HC Deb 03 December 1990 vol 182 cc5-6W
Mrs. Gorman

To ask the Secretary of State for Social Security what recent representations he has received from small business organisations regarding his plans to review statutory sick pay reimbursement regulations.

Mr. Scott

Such representations have been received from the following organisations representing small businesses.

  • National Federation of Self Employed and Small Businesses;
  • National Farmers Union;
  • The National Chamber of Trade;
  • The Retail Consortium;
  • The Union of Independent Companies;
  • The Electrical Contractors' Association.

Representations have also been received from the Confederation of British Industries and the Employers Engineering Federation, which will have small businesses within their membership.

Mrs. Gorman

To ask the Secretary of State for Social Security if he has estimated the cost to business of moving to 80 per cent. reimbursement of statutory sick pay to business.

Mr. Scott

The proposals in the Statutory Sick Pay Bill reducing the amount of statutory sick pay (SSP) which employers can recover from 100 per cent. to 80 per cent. will produce savings in public expenditure of £181 million in 1991–92, rising to £190 million in 1992–93 and £197 million in 1993–94. In addition, the ending of additional amount (currently 7 per cent.) which employers can recover as compensation for the national insurance contributions payable on statutory sick pay itself will result in an increase in national insurance income of £71 million, £75 million and £78 million in the three respective years.

My right hon. Friend has also announced reductions in employers' national insurance contributions, which will operate from the same date as the statutory sick pay changes. These are worth some £250 million to employers and have been particularly weighted to help small businesses. They will go a long way towards reducing the extra costs for employers of the statutory sick pay changes and in some cases totally offset them.

The precise effect of the combined statutory sick pay/National Insurance contributions package on individual businesses will depend on the sickness experience and pay levels within their work force, but bearing in mind both the contribution reductions and the fact that most spells of statutory sick pay are over very quickly—the average period is three weeks and 90 per cent. are over within eight weeks—the extra cost for small employers is not expected to be significant.