Work and Families Bill

moved Amendment No. 11:"Page 8, line 9, leave out from first ““of”” to end of line 22 and insert ““the Commissioners for Her Majesty’s Revenue and Customs””" The noble Baroness said: I shall speak to Amendments Nos. 11 and 13 together. These are probing amendments because the Government have not yet made clear the justification for what they are proposing. The amendments share the same objective: to shift the responsibility for the administration of these schemes—payment of statutory maternity and paternity pay—from the employer on to the shoulders of the Government via the Inland Revenue and Customs. It is significant that when the Bill and the Explanatory Notes were first published in the other place, subsection (3) provided that there would be circumstances when the liability to pay—in other words, administer—the additional statutory pay would be that of the Commissioner of the Inland Revenue. Somewhere along the line since the Bill’s publication, the Government have changed their mind and the burden is being shifted to the employers. This change of mind is one of the reasons why the CBI has told us it has withdrawn its initial support for the Bill. The Minister should explain that change of mind to us. One explanation, or perhaps part of the explanation, is the fact that the Treasury has estimated that it would cost £75 million to set up and £50 million per annum to administer. The Treasury wants that burden to become the responsibility of employers, most of whom are small employers who do not have the luxury of payroll departments to do the work, or personnel departments—or human resources departments as they are now sometimes called. Among the welter of conflicting figures produced by the Government, it is suggested that the cost to business would be only £3 million. How can it cost the Treasury £50 million but cost employers only £3 million. As far as I can see there is no indication where this figure comes from. I would be most grateful if the Minister could clarify this. I suggest that the figures have been plucked from the air, because in a paper published by HMRC there is another set of no less bewildering and somewhat different figures of the costs and benefits. I also notice that the HMRC figures suggest that an 8 per cent proportion of small employers deals with such matters electronically. How do they know this? How many employers using payroll programs on their computers will have to get them updated, and at what expense, to take on this additional responsibility? I believe that the Treasury is relying on small employers being unpaid benefits administrators. The Parliamentary Under-Secretary of State told the Standing Committee of the other place that it would require too complicated an exchange of information between employers and HMRC. I do not understand that. I cannot see why it could not be a simple letter such as, ““Dear taxman, Employee Bill Bloggins, reference number 1234, is taking additional paternity pay. Please let him have the money or ask the Social Security Department which is used to dealing with such matters to do so””. The amendment to Clause 9 will, in my opinion, put additional maternity pay on the same basis as, for example, statutory sick pay, where the employer, in effect, pays out the money on behalf of the Government and recovers it by deduction from the monthly or quarterly payments to the Revenue of the sums that the employer has to hand over under the PAYE scheme. The difficulties that the amendment to Clause 9 seeks to redress is that the complexities of the scheme, which undoubtedly will result in many employers being bewildered about who is entitled to the payments and when and for how long. That especially impinges on small employers who do not, as I said, have the benefit of a payroll department to work it all out for them. It is true, as the Minister told your Lordships on Second Reading, that employers will be reimbursed 104.5 per cent of the money that they pay out. I think that 104.5 per cent is a curiously exact figure but I am sure that they have worked it out very carefully. I do not know what arcane calculation produced the figure, but I suppose, in reality, it means that the employer who pays out £100 to his employee will be rewarded by getting back £4.50 from a most grateful Government who did not have to do it even though they said initially that they were prepared to consider doing it. It will be more, of course, if the weekly pay is more than £100. I do not know whether, in turn, this bounty is itself taxable in the employer’s hands or whether he gets the £4.50 free of tax. But in my book the whole thing will now become very much more complicated. I am sure that the Minister can tell us the situation as he has just received a note. It must be wonderful to have that facility.