HL Deb 22 November 2001 vol 628 cc1312-21

7.30 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville) rose to move, That the draft regulations laid before the House on 18th October be approved [7th Report from the Joint Committee].

The noble Lord said: My Lords, I have great pleasure in presenting to your Lordships significant changes to the Maternity and Parental Leave Regulations.

I should first like to provide some background to the Government's consideration of family friendly policies such as parental leave more generally. At the end of last year a Green Paper on work and parents was published which set out the Government's commitment to helping working parents achieve a better balance between the needs of their work and their home lives. It put forward a range of options to help improve choice for parents and enhance competitiveness and productivity for business.

The consultation, which asked for the views of both employers and employees on which options they wanted the Government to pursue, finished on 7th March this year. Over 600 formal responses were received by the end of the consultation process. In addition, members of the ministerial group and officials from the review team met almost 300 individuals face to face. They spoke to employers or their representatives, working parents and those representing unions or family groups. Further focus group work was also commissioned with expectant mothers and with small employers across Britain.

What we learnt from this comprehensive consultation was that working parents and employers clearly want more support—support for parents to fulfil their potential as both parents and employees and support for business, particularly small business, to take on board changes in legislation. At the core of the Government's decision-making are two principal elements, therefore—ensuring more choice for parents, together with appropriately light touch regulation for business.

In March this year the Government announced a series of new measures to offer more support to working parents around the time of a child's birth. These measures concerning maternity, paternity and adoption leave had all received strong support during the Green Paper consultation and will largely be taken forward through the Employment Bill which the Government introduced on 7th November.

I turn now to the specific subject of today's debate and the announcement we made in April this year to make changes to the regulations that govern parental leave. At the moment, only parents of children born on or after 15th December 1999, the date on which the right was first introduced, qualify for the right. Similarly, parents of disabled children are at present only entitled to the same amount of leave as other parents of 13 weeks.

When the Government introduced parental leave for the first time at the end of 1999, it was a totally new concept in the UK. We had no experience of how it would work in practice and, although we had, of course, consulted business on its possible effects, we could not be sure what, if any, difficulties it might create for businesses. The Government therefore felt at that time that it was important to introduce the right with a "light-touch" approach to give employers time to understand it and its implications.

The Government believe the parental leave right has worked well since its introduction and, accordingly, that the time is now right to increase the amount of leave to parents of disabled children and to extend the right to parental leave to all parents with children under five. During the Green Paper consultation exercise, parents and employers were almost universally positive in their support of extending the amount of parental leave for parents of disabled children. This will help to give parents of children with disabilities greater flexibility to strike the balance between working and caring for their child's additional needs. The question of extending entitlement to parental leave to parents of children who were under five at the time the right was first introduced was the subject of a specific consultation following the publication of the Green Paper.

The consultation period closed on 8th August, by the end of which 46 formal responses were received, almost equally split between parents, employers, and their various representative bodies. None of these responses opposed the changes, with the majority supporting the proposals, and the Government are therefore proceeding with them. The Government published their responses to the consultation on 18th October.

The changes to the regulations will mean that parents of disabled children can take 18 weeks' leave up to their child's 18th birthday—an increase of five weeks. Different provisions already exist for parents of disabled children whereby they are able to use their leave over a longer period than other parents—up to their child's 18th birthday. By increasing the amount of time these parents can take off to 18 weeks they can, if they so wish, take one working week off per year in parental leave up to their child's 18th birthday. This will give parents of children with disabilities greater flexibility to strike the balance between working and caring for their child's additional needs, and this move has been strongly supported by business and parents and disability groups.

In addition, the Government believe that the time is now right to increase the number of parents who are able to exercise the right to parental leave. The changes to the regulations will ensure that parents of all children who were under five when the right to parental leave was first introduced will now benefit from it.

One effect of the extension of the right is that transitional arrangements will be needed to cover parents of children who have since reached, or will soon reach, the age of five. The Government's aim is to ensure that these parents are not disadvantaged in comparison with the position if the original right had extended to them in 1999 but as far as possible to preserve the existing requirements of the regulations apart from that.

Under the statutory fallback scheme, which forms part of the original regulations, parents are limited to take a maximum of four weeks' parental leave in any one year. On this basis, it will take just over three years for these parents to take their full entitlement of 13 weeks' leave. The same applies to parents of children who were placed with them for adoption in the five years before the right was first introduced. The amended regulations will therefore give all such parents and adopted parents until 31st March 2005 to exercise their right, and parents of disabled children will have until their child's 18th birthday to take their 18 weeks' entitlement as provided in current legislation.

We intend, subject to approval here, that the amended regulations will come into force on 10th January 2002. These amendments make sound, sensible and necessary improvements to the law. I therefore very much commend the regulations to the House. I beg to move.

Moved, That the draft regulations laid before the House on 18th October be approved [7th Report from the Joint Committee].—(Lord Sainsbury of Turville.)

Baroness Miller of Hendon

My Lords, I thank the Minister for his explanation of the regulations. I also thank him for the positive history he gave of the consultation process. While we on this side of the House certainly accept the amended regulations, as did the other place, the history of how that arose is not as positive as that of the consultation. I shall try to relate the relevant events as that puts the matter in a proper perspective.

These regulations make three changes to the Maternity and Parental Leave Regulations 1999. Three is a significant number, as the explanatory note provided to your Lordships merely refers to two of them; namely, the retrospective inclusion of certain older children in paragraph 5(2) and increase of the length of leave in the case of disabled children under paragraph 4(b).

However, there is a further important and substantial amendment to the regulations; that is, the provision that employment by a previous employer qualifies an employee for leave from his new employer. I shall turn to the merits of that shortly, but for the moment I should like to be told the reason for the omission of that important provision from the explanatory notes. It seems rather extraordinary that the notes mention two of the provisions but not the third. This is not the first occasion that the DTI has been economical with the facts in the course of these new draft regulations passing through Parliament.

In April, the department issued a press release announcing the extensions to employees' rights covered by the regulations. That press release omitted to mention that the change to the qualifying age was brought about not by the Government suddenly discovering an anomaly in the original regulations or by a spontaneous desire to improve the benefits, but by an action by the TUC for a judicial review of the Government's interpretation of one aspect of the EC directive, which is the source of the original regulations.

The Government resisted the action and resisted it being decided by our own High Court. Instead, it was referred to the European Court of Justice and listed for hearing on 3rd May 2001—a date that your Lordships will recall had some significance, at least for the Government, because it was just a month before the general election.

One week before the hearing date, the Government gave in. Not only that, in the new regulations they have, as is typical of them, gold-plated the directive in a way that I shall describe shortly.

I am sure that the Minister will assure us that that sudden change of heart by the Government had nothing to do with the TUC's possible contribution to the funding of the Labour Party's election campaign. I am sure that the real explanation is that the DTI suddenly realised that the legal advice that it had received previously was hopelessly wrong.

On 1st December 1999, the Minister for Employment and the Regions told the Fifth Standing Committee on Delegated Legislation in the other place: All our legal advice tells us that our provision is in accordance with the directive".—[Official Report, Commons Fifth Standing Committee on Delegated Legislation, 1/12/99; col. 15.] What a pity that, instead of listening to their own advisers, the Government did not listen to the advice of the highly skilled expert on employment law who had been retained by the TUC—Ms Cherie Booth QC—who proved to be right where the Government's lawyers proved to be wrong. What a pity that the Government did not follow the example of the Irish Government, who caved in as soon as the error was pointed out to them.

Last month, my honourable friend the Member for Runnymede and Weybridge asked the Minister in the other place how much this legal fiasco had cost the taxpayer, including, no doubt, the substantial fees justifiably charged by Ms Booth. Answer came there none. At first the Minister claimed: The subject is still under negotiation. No settlement has yet been made". Could the costs still have been under negotiation six months after the settlement of the action? I compliment the lawyers involved for their remarkable forbearance about getting paid for their work.

When pressed by my honourable friend to undertake to write to him when the matter was settled and to say how much money was paid to the TUC, the Minister replied: No, I will not".—[Official Report, Commons Fifth Standing Committee on Delegated Legislation, 7/11/01; col. 20.] I ask the noble Lord, Lord Sainsbury, the same question. I shall not be satisfied with the answer that the Minister in the other place gave, vaguely hinting at "an element of confidentiality". The payment of public money to a litigant with close political links to the Government is a matter of legitimate public concern and interest.

Only last week, I heard the parliamentary ombudsman complaining on the radio about the Government's refusal to comply with one of his rulings. He said that where public money is involved, the public have a right to know how it is being spent. The Government have had adequate time to consider the implications of my honourable friend's legitimate inquiry in the other place and to agree to answer it. If the Minister cannot now give me the information and will not undertake to provide it to me when it becomes available, I shall return to the matter at a later date. I hope that he will display the characteristic openness that he has always shown me over the Dispatch Box and will co-operate, making it unnecessary for me to consider the issue again later.

I have given the history of the situation because the Minister gave a long history of the consultation and I thought it proper to say something to put the whole matter into perspective. I shall now deal with the substance of the three prongs of the proposed new regulation. First, they will enable a person's employment with a previous employer to qualify him for benefits from his new employer. Secondly, there is a provision retrospectively providing for the start-up date for a child's parents to qualify for maternity and parental leave for children born on or after 19th December 1994. That produces the anomaly that the parents of children who are currently six, seven, eight, nine or 10 are entitled to leave, whereas the parents of those who are born on or after 15th December 1999 will be restricted to the original five years. If I am wrong about that, I am sure that the Minister will tell me.

That bizarre situation arises because the Government botched up the original regulations, fought a pointless action with the TUC when the matter was drawn to their attention and in the end had to find some way to placate the TUC—by gold-plating the directive.

Finally, the least controversial—or the most uncontroversial—aspect is to extend the length of leave to 18 weeks in the case of disabled children. The problems faced by parents of a newborn disabled child do not bear thinking about. In the compassionate society that I believe that we all live in, there has to be room for employers to assist such employees. The vast majority of employers, even small employers, would show great consideration to their employees without the need for the regulation, but I agree that, to cope with the recalcitrant minority, this extension of the regulations is reasonable and necessary.

I have referred to the plight of small businesses, on whom the burden of the regulations and similar legislation impinges. They are the least able to cope when an employee takes time off for parental leave. A small firm with just three or four employees cannot simply spread the work among the other few employees. On the other hand, the Government's new legislation that any employee is entitled to full rights, including on holiday pay, redundancy and unreasonable dismissal, militates against such firms taking on temporary staff. The cost to industry of the burdens imposed by the Government in the previous Parliament is £15.9 billion.

In response to a question from my honourable friend, the Minister in the other place tried to persuade the Committee that the cost was a mere 50p per employee per annum. Only this week, he wrote to my honourable friend admitting that he had inadvertently misled the Committee. He said that the figure of 50p per employee per annum, is the cost of the bureaucracy associated with this legislation", but he did not offer any new estimate of the cost. I do not know whether the Minister is in a position to do so. There is no such thing as a free regulation. In the end, someone has to pay.

As I said at the start, we shall of course accept the regulations—we would not dream of opposing them. They have already been democratically accepted in the other place. We only hope that they will not have an adverse effect on small businesses. I note the Minister's comments that the consultation showed that they probably would not.

Lord Razzall

My Lords, I join the noble Baroness, Lady Miller, in supporting the regulations. I have two brief points to make. First, I hope that the Minister accepts our contention that the method of consultation used for these and many other employment regulations seems to produce answers that are well accepted by employers and employee groups. The Government should be commended on their conduct of such consultation exercises. When all the legislation was brought in there was a lot of criticism that far too much was being left to statutory instruments. The Minister and his predecessor said that one of the objectives was to have extensive consultation. It is important that such regulations are brought in after serious consultation. The Government should be commended on how they are conducting that.

Having said that—having given the olive branch with one hand, perhaps I may take it away with the other—I believe that the noble Baroness had a point. Having listened to it, and as we are nearing the end of our proceedings this week, perhaps I may say that, had the noble Lord, Lord Healey, or the noble and learned Lord, Lord Howe, been in their places, they might have considered that perhaps an opportunity had been missed to savage the Minister with a live sheep.

Nevertheless, the point is well made. Why was the TUC forced into the position of taking a case for judicial review against the Government on something that should have been dear to their hearts? I know that in the nine minutes that the noble Baroness spoke, the point became rather lost. However, I should like to hear from the Minister a simple explanation as to how the Government, with their well intentions, got into the position of being sued by the TUC.

The Earl of Erroll

My Lords, although I empathise fully with the cares and worries of the new parent—I have four children, one of whom is disabled—I believe that it is vital for the future to remember that the purpose of employing someone is to get a job done.

If one is a very small employer—I am talking about employing not two or three people but one secretary—it is absolutely disastrous when that employee moves away. No one else is available to train a temporary or semi-temporary replacement. The employer has to do it; there is no one else. A very heavy cost is involved. I believe that every time I change secretary, I probably lose about a fortnight's worth of work—perhaps a little more—over a one to three-month period. After a while, such an employer cannot cope with a number of changes.

I believe that people are losing track of what this issue involves. We are losing a sense of reality. We should protect employees, in particular, against unreasonableness and we should protect those in large companies, where people feel that they do not have a voice. However, if this type of legislation continues, I do not know what the very small employer, employing one person who perhaps carries out two different jobs, will do in the future.

Lord Sainsbury of Turville

My Lords, perhaps I may deal with some of the important points that have been raised. I believe that the noble Baroness has been listening to rather too many of the lurid stories that were put forward in the other place about the sequence of events. She cannot accuse us of gold-plating and then say that we did not fully comply with the directive.

The situation is that the TUC's challenge to the regulations came before the then Lord Chief Justice, the noble and learned Lord, Lord Bingham, in a Divisional Court. He considered that the intention of the directive was not clear. Accordingly, he referred the matter to the European Court. Therefore, clearly there is room for disagreement at a very high level as to whether or not we had complied fully. The Government still believe that we complied perfectly properly.

So far as concerns the costs of the TUC's legal challenge, as a Minister said in the other place, they are under discussion. Therefore, I cannot give them now. I believe that it is quite usual for negotiations about legal fees to drag on. However, in the spirit of openness on which the noble Baroness commended me, I should be very happy to write to her when the matter is settled.

So far as concerns the Explanatory Notes, the point is covered. Perhaps I may read out the relevant part: A new regulation 13(1A) enables these parents to rely on a period of service with a previous employer in order to satisfy the one-year qualifying service requirement to which the right to take parental leave is subject". I believe that that covers the particular point that the noble Baroness raised.

My final point concerns the costs. I believe that the noble Baroness explained the figures herself. Two quite different sets of costs are involved, which it pleases some people continuously to confuse. There is the cost of paying more to people in terms of increased wages or salary bills. According to the Government's own regulatory impact assessment, that figure is £5 million a year; that is, approximately 1 per cent of the annual wages and salary bill for the economy as a whole, or just under £4 per employee per week.

I believe that Members of this House, including Members on the other side, have a clear decision to make on that issue. They can say, "We do not want these particular regulations. We believe that they should be withdrawn and that people should not have these benefits". A straightforward decision can be taken as to whether or not one wants the regulations to be put in place. They may say, "We do not think that the minimum wage is a good thing, although there seems to be some disagreement as to whether that is the case. We think that it should be reduced". Then they can claim legitimately that they would remove that burden from industry.

My honourable friend in the other place referred to the cost of bureaucracy; that is, the procedures that must take place. That cost is 50p a year for each employee and it covers the introduction of the national minimum wage, paid holidays, parental leave, time off for family emergencies, fair treatment of part-time workers and improved maternity provisions.

Finally, the noble Earl, Lord Erroll, mentioned the problems that may arise if people avail themselves of these rights. Of course, there is a provision which allows people to put off the effects of the legislation for six months if difficult cases arise. It appears that the noble Earl has a great deal of experience of secretaries coming and going. Perhaps he should ask himself whether, because they have experience of his work, it is better to keep his secretaries by occasionally giving them parental leave than continually to have them leave their employment. Perhaps they consider that, because they do not receive reasonable leave when they need it as parents, it is very difficult for them to do the job.

The Earl of Erroll

My Lords, none of my secretaries has left because of parental leave problems. I simply point out that in the future I shall be very careful about employing anyone who might possibly qualify for such leave. Having experienced changes of staff, I know that it is very expensive in terms of training and other overheads. I am not an arm of the DHSS, and I believe that it would be nice if the Government started to remember that. I know that I should have responded to consultation. However, I did not even know that it was taking place because this is not the type of debate in which I normally take part.

Lord Sainsbury of Turville

My Lords, I absolutely accept that the noble Earl has this relationship with his secretaries. I believe that he would cut himself off from a very good source of people if he said that anyone who might become a parent would not be suitable for employment by him.

I believe that I have dealt with all the points raised. The changes proposed will help parents to balance the conflict between their work and family commitments. I hope that noble Lords will support the Government today in increasing support for working parents in a way which accommodates the needs of business.

Lord Razzall

My Lords, before the noble Lord sits down, he said that he had dealt with all the points, but he has not dealt with my fundamental question How did this Labour Government get into litigation with the TUC?

Lord Sainsbury of Turville

My Lords, I believe that it is clear that if we believe we are correctly fulfilling the directive and we believe that that is right, then we shall do so regardless of whether the TUC or any other body thinks differently. We are concerned with doing what is right for both working families and business in a way that is flexible and sensible and in a way that both parties can agree. If other parties—for example, the TUC or the CBI—think differently, that does not necessarily deflect us from what we consider to be right. I commend the regulations to the House.

On Question, Motion agreed to.