Orders of the Day — Work and Families Bill

House of Commons, 18 January 2006.

New Clause 1 — Administration of statutory leave payments

Norman Lamb (Liberal Democrat, North Norfolk)

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

Although we strongly support the purposes of the Bill as a package, we must recognise its impact on employers, especially small employers. It is incumbent on us all to ensure that its impact on employers is kept to a minimum. That has clearly been the Government's view, which they have expressed at various times.

The Government's 10-year strategy for child care, published at the same time as the pre-Budget report in 2004, made a commitment to consider the case for what the Revenue document, with which the Government have provided us, described as "direct payment"—a term I shall use in making the case for the new clause. Their starting point suggests that they saw the possible benefits of direct payment. Indeed, Labour's manifesto repeated the commitment to help employers. It made a commitment to increase paid maternity leave

"while simplifying the system for employers".

That commitment has been constantly stated.

The paper from Her Majesty's Revenue and Customs, which the Government have helpfully supplied, refers to the consultation that took place in the run-up to publication of the Bill. It talks about meetings with a consultation panel to discuss the issue; the panel included payroll experts and representatives from small and large employers. Interestingly, the Government's paper confirms that the employer representatives on that panel, in essence, support the new clause. They recognised that concern was greatest among small employers and that large employers did not want to introduce direct payment, as it would cause them unnecessary complexity and they would prefer to administer the system themselves. They recognised that there would be benefits for some small employers. The paper and common sense suggest that the benefits would be felt most by employers who still use manual payroll systems, where the process for making payments is more time-consuming than in an automated system.

The paper confirms that if a system were introduced based on the provisions of the new clause, or something akin to them, the cost of its introduction would be reduced. It gives a figure for start-up costs of £38 million—rather than £75 million—for a simple system, directed to assist small employers who choose to transfer responsibility to the Government. The paper accepts that the ongoing yearly costs would inevitably be substantially less than the £50 million it cites.

Gerry Sutcliffe (Labour, Bradford South)

If we accept the figure of £38 million that the hon. Gentleman gives, what benefit to small business would accrue each year?

Norman Lamb (Liberal Democrat, North Norfolk)

The paper refers to a total net benefit of £1.1 million. The figure for small employers, defined by the national insurance contribution threshold of £45,000 a year, would be about £400,000 a year, but the benefit would be focused on employers whose costs are much greater than average—those who decide that it is in their interests to transfer the administration to the Government, presumably because they have manual systems that they judge will take too much time to administer themselves. So the paper nowhere identifies how much that would benefit those employers whom the new clause would help.

Helen Jones (Labour, Warrington North)

What estimate can the hon. Gentleman give of the number of employers who would wish to transfer their responsibilities in the way that is suggested in the new clause?

Norman Lamb (Liberal Democrat, North Norfolk)

I cannot give an estimate of the number, and it is not necessary to do so to make the case. The HMRC document confirms the fact that the employers' representatives on the Government's consultation panel advocated a system that would allow the right to transfer responsibility to the Government to be focused particularly on small employers. In essence, the new clause builds on the case put by the employers' representatives on the Government's panel and recognises the fact that large employers see no benefit in the proposed system. They are left out of the equation. The focus is simply on those employers who would benefit by transferring the system to the Government.

According to the HMRC paper, small employers said that they would benefit. The paper also correctly recognises that every employer is different—employers have different payroll methods—so rather than simply seeking to transfer the responsibility for all payments to the Government, the new clause would give employees the power to decide whether they want to take advantage of the right. Under the new clause, we seek to recognise the facts that are set out in the HMRC document by excluding large employers, who would not benefit, from the right to transfer.

The paper also confirms that approximately 40,000 women employed by small employers—those employers who make national insurance contributions of up to £45,000 per annum—are in receipt of statutory maternity pay. I cannot begin to estimate the cost of the Government employing an administration to operate on the opt-in principle dealt with in the new clause, but if we are talking about a total of 40,000 women and only a proportion of their employers choose to transfer, I can imagine that the size of the unit that would be required to administer the system for the Government could be very limited and therefore could be provided at vastly lower cost than that set out in the HMRC paper. The paper itself concedes that the costs would be significantly lower when dealing with an opt-in system of the sort that we recommend.

I have already dealt with the net savings, but I want to say a word about whether we can rely on the figures set out in the Government's paper. We all accept that any regulatory impact assessment is inevitably only an estimate, because it considers what would happen in the future. There must inevitably be doubt about how accurate those estimates are likely to be in practice. The concern of many in the small business community is that the paper underestimates the time taken to administer those arrangements, particularly by small employers who operate manual systems.

The paper obviously considers average times for employers, but the new clause focuses on those small employers with manual systems who are trying to cope with everything, who do not have a director dedicated to dealing with payroll and staff issues and where a one-man or one-woman operation is trying to keep the whole show on the road, as well as dealing with all this. In those cases, learning and understanding what is involved in the payment of maternity or paternity pay, when the employer may not have had someone in that situation for some years, is a time-consuming operation. It is very easy to underestimate the burden that that imposes on employers. If that burden can be lifted and transferred to the Government—as they clearly envisage would be appropriate, provided that the costs are not too high—it seems right to do so.

Gerry Sutcliffe (Labour, Bradford South)

That is recognised in the 104.5 per cent. that can be returned to small businesses. That percentage contains an element to meet those costs.

Norman Lamb (Liberal Democrat, North Norfolk)

I am grateful to the Minister for making that point. Page 2 of the HMRC paper states that the additional 4.5 per cent. is intended to compensate businesses for the employers' national insurance contributions.

Gerry Sutcliffe (Labour, Bradford South)

Well?

Norman Lamb (Liberal Democrat, North Norfolk)

The point is that that part of the scheme will not do what the Minister says it will do: it is not intended to cover the cost of administering the scheme. Given that he clearly understands that there is a case for ensuring that an element of the payment covers the administration costs, if he rejects the new clause will he consider increasing the percentage repayment as an alternative? I am happy to give way if he would like to intervene.

Gerry Sutcliffe (Labour, Bradford South)

I do not want to take all the hon. Gentleman's time, and we will have a great deal of time for the debates this afternoon. I want to emphasise the point that the Government acknowledge the position of small businesses. I think that a lot of the hon. Gentleman's information relies on the brief issued by the CBI, and we have told the CBI that we will be prepared to talk to small businesses and to ask them how we can help them to administer what we know is a culture change in the Bill.

Norman Lamb (Liberal Democrat, North Norfolk)

I am grateful to the Minister for those comments. If we can take them as a willingness to consider the possibility of increasing the percentage repayment, I am sure that small business would be delighted to hear that. I am not entirely convinced that he has that in mind, even though he has indicated that he thought that the payment included something to cover the cost of administration.

Alan Reid (Liberal Democrat, Argyll and Bute)

Does my hon. Friend agree that, because the 104.5 per cent. figure is based on a certain level of employers' national insurance contributions, it will often apply to employers with about 15 or 16 employees, whereas the extra money will not apply to those employers with between 15 and 50 employees who would be covered by the new clause?

Norman Lamb (Liberal Democrat, North Norfolk)

Yes. A very limited benefit will apply to only the very smallest employers. As my hon. Friend rightly says, many employers in the category caught by the new clause, who would benefit from the right to transfer responsibility back to the Government, will get no assistance in covering NI contributions and only 92 per cent. of statutory maternity pay back from the Government. If the Government are not prepared to go down the route that we suggest, they should consider whether they are prepared to increase the percentage repaid to employers.

I am not sure whether HMRC's assessment adequately takes into account the cash-flow benefits for small employers in not having to make the payment in the first place. At the moment, every week, they must pay the woman on maternity leave or the man on paternity leave. If the responsibility were transferred to the Government, those payments would not come from small employers' systems at all. I am not sure of the repayment time at the moment—it would be helpful if the Minister could confirm it—but a cash-flow burden is imposed on businesses for the period that the money is out of their systems. Those businesses would be assisted if the Government took over responsibility for making the payments. I do not think that the assessment made by HMRC adequately takes that into account.

HMRC's calculation takes account of the fact that many employers have complex remuneration packages because of pension contributions and so on. It says that all those burdens remain with the employer, but the remuneration packages of most small employers are much simpler than those of large employers, so the burdens would not be relevant if they were not part of the remuneration package in the first place.

The Government's response is to try to solve everything by handing out a CD-ROM to employers—that is their get-out-of-jail card. They will also provide employers with a "teach yourself" package that will give them everything that they need to administer the system. However, the Government do not understand that the voluminous guidance that comes out of the Department of Trade and Industry in itself puts an administrative and regulatory burden on employers. In my previous life as an employment lawyer, I was constantly aware that employers were swamped by "teach yourself" guides and guidance notes on how to interpret regulations, such as the working time directive. Small companies are struggling to maintain their businesses, let alone do all the administration that goes with that, but the Government want to give them yet another "teach yourself" guide and burden. The proposal is not the panacea that the Government think that it is.

I have outlined the thinking behind new clause 1. I realise that the Government have stated an intent to help businesses, especially small businesses, to deal with the new burdens on them. However, we have seen little action to back up that intent. The Minister looks distressed by what I say, but it is the truth. Little has been done through the Bill to ease the burden on employers. In a nutshell, the assessment by HMRC understates the costs for employers. If we had the opt-in system about which we are talking, the cost to the Government would be significantly less. I know that the Minister is a reasonable man, so I hope that he will accept our arguments and that there will be no need to divide the House.

Eleanor Laing (Conservative, Epping Forest)

We want the Bill to work, which is why we have joined the Liberal Democrats in tabling new clause 1. The hon. Member for North Norfolk (Norman Lamb) explained eloquently and thoroughly the reasoning behind it, and we also discussed the matter at some length in Committee. He has cited all the statistics and arithmetical reasons that explain why we think that the Bill would be considerably improved with the addition of new clause 1 and I will not repeat his arguments—I agreed with what he said.

We understand that if the Bill is to work, its measures must have the confidence of those who will be affected by it. I am especially worried, as ever, about burdens on small businesses. Again and again, the Government bring forward ideas. Those ideas are sometimes good in principle, as is the case with the Bill. The Bill's intention of improving the work-life balance not only for parents—both mothers and fathers—but for people with caring responsibilities is good, but as ever, the Government will not take responsibility for administering their proposals. They expect, and indeed require, others to do so, and in this case, as in so many other cases, those others will be small businesses.

Mark Prisk (Conservative, Hertford and Stortford)

I hate to interrupt my hon. Friend's flow, but does she realise that the people to whom she just referred are also parents? The irony of the Government's position is that self-employed parents might be able to spend less time with their families because of the administrative burden that we are debating.

Eleanor Laing (Conservative, Epping Forest)

My hon. Friend is correct. It is undoubtedly true that when we talk about helping parents and carers, and thus improving matters for children, we are talking about all families in the country. Some families consist of employees, while others consist of employers. No one is suggesting that they should be treated differently. We want to improve matters for all families, so my hon. Friend makes a pertinent point.

As ever, the matter comes down to a question of balance. New clause 1 would help small businesses considerably by taking away from them the burden of administering maternity and paternity leave and pay. It would thus be easier for small businesses to concentrate on the matter on which they should concentrate: in a nutshell, making money. Time is money for a small business person. If employers have to spend more time than is necessary on administrative matters, they are, by definition, spending less time on running the business and making a profit. If a business makes a profit, it allows more jobs to be created and, perhaps, the payment of bonuses to employees. It is in everyone's interest that businesses run efficiently and well. The days of employers taking everything out of a business and employees putting in all the effort are gone—well, we hope that it does not happen any more, at least in 99 per cent. of cases. Most good employers know that if they treat their employees well, they will have a better work force and thus better businesses.

We return to the question of balance. Most people in Britain today are employed not by large businesses and multinationals, but by small businesses. What happens to small businesses thus has a knock-on effect on most employees. If employers spend too much time on administration, their businesses suffer and become less profitable, which might mean that they have to make employees redundant, or not take on more employees. A successful business will create employment and provide better conditions for employees, and a business is more likely to be successful if the administrative burden is removed from it.

Stewart Jackson (Conservative, Peterborough)

Does my hon. Friend agree that there seems to be a dichotomy in the Government's position? They are unwilling to accept new clause 1, but on Second Reading, at column 645 of Hansard on 5 December 2005, the Secretary of State for Trade and Industry said that the Government estimated that the new provisions would affect only a small number of small businesses. One thus wonders why they are not willing to accept the reasonable measure that we are considering.

Eleanor Laing (Conservative, Epping Forest)

I agree. My hon. Friend makes a very good point. I was about to mention the cost question, the Minister will not be surprised to hear.

In Standing Committee A, on 13 December, at column 53 of Hansard, when we were debating an amendment about the central administration of benefits and statutory pay, the Minister gave us some remarkable figures. He said that the cost to small businesses would be in the region of £400,000 a year. That is quite low, and if that were to be the cost, it would be reasonable. Yet the cost to Government, the Minister told us, of doing exactly the same would be £75 million in start-up costs and £15 million annually. I do not suggest for a moment that the Minister gave those figures in anything other than good faith, but I am amazed, and have been since 13 December. Where do those figures come from? The difference between £400,000 and £15 million is enormous, and it beggars belief that the figures can be accurate.

I do not believe that £400,000 would be the effective annual cost to small businesses throughout Britain. It must be much, much higher. When we pass the Bill, as I hope we do, we shall be asking businesses to take on an even greater task than they have at present, and give more and more flexibility to their employees. I agree with that in principle. It is right that maternity arrangements and pay should be as advantageous as possible because, as a society and an economy, we need women to do two jobs. We need them to produce children and we need them to be economically active in the work force.

Norman Lamb (Liberal Democrat, North Norfolk)

The hon. Lady referred to the figure of £400,000 as the cost for small businesses and made the point that it may well be much higher. Is not the issue also the rather unquantifiable time that it takes someone who is trying to cope with everything to deal with this burden on top?

Eleanor Laing (Conservative, Epping Forest)

Yes, and that is exactly the point that I am about to make. We are asking businesses to give extra flexibility to their employees. That means that we are asking them to make administrative arrangements for people to be away from their work duties. We support that; it is right. Families need that time; children, particularly new babies, need that time. I know personally that it is vital, as I seem to be running around in circles. This is my son's first week at real school, and I am trying to take him there in the morning and pick him up in the afternoon, although I will not be there this afternoon. We are fortunate. We have great flexibility in our hours here—they are long hours but they are quite flexible. If we have that privilege, so should as many other employees in the country as possible. I am completely in favour of that.

We are, however, asking an employer, first, to make arrangements to provide that flexibility, and secondly to administer a replacement employee, perhaps from an agency, to do the work that is not being done by the person on leave. We are asking the employer to pay money to the employee, and to go through a further administrative form-filling experience of claiming it back from the Government and then balancing the accounts. The hon. Member for North Norfolk made the cash-flow point very well. Instead of a very simple arrangement between employer and employee for the payment of wages, tax and national insurance, the situation becomes much more complicated, and it all takes time. As I said before, to an employer or small business man, time is money. The very effectiveness of the businesses that we are trying to encourage and support is threatened by what we are asking them to do in the Bill.

In new clause 1, we recognise that we are asking businesses to take on extra burdens because that is right for the economy, society and families, good for employers and businesses, and good for employees, so the Government ought to help in the administration of that burden. The Government promised to be deregulatory—that is the biggest joke I have ever heard. The Chancellor makes speeches about deregulation; the Government count the regulations and say how many there should be. My understanding—the Minister will correct me if I am wrong—is that if a new regulation is introduced, some other regulation has to be abolished to keep the regulatory burden balanced. That is certainly not happening. The Chancellor likes to talk about these things, but in reality that is not what the Government are doing for the employers and employees in UK businesses.

Michael Jabez Foster (Labour, Hastings and Rye)

It is enormously difficult to decide what regulation to get rid of when another is introduced. The hon. Lady has said what a good idea these regulations are. Can she give an example of a regulation that she would get rid of, to help us out?

Eleanor Laing (Conservative, Epping Forest)

Yes—exactly what new clause 1 proposes. The entire content of my speech is the answer to the hon. Gentleman's question. I propose that as we require an extra burden to be put on businesses by the regulations on maternity and paternity leave being introduced by the Bill, we should at the same time remove from small businesses the burden of administering those regulations.

Gerry Sutcliffe (Labour, Bradford South)

I read with interest the Financial Times this morning, which says, "Tories back concerns over parental leave". The hon. Lady was quoted as saying that she was concerned about fathers taking days off. Is she saying that, contrary to what her party said on Second Reading and in Committee, it does not accept the culture change and principles underlying the Bill because the Government are not prepared to consider one aspect of the issue—direct payments?

Eleanor Laing (Conservative, Epping Forest)

Not at all—far from it. I did not think that I was wrongly quoted in the Financial Times; I thought that it was a well-balanced explanation of the situation, although I admit that I have not yet read it, so I will have to check it very soon. I am utterly consistent with everything that my hon. Friends and I said in Committee. We entirely back the principle of the Bill. The hon. Member for Hastings and Rye (Michael Jabez Foster) asked me a pertinent question: if a regulation is to be brought in, which one would we take out? As I said, all this is a question of balance. We are asking small businesses to take on extra burdens, and it is the Government's responsibility to help them with those burdens. It is simply not fair to expect small businesses to do the Government's work of collecting taxes and paying out benefits. That is what the civil service is for.

Michael Jabez Foster (Labour, Hastings and Rye)

Is the hon. Lady simply talking about who should pay for the regulations, rather than whether the regulations should be introduced? I thought that she was arguing that certain regulations were unnecessary. However, she now seems to be arguing about who should pay. What substantive regulations would she get rid of?

Eleanor Laing (Conservative, Epping Forest)

It is not just a question of who pays; it is a question of who administers the regulations. The hon. Gentleman has misunderstood my point. Theoretically, the provisions in the Bill should not cost small businesses anything, because they will be reimbursed for the statutory maternity and paternity pay that they pay out. They could choose to pay additional maternity and paternity pay, but that would depend on the business, and on the contract between a particular employer and employee. The issue is one of who does the administration involved.

The Government continually fail to recognise this problem. We are the party of small business, and we do recognise it. I can still hear my father complaining, as he sat up late into the night—often past midnight—year after year, filling in forms and administering the part of his business that he was required to administer by the Government. This was at its worst under the Labour Government of the 1970s, when there was a recession in the building industry. I will never forget the effect that that had on my father and the rest of our family, or the enormous strain caused by the Government's imposing great difficulties on small businesses. It is not difficult to run a business, but it is difficult to keep all the regulations straight and do everything that the Government require. That is mostly what makes businesses go out of business, and I do not want to see that happening.

The intentions of the Bill are good, and I can confirm, in answer to the Minister's question, that whatever the Financial Times says, we back the intent of the Bill. We are in favour of the really good provisions that it contains, because they will help families, employees and employers alike. However, we want the new regulations to work properly, and it is simply unfair to impose extra burdens on small businesses. They are the lifeblood of our economy and our society, and they must be helped, protected and nurtured, not burdened by extra red tape, regulations and costs.

Michael Weir (Scottish National Party, Angus)

I welcome this opportunity to make a small contribution to this debate. As I said on Second Reading, I support the Bill because it introduces important new rights for workers. However, I also find myself strangely in agreement with much of what the hon. Member for Epping Forest (Mrs. Laing) has said about small businesses, although I should gently remind her that I ran a small business during the 1980s and 1990s, and regulation under the previous Conservative Government was every bit as bad as under any Labour Government. Whoever is in power, the amount of regulation for small businesses never seems to get any less.

My experience of running a small business leads me to support the new clause. I was surprised, however, to see that it stipulates the figure of 50 employees, as any business employing that many people would be considered relatively large in my neck of the woods these days, given the direction that the rural economy has taken over the past few years. Before I was elected to the House, I ran a small business as a country solicitor, and I recognise the hon. Lady's description of her father's frustration. The reality of running such a business is that employers do not do the VAT, the tax and the PAYE between the hours of 9 to 5 while they are in the office. That is when they try to make some money. They do those things in the evenings or at weekends. They go home at night and sit up until midnight, or often later, wrestling with these things. I was a solicitor but I am afraid I never truly got to grips with PAYE.

The Minister must realise that we are not just talking about tax regulation and maternity and paternity pay. Every business is subject to regulations from many other agencies as well. The cumulative effect of all these regulations, and the amount of time that anyone running a business has to spend dealing with them, will have an impact on that business. In my own case, there were masses of regulations that had built up from the Law Society of Scotland and the Financial Services Authority. Eventually, we decided that it was not worth the candle to go through all that, and that it would be better to junk our financial services business altogether because of the amount of regulation involved. There were good reasons for those regulations, because of what had happened in the financial services industry, but they became a huge burden for small businesses, which were doing their best to provide a service in small-town areas. The time spent dealing with those regulations impacts on a business, because it eats into the time that can be spent doing other things, such as spending time with the family.

A particular difficulty with these regulations could be the complexity of the interaction between the times when a mother and a father take their maternity and paternity leave. There could be difficulties with dealing with the statutory pay involved. That is another reason for considering ways of making it easier for small businesses to deal with these regulations, because they could get into difficulties if both parents were not working for the same employer. There would have to be interaction between the employers involved, as well as the Inland Revenue, and that could present problems. Transferring the obligation to the Revenue might provide a way round that, but there could still be an inherent difficulty if one party were with the Revenue and the other were not.

Gerry Sutcliffe (Labour, Bradford South)

The hon. Gentleman is describing the reason why we want to consult on how to deal with the additional paternity leave. We shall do that, and we shall have discussions with small businesses about the issue. I am concerned that the hon. Gentleman seems to be talking about regulation in general, rather than the direct payments proposed in the Bill. Does he consider a benefit of £400,000, following an investment of £38 million, to represent value for money for the taxpayer?

Michael Weir (Scottish National Party, Angus)

If the figures are correct, it would not appear to do so. I must echo what the hon. Member for Epping Forest said earlier: the figures seem incredible for what I would have thought to be a relatively simple operation. The Minister says that I am not talking about the specific measures in the Bill, but we cannot divorce those measures from the impact that other regulations have on small businesses. They have a cumulative effect. This might only be a small regulation that we are passing—although it is an important one—but it will be yet another regulation on top of all the other regulations that businesses have to deal with.

I accept that there is a need for many of these regulations in the modern world. I do not subscribe to the theory that we should just throw all regulations out of the window. We have to have regulations, but they must be minimised, and we must do everything that we can in that regard when imposing new laws for the social good. The Bill will be for the social good of families, but we must also minimise its impact on business and on those families who run businesses. There could be other ways of achieving that. In my experience, many small businesses now outsource their PAYE and other tax work to local accountants because of the increasing complexity of the work involved. However, there is a cost involved in doing that. The more the accountant has to do, the greater the cost will be. Many small businesses are already struggling to make a living—there is a pretty hard business environment in some areas—and they would not be able to bear such costs.

I am inclined to support new clause 1. I appreciate that the Minister is going to consult on the provision, but this might not be the best way of dealing with the issue. We must find a way of minimising the impact on small business of these very good policies.

Stewart Jackson (Conservative, Peterborough)

When speaking in this place, it is always a good rule of thumb to speak about something that one is vaguely acquainted with. That is a personal credo which is not always followed by other Members, but I hope to follow it today, as in a previous life I was a business adviser with Business Link. I well remember the days when I would trudge round Europe's largest industrial estate at Park Royal. As I would knock on the door and go into those very small micro-businesses, some with fewer than five staff and many with fewer than a dozen staff, the most dread words that I could say were, "I'm from the Government and I'm here to help your business."

That was rather unfair, and I take this opportunity to pay tribute to the sterling work done by Business Link. It does an excellent job. It is important to recognise the struggle that small businesses face every day to make ends meet. The points about cash flow made by the hon. Member for North Norfolk (Norman Lamb) and my hon. Friend the Member for Epping Forest (Mrs. Laing) are well made. Whether by the British Chambers of Commerce, the Institute of Directors or the CBI, much comment has been made about the speed and quantity of regulations coming from Government.

I should like to explain in a wider context why I support the Bill from a political as well as a personal point of view. To be slightly partisan, I resent the implication that the Labour party—the Government—has a monopoly on concern for working people and on care about work-life balance, that amorphous group of policies dealing with quality of life issues. That is not true. My party should not be pigeon-holed as a party that is not progressive, that is not modern, and that is unwilling to look at Britain as it is today, rather than as it was. I strongly support the views of my right hon. Friend the Member for Witney (Mr. Cameron) in that respect.

Similarly, I am not speaking today as a mouthpiece of big business. To me, big business has good parts and bad parts. The bad parts are supermarkets and banks, which are my own bugbear. But that is not free enterprise and competition. Free enterprise and competition is the invisible hand of Adam Smith, which my hon. Friend the Member for Epping Forest no doubt invoked when speaking about her father, a good Fife man.

We care about working families and we welcome the Bill because we think that in general it will be successful, it will make an impact and it will help with aspects such as bonding between parents, quality time, and nurturing and protecting family life. I say that not because I am some wishy-washy Liberal, although they are in the news this week, but because that is good, practical, economic common sense. I reiterate the comments of my hon. Friend the Member for Epping Forest that small business people have families too and they want quality time. If they have mortgaged their house or remortgaged their business and gone cap in hand to the bank, their right to have a family life is important too. We should do everything we can to mitigate the pressures on them.

I turn to the issue of paternity pay. In Committee the hon. Member for Burnley (Kitty Ussher) was offended by the fact that men are paid more than women and consequently that paternity pay was an issue. That is a fact of life. There are cultural issues involved in the non-take-up of paternity rights. Men are often at a higher level in the hierarchy and are better paid than women, and they perceive that their careers will be damaged if they take paternity pay and avail themselves of paternity rights.

I referred earlier to the dichotomy in the Government's position, and I sense a slight weakening in resolve on the Minister's part with regard to new clause 1. The Government are effectively saying, "We are going ahead with paternity rights. We want more men to have that work-life balance, but there are not many of them, so don't worry about it." If that is the case, the Government should consider new clause 1 with an open mind.

We should be careful about the amount and proximity of regulations coming through to small businesses. There is both anecdotal and empirical evidence suggesting that we should not inadvertently bring about discrimination. If a business is struggling at the margin, business people will look at the legislation coming through and make a judgment about the impact that it will have on them. If the future of the business is a matter of life or death, they may well decide that they do not want to employ a young woman of childbearing age or a younger man. That is discrimination. I make no excuse for it, but if the Government are not sensitive to that degree of regulation and the burden that it places on businesses, they will find that the people they most wish to help—young families, mums and dads who have to work to pay the mortgage and meet the costs—will be discriminated against.

I am concerned particularly about paternity rights because I am unsure about the figures. Are they based on social studies, demography or statistics compiled centrally by the Department of Trade and Industry? I am not clear how straightforward and transparent the figures are and what impact they will have on small and medium-sized enterprises. For instance, the indicative estimates of the cost of paternity pay are anywhere between 12 and 21 per cent. That is potentially an 80 per cent. overrun. For the right to request flexible hours, the indicative cost is anywhere between just under £30 million and £120 million, which is a pretty substantial difference. That is a concern to me. One might say flippantly that the figures could have been prepared by the architects of the Scottish Parliament, but I would not go that far.

The issue is balance, as my hon. Friend the Member for Epping Forest said. We must get the balance right. We all care about making sure that the economy is improved, that businesses grow, and that families are not put under stress to the extent that they disintegrate as a result of getting the work-life balance wrong. None of us wants that. Given that 97 per cent. of the UK's gross domestic product is generated by small businesses, many of which are micro-businesses and innovative businesses, we must not throw the baby out with the bathwater or crack the golden egg. No more similes.

I broadly support the Bill. My experience as a business adviser is that where they can, people who run businesses will do their best to comply with regulations if they think they are fair and if they think others are complying with them. If they think the regulations are unfair and that the Government are not listening to them or their representative organisations, they will avoid them, the scheme will not work, and ultimately the Government will not achieve their aims. With that, I give the Bill a broad welcome. I hope that when the Minister speaks later, he will address the concerns that I raised today.

Alan Reid (Liberal Democrat, Argyll and Bute)

The Bill is important and I welcome the rights that it extends to working families, particularly the rights that relate to the clause, concerning maternity, paternity and adoption pay. However, there is a downside to the Bill, as other hon. Members have pointed out—the extra burden of administration that it will place on employers, especially the owners of small businesses.

I shall quote from a document that I am sure the Minister is familiar with, the 2005 Labour party manifesto. It states on page 77:

"We will therefore increase paid maternity leave to nine months from 2007—worth an extra £1,400—with the goal of achieving a year's paid leave by the end of the Parliament while simplifying the system for employers."

Norman Lamb (Liberal Democrat, North Norfolk)

The CD-ROM!

Alan Reid (Liberal Democrat, Argyll and Bute)

My hon. Friend the Member for North Norfolk (Norman Lamb) is correct. The Government made a commitment to simplify the system for employers, but it seems to consist of a CD-ROM and a do-it-yourself guide. That is not simplifying the system for employers and that is not what employers read into the Labour party manifesto.

I hope that the Government accept new clause 1, because we are trying to assist them in implementing their manifesto. New clause 1 would transfer responsibility for the administration of payments for maternity, adoption and paternity pay from a person's employer to Revenue and Customs. The procedures involved are complicated, and they will become even more complicated with the introduction of additional paternity pay, because in most cases parents work for different employers, which introduces an extra level of complexity.

The Government have referred to a cost-benefit analysis produced by HM Revenue and Customs, which claims to show a minimal benefit. However, that cost-benefit analysis considers only statutory maternity pay and does not attempt to examine issues such as adoption pay or paternity pay. Many small business owners challenge the assumptions in the cost-benefit analysis—in particular, they take issue with the time that the report assumes that it will take them to perform the necessary tasks. Employers who have examined the report say that it will take them far longer to carry out those tasks than the analysts from Revenue and Customs suggest. It is questionable whether the savings to employers set out by Revenue and Customs will accrue from the transfer of direct payments, and it is also questionable whether the benefits to employers will be as low as the report suggests.

We need to take account of the great burden on small employers who come across new working procedures for the first time. A big employer with large human resources and IT departments will handle the new processes easily, but a small employer who is faced with working out additional paternity pay for the first time will find that it takes a great deal of time, even with the help of the Government's CD-ROM and do-it-yourself guide. As hon. Members have said, that time is often late at night, and if the employer tries to deal with the matter during the day, it distracts them from trying to grow their business and create jobs.

New clause 1 states that companies with fewer than 50 employees should be given the choice between running that part of the payroll themselves or transferring it to HM Revenue and Customs, which should be able to run such procedures more easily given the benefits of scale. That would compensate small employers—the Government are giving small employers more work by introducing new rights for workers, and they should help them by taking on that part of the administration. It is vital that we free up small employers to enable them to grow their businesses, and we can do so by giving them a choice on the burden of administration.

Finally, I remind the Government of their manifesto commitment, which I hope that they honour today.

John Redwood (Conservative, Wokingham)

I rise to support my hon. Friend the Member for Epping Forest (Mrs. Laing) and other hon. Members who support new clause 1. I am non-executive director of three companies cited in the register, but I am, of course, not speaking on their behalf or at their request.

The Minister should ask himself two important questions before he asks the House to reject the new clause. The first question has partially emerged in the debate: what has become of the Prime Minister's policy, which is very good, that a regulation should be struck off for every new one that is imposed? No equal and opposite regulation is being struck off to balance today's sizeable one.

The hon. Member for Hastings and Rye (Michael Jabez Foster) asked my hon. Friend the Member for Epping Forest which regulation we would strike off. If he had been present in the House just before Christmas, he would have witnessed my leading for the Opposition from the Front Bench and setting out a wide-ranging deregulatory policy, which includes 63 specific ideas for the Government, and we have sent those ideas to different branches of the Government in the hope that some of them will be incorporated. Indeed, a Minister suggested the beginnings of one such idea in an overnight briefing to the papers, and perhaps the House will have the courtesy of being told whether it is true—it would be nice to feel that as a Member of Parliament, one is sometimes the first to hear such things rather than the last.

We have identified plenty of regulations that could be struck off to add to the good workings of the British economy and reduce the burden on people and businesses, but they fall outside the scope of the debate on new clause 1. One sometimes wonders whether Ministers belong to the same Government as the Prime Minister. The Prime Minister has made some extremely good speeches, such as his speech on deregulation, but the opposite of what he has said is happening day by day. As has been said, this provision is a good example of something happening in exactly the opposite direction from that set out by the Prime Minister and without the action to balance the situation enjoined by him. My hon. Friend the Member for Epping Forest has made it clear that she supports the proposal, but on the condition that offsetting deregulation, which has not been introduced, takes place.

The second question about which the Minister should think more carefully concerns cost. It is unsatisfactory that we should debate such an important measure with no credible figures from the Government, and I find it unbelievable that we are discussing a cost of only £400,000. If we examine the Government's assessment of the impact of the legislation, the gross figure for the regulatory impact of the legislation is cited as £575 million a year, if one adds up the highest estimates. The Government say that there could be offsets of £209 million a year against that figure—£196 million of those offsets are extremely optimistic, but let us give them to the Government. In short, according to the Government's own regulatory impact assessment, we are discussing about £400 million of extra cost.

We are being asked to believe that the important part of the cost imposed on small businesses will amount to some £400,000, so it is not worth exempting small business—although it will cost the Government a mind-blowing £39 million to deal with the problem, it will save small businesses only £400,000. I know that anything that this Government run is considerably less well run than it would be in the private sector—productivity is a far bigger problem in the public sector than the private sector—but it is difficult to believe that they are so monumentally incompetent that they would spend £39 million to save £400,000 a year. I put it to the Minister that the truth of the position is that a bigger element of the £575 million that the Government have identified will be attributable to small business, and that it would therefore be a useful saving for small businesses in implementing the measure to transfer the work burden from them to the Treasury in cases in which small businesses would like that to happen.

I understand that my hon. Friend the Member for Epping Forest and other hon. Friends have in mind an opt-in system, which means that if by any chance the Government are right and there are no real costs to the measure for small businesses, those small businesses would be happy to administer the measure themselves and the Treasury would not be troubled. However, I suspect that the measure will involve substantial cost. It would be a very good idea for small businesses for the Treasury to do the work, if we discover that the cost estimates are far from adequate.

It is fundamental that a Government who claim to believe in deregulation should set out accurate and detailed costings that have weight and carry credibility both with this House and with those outside who are interested in such matters. This is yet another example in which the regulatory impact assessment is on the whole vague and incredible. Where the regulatory impact assessment is specific, it comes up with some very large numbers, which the Government have passed by and cannot explain. We should not ignore the £390 million cost which the regulatory impact assessment states that the Government must pay, which means that the total cost of the measure taking the Government cost and the net private sector cost in the RIA will be around £800 million.

The Government must remember that they have no money of their own. They have only the money that they collect from us as individuals and from the business community, so the £390 million of so-called Government cost is also a cost on business and individuals who work for those businesses, just as much as the £400 million cost is a direct charge on the private sector.

I urge the Minister to think again. If he will not, and if he remains inclined to tell hon. Members that he does not want new clause 1, will he please explain when we will have proper figures for the costs and a proper off-set under the terms of the Prime Minister's policy?

Mark Prisk (Conservative, Hertford and Stortford)

It is a pleasure to follow my right hon. Friend the Member for Wokingham (Mr. Redwood), who, like every other speaker in the debate, supported new clause 1. I trust that the Minister will make it a full house and I look forward to his contribution on that basis.

New clause 1 is an eminently sensible provision. I do not often associate the Prime Minister with being eminently sensible, but it follows his original idea last year of a one-in, one-out approach to regulation, to which hon. Members have referred.

The background to the new clause is crucial. The administrative costs of the regulatory burden are especially important to the smaller employer. All hon. Members recognise that, for a smaller business, the costs are disproportionate to any perceived benefits. Conservative Members support the principle of the Bill, which aims to get the right balance between work and families. That is not questioned. The debate is about how to strike the balance and why the Government's original promise that they would seek to cover the administrative costs aspect of the deal has changed. That is at the heart of the new clause.

The administrative burden is already becoming difficult for small businesses to bear. The Federation of Small Businesses has highlighted the fact that each small business has to put aside an average of 28 hours a month to comply with Government information requirements and regulations. Given that, according to Government figures—we shall trust them for the purpose of this exercise—there are some 4 million small businesses, that is bad not only for the individual enterprise but for the productivity of the United Kingdom's economy. It cannot be right that so much time is spent on dealing with Government requirements and not on generating wealth.

Let us imagine what those businesses could achieve without losing that time. They could spend it generating prosperity and especially in employing new people or to generate new products and services. As the hon. Member for Angus (Mr. Weir) highlighted, that time is also lost to the families of those who run small businesses. If we are to be fair and balanced in ensuring that we help families, we cannot ignore the rights of the self-employed mother and father.

The payroll burden is of especial concern to smaller businesses. Other hon. Members dealt with the administrative burden, so I shall not allude to it in detail. However, there is also the difficulty in a small family business of employers, who may know their staff well, having to ask the difficult questions about relationships that are essential if they are to run a payroll system properly. That is often ignored and overlooked. My hon. Friend the Member for Peterborough (Mr. Jackson) eloquently highlighted that we must not forget that those who run small businesses have families. That is a key point.

Let us consider new clause 1 and why I support it. I hope that the Minister can provide some thorough replies to my questions. First, I believe that the burden should be lifted on a quid pro quo basis. Is it no longer the principle that one regulation should be removed for another? The new clause would achieve that and I am therefore interested in the Minister's reply to that question.

Secondly, the point has been made, especially by the hon. Member for North Norfolk (Norman Lamb), about cash flow. As politicians, we often assume that the most important monetary aspect of a business is profit, and we are wrong. The most important aspect for small businesses is often cash flow. If cash flow is negative, sooner or later, there will be no small business. That point is often forgotten, so I want to stress it. A direct payment scheme will free up significant cash flow in small businesses and may be the one thing that prevents them from going out of business. I hope that the Minister will bear that in mind.

Thirdly, let us consider the controversy about costs. To refresh my memory, I read what the Minister told us in Committee. For the benefit of hon. Members who did not serve on the Committee, I shall quote him. He said:

"I said that the costs of the direct payment scheme were estimated to be up to £75 million in set-up costs and £50 million in annual running costs . . . the benefits for employers were estimated to be around £1 million per year, of which only £400,000 would accrue to small employers."—[Official Report, Standing Committee A, 13 December 2005; c. 52.]

Does the Minister really mean that small businesses can do something for £400,000 that costs the Government £50 million annually? Where does the figure of £38 million come from? What is the difference between that and the figure of £50 million?

Gerry Sutcliffe (Labour, Bradford South)

The hon. Member for North Norfolk (Norman Lamb) used the figure of £38 million when he explained the application of new clause 1 to 50 people.

Mark Prisk (Conservative, Hertford and Stortford)

That reaffirms my concern because of the difference between an apparent benefit of £1 million to employers, who can clearly run the scheme for that sum, and £50 million, which the Government have to spend on running it instead. Even if we put aside the £75 million of set-up costs, we are still considering an extraordinary difference in efficiency. As my right hon. Friend the Member for Wokingham said, that tells us an enormous amount about either the extraordinary efficiency of the private sector and why we should support it or the extraordinary inefficiency of the Government. Or perhaps it tells us something else: that the Government do not wish to engage in the process, are embarrassed by the promise that they appear to have made and therefore accentuate a difference that is not quite what the Minister claims.

I am interested in the Minister's explanation of the illogic of a position whereby one organisation can spend £50 million on administering something that many other organisations, which, one would assume, would be a little less efficient because there are many of them, can do for only £1 million. That is illogical and I hope that the Minister can enlighten us about that in his usual fashion.

My final point, which is of especial concern to business representatives, is to ask why the Government have reneged on what businesses regard as a promise. In all my talks with various business organisations—the Forum of Private Business, the Federation of Small Businesses or the CBI—they were crystal clear months ago about the fact that they had an agreement with the Government. Their phraseology was that the Bill was "part of a package" and they were willing to support it on that basis. They have changed their position because it appears that the package is no longer available. They perceive that the Government have reneged on it.

We have seen what was written in the Labour party manifesto. Business has been given some assurances and now we find a different settlement. When the Minister responds, will he tell us exactly what he or the Secretary of State agreed with business representatives, especially the CBI, so that we can better understand why they feel so aggrieved?

Fairness is at the heart of the new clause, which tries to ensure that we can allow families who work for small businesses to have a sensible balance in their lives, with the quid pro quo of ensuring that the smallest businesses that are run by people who have families can have some of the burden lifted. People in business believed that the Government were making that promise. The purpose of the new clause is to fulfil it.

Gerry Sutcliffe (Labour, Bradford South)

I thank the hon. Member for North Norfolk (Norman Lamb) for tabling new clause 1. It was not unexpected, given the extent to which we debated the issue in Committee, and there are strong views among the Opposition parties, who have come together to support the new clause and clearly wanted to pursue the matter further. Those views were emphasised by the CBI, which wrote to my right hon. Friend the Secretary of State just before Christmas withdrawing its support for the Bill because the direct payment issue had not been resolved to its satisfaction. Understandably, a number of Opposition Members spoke in support of the new clause today, but in raising the issue of regulation in general, as the right hon. Member for Wokingham (Mr. Redwood) did, they lost sight of the balance that we are trying to achieve in the Bill and of the issue of direct payment. We consulted fully on the Bill, and sought the opinions of a range of organisations in the business community and the voluntary sector, as well as of stakeholders on whom the measure will impact. In fact, the Government were congratulated on the consultation and on the time that we took before introducing the Bill.

Norman Lamb (Liberal Democrat, North Norfolk)

Does the Minister accept that, as a result of the consultation the employers' representatives to whom the Government talked supported our approach? The paper by Her Majesty's Revenue and Customs says:

"In the face of the mixed response from employers,"—

that is a reference to the fact that there is support for the Bill among small business, but not among larger employers—

"their representatives suggested Direct Payment should be optional".

That is precisely what the new clause seeks to achieve. The paper says:

"Such a scheme could be developed."

Does the Minister therefore accept that the representatives consulted by the Government support what the new clause is trying to achieve?

Gerry Sutcliffe (Labour, Bradford South)

No, I do not. I shall come on to the work of the Committee later.

The hon. Member for Epping Forest (Mrs. Laing) said that it was a question of balance. I agree. We must consider what provides value for the money for the taxpayer when administering the system. We made it clear at the outset that we are committed to delivering the work and families legislation in a way that strikes the right balance between the needs of children, families and employers. We looked at a range of issues that affect employees and employers. At the time of the 2004 pre-Budget report, we made a commitment to consider the possibility of direct payments as a way of easing the administration of leave and pay. After careful consideration, we concluded that the scheme would be out of proportion to the benefits accruing, representing neither good value for money for the taxpayer nor a significant saving for employers. Hon. Members asked about costs and it was estimated that set-up costs would be up to £75 million with annual running costs of £50 million.

Those costs should be contrasted with an estimated net benefit for employers of about only £1 million a year. A figure of £38 million was mentioned, but if we accepted new clause 1, which applies to employers with 50 employees or fewer, HMRC's analysis would be relevant. I accept that hon. Members wish to question the figures as they try to make their case, but those figures were widely available. In the CBI response, no one questioned the figures or the detail, nor did they offer alternative figures to explain why the direct payment scheme would work. There would not be any net benefit for the taxpayer or, indeed, small businesses. As for the cost to business of the whole Bill, the majority of costs fall on the Government, as the Treasury reimburses business for statutory maternity, adoption and paternity pay at 92 per cent. for large businesses and at 104.5 per cent. for smaller businesses. As the right hon. Member for Wokingham said, that is worth about £390 million a year. Small businesses will bear only a small proportion of the costs of the Bill. For example, of the £29 million to £43 million net cost to business of extending maternity and adoption pay, small businesses will pay only £1 million to £8 million.

We have taken the problems for small businesses into account. I do not think that there are differences between us on whether the self-employed or small businesses are affected, but we must achieve the right balance. We are not starting from scratch, as we already have statutory maternity and paternity pay. The principle of the Bill has been accepted by all parties. I raised an article in today's Financial Times with the hon. Member for Epping Forest (Mrs. Laing). I accept that she has not had time to read it, but it suggests that the Opposition have changed their view on paternity leave and fathers taking time off when their child is born. In earlier debates, however, she backed what we are trying to achieve.

Eleanor Laing (Conservative, Epping Forest)

May I reiterate that, whatever impression has been given, we support the basic principle of the Bill? Fathers should be allowed to take time off when their children are born.

Gerry Sutcliffe (Labour, Bradford South)

I accept that the hon. Lady is sincere and I accept the view of the hon. Member for Peterborough (Mr. Jackson) that the Labour party does not have a monopoly when it comes to political parties caring about employees and working conditions. The proof of the pudding, however, is the action that is taken. The Opposition talk about attacking business where necessary, but the article gives the impression that, in this instance, paternity leave may not be appropriate.

Mark Prisk (Conservative, Hertford and Stortford)

The Minister says that the proof is in actions, not words, but the business community clearly understood that there was a one-for-one package. Why, therefore, did the Minister not back his words with actions?

Gerry Sutcliffe (Labour, Bradford South)

In Committee, as I hope to show later, I discussed areas in which the Government are helping business by trying to support it—

Norman Lamb (Liberal Democrat, North Norfolk)

With a CD-ROM?

Gerry Sutcliffe (Labour, Bradford South)

The hon. Gentleman may attack the CD-ROM proposal, but we have regular meetings with small businesses to look at what can be done. We have set up Employee Direct, particularly for small businesses, to see what can be done about the burden of regulation and to try to make sure that we ease it.

In the context of direct payments, much has been made of the cost of such payments. In its response, the CBI attacked us, saying that we were trying to hide the figures. That is the not the case—the figures are on the website and have been placed in the Library. HMRC took a great deal of advice from a specially convened advisory group of payroll experts who were representatives of both large and small employers, payroll bureaux and software developers. HMRC's own analysts also carried out extensive analysis that was published on its website when the 2005 pre-Budget report was published.

Having given the House the headline figures, which demonstrate why a direct payment scheme would neither offer good value for money for the taxpayer, nor offer employers the savings that they might have hoped for, I will briefly explain why, even if we opted for a direct payment scheme employers would still be left with administrative responsibilities.

Nigel Dodds (DUP, Belfast North)

Given the doubts expressed today about the costs and the burden on small businesses in particular, can the Minister give the House an assurance that if the new clause is not accepted—I sincerely hope that it will be—he will keep the matter under review? If the costs are much greater to small businesses, will he look at the provisions in new clause 1 again and revisit the matter?

Gerry Sutcliffe (Labour, Bradford South)

I am happy to give the House an assurance. The Government do not think that the direct payment scheme, given the cost both of setting it up and of its administration, is appropriate. However, regulations will flow from the Bill and we will have to consult with small businesses on regulations on additional paternity leave and so on. The hon. Member for North Norfolk rightly pointed out that the figure of 104 per cent. related to the national insurance contribution. We will consider whether we need to change the position as to who can access the 104 per cent. We will also consider how we can further relieve the burden on small businesses, but I do not want the House to run away with the view, which understandably comes from the Opposition, that because we are not providing direct payments, we are not prepared to consider the burdens on businesses, particularly small businesses. In the context of the Bill, I have tried to outline where the burden on small business lies.

Mark Prisk (Conservative, Hertford and Stortford)

Is not the Minister embarrassed that what would cost £1 million if run by business will, it appears, cost £50 million if his Department runs it? Is not that an embarrassing statement in terms of the protection that he and his colleagues are meant to provide to the public purse?

Gerry Sutcliffe (Labour, Bradford South)

No, I am not embarrassed, but I understand why the hon. Gentleman is trying to distort—that might be too strong a word—the position. The effect on certain small businesses that have written payrolls rather than more technologically developed ones is complex, and that has been included in our calculations.

Eleanor Laing (Conservative, Epping Forest)

If we accept the Minister's calculation of what the provision would cost the Government or the taxpayer to administer, will he accept that £400,000 is not a realistic figure to put on the cost to small businesses? It is not just a question of how many stamps are required and how many letters they post but of the time and the additional burden involved. Surely the overall cost for small businesses must be far greater than £400,000.

Gerry Sutcliffe (Labour, Bradford South)

I am prepared to accept the word of the payroll experts and the experts at Revenue and Customs who have come up with those figures. The time involved in administration is incorporated in those figures.

Even if cost were not an issue, there are other issues relating to direct payment that would increase administrative responsibilities. In many instances, the scheme would add new responsibilities for employers, which I am sure is not what Members want. I therefore hope that Members will allow me a little time to explain why the Government believe that the actuality of a direct payment scheme, as well as the burden of costs, would not benefit employers.

Norman Lamb (Liberal Democrat, North Norfolk)

Does the Minister accept that, even though there are some new burdens in passing information over, even the Government's regulatory impact assessment accepts that those are less than the saving that would be made? The RIA assesses it as a small saving of £1 million, but those burdens are still less.

Gerry Sutcliffe (Labour, Bradford South)

I fear that, however eloquently I try to explain the position in relation to direct payments, Opposition Members have already made their minds up. They have decided that they want this scheme and, no matter what explanation I give, they will push for it to be developed. I ask them to bear with me a little further.

A direct payment scheme would add new responsibilities for employers. Because statutory maternity pay and other payments listed in the new clause are wage replacements, which are subject to the full range of payroll deductions and paid net, direct payment would mean Revenue and Customs becoming a temporary payroller for SMP and other statutory payments to employees of potentially any employer in the country, taking off the full range of payroll deductions. Employers would not, however, lose all their current tasks and responsibilities in relation to those payments. For example, they would remain responsible for making earnings-based contributions such as employers' national insurance contributions and employers' contributions to occupational pension schemes. They would also continue to be responsible for completing periodical returns such as the employer's annual return. Many employers also provide occupational maternity and paternity pay on top of the statutory minimum, which is something that the Government welcome. Handing responsibility for statutory payments to the Government would still leave such employers with the responsibility of making those occupational payments, in addition to having to pass on new information to Her Majesty's Revenue and Customs.

For a direct payment scheme to work properly for both employers and Revenue and Customs, a potentially complex two-way information exchange would be necessary, which, as I have pointed out, would impose new burdens on employers. HMRC would require detailed information to be provided by employers to high standards of accuracy and to tight time limits in order to take on that function, and employers would still need information from HMRC to fulfil their obligations and to take back the payroll at the end of the direct payment period.

During the work and families consultation, many people, including the ad hoc advisory group of payroll experts, pointed out that such complex information exchanges could not realistically take place without error. Dealing with the consequences of errors would fall to the employers as a new burden, as employees would in the first instance turn to their employers for an explanation. Of course, the errors would also affect the employees concerned.

Given the cost of a direct payment scheme, it does not represent value for money for the taxpayer, which is why we have not moved forward with such a scheme. The administration of such a scheme would not benefit businesses, particularly small businesses.

Mark Prisk (Conservative, Hertford and Stortford)

The key word in the new clause is that companies "may" transfer responsibility. Such companies can make their own sensible assessment as to whether it is right in their circumstances. No compulsion is involved—the new clause would merely allow them to make that transfer. Does the Minister therefore accept that companies are better able to judge that than he is?

Gerry Sutcliffe (Labour, Bradford South)

With due respect to hon. Members, the bulk of the reason for their position is that the CBI has withdrawn its support for the Bill because of the issue of direct payments—[Interruption.] It is important to see direct payments in the context of the whole Bill. The CBI and most employers' organisations support the principles of the Bill, as do all political parties.

Because of the costs involved, we not believe that a direct payment would represent value for money for the taxpayer. It would not provide the benefits that hon. Members claim, not only because of the costs involved but because of the administration of the scheme. The issue of cash flow was raised with regard to small businesses, but small businesses can apply for funding upfront in relation to the administration of schemes. Throughout the process, we have consulted small businesses and the business community about how to deal with the issue.

I am unlikely to be able to change the view of Opposition Members, given the positions that they have set out. I hope that they will take in good faith what the Government have said about the costs of a direct payment scheme and that they understand that such a scheme would not work for the reasons that I have given. I hope that the hon. Member for North Norfolk will withdraw the motion.

Norman Lamb (Liberal Democrat, North Norfolk)

Liberal Democrat Members are not satisfied with the Government's response and will seek to divide the House on the new clause. The Minister says that our whole position is driven by the CBI, but it is long-standing Liberal Democrat policy and part of our election manifesto. I am delighted that Conservative Members added their names to our new clause and that the CBI supports Liberal Democrat policy, which seems an entirely good thing. We are not responding to any change of position from the CBI—our position has been the same throughout, and we tabled such a proposal in Committee, as the Minister knows.

I repeat that we strongly support the Bill, which provides new rights that are thoroughly welcome and will help in achieving a better work-life balance for families. As the Conservative spokesman mentioned, however, it is important to ensure that there is confidence in the changes and reforms introduced, and that the Government bring business with them. The Government must acknowledge that they have a problem. For example, it is not good that the CBI has withdrawn its support, because the Bill ought to be a package of proposals around which everyone can unite. The Government have lost that big tent, to coin a phrase, and they ought to be thinking about how they can recover that position.

The hon. Member for Hertford and Stortford (Mr. Prisk) just reiterated a point that I, and others, have already made: this is all about giving employers a right. They might seek to transfer responsibility to the Government if they considered that that was in their interests. Self-evidently, the new clause is directed at the employers who would benefit most in terms of cost savings.

I want to deal briefly with what has been described as the incredible disparity between the assessed cost of the Government's running the scheme—50 million quid—and the assessed savings for employers—£1.1 million. That is based on the regulatory impact assessment. I support the RIA process in principle, but we need to be clear about the severe limitations imposed by the way in which such assessments are conducted. They tend to be self-serving, in that they are prepared by the Departments that seek to benefit from them. Her Majesty's Revenue and Customs obviously does not want an additional responsibility, so self-interest is involved in the delivery of an assessment that is discouraging from the point of view of employers.

We should bear it in mind that many small employers still make their calculations manually. It seems incredible to me that the saving to employers should amount to only £1 million, while it would cost the Government £50 million to operate the scheme on an automated basis. That simply does not make sense. We believe—as, I think, do the Conservatives—that the employers' costs have been underestimated, and the Government's costs have been overstated.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

Is this not yet another illustration of why we need an independent body to assess the quality of regulatory impact assessments? The House would then be better informed of where the true figure might lie.

Norman Lamb (Liberal Democrat, North Norfolk)

I entirely agree. There must be an element of independence in the RIA process, for, without it, the figures simply cannot be robust enough. There should also be a reassessment once the regulation has been introduced. Perhaps the Minister will confirm that that will happen. He said that he would keep the matter under review in response to an intervention, and, a year on, we ought to establish what the actual costs have been.

A number of factors have led us to conclude that this assessment is wrong. I heard what the Minister said at the end of his speech, but I still believe that, for many employers statutory maternity and paternity pay has cash flow implications which could be avoided if the payments were made directly by the Government. We should also bear in mind the time taken away from wealth generation. The time spent on completing a manual declaration could be spent on making money—generating wealth for the business. I bet that the assessors did not calculate that loss adequately.

Gerry Sutcliffe (Labour, Bradford South)

The assessors did take account of those figures, but the Government are taking a number of other measures to help small businesses improve their payroll systems and are considering better ways of giving them information. The hon. Gentleman must accept that. He is speaking out of context.

Norman Lamb (Liberal Democrat, North Norfolk)

With due respect, I am not entirely sure what that intervention was meant to achieve.

Gerry Sutcliffe (Labour, Bradford South)

It made me feel better.

Norman Lamb (Liberal Democrat, North Norfolk)

In that case, I welcome it, because the Minister is a good friend. [Laughter.] That has clearly caused a lot of trouble. I had better move on.

A simplistic exercise could be undertaken at a desk in Whitehall to calculate the total cost to employers, but such an exercise would not take account of the time involved. Imagine a small business with a manual payroll system and one boss, man or woman, trying to run everything: trying to keep the money coming in, and at the same time having to deal with additional administrative burdens. I do not think that the RIA takes adequate account of that either.

The hon. Member for Angus (Mr. Weir) made a good point about the cumulative effect of one regulation after another. Others pointed out that business people have families themselves, and must often do the work late at night or at weekends when they too could be improving their work-life balances. There is another important point, which has not been mentioned today but which should be borne in mind. Members of Parliament may have staff who take maternity leave. I face the delightful prospect of two staff members' taking maternity leave this year. [Interruption.] There is nothing further to be said about that. There is no scandal. There is no skeleton in my cupboard.

Stewart Jackson (Conservative, Peterborough)

Busy in North Norfolk.

Norman Lamb (Liberal Democrat, North Norfolk)

Busy in North Norfolk, yes. One is in London and the other is in North Norfolk. [Laughter.] I am getting myself into trouble here.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

Order. Perhaps I can help the hon. Gentleman. Perhaps he should get on with discussing new clause 1.

Norman Lamb (Liberal Democrat, North Norfolk)

I am grateful for your guidance, Mr. Deputy Speaker.

My point is that we Members are compensated for the cost of having a member of staff on maternity leave. The cost of replacement staff is paid by the Fees Office. People who run their own businesses are not compensated in that way and must incur an additional burden in paying for replacement workers.

If the Minister is intent on rejecting the new clause, we will press it to a vote, but in any event I urge him to look again at the percentage repayment. As he has conceded, the 104.5 per cent. for small businesses does not compensate them for the administrative burden. When he intervened on my speech earlier, he accepted that they should be compensated. The Government ought to act according to their words, and increase the amount given back to employers.

Eleanor Laing (Conservative, Epping Forest)

Has not the Minister demonstrated that the Government simply do not understand how small businesses work? It seems that they are about to reject a new clause that has the support of everyone else in the House.

Norman Lamb (Liberal Democrat, North Norfolk)

One does get that impression. The only Member to speak against the new clause was the Minister. He was on his own: not a single member of his party supported what he was trying to do.

We will press the new clause to a vote, because the Government have not stuck by their promise to help small businesses introduce the system. We ought to be bringing small businesses with us, and the Government are failing in that regard.

New Clause 3 — Review of additional paternity and leave pay

Eleanor Laing (Conservative, Epping Forest)

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.

Gerry Sutcliffe (Labour, Bradford South)

I shall wait until later.

Eleanor Laing (Conservative, Epping Forest)

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.

Mark Tami (Labour, Alyn and Deeside)

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?

Eleanor Laing (Conservative, Epping Forest)

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 the hon. Member for Cardiff, North (Julie Morgan) and my hon. Friend the Member for Broxbourne (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 the hon. Member for Alyn and Deeside (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.

Sadiq Khan (Labour, Tooting)

I sympathise with what the hon. Member for Epping Forest (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.

Eleanor Laing (Conservative, Epping Forest)

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.

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.

Eleanor Laing (Conservative, Epping Forest)

rose—

Mark Tami (Labour, Alyn and Deeside)

Will my hon. Friend give way?

Sadiq Khan (Labour, Tooting)

Of course.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

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.

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.

Mark Tami (Labour, Alyn and Deeside)

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?

Sadiq Khan (Labour, Tooting)

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.

Eleanor Laing (Conservative, Epping Forest)

Will the hon. Gentleman give way?

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—

Eleanor Laing (Conservative, Epping Forest)

On a point of order, Mr. Deputy Speaker. The hon. Member for Tooting (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.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

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.

Sadiq Khan (Labour, Tooting)

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

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

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

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.

Norman Lamb (Liberal Democrat, North Norfolk)

I was becoming confused by the talk of elephant traps and Trojan horses, but I think that I understand the points made by the hon. Member for Tooting (Mr. Khan). The hon. Member for Epping Forest (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.

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.

Michael Weir (Scottish National Party, Angus)

The hon. Member for Tooting (Mr. Khan) was a little hard on the hon. Member for Epping Forest (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.

Eleanor Laing (Conservative, Epping Forest)

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.

Michael Weir (Scottish National Party, Angus)

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.

Gerry Sutcliffe (Labour, Bradford South)

I am grateful for the opportunity to hold this debate. The hon. Member for Angus (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 the Member for Tooting (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.

Norman Lamb (Liberal Democrat, North Norfolk)

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?

Gerry Sutcliffe (Labour, Bradford South)

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 the hon. Member for Epping Forest (Mrs. Laing) personally, but the idea that comes from the right hon. Member for Witney (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 the hon. Member for Peterborough (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.

Eleanor Laing (Conservative, Epping Forest)

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, the hon. Member for Tooting (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.

Mark Tami (Labour, Alyn and Deeside)

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.

Eleanor Laing (Conservative, Epping Forest)

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.

The hon. Member for Angus (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.

Clause 13 — Annual leave

Gerry Sutcliffe (Labour, Bradford South)

I beg to move amendment No. 2, in page 11, line 27, at end insert—

'(4A) Regulations under this section may not make provision in relation to the subject-matter of the Agricultural Wages (Scotland) Act 1949 (c. 30) (as that Act had effect on 1st July 1999).'.

The amendment reflects the fact that holiday entitlements and rates of pay for agricultural workers in Scotland are devolved to the Scottish Parliament. The minor technical amendment ensures that the current limited devolution is preserved.

Alan Reid (Liberal Democrat, Argyll and Bute)

The Minister is quite right that the matter is devolved to the Scottish Parliament. The Scottish Agricultural Wages Board sets the minimum wage as well as holiday entitlement. It is obliged to set a minimum wage that is above the national minimum wage and a holiday entitlement that is greater than that laid down in the Working Time Regulations 1998. Will the Minister assure the House that the future holiday entitlement of agricultural workers in Scotland will not lag behind that laid down in UK or European regulations?

Russell Brown (Labour, Dumfries and Galloway)

While I appreciate that my hon. Friend the Minister indicated that the amendment is technical, I share the concerns of the hon. Member for Argyll and Bute (Mr. Reid). I regret to say that although we have a national minimum wage in this country, there are all too often some who would like to attack the protection that is offered through the Scottish Agricultural Wages Board. Like the hon. Gentleman, I merely say to my good friend the Minister that I hope that the amendment will offer protection to agricultural workers in Scotland and that they will not be worse off in any shape or form compared with workers in other parts of the country.

Michael Weir (Scottish National Party, Angus)

I had not intended to speak to the technical amendment, but I have been interested by what hon. Members have said. As the Scottish Agricultural Wages Board is a devolved body, it is up to it to decide what to set. I would hope that members of the board, being good Scots, would set rates that were higher than those in other parts of the country, although I accept that there is no guarantee that that will happen. However, as an independent body, it would have the right to set such rates.

The number of people working in agriculture in Scotland has declined steadily over the years. Many people who work in agriculture, especially those who are seasonal workers, come from eastern Europe to work for short periods. Will the Minister confirm that they are covered by regulations on the national minimum wage, rather than the Scottish Agricultural Wages Board, and that the amendment thus covers people who are permanently engaged in agriculture, rather than seasonal workers?

Eleanor Laing (Conservative, Epping Forest)

I also realise that the amendment is technical, so I do not intend to speak for long. Devolution is complicated, so we can forgive the Government for not getting the drafting perfectly right from the beginning and thus having to table the amendment. It is much better for technical amendments to be considered on Report than for us to have to spend hours and hours upstairs considering statutory instruments to make devolution work. We all want devolution to work, so we welcome the amendment.

Gerry Sutcliffe (Labour, Bradford South)

I am pleased that hon. Members' contributions show that we were right to table the amendment. This is a matter for the Scottish Parliament. It will be guided by the Low Pay Commission on the national minimum wage and by the European Union on the working time directive and hours. I am sure that the Scottish Parliament will note what hon. Members have said.

Amendment agreed to.

Schedule 1 — Leave and pay related to birth or adoption: further amendments

Meg Munn (Labour, Sheffield, Heeley)

I beg to move amendment No. 1, in page 20, line 9, at end insert—

"1A In section 106 of ERA 1996 (replacements) in subsection (2)(a) after "adoption leave" insert "or leave under section 80AA or 80BB (additional paternity leave)".'.

This amendment will support employers in managing the new entitlement to additional paternity leave. The Government recognise that employers are concerned about their position when they take on a new employee to cover a woman's absence on maternity leave. Those concerns were raised on Second Reading. They were also discussed in Committee during debate on an amendment tabled by the hon. Member for North Norfolk (Norman Lamb). We recognise that the same issues will be of concern to employers taking on new staff to cover an absence due to additional paternity leave.

An employee with 52 weeks' service is, of course, protected from being unfairly dismissed. It is right that employees are protected in that way; the Government reduced the qualifying service from two years to one in 1999. However, we recognise that it is also right that we make the management of maternity, adoption and additional paternity leave as straightforward as we can for employers, and that includes making the management of employees they take on to cover maternity, adoption or additional paternity leave as straightforward as we can.

Section 106 of the Employment Rights Act 1996 provides that where an employee is taken on to cover an absence caused by pregnancy, childbirth or adoption leave and is dismissed because the original employee returns from the absence, they will be treated as having been dismissed for a substantial reason which would mean that the dismissal was not unfair, provided that the employer had acted reasonably.

Section 106 is intended to protect employers who take on employees to cover maternity or adoption leave. It enables them to dismiss the replacement employee when the original employee returns from leave. The replacement employee is also protected since section 106 applies only where the replacement was informed in writing when they were appointed that their employment would be terminated when the original employee returned to work, and the dismissal will be fair only if the employer acted reasonably and fairly and followed proper procedures in carrying out the dismissal.

As well as maternity and adoption leave, section 106 includes replacements taken on to cover maternity or medical suspensions and other absence caused by pregnancy.

Charles Walker (Conservative, Broxbourne)

Will there be a requirement for notice or any form of redundancy payment to be given to an individual being dismissed when a women returns from maternity leave? What period of notice and conditions will be attached to that dismissal?

Meg Munn (Labour, Sheffield, Heeley)

The hon. Gentleman will be aware that the Bill extends the notice that women returning from maternity leave give to their employer, enabling the employer to give more notice to the replacement employee. My understanding is that there will not be issues of redundancy as this is not a redundancy situation.

Charles Walker (Conservative, Broxbourne)

A woman returning to work could say, "I'll be coming back in two or three months". Will there be a requirement for the employer to notify the temporary employee that they will be moving on? It would be fair for the temporary employee to have as much notice as possible that they will not required in future.

Meg Munn (Labour, Sheffield, Heeley)

My understanding is that nothing in the Bill changes the current arrangements, and clearly the employer has to follow the correct procedures. Having the extended notice helps the replacement employee. They need to be told at the outset that they are a replacement and that they will finish at that point. The proper procedures should be followed. I hope that that reassures the hon. Gentleman.

The amendment will allow section 106 to be extended to include the dismissal of employees taken on to cover absence due to additional paternity leave. In the majority of cases, such an absence will be short and the replacement employee will not have enough continuous service with their employer to enable them to claim unfair dismissal. However, there may be circumstances, including where additional paternity leave is taken on the death of the mother, where the father's absence is long enough to allow the replacement to clock up one year's service and be able to claim unfair dismissal. The extension of section 106 will provide certainty to employers managing the new entitlement to additional paternity leave. Employers will know that they can take on a replacement to cover the absence without concern about their ability to end the replacement employee's contract. I commend the amendment to the House.

Norman Lamb (Liberal Democrat, North Norfolk)

If my amendment on a related point has triggered the Government to spot this anomaly, I am obviously delighted. This measure appears eminently sensible, and we must ensure that in all the different circumstances—maternity or paternity leave, or adoption—the employer and the employee are in the same position. The amendment will regularise that situation, so as to ensure that in the few cases in which someone takes extended paternity leave beyond a year, they will not be in a different position from anyone else. We support the amendment.

Henry Bellingham (Conservative, North West Norfolk)

I was not on the Committee for this Bill, and I would like to ask the Minister and her colleagues a quick question. The proposal in the amendment seems so obvious and logical in the context of the Bill, and I wonder why it was not in the original Bill. Why was it necessary for the Government to table this amendment? I applaud them for so doing, but I wonder whether there is a good reason why the proposal was not considered in the first place.

Meg Munn (Labour, Sheffield, Heeley)

First, I am delighted that the hon. Member for North Norfolk (Norman Lamb) is delighted. Secondly, to respond to the hon. Member for North-West Norfolk (Mr. Bellingham), the amendment will ensure that the regulations are clear and that everyone fully understands the position. As I said in my speech, the expectation is that, given the arrangements, there will be very few occasions on which additional paternity leave will last longer than a year. However, as hon. Members know, we are a listening Government and we respond to people's concerns. We wanted to do everything that we could to make the position clear, and that is why we have tabled the amendment at this stage.

Amendment agreed to.

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

I beg to move, That the Bill be now read the Third time.

This Bill, which has enjoyed a positive reception from both sides of the House during its passage, is pro-family and pro-business. These aims are not mutually exclusive, but mutually supportive. Flexible working increases the number of people who are able to work, which widens the talent pool for business. More importantly, it gives parents a genuine choice when making the difficult decisions about how they balance their work and family lives. That is why these measures are an essential component of an enabling state.

The Bill extends paid maternity and adoption leave. It extends to carers of adults the right to request flexible working. It also gives fathers the opportunity to play more of a role in their child's upbringing, and it makes it easier for employers to administer these rights. These are progressive policies that respond to profound changes in our workplaces and our homes.

It is therefore curious to read that the Leader of Her Majesty's official Opposition, the right hon. Member for Witney (Mr. Cameron), is apparently against the measures. Having pronounced his commitment to social justice and espoused the causes of trusting people and sharing responsibility, he now sides with some of the more reactionary elements of society in arguing to prevent fathers from exercising a choice with their partners to take a more prominent role in caring for their child.

I know that the right hon. Member for Witney, together with his hon. Friends on the Conservative Benches, voted against every single family-friendly measure that this Government have introduced, from extending maternity leave, maternity pay and paternity leave to the right to request flexible working. They also voted against giving adoptive parents help for the very first time in dealing with the difficult task of taking children into their homes. We genuinely hoped that there had been a change of heart, and that there would be a progressive consensus behind the Bill.

Henry Bellingham (Conservative, North West Norfolk)

The Minister will remember that, for a couple of years during the last Parliament, I shadowed him when he was a Minister of State. We consistently supported a number of family-friendly measures. We certainly gave our wholehearted support on adoption rights. Perhaps, going back a bit further, the Opposition might have taken a more anti-family stance, but for the past four years or so we have supported the Government on many occasions. Yes, we have had our differences with them over employment legislation, but we have also supported them time and again.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

I remember when we dealt with the Employment Bill in 2001. The hon. Gentleman's memory is faulty. Conservative Members opposed the Employment Bill on Second Reading on 27 November 2001. That Bill contained every element that I just mentioned. It was supported with fine words in Committee. I well remember the principle being acceptable, but when it came to the crunch and the vote, Opposition Members, including the right hon. Member for Witney, voted against every single measure. Although we hoped that there had been a change of heart and that there would be a progressive consensus behind the present Bill, that seems not to be the case, but I still hope that Members in all parts of the House will support the Bill this evening.

Progressive politicians should certainly back the Bill, because progressive businesses back it—not just the biggest businesses, which find it easier to invest in human resources policies, but small businesses too. In many cases, small businesses are far ahead of larger businesses in their enlightened approach to employment relations. They do it almost instinctively, as we found when we researched the original employment relations policies introduced in the early part of the century.

The economics are clear. It costs £80 to handle a straightforward flexible working request, for instance, but it costs £4,800 to recruit a new employee. That is why 90 per cent. of flexible working requests are being accommodated, according to a CBI survey. That is why Miles Templeman, director general of the Institute of Directors, which was against the original proposals back in 2000–01, now says:

"Our members, by and large, support family-friendly policies."

The CBI accepts in principle the Government's desire to extend family-friendly rights further.

Business backs the extension of flexible working to one group at a time, the very approach that we have taken in the Bill. Business also supports the extension of maternity pay towards 12 months by the end of this Parliament, and many of the other measures in the Bill—the increased notice periods, the "keeping in touch" days and the alignment of start dates, all of which are essential simplifications of the legislation. Many of these measures were developed in partnership with business, through our external advisory group of human resources experts.

We will continue to work closely with business as we move forward. In February, we will consult on the details of the paternity scheme so that large and small businesses can introduce these important measures successfully. We will also consult on the annual leave entitlement before putting detailed changes to Parliament, including on phasing in the introduction.

The Bill is business-friendly, child-friendly and parent-friendly and will enhance Britain's economic success. I commend it to the House.

Eleanor Laing (Conservative, Epping Forest)

May I begin by correcting what the Secretary of State has just said about the attitude of my right hon. Friend the Member for Witney (Mr. Cameron) ? My right hon. Friend supports the Bill, as do I. If he did not support its provisions, I would now be urging the House to vote against the Bill on Third Reading. I am not doing so. I am supporting the Bill, as I have done throughout its passage which, incidentally, began before my right hon. Friend became leader of the Conservative party—a whole day before.

The right hon. Gentleman may be right in his recollection and assessment of what the Conservative party may have said in the dim and distant past. I am interested in the future.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

Will the hon. Lady confirm that in the dim and distant past—1 January 2006—the right hon. Member for Witney (Mr. Cameron) said:

"The suggestion for the massive extension of paternity leave owes . . . more to political correctness than the realities of life."?

Eleanor Laing (Conservative, Epping Forest)

It depends how one interprets those words. [Laughter.] My interpretation is that my right hon. Friend agrees with all that I have said during the passage of this Bill and, I hope, with all that I am about to say on Third Reading.

As I said on Report, it is idealistic to suggest that a work force will be happy, and able to do their jobs to the very best of their ability, if they do not have to worry about what is going on in the rest of their lives while they are at work. If, however, a person goes to work knowing that they can leave work if someone for whom they are caring at home—a small child, someone who is ill or an elderly relative—needs them, then they will work better and form part of a better work force.

Employers will be happier with how their employees are functioning, if their employees can get on with their work without anxiety about trying to balance work and family life—that said, mothers and fathers who go to work will always have some anxiety about their children or elderly relatives, so perhaps I am being idealistic. However, I am trying to convince the Secretary of State that I entirely agree with his remarks about the importance of flexibility and the work-life balance, which make for a better, more efficient work force.

If the Bill works as intended, it will be good for not only society, but the economy—the economic imperative.

Jim McGovern (Labour, Dundee West)

In Committee, some hon. Members were surprised that the hon. Lady and I seemed to agree about annual leave entitlements. Will she confirm that she agrees that all workers should be entitled to 28 days paid annual leave guaranteed by law?

Eleanor Laing (Conservative, Epping Forest)

rose—

John Heppell (Labour, Nottingham East)

What does 28 days mean?

Eleanor Laing (Conservative, Epping Forest)

That is the point. Does it mean 28 days including public holidays or 28 days excluding public holidays? I personally think it correct to exclude public holidays from the 28 days. Public holidays should not be included as part of annual leave—they are additional holidays. The transition should be introduced gradually, because it will have a large and immediate impact on some businesses, which may be detrimental.

Charles Walker (Conservative, Broxbourne)

I understand that the current provision is 20 days, of which eight days are bank holidays and 12 days are holidays provided by employers. The Warwick agreement states that employers will provide 20 statutory days with eight additional bank holidays on top of that, and the Minister provided an assurance on that point in Committee.

Eleanor Laing (Conservative, Epping Forest)

I thank my hon. Friend for assisting me, because I have got it wrong. When I said 28 days excluding bank holidays, I meant to say 20 days excluding bank holidays. I inadvertently misled the House in my answer to the hon. Member for Nottingham, East (Mr. Heppell), who said from a sedentary position that it depends on what 28 days means. I am in favour of 20 days plus bank holidays, not 20 days including bank holidays. I hope that I have now made myself clear. I apologise for my lack of clarity, Madam Deputy Speaker, and thank my hon. Friend the Member for Broxbourne (Mr. Walker) for noticing it and helping me so propitiously.

The Secretary of State is right that, if the Bill works as it is intended to work, business will become more efficient as well as more family-friendly. There is no need for what we describe as family-friendly measures to be in any way opposed to business-friendly measures. As he said, if things work properly, there should not be a choice between a business working efficiently and profitably and a work force being happy. On the contrary, for a business to work to the best of its ability, it is necessary to have a work force who are working to the best of their ability. That means that it is necessary to have a proper work-life balance. We come back, as we always do, to that word, "balance". That is what it is all about.

My concern throughout has been that, if measures go too far in one direction, the Bill will backfire. I do not want employers to be reluctant to employ women of childbearing age because they are likely to take maternity leave.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

That is illegal.

Eleanor Laing (Conservative, Epping Forest)

The right hon. Gentleman rightly says that it is illegal. We recently spent a great deal of time on the Equality Bill making sure that it is illegal. I supported that Bill as well. Nevertheless, it was once the case that women were required to give up work, notably in the civil service. It happened to my mother when she got married. I do not think that she minded. It was the fashion at the time that if a woman who was a qualified civil servant got married, she was required to give up work there and then because it was assumed that she would have a baby more or less immediately. Of course, my mother was very fortunate because she gave up the civil service and had me, although I would not necessarily expect the whole House to agree with that. [Interruption.] If the hon. Member for Tooting (Mr. Khan) would like to disagree, I will certainly give way to him. [Interruption.] The hon. Gentleman did not say anything—I turned the tables for a change by putting words into his mouth instead of him putting them into mine.

Keith Vaz (Labour, Leicester East)

It was I who spoke from a sedentary position. I said that we are delighted by the decision taken by the hon. Lady's mother to have her immediately.

Eleanor Laing (Conservative, Epping Forest)

I thank the hon. Gentleman. It was not quite immediately—if it had been, I would be even older than I am now, but we will not go into that.

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Order. To save any further confusion, perhaps we could concentrate on the Third Reading of the Bill.

Eleanor Laing (Conservative, Epping Forest)

Thank you, Madam Deputy Speaker. I will of course adhere to your ruling.

I do not wish to digress or to take up the House's time unnecessarily, but to convince the Secretary of State that I agree with most of what he said. We are thoroughly behind the Bill and its intentions, but I remain concerned about the burdens on small businesses and about the cost to the taxpayer and the business community, large and small, of implementing some of the regulations. I also remain concerned that, if employers do not have confidence in the Bill and feel that they are being forced into a situation that they do not want, the measure might backfire. However, I hope that it does not because in our debates in many forums in the past few months, we have all been trying to achieve equality in society and in the work force. That is not only desirable but necessary.

Women have to do two jobs and it is not only desirable but economically necessary that they should do that because we need them in the work force. We need women who are currently in the work force to remain there and it is wrong that a woman who has a child and wants to return to work should sometimes be required to go back at a lower level than that that she had reached before she gave birth. That is wrong socially and because it is unfair, but it is also wrong because of its effect on the economy.

I shall repeat the statistic that the Minister for women and equality first mentioned. If all the women in our work force worked at the height of their capability instead of doing jobs for which they are over-qualified in order to do part-time work to look after their families, annual GDP would increase by 3 per cent., which is equal to our annual trade with Germany. I have often used that statistic and people have argued against me on many occasions. I cite the Minister as the person who first mentioned it and I therefore hope for my sake as well as hers that it is accurate. However, I should like us to prove its accuracy by enabling the women to whom we refer to work to the limit of their abilities instead of being undervalued because they happen to be mothers as well as important people in the work force.

If we require women to do two jobs, we must also require families to support the women and the children involved. For that reason, it is necessary for fathers as well as mothers to have rights.

If a family is to work the way that it should, flexibility is required to enable people to look after their elderly parents, their sick relatives and their small children when necessary. Flexibility does not mean not working properly. If the employer and the employee exercise it responsibly, it works in everybody's best interests. That is why the Bill is so important. I am pleased to be able to support the Bill. It is a big step forward towards a family friendly workplace. If it works properly—I sincerely hope that it will—it will be a huge boost not only to our society but to our economy.

As the hon. Member for North Norfolk (Norman Lamb) said, it is a pity that we have not seen the regulations. On Second Reading, the Secretary of State and the Under-Secretary, the hon. Member for Bradford, South (Mr. Sutcliffe), promised us that we would see them. There was an understanding that we would have them in Committee. The Minister expressed a further hope in Committee that we would have them before Third Reading. We are nearing the conclusion of proceedings on the Bill and we have still not seen the regulations, so I fear that it may be the duty of our colleagues in another place to pursue the argument about their introduction. In Committee, the Under-Secretary said that the Secretary of State was a "hard taskmaster" in promising that the regulations would be published soon. That was several weeks ago, and we still have not seen the regulations, which is disappointing. Our consideration of the Bill would have been better informed if the regulations had been published. I cannot make that point strongly enough.

Peter Bone (Conservative, Wellingborough)

In Committee, I thought that the publication of the regulations was more of a promise that an aspiration. It is difficult to consider the Bill properly without knowing what the regulations are.

Eleanor Laing (Conservative, Epping Forest)

My hon. Friend is correct. It is difficult to consider the Bill properly without knowing what the regulations are. It is hard to understand why we have reached this stage without the regulations that the Secretary of State promised. The Under-Secretary said that he was doing all that he could to produce them. There is no urgency to introduce the Bill. We could have waited for Third Reading until next week, the week after, or the week after that. It is a good Bill, and we want it to come into force, but there is no reason why it should do so in six or seven weeks' time rather than in 10 or 11 weeks' time. We could have had a far better and more informed debate if we had had the regulations before us. As a matter of principle, it is careless of the Government to expect the House of Commons to do its job properly if we do not have all the information that they ought to give us to allow us to scrutinise the Bill properly.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

On Second Reading, I expressed the desire and hope that the regulations would be ready while the Bill was proceeding through the House. I am very sorry that that has not proved possible, but that is far from suggesting that it is an essential part of the legislative process. Countless Bills go through the House without regulations being published until they have completed their passage. That is the normal practice. In this case, particularly given concerns about the way in which paternity leave would operate, I thought that it would assist the scrutiny of the Bill in Committee if the regulations were ready while the Bill was proceeding through the House.

I accept, however, that the important thing is to get the regulations right. We should not hurry them unnecessarily and perhaps make errors. They are, of course, subject to the affirmative procedure. Our latest information is that they will be included in a consultation document in February. I am sorry that that is after the Bill will have completed its passage through the House but, because of the affirmative resolution procedure, it leaves ample opportunity for Members on both sides of the House to comment and amend them. However, may I record my apology that we could not do something which we hoped and tried to do?

Eleanor Laing (Conservative, Epping Forest)

I thank the right hon. Gentleman for his frankness and for his apology. The Minister said in Committee that the right hon. Gentleman is a hard taskmaster, and I am sure that some people are quaking in their boots and will not dare to ask for any flexible working time until those regulations appear. We look forward eventually to seeing the regulations and I am pleased to accept his assurance that all the regulations will be subject to the affirmative procedure so that we will have an opportunity in the Statutory Instrument Committee to consider them in detail. I look forward to being able to do so as soon as possible.

I want the Bill to work. I am concerned that some parts will not work if the regulations are too tight, if the burdens on small businesses are too great or if the red tape involved in administering the Bill's good intentions cause the legislation, once it comes into force, not to work as the Government intend. The Government have good intentions, and we have good intentions in supporting the Bill, but I do not want anything to happen that would undermine the position of small businesses, because that would make the whole body of legislation on maternity and paternity pay and family-friendly working arrangements backfire. We therefore want to examine the regulations in great detail to make sure that the Bill will work as intended.

I leave my reservations on the record and reserve the right to discuss the matter again. It is important that employers and employees alike have confidence in the way in which the regulations will work. If we all want them to work, it is important that we have further discussions about exactly how they will work and that we get the correct balance between the rights of business, particularly small business, and the rights of employees.

Having said all that, I conclude by thanking all the Ministers who have been involved in the passage of this legislation for the courteous and reasonable way in which they have dealt with it. In finalising the Bill, they have taken many concessions and points into consideration. I also thank Liberal Democrat and Scottish Nationalist Members who have contributed so much to the Bill. An unbelievable degree of consensus has been found between all the parties—particularly between the Opposition parties, which worries me considerably—which has meant that our deliberations have been pleasant and constructive throughout the passage of the Bill.I also thank my hon. Friends who served on the Committee and who supported the Bill today, and all the officials who have worked hard behind the scenes.

Strangely enough, we appear to be doing well in our use of time this afternoon. As the Bill is intended to be family-friendly, it is wonderful that our deliberation might finish early. I was upset at the thought that I would not be able to attend the first parents meeting at my four-and-a-half-year-old son's school, where he started only last Thursday. I was called before the headmistress this morning to apologise, as I was not going to be able to attend. If it turns out that we finish early—

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

Right to request.

Eleanor Laing (Conservative, Epping Forest)

As the right hon. Gentleman says rightly from a sedentary position, there is a right to request. I request that the House finishes its deliberation of the Bill before 6 pm, and then I can present myself to the headmistress.

Julie Morgan (Labour, Cardiff North)

I will be brief, in order to allow the hon. Member for Epping Forest (Mrs. Laing) to attend the parents evening at her son's school. I am pleased to speak on Third Reading, and I congratulate the Government on yet another step forward to a family-friendly, more equal society, in tune with modern life. Along with all the other progressive legislation that we have introduced or are in the process of introducing—such as the Equality Bill and the Childcare Bill—this Bill will move us towards a more equal society. It is very important, and I was glad to serve on the Committee.

As has been said, much of the detail of the Bill has been left to regulation, and I accept my right hon. Friend the Secretary of State's comments that that must be done carefully and that time is needed, but that there will be the opportunity for further discussion if necessary. I particularly support the extension of the right to request flexible working to adults. As a carer myself, I spoke on Second Reading about the specific needs of carers, and I am anxious that the consultation on the regulations should give detailed consideration to the definition of a carer. It should be as wide and as flexible as possible. We have all received very good briefings from Carers UK telling us that caring is not the same as child care. Different needs are involved, and different factors must be taken into account. When the regulations are considered, it should be borne in mind that some of those who are cared for may suffer from deteriorating conditions. I am glad that we may have an opportunity to comment on the regulations, and I hope that the consultation will be as broad as possible.

At present, the right to request flexible working extends only to children under six unless the children are disabled. The Government do not plan to raise that age. As a Government, we have made tremendous progress towards considering the needs of parents, families and people with disabled and elderly relatives in an entirely new way. I hope that we have taken a step towards enabling all families with children of all ages to request flexible working. We all know that children's needs may be even greater when they are older than when they are babies or toddlers. Parents may be more likely to know where there children are when they are little. Different needs arise at different stages of the family cycle. I hope that the Bill will lead to circumstances in which everyone can combine work and family life to the benefit of all, and I hope that we shall be able to discuss that possibility in the future.

Businesses that already employ people who are carers have found it profitable to consider their rights and needs. I have encountered general support for the Bill among businesses, but I accept that we must consider their needs as well, and work with them to ensure that the fairer, more equal society for which we are working takes those needs into account.

I strongly support the Bill. It contains excellent provisions. I should like some of them to go further, but the Bill is nevertheless a tremendous step forward.

Norman Lamb (Liberal Democrat, North Norfolk)

I join the hon. Member for Epping Forest (Mrs. Laing) in thanking the Secretary of State and the two Ministers—despite their failure to provide the regulations on time—for the way in which they have conducted our debates here and in Committee. I also thank the hon. Member for Epping Forest and other members of the Committee, including the hon. Member for Tooting (Mr. Khan). I have not been on the receiving end of too many of his lashings. The Committee stage was conducted in good heart.

I am pleased to confirm to the Secretary of State that the Liberal Democrats are fully signed up to the progressive consensus that he mentioned earlier. I am delighted that on this occasion the Government are part of that progressive consensus: that is not always the case nowadays.

The Bill contains important measures relating to increases in maternity leave and pay, paternity leave and adoption leave. It is remarkable how long it has taken us to acknowledge the importance of giving parents time with children whom they adopt. The Bill also extends flexible working, and facilitates the provision of extra paid leave. It is a good package that recognises the changing nature of the workplace. There has been a transformation—a revolution—in the workplace over the past two decades, since the days when it was dominated by males—indeed, fathers. Women were denied many rights, and did not have the opportunity to become economically active.

The Bill also accepts the economic case for enabling people to stay at work, and to balance that with family commitments. For both those reasons, the Bill is very good. It makes the point that there is no conflict between profitability and family-friendly policies. From the very start of its existence, a company in my constituency adopted a culture of facilitating the employment of people with family responsibilities.

Rob Marris (Labour, Wolverhampton South West)

Bernard Matthews?

Norman Lamb (Liberal Democrat, North Norfolk)

No; I could not possibly comment on that company's commitment. For example, from the very start, this company—Listawood—enabled women to have time off during school holidays and to change their shifts during holiday times to tie in with their partners, and parents to take time out of work to see their children participate in sports days. Such initiatives are not rocket science, but they encourage employees to believe that they are valued and make them feel warm about their employer. I suspect that, as a result, they are more committed to the business.

The hon. Member for Epping Forest spoke of the days when women were sacked when they got pregnant. I was reminded of a role that I had in my previous existence as an employment lawyer.

Rob Marris (Labour, Wolverhampton South West)

A very honourable profession.

Norman Lamb (Liberal Democrat, North Norfolk)

Absolutely. I led the campaign for compensation for women who were discharged from the armed forces when they got pregnant. Some 5,000 women were discharged simply because they became pregnant, and we should note the craziness of the resulting lost investment in their training. One of the biggest critics of the campaign to get compensation was a Conservative MP, so if the Conservative party has now moved on that is a good thing from everybody's point of view.

I have a number of specific points to make about the Bill, but I shall be as brief as I can because I want to make sure that the historic opportunity for parish councils to have their moment in the spotlight in the forthcoming Adjournment debate is not lost. Never has so much time been able to be devoted to the interests of parish councils. First, we must all accept that the Bill does impose new burdens on employers. By and large, employers' organisations recognise that the rights being introduced or extended are good things in themselves and they are prepared to go along with them, but they continue to express concern about the impact on small businesses in particular.

On Report—the Secretary of State was not present for that debate—the Government rejected a new clause to introduce a right for small employers to transfer responsibility for the payment of statutory maternity and paternity pay to the Government. We put it to the Minister present for that debate that the Government ought to consider adjusting the percentage payback to employers when recompensing them for the maternity or paternity pay paid out. Currently, 92 per cent. is paid back to all employers who make national insurance contributions in excess of £45,000 a year; for those below that level, the figure is 104.5 per cent. However, even for smaller employers, such repayments do not reflect the administrative burden. In an intervention on my speech on the new clause, the Minister seemed to accept the case for compensating for the cost of the administrative burden. Given that the Government rejected the new clause, they ought to consider making an adjustment to assist employers. If they are unable to help them through the direct payment method, that is another way in which they could help, and they ought to take it seriously.

My second point concerns the regulations facilitating the increase in paid leave. The Bill provides potentially sweeping powers for the Secretary of State to increase paid leave. The understanding is that it will be increased by another eight days, to reflect the fact that there are still many employees who do not get paid for bank holidays and other public holidays. We very much support such an extension. The CBI made the case for phasing in that additional right.

Gerry Sutcliffe (Labour, Bradford South)

indicated assent.

Norman Lamb (Liberal Democrat, North Norfolk)

I see that the Minister is nodding at that. My purpose is merely to ensure that the Government consult fully with business interests on this matter. I am sure that they will, as the effect will be felt most particularly in low-paid employment such as the hospitality and cleaning industries. The additional costs will be considerable, and there is at least a case for phasing the changes in. The Government need to consult carefully about that.

Secondly, I turn to the regulations covering the circumstances in which maternity leave can be replaced by paternity leave—when the father can take time off after the mother returns to work. I support that provision, but framing the regulations to ensure that it works effectively could be a complex matter. In most cases, for instance, the father and mother will work for different employers, with the result that their employers will have to exchange information with each other. It will be difficult to make sure that that works effectively—both for fathers and mothers and for employers, especially small ones—and again I urge the Government to consult very carefully on that. They should also look at the mechanism again after a year or some other interval to ensure that it is working effectively.

My third point has to do with the extension of the right to request flexible working. I support that, but on Second Reading I mentioned the contention of the Parkinson's Disease Society that a right to make such a request only once a year did not take into account the fact that the seriousness of some conditions, including Parkinson's disease, can vary considerably over the course of 12 months.

The Government did not accept the idea that requests might be made more often, and I understand why. However, I urge Ministers to reflect on concerns raised by organisations such as the Parkinson's Disease Society and to see whether the system could be made more flexible. Alternatively, I hope that the guidance that they supply will at least encourage employers to go beyond the statutory minimum in respect of helping the carers of adults with a horrible illness such as Parkinson's disease.

The hon. Member for Cardiff, North (Julie Morgan) made a very important point about how carers are defined. That definition will determine whether the extension of the right to request flexible working is limited in value. If the definition is narrow, few people will benefit, whereas a broad definition will be of real value to a large number of carers. Like the hon. Lady, I hope that a broad definition is adopted, so that many people who care for loved ones at home can benefit.

My final point has to do with the extension of the right to request flexible working to include people with teenage children. The Equal Opportunities Commission has said that the right should, in due course, be extended to cover everyone. People at work who do not have children or who do not care for loved ones at home could feel that there are two separate groups in society. Single people who crave a better work-life balance could believe that they have no right to request anything.

Julie Morgan (Labour, Cardiff North)

indicated assent.

Mark Tami (Labour, Alyn and Deeside)

indicated assent.

Eleanor Laing (Conservative, Epping Forest)

indicated assent.

Norman Lamb (Liberal Democrat, North Norfolk)

I am delighted to hear the supportive comments from Labour Members—

Eleanor Laing (Conservative, Epping Forest)

And from Conservative Members!

Norman Lamb (Liberal Democrat, North Norfolk)

And from Conservative Members—I am sorry to have left them out.

I understand why the provision to allow people to request flexible working is being phased in. The Government's step-by-step approach is sensible, but I hope that they will be prepared to consider extending the right to everyone. This is a light-touch regime: people will have the right only to request flexibility, not to get it, but they will be able to discuss the matter with their employer. Indeed, anyone who falls outside the Bill still has the right to ask their employer, but there is no statutory framework to facilitate that. I hope that the Government will say that as time goes by and the arrangements are assessed and evaluated, they will be able to go on to ensure that everyone has the same right of request.

The debate has been well conducted at every stage, and there has been broad consensus about sensible provisions. I confirm that we shall support the Bill.

Sadiq Khan (Labour, Tooting)

It is a real pleasure to speak on Third Reading to a united Chamber. There was, in fact, a broadly united Standing Committee, too. Some on the Opposition Benches would, given the new leadership of the Conservative party, like to forget the recent past, and particularly their voting record. The Bill needs to be considered in the context of a journey that began in 1997. Although the hon. Member for North Norfolk (Norman Lamb) was right to say that most good employment practices are not rocket science, the reality is that for those employers who do not get there by themselves, we need prescription in the law. Secondly, the law and regulations help to change attitudes so that employers, parents and carers change over time.

It gives me great pleasure to welcome the main thrust of the Work and Families Bill, which will extend paid maternity and adoption leave. It will also extend the right to request flexible working to carers of adults. It will help fathers to play a role in their child's upbringing if the mother returns to work. It will also make things easier for employers—a point often forgotten in Report stage debates. It will make it easier for employers to manage the administration of rights. The Bill will also include powers to deliver and ensure that all workers are entitled to four weeks of statutory leave in addition to the eight days for bank holidays.

It is a great pleasure to welcome the Bill, but it is worth emphasising that it is part of a jigsaw. Other parts of that are the work we have done on tax credits and child tax credits—helping hard-working families and those who are least well off. Other parts of the jigsaw are the work we have done to extend maternity leave to 26 weeks, not just benefiting mothers and families, but benefiting employers by facilitating more continuity and less staff turnover, with mothers given longer maternity leave.

We introduced two weeks' paternity leave. Other pieces of the family-friendly jigsaw are the introduction of three months' adoption leave. We must not forget the right to request flexible working, which has benefited 1 million parents across the country and many hundreds in Tooting. We also, of course, in another piece of the jigsaw, increased maternity pay, which was as low as £55 in 1997. Part-time workers now have the same rights as full-time workers, particularly benefiting women and ethnic minority employees, who were disproportionately part-time workers. Other pieces of the jigsaw are the introduction of four weeks of paid leave, which will include the eight pubic holidays. Finally, another piece of the jigsaw is the introduction of the national minimum wage—

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Order. I hope that the hon. Gentleman will now begin to address his remarks to the present Bill.

Sadiq Khan (Labour, Tooting)

I will, indeed, and I am grateful,

I was coming to the point that the Bill, as part of that jigsaw, is different from other pieces of legislation in at least one respect: it has the support of Her Majesty's official Opposition. I do not mean to be churlish in acknowledging that U-turn, which is welcome.

I must emphasise what the Bill does to improve the quality of life for families in Tooting and around the country. Increased notice periods benefit both employers and employees, clarifying in law the fact that reasonable contact during maternity leave is permitted, allowing optional "keep in touch" days and enabling women to go to work for a few days during the paternity pay period. That will help employers to run maternity leave more effectively and will improve communication and contact during leave periods. The Bill will also enable statutory maternity pay to be paid daily and start on any day, which will ease the administration of SMP and allow employers to align the payment of SMP with their normal payroll arrangements.

Some of my hon. Friends and Liberal Democrat Members have mentioned the extension of the right to request flexible working to carers. It is important to reassure business that the costs of that will not be disproportionate. The majority of the cost of the measures in the Bill will fall to Government, because the Treasury will reimburse business for any maternity and paternity pay, at the rate of 92 per cent. for large businesses and 104 per cent. for smaller businesses. It is often forgotten that the net cost to business is estimated to be much smaller—£40 million to £90 million in any one year—and much of it is offset by the benefits that accrue, such as lower recruitment costs because more mothers return to work. As has been mentioned, more flexible working practices also lead to more productivity and profit, estimated at 3 per cent. of GDP.

The fact that groups as disparate as the Federation of Small Businesses, the TUC, the British Chambers of Commerce, the Maternity Alliance, Carers UK and even, dare I say, the Conservative party welcome the Bill is to be commended. The fact that the Bill will pass unopposed shows how far society has moved in recent years. As a Labour Member, I am especially proud that the movement towards a more family-friendly society and a healthier balance between work and family life began in earnest in May 1997.

Charles Walker (Conservative, Broxbourne)

It is a privilege and honour to follow the hon. Member for Tooting (Mr. Khan) because I had the great pleasure of being a councillor with him in Wandsworth. I congratulate him on his excellent speech. Parental leave is a good thing, and that is accepted on both sides of the Chamber. Most important, it is good for children. Children need their mum and dad. They do not need to be farmed out to day care centres at two or three months old. That is not good for them and it is not good for families. I am delighted that the Bill will allow children in their formative years to spend more time with their parents. After all, once they hit eight, nine or 10, the last thing that they want to do is spend any time with us.

The Bill is also very good for parents. It allows mothers and fathers to share child-rearing responsibilities between them. It is also excellent that women who go on maternity leave can return to the job that they left. Let us imagine the outrage if the Secretary of State for Health, for example, left to have a baby and was offered a junior transport job when she returned. She would be appalled, we would be appalled and the nation would be appalled. The important element is choice. It might be that the Secretary of State decided that she wanted to spend more time with her family and have a better work-life balance, so she wanted to become a junior Transport Minister. It would be in a strange, parallel universe, but it might happen. In any event, it must be her choice whether to return to her health portfolio or take a slightly less senior role. Choice is very important.

The Bill is also good for business, because it will be able to hold on to talent. Business is in a skills battle at present. There is a skills shortage and good people are leaving the labour market and not returning. Most good employers will welcome the Bill. Indeed, many good employers have already adopted many of the provisions, but other employers—with a little encouragement—may find that it is a good thing for them and allows them to become more profitable in the longer term.

I want to inject a couple of caveats about the benefits for business. I am broadly in favour of increasing paid holiday entitlement from 20 to 28 days. It was always a little disingenuous of us to include eight days of bank holidays in the 20-day period. That was an unsustainable position, but the Minister assured us that he would look at the impact of the increased entitlement on small businesses, for whom the extra eight days would mean a 3 per cent. increase in their payroll costs. Given that there are other added costs, it is important that we consider the impact on overall employment rates, profitability and performance.

The Bill is exceptionally good for the economy. There is a skills shortage; we do not have enough people with the right skills in the right jobs doing the right things. If the Bill provides people with the reassurance that they can start a family and then return to work we may even see an increase in fertility rates. I realise that that is not the purpose of the Bill, but let us talk about it anyway, in an open and honest fashion.

I have very much enjoyed taking part in the debate. The Bill is excellent. I seem to be spending an unnatural amount of time voting with my Labour colleagues, although we shall probably not vote on this measure. I commend the Bill to the House and am grateful to have been allowed to make a short contribution.

Michael Weir (Scottish National Party, Angus)

It will probably come as no surprise for the House to learn that we do not always see eye to eye with Labour Members—[Hon. Members: "Shame."] We get it right more often than they do.

On this occasion, I am glad to welcome the Bill warmly on behalf of the Scottish National party and Plaid Cymru. It contains important measures that will benefit families throughout Scotland and Wales and, indeed, England.

It is many years since my children were born, but these rights will make a huge difference to families. When my children were born I was self-employed and could change my work patterns so that I could spend time at home with them in the early days. But how many of those who shared the joy of the antenatal clinic with me were able to do the same? If the Bill becomes law, more and more people will be able to take advantage of it, and anything that is good for the family is a very good thing indeed.

Some points need further examination. On Second Reading and earlier this afternoon, I raised the question of the structure of paternity and maternity leave. It is a shame that there is no opportunity for both parents to take leave at the same time. That is a defect in the legislation. We talked about the possibility of a review in a few years' time and I hope that that is one of the things that will be considered. These are new rights and they will take time to bed in, so we need to see how they work as time goes on.

We have talked about the importance of children spending their formative years with their parents. They need time with both parents. The arrival of a child can be a traumatic event for a family. It changes people's lives in ways that they had not envisaged and to spend time together with their child is important.

Charles Walker (Conservative, Broxbourne)

A new child is often likened to having a house guest who never leaves.

Michael Weir (Scottish National Party, Angus)

And probably costs much more, but we will not go there.

On Second Reading, I referred to surrogate parents. The Under-Secretary of State for Trade and Industry, the hon. Member for Bradford, South (Mr. Sutcliffe), wrote to me with detailed reasons as to why, in his opinion, the provisions relating to them should be introduced. I was not entirely convinced by his argument. Society is changing and the numbers involved would be low, although they may increase in future—I do not have a crystal ball so I do not know. Only a small group of people are involved and their situation is very similar to that of adoptive parents, so I hope that it can be reconsidered in a future review. I accept that we cannot do everything at once.

We have heard about the impact on business. That is a relevant consideration. Business is in many ways the lifeblood of the nation—we need business to give employment, to create wealth—and we must be careful of the impact. Again, we must see how that beds in over the years.

It is unfortunate that new clause 1 was not passed, because it would have allowed some of the administration to be transferred to the Inland Revenue. Again, that issue may have to be reviewed, because of the impact on small businesses. Those of us who have run small businesses know what it is like to deal with both the business and the huge amount of associated red tape and regulation.

Family-friendly hours are important. If Ministers wish to push that issue further forward, I make the small suggestion that they should have a chat with the Leader of the House to see whether he could align recesses more with school holidays in Scotland and Northern Ireland, as that would help many hon. Members considerably—just a quick, self-interested suggestion.

The other part of the Bill to which I give a warm welcome is the right to request flexible working. Although the right is fairly restricted—it is only a right to request—it is an important step forward. I had a meeting with carers in my constituency last Friday to discuss the report, "Care 21: Exploring the Future of Unpaid Care in Scotland", which has been commissioned by the Scottish Executive. The phrase "unpaid care" gives hon. Members an idea—

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Order. I appreciate what the hon. Gentleman is saying, but I ask him to confine his remarks to the Bill.

Michael Weir (Scottish National Party, Angus)

I am coming back to the Bill, Madam Deputy Speaker, but I take your admonition.

My point is that that report impinges on what is happening in the House in the context of the work of the Department for Work and Pensions and employment regulations. By introducing such regulations, we are giving carers the option to seek flexible working. Many carers of disabled or elderly relatives find that they end up having to give up work, because there is no such flexibility. That often puts them into a cycle of benefit dependency and poverty. We are taking the first step to change that by giving carers much more flexibility. That is very welcome.

All in all, we strongly welcome this very good Bill, which will provide a good way forward. I hope that changes in future reviews will extend the legislation even further, because it is important and I welcome it.

Peter Bone (Conservative, Wellingborough)

A family-friendly Bill is bound to be welcomed by Conservative Members, and I certainly do so. This is the first time that, as a new Member, I have had the pleasure of seeing a Bill pass through all its stages in the House of Commons, and I do not think that people outside the House realise the amount of scrutiny and work involved and the give and take in which the Government have seen fit to take part with the Bill. That has been impressive, and I welcome it.

Just two points concern me. My hon. Friend the Member for Epping Forest (Mrs. Laing) mentioned her four-year-old. I have a five-year-old, and one great thing about the House is the Parliament Channel, so that he can see daddy now and again.

Eleanor Laing (Conservative, Epping Forest)

At least he can wave hello to daddy. [Laughter.]

Peter Bone (Conservative, Wellingborough)

I used to run a small business, and every employee was female and either had children or could have had children. One of the things that the Government sometimes forget is that, to a small business, its employees are the most important asset. I can remember giving time off to employees, because they needed to go home because their children were sick, and providing flexible working. We did that automatically—we did not need regulation to do so—but I understand that some companies might not do so and might need regulation.

As I said in Committee, what concerns me is the cost of such regulation to small businesses. The one thing that I would have hoped that the Government would take on board, as happens in other countries, is that the cost of that regulation should be reimbursed to the employers. I think that that needs to be examined at some time in the future because it is important for small businesses.

Although the Bill will look after mothers who want to go back to work, it will have little impact on mothers who choose to stay at home to bring their children up—full-time mothers. It is a shame that there is such an omission from the Bill. I hope that the Government will examine the matter again and give encouragement to mothers who want to stay at home full-time instead of going back to work.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

With the leave of the House, Madam Deputy Speaker, I want to say a couple of things in response to the debate, albeit without eating into the hours available for the Adjournment debate on parish councils.

I pay tribute to the hon. Member for Epping Forest (Mrs. Laing) for her contribution. Indeed, I feel like awarding her a prize—perhaps a Terry's Chocolate Orange straight from the checkout of WH Smith—because she was very brave to say how much she supports the Bill, including the measures on paternity leave, and how much she disagrees with her right hon. Friend the Leader of the Opposition.

I also congratulate the hon. Lady on raising the important matter of the marriage bar, which affected her mother. It does the House a service to think back because the marriage bar lasted until the late 1960s. Indeed, trade unions that stemmed from the civil service such as my own, the Communication Workers Union, kept the marriage bar for their employees into the early 1970s. Kim McKinlay, a great woman trade unionist, had to keep her maiden name and pretend that she was not married to prevent her from being sacked from her position as an assistant secretary with the union. I say this to many young girls, including my daughters, so that they understand what women have had to do to reverse a situation that, as the hon. Lady said, meant that women had to lose their senior positions in the civil service simply because they got married.

I thank the hon. Member for North Norfolk (Norman Lamb) for his support for the Bill, and I shall respond to a couple of the points that he made. He talked about direct payments, and although the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Bradford, South (Mr. Sutcliffe), dealt with this during the debate, I noticed—I was watching it on the telly—that the hon. Gentleman said that the problem with regulatory impact assessments is that because they are produced by the Government, there is a suspicion that they are meant to reinforce their argument. We really wanted the figures to come out differently. Nothing would have pleased us more than to find that we could introduce direct payments in the way in which we and the hon. Gentleman wanted. The startling figures of £75 million ongoing costs and a £1 million saving for small businesses were correct. We must remember that we are considering setting up a completely separate duplicate structure. The payroll experts from the CBI who met representatives from Her Majesty's Revenue and Customs agreed that the figures made it difficult to proceed. I assure the hon. Gentleman and other hon. Members that we want to help small businesses. If we cannot do that through the direct payments route because of the stark figures and statistics, we shall look for other ways.

Norman Lamb (Liberal Democrat, North Norfolk)

Would those other ways perhaps include adjusting the percentage repayment for statutory maternity and paternity pay—

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Order. I am afraid that I will have to ask the hon. Gentleman to take that up with the Secretary of State at a more appropriate time because the matter is not included in the Bill.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

The hon. Member for North Norfolk also talked about full consultation on hours and whether four weeks' paid holiday would be additional to eight bank holiday days. We shall consult carefully on that and on whether we should phase the introduction.

My hon. Friend the Member for Cardiff, North (Julie Morgan) made a good speech. She and the hon. Members for Angus (Mr. Weir) and for North Norfolk talked about extending the right to request. If we look at what is happening in British workplaces, we see that the fact that parents of children under six and disabled children under 18 have the right to request flexible working means that employers, in complying with those requests, are seeing the benefit of flexible working in general. As the hon. Member for Wellingborough (Mr. Bone) pointed out, if employers were not doing that before, they are now saying, particularly in small businesses, that they ought to make flexible working available to all their staff because they see the benefits.

We need to examine the matter further; we said in our election manifesto that we would do so. We should recognise that the whole culture in the workplace is shifting, and it will shift even further when the age discrimination legislation comes in later this year and people have the right to request to work after 65.

I thank my hon. Friend the Member for Tooting (Mr. Khan), who reminded us how far we have come since 1997. I thank the hon. Members for Broxbourne (Mr. Walker), for Angus and for Wellingborough for their considered responses. This has been a tremendous scrutiny process.

Finally, I thank my hon. Friends the Members for Bradford, South and for Sheffield, Heeley (Meg Munn). I am lucky indeed to have two such talented Ministers in my team. The praise that they have received from both sides of the House is testament to their skill. With that, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read the Third time, and passed.