Clause 1 - Maternity pay period
Work and Families Bill
Public Bill Committees, 13 December 2005, 10:30 am
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
I beg to move amendment No. 10, in clause 1, page 1, line 7, after ‘weeks’, insert
‘; but a woman taking maternity leave who takes less than the maximum prescribed period is entitled to receive the same total amount of statutory maternity pay that she would have received had she taken the maximum prescribed period, paid so far as practicable by equal weekly instalments.” ’.
Hugh Bayley (York, City of, Labour)
With this it will be convenient to discuss the following amendments: No. 11, in clause 2, page 1, line 11, after ‘weeks’, insert
‘; but a woman receiving statutory adoption pay who takes less than the maximum prescribed period is entitled to receive the same total amount of statutory adoption pay that she would have received had she taken the maximum prescribed period, paid so far as practicable by equal weekly instalments.”’.
No. 12, in clause 6, page 5, line 45, leave out ‘and’.
No. 13, in clause 6, page 5, line 48, at end insert
‘, and
(c)provide that a person receiving additional statutory paternity pay who takes less than the maximum prescribed period is entitled to receive the same total amount of additional statutory paternity pay that he would have received had he taken the maximum prescribed period, paid so far as practicable by equal weekly instalments.’.
No. 14, in clause 7, page 6, line 46, leave out ‘and’.
No. 15, in clause 7, page 7, line 3, at end insert
‘, and
(c)provide that a person receiving additional statutory adoption pay who takes less than the maximum prescribed period is entitled to receive the same total amount of additional statutory adoption pay that he would have received had he taken the maximum prescribed period, paid so far as practicable by equal weekly instalments.’.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
As I was saying, the Liberal Democrats very much support the increase in maternity leave proposed in the Bill. It seeks to increase the maximum period of maternity leave to one year. The indication is that that would be introduced by a phrased approach, by way of regulation. First, there would be an increase, by regulation, to nine months and then subsequently to a year by the end of this Parliament. That is a thoroughly sensible way of proceeding.
There is a problem with this new right, which, in a sense, relates to the level of pay. The level of pay for the bulk of the maternity leave is low: £106 at present. There is inevitably a risk that, for many people, it will be impossible to take the full period of maternity leave to which they will be entitled. It may be that there should be a long-term objective of raising that level of pay in a way that is achievable given overall Government expenditure.
In the meantime, however, it seems that it is worth trying to find ways of putting the power into the hands of the woman taking maternity leave to choose, if she wants, to take a shorter period of maternity leave than the maximum at a higher rate of weekly pay. In other words, every woman who takes maternity leave should be entitled to the full amount of maternity pay that she would receive under the period allowed by the Bill—ultimately, one year. However, if she chooses, she should be able to take it over a shorter period at a higher weekly rate. That follows the Swedish approach, introducing more flexibility and enabling the woman to choose how she will take the leave while ensuring that every woman is entitled to the maximum amount of maternity pay that can be provided for over the maternity pay period.
Some women might not take the full maternity period, but, if my amendment is accepted, they might take more than they would be able to take financially under the unamended Bill. The risk that we face is that the entitlement that the Bill provides will be meaningless for a group of women who cannot afford to take the full period at £106 per week. I appreciate that that figure will increase marginally year by year.
In my model, which introduces greater flexibility for the woman taking maternity leave, we may well see a situation in which a woman chooses to take nine months rather than a full year of maternity leave, but combines that with a request to the employer on returning for flexible working. In other words, we could envisage a phased return to the hours the woman chooses to work. Perhaps the woman could take nine months rather than a year, return on an agreed basis of flexible working to work two days a week and, if she is a full-time worker, increase that progressively until she is back full-time. In other words, it is about putting the power in the hands of the individual who is taking maternity leave.
I suspect that, under my proposal, the total bill for maternity pay that the Government would have to meet would be higher. In effect, we would be saying that every woman would be entitled to the full amount of statutory maternity pay, but that she might be able to take it over a shorter period. Will the Minister tell us whether a calculation has been done of the extra cost of the amendment? It would be a pity if it were rejected on cost grounds because the Government are facilitating women taking the full period of maternity leave. Therefore, in theory, they must support women being entitled to the full amount of statutory maternity pay. The reality under the Bill will be that not all women will be able to take that for economic and financial reasons.
James McGovern (Dundee West, Labour)
I think that I understand the hon. Gentleman’s point, but there is a danger associated with it. I assume that we agree that the purpose of maternity leave is to allow the mother to spend time with her new child, but does not this amendment provide an incentive for the mother to spend less time with her new child?
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
I think that the opposite is the case. The power will be in the hands of the woman. Some women will be financially able to take the full amount of maternity leave, but Ministers must accept that the reality is that not all women can do that. Many women will have to take less than that because they cannot afford to be off work at such a rate of pay for the full one-year period.
This measure would mean that more women will be able to take more time off, and to choose how to do that. If we have a situation in which a proportion of women cannot afford to take a full year so they take significantly less than that, I am sure that the hon. Member for Dundee, West (Mr. McGovern) would agree that that is not good. However, if the mother is able to take nine months at a higher weekly rate than for the full year, and that facilitates her taking the nine months off, perhaps combined with flexible working when she returns to work—a phased return—that will be a good thing that ensures that women are able to take more time off than would otherwise be the case.
Sadiq Khan (Tooting, Labour)
To follow on from the point made by my hon. Friend the Member for Dundee, West, is there not a problem in that someone could take a very short period of time off for maternity leave in order to get back to work as soon as possible so as to get a “windfall” by receiving the contractual pay entitlement as well as statutory maternity pay for the period when they are entitled to that? That would encourage people to go back to work sooner, when the purpose of the Bill is to allow mothers to spend more time with their newborn child.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
The hon. Gentleman makes a good point, and I accept it completely. This is a probing amendment. It is designed to initiate a debate, so that we can discover whether there is a way of introducing greater flexibility and of giving more power to the woman taking the maternity leave, instead of the provisions being something of a straitjacket.
The principle behind my amendment is a strong one: more power should be given to the woman. If that were to happen, more safeguards might be needed to ensure that the entitlements apply for a defined period, so as to avoid the windfall that the hon. Gentleman refers to. However, I hope that we would all accept the principle that more power should be given to the woman to decide how to take that period of leave.
We should adopt the Swedish approach: there should be as much flexibility as possible and the woman should be given the power to decide. The amendment gives the woman the power to decide and helps more women to take more leave, and it does not in any way compromise her entitlement.
The other amendments follow on similar lines. Amendment No. 11 would ensure that the same principle was applied to adoption pay. Amendments Nos. 12 and 13 relate to statutory paternity leave and pay. The Government’s own assessment is that take-up of paternity leave will be very low. The regulatory impact assessment makes that very clear; I refer Members to pages 84 and 85 of the document. The prediction depends on whether the entitlement to additional paternity leave is based on 26 weeks’ service or 60 weeks’ service. If it is based on 60 weeks’ service, the Government’s own prediction is that 9,000 to 13,000 fathers will take advantage of the entitlement. That is a tiny proportion of the total. If there were a 60-week employment requirement, the total eligible for leave would be 380,000 and the total eligible for pay would be 238,000. The total anticipated to take the entitlement would be 9,000 to 13,000—as a percentage, that is tiny. We can make all sorts of grand statements about how the entitlement will transform the workplace, but let us be honest about its anticipated impact: that is tiny.
Mark Prisk (Whip, Whips; Hertford & Stortford, Conservative)
I understand what the hon. Gentleman has said, but conversely is there not a different danger? If the Government assume that the take-up will be less than they have said, the costs could be dramatically different from those presented to us as we have considered this legislation. In other words, if the 9,000 were to become 18,000, that would make a radical difference to the cost, although I am not sure that it would double it. Does the hon. Gentleman share my concern that an underestimation is involved, which could be to the detriment of small businesses in particular?
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
I welcome the hon. Gentleman’s intervention; what he says may well be the case. We all need to be honest about the issue: do we believe in fathers taking paternity leave? I strongly believe in the right being introduced, but if the Government’s own estimate is that the take-up could be as low as 9,000, we shall not be introducing much of a right.
The danger is that the entitlement will be taken up only by those fathers who can afford to take time-off pay at that very low rate; it might become a middle-class entitlement and not one for people on lower earnings, who may have mortgage burdens and so on and simply not be able to afford to take the amount of leave provided for. If we are talking about trying to change the culture of the workplace and really ensuring that men are able to take time off and spend more time with their children during their early years, we have to do something effective to achieve that.
It seems much better to put the power in the hands of the father. I fully acknowledge the point made by the hon. Member for Tooting (Mr. Khan); adjustments may be needed to ensure that the allowance is not all taken as a windfall. However, surely it is better for a father to take, say, nine weeks off rather than the full entitlement, but at a rate of pay that ensures that he can do so. That is better than not taking it at all. That is the risk that we face, which was acknowledged by the Government in their regulatory impact assessment.
The case is strong. In principle, if we can put the power in the hands of fathers—perhaps with more safeguards to ensure that the entitlement is not taken as a windfall—and ensure that they are able to take advantage of the entitlement, that would be a good thing in changing the culture of the workplace and ensuring that men—and women, when they take maternity or adoption leave—take advantage of those rights. At the end of the day, that is what we all want.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
To observe the proper conventions, I should say that it is a great pleasure to serve under your chairmanship, Mr. Bayley. I welcome both Ministers. The Minister with responsibility for women and equality and I have probably spent more time together during the past six weeks than either of us have spent with any family at any time, so some of what we say this morning is said with heartfelt understanding.
Having said that, I strongly welcome the fact that the Government are taking all the measures that we have been debating and discussing in the past few months, because we thoroughly support the intent to help everyone to achieve the work-life balance that is essential not only to individuals and families but to business and the economy. That is a general point, however, wide of what we are now discussing. I shall not try your patience on it now, Mr. Bayley.
On the precise matter of amendment No. 11 and the others in the group, and the general assertions made by the hon. Member for North Norfolk (Norman Lamb), we agree in principle with what he just said. There may be differences of detail and, as ever, I make a cautionary point about how much public money could be spent, always bearing in mind that everything that we discuss in passing the Bill must be balanced with other matters on which we would want to spend taxpayers’ money. Still, in principle, I totally support what the hon. Gentleman said.
The fact is that all families are different. It is wrong for the Government to prescribe exactly how a new mother and father and family should behave, exactly how an employee should behave immediately after the birth of a child, how a family should balance its resources between the mother and father or anyone else in the family who is involved in the child’s upbringing, and how all employers should deal with their employees.
Those matters require a degree of flexibility, because every family—every mother, father and child—and every employer is different, as is every employer-employee relationship. In particular, there is considerable variation between large employers with a human resources department and plenty of flexibility about replacing one employee with another temporarily and smaller employers that do not have the flexibility to allow that. Therefore, for the Government to prescribe precisely how maternity and paternity leave and pay should work is not the best approach. Everything that I say about maternity and paternity rights should of course apply also to adoption rights, as the hon. Member for North Norfolk said.
In particular, we previously proposed—and made it an important plank of our manifesto for the general election—that should a new mother, or, indeed, new father, wish to take maternity or paternity leave or pay, it should be possible for them to receive the amount that would have been paid over nine months in six months, or a period in between those two, as a way of providing the flexibility, choice and adaptability that would fit the rights to each family.
If the Government confer a right but it does not help a particular person or family at the relevant time, that is pointless. It might as well not be given if the family—or the employee or employer, or the child, father or mother—cannot benefit. Flexibility is the key factor in making those rights work. It is hard to imagine why the Government would argue against somebody taking the same amount of taxpayers’ money in maternity or paternity pay but taking it over a shorter period of time.
James McGovern (Dundee West, Labour)
When would the mother decide the date of her return to work? It seems to me that if she wanted an increased payment, she would have to say so prior to the birth of the baby? Following the birth, the assessment could change and she might decide that she would need a longer period.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
I do not think that the woman would need to say so before the birth of the baby, although she might have to do so shortly after it.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
On that point, may I assist by way of referring to the amendment? I suggest that, so far as reasonably practicable, the payment is made in equal weekly instalments, but clearly we cannot prescribe beforehand exactly how long the woman would choose to be off. If there is a balance to be paid at the end, she would know that she would be entitled to it. That is the way that the amendment would work.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
I thank the hon. Gentleman for clarifying exactly what his amendment says. As I said, I support his amendment in principle, but the detail will take further working out. It does not seem beyond the limits of practical administration that a new mother could, in the first few weeks after the baby’s birth, claim her maternity pay, taking it over the nine-month rate per week but that that could then be changed if she wished to shorten her period of maternity leave. Why not?
We all pay too much tax. We all, from time to time, might pay too much tax and then have the tax code changed to take account of that and pay less tax over the next year or receive a rebate. The Exchequer can surely manage to do a simple calculation of an amount that is due. When I think about it, that is a wild hope on my part, given the way in which tax credits are working. In my constituency alone it would take hundreds of man hours of Inland Revenue time to sort out the problems in the tax credit system.
Mr. Khanrose—
Hugh Bayley (York, City of, Labour)
Order. I remind both hon. Members that we are debating the Work and Families Bill and not tax credits.
Sadiq Khan (Tooting, Labour)
Has the hon. Lady not demonstrated the paradox in the argument of the hon. Member for North Norfolk? He is claiming that the problem with the paternity leave suggestion is that it will benefit middle-class fathers, yet the hon. Lady is saying that the problem with the maternity pay is that those who earn more than £106 a week will not benefit, because a small amount of money is involved. Does she not recognise that some people earn small sums of money and will benefit from the SMP being extended over a nine-month period, rather than it simply benefiting those affluent people in her constituency by way of a windfall? Will this provision not benefit those who need it the most?
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
I did not say anything of the sort, and I do not know where the hon. Gentleman got that from. I never mentioned £106. I would like to make that clear. He must be making an assumption about what a Conservative would say. I did not say anything remotely like what he said. This is extremely important. There is no reason why someone who wants to take nine months’ maternity leave cannot do so and take the amount of maternity pay that would then become due.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
I never mentioned the word “windfall”.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
If my hon. Friend will forgive me, I will continue for a moment. The hon. Member for Tooting spoke from a sedentary position, and I have not given way to him. He is more than putting words into my mouth. I never used the word “windfall”. When did I say that?
Hugh Bayley (York, City of, Labour)
The hon. Lady should continue. She has made it clear that she is not giving way.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
I am not giving way to the hon. Member for Tooting, who seems to be making up what I have said. He is having hallucinations about what I am saying. I said that I see no reason why a woman who wishes to take maternity leave over nine months should not be able to do so. Of course, she might not wish to do so—we have to allow for different circumstances; every family, employment situation and child is different and it makes a huge difference if a mother has a healthy child who does all the things that small babies are meant to do and sleeps through the night at three months. That is all wonderful. I wish that my four-year-old had slept through the night last night, but that is neither here nor there.
How very different is the situation if a mother thinks that she is going to have a baby with whom there will be no problem, but it has even a small health problem. That changes the picture completely. Therefore, flexibility is very important. I see no reason why there should not be choice and flexibility if somebody wishes to take only six months away from work, whatever the reason. It might be because she or he does not feel the need to spend more than six months at home with the child because there are brilliantly competent grandparents to help or something along those lines, or it might be that the parent has a particular project or issue in the workplace that he or she wishes to deal with and therefore wishes to go back to work sooner; and why not?
Charles Walker (Broxbourne, Conservative)
Are we suggesting that there should be a default position? I can see hon. Members raising concerns about the fact that the total sum over a year is £5,512 and that a woman might decide to go back after two months and to receive £4,000 and that we would not want to encourage that. However, some flexibility would be good. Perhaps a default position of six or nine months would allay some of the concerns that have been expressed today.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
My hon. Friend makes a good point. One of the problems is that we are dealing with generalities, not with the precise way in which this will be constructed. At a later point in the debate, I shall make a point about the need for very detailed regulations to be brought before the House. Flexibility and choice are what matter if families are to achieve a work-life balance. Every situation is different from every other, every family is different, every employer is different, and every child is different. Therefore, it is right to introduce choice and flexibility.
I should also say that every economic situation is different. For some people, because of their financial circumstances, basic maternity pay is sufficient and for some it is not. If they wish to top up that amount—for example, by working more—why should they not be able to do so? It should not be for the Government to prescribe exactly how each citizen lives his or her life at any one time. It is for the people to choose how to live their lives and for the Government to be an enabler. The amendments proposed by the hon. Member for North Norfolk enable them to have the choice and flexibility that, in principle, we support.
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
I am delighted that we have had such a lively start to the Committee. These amendments seek to allow employees to choose the period over which they will receive their statutory maternity, adoption or additional statutory paternity pay. From April 2007, women who are expecting babies and adopters with whom children are placed will be able to receive up to 39 weeks’ statutory maternity pay, maternity allowance or statutory adoption pay after the Bill becomes law.
The amount of additional statutory paternity pay that a father or partner of an adopter may receive will depend on the detail of the scheme, which will be subject to further consultation. I note the concern expressed by the hon. Member for North Norfolk that the Bill deals with a range of regulations, but they will enable us to get the detail right through more consultation.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
On that narrow point, as I was quite properly prevented from referring to this issue in my introductory remarks, will the Minister gives us the likely time scale for the introduction of paternity leave rights?
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
It is relevant to the amendment.
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
It is, but I ask the hon. Gentleman to wait for our discussion later on. I am sure that he will receive a better response from my hon. Friend the Minister with the policy lead on that issue. It is good that we can work together on these things.
My comments, which are general, will explain the rationale behind the Government’s opposition to the amendments on statutory maternity and adoption pay and to the amendments on additional statutory paternity pay. The amendment seeks to allow employees to receive the same total payment but in a fewer weeks. The net effect would be that the employee would receive a higher amount each week if they chose a shorter period.
Maternity pay has a particular purpose, to which we must keep returning. It provides an element of wage replacement to help women to take time off work to prepare for and recover from the birth of their child. Adoption pay also has a particular purpose in that it provides an element of wage replacement to help adopters to take time off work to bond with the child, or indeed, children—sibling groups are often placed together for adoption—and to settle the child or children into their new home, which is an enormously important task for some of the most vulnerable children in our society.
The first months of a child’s life are very important to a mother, and the Government are keen to encourage employees to take as long as they want and need around the birth or placement of the child. We estimate that only about 16 per cent. of women—about 50,000 women—take less than 26 weeks’ maternity leave. By extending the pay period to 39 weeks, we are helping working parents to take more time off in the first year of their child’s life. Evidence shows that most mothers take their paid maternity leave, and it is our priority to extend paid leave to help them to take more if that is right for them.
Charles Walker (Broxbourne, Conservative)
Building on that point, I see some merit in telling a woman that taking the maximum amount of maternity pay over nine months would be the total pot of money for which they would be eligible, but it would insert an element of flexibility into the provision if that woman were allowed to have access to that pot at a variable rate for between six and nine months. That would provide some choice, but it would not be the free-for-all that it would be if the women worked for one month and then took the whole pot of money. The provision to allow the woman to take the money for between six and nine months could be varied, but the woman would have access to the total amount of money, whether she took it over nine months or over eight, seven or six months.
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
I very much appreciate the spirit in which the hon. Member for Broxbourne (Mr. Walker) is entering into the debate and seeking to achieve a sensible balance. I agree that flexibility and choice are very important, but I shall respond to his point when I say why the Government are resisting such a flexible approach.
The hon. Member for North Norfolk talked about the amount of money going to people’s families. I emphasise that, in addition to statutory maternity pay, we should also consider the fact that families now receive additional money. The tax credits introduced in April 2003 are more generous and inclusive than any previous system of income-based financial support.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
Would the hon. Gentleman be patient for a moment?
The value of child benefit has gone up by 25 per cent. since 1997, so families in the poorest fifth of the population are better off by an average of £3,200 a year. As a result of tax credits, about four in 10 families in Britain effectively pay no net tax. That number has risen by about 500,000 since 1997. It is wrong to say that the only money available to families is statutory maternity pay, which brings me back to the point that statutory maternity pay is wage replacement. As the hon. Gentleman knows, tax credits go way up the pay scale; but supporting families, and particularly families on lower incomes, is a completely different matter.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
I fully acknowledge that there is other income apart from the tax credits, but bearing in mind what the regulatory impact assessment says about the limited take-up of paternity leave, does the Minister none the less accept that some people will not take maternity leave or paternity leave because of the level of their pay?
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
I was going to deal with the issue a little later, but the hon. Gentleman has raised it in an intervention.
We know that culture and people’s attitudes change over time. I do not say this to reflect badly on my late father, but when my brother was about to be born my mum rang for the ambulance; he packed her off in the ambulance and then went back to bed. Someone had to wake him to tell him of the phone call saying that his first-born son had arrived. My father loved his children very much, and he spent a great deal of time with us. However, that was the culture of nearly 50 years ago. Times change.
We are moving on from the introduction of paid paternity leave, of which there used to be none, to a system that will allow fathers to spend more time with their families if they so choose. Our estimate of what we think will happen is obviously based on current trends. There will be any number of reasons why fathers might or might not choose to spend time with their newborn child. As the hon. Member for Epping Forest said, we are talking about families, but each family is different, and they make different choices. We have estimated what we think will happen. It would be a positive thing from my perspective if more fathers took the opportunity of paid paternity leave, but I think that things will change over time. We are at the starting point. I shall now make some progress.
The majority of women start their maternity leave before their child is born. If we were to adopt the amendment, the amount of money that a woman received each week would depend on when she had decided to return to work—and if the amendment is accepted, that decision would have to taken before the child was born. That would make it difficult to adapt to the changed circumstances that the arrival of a child can bring.
My hon. Friend the Member for Dundee, West said earlier that the birth of a child can bring a great many changes to a family. A woman may start her maternity leave and start receiving her maternity pay up to 11 weeks before the baby is due. She may decide at that point to return to work after 26 weeks’ pay, which would be 15 weeks after the baby was born. However, the baby may be born late, or have health problems, and she may decide after the birth that she would prefer to stay at home for the next six months. In such cases, the maternity pay would run out about three months after the birth, requiring the mother to return to work at a point that had become unsuitable, despite her original judgment. Similarly, if she chose to return to work earlier than she originally intended, her employer would need to recalculate the payment and pay the arrears due; that would increase the complexities for her employer.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
I appreciate what the Minister says, but is it not better to give a bit more work to those who administer the public funds than to deprive families and parents of necessary flexibility?
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
We will discuss in a moment the difficulties of calculation and the impact of that on business and maternity payments, but this comes down to principles. The first principle is that maternity pay is wage replacement. We know that, setting out from that basis, families can calculate their financial situations and how much money they will have a week to manage their new situation. As for the level of maternity pay, I say to the hon. Member for North Norfolk that that has increased—the amount is somewhere among the deluge of bits of papers that I have been helpfully been provided with; ah, here it is—from £60.20 in 2001 to £106 now. That is a 70 per cent. increase. We should welcome that. In addition, there are other children’s benefits. That is the principle; I will come to the impact that the amendments would have on business.
Another consequence of the amendment—I think that my hon. Friend the Member for Tooting referred to this and used the term “windfall” in the first place, but I do not want to be the referee of a dispute across the Committee—would be that a woman who took only the compulsory two weeks after the birth would be entitled to receive 39 weeks’ pay for those two weeks. That means that a woman who earns over £30,000 a year could receive over £6,000 in statutory maternity pay for those two weeks, and then return to work and continue to receive her normal salary. The Government would fund at least 92 per cent. of the payment for those two weeks—the hon. Member for Epping Forest has, rightly, constantly reminded me over the past three or four weeks of the importance of taking care of public money, although it might seem like six weeks to her—and the woman’s employer would have to fund 8 per cent. of that payment and continue to pay her salary or wages when she returned to work.
Eleanor Laing (Shadow Secretary of State for Scotland, Scotland; Epping Forest, Conservative)
The Minister is addressing the comments of the hon. Member for North Norfolk on the amendments; I simply want to make it clear that our position is that the nine months could be varied not to two or three weeks but to six months, or to seven or eight months or thereabouts.
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
I understand that that is completely different to what is proposed in the hon. Gentleman’s amendments. I am sure that when we come to discuss the periods of extension in detail, we can deal with the issue of whether six months or nine months is appropriate, and with the interplay between the father and the mother in that situation.
As well as presenting employees with potentially difficult decisions, the amendment would add complexity for employers, who would need to calculate a different weekly rate for each employee depending on the length of time that they chose to receive their statutory pay. In addition, if we were to accept the amendments and allow employees to change their minds mid-receipt, even in limited circumstances employers would be faced with yet another recalculation of their statutory pay. Opposition Members regularly make points about the cost to business of regulation and the changes and difficulties around that. We seek to find the right balance in the Bill regarding giving families flexibility. As the hon. Member for Epping Forest rightly said, every family is different and they should all have the ability within a clear framework to make decisions about what is right for them. There must be that clear framework to enable families to understand to what they could be entitled, how to access the money and what the benefits would be for them individually.
Clarity must also exist for business. Without it, the cost to business would be enormous. Members of the Committee rightly referred to the issues that affect small businesses. I have only small businesses in my constituency. There are no large employers, so I know very well that the biggest problems are caused by issues that employers deal with only periodically. For most small employers, maternity leave issues come up only every so often. In dealing with maternity leave or a disciplinary matter, a small business will probably have to start from scratch and inform itself of what it needs to do. The greater the complexity that we put into such matters, the more difficult we will make it for small businesses and the more costly it will be for them.
Mark Prisk (Whip, Whips; Hertford & Stortford, Conservative)
I welcome the Minister’s remarks. Given that, as she rightly says, small employers have little experience of such matters, does she not see the benefit of the Government taking on an administrative role in certain circumstances?
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
We have considered that, and the overall costs to provide that service to businesses are prohibitive. Other mechanisms are in place to assist businesses, the detail of which is I am sure on another bit of paper to which we shall perhaps return. It concerns the process of assisting small businesses to undertake calculations, confirming those calculations and having help at the end of a telephone. I or my hon. Friend the Minister with responsibility for employment relations, consumers and fair markets will come back with more detail about the mechanisms that are in place. We recognise that matters are difficult for small businesses and we want to provide as much help as we can. However, we have to be mindful of the costs.
Julie Morgan (Cardiff North, Labour)
Is my hon. Friend aware of the report of the Cardiff business school in the Welsh Economic Review about the impact of the Bill on small businesses in Wales? It does not regard the Bill as a burden on small businesses in Wales. In fact, it concludes that it will be of benefit.
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
I am delighted that my hon. Friend drew my attention to the report. Despite my recent visit to Wales, of which she is aware, that was not one of the documents that was drawn to my attention. I should be interested to see it in more detail; it seems an interesting report. That people understand how the Bill will impact on small business is important for the Government.
Mark Prisk (Whip, Whips; Hertford & Stortford, Conservative)
The Minister talked about costs. I know from page 36 of the regulatory impact assessment that the Government have undertaken to pay £369 million of the £389 million that will arise from the policy costs of statutory maternity pay and maternity allowance. If my maths serve me correctly, that is 94.85 per cent. of the total cost. We learned in the debate that the costs could rise or fall. If they fall, that would be to the benefit of the Government and of business. If they rise, there could be a pinch point. Are the Government committed to maintaining 94.85 per cent. of the cost, if the costs rise or fall?
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
Yes, that is the approach that we are adopting.
I have obtained a little more information about the issue of direct payments, which was raised earlier. Building on the work done by Her Majesty’s Revenue and Customs’ ad hoc consultation group on direct payment, the Government carried out a further analysis that demonstrated that such a scheme would represent neither good value for money for the taxpayer nor a significant saving for employers. It would provide about £1.1 million of savings for employers, of which only about £400,000 would accrue to small employers. The costs of implementing such a scheme are estimated at up to £75 million in set-up costs and £50 million per year in ongoing costs. It has been deemed that that would not be a good use of taxpayers’ money.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
On that narrow point, could the Minister provide the background calculations showing how those figures were arrived at, so that we could assess the matter for ourselves?
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
In one sense, I am delighted to help; a full analysis can be found in a technical note on Her Majesty’s Revenue and Customs’ website, at—and this is the sense in which I am not delighted, because reading out website addresses is rarely easy; however, I will ensure that it is correct in Hansard—www.hmrc.gov.uk/pbr2005/smp.pdf.
Finally—I am determined to get to the end—the amendments would add more complexity, and would have the opposite effect to that which the Government want; we want to give parents the choice of staying at home for longer, and of looking after their child themselves during the first year of the child’s life. I therefore hope that the hon. Member for North Norfolk will consider withdrawing his amendment.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
The amendment was a genuine attempt to initiate a debate on how we can introduce greater flexibility and put greater power in the hands of the woman taking maternity leave, the father taking paternity leave, or either parent in respect of adoption leave. I fully acknowledge the flaws in the wording of the amendment. Earlier, the hon. Member for Tooting highlighted the risk of a windfall being paid in circumstances in which someone chooses to go back to work very early, so the amendment is not the finished product, and I readily accept that.
However, we ought to be looking into how we can ensure that the rights provided in the Bill are actually taken up. That is what I am interested in, and I think that that is what Government Members are interested in, too. The regulatory impact assessment identifies that as few as 9,000 fathers will take up the paternity leave right. As for maternity leave, on page 29 of the RIA, the assumption is that 8 per cent. of mothers who currently take 26 weeks will move to 39 weeks, so we are talking about a low proportion of mothers, too. I fully accept what the Minister says: in part, that is a cultural thing. It is a matter of changing attitudes.
Part of the reason why fathers, in particular, will not take advantage of the entitlement has nothing to do with money, but the Government must concede that it has something to do with money. Part of the reason why fathers will not take up the full entitlement is because they feel that they cannot afford to do so at the rate of £106 per week.
Kitty Ussher (Burnley, Labour)
Is there not a deep prejudice underlying what the hon. Gentleman just said—the idea that men earn far more than women? Is not that exactly the type of thing that we are trying to do something about? Changing the culture, in the way that we have proposed, will actually help.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
What I said was absolutely not about prejudice; it was an acknowledgment of the reality. The hon. Lady will know that there is a pay gap. We have unequal pay in this country. The Equal Opportunities Commission works tirelessly to try and remove that gap, but it exists. If we are serious in our aim, which I am sure we share, of getting fathers to take up paternity leave we must ensure that it is more than gesture politics. There is a real risk of coming out with a grand statement on the introduction of paternity leave when, quietly hidden away on page 85 of the RIA, it acknowledges that a tiny percentage of fathers will take it up—partly because of the pay. It will not actually mean much then.
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
I am sure it is not hidden, as the hon. Gentleman has managed to find it. The estimate is on the basis of evidence from the maternity and paternity rights survey 2005. It is not a number picked from the air. The Government have to deal with reality, something with which I know that the Liberal Democrats have a problem. The hon. Gentleman needs to acknowledge that even in Sweden, where pay levels are higher, take-up by fathers is still low. It is, as much as anything, a cultural issue.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
The Minister introduces an element of bitterness in that intervention. I had thought this was being considered in such a reasonable tone, but that is a quite outrageous slur against my party.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
I accept that, and apologise. I had already accepted that it is partly cultural. That is understood, but it is partly pay too, and if the Government seek to deny that, they deny the absolutely obvious.
Kitty Ussher (Burnley, Labour)
I apologise for intervening again, but I am grateful for the opportunity. I believe that one reason why men are paid more is that in later life they have not taken paternity time off if they want it earlier. As I think I said at Second Reading, what tends to happen is that because the rights accrue to the woman and she spends more time at home, the man works harder. So the man, after a few years, ends up getting paid more. For people starting out, then, the purpose of the Bill is to prevent that happening if they do not want it. Therefore the hon. Gentleman’s comments about it being the pay at the point when a young family sets off do not actually apply.
Norman Lamb (Shadow Secretary of State for Trade & Industry, Trade & Industry; North Norfolk, Liberal Democrat)
I thank the hon. Lady for that intervention. I accept her point, and that the Bill’s purpose is to address that problem. However, if the Government assume that only 9,000 fathers will take paternity leave, it will not do much to address that problem. So I want to find a way of facilitating fathers taking time off in practice, not just in terms of gestures. I am sure that the hon. Lady would agree that if the consequence of my amendment was that more fathers took perhaps eight weeks off—rather than no time at all—it must be a good thing. Surely it is good to find ways to encourage fathers to take an element of their entitlement, rather than nothing. That is what the amendment seeks to achieve.
To deal with another point, the hon. Member for Tooting raised the suggestion, in an intervention on the Conservative spokesman, that the amendment somehow sought to undermine the rights of low-paid people to take the full period. It does not, because the power is put completely into the hands of the mother or father. If either wants to take the full period, at the rate of £106 per week, that is their entitlement. I would be delighted if people did that, but it is simply an acknowledgment of economic reality that many people will not. The RIA accepts that, and I am seeking ways to ensure that people take advantage of the good entitlement that the Bill provides.
In summary, my amendment was a probing one in a group of amendments. I do not seek to press it to a vote, because it is currently incomplete, but I hope that the Government will do some further thinking on ways to increase flexibility. On the point about complexity for employers, it seems rather simple to me; if every employer knows that the entitlement is the full amount of statutory maternity, statutory adoption or statutory paternity pay, it is not really a complicated matter. Everyone would get to know the full entitlement for every employee taking time off. I do not see that that is any great complication for an employer to have to deal with. I beg to ask leave to withdraw the amendment.
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
Clause 1 extends the maximum period for the payment of statutory maternity pay that may be prescribed in regulations from 26 weeks to 52 weeks. We aim to achieve our goal of 52 weeks by the end of the Parliament. As a first step we will increase the period of payment to 39 weeks for women expecting babies on or after 1 April 2007.
Mark Prisk (Whip, Whips; Hertford & Stortford, Conservative)
Is the Minister in a position to give us some information on the phasing of that? Clarity is crucial and employers will want to know what they are planning for. The Minister has referred to the end of the Parliament; that could be four or five years away depending on events in Government and within the ministerial ranks. I wonder whether she could give employers the opportunity to understand what she expects. If she cannot, when will employers know when 39 weeks will become 52? How much warning time will they get?
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
I am not sure what the hon. Gentleman is referring to when he talks about events in the ministerial team.
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
Thank you. Well, there we go.
The hon. Gentleman needs to take heart from the process with which we are involved at the moment. We are starting the process and giving employers notice that we will introduce the provision of 39 weeks on 1 April 2007. We want to assess how that goes and to remain in consultation. As I have said, employers know that our aim is 52 weeks by the end of the Parliament, but we will continue to consult and will give sufficient notice in line with the better regulation principles to which we adhere.
As I was about to say, this is an important change for working mothers and is part of our continuing drive to help pregnant working women and parents achieve a better balance in their home and working lives. An extra 13 weeks paid maternity leave will be worth nearly £1,400 to the majority of women. We set out our commitment to extend maternity pay in our consultation document “Work and Families: Choice and Flexibility.” The document was well received, with all sides recognising that any extra time that the mother has at home with her baby will be beneficial to the child but will also allow the mother greater opportunity to secure child care arrangements and to smooth her path to return to work. That will also be beneficial to her employer.
We recognise that some employers, and particularly small employers, are concerned that the absence of an employee over a long period can cause difficulties. We believe, however, that the increased availability of paid leave will make it easier for women to return to work and stay at work because they will have the opportunity to take the amount of paid maternity leave that they feel they need. Businesses will benefit because they will retain the skills and services of employees that they might otherwise lose, avoiding recruitment and training costs. We will, however, ensure that the views of employers are taken into account and that the impact of these important changes is fully understood and considered before any further extension of the pay period to 52 weeks is implemented.
Mark Prisk (Whip, Whips; Hertford & Stortford, Conservative)
I am grateful to the Minister and I welcome her point about consultation. Will she undertake to ensure that she and her colleagues meet with all the small business organisations prior to the bringing forward of any draft regulations, so that they will have an opportunity to contribute to those deliberations?
Meg Munn (Parliamentary Under-Secretary, Department of Trade and Industry; Sheffield, Heeley, Labour)
Of course. There is regular consultation with such organisations not only on this matter but on other issues.
Of course, there are costs in the short term, both in paying statutory maternity pay and in arranging cover for absent employees, but those costs should be seen in context as an investment in the future for the employer. The taxpayer, through the Revenue, reimburses large employers 92 per cent. of the statutory maternity pay that they pay out and small employers get back all of the statutory maternity pay that they pay out plus an additional payment of 4.5 per cent. to meet their national insurance costs. We widened the definition of small employer in April 2004. Now, 60 per cent. of employers who pay statutory maternity pay in any year get back 104.5 per cent. of the statutory maternity pay paid out. In this Bill, we are making it easier for employers to operate statutory maternity pay. We will address that in more detail when we discuss the relevant schedule. We are amending the start date of the maternity pay period to align it with the start of maternity leave. In addition, we are making it possible for statutory maternity pay to be paid at a daily rate, to make it easier for employers to align SMP payments with their employees’ usual pay period.
Her Majesty’s Revenue and Customs is introducing an extensive package of support for employers; I referred to that earlier, and I am happy to give more detail to the hon. Gentleman now. The aim is to eliminate manual SMP calculation, and to make the assessment process easier to understand. For example, the electronic calculators that are already available are being improved, as is guidance, and plans are being worked on to help employers calculate SMP over the telephone via their employer helpline service. The telephone conversation will then be followed up with a written confirmation of the SMP calculation to the employer, thereby considerably easing employers’ concerns over the calculation.
This measure will benefit more than 390,000 women a year—about 317,000 who receive SMP, and a further 76,000 who receive maternity allowance. The payment period for maternity allowance is dependent on that for SMP, so the maximum maternity allowance period will also automatically be extended to 52 weeks as a result of this clause. Some 20,000 women a year who receive maternity allowance have not been employed long enough to qualify for additional maternity leave. They will therefore not have the right to take time off work and benefit from the proposed extra 13 weeks of maternity allowance. We are extending the eligibility condition attached to additional maternity leave so that all women who currently get ordinary maternity leave will get additional maternity leave and will be able to take the extra pay.
I shall now deal with how the clause works. It amends the regulation-making power in section 165(1) of the Social Security Contributions and Benefits Act 1992 to allow the maternity pay period to be a maximum of 52 weeks. The length of the maternity allowance period automatically follows by virtue of section 35(2) of that Act, which provides that the maternity allowance period will be the same as the maternity pay period. The extension of the maternity pay period—and, in consequence, the maternity allowance period—to 39 weeks will be specified in regulations. The extension of the maternity pay period forms a crucial part of a broad package of measures that will help parents choose how best to combine parenthood with their responsibilities towards their employer.