Work and Families Bill

My Lords, I thank all noble Lords who have participated in the debate for their support for the general thrust of the proposals, which is very welcome. Many interesting and important points have been raised, all of which I have listened to with great interest. I shall try to deal with as many as possible. I shall start with the cost to business which was raised by a number of speakers and certainly by the noble Baroness, Lady Miller, and the noble Lords, Lord Razzall and Lord Northbourne. Concerns have been raised about the Bill being unduly costly to employers but I assure the House that that is not the case. This package is good news for employers as well as for employees and presents a balanced framework of rights and responsibilities for both employers and employees. We are making it easier for employers to manage leave and pay and at the same time we are extending entitlements for employees. We also want to minimise the burdens on business of the new arrangements in line with the Government’s better regulation agenda. In his introduction to the Bill, my noble friend pointed out the background to it and that throughout the Work and Families: Choice and Flexibility consultation we considered how best to help business. He itemised some of the ways in which we have done that: the start date for maternity pay; being able to compute maternity pay on a daily basis; keeping-in-touch days; and the extended notice periods for women who change their return dates from maternity leave from 28 days to two months. All those matters were pressed on us by the business community and it is right that we have responded. The noble Baroness, Lady Miller, spoke about the keeping-in-touch days. Under current rules a whole week’s statutory pay is lost if one day is given up to the employer. There is concern that employers should not use these opportunities to harass people to try to get them to return to work. We agree that the existing regulations can sometimes have the effect of preventing contact between employer and employee during maternity and adoption leave and that is why we are changing the law. We also agree that it is important that employers have confidence in making use of keeping-in-touch days and the regulations published in draft make it clear that both parties must agree that the keeping-in-touch days should take place. Neither has the right to demand that they take place without the full agreement of the other. We have dealt with the issue of trying to clarify the import of keeping-in-touch days. Noble Lords have mentioned the cost to businesses. I remind the House that there is an opportunity for reimbursement. Small employers are provided with reimbursement at a rate 104.5 per cent of the money that they pay out and they have an opportunity to claim funding in advance. Although I do not believe they were greeted with great approval, some of the new arrangements to help the calculation of statutory maternity pay are a help. I also remind noble Lords that there is a huge benefit to business, which a number of people recognised. It is considered that £80 is the average cost of dealing with a straightforward, flexible working request, whereas the cost of recruiting a new employee is about £4,800 and firms need to recruit and to retain the best staff and enable parents to remain in the workplace. Ninety-four per cent of employers thought that people worked best when they strike a better balance between work and the rest of their lives. Employers benefit from being able to recruit from the widest talent pool. Women now make up 45 per cent of the workforce, whereas in 1971 the figure was 38 per cent. By 2010 there will be 2 million more jobs, and four out of five are likely to be filled by women. The noble Baroness, Lady Miller, spoke about the CD ROM, saying it would be complex to use for the calculation, but we do not necessarily think that is the case. Employers’ savings are estimated purely in terms of time costs and in net terms—gross time saved on old tasks, less time spent on new tasks. HMRC’s costs are estimated not only in staff time costs but also in IT systems costs and the costs are cumulative. My noble friend spelled out direct payments in some detail in his introductory speech. Looking at it in more detail, just think of some of the complexities that it would involve if it were to proceed. It would involve a major new role for both employers and HMRC. Up-to-date information from the employer would enable HMRC to take on temporary payroll duties for the employer, which would involve deciding eligibility for and calculating gross SMP, and calculating the full range of payroll deductions, according to the detailed rules for each, which will be taxed—national insurance, student loan deductions, pension contributions, union subscriptions, payroll giving, save as you earn, a repayment of interest-free or reduced-rate loans from the employer. It would involve paying over the deductions properly, and making the net payment to the employee on their normal pay dates. Up-to-date information from HMRC about direct payments of SMP and deductions would then enable the employers to make employers’ SMP-based contributions by the due dates, make returns when needed and take over the complete payroll function at the end of the direct payment period. Just running through that highlights just how complex it would be. It would involve a mixture of removed tasks, retained tasks and new tasks for employers. The noble Baroness, Lady Miller of Hendon, talked about annual leave entitlement, and why it was in the Bill. It was a manifesto commitment that we would, during our third term in office, increase the existing four-week entitlement to annual leave to reflect permanent bank and public holidays. As with existing leave entitlement, this would be on a pro rata basis for those working part time. While we are taking regulation-making powers in this Bill, we will be conducting a full and extensive consultation with business and other stakeholders before detailed regulations are brought forward for affirmative resolution. Most full-time employees already receive 20 days’ or more paid leave, not counting bank holidays. The same is true for many part-timers, who receive an equivalent entitlement based on the time that they work. Those who do not are likely to be in lower-paid occupations, including women in part-time jobs and ethnic minorities. The issue of the broad powers to make regulations was raised. We should not underestimate the complexity of this issue, given the variety of working patterns which exist today. Powers under Clause 13 ensure that regulations may make comparable provision to that under the Working Time Regulations, such as arrangements for taking leave and bringing a complaint to the tribunal. The Government are committed to undertaking a full and extensive consultation with stakeholders before detailed changes are put before Parliament, as well as gathering more data on existing arrangements. The noble Baroness, Lady Miller of Hendon, again raised a specific point about who the father eligible for additional paternity leave and pay is. To simplify the scheme, it is proposed that the same definition of a father as for paternity leave will be used under the additional paternity leave scheme; that is, he is the father of the child, or married—or the partner, including the civil partner—of the child’s mother, and is responsible for the upbringing of the child. This works well now, and we have had no representations from business to say that this definition is problematic, although we will consult further on the details of the additional paternity leave scheme. The noble Baroness, Lady Miller of Hendon—again—and the noble Lord, Lord Razzall, in particular, raised regulation. Better regulation is a top priority for the Government. The DTI is taking forward a radical regulatory reform programme, following the recommendations of Philip Hampton and David Arculus. The DTI will deliver £1 billion of reductions in burdens by 2010. We consult business fully before devising new proposals. There is a draft simplification plan covering all areas of DTI policy, including company and consumer law. There is also a new programme of work on employment law, which aims to simplify rules and improve guidance without undermining rights in those areas business has identified as being difficult to understand. This includes work on the statement of employment particulars, the redundancy law framework, the maternity pay leave regime, targeted enforcement inspections, in keeping with Hampton principles, and confirms the review of dispute resolution procedures. We were asked why we are changing the statutory scheme on redundancy matters. Again this is a government manifesto commitment to raise the weekly limit. We are going to consult on this and no decisions have been taken about what the weekly limit might be. Issues were raised about the reasons for not proceeding with transferred leave and pay and why the Government are no longer proceeding with that arrangement. The transfer of maternity leave and pay poses some legal complexities. In working through these it became clear that providing fathers with an additional period of paternity leave would provide a more straightforward mechanism for delivering the policy intentions, while being similar to administer and clearer than a father being transferred maternity leave and pay. Additional paternity leave and pay provides fathers with an opportunity to take an additional period of paternity leave, some of which can be paid if the mother returns to work and enables either the mother or the father to be off work to care for the child in the first year. A question was asked about regulations being subject to the affirmative procedure. All the arrangements are set out in the Bill, either in the clauses or in Schedule 1. All regulations are affirmative, apart from maternity adoption pay and flexible working. The Secretary of State gave that assurance in the other place but, to be clear, this is covered in the Bill although not easy to find as you have to delve into Schedule 1 to get some of it, I think. The noble Baroness, Lady Walmsley, welcomed the Bill. We thank her for that. She touched on the rate of benefit and said that it was too low and that there was not enough take up. The flat rate has gone up significantly since 1997 when it was £55.70 a week. It is due to go up in April of this year to £108, and by April 2007 government support for working families will be worth more than £8,000 during the first year of a child’s life, if you look at the package together, compared to £2,600 in 1997. I think that, by any measure, is a spectacular commitment by the Government to support families and children. The issue was raised, again by the noble Baroness, Lady Walmsley, about fathers taking paternity leave and pay earlier. If a woman returns to work, say in three months, why cannot the father take leave at that point? Responses to the Work and Families: Choice and Flexibility consultation were overwhelmingly in favour of reserving the first six months of leave for the mother for a variety of reasons. If fathers were able to take up additional paternity leave when the mother returned to work after three months of maternity leave, it could lead to women feeling under pressure to return at this earlier point and therefore earlier than they may actually wish. That may give rise to health issues or affect the mother’s ability to continue to breast feed, if she wishes to do so. It is in line with World Health Organisation guidance. The issue was raised about the right to request leave for all carers. As your Lordships know, we are currently consulting on which carers are covered. A number of noble Lords touched on that issue. We are concerned that too broad a definition would make it more difficult for business, particularly small businesses, to manage demand—and small businesses have featured significantly in our discussions this afternoon. Small businesses have stressed that their resources to meet an increase in demand are limited, and the CBI’s own research shows that although small businesses are more likely to accept a request, they are finding it more difficult to accommodate requests. The success of the law so far is due to the widespread support of employers. The noble Baroness, Lady Morris, made an interesting point. She said that sometimes these things are accommodated at the expense of perhaps the owner/shareholder of a business who takes the strain. The noble Baroness, Lady Walmsley, and other noble Lords raised the issue that the right to request should be extended to parents of older children. We will continue to examine the case for that. We are keeping a targeted approach to provide employers with the best way of managing requests, knowing that, on the basis of experience today, it is likely to stimulate many to open up flexible working to others in their workforce. There was agreement from the consultation that carers face real difficulties balancing work and caring responsibilities and should be given priority in any extension to the law, which is what we are doing. Many parents have benefited from the law and many employers, persuaded by the business case, now willingly consider requests from other parents and members of their workforce. Other measures provide support to parents that is not available to carers and other individuals to the same extent. Those include plans to extend school opening hours and our commitment by 2010 to provide out-of-school childcare places for all children aged between three and 14. The noble Baroness, Lady Walmsley, also mentioned that 15 weeks’ notice was too long. We are keen to ensure that the notice period is appropriate. The existing period of notice that employees need to give in order to take paternity leave is appropriate. Although employees have an entitlement to leave, it is only right that employers should have the right to receive proper notice of employees’ intentions so that they can plan ahead and provide cover or make alternative arrangements as necessary. Careful consultation prior to the introduction of the new paternity leave and pay entitlements in 2003 took into account the views of both employees and employers. Entitlements such as those need to reflect the interests of everyone affected. The point was raised that four out of 10 mothers are not in work at the time of birth, so their partners would not benefit from additional paternity leave or pay. Where women are not working prior to the birth of a child and so not entitled to maternity leave that is often because they already have other children. It is not thought that many women in those circumstances would want to start working before the second or third child was more than 12 months old. We have sought to balance the needs of employers and employees in developing the new rights; the eligibility requirements; and the accompanying administrative arrangements attached to fathers taking additional paternity leave. We are of course planning to consult further on the details of the scheme and will carefully consider representations made by stakeholders. The right reverend Prelate the Bishop of Southwell and Nottingham welcomed the Bill. We are grateful for that. He raised the issue of low pay and whether the rate of pay would inhibit families from making best use of the extended arrangements. Again, we should consider the whole package available to families with children—not just paternity and maternity pay—and how we can best target resources. The noble Baroness, Lady Howe, also supported the Bill. She also asked about small businesses. I stress that they are entitled to be reimbursed for the costs of statutory maternity and paternity pay at a rate of 104.5 per cent. However, she highlighted the huge contribution that carers make to the wellbeing of our society. I think that the figure that she cited was £277 billion, which is a staggering figure indeed. She asked about the definition of carers. Many different definitions of carers are currently in use. We are currently consulting on our proposed definition. Our primary concern is for the law to be clear and straightforward. It would be difficult to achieve legal certainty if we specifically define such concepts as the sick or elderly. We propose to take the same approach to defining who is covered by the legislation as was taken for parents and children, where we define not the nature of care involved but, instead, the relationship between the carer and those for whom they care. The noble Baroness also asked about carers being able to make a request more than once a year. We need to be mindful of the impact of the legislation on employers. Our approach has always been to balance the needs of employers and employees. Employers are already familiar with current practice. Making changes and increasing the number of requests would add too much to the burden on employers. The noble Earl, Lord Listowel, again brought to our debate his clear commitment on the issues of family and children for which he is well recognised in this House. He paid tribute to the work and commitment of his erstwhile colleague Lord Chan. It is appropriate that we echo that across the whole House. He said in particular that the day-care provision for children under 12 months needs attention. The new Childcare Bill, which was presented on 8 November, will implement proposals outlined in the 10-year childcare strategy, alongside the Work and Families Bill. As has been recognised, the Childcare Bill is truly pioneering legislation and is the first ever Bill exclusively concerned with early years and childcare. It will help to transform childcare and early-years services in England for generations to come. The noble Earl, Lord Listowel, made a point about employers discriminating against women as a result of the Bill’s measures. Employers who refuse to employ women because they are pregnant or on maternity leave are breaking the law and damaging their businesses. But we believe that most employers are good employers. The Government’s own survey evidence is robust. For example, in the 2002 maternity and parental rights survey, only 3 per cent of women who worked as employees during pregnancy said they had experienced difficulties with their employer about when they started maternity leave, and 6 per cent said they were treated with less respect by their employer or line manager. Notwithstanding that, we are not complacent and will continue to monitor all evidence. Perhaps it is right to restate the statistic that as women’s rights have increased, their participation in the labour market has also increased. They now make up 45 per cent of the workforce, as I said. Between 1971 and 2004, female employment rates in the UK rose from 42 per cent to 70 per cent. The noble Lord, Lord Northbourne, raised issues, again about small businesses, and about parents being able to share paid leave between themselves. Statutory paternity rights are currently available to an employee who has met eligibility qualifying criteria to take some time off to care for the child and support the mother around the birth of the child. We are likely to allow only one stream of payment, so a father would not be able to take paid additional paternity leave at the same time as a mother was receiving SMP or the maternity allowance. We need to consider the best use of resources, and it would not be appropriate for the state to pay for two parents to be off work for up to six months together to care for a baby. Why is additional paternity leave dependent on a mother’s choice to take leave? The aim of additional paternity leave and pay is to give parents more choice by enabling either the mother or the father to be off work to care for their child in the first year. The noble Lord, Lord Northbourne, asked about producing regulations and allowing key workers to be obliged to go into work occasionally. Understandably, there are difficulties in firms where specialist workers take any kind of leave, but this applies to both men and women, not just to fathers who want to take additional paternity leave. Parents already give notice of their intentions to take maternity and paternity leave, which gives employers time to adjust business plans to accommodate absences. Revisions allowing us to specify notice periods are included in the Bill, and we have the keeping-in-touch days, which will allow occasional days of work or training. The noble Baroness, Lady Knight of Collingtree, asked particularly about practical issues and whether there could be fraud, as two employers could be involved in the arrangements. We will consult on the arrangements in detail, just to highlight some of the complexities that need to be addressed. Certainly, the Government will continue to reimburse payments in the same way in which they reimburse maternity pay and paternity pay at present. On the administration, we are not starting with a blank sheet. We already have systems in place for men who want to obtain paternity leave and pay, and we will build on these, but it is an important issue. The noble Lord, Lord Razzall, welcomed the Bill, and we are grateful for that. He touched on two issues of principle; in particular, the rate of pay, and whether we could move towards the Swedish approach of condensing the leave but keeping the pay at the same rate. He has probably anticipated the response that he will get, which I think was the one that was given in another place; what we do not want to do is to encourage women to return to work too soon. The purpose of these arrangements is to do the reverse of that, and there is a real risk that proceeding down that path could have that effect. The noble Lord also touched on small businesses and the costs associated with them. It has not traditionally been the case that the costs of complying with legal obligations by companies, large or small, have been reimbursed by government. That would be a departure from normal practice. With the noble Baroness, Lady Morris, perhaps we should also celebrate the birth a child. We send our congratulations to the noble Baroness’s new leader. She made reference to the McDonald’s experiment. My wife has focused on that and has offered to appear at the next Treasury Question Time. The noble Baroness also referred to the issue of initially fostering a child and then transferring to adoption. Concurrent adoptions are under consideration and we are considering how the leave and pay rules may apply to concurrent placements. My time has run out—I have exceeded it. The Government have a record of support for working families that is second to none. In 1997, most women were entitled to just 14 weeks’ maternity leave. It is now more than triple that at 52 weeks for most women—from April 2007, it will be 52 weeks for all employed mothers. Back in 1997, women who qualified got just 18 weeks’ statutory maternity pay. The increase proposed in these arrangements will mean about £1,400 to each working mother, and it does not stop there. We have an ambition to raise that still further to a full year’s pay by the end of this Parliament. We have significantly raised the level of payment from £55.60 in 1997 to £108.85 from April of this year. In 2003, we recognised the growing importance that families place on the role of fathers in care of a new baby, which we are now building on with this Bill. In 1999, we created a new entitlement for parents to take 13 weeks’ unpaid leave up to a child’s fifth birthday. We also recognised the hugely important role played by adopters by ensuring that their rights to paid time off work mirrored those of birth mothers as far as possible. We introduced a right for all employees, regardless of length of service, to take a reasonable amount of unpaid time off work to deal with emergencies involving a dependent. Since 1997, 1.2 million childcare places have been created. As noble Lords have already heard, the Work and Families Bill responds to changing employment patterns. It aims to ensure that parents and those with caring responsibilities have genuine choices about how to balance their work and family life. It will also help business recruit and retain the best people from the widest possible pool of talent. I echo the words of my noble friend when I say that this legislation can enhance Britain’s economic success, can raise employment levels and can increase the standard of living for families. I believe that there should be genuine consensus about the issues in this Bill, although noble Lords will, as indicated, want to examine specific areas closely. On the basis of today’s debate, I am confident that this Bill will receive a high level of detailed and expert scrutiny in Committee: I look forward to continuing the debate there. On Question, Bill read a second time, and committed to a Grand Committee.