out consent to them, rather than by the negative procedure which means that we put up the trip wire so that we have an opportunity to discuss them.
Traditionally the Government's position is that controversial propositions require the affirmative resolution procedure and that non-controversial propositions require the negative resolution procedure. The Government have suggested that such transitional arrangements as are contained in the Bill are non-controversial. The Minister may be right. We do not know. We cannot tell. That is why we preferred the affirmative resolution procedure. The Minister may suggest that the regulations caught by the negative resolution procedure are trivial. Again, he may be right. Again, we do not know. Again, we cannot tell. We do not have the resources continually to put in place the trip wires to ensure that they are properly scrutinised if, heaven forbid, the Minister has misjudged.
The Minister may say that this is an onerous procedure for small issues. But on the assumption that the major and controversial issue will in any case be caught by the affirmative resolution procedure and must be brought before this Chamber there is no problem of attaching to it other instruments which may be trivial and non-controversial but which allow us all to review them collectively and en bloc, and thus to scrutinise the progress of this procedure. That has been our experience in other areas such as local government.
921 We seek the Minister's agreement that such changes which are to be carried by resolution, by statutory instrument, come under the affirmative resolution procedure rather than the negative procedure. Otherwise this Committee will find its control of social security legislation incrementally whittled away. That has been the history of the past decade. I beg to move.
§ 5.30 p.m.
§ Lord Boyd-Carpenter
My approval is almost always in favour of parliamentary control of delegated legislation. However, after studying carefully what the noble Baroness said and the terms of her amendment, I believe that it goes too far. Members of the Committee will see that it applies to:any regulations made under subsection (1)".That is any regulation, however trivial and minor it may be. There is a danger of piling on additional obligations to apply the affirmative procedure to minor regulations. The problem is that if we overload our list with Motions for the approval of minor and trivial proposals we shall blur interest in the important issues which can arise under certain regulations, some of which are of great importance.
I shall listen to what my noble friend the Minister says. However, after listening to the noble Baroness my first reaction is that the amendment goes too far, that it is unnecessary and will add many unimportant matters to the list of business in this Chamber and thereby perhaps distract attention from the more important ones.
§ Earl Russell
The noble Lord, Lord Boyd-Carpenter, argues that we should refrain from invoking the affirmative procedure because we are not certain what kind of regulations we shall have. That point may well be used as an argument for the other side of the case. The regulation-making power arises in Clause 2 (1) which states:The Secretary of State may by regulations make such transitional and consequential provision, and such savings, as he considers necessary or expedient".I cannot help remembering my favourite quotation from W.S. Gilbert:Is gentle music rolls in the melody of souls",which is pretty, but I do not know what it means.
It may be that regulations made under this power are trivial. It may be that they are far-reaching. However, the clause is worded so generally that this Committee cannot tell. For that reason the noble Baroness was correct to table the amendment. When we debated the Henry VIII clause in the 1991 Bill we were given the most urgent and earnest assurances that the department had no present plans to do what it is now doing. I believe that those assurances were genuine at the time they were given but I cannot help wondering whether the present Bill was just a twinkle in the Treasury's eye—or maybe I should say a chink in the Treasury's pocket. I do not know what may be coming to this Chamber.
I heard the remarks made on the Friday before last by Mr. Michael Portillo. He expressed a great dismay about those who diminish respect for Parliament. I share his dismay in diminishing respect for Parliament. But respect for Parliament depends on what Parliament may 922 do. It depends on the belief that Parliament can make the law and can control the Executive. The use of the regulation-making power, especially in this Chamber, diminishes both those aspects. It diminishes our power to control the Executive and the increasing use of the regulation-making power—I shall not mention other Bills, I am sure that Members of the Committee know what is in my mind—tends to cast doubt on the principle that Parliament makes the law. If Parliament gives way on those two crucial issues it will diminish respect for itself. I, for one, would regret that very bitterly indeed. I am happy to support the amendment.
§ Lord Boyd-Carpenter
Before the noble Earl sits down, will he note that the passage which it is proposed to delete refers to "any regulations"? I agree that we are dealing with important regulations but surely the phrase "any regulations" is carrying the matter to an extreme, which means that the whole procedure becomes somewhat discredited.
§ Earl Russell
The noble Lord, Lord Boyd-Carpenter, is right about the pressure on our business. I am well aware of that. However, I do not see how we can make the distinction in relation to the amendment until distinctions are made in the regulation-making power which allows us to address that. If the Minister will offer to withdraw the clause and to redraft it so that we can distinguish between the major issues which need an affirmative power and the minor issues which do not I should be delighted to go along with that. I do not see how I can do so without the Minister's help.
§ Lord Carter
Subsections (2) and (3) make it clear that any regulation is subject to the negative procedure unless there is a requirement for the affirmative procedure. Members of the Committee have always rejected that approach and prefer that all the regulations shall be affirmative unless the Government produce a requirement that it shall be negative. As the Bill stands, it is within the power of the Government to ensure that all the regulations, however important, are subject to the negative procedure.
§ Lord Simon of Glaisdale
I am generally strongly in favour of the affirmative resolution procedure as against the negative resolution procedure. There are a number of reasons for that. The first is that the negative resolution procedure frequently involves no scrutiny in the other place because time has flowed out before the time for a review of the regulations. Secondly, with the affirmative resolution procedure one has a much more orderly debate. The Minister opens, explains the purpose of the regulations and debate ensues. In the negative resolution procedure the debate is generally ragged with various Members feeling their way and the Minister replying at the end.
But having said that, and having expressed a personal predilection of my own, we must remember that we have now, in the face of some opposition, the scrutiny committee. That committee has adopted an extremely sophisticated approach. It does not adopt a general view in favour of one procedure or another. It discriminates very closely, according to the importance of the regulations. In my view it is extremely important that 923 when the scrutiny committee gives a clear signal, as it did on the Railways Bill and, in the current Session, on the Local Government (Wales) Bill, we should pick up that signal and vindicate the committee's view.
On the other hand, in the present case the scrutiny committee has found nothing to complain of at all. It seems to me that with all that has been said in favour of the affirmative resolution procedure here, we should blur the impact of the scrutiny committee if we adopted this amendment, although the reasons for it have been persuasively argued by the noble Baroness and the noble Earl. In view of that, and subject to anything that the noble Viscount may say, I hope that the noble Baroness will not press the amendment to a Division.
I can assure the Committee that it is normal practice for statutory instruments which give effect to the detailed non-controversial provisions consequential to the main changes proposed in primary legislation to be dealt with under the negative resolution procedure. The Government's proposals in this piece of legislation do not differ from those normally included in the social security legislation which comes before this place. Indeed, the last major piece of statutory sick pay legislation with which this place had to deal—the Statutory Sick Pay Act 1991, which Members of the Committee will recall reduced the reimbursement rate from 100 per cent. to 80 per cent.—contained a provision similar to that provided for in Clause 2(3).
My noble friend Lord Boyd-Carpenter is normally a strong proponent of the affirmative resolution procedure but he explained clearly why the amendment goes too far. I do not believe in this case that there is any diminution of Parliament's power, as was suggested by the noble Earl, Lord Russell. The noble and learned Lord, Lord Simon, also agreed that in this case, because there have been no comments from the scrutiny committee on this clause, there is no need for the affirmative resolution procedure.
Having heard from the noble and learned Lord, Lord Simon, and my noble friend Lord Boyd-Carpenter, I could rest my case and sit down. However, in a spirit of helpfulness to Members of the Committee opposite, perhaps I may give an example explaining the circumstances in which the negative resolution procedure is intended to be used. The main purpose of this legislation is to end the right of an employer to recover 80 per cent. of the SSP paid out to his employees from their remittances of national insurance contributions with effect from 6th April. But we need to provide clear and workable instructions to employers on just how the change will operate in practice. We need to be able to tell them what effect the change will have on the recovery arrangements in respect of those employees who are already sick and entitled at about the time of the change.
The Government's intention is to provide that employers will be able to continue to recover the appropriate amount of SSP paid for days of sickness up to and including 5th April 1994, even if the employer cannot actually recover the amount due until after that date. Only SSP due for days of sickness occurring on or after 6th April will be affected by the ending of the 80 924 per cent. reimbursement rate. That is in line with what industry will expect at the change-over date. It follows the practice adopted in April 1991 when the reimbursement rate was reduced. All SSP due for days immediately before that change was recoverable at 100 per cent. The reduction to 80 per cent. applied only for days of sickness falling on or after 6th April 1991. That is a typical example of how the Government propose to exercise the power contained in Clause 2(3). It simply provides a power for the Secretary of State to implement non-controversial transitional and consequential changes promptly without the need for further lengthy debate.
Employers rightly expect to know as soon as possible the nature and detail of the changes that they will have to administer from next April. This amendment will only delay the issue of clear and definite instructions to employers and will only confuse matters for employers who have to administer the SSP scheme. Without clear and comprehensive instructions delivered in a reasonable time, they will not be in a position to introduce the changes smoothly.
In the light of that and in the light of what has been said by the noble and learned Lord, Lord Simon, and by my noble friend Lord Boyd-Carpenter, I hope that the noble Baroness will withdraw the amendment.
§ 5.45 p.m.
§ Baroness Hollis of Heigham
I thank all Members of the Committee who have taken part in this interesting debate. The noble Lord, Lord Boyd-Carpenter, and the noble Viscount, Lord Astor, are right to say that the business of this Chamber should not be cluttered up by discussing trivial matters of detailed regulations. However, there are important issues which require the proper scrutiny of this place. On these Benches we all wish to see a full debate of those statutory instruments which are important and significant, but we do not wish to take up the time of this place in debating that which is trivial.
That is fine. But our problem is that we do not know which is which. We have no way of knowing that in advance because this clause gives total power to the Minister, rather than this place, to determine which is which.
I have every confidence in the Minister's integrity, but I remind the Committee that it is the same department, if not the same Minister, which only a couple of years ago tried to persuade us to accept a Henry VIII clause which would have allowed the Minister, by regulation, to change at will primary legislation and thus reduce reimbursement from 80 per cent. down to any figure that he saw fit. I am quite sure that at that time the Minister—I suspect that it was the noble Lord, Lord Henley—told the House that there would be plenty of opportunity to scrutinise the matter; that the affirmative resolution procedure was unnecessary; and that any such changes were trivial. Fortunately at that time the House, in its considered and wise judgment, disagreed with that and insisted that any such changes should be made in the form of primary legislation, the Minister notwithstanding. The House was entirely right to do so.
925 The Minister said that we should not accept the amendment because it would introduce further and lengthy debate while such regulations are discussed. That is precisely our problem. Some issues require some debate and some do not. We have no way of knowing in advance which do and which do not. Therefore, we are dependent upon the integrity and honour of Ministers in that regard.
I accept that we now have the scrutiny committee to assist us in that judgment. Nevertheless, the Minister is continually placing a responsibility on the Opposition to put in a trip wire rather than bringing rafts of statutory instruments, which have the force of law, before the law-making Chamber.
I do not propose to press the amendment this evening. Obviously we wish to consider the matter further. I believe I am right in saying that the DSS is more remarkable than virtually any other government department of which I am aware in furthering its policy aims by regulation. If I am right, it behoves this Chamber to have even more urgent powers of scrutiny and to put the presumption on the Minister by going for the affirmative rather than the negative resolution procedure. After all, 20 million people in the country are the clients, customers or recipients of the benefit procedures of the DSS. On their behalf, it behoves us to be stringent and scrupulous in our vigilance. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 2 agreed to.
Lord Carter moved Amendment No. 5:
After Clause 2, insert the following new clause:
("Annual report on effect of Act on disabled people
. The Secretary of State shall annually publish a report on the effects of this Act upon the employment of people with disabilities and that report shall be laid before Parliament.").
§ The noble Lord said: The amendment again deals with the employment of people with disabilities. Members of the Committee will be aware from the debates in another place and from debates on previous amendments of the concern expressed about the possible effect of the Bill on the employment of people with disabilities. We are told by Disability Alliance that its rights workers receive numerous calls for help from people who have had problems obtaining their statutory sick pay or, worse still, have been dismissed as a result of a long spell of illness.
The flaw in the argument heard from the Government from time to time regarding the employment of disabled people is that it does not deal with the healthy or fit employee who develops a serious condition during his employment. Again, Disability Alliance points out that its rights service regularly comes across people who have been refused statutory sick pay or who have been dismissed during a protracted spell of illness.
We know that two out of five people with disabilities work for small firms whose record in terms of employment practice tends not to be all that good. Therefore, in that sense disabled people are likely to be even more vulnerable than the average person. We know also that only one-third of disabled people remain 926 with their employer after the onset of disability and that the unemployment rate of disabled people is three times that of the able bodied.
We are not asking in the amendment for any special arrangements which will cost the Government money or any payment arrangements, disbursements or compensation. We are merely asking for a report to be laid before Parliament which will give the facts and the evidence to Parliament and thus enable a conclusion to be reached about the effects of the legislation on the employment of disabled people.
I am sure that the Minister will repeat something we are always hearing; namely, that the average attendance record of people with disabilities in employment is better than the average of able-bodied people. That is true, but it only applies to those in work. The essential point is the number of disabled people who find it hard to find employment either because they are already disabled or because the onset of disability occurs in the course of their employment. As I said, the unemployment rate for disabled people is three times that of the able bodied.
If the Government are confident—and they keep saying they are—that the Bill will not unduly affect disabled people, what have they to fear from accepting the amendment? This Chamber has a long record of expert all-party concern over issues of disability. In the light of that expertise and concern, I hope that the Minister will feel able to accept at least the principle behind the amendment. I repeat. There is no cost to the Government other than that of preparing the report. It would at least enable Parliament to obtain the facts and the evidence and thereby enable it to draw a conclusion as to whether or not the fears of those who feel that the legislation will have a deleterious effect on the employment of people with disabilities is well grounded. I beg to move.
The amendment is worthy but aims at achieving something which is impossible. How can anyone hope to tell what the effect of this measure will be on the employment prospects of those with disabilities? Surely we need comprehensive information on the employment prospects of the disabled which examines all the factors affecting them. At the very least the Government should ensure that when we ask such questions we are not told that the information is not collected centrally or that it is not collected in such a form. I hope that my noble friend the Minister will be able to give us some comfort in that respect.
I should like to point out to the noble Lord, Lord Carter, that if two-fifths of disabled people are employed by small firms, that does not say that they are more vulnerable as a result: it says that small firms have a better record of employing disabled people than larger firms. That is to their credit.
While I understand and appreciate the concerns expressed by the noble Lord, Lord Carter, I do not wholly agree with the claim that people with disabilities who have poor health records have suffered since the SSP scheme was first introduced and on subsequent occasions when changes were made to it. As I said previously, we do not accept that the abolition of 927 the 80 per cent. reimbursement rate will lead to discrimination against people with disabilities or poor health records. Nor do we expect that there will be any changes in the pattern of employment of people with disabilities as a result of the change. I am sure that the noble Lord, Lord Carter, agrees that the evidence suggests that people with disabilities make very good employees and often have a more reliable sickness absence record than other employees.
We believe there are many other factors of far greater importance in determining job opportunities for disabled people. Both this department and the Department of Employment have developed policies to promote the employment of people with disabilities. The disability working allowance which we introduced in April 1992 promotes greater opportunities for employees with disabilities by providing them with financial support while in employment.
It has been the endeavour of successive governments to increase awareness that disabled people are good employees and have a valuable contribution to make. The Government share the aim of ending any possible discrimination against disabled people and believe that the best approach is by a programme of education and persuasion. The Prime Minister has asked my right honourable friend the Minister of State for Social Security and Disabled People to work with the all-party disablement group to identify areas for further action where discrimination could be eliminated at little or no cost Moreover, "access to work" will provide a wider range of help to a greater number of people. That new, more flexible, provision has been widely welcomed by organisations of and for disabled people. I am aware that employment Ministers are carefully considering all the representations made to them by disability and employer groups. They will be mindful of those views when reaching decisions on outstanding issues. Moreover, the employment of people with disabilities is already governed by the Disabled Persons (Employment) Acts 1944 and 1958. In addition, people with disabilities have the same employment rights and protection as everyone else under employment protection legislation. That is an important point.
However, we shall be monitoring the effects of the change in the course of the routine visits of the Contributions Agency to employers and by other means such as the feedback we receive from employers, employees and their representative organisations. The groups representing people with disabilities are quick to come to us and explain their concerns. With that explanation, I hope that the noble Lord will see that it would not really be appropriate for a special report to be laid before Parliament. I trust that he will feel able to withdraw the amendment. I have given him the reassurance that we are certainly doing a great deal to help people with disabilities to gain employment.
§ Lord Carter
We are not engaged in a debate about what the Government are, or are not, doing to help people with disabilities obtain employment. The amendment deals specifically with the effect of the Bill on the employment of people with disabilities. That is the purpose of the amendment. I repeat. We are 928 continually told that people with disabilities make good employees, that their average attendance at work is good, and so on. As I said, that is fine but only if they are in work. The rate of unemployment among people with disabilities is three times the unemployment rate of able-bodied people. Those who are in work are extremely good employees but the problem is that three times as many disabled people are out of work as able-bodied people.
The Minister said that the Government did not expect, any change in the prospect of employment for disabled people as a result of the operation of this Bill. I am sure that is correct but—it is only fair to mention this—if there was evidence to the contrary, the Government would no doubt wish to take action. If the Government discovered from their monitoring that there was evidence that the Bill affected the employment of people with disabilities, they would wish to take action. All we are asking is why should the Government not find out about that. Why not ask for a report to be submitted to Parliament each year to answer the question? We would be delighted if the Government were correct about this matter.
I know from long experience that many groups of disabled people and groups representing disabled people approach the Government and explain the problems. However, the problem is that the Government do not always listen. I shall, of course, withdraw the amendment at this stage, but this is a point to which we shall wish to return. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 6, as an amendment to Amendment No. 5, not moved.]
§ 6 p.m.
Baroness Turner of Camden moved Amendment No. 7:
After Clause 2, insert the following new clause:
("Annual report on effect of Act on women
The Equal Opportunities Commission shall annually publish a report on the effects of this Act upon the employment of women and that report shall be laid before Parliament.").
§ The noble Baroness said: I rise to move the amendment standing in my name and that of my noble friends. We have been seeking, in discussion on this Bill, to protect the most vulnerable. Clearly, disabled employees come into that category. The rate of unemployment among the disabled is already unacceptably high and the position is unlikely to improve as a result of the Bill. However, it might perhaps not be thought necessary to write in any special protection for women.
The noble Viscount will probably remind the Committee that employment among women has increased. That is true, but that employment is mainly in part-time and in low-paid jobs. It is noticeable that many of the cases mentioned by the National Association of Citizens Advice Bureaux of employees who even under the present system are not getting their entitlement involve women working in low-paid employment. Often such employees are so grateful to have any kind of job that they do not make a fuss when they do not get their sick pay. Examples of this are referred to in the 929 NACAB brief. The situation of such employees may well become worse as a result of the legislation that we are now debating. Furthermore, women have special problems and many of these are connected with their reproductive function. There are already provisions in law in regard to maternity leave and maternity pay. I wish to emphasise at this point—as I did earlier—the concerns of the CBI and other employers' organisations that they may eventually be landed with responsibility for statutory maternity pay. I hope that the noble Viscount will take seriously the representations that have been made on that point.
There are other conditions connected with maternity which can cause sickness absence. Some of these conditions are not life threatening and therefore perhaps are not treated all that seriously. However, they can give rise to absences, as can stress-related illness to which many women are prone as a result of having to look after a family and carry out some form of outside employment. The amendment suggests that the Equal Opportunities Commission be asked to monitor the situation and to publish a report,
on the effects of this Act upon the employment of women".
This Bill is a new departure. For the first time employers are being made fully responsible for the whole of a particular social benefit. It seems to me that we are right to be wary of it and to want to see how it affects employees who seem to us to be most vulnerable. By writing into the Bill a role for the Equal Opportunities Commission, we will signal to women, who may feel particularly vulnerable, that there is a body prepared to watch over them and to look after their best interests. I beg to move.
§ Baroness Seccombe
I always follow new legislation that affects women very carefully. I have no evidence to hand, but I think I am right in saying that women are reliable, regular attenders at work. That applies particularly to women who are returning to work after a break. I believe that this amendment would constitute a bureaucratic and expensive way of monitoring when it could be done simply in the way that was suggested earlier by my noble friend Lord Astor.
§ Earl Russell
I am happy to support this amendment. One reason why women are particularly vulnerable in this situation is that a high proportion of them, often for obvious reasons, are in low-paid, part-time employment. They have sometimes been in that employment for a short period of time and they enjoy employment protection much less often than men. We have here a special problem and I hope that the Minister will pay it some attention.
There is no evidence to suggest that measures such as the introduction of the statutory sick pay scheme in 1983—and subsequent changes to the scheme made since then—nor the introduction of the statutory maternity pay scheme in 1987 have had any adverse effect on the employment of women. Between 1979 and 1992 the number of women employees as a percentage of all employees grew from 41 per cent. of all employees to 47 per cent. As the noble Baroness 930 said, these figures include both full-time and part-time employees. But, even if we compare the numbers of full-time women employees in 1984 with the numbers in 1992, the growth rate is around 15 per cent. The corresponding rate from 1987—when the statutory maternity pay scheme was introduced—until 1992 is around 10 per cent. There is no evidence there that either of these measures has affected employment prospects.
Women already have statutory employment rights, including protection against discrimination and unfair dismissal in legislation governing equal treatment and employment rights. The Government are confident that the changes in this Bill will have no adverse impact on the employment prospects of women. On the contrary, all the evidence suggests that the employment opportunities for women have steadily increased and will continue to do so. There is no evidence to suggest that they have been or will be affected by measures such as the availability of statutory sick pay or statutory maternity pay.
In any event this amendment is unnecessary. Under Section 56 of the Sex Discrimination Act 1975 the Equal Opportunities Commission is already required to publish an annual report on its activities during the year. Each annual report shall include a general survey of developments during the period to which it relates, in respect of matters falling within the scope of the commission's duties. I hope that with the explanation that the amendment is unnecessary because of the requirement on the Equal Opportunities Commission to publish an annual report already, the noble Baroness will feel able to withdraw the amendment.
§ Baroness Turner of Camden
It is not my intention to press the amendment this evening, but I am rather disappointed with the noble Viscount's response. Of course I am well aware that the Equal Opportunities Commission has to issue an annual report. I was a member of the EOC for some six years. However, it is a general report. It covers the whole spectrum of what has happened in the preceding year. This amendment seeks to give the EOC a specific role because this Bill constitutes very much a new departure. For the first time employers are being given the total responsibility for a social benefit.
As we have already heard when discussing various aspects of the Bill, categories of employment in which many women are engaged such as part-time and casual work, are the very categories in which the individuals concerned do not often succeed in obtaining the rights that are available to them now. If the employers are responsible for all rights, it seems to me doubtful that the employees that I have mentioned will continue to obtain their rights in the future. As I have said, I will not press the amendment this evening, but this is a matter which we may return to on Report as I do not feel that the Minister has dealt with the anxieties that we on this side of the Chamber have expressed in moving the amendment. However, in the meantime I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 3 agreed to.
§ [Amendment No. 8 not moved.]931
§ Remaining clause agreed to.
§ House resumed: Bill reported without amendment.
§ Viscount Goschen
My Lords, I beg to move that the House do now adjourn during pleasure for a period of 10 minutes.
§ Moved accordingly, and, on Question, Motion agreed to.
§ [The Sitting was suspended from 6.9 to 6.19 p.m.]