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Baroness Miller of Hendon: My Lords, I thank the Minister for his clear explanation of the Bill and for the Explanatory Notes, which are as helpful as usual. However, I confess that while totally accepting the family-friendly ethos of the Billand I assure the Minister that we dowe nevertheless will be expecting
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some clarification that the Explanatory Notes have not achieved for us. That is quite unusual, but some things need to be cleared up.
My noble friend Lady Morris of Bolton and I will be working together on the Bill. I will be dealing with Department of Trade and Industry matters; while my noble friend, with her great experience in family matters, will be dealing with those issues. As my honourable friend the Member for Maidenhead told the other place on Second Reading,
The Minister talked about consulting widely on the regulations. The truth is that when this Bill went through the other place, it had not seen the regulations at all; it is a short Bill, and only half the draft regulations are out now. It is hard when you have to deal with a Bill and in due course pass it through this House and you do not know all the detail of what it is that you are talking about; in fact you do not know much of the detail at all.
In Clause 14, which the Minister mentioned, there is a special one-off power to regulate, which I will come back to. In view of the length of the Bill and the high proportion of clauses that are dependent on regulation, my noble friends and I hope that the Government will be more receptive than they usually are to any amendments that we table, bearing in mind that they will, as ever, be designed purely to improve a Bill whose objectives are supported all around the House. It is the methodology that causes the problems. As the Secretary of State in introducing the Bill said to the other place, and as the noble Lord, Lord Sainsbury, said here, it has four main parts: extending paid maternity and adoption leave; extending the right to flexible working to carers of adults; helping fathers to play more of a role in the upbringing of their children; and making it easier for employers to administer the rights that are created by the Bill. It is in that latter respect that I regret to say the Government have failedI refer only to small businesses.
The reduction of the burden on employers of administering statutory maternity pay by returning it to the Inland Revenue was originally part of the package offered by the Government to secure the support of the CBI. But after that suggestion was made, the Government resiled from it. Will the Minister say why? The Minister gave a long explanation in his introduction, but having read the figures discussed in the other place, it is extraordinary
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that it costs so little for small businesses to have to do their own administration, but would cost so much for this clever Government to take that on board. We will explore that in Committee.
The effect of that unilateral change of heart was that the CBI said it could no longer support the Bill as it stands. It roundly condemned the Government for failing the first test of the commitment to better regulation that they claimed to have, and their failure to compensate employers by better support. We are on the side of the CBI in this matter. My honourable friend the Member for Epping Forest told the other place on Report:
That is the problem for small businesses. Some 95 per cent of small employers have five employees or fewer. They will regard as a sort of joke the offer of a CD-ROM to help them calculate statutory maternity pay as they lock themselves in their front rooms on a Sunday afternoon, struggling to cope with PAYE, national insurance returns, VAT and whatever other regulatory returns affect their businesses. I know that particular story from personal experience in my own household. CD-ROMs, advice and helplines are all very well, but small businesses have to fight hard today. They do not have personnel departments; they do not have people to work such things out; and the more regulation you put on them, the more difficult their position becomes. Therefore, we will introduce probing amendments to look at that issue.
The introduction of the novel concept of additional paternity leave will also create horrendous complexities when two separate employers are involved. But that is not the only legislative complication that employers will face. Clause 3 enables the Secretary of State to nominate certain persons to be the beneficiaries of part of the mother's entitlement to maternity leave. The question is: who is the father? Is it the biological father, or the man who the mother is living with at the time the child is born, or the man who the mother takes up with soon after the child is born, or even a lady with whom the mother enters into a relationship during pregnancy or after the birth, and who she would be living with and would like to have that entitlement to time off work?
Regarding the same complication, how will the employer of the person claiming that additional leave know who is entitled to it? The Government, with the best of intentions are creating a legislative nightmare and we shall certainly require clarification from the Minister before the next stage, so that the issue can be settled by primary legislation, rather than that this complicated issue should be the subject of a blank chequea regulation that will come.
How will employers know that two different men are not both claiming that right? The fact is that since 1997 there has been a 53 per cent increase in the regulatory impact on business, at a cost of £14 billion per annum. Some 97 per cent of all enterprises are classified as "small", which means, if my mathematics is correct, that an additional cost of £13.5 billion will
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fall on small enterprises. The cost to individual firms may be less than the Government spend on paperclips in a week, but for a trader struggling to pay his rates or to find the money to pay wages on a Friday, it is yet another crushing, back-breaking straw.
There is another rather curious aspect to the Bill. My noble friend Lady Morris and I were surprised by the inclusion of Clauses 13 and 14. They make far-reaching changes in general employment law which are nothing to do with families. They do not seem to be part of the general purpose of the Bill but have the appearance of something tacked on to take advantage of a legislative slot. The purpose of the Bill, as described in the introductory paragraph, is to,
and so on. As a sort of afterthought, it continues that the purpose isI paraphraseto provide increases in annual leave and redundancy pay. I suspect that the inclusion of the word "work" in the title of the Bill is to justify the inclusion of these two totally unconnected provisions.
Clause 13 piles another burden on the back of business. The clause is one of the longest in a very brief Bill. It gives the Secretary of State sweeping power by ministerial decree to prescribe the amount of paid annual leave and to permit employees to decide when they will take it, irrespective of the requirements of the business. We already have a requirement for four weeks' paid holiday a year. Now that is being redefined by discounting the statutory bank holidays from the calculation, of which there are eight in England and Wales.
Now we are to move from four weeks' paid annual holiday to four weeks plus eight extra working days, and someone will have to pay for that. The question is: who? I am afraid that in the case of tiny corner shops trying to compete against giant supermarkets, and small manufacturers trying to compete against Chinese and Indian businesses, which are untroubled by such burdens, that "someone" will be the employers, who will find it increasingly difficult to remain open for business. That is not just my personal opinion; it is also the view expressed by the CBI. As we know, the CBI is usually more concerned with big businesses as most of the businesses attached to it are big, but here it is small businesses that would be hurt. The CBI briefing suggested to us that, if this is to happen, the extra days should be phased intwo one year, and so onso that small businesses have a chance to get used to the arrangement.
Clause 14 enables the Secretary of State to adjust the calculation of salary for the purpose of determining the amount of redundancy pay which an employerpresumably already in financial difficulties if we are talking about redundancy paywill be obliged to pay. Since the introduction of the concept in 1965, redundancy pay has been based on a formula related to age and length of service. These new provisions will enable the Secretary of State to use virtually any formula that he chooses, including, I suppose,
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extraneous matters, such as the formulae used elsewhere in the EC or even, not to be too frivolous, golden handshakes given to sacked football managers.
The Secretary of State seeks power to invoke that provision only once. Why am I not impressed by this feat of seeming self-denial? First, because the temptation will be to include in the new formula a truly swingeing increase on the grounds that it is a one-off. We are aware that the unions are seeking an increase from the current figure in the formula of £290 a week, which is subject to normal indexation, to a staggering £400 to £500 a week, or that they would even like it to be increased by 100 per cent to just under £600 a weekabout £580. I believe that before the Government ask your Lordships to sign this blank cheque, the Minister should tell us today precisely what figure they have in mind for the new power that they are going to put into Clause 14. If, as I suspect, he says that nothing has been decided yet, perhaps he would care to disclose the representations they are currently being asked to consider.
Secondly, once the precedent has been set, the Secretary of State will be able to have several more bites of the cherry by slipping in another similar clause as a miscellaneous provision in some later Bill. The Minister should tell the HouseI hope he willthe reason behind this violent change to a formula that has worked perfectly well for over 40 years. I believein fact I am practically certainthat it was part of the so-called Warwick agreement, negotiated between the Government and the TUC before the last election to secure union support for other aspects of the Government's manifesto. Your Lordships should note that this very important provision was not debated at all in Committee in the other place, so we are raising it now for the first time, although the Minister mentioned it in his introduction but not with the detail that I have given it. I expect that this House will want to examine the full ramifications in some detail.
On another subject, both the CBI and the Engineering Employers Federation are very concerned about what the CBI calls the in-touch days. These enable an employee on maternity leave occasionally to continue to work on her employer's behalf. At the moment one day's attendance costs a whole week's benefit, which is manifestly nonsense as well as being grossly unfair to both sides. Keeping in touch in that way is beneficial to both employer and employee. As the British Chamber of Commerce points out, it enables an employer to be sure of an employee's future intention about returning to work, which is very helpful for a business. We wish to ensure that employees who take that very responsible attitude to keeping in touch with their employers during maternity leave are not penalised for doing so and employers are not accused of harassing such employees when they maintain contact at such a time.
Some aspects of maternity leave and additional maternity leave are currently enshrined in secondary legislation, which causes employers some concern. As there was no opportunity to amend those aspects
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during the passage of the regulations, we shall ask the Minister to clarify them during their passage through this House.
Earlier I referred to the inclusion of the anomalous Clauses 13 and 14 as curious. In my opinion, they are out of place in a Bill whose many other provisions in Clauses 1 to 12 are mainly related to maternity and paternity leave and pay. Those two clauses are described as "miscellaneous provisions", which are just slipped into other Bills in the expectation that they will not excite too much interest. These two clauses are part of what happens when one continues to put little bits at a time into Bills until one finds that altogether they make quite a big difference.
The CBI has pointed out, for example, that the new additional paternity leave is a stepping stone to compel employers to match occupational paternity pay with maternity pay. I do not know about that, but we shall certainly want to probe that with the Minister. This drip-by-drip tactic is illustrated by the fact that any of the provisions of the Bill could just as easily have been incorporated in the Employment Relations Act 2004.
A final matter of concern is that while I am glad to see that the regulations, which the Government will promulgate under Clauses 13 and 14, will be subject to the affirmative approval procedure, it is proposed that those under Clauses 3, 4, 6, 7, 8, 9 and 12 will not be. In introducing the Bill the Minister said that they would be. If they are not, that would be contrary to the assurances given by the Government at Second Reading in the other place. I say that because the Minister in the other place was asked whether they were affirmative or negative. He was sure that they were affirmative, which is why I said that was an undertaking to which the Minister has a duty. But the way in which those regulations are drafted does not say that they are affirmative, and one cannot assume that they all are; three which definitely are have got "affirmative" written after them. When the Bill came to us, it should have said that it was affirmative to make this absolutely certain, which is why I want that clarified as well.
It is totally wrong that major legislation, such as that contained in this Bill, should be buried away in secondary legislation that cannot be amended. The Minister knows that I feel strongly about this. To have a Bill with 20 clauses, with the number I pointed out earlier all being regulation, is wrong. It should not happen. We will seek to rectify this shortcoming in Committee.
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