Work and Families Bill

My Lords, I beg to move that this Bill be now read a second time. I am very pleased to have the opportunity to introduce this Bill to the House. I believe that it is a significant piece of legislation and one that will enhance Britain’s economic success, raising employment levels and increasing the standards of living for families. I start by putting the Bill in the context of the Government’s strategy. One role of government, and in particular my department, is to create the right environment for business to succeed so that our economy continues to grow, creating more jobs with greater security and better rewards from working. As part of this, we want to ensure that all those in the workplace, including the most vulnerable workers, have the right to decent minimum standards and that employers and employees are aware of their rights and responsibilities under the law. Today’s families face huge challenges in balancing their home and work life. Giving children the best start in life and the demands of an increasingly competitive economy mean that many parents often struggle to balance their work and caring responsibilities. Changes in family life and working patterns are set to continue. In future we are likely to see an increasing number of women and men taking time out from the labour market to care for children or elderly relatives or both. At the same time, businesses will face increasing competition from emerging markets such as China and the rest of Asia. An ageing population and a decline in the number of people of working age across Europe will increase the need for a wide pool of skilled employees. The purpose of the Work and Families Bill is to respond to these changing patterns of employment to ensure that parents and others with caring responsibilities have genuine choices about how they balance their work and family life, to ensure that children get the best start in life, and to help business benefit from the widest possible talent pool. We have already built a strong foundation of support for working families. Since 1997 we have created 1.2 million additional childcare places, guaranteed all three and four year-olds a free part-time nursery place, and improved financial support for increased child benefit and working tax credits. Parents have benefited from improved maternity leave and pay and new rights to paternity and adoption leave. We are also helping people to remain in work by encouraging the spread of flexible working. We have introduced a new right to request flexible working for parents of young and disabled children. At the same time we encourage employers to offer flexible working opportunities right across their workforce by promoting the business benefits and encouraging them to follow best practice. This targeted light-touch approach has helped the success of the law. Businesses have been able to grow flexible working at a pace they can manage, and many are opening up opportunities for flexible working to more of their employees, not just those covered by the law. Now 5.4 million employees work through some form of flexible working, and seven in 10 employers say they are willing to consider flexible working requests from all staff. We have come a long way, but, as I said earlier, we will face greater challenges in the future. The Work and Families Bill, which I present to your Lordships today, builds on our achievement and addresses these issues. The Bill has four main parts. First, it will introduce powers to extend maternity and adoption pay from six to 12 months. We will bring in regulations to extend the period of pay to 9 months from April 2007, and to 12 months by the end of this Parliament. This will benefit around 400,000 parents per year, enabling them to spend more time with their children when it is most valuable—when they are very young. Secondly, it will pave the way for fathers to be more involved in their child’s upbringing and give mothers the opportunity to return to work earlier, should they wish to do so. While around the first six months of leave will be reserved for the mother, eligible fathers will be entitled to up to six months’ additional paternity leave during the second six months of the child’s life. Some of this leave could be paid if the mother returns to work and has some of her pay entitlement remaining. This is an important step. We need to ensure that it benefits both employers and employees, and that we give business enough time to plan for this change. In line with the approach of this Bill, we will shortly be consulting fully on the details of the scheme to ensure that it is manageable for business, and that administrative burdens are minimised. Thirdly, the Bill will introduce powers to extend the successful right to request flexible working to carers to adults, something carers’ organisations have greatly welcomed. There are around 6.6 million people in Britain with caring responsibilities, and about 3.5 million of them are working. This new right will help those carers who want to stay in work to better balance their care and work responsibilities, and help them stay in the workplace. Noble Lords will be aware that we are currently consulting stakeholders on the draft regulations and how best to define which carers should be covered by the legislation in the way that meets the needs of employers and employees. The Bill will make it easier for employers to manage the administration of these rights, and for employers and parents to stay in touch during maternity leave. Employers will be able to calculate a daily rate for statutory maternity pay, if this will help them to pay it at the same time as a woman’s usual pay day. Women can choose when their maternity pay will start, allowing their pay and leave to start at the same time. Employers and employees will be able to agree a limited number of ““keeping in touch”” days, without sacrificing statutory payments or bringing a woman’s maternity leave to an end. In regulations there will be increased notice periods for mothers who wish to return to work earlier or later than originally agreed to give greater certainty to employers. In addition, the Bill delivers on our commitment to increase statutory entitlement to annual leave. We are committed to increasing the current four week minimum leave entitlement to reflect permanent bank and public holidays. We will undertake a full and extensive consultation with stakeholders before detailed changes are put before Parliament, as well as gathering more data on existing arrangements. And the Bill will provide a one-off power to increase the maximum amount of a week’s pay affecting compensation payments in connection with, in particular, redundancy, unfair dismissal and insolvency. We are in close touch with key stakeholders on this issue. So these measures benefit employees in a very direct way, but they will also benefit business and the labour market as a whole. We have consulted widely on the provisions in the Bill. As well as a formal consultation launched in February last year, we have had, and continue to have, discussions with key stakeholders. We worked with an advisory group of human resource experts, set up specifically to look at how we could introduce these changes while easing the administration for employers. We were clear from the start that we wanted to establish a framework of rights and responsibilities for both employers and employees in line with the Government’s better regulation agenda. We have listened and have responded to what we have heard. For example, the measures I outlined earlier to ease the administration of leave and pay are a direct result of what we have heard. We will be working with the Equal Opportunities Commission and other stakeholders to develop their idea of a ““written statement”” of employer and employee rights and responsibilities in connection with maternity leave as well as guidance on what ““reasonable contact”” means so that the law is clear to everyone affected. We are targeting the extension of the right to request flexible working to carers only to make it more manageable for business. This approach has allowed us to bring forward a Bill which has the broad support of both employees and employers. There are, of course, those who want us to go further and others who say that we have gone too far, but I believe we have struck the right balance and we will continue dialogue with stakeholders as we take the Bill forward. There are concerns from some business organisations that we are not going ahead with a direct payment scheme, which we committed to consider as one of the ways of easing the administration of leave and pay. After careful consideration we concluded that the costs of such a scheme would be out of all proportion to the benefits accruing, representing neither good value for money for the taxpayer nor a significant saving for employers. For a direct payment scheme to work properly there would need to be a potentially complex two-way information exchange, which could impose new burdens on business. While employers would no longer need to calculate SMP and make payments—costs estimated to be around £3 million per year—they would still have to make employers’ earnings-based contributions and periodical returns on top of managing the information exchange. This would cost employers nearly £2 million in time costs, leaving an estimated net benefit for employers of around £1 million per year only. Analysis showed that about £400,000 only of this benefit would accrue to small employers. For the Government, direct payment would involve not just taking over the tasks removed from employers but also providing the information exchange mechanism to support employers with their remaining and new tasks. Her Majesty’s Revenue and Customs would have to create a highly complex new IT system and this, plus the information exchange mechanism, would need to be linked internally to employee data systems and externally to those of employers via a secure route. Payroll experts believe that errors would be inevitable, driving up the costs for government as well as impacting on employees and employers. As a result, costs for the Government are estimated to be around £75 million in set up costs and around £50 million in annual running costs. Given the figure of employer benefits, it does not represent good value for money for the taxpayer or a significant saving for employers. During the consultation, we heard that employers would welcome further practical support. As well as easing administration for employers, HM Revenue and Customs is this year eliminating the need for any employer to calculate statutory maternity pay and other such payments manually by a mixture of free electronic calculators and a helpline service that will do the calculations and follow up with prompt written confirmation. Noble Lords will doubtless closely scrutinise the delegated powers in the Bill. The bulk of the provisions, including powers relating to additional paternity leave and pay, some of the maternity and adoption leave measures, annual leave, and the one-off power relating to redundancy powers, require regulations to be made by affirmative resolution, so noble Lords will have ample opportunity to examine and debate them. In the case of regulations relating to maternity and adoption leave and flexible working, draft regulations are already in the public domain. Consultation on additional paternity leave and pay will be launched shortly. I look forward to hearing noble Lords’ thoughts and comments on the Bill. I am sure that many valuable contributions will be made when they come to scrutinise it in Committee. We have consulted widely on the Bill, and we will listen carefully to any arguments put forward for change. It is not a radical Bill, but it has the potential to make a real difference to the lives of working people in this country. I commend the Bill to the House. Moved, That the Bill be now read a second time.—(Lord Sainsbury of Turville.)