Clause 2 - Statutory paternity pay
Employment Bill
10:30 am
Amendment proposed [10 January]: No. 129, in page 8, line 8, leave out from the word 'State' to the word 'is' in line 10 and insert the words
'shall, by regulations, provide that all statutory paternity pay and associated employers National Insurance Contributions, together with an amount calculated by the Secretary of State to equal the average cost to employers for each employee to administer'.—[Mr. Hammond.]
Question again proposed, That the amendment be made.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
Good morning, Mr. Benton. Clause 2 relates to a part of the Bill that is not concerned with an employer's right to recover statutory paternity pay—an issue to which we will come when we discuss clause 7. I refer the hon. Member for Hertford and Stortford (Mr. Prisk) to that clause in respect of his previous question about adjustment of the recoverable element of 92 per cent. He will see that that provision is written into the Bill, so we would not be able to make such an adjustment. His question was right, but he asked it of the wrong clause.
Clause 2 deals with specific occasions when an employer's liability to pay statutory paternity pay is transferred to the Inland Revenue. We intend to provide for that in two circumstances: first, when an
employer becomes bankrupt or insolvent; secondly, when he has failed to pay statutory paternity pay.
Mr Mark Prisk (Hertford and Stortford, Conservative)
Do such circumstances include those in which companies are put into administration?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
Yes. Such provision will be made if, for any reason, an employer is unable to meet his obligations in respect of statutory paternity pay. Where an employer should have paid statutory paternity pay but appears to have failed to do so, the Inland Revenue will first have to investigate the circumstances. Where it is satisfied that the employer was indeed liable, it will make a formal decision to that effect and write to the employer stating as much. The employer will then have the right to appeal against the decision. If he does not appeal, or if the appeal is unsuccessful and he continues to fail to pay statutory paternity pay, the Inland Revenue will take over liability and will make the payment direct to the employee. The same principle will apply to statutory adoption pay.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I can see, in the light of the Minister's explanation of the purpose of this part of the clause, that the amendment appears to have missed the target somewhat. As he says, it would have been better applied to clause 7, but it is not at all clear from the Bill that the term ''liability to make payments'' relates only to a liability to make direct payments. I interpreted reference to the board's liability to make payments as reference to the ultimate funder of the arrangements, and I thought that the clause was providing for the Secretary of State to apply the 92 per cent. rule or the 100 per cent. rule. Is the Minister comfortable in his own mind that the words
''circumstances in which . . . liability to make payments . . . is to be a liability of the Board''
could not be properly interpreted to mean circumstances in which the board was reimbursing the employer through the pay-as-you-earn system?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
Yes, I am satisfied that that is the effect of the Bill. The amendment would remove the Secretary of State's ability to specify circumstances in which liability to pay will fall on the Inland Revenue, so it would allow employers to do three things. It would allow them to recover, first, all the statutory paternity pay that they pay out, secondly, the associated employer's national insurance contributions and, thirdly, a further amount that would equal the employer's average administration costs. We already intend to do most of what the amendment calls for and, as I have said, the relevant provisions are in clause 7.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
Whether or not the amendment is in the right place, perhaps we can address the substantial point, which is that the whole cost of the statutory paternity pay scheme should fall on the state, the benefit being a social benefit, not a benefit to the employer. What estimate has the Minister's Department made of the full cost to the Treasury of meeting the obligations set out in the amendment—100 per cent. reimbursement plus national insurance contributions in all cases, together with an appropriate administrative fee?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
We have estimated that the cost would be around £60 million a year. That is an important point, although the amendment has been tabled to the wrong clause.
Let me deal with each element of the amendment, because one important principle about the cost of administering the scheme was raised by the hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Hertford and Stortford. We have made it clear that employers will have the right to recover statutory paternity pay in the same way as they recover statutory maternity pay. All employers will be able to recover at least 92 per cent. of statutory paternity pay—the hon. Member for Runnymede and Weybridge said on moving the amendment that that is quite a large proportion—and small employers will be able to recover 100 per cent. Because of the changes that we have made elsewhere, more small employers will qualify than previously, which mirrors the position applying to statutory maternity pay.
It is perfectly reasonable to expect larger employers to demonstrate their commitment to employees taking leave to care for new families by funding a small amount of payments made to them while they are on paternity leave from work.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
We believe it right that they should do so. We apply the same principle to statutory maternity pay. Many of the best employers recognise that by topping up their statutory maternity pay schemes and are happy to bear the cost of doing so.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
On other occasions, the Minister has argued that employers should gladly bear a burden imposed on them by statute because it is in their own interests to do so. No matter how valuable paternity leave and pay are, however, they are clearly being imposed for the wider benefit of society as a whole. Does the Minister accept that, or is he suggesting that there is a direct benefit to employers from the proposed scheme for statutory paternity leave and pay?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The same argument—that 92 per cent. of costs should be recoverable—applies to statutory maternity leave, a provision introduced by a Conservative Government. There are benefits to employers in better staff morale, recruitment, retention and so on. However, the point that I am laboriously repeating—I am boring myself, never mind members of the Committee—is that we have sought to mirror the maternity leave provisions, so that employers faced with a woman seeking to take maternity leave and a man seeking to take paternity leave do not have to comply with two different sets of regulations. We have largely married them up.
Mr George Osborne (Tatton, Conservative)
On paternity leave and the cost of the new regulations, the regulatory impact assessment produced by the Government clearly states that the cost to taxpayers will be £63 million recurring, the one-off cost to employers will be 10 million, and the cost to employers for covering absences will fall within the wide range of £25 million
and £42 million. However, no assessment of the cost to larger employers is apparent. They would have to fund about 8 per cent. themselves, so has the Minister any figure for that?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I am not sure whether we have broken that down precisely. If the regulatory impact assessment does not address that, I will try to answer the hon. Gentleman's question later today.
Mr Charles Hendry (Wealden, Conservative)
The Minister referred to the 92 per cent. recoverability rate. My recollection is that when that was introduced by the Conservative Government, it was accompanied by a reduction in employers' national insurance contributions to compensate for the fact that they would not get as much money back. If the principle is to be extended to statutory paternity pay, is it not appropriate to make a similar reduction to national insurance contributions?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
We have moved into Finance Bill territory. Employers have welcomed reductions made to national insurance contributions since 1997. We have not heard a case for reducing national insurance contributions as a result of the introduction of statutory paternity leave and adoption leave. Adoption leave will affect around 200 people a year. On paternity leave, we expect an 80 per cent. take-up, but that may not be the case. I do not accept the hon. Gentleman's argument to marry up two different ideas, even if that was done under a Conservative Government, which the hon. Member for Wealden (Mr. Hendry) does not seem sure about.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I may have misunderstood the Minister, but I heard him say that statutory adoption pay will affect around 200 people. That is a small number. Do the Government not want a higher target for increasing the number of adoptions and expect adoption leave and pay to be correspondingly higher?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
In the few minutes since I spoke, we have considerably revised that figure up to 3,000. God knows how 200 became lodged in my mind. The hon. Gentleman is right and has given me the opportunity to correct myself. None the less, the figure is small compared with the number of women who take maternity leave.
The amendment calls for employers to be reimbursed for the full amount of the associated employers' national insurance contribution. That is already done for small employers paying statutory maternity pay, who receive compensation calculated to cover the cost of associated employers' NICs. That will be extended to statutory paternity pay and statutory adoption pay, and the relevant provisions are in clause 7.
On Thursday, Opposition Members recognised the important principle that the amendment calls for further compensation to be paid to employers—employers would be paid an amount to cover the new schemes. We recognise that employers will incur a cost for implementing and administering the new schemes and that is why we have tried to make the schemes as similar as possible to statutory maternity pay and why the Inland Revenue will provide
extensive support and guidance to employers to keep costs to a minimum.
On principle, however, we do not accept that employers have a right to cover administration costs from the public purse. I do not think that any hon. Member would agree with the proposition that citizens, including employers, should be paid for complying with the law. We all incur costs to meet obligations, whether it be time spent to complete tax returns or take a trip to the post office to tax our cars, or the many thousands of pounds a limited company pays to have its annual accounts audited. The position is the same here, and there is no reason to go beyond what we have already said we will do. We do not accept the argument for changing the principle of not reimbursing citizens or companies for complying with the law. I hope that I have clarified our intention on the employer's right to recover costs, and that we shall not have the same discussion when we go round the course on clause 7. I also hope that I have resolved any confusion about the clause's purpose, and I invite the hon. Member for Runnymede and Weybridge to withdraw the amendment.
Mr Norman Lamb (North Norfolk, Liberal Democrat)
Clearly, everyone accepts that this is the wrong place for the amendment. Nevertheless, there is a case for all organisations that employ people incurring the cost of administering the scheme. If the burden were shared among all taxpayers, some people who have no children would say, ''Why should we contribute to the cost of companies administering paternity leave?''
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The point is that the choice is between sharing the burden among all taxpayers whether they have children or not, or sharing it among all employees, whether they have children or not, of the employer in question. I suggest to the hon. Gentleman that the wider base is more appropriate.
Mr Norman Lamb (North Norfolk, Liberal Democrat)
The wider base will be used to pay for the majority of paternity leave. Given that the costs will be insubstantial and that the scheme's administration should not be complex, it is pragmatic to judge that companies should incur that limited cost. We have received no representations from employers' organisations demanding that that part of the cost should be paid by the state. The amendment is in the wrong place, but I still reject the principle behind it.
Mr Mark Prisk (Hertford and Stortford, Conservative)
The Minister made a point at the end of his speech on which I was unable to intervene because I am not quick enough on my feet at this time in the morning. It related to the established principle of not recognising costs to employers where they are dealing with the administration of laws. Can he square that with the recent reviews of payroll costs undertaken by his colleagues in the Treasury, which are supported by the Under-Secretary of State for Small Business? Those reviews examine how the Government can square the need to recognise the disproportionate cost of these administrative burdens on small businesses. I would be grateful if the Minister were to explain how his earlier statement squares with that review.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I shall seek to withdraw the amendment, but I have a couple of points to make to the Minister, who I hope will have a few more words to say.
On statutory paternity pay, I accept that we are discussing burdens that would be small in practice. The issue of where the line is drawn is therefore a matter of principle. I do not want to get into lengthy debates about straws and camel's backs because we have been around that territory before. Nevertheless there is a feeling, of which I am sure the Minister will be aware, in business, and in small business in particular, that we are moving into dangerous territory where the Government routinely regard business as an extension of the welfare state. They are using businesses' expensive and extensive payroll infrastructures as the mechanism for delivering benefits and financial support that would have been regarded 20 or 30 years ago as something that one collected from the post office on a Thursday morning.
That is happening because the Government are intent on wiping out the post office network, and in particular the rural sub-post office network. They have undoubtedly had to think of an alternative method of delivering those benefits because they have told us that the post office network is an administratively expensive mechanism for delivering benefits and financial support. Disingenuously, they have sought to find what would be, from their point of view, a completely free system requiring employers to shoulder the burden. Of course, we are talking not only about statutory paternity pay or statutory maternity pay, but about the working families tax credit and a panoply of other benefits. The Government appear to have resolved to use the pay packet as the principal method of delivering financial support to those who are in work.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I remember that the hon. Gentleman took part in debate on this issue in Finance Bill proceedings. We are talking about a relationship between the employer and the employee. It is right that paternity pay is issued through the pay packet. Some employers who now pay paternity leave willingly will be grateful for assistance from the state that they do not get at the moment. Under these provisions, they will be able to claim back 92 per cent. to 100 per cent. of what they already pay out.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
Hold on, this is an intervention—a pretty long one, Mr. Benton, but I am using it to deal with the point raised by the hon. Member for Hertford and Stortford.
Through the working families tax credit and the children's tax credit, we are trying, for the first time in my lifetime, to deal with the problem of people who find that marginal tax rates are an enormous disincentive to moving from the dole queue back into work, and with the fact that there is a world of difference between money arriving in a giro cheque and money arriving in a pay packet.
Let me tell the hon. Member for Hertford and Stortford that we must consider every opportunity to reduce any unnecessary burdens on business in
administering the schemes. That is a world away from changing the principle—adopted by all Governments, including the previous Government and ourselves—that citizens or companies should not be compensated for carrying out the law. There is a vast difference between those two concepts.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I accept that that point was addressed more to my hon. Friend the Member for Hertford and Stortford than to me.
High effective marginal tax rates are a problem, and a pretty intractable one, in every system.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I shall in a moment.
We could have a lengthy debate about in-work benefits, but I am sure that you would not encourage us to do so, Mr. Benton. That fascinating subject needs to be looked at again, because we are in danger, if we are not careful, of creating a society in which low wages and in-work benefits are considered the norm. That would be completely the wrong way to go. We should encourage a society in which the economic dynamics are such that people in work do not routinely need benefits to enable them to have a decent standard of living. The Government seem to be heading in the direction of accepting that people in work and pensioners will routinely need support from the benefits system.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
In a moment. I just want to make my point. The Minister is right to say that we do not reimburse citizens for complying with their routine obligations under the law. However, it is a matter of degree. The Bill is not asking people to comply with a routine requirement of the law. It makes a wholesale transfer to employers of a responsibility that has been a responsibility of Government, and a cost to Government through the operation of the benefits system. That process has been going on for some time, and the present Government have accelerated it.
Conservative Members worry about the cumulative burden of the role that the Government are imposing on employers. It is wrong for the Minister to say that it is beyond the pale even to consider making payments to employers for shouldering that burden on the Government's behalf. I am not suggesting that the employer payroll is not the most efficient way of delivering the benefits: employers may be willing to offer that service to the Government. However, it is unreasonable of the Government to torture century-old Inland Revenue legislation, which was not established with the intention that people should ever be paid money through the payroll system of tax collection, to remove a burden hitherto borne by the state. The Minister is wholly wrong to suggest that the Government could not consider such a proposition. As my hon. Friend said, the Chancellor of the Exchequer commissioned a study of the payroll administration burdens of the part of the welfare state that employers administer through the payroll. I have referred to that previously in the Committee and the Minister and the
Under-Secretary for Small Business—he is knowledgeable about and interested in the matter—will know that a system operating in the United States allows small employers to claim cost support for the administrative burden of managing payroll-based systems.
The amendment is not impossible and, since they are considering the matter, it clearly would not conflict with any principle that the Government hold dear. I accept that the costs would be small, but I do not accept that it is proper in principle for Government to transfer parts of their function wholesale, remove costs from their budget and expect someone else to take up the burden without compensation.
I shall now give way to the hon. Member for North Norfolk who has been exceptionally patient.
Mr Norman Lamb (North Norfolk, Liberal Democrat)
The problem of delaying for so long is that my point has long since been lost. I wanted to suggest to the hon. Gentleman that the principle of transferring a burden from the state to employers worked with a vengeance during the years of Conservative Government—for example, responsibility for statutory sick pay had been a burden on the Government, but was transferred to employers with a massive cost burden. In a small firm employing perhaps 10 people, the occasions on which it will have to administer payment for paternity leave will not be frequent—perhaps once every one or two years one person will take two weeks' paternity leave. Should we not be pragmatic and say that the cost on the small firm of administering that one employee's paternity leave will not be great? The burden must fall somewhere and, given that the cost of paternity leave will fall generally on taxpayers, it is surely not too much to expect a small firm to bear the cost of administering the paternity leave of one employee. If the Conservatives intend fully to embrace the concept of paternity leave, surely it makes sense to follow the same principles applying to maternity leave during the short two-week period of paid paternity leave.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I do not want to argue with the hon. Gentleman. The trend has continued for some time and I detect roots planted before 1 May 1997, but the Government have accelerated the trend and are doing so further in the Bill. If my memory is correct, the previous Conservative Administration reduced employers' national insurance contributions to compensate for the cost burden of statutory sick pay.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
That may be so. I agree that it would be impracticable to think in terms of a £2.34 weekly administration payment for each person on statutory sick pay. I am asking the Minister about the principle that the overall cost of administering such schemes—or, if the Government wanted to be more generous, the estimated saving to the Government of not having to administer the scheme directly, which would be a much higher figure—should be recognised as a credit to employers. That could be done through a national insurance contribution credit for small employers—a straight percentage reduction in employers' rate of national insurance contributions. I am addressing the principle, and it offends me—it
offends all employers—that the Government seem to believe that it is legitimate to transfer burdens successively and in an accelerating pattern from the state to employers, transferring that administrative cost without any form of recognition at all. It just will not do for the Minister to say, ''We don't pay people for doing their tax returns so why should we pay employers for carrying out administrative work on behalf of the Government?'' I do not think that that is a reasonable position for him to take.
I have focused my remarks on the administrative cost element. It does not appear to me self-evident that large employers should meet 8 per cent. of the cost of statutory pay together with the full national insurance contribution. That could total a fairly significant figure, and we are not talking only about paternity pay, but about other areas as well. I think that that leads to a more general debate about where the benefits of part 1 of the Bill will be felt and how the burdens should be shared. I hope that we will be able to have that debate later today, although in view of the timetable that has been imposed, we shall have to speed up our consideration of the Bill to have that opportunity—[Interruption.] The Government Whip is chuntering from the Front Bench. I did not catch the exact import of his remarks, although I suspect that I can guess their general drift.
Mr Rob Marris (Wolverhampton South West, Labour)
The hon. Gentleman addresses the administrative burdens on business, as did the hon. Member for Hertford and Stortford. There are always trade-offs in society. There are administrative costs, and the hon. Member for Runnymede and Weybridge mentioned those for small employers. However, many businesses recite the mantra that people are their most important asset. There are significant education costs for a labour force, which are rising steeply under this Government. Those are met wholly by the state. It is, disproportionately, small employers who fail to train their staff adequately or at all.
The hon. Member for Runnymede and Weybridge referred to the trend of those in work receiving benefits. I note the Opposition's U-turn on House of Lords reform. Do I now detect an implied U-turn on the minimum wage and that the hon. Gentleman is asking for a higher minimum wage instead of benefits? Conversely, perhaps he will say what benefits he thinks ought to be cut for those in work who are receiving a lot more benefits under a Labour Government.
The hon. Gentleman mentioned the balance of the Bill's benefits. It contains benefits for employers, as well as for society, over paternity leave and adoption leave. Again, is the hon. Gentleman now performing a U-turn against the U-turn of the Opposition on the working time directive and paid holidays for employees, which benefit employers as well as society?
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The hon. Gentleman is not intervening but launching a very interesting and wholly new debate. I would be delighted to have it with him, but I suspect that you would not encourage me to do that right now, Mr. Benton.
Mr Mark Prisk (Hertford and Stortford, Conservative)
Does my hon. Friend agree that it is a shame that the hon. Member for Wolverhampton, South-West (Rob Marris) has chosen to launch an attack on all small businesses in terms of education and training? He said that small businesses—he did not say ''some'' small businesses—are the ones that fail to train. I think that that is regrettable. Many small businesses are extremely good and at the forefront of training.
Mr Rob Marris (Wolverhampton South West, Labour)
On a point of order, Mr. Benton. I used the word ''disproportionately''.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I thank my hon. Friend for his intervention. I think that the hon. Member for Wolverhampton, South-West did say ''disproportionately'', but he did not say ''some''. I think that he applied his remarks to all small business, although I am sure that on reflection he would not want to suggest that all small businesses disproportionately under-perform in training.
Mr Rob Marris (Wolverhampton South West, Labour)
I did not mean to imply in any way that all small businesses fail to train, which is why I used the word ''disproportionately.''
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I am grateful to the hon. Gentleman for clarifying that matter.
This is an extremely interesting area. The hon. Gentleman has tried to put his comments to me in the form of a series of man-traps, asking whether I would acknowledge wanting to do a U-turn on the minimum wage and the working time directive.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The answer is that the world is not as simple as the hon. Gentleman would like to make it, but I will give him my personal view. It is questionable whether we are heading in the right direction in creating a society where we have relatively high taxes and high percentages of people in work or on pensions who must have some form of means-tested benefits to live properly. We should not aspire to having 50 per cent. of people in work drawing benefits, but to create a modern and dynamic economy that delivers a labour market in which employers can earn good profits so that employees, exploiting the tightness of the labour market, can earn good wages that enable them to live comfortably without needing in-work benefits. That is my picture of the ideal society that I would like to live in. I am sure that, on reflection, every member of the Committee would have the same aspiration, but I fear that progress down the route of in-work benefits might not encourage us—
Mr Joe Benton (Bootle, Labour)
Order. I do not wish to intervene unnecessarily, but it would be serve a greater purpose if we got back to amendment No. 129.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
You are absolutely right, Mr. Benton. I apologise for having been tempted by the hon. Member for Wolverhampton, South-West down that course. Perhaps in the Smoking Room at 10.30 one evening we might more appropriately pursue that interesting debate, but I shall seek to withdraw the amendment.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg to move amendment No. 127, in page 8, line 13, leave out from 'at' to end of line 15 and insert
'the lower of—
(a) a weekly rate equivalent to 90% of the person's average weekly earnings; and
(b) a weekly rate of Statutory Paternity Pay to be prescribed in regulations.'.
Mr Joe Benton (Bootle, Labour)
With this we may take the following amendments:
No. 147, in page 8, line 45 at end insert—
'(9) In this section, ''average weekly earnings'' means the average weekly amount (as determined in accordance with regulations) of specified payments which—
(a) were made to him or for his benefit as an employed earner, or
(b) are (in accordance with regulations) to be treated as made to him or for his benefit as a self-employed earner,
during the specified period.'.
No. 138, in page 11, line 11, leave out 'normal' and insert 'average'.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The Government Whip said yes with some enthusiasm the question that the last amendment be withdrawn, Mr. Benton. It was indeed the hon. Member for Dudley, North—
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg the hon. Gentleman's pardon. I am sure that that is much the better side of town.
I thought that the hon. Member for Dudley, South (Mr. Pearson) employed a slightly crowing tone of voice in his final remarks to the Committee before Christmas, when he observed that, notwithstanding Opposition Members' objections to the timetable motion, we had reached the guillotine point just before the Committee rose for the Christmas recess. I make it abundantly clear to the hon. Gentleman that that was no coincidence, but the result of incredible self-discipline and some self-sacrifice on the part of the Opposition, and especially my hon. Friends, whom the hon. Member for Doncaster, North (Mr. Hughes) rather unfairly chastised last Thursday for not having played a larger part in the debate. I know that they would like to have made much greater contributions to this debate, but I have had to ask them to exercise restraint in the light of the extraordinarily tight programme motion that the Government have imposed on the Committee's deliberations.
Mr Joe Benton (Bootle, Labour)
Order. I should prefer the Committee to get down to the amendment. We shall not go back and begin discussing the timetable again.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I am grateful to you, Mr. Benton. That point having been made, we now need to make fairly rapid progress through today's large agenda to reach the end of the section that the Government have timetabled for today. I shall therefore try to step up the pace.
Amendment No. 127 addresses the Government's intention that the amount of earnings to be paid under statutory paternity pay should be 90 per cent. of the relevant earnings or the fixed prescribed rate, whichever is lower. We know that only because it is stated in the explanatory notes; it is not in the Bill. The amendment invites the Government to place in the Bill a statement that statutory paternity pay will be 90 per cent. of a person's average weekly earnings or a statutory paternity pay rate to be prescribed in regulations, whichever is lower.
Amendment No. 147 seeks to define average weekly earnings. I am sure that the Minister will correct me in a moment, but I cannot find a definition in the Bill. I have lifted one from elsewhere and included it in amendment No. 147, with the intention of inviting the Minister to confirm that it is correct for these purposes. Interestingly, it includes a definition of payments made ''as a self-employed earner'', which relates to a point made by my hon. Friend the Member for Hertford and Stortford in the previous sitting about self-employed people who pay national insurance contributions. In responding to amendment No. 147, it would help if the Minister could explain what entitlements self-employed people will have under the statutory paternity pay scheme.
Amendment No. 138, which might seem to cover a point of semantics, would replace ''normal'' with ''average'' in respect of earnings. As I understand it, normal earnings are average weekly earnings. Can the Minister explain the difference between those cases where average weekly earnings are specified, and those where normal weekly earnings are specified? I find the terminology slightly confusing, and this is not the first time that a concept has been referred to in different places by different names.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
Amendment No. 127 would establish in primary legislation that payments must be the lesser of 90 per cent. of average weekly earnings, or the prevailing flat rate. We have made it clear that statutory paternity pay will be paid at the same standard rate as statutory maternity pay, which, from April 2003, will be £100 a week, or 90 per cent. of average weekly earnings where that is less.
I am happy to reassure hon. Members that it remains our intention that paternity pay should mirror maternity pay, but I do not think it necessary to include such a provision in the Bill. This right is a new one, and as has been said in other contexts, it is not inconceivable that we might wish, over time, to introduce a flexibility that is not currently anticipated. As matters stand, I cannot foresee that, in setting paternity pay, it would make much sense to depart from the formula for maternity pay, but I am not sure that we need specify that in primary legislation.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
On reflection, and having heard the Minister's comments, I rather wish that, instead of prescribing the rate, I had prescribed a link with statutory maternity pay. Is the Minister tempted to think that statutory paternity pay should be defined in terms of statutory maternity pay?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
We have debated that question in respect of several clauses. We have to cater for all eventualities, and it is right to give ourselves some flexibility. At the moment, I cannot think of any circumstances in which we would move away from such a link, but it would be dangerous to cut off the option.
Amendment No. 147 tries to do two separate things, the first of which is to define the phrase ''average weekly earnings''. I hope that I can satisfy the hon. Gentleman that the amendment is unnecessary in that respect. Clause 4, which will insert a new section in the Social Security Contributions and Benefits Act 1992, defines ''normal weekly earnings'' in a manner almost identical to the amendment. I know that the hon. Member for Runnymede and Weybridge is concerned about the difference between ''normal'' and ''average'', and I shall return to that issue when I deal with amendment No. 138.
Hon. Members might also be concerned about ''earnings''. For the purposes of statutory paternity pay, that word will be construed in exactly the same way as for statutory maternity pay. As with statutory maternity pay, the definition will be set out in regulations, and will define earnings as gross earnings including any remuneration or profit derived from an employee's employment.
The second part of the amendment is opaque, but the hon. Gentleman clarified it when he spoke. He suggested that employers should include any earnings that their employees may have gained from self-employment in calculating and administering statutory paternity pay, which would be a significant departure from the precedent set by maternity pay. If the man in question is or has been genuinely self-employed—he would be an employed earner but would also be self-employed in another capacity—it is difficult to see how his employer could know his earnings from self-employment and make the calculations necessary to account for them.
The hon. Gentleman proposes that employers should be responsible for administering the entirety of their employees' pay, and that would be burdensome on business. Most likely, it would also be totally unnecessary because we are discussing calculations for people who qualify for the lower 90 per cent., and they must earn less than £111 at current rates. The amendment would add many complex burdens to address a small, if not entirely absent, problem.
Mr Mark Prisk (Hertford and Stortford, Conservative)
When the Minister refers to self-employment, does he use the definition used by the Inland Revenue or that used by tribunals?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
It certainly is not the definition that the hon. Gentleman is trying to include in his ten-minute Bill.
For the purposes of standard employment rights the self-employed are, by definition, not employees and cannot logically qualify for leave rights. Furthermore, they are not employed earners for the purposes of pay
rights because they have no employer to administer pay, which means that they cannot receive paternity leave or paternity pay. I am unsure which definition covers them, and perhaps I should take a rain check on that issue.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The hon. Member for North Norfolk (Norman Lamb), from his experience in this area, suggests that it would be the rules used in tribunals.
Mr Mark Prisk (Hertford and Stortford, Conservative)
The Minister is right that that definition should be used, but the point of my question was to let him recognise the difficulty caused for employers by the existence of two definitions.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The hon. Gentleman has made his point for the record.
Amendment No. 138 provides me with a useful opportunity to explain what will be in the regulations made under the power in new section 171ZJ(8). In doing so, I shall explain why ''normal'' is used instead of ''average''. I hope that I can reassure hon. Members that we all want to achieve the same result—a formula that is fair to employees in properly reflecting what they receive from their employment and fair to employers because it is straightforward to calculate. The key is to use the same rules used to determine statutory maternity pay.
Without going into enormous technical detail—though I have brought a large briefing into Committee as a threat—one cannot use an average because it would be improper to include some payments made in the period in question. For example, a one-off bonus payment would not reflect an individual's normal earnings. The rules are not too complex; employers said, ''Keep them the same as statutory maternity pay. We understand that now, for all its wild and wonderful ways.'' When we consulted on extending the period to 26 weeks, employers, along with various other groups, said that we should stick to eight weeks. We must stick to the system that employers know and for which they feel, if not love, at least affection, and that means that we shall go by the rules for statutory maternity pay.
The calculation of a person's normal weekly earnings for the purpose of statutory maternity pay is set out in regulation 21 of the Statutory Maternity Pay (General) Regulations 1986, which is perhaps the provision that the hon. Member for Hertford and Stortford was looking for. We intend to mirror that calculation both for statutory adoption pay and for statutory paternity pay. Substituting ''average'' for ''normal'' would remove a crucial step in that process.
Mr Norman Lamb (North Norfolk, Liberal Democrat)
It makes sense to mirror the approach taken to statutory maternity pay, but I want to raise a broader issue. Pay is calculated in different ways for various rights to paid time off—for example, the right to holiday under the working time regulations or the right to maternity and, now, paternity pay. When I wrote about that in my previous existence, understanding the different approaches taken under different legislation was a tortuous process. From the point of view of the employers who are to administer this, it is time that there was one basis for calculating pay for all the
various rights to paid time off. I urge the Minister to have his Department consider simplifying the basis upon which such pay is calculated.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I take the hon. Gentleman's point, which he made eloquently. We can certainly consider that.
The amendments are unnecessary for several reasons. I have made it clear that the rate of statutory paternity pay will be the same as that for statutory maternity leave—in 2003, £100 a week or 90 per cent. of average weekly earnings if that is less. Paternity leave and statutory paternity pay are rights of employees and employed earners respectively. It would not be right to burden employers with additional calculations concerning any earnings that their employees may gain from self-employment. I have also made it clear why it is right to refer to normal, not average, weekly earnings. On that basis, I hope that the hon. Gentleman can withdraw the amendment.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I am grateful to the Minister for clarifying the use of ''normal''. It makes sense to ensure that certain payments could be excluded where they would distort the figure. However, if a payment was made to a person annually, but was routinely regarded as part of their total remuneration, it might be excluded altogether. That bothers me. It would obviously be appropriate to exclude it from falling fully within the week in which it was paid, but it would not be appropriate to exclude it entirely in calculating remuneration. For example, if somebody received £1,000 as a Christmas bonus, it would not be sensible to include that figure in calculating normal pay over the eight weeks that included Christmas, but it would be sensible to divide it by 52 for each relevant week.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
These matters are complex. As I understand it, the major aspect that is regularly taken into account is arrears of pay. For example, if a pay settlement was made a year after the pay date and one payment to cover the arrears was made in a particular eight-week period, that would distort the whole calculation. Such factors are taken into account when the calculations are made.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I am grateful to the Minister. His explanation of why ''normal'' is used is perfectly acceptable.
On amendment No. 127, I am grateful for his assurance—in so far as he can give it, because any Minister can speak only for the present incumbents at his Department—that statutory paternity pay will be paid at the same rate as statutory maternity pay.
On amendment No. 147, I must confess that I did not draft all the words myself. I lifted the phrase
''to be treated as made to him or for his benefit as a self-employed earner''
but for the life of me I cannot remember where from. I am pretty sure that it comes from the Social Security Contributions and Benefits Act 1992, but I cannot find the right page. I was not sure how the phrase should be
interpreted, and that part of the amendment was intended to probe the Minister on the status of self-employed people.
The Minister has effectively told the Committee that it is tough luck if someone is self-employed and therefore pays lower national insurance contributions: that person falls outside the scheme, although precisely the same argument applies to those who earn below the lower earnings limit. We had an extensive debate on that last week, instigated by the hon. Member for Doncaster, North. The consensus, which the Minister was quite prepared to accept, was that for the sake of equity someone should not be excluded from the benefit just because they did not pay the contribution. He undertook to ensure that the system would operate so that although such people do not formally receive statutory paternity pay, they will get at least equivalent benefit compensation.
Can the Minister give a similar assurance in respect of self-employed earners, so that if their earnings are such that they do not pay the employee's national insurance contribution, they will not be disadvantaged simply for that reason? People earning below the lower earnings limit are a specific group addressed by the amendments discussed last week by the hon. Member for Doncaster, North. People who are self-employed and pay self-employed contributions are another specific group, and I ask the Minister to address the equity of the situation regarding those people, some of whom are extremely low earners.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The hon. Gentleman mentions the self-employed. It was this Government, not the previous one, that extended the right to maternity allowance to self-employed women. His Government did not do that. We examined the position of those women and, on the basis of health and safety problems, which mean that a woman has to have time off work to give birth to a child, we introduced a provision for maternity allowance.
I cannot see that the same argument relates to the hon. Gentleman's points. Of course we recognise that self-employed men will want to spend time with newborn or adopted children, but I do not see a role for the state in facilitating that for the self-employed. We are dealing with an Employment Bill, and the relationship throughout it is between the employer and the employee. I cannot immediately see any need to take action on the hon. Gentleman's point in the context of the points made by my hon. Friend the Member for Doncaster, North.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The Minister said that we are dealing throughout with the relationship between employers and employees. On several occasions, we have discussed whether that definition might change to ''workers'' in future. If he were minded, as a result of the review being conducted by his right hon. Friend the Secretary of State, to change ''employee'' to ''worker'', would the self-employed taxi driver, for example, be embraced in the Bill's scope?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I shall not answer that hypothetical question. The coming review will take up some of the points made on that by the hon. Member for Hertford and Stortford in his ten-minute Bill, but I will not
pre-empt it. Of course, self-employed men will be entitled to claim the working families tax credit in such situations. We think that self-employed men will be in control of the time taken for such things. In terms of remuneration, we think that the working families tax credit provides a better answer than dealing with that situation through this Bill.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
It may well be that the working families tax credit is a more effective tool to deliver the same end, but I have not heard from the Minister the assurance that I sought. Two people on the same income, one of whom is an employee falling below the lower earnings limit and the other self-employed, should not be treated differently? I am indifferent about the mechanism that gets them there.
There is a perception, rightly or wrongly, that the Government treat the self-employed as an underclass, not to be brought into the circle of benefits and support that others enjoy, notwithstanding what the Minister has said about maternity allowance. I thought it interesting that although he referred last Thursday to considering an equivalent to maternity allowance for men earning below the lower earnings limit, he has made no such comments about the self-employed. I will be disappointed if he cannot make the simple statement that a person earning below the lower earnings limit for employees, whether he be self-employed or employed, will be treated in the same way as regards state support.
I do not accept what the Minister said about the state having nothing to do with supporting self-employed people who want time off around the birth of a child. If we agree that the benefits of paternity leave are benefits to society and we acknowledge, as we did last Thursday, that the accrued benefits will be greater to low-income families and those at the lower end of the economic scale, it is wrong to say that the state should support families in which the father is an employee but not those in which the father is self-employed. Such an assertion implies the fallacious assumption, which underlies much Government thinking, that the self-employed are all well off and probably tax-avoiders.
Alan Johnson indicated dissent.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
That seems to be the underlying premise of much Government thinking. Many of the self-employed have low incomes and earn less than the people whom they employ. It is not right for a Minister to make a statement about the Government not seeing themselves as responsible for delivering support to that group, but accepting responsibility for delivering it to employees.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
Those comments about Government perceptions of the self-employed are outrageous. I apologise for dwelling on this, but I have already pointed out that the Conservatives did nothing during their 18 years in Government to address the position of self-employed women who had to take time off work to give birth, whereas we extended maternity allowance to cover that group. I said that, of course, self-employed men will want time off with a newly born or adopted child, but I do not see a role for the
state in facilitating that. The self-employed person either can or cannot spend time with the child.
Mr Norman Lamb (North Norfolk, Liberal Democrat)
I am not sure of the Minister's logic. In many debates we have recognised the importance of treating paternity leave the same as maternity leave by giving basic core rights to parents. The Minister rightly explained the extension of benefits to self-employed women to allow them to take effective maternity leave, and I fully support that. To follow that principle, surely we should enable and encourage self-employed men to have paid time off, as we do for women.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
With women, we do not encourage it, we require it. They have to take between two and four weeks off to give birth to a child. The charge that we care nothing for the self-employed and have done nothing for them does not stick. Child birth is a significant area in which we have provided help and the Conservative Government did not.
Facilitating time off for self-employed people is a problem for those people; it is their business because they are self-employed. For employees, it is different. There is clear difference between facilitating time in those cases.
In relation to time off and remuneration, a woman must take time off and maternity allowance is therefore provided. In respect of paternity leave or adoption leave, no physical necessity requires a man take time off work and we are not making it a requirement; it is optional. The issue for the self-employed may be remuneration and I have suggested that the working families tax credit might be the answer. The cases are different and the hon. Gentleman is unfair in suggesting that because, on these practical points, we are unwilling to treat self-employed people in the same way as everyone else, we are implying that they are an underclass. That is a ridiculous argument against a Government that have done something practical for self-employed women in such circumstances.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I have listened to the Minister's argument, but there seems to be an element of discrimination against the self-employed and against men. He is not prepared to treat self-employed men in the same way as self-employed women for paternity and maternity pay purposes. The Minister may give all sorts of reasons for that, but it is not satisfactory. One amendment in this group gives cause for concern, so I shall talk to organisations that represent the self-employed and return to the matter on Report.
We are simply asking for an assurance that the Minister could easily give. We want him to ensure that self-employed people with low earnings are able to take paternity leave and receive benefit equivalent to statutory paternity pay. No matter how he does it and regardless of the mechanism used and whether it is called statutory paternity pay, will he give that assurance, as he gave a similar assurance to the hon. Member for Doncaster, North last week in respect of employees below the lower earnings limit? That is all I ask. I understand his reluctance to make such a commitment, but if he thinks about the matter, he may find that he is able to give that undertaking within the scope of the overall benefits system. I shall return to
the matter on Report, and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg to move amendment No. 128, in page 8, line 15, leave out 'kinds of rate' and insert 'rates'.
This amendment addresses a point at two levels. New section 171ZE(1) refers to regulations that may prescribe different rates for different cases. I understand what is meant and I am used to Bills providing that regulations may prescribe different rates for different cases and different rates for different classes of people. I may not agree with that and I would challenge the requirement for a provision that allows the application of different rates to different cases. Will the Minister explain what circumstances would justify payment of different rates in different cases? It is not obvious to me that any cases would justify the payment of rates different from those laid down in the regulations.
I am intrigued by the concept of ''kinds of rate''. Will the Minister explain what that is, because I have wracked my brains. Is it a generic phrase? The rate is 10 per cent. and a different rate is 20 per cent.? Would a different kind of rate be one fifth instead of 20 per cent? I do not understand the phrase ''kinds of rate'' and in the interest of economy of drafting and removal of some of the muddle in the Bill, I suggest that the phrase be eliminated and that ''rate'' be inserted if the Minister insists that he requires the ability to apply different rates to different cases.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The new section will enable us to set the rate of statutory paternity pay at the same standard level as statutory maternity pay. We have made it clear that we intend to set the rate of statutory maternity pay in 2003 at £100, and the rate will be the same for statutory paternity pay, or 90 per cent. of average weekly earnings, if that is less. The issue at the heart of the amendment is that different kinds of rates are required, one standard and one variable. The amendment would restrict our ability to follow the approach taken for statutory maternity pay, preventing us from setting both a flat rate and a variable rate by allowing us to set only different flat rates—say, £100 and £75 a week. That is why the term ''kinds of rates'' is used. We want to determine that there are flat and variable rates.
Statutory paternity pay will provide some earnings replacement to help parents to take paternity leave.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I am afraid I do not agree with the Minister. Subsection (2) begins:
''Statutory paternity pay shall be payable at such fixed or earnings-related weekly rate as may be prescribed''.
If it went on to say that that would be done by regulations which may prescribe different rates, the rate—10 per cent., 20 per cent., 90 per cent. or whatever it may be—would apply to fixed or earnings-related rates and would be a percentage of earnings. I do not understand the Minister's point.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
When it comes to drafting, we often plead with hon. Members to trust us that the wording is right. I am assured that the Bill mirrors statutory maternity pay legislation. I am advised that the amendment would allow us to set only two flat rates and not one flat rate and one variable rate. That is why ''kinds of rates'' is included, as it is for statutory maternity pay. Whenever the hon. Member for Runnymede and Weybridge points me to a set of words and I read them out of context, I tend to go over to his point of view until I have communicated with the parliamentary draftsmen, who reassure me. I am convinced that the amendment would have a serious effect on what we all propose to do in relation to statutory paternity pay.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I cling, however tenuously, to the notion that Committees of the House rather than Ministers huddled with their parliamentary draftsmen. are supposed to investigate these matters. I am disappointed, but perhaps not surprised, that the parliamentary draftsman usually manages to swing the Minister back to his way of thinking. It seems to me that different rates would encompass the concept of different percentages of earnings to deal with earnings-related weekly rates. I do not see the problem there, but this is less a major issue than a simple attempt to clean up the Bill a little. Therefore, I shall not press it, and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg to move amendment No. 133, in page 8, line 31, leave out
'except in such cases as may be prescribed.'.
Subsection (4) is a bit of a mystery to me. It says that
''except in such cases as may be prescribed, statutory paternity pay shall not be payable to a person in respect of any period when he works under a contract of service.''
The words
''except in such cases as may be prescribed''
give the Secretary of State a large amount of discretion. The purpose of excising them is to ask the Minister to clarify in which cases he expects to prescribe that statutory paternity pay shall be payable to a person in respect of a period when he works under a contract of service. Perhaps it would help the Committee if he could begin by explaining why, in general, statutory paternity pay would not be payable in such circumstances.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
We have an amendment on that issue somewhere down the line, probably on adoption pay. The simple reason is that a person cannot work and get the payment at the same time. Other than in prescribed circumstances, we cannot have a situation in which people are being paid by the state to take time off to spend with their children, but are working. The words
''Except in such cases as may be prescribed . . . by regulations''
are included here, as they are in the maternity provisions. The amendment, if accepted, would remove our ability to make exceptions. However, the hon. Gentleman makes a fair point when he asks what
type of exceptions we have had experience of in relation to maternity provisions. Once again I say, with boring regularity, that we are mirroring the provisions in the maternity pay statutes.
In the case of maternity pay the equivalent power has been used, for example, to allow mothers who have two contracts of employment that qualify them for statutory pay to claim their statutory pay from one employer and work for the other, perhaps for only a few hours a week, if they wish. That is not in the two-to-four-week stage, but further down the road of maternity leave. That has proved useful for mothers who want to return to work gradually without losing their entitlement to SMP. That is a clear example of a situation where that provision has been used.
I recognise that because maternity leave is so much longer, it is difficult to think of a similar circumstance where we may need to use the provision for paternity leave. However, I see no fundamental reason to regulate differently. The hon. Gentleman says that the provision allows the Secretary of State to do all kinds of things, but I think that he will accept that we are here looking to keep our options open for exceptional circumstances that may arise. A certain circumstance has arisen in the case of statutory maternity pay, and the provision was very useful for that. It is not inconceivable that a similar situation could arise for paternity leave.
Mr Norman Lamb (North Norfolk, Liberal Democrat)
There are plenty of cases in which men work a few hours a week in different jobs, in each of which they are classed as an employee. It may well make sense for them to give up one or more of those individual jobs but retain another during the period following the birth. They might work 10 hours a week in a cleaning job but give up another job washing up in a kitchen, for example. There might well be cases in which such provision is necessary to safeguard the rights of such people, so that they may receive pay for the small job that they continue to do but receive paternity pay at the same time. I am just confirming that there are clearly cases where the provision could apply to paternity leave.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The hon. Gentleman makes a good point. I was saying that in the case of maternity leave, that provision is used to allow women to return gradually to the workplace. With the two-week statutory paternity leave, the same circumstances would not apply, but we may need to prescribe for the circumstances that the hon. Gentleman mentioned.
That is why that provision is included in the clause. I hope that the hon. Member for Runnymede and Weybridge can withdraw the amendment.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The hon. Member for North Norfolk cited a valid example of where it might be appropriate to allow someone to continue to work and to draw statutory paternity pay. Our difficulty is that the Minister has not said that that is what the Government intend to do under regulations. I assume from his silence—or, rather, from his open acknowledgment that he cannot yet foresee a situation in which they would wish to use that power—that we can deduce that it is not the Government's intention to
give the flexibility to which the hon. Member for North Norfolk referred.
The Minister said that he would like to keep his options open. I suggest that Henry VIII was probably a great person for doing that, and that the best way of truly keeping all options open is to abolish Parliament altogether. Our purpose in being here is to try to circumscribe the enormous powers that Secretaries of State have, lest, at some unforeseeable future point, the Secretary of State for Trade and Industry is not the present fragrant incumbent but someone of an altogether less agreeable disposition who might use the extensive and unconstrained powers in a way that Parliament would find onerous and unacceptable.
In general, I therefore think it legitimate to try to tighten Bills and to remove as much discretion as possible. At the very least, we should try to get Ministers to scratch from the depths of their brain instances of occasions when they might need the powers that they say they need. If, with the benefit of huge civil service resources, a Minister cannot produce a single example of the intention to use such a power, or of a circumstance in which it might need to be used, it almost certainly need not be included in the Bill. That is my motivation in probing these matters.
The hon. Member for North Norfolk has come up with a good example, but the Minister has not endorsed it, so we are no further forward in establishing whether there is a practical reason for the provision. However, as we have had the debate, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg to move amendment No. 134, in page 9, leave out lines 1 to 17.
The amendment would leave out proposed new section 171ZF, which deals with restrictions on contracting out. I want to raise with the Minister an issue of principle. I understand the desire to prevent avoidance of rights granted through this part of the Bill, but it is somewhat demeaning to treat grown men—it is they whom we are talking about—as though they were children by sending in the nanny state to protect them with its full force. In certain circumstances, employees, together with their employers, might want to consider a different way of packaging the overall benefits and leave entitlements available to them. A blanket prohibition on contracting out is therefore a little harsh. I would prefer that people were granted additional leave around the time of a child's birth in a way that was less inflexible.
In relation to another matter, we talked about the perfectly plausible circumstances in which an employee and an employer might both want to proceed in a way for which the Bill, as drafted, does not provide. The Minister will doubtless have up his sleeve the example of a downtrodden employee whose bargaining power with his employer is grossly unequal, and who might prove vulnerable in such situations. Far more often, however, the balance of power is much more even. Where relations are good and both parties are competent adults, it is wholly desirable that they negotiate the overall terms and conditions of
employment themselves, rather than their being imposed by statute in minute detail. Indeed, in respect of certain matters, that might be the view of the trade unions.
The purpose of tabling the amendment is to get the Minister to defend the Government's view that the exclusion of contracting out is essential. Can he give examples of the mischief that he believes proposed new section 171ZF will prevent?
Mr Norman Lamb (North Norfolk, Liberal Democrat)
The amendment would remove the statutory right to paternity leave and paternity pay, in that it would enable an employer and employee to agree that such a right should not apply in a particular case. Having drafted many contracts of employment, I know that, were the legislation to provide such flexibility, plenty of employers—for perfectly good reasons, from their perspective—would instruct their lawyers to draft contracts of employment that excluded the right to paternity leave. If the amendment were passed, the Bill would provide a right for employers and employees to opt into paternity pay if both parties chose to do so. However, if it is not imposed as a statutory right with the opportunity to opt out, it will lose all statutory force.
I appreciate that the hon. Member for Runnymede and Weybridge wishes to see greater flexibility in the way that the provision works. However, in effect the amendment would create a bottom line in terms of the giving of rights by employers, below which they could not go. They would have every opportunity to be flexible above that bottom line, but no flexibility to go below it. That strikes at the heart of this part of the Bill.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The hon. Member for Runnymede and Weybridge did not make the case for contracting out. I do not have reams of examples of downtrodden employees. The hon. Member for North Norfolk is right to say that the provision lies at the heart of the Bill. We are introducing a statutory right, and people are entirely at liberty either to claim it or not. There is no requirement on them to take their paternity leave—they can choose not to do so.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
My argument is that someone who does not intend to take his paternity leave has no opportunity to trade it with his employer for something else. He cannot say, ''Give me a couple of extra days a year of holiday entitlement and I won't take my paternity leave.'' That is an old-fashioned constraint on people's ability to manage their own life and their own time.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The hon. Gentleman said earlier that it was demeaning to treat grown men as though they were children. Throughout all our consultations on the provisions, employers did not raise this matter with us once. All they said was that the costs of any statutory right to paternity leave should be met by the Exchequer, not left to employers.
The amendment would not only allow employers and employees to contract out, but would affect the position under the clause whereby employees are
protected from having moneys deducted from their pay, except in certain circumstances where there is prior agreement. That would be the wrong path to take in both respects.
The provisions on statutory paternity pay exactly reflect those on statutory maternity pay. No one says that the fact that women have a right to statutory maternity pay means that we are not treating them as grown-ups. I do not see why the hon. Gentleman should suggest that it is a retrograde step for us not to allow a person to negotiate to take the money in another way. This is Government money from the Exchequer.
The hon. Gentleman must realise that in the majority of cases the measure that he proposes would be used as an inducement by the employer, who would say to his employee, ''You have a right to statutory paternity pay, but there is a get-out clause—if we give you an extra couple of days' leave you won't need to take it.'' Pressure will be put on that individual, who may one day feel that they have been disadvantaged by applying their rights. It would be entirely the wrong approach to enable employers to provide less than the statutory minimums. The amendment is wrong and potentially confusing to employers, who would face different regimes for a woman who seeks maternity pay and a man who seeks paternity pay. It is also wrong that it would not protect individuals from deductions from wages. The hon. Gentleman has not made a strong case for the amendment and I hope that he will seek leave to withdraw it.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I had intended to deal with pay and direct or indirect contributions in a short clause stand part debate, rather than in a debate on an amendment. The purpose of the amendment was to hear the Minister's view on the desirability of allowing individual or collective bargaining over terms of employment. That purpose has been served. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg to move amendment No. 135, in page 10, leave out lines 6 and 7.
Mr Joe Benton (Bootle, Labour)
With this it will be convenient to discuss the following amendments: No. 136, in page 10, leave out lines 8 and 9.
No. 159, in clause 4, page 18, leave out line 28.
No. 160, in page 18, leave out lines 29 and 30.
No. 161, in page 18, leave out lines 31 and 32.
No. 163, page 18, line 38, leave out paragraph (c).
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I shall try to be brief. These probing amendments seek to remove paragraphs to obtain an explanation from the Minister of how the powers that they contain will be used. The lead amendment removes the paragraph that allows regulations to
''in particular, provide—for any provision of this Part of this Act to apply to any . . . person, notwithstanding that it would not otherwise apply;''
In other words, one can read the Act and work out who does not get statutory paternity pay, but the
Minister has an ability, through regulation, to say that those people will get it anyway. Likewise, amendment No. 136 removes the paragraph that states that any person whom the Act defines as not being entitled to receive such pay can receive it anyway if the Minister says so. We want to understand why the Minister needs those wide powers, which, in practice, mean that the Bill might just as well say that statutory paternity pay should be payable to anyone whom the Secretary of State says it should be. If the Minister has specific cases or problems in mind, perhaps he will share them with the Committee.
Amendment No. 159 addresses people who are
''employed on board any ship, vessel, hovercraft or aircraft''.
Amendment No. 160 deals with those who are
''outside Great Britain at any prescribed time''.
Amendment No. 161 deals with those working on the UK continental shelf on oil and gas rigs. Those amendments allow the Secretary of State to disapply, apply or modify the new section in any way that he thinks fit. A large number of people will be affected, so how do the Government intend to apply the regulation-making powers to that substantial group?
Amendment No. 163 is somewhat different. It would delete the paragraph that gives the Secretary of State power by regulation
''for excepting any . . . person from the application of any . . . provision where he is neither domiciled nor has a place of residence in any part of Great Britain.''
I have sought to delete that paragraph because it is so self-evident that a person who is neither domiciled nor has a place of residence in any part of Great Britain should not benefit from the provisions of this part of the Bill that it need not say so. If that is not the case, perhaps the Minister will explain why.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
In relation to amendments Nos. 135 and 136, new section 171ZI enables the Secretary of State to make regulations dealing with the application of statutory paternity pay to those employed or living outside Great Britain, mariners and continental-shelf workers. The provisions mirror those for statutory maternity pay, and we would expect to make regulations in the same way. Amendments Nos. 135 and 136 would remove paragraphs that will allow us to make regulations specifying who may or may not be eligible to receive paternity pay. Regulations under these paragraphs will be necessary if we are to follow the SMP model.
For example, the SMP legislation excludes a woman from receiving maternity pay if she is a mariner employed by a UK employer on a foreign-going vessel while under a contract for which an employer pays a special low rate of national insurance contributions, and we must mirror that in the paternity pay regulations. A woman who is a continental-shelf worker or a mariner employed by a UK employer would be covered by the SMP scheme. Employers and employees in these special circumstances know how the SMP rules work, and it is right that we should mirror those rules for statutory paternity pay.
Amendments Nos. 159, 160, 161 and 163 relate to making it clear on the face of the Bill that people who are not normally resident in Great Britain and who do not maintain a residence here will not be eligible for adoption pay—the clause relates to adoption pay, not paternity pay. I accept that it is unlikely that situations will arise in which a person in those circumstances will qualify for adoption pay, but it is possible and should not be ruled out. It is possible, for example, to think of an employee working abroad for a UK employer who is still a British-employed worker for social security and tax purposes but who no longer maintains a British residence. That employee may want to take a year off work in order to adopt and care for a child. In such cases, as with a birth mother who is in a similar position, we might want to ensure that the entitlement to pay is safeguarded because the employee has earned that right.
I would not swear by the validity of that example, and I could not put my hand on my heart and say that I know exactly how we would use the regulations because we still have thinking to do in relation to the clause, including consultation with adoption experts. However, I hope that I have done enough to allow hon. Members to understand that there are issues about which it may be worth thinking, and it would be wrong to be inflexible and state once and for all on the face of the Bill that there can be no entitlement. That issue, and our desire to mirror the SMP regulations, are the reasons why we hope that the hon. Gentleman will withdraw the amendments.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I am largely satisfied with the Minister's answer, but I am unsure whether I have understood how the regulations are intended to apply to people on ships. Ships would present a problem case if someone were on a long voyage. Am I to understand that the Minister does not have a scheme, but he recognises that it will be necessary to apply the rules differently?
The Minister mentioned consultation, and I hope that we can take it as read that there will be extensive consultation with shipowners and shipping management. Further regulations that impact on the operation of UK-flagged merchant shipping can only have a negative effect on what is already a difficult situation. It is in all our interests that we do not drive UK-registered vessels away from the UK flag registration by piling on employers obligations that they find it difficult to meet.
With those reservations, I am satisfied by the Minister's comments and grateful to him for clarifying the matter. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I beg to move amendment No. 139, in page 11, leave out lines 43 and 44.
I want to probe the Minister about subsections (9) and (10), which deal with a specific situation in the national health service. I served on the Standing Committee of the Bill that became the Health Act 1999, when the events that led to the contract-splitting arrangement in the NHS took place. We spoke then about the confusion and the problems that the
arrangement would create, and here the chickens are coming home to roost.
My basic problem is that the Government, as an employer, are quick to see a problem that their legislation creates for themselves as an employer and for their employees. They have the power to put a lengthy provision of half a page into a Bill to deal with a wholly exceptional situation that they have created in relation to their own employer status in dealing with their own employees. No other employer could expect to get primary legislation drafted to deal with a peculiar circumstance that had arisen in his industry or his business. It seems to me a bad way to proceed generally that the Government, in special situations that have been created, solve their problems as an employer by inserting provisions into primary legislation.
The amendment leaves out lines 43 and 44 on page 11—which means that I am slightly missing the point here. I am sorry, Mr. Benton; I have gone off the track. I am trying to address two issues in two separate amendments and I fear that I am speaking to the wrong one. If lines 43 and 44 were omitted, the requirement for regulations under any of these subsections to be made with the concurrence of the board would be removed. [Laughter.] Just testing, as they say, Mr. Benton. I shall return to the national health service later and I shall not repeat what I have said, so if the Minister would hit the save button and, unlike me, retrieve at a later date what he has just saved, that would be useful.
The amendment to which I should have been speaking simply removes the requirement for regulations to be made with the concurrence of the board—the Commissioners of Inland Revenue. I have tabled the amendment to probe the Minister about the extent to which that requirement limits the power of Parliament. The normal procedure for regulations is that the Secretary of State lays them and Parliament considers them and approves or rejects them. The idea that the Commissioners of Inland Revenue must approve them first seems restrictive of Parliament's powers. Presumably the Secretary of State would not be able to bring a regulation before Parliament that the Commissioners of Inland Revenue had rejected. Can the Minister explain why an appointed body should have this power of veto over a draft regulation that the Secretary of State would normally bring before Parliament to consider?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
The hon. Gentleman nearly sent some people in the Room into the care of the national health service then. We were perplexed by the reference to the NHS.
The amendment seeks to remove the right of the Board of Inland Revenue to agree to regulations in respect of statutory paternity pay before they are made. I welcome the opportunity to discuss why we think that that right is important. Hon. Members will be aware that we shall have detailed discussions on the role of the Inland Revenue when we discuss clauses 5 to 16 on the administration of the new statutory schemes. However, it will be useful to cover some of
that ground now so that the Committee may be aware of the detailed thought that we have put into the role of employers in relation to the payments.
First, we want the new schemes to mirror as closely as possible the arrangements for statutory maternity pay. That is what employers are used to. Since April 1999, the Inland Revenue has been responsible for the operation of statutory maternity pay. It works with employers by providing them with the guidance and support that they need to pay employees when payments are due and to recover the payments made from the Inland Revenue. The Bill enables the same arrangements to be put in place for the new schemes.
Secondly, the Inland Revenue has considerable experience of working with employers. It regularly discusses payroll-related matters with employers and provides extensive guidance for all employers dealing with them. It also has a network of business support teams that provide free training seminars and one-to-one educational visits to employers. The Inland Revenue is an important partner in putting together the rules for the new schemes. It will work with employers to help them administer the right payments, in the right amounts, to the right employees at the right time. We want it to scrutinise the rules that employers will be asked to follow, to help us to ensure that they are sensible and straightforward.
That is an example of joined-up government, bringing together Department of Trade and Industry skills in dealing with employment and Inland Revenue skills in dealing with employers and payroll-based schemes. I suggest that, having heard that explanation, the hon. Gentleman asks leave to withdraw the amendment. I do not see that the provision interferes in any way with the role of Parliament.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
It would help if the Minister would tell the Committee where in legislation generally such provision is used. Is it used in every case in which payments are made to employers through the pay-as-you-earn system?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I am not sure about that, as the provision relates to the particular regulations that cover the relevant subsections.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I was seeking to clarify whether it was common practice, in legislation concerning the reimbursement of employers through the Inland Revenue, for the concurrence of the Board of Inland Revenue to be required for any regulations in such areas of legislation.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
It is standard practice for that to happen. That is not a veto on Parliament. The board and the Secretary of State need to concur before the arrangements are laid before Parliament. In discussion on a previous clause on employment tribunals, we mentioned the role of the Advisory, Conciliation and Arbitration Service in the three-step procedure. It is advisable to make it absolutely clear that we shall consult in this case with the Board of Inland Revenue, which has a very important role, so that its views may be taken into account. I hope that, with that
explanation, the hon. Gentleman will seek leave to withdraw his amendment.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The hon. Gentleman has many years' experience of negotiating, so I would have expected him to recognise that when two parties have to concur, that gives each a veto. This provision, therefore, is a veto for the board over any of the regulations.
There is nothing wrong with drawing on experience and I would expect all Government Departments to try to draw on that held by other Government Departments. I have not had the privilege of being there yet, but I am not overly optimistic about the extent to which Departments and agencies of Government are willing to allow their experience to be drawn on by other Government Departments. However, it does not seem to me that that perfectly sensible practice needs to be enshrined in the Bill by giving the Commissioners of Inland Revenue a veto.
It occurs to me that the Commissioners of Inland Revenue are wholly beholden to the Treasury and the Chancellor of the Exchequer. A conspiracy theorist, which I am not, could see the ever-extending tentacles of the Treasury reaching out, with a Treasury agency being required to approve in advance any regulations that the Secretary of State for Trade and Industry might wish to lay before Parliament. That is the aspect that I am probing. We are all aware that the Treasury is powerful and that, almost by the week, it is becoming more powerful and reaching into the affairs of every other Department. The Department of Trade and Industry has been described, perhaps unkindly, as a wholly owned subsidiary of Treasury plc. It certainly seems to operate in that way much of the time and this rubs salt in the wound. I had hoped that the Minister might have something to say about that, but he may have private thoughts on the broader issue.
I want to speak about the NHS and I thought that I had tabled an amendment on it, which is why I became slightly confused, but I shall return to the matter, without repeating myself, on clause stand part.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
I want to summarise some of the issues that we have discussed and to raise some points that have not arisen in amendments. The Minister made two commitments during our discussion of clause 2. First, he said that he would consider the question of symmetry between the conditions that must be met for entitlement to statutory paternity leave and payment of statutory paternity pay, one being in the Bill and the other to be prescribed in regulations. The Minister undertook to consider whether it would be more appropriate to have symmetry between them.
The Minister also undertook to examine some of the language used in this part of the Bill, including the phrase, ''ceased to work'' and the reference to
''a person who is, or has been''
employed, which I maintain could be confusing. I am grateful to him for agreeing to consider those matters and look forward to hearing from him in due course whether he will be able to address them or whether we shall need to revisit the matter.
On new section 171ZE(5), can the Minister give some examples of cases in which there will be no liability to pay statutory paternity pay
''in respect of a week''?
It is not immediately obvious what that provision is driving at and it would be helpful if the Minister could give some examples to reassure us that there is a reason for it and that the Government have something reasonable in mind.
The Minister touched on new section 171ZF(1) when replying to an amendment but I did not refer to it when speaking to the amendment. It prevents any requirement for an employee or former employee to make a contribution towards any costs incurred by his employer or former employer under this part of the Act. Any agreement requiring people to contribute to their own statutory paternity pay would be unlawful. That sits uncomfortably with the clause about contractual entitlement to paternity pay and what the Minister told the Committee during our proceedings last week. If I have understood correctly, a contract stating that someone is entitled to £300 a week and to continue receiving that during any leave that is taken around the time of the child's birth will subsume the statutory paternity pay of, say, £100 a week, and the employer will claim it back from the Inland Revenue. However, the employee will be contributing indirectly to payment of that statutory paternity pay. He is already entitled to £300 a week, and statutory paternity pay constitutes an additional £100 a week. In effect, his employer will therefore pay him a net £100, plus £100 reclaimed from the Inland Revenue.
There is no disagreement about the purpose of the provision, which is to ensure that the employee continues to receive that to which he is contractually entitled, of which statutory paternity pay is regarded as part. I ask the Minister to reflect, however, on terminology that specifies that it is void to require an employee to contribute, whether directly or indirectly, to payments under this part of the legislation. I can think of examples where the boot is on the other foot, as it were, and one would argue that such an arrangement amounted to an indirect contribution to pay.
In respect of the relationship between contractual remuneration and statutory paternity pay, subsection (3) of new section 171ZG refers to the provision of
''payments which are, and . . . are not, to be treated as contractual remuneration''.
Can the Minister explain what is, and is not, to be treated as contractual remuneration? He has already touched on special classes of people, with which new section 171ZI deals.
Subsection (4) of new section 171ZJ deals with situations in which
''two or more employers are to be treated as one'',
or
''two or more contracts of service . . . are to be treated as one.''
We touched on this matter earlier, when the hon. Member for North Norfolk pointed out that, in certain cases, it might be appropriate for someone to draw statutory paternity pay in respect of one contract while continuing to work under another. Of course, the new section empowers the Minister to treat two contracts as one. If that is simply an anti-avoidance provision, I have no problem with it, provided it works solely in that way. However, are there specific and substantive cases that he intends to address through it?
Finally on new section 171ZJ, I shall avoid taking up any more of the Committee's time by reminding hon. Members of what I said 10 minutes ago about special provisions dealing with the NHS. It would seem entirely inappropriate to include in primary legislation a special provision that deals with a situation arising from the Government's role as an employer, and which is entirely of their own making. During consideration in Standing Committee of the Health Act 1999, we told them that such a provision would lead to problems later.
It also seems bizarre to include in subsections (9) and (10) provisions that deal with a specific case relating to one, albeit large, employer—the NHS—only to state in subsection (11):
''The powers under subsections (9) and (10) are without prejudice to any other power to make regulations under this Part of this Act.''
Why include those provisions in the Bill? The matter could have been dealt with in regulations. Although I am not often heard to say such things, a case involving a specific employer or employee should be dealt with through secondary legislation; it is entirely inappropriate to deal with it through an Act of Parliament. In time—probably not very much time—the matter will become redundant. It essentially concerns NHS split contracts that arose from reorganisation in the NHS following the 1999 Act.
Mr Norman Lamb (North Norfolk, Liberal Democrat)
I have little to add. Will the Minister deal with my point, to which the hon. Member for Runnymede and Weybridge alluded, about people who have more than one contract of employment with different employers? The regulations must cover those who do low-paid work in different jobs. An employee may go out each morning to clean an office block and then, in the afternoon, wash up in the kitchen of a local organisation. They may choose to give up one of those jobs, but not the other, during the two-week period immediately following the birth of their child. [Interruption.] I can see that I am boring some people. It is important that the regulations should ensure that people can continue to receive pay for one job and paternity pay for the other job that they give up for two weeks.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I ask the hon. Gentleman to forgive me. I just noticed that the Annunciator said that I was taking part in a debate in Westminster Hall.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I shall try to cover the waterfront on the issues that were raised.
I thank the hon. Member for Runnymede and Weybridge for mentioning people qualifying for leave and for pay. I should clarify whether we expect precisely the same groups of people to qualify for statutory pay as qualify for statutory leave. Members of the Committee may remember that when we debated amendment No. 130, some confusion arose owing to a typo on the original Amendment Paper that led me to believe that the hon. Gentleman wanted to delete four pages of the Bill, although it was actually much less. We found ourselves talking at cross-purposes for a while. As I understood it, his main concern was that the 26-week period of qualifying service that is stipulated in the Bill in respect of paternity pay is left to regulation in respect of paternity leave. He repeated that point this morning.
I undertook to check the respective roles of primary and secondary legislation, and I can assure the hon. Gentleman that there is no question of doing anything other than imposing the service requirement in respect of both leave and pay, wherever the figure may appear in the Bill. The hon. Gentleman went a little further and asked me whether the Government intended that precisely the same groups of people should be entitled to leave as to pay. I said yes, with the exceptions that we have discussed—that is, those who earn below the lower earnings limit. In terms of broad policy intentions, I hope that my answer was not misleading. We certainly do not intend to regulate on qualifying criteria in a way that makes any deliberate distinction between the two. However, there may be some people at the margin who qualify for one right but not the other. It would be difficult to harmonise the qualifying conditions for statutory pay and statutory leave completely, in any technical legal sense, as they derive from social security legislation and from employment legislation respectively.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
One easy way to harmonise them at a stroke would have been to accept my amendment and use the terminology in new section 171ZA that I suggested, which would make the entitlement to statutory paternity pay an entitlement of anyone who qualified under new section 80A for statutory paternity leave. I fear that some Labour Members have missed the Minister's important point, which is that not everyone who qualifies for paternity leave would necessarily be entitled to paternity pay.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
It is an important point, which is why I am taking some time to read this into the record.
The hon. Gentleman's amendment would not have resolved the problem. Obviously he thought that it would because he tabled it, but we did not take the same view. We have a technical legal problem with harmonising these arrangements. Pay and leave regimes operate on slightly different concepts, namely the notion of an ''employee'' in employment law and an ''employed earner'' in social security law. As I explained, it would be hideously complex to harmonise those definitions as that would entail reviewing all existing legislation in those areas to ensure that in harmonising definitions for the purposes of the current rights we did not create worse anomalies
elsewhere. We must therefore live with these minor discrepancies. For almost all practical purposes, ''employees'' and ''employed earners'' are one and the same people. Any slight differences will merely reflect the position as it already applies to maternity rights, where it has not proved to be problematic.
In parallel with our consultations on paternity and adoption rights, we conducted an extensive consultation on how we could simplify maternity rights. Not one respondent told us that the discrepancy between the legislative base for the pay and leave regimes was a source of confusion, and no one said that the technical differences in the definitions used for pay and leave purposes caused practical concerns. When we asked people how they wanted the systems for paternity and adoption rights to be designed, without exception they wanted us to mirror the current provisions on maternity rights wherever possible. There is no issue of substance, but I wanted to set the record straight because it is possible that there will be some people—not many, but some—whose precise conditions of employment are such that they qualify for leave and not pay or vice versa.
It might help, Mr. Benton, if I try your patience a little longer and give an example. It is not always easy to give examples because they depend on an individual's details, but, for example, police officers currently qualify for statutory maternity pay but not leave. They receive an equivalent to the statutory leave provisions by virtue of separate police regulations, but they are not technically covered by the normal statutory right to leave because they are not ''employees'' in employment law, but ''office holders''. The same is true of other classes of people such as the judiciary. There is no need for Labour or Opposition Members to be concerned that there is a hidden difficulty here; this is simply a technical problem. Last week I said that everyone who received leave would qualify for pay in the same way. It was important that I set the record straight and I am grateful to the hon. Member for Runnymede and Weybridge for allowing me to do so.
The second question concerned new section 171ZE(5). The hon. Gentleman asked for examples of where there would not be a liability to pay statutory paternity pay in respect of a week. There would be no such liability if the individual were in prison or if they had unfortunately departed this earth—if they were dead.
The next question concerned the definition of contractual remuneration, which is a matter that we dealt with last week. In simple terms, it is wages and salary. That is what we say in respect of maternity pay, and that is what we put into these provisions. The hon. Gentleman asked about the NHS provisions from his experience in opposition of dealing with the subject. I wish that I were dealing with the landfill tax with the hon. Member for Henley (Mr. Johnson) in Westminster Hall, but let me have a stab at the points that he raised.
First, the hon. Member for Runnymede and Weybridge is right that the subsections enable us to make regulations allowing contracts with two or more NHS trusts to be treated as one to qualify for statutory
paternity pay. We believe that the provisions are rightly included in the Bill in the interests of equity and fairness. There was no real argument about that. The hon. Gentleman seemed to be having an ''I told you so'' moment from his previous role.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
The question is whether it should be in the Bill, because clearly the power already exists in new section 171ZJ(4). Why then do the Government list a specific example that takes up two more subsections? We could probably all think of specific examples in which it needs to apply. The regulation-making power exists.
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I understand that this approach has been taken in relation to statutory maternity pay in the Statutory Maternity Pay (National Health Service Employees) Regulations 1991 and we have sought to mirror it in relation to statutory adoption pay. We believe that it should be in the Bill.
The hon. Gentleman also asked how we use new section 171ZJ(4) in respect of two employers. Two different employers are treated as one for national insurance purposes, so the rules in respect of statutory maternity pay follow that. It is not a question of anti-avoidance, but of consistency. In other words, the two related employers can be treated as one and employees' contracts aggregated in order to qualify for statutory paternity pay.
Mr Philip Hammond (Runnymede and Weybridge, Conservative)
Will the Minister explain how the payment would then be made? Would one employer be responsible for making the payment? If so, how would the equity issue be addressed when, in the case of a large employer at least, he would not recover 100 per cent.?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
We would mirror exactly the regulations for statutory maternity pay, so I presume that we would just carry those over into statutory paternity pay—a good answer, and the only one that I am qualified to give.
There was a rush of points, but I believe that the hon. Gentleman asked about deductions from wages. To make the issue clear, the deductions of pay that we are talking about in subsection (2)(b) generally relate to matters such as interest-free travel loans, additional voluntary pension contributions, trade union subscriptions and so on. Those are the kinds of payment that we are looking to safeguard in those circumstances.
The hon. Member for North Norfolk raised a point about two employers. It is feasible that an individual may work for two employers, will take statutory paternity leave and receive statutory paternity pay, but will continue to work in the way described. We do not want to make any changes to the arrangements for statutory maternity pay that are well tried and tested and we intend to write the same regulations into the paternity pay provisions.
Mr Norman Lamb (North Norfolk, Liberal Democrat)
Does that mean that regulations will ensure that the person will receive paternity pay in respect of the job that he does not do for the fortnight, while continuing to receive ordinary, contractual pay for the job that he continues to do?
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
I would not like to answer yes or no. That is the general principle, but obviously it will depend on the detail, about which we will consult and which will be subject to the affirmative procedure. With that, I hope that the Committee will accept the clause.
Question put and agreed to.
Clause 2 ordered to stand part of the Bill.