HL Deb 07 November 2002 vol 640 cc931-41

3.5 p.m.

Lord McIntosh of Haringey

rose to move, That the draft regulations laid before the House on 24th October be approved [39th Report from the Joint Committee].

The noble Lord said: My Lords, in moving these regulations, and with the leave of the House, I shall also speak to the Paternity and Adoption Leave Regulations and to the Statutory Paternity Pay and Statutory Adoption Pay (Weekly Rates) Regulations.

Those who took part earlier in the year in the passage of the Employment Bill, now the Employment Act 2002, will be very familiar with the subject matter of these regulations. We had many good debates on the provisions, and many points were raised which clarified our thinking and led either to amendments to the Bill at that time, or indeed helped to inform the eventual drafting of the regulations which we are considering today. I record my gratitude to all those who took part in those debates.

I begin with the maternity regulations. These regulations will improve maternity rights for up to 300,000 working mothers a year, and they will simplify the arrangements both for them and for their employers. We are increasing paid maternity leave, to which all employed women are entitled, from 18 weeks to 26 weeks, and we are increasing additional unpaid maternity leave to a 26-week period following immediately after ordinary maternity leave. This will give most mothers the possibility of up to one year off work in total. At the same time, negative procedure regulations will increase the standard amount and duration of statutory maternity pay and maternity allowance to £100 a week for up to 26 weeks.

The new maternity regulations will benefit employers as well as employees. Employers will now be given earlier notice of a woman's planned leave, and the period of that leave can be determined in advance, rather than, as now, calculated only once the woman has actually given birth. Employers told us this should make it easier for employers to arrange cover for the absent employee and help retention of women in the workplace, saving costs on recruitment and training.

The second set of regulations, the paternity regulations, give new benefits for fathers. For the first time, eligible fathers will have the right to two weeks' paid paternity leave in the time shortly following their child's birth or—in the case of the partner of an adopter—after a child is placed with them for adoption. Pay will generally be at the same standard rate as statutory maternity pay. This will give fathers more time to care for and build a relationship with their new child and to offer support to the mother.

Paternity leave is available only where the employee in question will share responsibility for the upbringing of the child, and is taking time off for the purposes of supporting the mother and caring for the child. In the majority of cases, of course, this will be the child's natural father; but the regulations do not rule out a new partner of the mother—or, as the case may be, the adopter—if he or she satisfies these fundamental tests.

We have made the system as easy as possible for employers to administer. We have followed employers' suggestions and, wherever possible, have designed the scheme to reflect the existing operation of statutory maternity pay, making it easier for those who need to administer it. We have also taken the opportunity to make some improvements, including an ability for firms to reclaim payments from the Inland Revenue in advance, thus easing cash-flow difficulties. Recent changes to the threshold for Small Employers Relief ensure that an ever-increasing number of smaller firms qualify for reimbursement at a rate of more than 100 per cent of the statutory payments they make.

Adoptive parents, who are covered by the third set of regulations, have sometimes in the past been considered as some kind of second-class parents. I am particularly pleased that—following the decisions of this House earlier this week on the Adoption and Children Bill—today's regulations will, for the first time, give an adoptive parent a statutory right to paid time off work after a child is placed with them for adoption. This new right recognises the valuable contribution that adoptive parents play in society, and allows them to take time off work to establish a relationship with their new child. One adoptive parent will be entitled to the full adoption leave; the other will be eligible for paternity leave, on the lines that I have just mentioned. That will, we hope, reduce the rate of disrupted placements and thus ensure a better future for many children who are leaving the care system and seeking placement with a family.

Adoption leave is broadly equivalent to maternity leave, set at six months' paid leave at the standard pay rate, followed by six months' unpaid leave, giving up to 12 months off work in total. We expect that to benefit up to 4,000 adopters in 2003 who will be up to £2,600 better off than before.

These regulations form a key component in our package of statutory support for working parents. They have been designed in the closest possible collaboration with all interested parties and are, I believe, not just right in principle but practical in detail. I beg to move.

Moved, That the draft regulations laid before the House on 24th October be approved [39th Report from the Joint Committee].—(Lord McIntosh of Haringey.)

Lord Hodgson of Astley Abbotts

My Lords, I begin by thanking the Minister for the characteristically clear way in which he introduced and explained these three interlocking statutory instruments.

It is hard to think of any event in a person's existence that gives greater joy than the arrival of a new child. That is as true for adopted children as for new born ones. Regulations designed to enhance that sense of joy and improve bonding between parents and new arrivals command instinctive sympathy. But on this, as on so many matters of public policy, there is a balance to be struck between the enhancement of private happiness and an increase in public cost, be it to the taxpayer or to the employing firm.

I said that I was grateful to the Minister for having explained the instruments so carefully because they are not in themselves an easy read. That is particularly relevant given the wide impact that they will have, involving, as they will, every employee and every employer, large or small, in every part of the country. It is because of that wide impact that, before I turn to the issues directly involving the regulations, I hope that the Minister will forgive me if I address the process and timetable that his department has followed for their promulgation.

When I was asked at the beginning of last week to speak to these regulations I went to the Printed Paper Office on 29th October, a week last Tuesday, to get copies of the regulations. I was told that they were not yet available in print. They were finally made available on Thursday, 31st October, exactly seven days ago. Today we discuss them and they come into force on 24th November, a fortnight on Sunday, and on 8th December, although it is perfectly fair to say that a number of the provisions take effect only in April of next year. This is too short a period of time between publication of the final regulations and the debate here today and, indeed, in another place on Tuesday. It is too short a period in any case but particularly so when the regulations have such far-reaching implications.

The Minister's colleague, the noble and learned Lord the Leader of the House, has often chided us on the need for the House to become more professional and businesslike in its approach. I hope that the Minister will forgive me if I say that I do not find that timetable businesslike or professional. Nor, indeed, is it likely to provide a framework within which genuine concerns or objections about the final regulations can be raised, ventilated and discussed; that is to say, the carrying out of the proper essential function of your Lordships' House as a revising Chamber.

The Minister could, and probably will, argue that there has already been wide-ranging consultation. The Explanatory Memorandum that accompanies the regulations signed by the Minister's colleague, Mr Alan Johnson, stresses that. That is a perfectly fair point. However, few, if any, of the interested parties in the wider world know the result of the consultation as they have not yet had a chance to see the final documents. For example, I spoke to the Engineering Employers' Federation to seek its views on the final regulations. It recognised the scale of the consultation and referred to what the Minister had done. These extremely heavy documents certainly meet the weight test if nothing else. However, the federation said that it had no idea of the outcome as it had not yet seen the regulations. That is no doubt paralleled in other bodies and interest groups. It is not a satisfactory situation.

I turn to the issues raised by the regulations. My first broad point concerns the drafting style of the regulations. It has been put to me that in earlier drafts, and perhaps in the versions that are now before us, the terminology and definitions of terminology do not precisely match. The Maternity and Parental Leave (Amendment) Regulations and the Paternity and Adoption Leave Regulations had at that time different terminology from that in the Statutory Paternity Pay and Statutory Adoption Pay (Weekly Rates) Regulations. That probably arose because the first two regulations are the child of the Employment Rights Act 1996 and the other is the child of the Social Security Contributions and Benefits Act 1992, which means that they fall under different departments: the Department of Trade and Industry and the Department for Work and Pensions.

The major concern outside the House has been the unmeshed terminology and rules for maternity, paternity and adoption leave, as opposed to maternity, paternity and adoption pay. Will the Minister reassure the House that those discrepancies have been ironed out? It would add enormously to the burden of the regulations if there was not clarity and consistency.

As the Minister pointed out, the Government have made a genuine and great effort to tidy up and synchronise different rules in the regulations. I refer, for example, to the harmonisation of dates and efforts to build on the existing operation of maternity pay in the administration of the new regulations. I congratulate the Government on that. It would be a pity if, as they cleared up one set of inconsistencies, another set was created.

My second general point is about the impact of the legislation on smaller firms, especially very small firms: those that employ only a handful of people. For such firms, the regulations represent a real burden. I accept that the Government have prepared an impact assessment to accompany the regulations. However, because of their very nature, such statements are broad brush and cannot identify where the shoe particularly pinches. Consider the position of a firm with half a dozen employees when one member of staff wishes to take the full leave entitlement of 52 weeks. The firm would have lost one-sixth of its workforce and would have to provide cover for that post. If, at the end of the 52 weeks, the original employee wanted to return, the replacement employee would have completed one year's service. He or she would therefore, as I understand it, have certain protections within employment legislation. I assume that I am right about that but if I am not, I am sure that the Minister will correct me. The small firm either has to have seven employees—an increase of 15 per cent—or face a redundancy cost.

When the question of the cost of the regulations on small firms in particular was raised in the other place, the Minister, Mr Alan Johnson, focused entirely—as did, I am afraid, the noble Lord the Minister—on changes in Inland Revenue regulations; that is, on the cash impact. When one reads the debate in another place, the Minister's response reveals how little the Government really understand about real business life at the sharp end, especially in smaller firms. I know that the noble Lord the Minister can be exempted from that criticism because I have heard him talk from the Dispatch Box about his existence in the lighting industry. The burden of regulation, as he knows, is not just about cash and cash flow; it is about form filling, administration, making sure that the boxes are ticked and that the money is properly identified and recorded, arid that proper notification is sent out to employees on the right date.

Various extensions in that latter category will be imposed on firms by these regulations and, moreover, by the hundreds of other regulations that are increasingly burdening smaller firms and blunting their entrepreneurial drive and competitive edge. At some point, somebody somewhere is going to have to step back and look not at the individual regulations, most of which have thoroughly worthwhile motives, but at the overall burden that they represent. At some point, the threshold for small firms will have to be addressed. Eventually, we shall reach the point of unintended consequences.

The regulations are basically intended to improve the life/work balance and specifically to enhance employment opportunities and conditions for parents and for young women in particular. It would be a shame if the result of the burden of regulation was that firms—in particular, smaller firms—became more reluctant to employ women of child-bearing age.

I want to ask the Minister four specific questions about the regulations. The first concerns the notification by employees who intend to return from leave early and not take their full entitlement. Under the present regulations, such employees are required to give notice of their intention to return early; alternatively, the employer can write to them and they are statutorily required to answer. I understand that that is no longer the case and that the firm must depend on the good will of the employee—in itself, no bad thing—to be able properly to plan its manpower. Is that really a sensible way to proceed?

Secondly, I turn to the remuneration position of employees during the second 26-week period if they elect to take additional leave. I understand that they are not to be paid, but what about year-end bonuses, entitlement to holidays and other fringe benefits? Can the Minister clarify that position?

Thirdly, I want to ask about working and drawing. Can the Minister put on record the future employment position with his original employer of the employee who, during the period of leave—whether it is the first or second period of 26 weeks—elects to go to work for another firm and then returns to the firm by whom he or she was originally employed?

Finally, I turn to the position of adopting parents. Of course, one understands the excitement of such people, but they are in a different position from birth parents in at least two senses. First, a natural mother will have gone through the physical trauma of a birth from which she needs time to recover. Secondly, the adoption may be of a baby, in which case the perils of natural birth are fairly close. But the adoption may be of a school-age child. In the documents circulated by the adoption agencies, which many of your Lordships will have seen and which tug enormously at one's heart strings, many of the children listed as being available for adoption are of school age. In such circumstances, the need for longer periods of leave does not seem to be as pressing. Can the Minister explain the Government's decision to give the same leave entitlement for all adopted children, irrespective of age?

In conclusion, as I said at the beginning, we have to strike a balance. No one could fail to be excited by the exhilaration of parents—natural or adoptive—with a new child. But, in supporting these regulations, we have to look at all aspects of what is implied. I look forward to hearing the Minister answer the points that I have raised.

3.15 p.m.

Lord Roper

My Lords, from these Benches we accept the three sets of regulations. We have always supported the introduction of these benefits and are therefore pleased to see their implementation and the fact that next year they will be in operation. The noble Lord, Lord Hodgson, was right that a balance must be struck in these matters. On this occasion, we believe that the balance has been broadly correctly struck. However, the points about small businesses are ones that we must always keep under consideration, and no doubt we shall return to them.

As the Minister made clear in his introductory remarks, it is a very happy coincidence that, in the week in which we completed consideration of the Adoption and Children Bill, we are agreeing that the benefits which have previously been available to birth parents should also be available to adoptive parents. Although I understand the point raised by the Conservative Front Bench about the differences, I believe that in order to give support and assistance to adoptive parents—an issue raised during our earlier consideration of the other measure—again, the balance has been properly struck.

However, in responding to the debate, perhaps the Minister will say something more about the point made in the Explanatory Memorandum concerning the summary leaflets which have been produced and which will be made available so that people will know of the benefits that they are about to receive. On these Benches, we very much hope that the orders come into effect.

Lord Lea of Crondall

My Lords, I want to make two points which arise principally from the interesting analysis of the noble Lord, Lord Hodgson of Astley Abbots. There is no doubt that statutory instruments which are regularly brought forward on matters akin to this are of great importance. They affect the lives of real people and small and large businesses and so on. They have a positive impact in transforming the labour market in the sense that many people are able to run what some call a post-modern existence more readily because of such regulations. There is a downside and an upside, as has been said.

The noble Lord, Lord Hodgson of Astley Abbotts, also commented on the process and audience of statutory instruments. I am a member of the Joint Committee on Statutory Instruments, and the problem occurs in the following way: people say, "Let's have an in-depth examination of how this is received out there", and, "This is a much more generic matter than one particular statutory instrument". There is a need for a generic inquiry about how statutory instruments can be made more easily comprehensible. If one asks for a more generic inquiry, people will say,"Give us evidence of one example of a difficult situation", and the one example may concern slaughtering sheep or whatever. That is a difficult exercise. I leave that thought with the House because a question arises, but procedurally it is hard to know how to take it further.

My other observation is that this presents challenges to employers. The great advantage of the procedure that entails social framework bargaining, some of which comes from Brussels, such as the Social Chapter—I am sure that the noble Lord, Lord Hodgson of Astley Abbotts, would not agree with this—is that the CBI, like the TUC, is part of it. Participants in Social Chapter negotiations comprise one organisation from the employers and one from the trade unions in each country. That is not the small businesses; the small businesses have much smaller membership and of course they are all snapping at the heels of the CBI. That is not surprising.

I emphasise that the regulations have been received more readily by industry and business as a result of the involvement of the social partners in drawing up the frameworks against which those detailed regulations are put forward. The only other conclusion that one can reach is that some people would de facto advocate a two-tier labour force. If one works for a small firm, one does not have the same rights as if one worked in a large firm. As I had occasion to remind the House once before, I remember the former Prime Minister Mrs Thatcher discussing the problems of small firms. John Monks said to her, "Prime Minister, why not consider saying that small firms do not have to observe the 30 mph speed limit?" to which she said, "That's a good idea; make a note of that", to a civil servant.

One cannot have a two-tier labour force on basic rights like this, so there is a balance to be struck. With regard to the difficulty of introducing such provisions, there is a more generic issue relating to statutory instruments, but that is not for this debate; it is a matter for future consideration.

Lord Monson

My Lords, a potential problem arises with the new concept of paternity leave and paternity pay that for obvious biological reasons cannot apply to maternity leave or maternity pay. What happens when a man has two or more children by two or more women in the course of a year at, say, for the sake of argument, intervals of three months? If the picture of contemporary Britain painted by the tabloids is in any way accurate, that must happen with increasing frequency. In such a case, is the man entitled to paternity leave and paternity pay in respect of each child? If so, that seems more than a little unfair to the employer—in particular, the small employer cited by the noble Lord, Lord Hodgson—and more than a little unfair to the taxpayer.

3.30 p.m.

The Earl of Listowel

My Lords, I also welcome these three regulations. I am put in mind of my cousin who was so sad after her first child Thomas's birth to have to return to work so soon. I hope the regulations will allow many mothers to have the joy of their children for longer.

I welcome the first regulation because of the increasingly available and widely received evidence of the importance of an infant's relationship with his primary care giver in the first months and year of his life: the importance of that to his emotional well-being, the resilience it gives him and that that child is less likely to be involved in antisocial behaviour later in life.

At the weekend I attended a colloquium celebrating the 50th anniversary of the Anna Freud Centre. Three neurobiologists and neuropsychologists gave talks which were way above my head, but they were using the latest scanning technology which can show how the brain responds to feelings in changes in body chemistry. What they were saying, as I understood it, was that at birth an infant has a huge array of neural connections. Many of these are pared down in early infancy. The relationship with the mother, or with the primary care giver, is key to setting those neural pathways in that infantile period. If there is not a good relationship with the primary care giver there are many problems, among them a difficulty in regulating emotions. That is a primary concern in later antisocial behaviour. If an adolescent cannot manage his emotions, he is far more likely to be involved in antisocial behaviour. So I welcome this regulation.

The Minister and I have debated before the consistency between encouraging mothers to choose to go back to work early on in an infant's life rather than perhaps allowing them to make a choice between going back to work or looking after their child. Tax incentives encourage mothers to go back into work as early as possible. I would prefer mothers to be able to make a choice between going back to work and choosing to stay with their child. I would like to see that made easier. Again, I welcome these regulations.

Baroness Howarth of Breckland

My Lords, I welcome these regulations. I had not intended to speak, but I want to make a comment about adoptive children. As a practitioner, I can say that rarely and occasionally one places a delightful seven year-old child, or any child from two years up. If one took part in the adoption debate, one would know that these children are extraordinarily difficult and, if anything, need more time. Many women, sometimes men, in the family give up work in order to settle these children because of the difficulties. Far from needing less time, I am sure that they need more time.

Lord McIntosh of Haringey

My Lords, I am grateful to all noble Lords who have taken part in the debate, particularly since my understanding is that everyone welcomes the regulations that have been moved.

I shall try to deal with the points as far as I can in order. First, I am sorry that the regulations which were laid on 24th October appear not to have been available in the Printed Paper Office until 31st October. I did not know that. Inquiries will have to be made into that. I hope that the noble Lord, Lord Hodgson, when he received them finally, was consoled by what I consider to be excellent Explanatory Notes.

The noble Lord asked about the consultation period. I deliberately did not take the House through all the steps in the consultation exercise, which began with the publication of the Green Paper in December 2000 entitled Work & Parents: Competitiveness and Choice. It has continued through a number of further formal consultation exercises, virtually up until today. I do think that it has been widely agreed that this is one of the most open, comprehensive and participative consultation processes that the Government have ever undertaken. Although no one can undertake to satisfy everyone, the regulations have the broad endorsement of everyone whom we have consulted, including employer and employee interests.

The noble Lord, Lord Hodgson, asked about terminology and past difficulties with concordance between regulations about leave and pay. The new paternity and adoption regulations cover both leave and pay. I hope that the noble Lord will find that they are consistent. We have sought to bring up to date existing maternity regulations. They are not all contained here, because some fall under the negative resolution procedure. It is not self-evident. but if divergences remain that is because people have told us during the consultation that there are good reasons for maintaining those differences. If the noble Lord has any help to offer on any particular point, I shall of course be delighted to listen to him.

I am not surprised by what the noble Lord, Lord Hodgson, and my noble friend Lord Lea said about the problems of small businesses. Although they recognise that cash arrangements for small businesses will be improved, I agree that other burdens on small businesses remain. As the House will be bored with hearing, my qualifications are not just that I spent a couple of years in the lighting industry but that I ran a small business for 30 years. I know the regulatory impact on small businesses. I have experienced senior staff in a business employing only 30 to 35 people going off to have three babies one after another, quite properly taking advantage of the 13-week rule and then, less than a year later, going to work for someone else. That is galling.

As the noble Lord, Lord Hodgson, said, we must maintain a balance. It is difficult to get that balance right for everyone. However, I agree with the noble Lord's conclusion that it is important to maintain the life/work balance. The advantages for employment opportunities, especially for young women, and for employers of increasing the pool of available labour outweigh the disadvantages. That is not just socially, but economically right.

The noble Lord asked me four specific questions. First, on the notification of the return, the regulations mark an improvement on the existing provision, because they provide that notification of return must be agreed in advance between employer and employee. If any change takes place, inquiries can be made and notification given, but there will certainly be no less protection for employers. The noble Lord asked me about remuneration in the second period and bonuses. They are subject to prior agreement between the employee and employer. There is defined case law on holidays and accrued holidays, which resolves that issue. The noble Lord also asked me about an employee who goes to work for a second employer and then expects to return. There is no entitlement. No one can get a second job at public expense. That would be unacceptable.

The noble Lord, Lord Hodgson, asked me an interesting question that was followed up by the noble Earl, Lord Listowel, and the noble Baroness, Lady Howarth, about adoption of older children. Having taken part in a junior ministerial capacity in consideration of the Adoption and Children Bill, I am thoroughly convinced that the argument for having adoption leave for older children is, if anything, stronger than for babies. The risk of disrupted placement is greater at a more advanced age. As the noble Baroness said, even if there is no pay, many adoptive parents take time off for an older child simply because they believe it essential to avoid disruption and a failed adoption. The argument is strong in that sense.

I am grateful for the comments of the noble Lord, Lord Roper. He asked me about the summary leaflets. They were produced in August and are subject to the approval of Parliament and say so. They will be updated as time goes on. I stress that employers and employees need not read the regulations; they must read the leaflets in order to understand what to do.

My noble friend Lord Lea of Crondall joined in the debate on small businesses. I am grateful for what he said. The Opposition never suggested, in this House or in the Commons, that small businesses should be exempt from the regulations. That would, indeed, be a system of postcode benefits, and it would be a thoroughly bad idea.

The principal answer to the noble Lord, Lord Monson, is the one that I gave in my opening speech. Paternity leave is available for the father or equivalent person who is responsible for upbringing. It would be difficult to conceive that somebody having two children by two different women in the same paternity leave period—it is only two weeks—could realistically be thought responsible for upbringing.

Lord Monson

My Lords, I was talking about two children being born not within a period of two weeks but within a period of, let us say, three months.

McIntosh of Haringey

My Lords, even at that, it is difficult to believe that they could realistically claim to be responsible for the upbringing of both, unless it were a ménage à trois, which would raise interesting complications in regulation making.

I have answered and expressed my gratitude to the noble Earl, Lord Listowel, and the noble Baroness, Lady Howarth of Breckland, for their observations and for their support for the regulations.

On Question, Motion agreed to.