New Clause 3 — Review of additional paternity and leave pay

Orders of the Day — Work and Families Bill – in the House of Commons at 2:28 pm on 18th January 2006.

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'The Secretary of State shall review and publish a report on the effectiveness of regulations made under—

(a) sections 80AA and 80BB of the Employment Rights Act 1996, and

(b) sections 171ZEA to 171ZEE of the Social Security Contributions and Benefits Act 1992, every year in which the regulations are in force beginning 12 months after the regulations are made.'.—[Mrs. Laing.]

Brought up, and read the First time.

Photo of Eleanor Laing Eleanor Laing Shadow Minister (Women and Equality)

I beg to move, That the clause be read a Second time.

New clause 3 might appear somewhat opaque, but it would require clauses 3 to 10 to be reviewed after one year. We touched on some of the issues in our debate on new clause 1, but this proposal deals specifically with additional paternity leave and additional statutory paternity pay.

The Bill goes much further than the Government's original proposals, which suggested that mothers' rights to maternity leave and maternity pay would be transferred to fathers. In effect, it creates new rights for fathers.

We are not against paternity pay in principle. We accept that it is good for families if new fathers can be with their babies in the months after they are born. It is especially important for working mothers to have the support of fathers when a child is very small. That is a crucial time, and the Government's proposals are absolutely right in principle but, as ever, the question is one of balance.

As I said in the debate on new clause 1, it is very important to balance the needs and rights of employers, and especially small employers, with those of employees. Only by striking the right balance will we be able to achieve the optimum result for the economy and for society. It is true, of course, that a work force that is treated well will be more efficient, and that employers who treat employees reasonably will get better employees and run better businesses.

We accept that all the proposals under discussion today have an economic as well as a social imperative, but we have tabled new clause 3 because we remain concerned about the mechanics of how paternity leave and paternity pay will work. We support the principle, but no one knows what will happen in practice.

The debate on new clause 1 revealed a stark and unarguable truth—that no one knows how much it will cost businesses to administer the proposals in respect of maternity and paternity pay and leave. It may cost £400,000 every year, or £5 million—the gap is enormous. Were the monetary costs involved estimated at a ball-park figure of between £500,000 and £2 million, it would be reasonable to accept them, and we should do so happily enough. However, there is not a ball park but a whole town of difference between the estimates.

I think that even the Minister will accept that we have no idea of how much the proposals in the Bill will cost business. If I am wrong, I should be happy to give way to him.

Photo of Eleanor Laing Eleanor Laing Shadow Minister (Women and Equality)

The Minister says that he will wait, and that is fair enough, but I believe that even he does not know the cost to small businesses—monetary and otherwise—of administering and paying for the rights created in the Bill. If he does not know that, it is fair to say that no one does.

If I address my remarks specifically to small businesses, it is not because I have no sympathy for or understanding of big business. However, large firms have human resources departments, and full-time accountants and tax experts, and so on. Proportionately, therefore, they will have to put less time and effort into bringing into the Bill into effect. I hope that the Minister will agree about that.

Photo of Mark Tami Mark Tami PPS (Rt Hon Dawn Primarolo, Paymaster General), HM Treasury

Does the hon. Lady accept that what we need is a level playing field? Will not small businesses that treat their staff properly consider that they are being penalised because of bad employers that do not grant reasonable leave to fathers?

Photo of Eleanor Laing Eleanor Laing Shadow Minister (Women and Equality)

I see what the hon. Gentleman is saying, but I would say that we need not so much a level playing field as to try to make all employers do what good ones already do. We had an excellent debate in Committee on paternity leave, and I am sorry to see so few members of the Committee here, although there are some—notably Julie Morgan and my hon. Friend Mr. Walker. Examples were given of times when men had found an excuse to be absent from work on the day that their child was born, or the day after, or the day after that. They would give any excuse other than what might be construed as the soppy excuse that their wife was having a baby and they would leave work that afternoon. When I say "soppy", incidentally, I do not mean that I think it a soppy excuse; indeed, Mr. Deputy Speaker, I am not sure whether soppy is parliamentary language, and I apologise unreservedly if it is not. The point is that we all know the way in which men sometimes talk to other men, and it is often the case that there is not always universal sympathy for a man who thinks that his place on the day on which his child is born is beside his wife and child. There are people who think that he should be anywhere else in the world. It is generally agreed, however, that a man should, of course, have the right to paternity leave.

It is far better that employers and employees are given the opportunity to be honest about this matter. Examples were given in Committee of where expectant fathers would give all sorts of excuses for not being at work when they were in fact attending the birth of their child. The really good thing about the Bill is that it encourages, and indeed enables, employers, and employees, to be honest. If a man wishes to be present at the birth of his child and be with his wife and child the following day and for a little while thereafter, he should be able to be honest about it, and a good employer, as Mark Tami said, will recognise that he will get more out of his employee if he is flexible about giving leave. That is what is good about the Bill.

What is not good is that we do not know what the effect will be on small businesses, and therefore on the economy as a whole. That is why we tabled new clause 3, requiring the Secretary of State to review and report on the effect of clauses 3 to 10 during every year in which the regulations are in force, beginning 12 months after they are made. That, of course, could be just over a year from now, and the Minister might be able to tell us what we all suspect, which is that £400,000 is not anything like the real cost to business of administering the new rights in the Bill.

I hope that the Bill will pass today, but I hope that the Minister will tell us in 12 months' time that the regulations are working smoothly and well, that employers have adjusted very well to the way in which paternity leave is being sought and given and paternity pay paid. I hope that he will be able to tell us that the administrative problems are few. I hope he will be able to say that, but we do not know.

The Bill would be the better for having new clause 3 added to it. I said earlier that it is essential that Bills such as this one command the respect of all who have to implement them. The Bill would command far more respect if it required that we review its operation after a year. We would thus be able to see what was really happening on the ground. So often, the House and the other place deliberate at length on what ought to be done, what laws passed, what regulation made and how different people ought to behave. We then discover afterwards that there were unintended consequences of the laws that we have passed.

I do not want the Bill to go wrong. I want it to succeed. If we have the assurance that the Secretary of State will come back in a year to tell us how an essential part of the Bill is progressing and how it is affecting businesses, employers, employees and the economy as a whole, we could have far more confidence in it.

Photo of Sadiq Khan Sadiq Khan Labour, Tooting

I sympathise with what Mrs. Laing said. It is clear that she has been given a difficult brief by the men in green suits and pastiche ties who run her party, even if they are better, I suggest, than the grey men in grey suits who used to run it. They clearly need to be seen to be close to business, but the front page of today's Financial Times and new clause 2, which is not being taken today, rather give the game away.

The implication of what the hon. Lady said is that the Secretary of State and the Minister do not spend a considerable amount of their time talking to businesses and listening to what small businesses and employers have to say. That is, of course, absurd. The idea that they speak to business or small employers only once a year and that only once a year would they relay those people's views back to the House is absurd. This back-door sunset clause—for that is what the new clause is—attacks the paternity leave that we introduced for birth and adoption. It attacks, indirectly, additional statutory paternity pay for birth and adoption, and it attacks additional statutory maternity pay and the rates of pay and period of leave that we are introducing. The platitudes of the hon. Member for Epping Forest on the wonders of paternity pay and her statements that the Government have, of course, got their policy right in principle, are also absurd. There is no sincerity in them.

Photo of Eleanor Laing Eleanor Laing Shadow Minister (Women and Equality)

Throughout the passage of the Bill, the hon. Gentleman has made it his business to misinterpret everything I say, to put words in my mouth and to make out that I am saying things that I am not saying. Every word he just said was nonsense. We support the Bill.

Photo of Sadiq Khan Sadiq Khan Labour, Tooting

The proof of that can of course be found in two things, to deal with any assertion of misinterpretation. One, of course, is Hansard. The other is form. If we look at the form of the official Opposition, we see that new clause 3 was not present in Standing Committee. In addition, they have form on opposing paternity pay provision when it was first introduced back in late 2001. I shall give the hon. Lady the opportunity to intervene if she wants to say that her party and her leader did not vote against the introduction of paternity pay in late 2001. I note her silence.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I do not think that we want to go down the road of history. The hon. Gentleman ought really to confine his remarks to the new clause before the House.

Photo of Sadiq Khan Sadiq Khan Labour, Tooting

I am grateful, Mr. Deputy Speaker. I was simply trying to answer, pleasantly and courteously, the spurious allegation made against me.

Photo of Mark Tami Mark Tami PPS (Rt Hon Dawn Primarolo, Paymaster General), HM Treasury

The Opposition claim to support this measure, so why have they tabled a new clause that would make it appear to employers that it was a temporary measure that would last only a year?

Photo of Sadiq Khan Sadiq Khan Labour, Tooting 3:00 pm, 18th January 2006

My hon. Friend spots the elephant trap that the Opposition wish us to fall into. As for the Trojan horse of the sunset clause, I suspect that a focus group held over the weekend told them that it was a good idea. However, I shall not dwell on the reasons behind the tabling of new clause 3. Without the new clause, the Bill will not lead to a doomsday scenario, as the Opposition have predicted, because we have introduced other family-friendly measures.

Photo of Sadiq Khan Sadiq Khan Labour, Tooting

No, I will not give way. The hon. Lady has had the opportunity to make her contribution, welcome as it was.

New clause 3 would remove certainty and clarity for families who wish to plan when to have their children and for businesses and employers who wish to employ workers from the widest—

Photo of Eleanor Laing Eleanor Laing Shadow Minister (Women and Equality)

On a point of order, Mr. Deputy Speaker. Mr. Khan is not interpreting the new clause correctly. It would have no effect on the Bill, and he is inadvertently misleading the House in suggesting that it would. It would not take away any part of the Bill: all it would do is require the Secretary of State to provide a report.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

The Chair is reluctant to get involved in the debate, but the hon. Gentleman should be careful that he does not confuse new clause 2 with new clause 3. He must confine his remarks specifically to new clause 3.

Photo of Sadiq Khan Sadiq Khan Labour, Tooting

Absolutely, Mr. Deputy Speaker, and that is what I was doing—

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. If the hon. Gentleman had been doing so, I would not have made the remarks that I have just made.

Photo of Sadiq Khan Sadiq Khan Labour, Tooting

I hear what you say, Mr. Deputy Speaker.

The problem with new clause 3 is the burden that it would place on the Secretary of State to report once a year and the lack of clarity and certainty that it would mean for families and employers. I know that my hon. Friend the Minister listens carefully to the sensible words spoken by hon. Members, and I ask that he rejects new clause 3 and fulfils our manifesto commitment to continue to build on the family-friendly policies that we have introduced since 1997.

Photo of Norman Lamb Norman Lamb Shadow Secretary of State (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I was becoming confused by the talk of elephant traps and Trojan horses, but I think that I understand the points made by Mr. Khan. Mrs. Laing talked about the paucity of attendance by members of the Committee, but I wish to point out that the Liberal Democrats have a 100 per cent. attendance.

I support the new clause in part. It would be eminently sensible to review how regulations are working a year after their implementation. I accept that the hon. Gentleman was talking about an annual review of the regulations, but the general concept of revisiting regulations to see how they operate in practice is good and should not divide us politically. I appreciate that the Conservatives are trying to reinvent themselves, but to give the Government work for the sake of it by reviewing the regulations every year into the future seems a little over the top. However, the administration of the regulations, especially in the transfer of rights from the mother who gives up some of her maternity leave to allow the father to take paternity leave, will be complex, and the Government might not get it absolutely right. It would, therefore, be worth while looking at how the regulations are working after a year to ensure that they are working as well as possible or whether they need tweaking to ensure that their operation is not overly complicated for employers, or for mothers and fathers seeking to take advantage of those rights.

I support the principle of review, therefore, but not every single year.

Photo of Charles Walker Charles Walker Conservative, Broxbourne

I wish to make a vicious and premeditated attack on the Minister, and I make no apology for doing so. In my dealings with him in my former life as a director of Blue Arrow, I found him an excellent listener and very sympathetic to the needs of business. If that has destroyed his future political career, I still make no apology for saying it.

It is nice for me to make a speech—and I am sure that it is also a relief for you, Mr. Deputy Speaker—on a subject on which I have a small degree of expertise, as a former director of Blue Arrow, a recruitment company that places some 20,000 people in work a week. As the Minister is aware from our discussions, the labour market has changed for the better over the past two decades, under both Conservative and Labour Governments. These days, 50 per cent. of the work force are male and 50 per cent. female. Indeed, it is predicted that by 2010 women will make up 53 per cent. of the work force.

The change in work patterns has also seen a change in child-rearing responsibilities. In my case, my wife would not want me to be involved in any way with child-rearing, because she thinks that I am completely useless at it, and I am happy not to be involved. However, many women have excellent husbands whom they feel they can trust to share child care duties. In such cases, we have to accept that some men will want to take paternity leave to spend time with their children and release their wife to continue her career, perhaps in a higher paying job.

The recruitment industry welcomes the extension of paternity leave, because we think that we shall make a bit of money from it. Fathers will want to take time off and there will be a consequential cost to small businesses in filling those positions. Recruitment companies often pay a higher hourly rate to temporary workers because they do not have access to the same level of in-work benefits as their permanent colleagues. Recruitment businesses also charge a margin on top of the hourly rate that can be as high as 20 per cent., so the cost to small business can be very real.

The other issue that small businesses face is losing a key member of staff. I know that the issue is the same when they lose a valuable female member of staff, but the provision will mean that they will lose valuable male members of staff. If a small business employing fewer than 10 people loses one of its star performers for 10 or 12 weeks, it can leave a big hole to fill. Yes, the business can get a temporary worker to cover the role, but the skill set required may be such that the temporary worker cannot hope to fill the vacancy properly.

I agree that we do not want a sunset clause, but I urge the Government to report to the House in 12 months and let us know how the regulations have been working. That could be done through a statement or a report. Paternity leave will be a new concept and it will take time for businesses to get their heads around it. It will also take time for fathers to get their heads around how to access and manage their new right. If we can ensure that regulation is thought through thoughtfully, implemented thoughtfully and followed up thoughtfully, it will be a great reassurance to Members on this side of the House. It might also be a reassurance to Labour Members and I am sure that it would be a reassurance to business.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Trade and Industry)

Mr. Khan was a little hard on Mrs. Laing, who made some interesting points in her speech, although I cannot support the new clause, as I shall explain.

The introduction of paternity leave is most important, as I have said before. When my youngest daughter was born my wife had to stay in hospital before and after the birth, which made things difficult. I had a young daughter to look after and had to change my work patterns. As I was self-employed I was able to do so by working late some nights, but many husbands do not have that opportunity. Far from making excuses, it is actually difficult for many men to take paternity leave for practical reasons so the introduction of statutory paternity leave is important for them.

I am concerned about the wording of the new clause:

"The Secretary of State shall review and publish a report on the effectiveness of regulations".

I was not entirely clear what the hon. Member for Epping Forest meant by "effectiveness"; she referred several times to the effect on business and the costs to business, but that is only one side. There may be an effect on business, but I am interested in the effect on families and employees and how they react to and deal with things. Effectiveness goes two ways; it is not just about cost.

My worry about the wording is: what happens if after a review we find that the measure is costing business x millions and the situation cannot continue? Are we seriously saying that having granted paternity leave to employees we should tell them that it costs too much and we shall abolish it? That is not a practical proposition.

Photo of Eleanor Laing Eleanor Laing Shadow Minister (Women and Equality)

The hon. Gentleman is absolutely right. If the new clause does not seem sufficiently wide, its wording is deficient and I take responsibility. Perhaps I am not as good a lawyer as he. He is right: it is not just a question of costs. If the Government accept the new clause and the Minister makes an assessment of effectiveness, there must be a full assessment of the effect on everyone involved, especially employees and fathers.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Trade and Industry)

I thank the hon. Lady for that clarification. Indeed, if she had used the word "effect" instead of "effectiveness" she might have avoided many of the problems.

Another problem is that the review would be annual, beginning in a year's time. That is wholly and utterly impractical. We are introducing an important new right and it will take time for it to bed in. We need to know about its effects over a longer period. After only one year, relatively few people will have taken advantage of that right, and by its nature its impact will vary from year to year. We cannot take one year in isolation and say that the effect has been x. The effect in year two may be vastly different.

We need a bedding-in period of at least five years to give a real view of how the measure is working. If the new clause had proposed a review after five years to assess the impact and to consider what we should do if there were detrimental effects either on business or, more important, on employees, I could have supported it, but I cannot do so with its current wording.

The analogy of the elephant trap was interesting—I can see the Trojan horse falling into it. There are too many dangers in passing a clause worded in that manner. It could have the unintended consequences to which the hon. Member for Epping Forest referred. There are too many ifs and buts. The point about holding a review is valid, but it must take place only after a reasonable period to see whether the regulations have bedded in.

I shall not support the new clause if the hon. Lady puts it to a vote, but I urge the Minister to assure the House that after a reasonable period—perhaps the end of this Parliament—we shall have a review of the effect of the regulations. On Second Reading, I expressed concern about the fact that a mother and father could not take maternity and paternity leave at the same time, which would have been extremely useful in my situation, if my wife and I had been in employment. Many aspects of the impact of the regulations on employees need to be assessed. Perhaps a review could reconsider the year's leave and split the time up in different ways to allow a crossover period. It could also consider the effects on small businesses that we discussed in our earlier debate. The review is fine but a year is far too short a period.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs) 3:15 pm, 18th January 2006

I am grateful for the opportunity to hold this debate. Mr. Weir has outlined, in relation to its wording, why we cannot support the new clause, but I am happy to accept the spirit and intention of what it tries to achieve. I am grateful for the contributions of the hon. Members for North Norfolk (Norman Lamb) and for Broxbourne (Mr. Walker) and of my hon. Friend Mr. Khan. It was always a great pleasure for me to meet the hon. Member for Broxbourne in his former capacity, and I hope that I have not done too much damage to his career or mine by saying that. His experience in the field has been vital in informing our debate.

Of necessity, we expressed a wide range of views on direct payments, as there is great strength of feeling about the differences between us. With paternity leave, however, we are looking at culture change; we are trying to ensure that there is a continuous process whereby employers offer the best support for their employees.

The measure has not come out of thin air; it is the result of consultation and discussion. One of my concerns has been that the pace of change in the world of work is so dramatic that it is important for the Government, employers and employee representatives to keep up with the requirements of the people that we represent. Research on how the existing rights for statutory paternity pay and leave are used shows that fathers want the flexibility to spend more time with their babies in the first year and are taking advantage of the leave and pay available.

The Department of Trade and Industry supported the Equal Opportunities Commission survey, "Fathers in the First Year", which looked into how much time fathers took off work when their child was born, as well as the attitude of fathers and their partners to fathers' caring role. The hon. Member for Broxbourne told us about his wife's view. I am sure that we have some parenting courses that he could follow.

The world is changing and it is important that we achieve that culture change. The hon. Member for North Norfolk spoke about the need for great care in drawing up the regulations. I agree that it is important that we get that right, and under the affirmative regulation principle, we are taking plenty of time to ensure that we do so.

Photo of Norman Lamb Norman Lamb Shadow Secretary of State (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

On Second Reading, the Secretary of State for Trade and Industry undertook to attempt to get the draft regulations ready before the Committee completed its deliberations. That did not happen, and they are still not ready. Would it not have been better to allow the House to see the regulations at least to assist in the debates on such matters?

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

My right hon. Friend made that offer—if it was possible—but he also said that we need to ensure that we get the detail right and to consult thoroughly and widely, and we are happy to do so with Opposition parties. I have certainly done that when involved with previous Bills, and we welcome any support from Opposition Members in the way that we try to administer doing so. The regulations will go through the affirmative procedure—Parliament will have an opportunity to discuss them—and that is the proper way to proceed.

My hon. Friend the Member for Tooting is quite right. He was consistent during the debates in Committee. He is attacking not Mrs. Laing personally, but the idea that comes from Mr. Cameron, who says that there are times to stand up to business and times to show that family-friendly employment policies are being considered—a point made in an earlier discussion by Mr. Jackson. However, the evidence shows that the right hon. Member for Witney is attacking paternity leave and running behind what the CBI has said about it. That is why my hon. Friend the Member for Tooting is right to be consistent in saying that those warm words are not good enough and that actions count. We need to see those actions.

It is important to review how the system works for the reasons outlined by the hon. Member for Angus. We want it to work. We want it to be appropriate. We want it to be right. However, the annual review suggested in new clause 3 is not appropriate; it would not represent a good use of taxpayers' money—something that is of genuine concern to the hon. Member for Epping Forest. For those reasons, I hope that she accepts the spirit of what we are trying to achieve. I welcome any contribution that she wants to make on the regulations when they are drafted. I also hope that, in light of my recommendations, she will withdraw the motion.

Photo of Eleanor Laing Eleanor Laing Shadow Minister (Women and Equality)

The Minister has been most convincing. He used the magic phrase that always makes me sit up and pay attention—"taxpayers' money". We discussed that matter in Committee on many occasions. I consider the Conservative party to be the guardian of taxpayers' money, but the Government often want to spend so much of it, and it is up to the Opposition to defend the taxpayer. So I am quite persuaded by the Minister's argument, but it is even more pleasing that he says that he accepts the principle of what I have said about the effect of new clause 3.

Of course, Mr. Khan has his job to do as well. It is quite astonishing that, because I am saying something in 2006 that is broadly in agreement with what the Minister and the Government are saying, he must hark back to what the Conservative party said five years ago. Not so long ago, the Labour party was in favour of the common ownership of the means of production, but I do not hark back to that all the time to try to find something on which we disagree. What we said five years ago is not relevant; what we say now is relevant, and I am saying now that we are in favour of statutory paternity leave.

Photo of Mark Tami Mark Tami PPS (Rt Hon Dawn Primarolo, Paymaster General), HM Treasury

The problem is that Labour Members find it very difficult to know what "now" means, because the concept seems to get shorter and shorter: the Opposition's policies change by the second, not even by the minute.

Photo of Eleanor Laing Eleanor Laing Shadow Minister (Women and Equality)

No, the problem is that Labour Members are very worried about the rising popularity of the Conservative party, but I appreciate that we cannot debate that matter within the terms of new clause 3. So I will take that no further, but I notice that the hon. Gentleman loyally echoes the words of the Prime Minister earlier today. If political parties could not review their polices in light of a changing world and a changing society, what is the point of political parties and what is the point of Parliament as a place to propose ideas and to have debates and arguments? That is what Parliament is all about. I am pleased to say that that is what we are doing effectively this afternoon, and the Minister has done it so effectively that he has persuaded me: I am happy with his assurances that he will return to the House and that we will have such an opportunity in future.

Mr. Weir is right to say that exactly one year is perhaps too soon. Perhaps we need rather more flexibility in the way in which the Government come back to the House to review their legislation. However, I can assure the House that, if the Minister does not return to the House to report on a review of the way in which the legislation is working, the Opposition will ensure that the matter is debated in a year or so, thus ensuring that the House has the opportunity to consider not just the effectiveness of regulations that we hope to pass today, but their effect, as the hon. Member for Angus rightly says—there is no better education than that of a Scottish lawyer—so I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.