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Clause 9

Volume 77: debated on Thursday 18 April 1985

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Period Of Entitlement

I beg to move amendment No. 9, in page 9, line 37, leave out 'any' and insert 'all'.

With this it will be convenient to take Government amendment No. 10 and amendment No. 11, in page 9, leave out from line 41 to line 7 on page 10.

Amendments Nos. 9 and 11 make slightly different points. Amendment 9 is another of these amendments where one bungs down any old thing to raise an issue. Through it, I am seeking to clarify the assurance given to me in Committee at various stages by both the Under-Secretary and the Minister for Social Security. It was to the effect that, although statutory sick pay is not payable over the same number of individual days as sickness benefit used to be, nevertheless the same period of time that would be involved in the 168 days of sickness benefit would be covered by days of statutory sick pay. That would be a smaller number of days although they would cover the same period of weeks, because there would be no difference in the period of time that enabled one to draw invalidity benefit as between sickness benefit and statutory sick pay. I hope that I have not made that too confusing. Both Ministers assured me that it was the Government's intention that there should be no such differences, and that the Bill would allow that.

On a number of occasions, and from a number of different quarters, I have had representations from organisations, trade unions, charities and people who deal with this sector to say that, whatever the Government's intention, the Bill does not allow that. Once again, I ask the Minister and the Department, which, in all charity, has sometimes, as one can see from all these amendments, not got the drafting right, to look at this issue again because, while the Government may be convinced of what the Bill says, nobody else is.

Amendment No. 11 raises a different point, but one that we wish to raise again with the Minister. It concerns the way in which the statutory sick pay is treated. Here again, there is some difficulty. The argument that the Minister puts against deleting this clause, as we wish to do because that would remove a number of anomalies, is twofold. First, it is because people should arrive at invalidity benefit in the same way, and second it is to do with whether statutory sick pay should be treated as earnings or benefit.

It is possible and logical to make a case for treating statutory sick pay as earnings, or to make a case for treating it wholly as a benefit. Moreover, it is not possible and logical to treat it as earnings on one occasion, when it is advantageous for the Government to do so and disadvantageous to the claimant, and to treat it as benefits on another occasion when it is advantageous for the Government to do so and disadvantageous to the claimant. The Government consistently do that.

We wish to press the point and to ask the Minister to look again at deleting this clause. We dealt with the attachment of earnings earlier in the debate, and the Under-Secretary advised me that it was not right or proper to make changes in the Law Reform Act. The Department in that case advised that statutory sick pay should be treated as earnings. We are anxious to help the Government to achieve consistency in their treatment of this payment.

The Minister also argued that it is a matter of equal treatment that people should arrive at the invalidity benefit under the same circumstances, whatever the circumstances of their previous illness. However, they are not in the same circumstances necessarily as those who are on statutory sick pay and then, having been ill for 28 weeks, become entitled to invalidity benefit. Throughout that period, they have continued to pay national insurance contributions and perhaps tax. As they have made extra payments, it is not wholly unjust that they should have extra entitlement at the end.

We accept the Minister's argument that young people starting work may not be as effective as we thought at first, but we still believe that married women who return to work, particularly those who paid reduced contributions at one time and who have now gone back to work and are paying full stamp, will be affected. The Minister accepts that the other anomalies that we raised in Committee exist, but he does not think that they are serious enough to make it worthwhile to do anything about them. We do not accept that.

Once again, we ask the Minister to look at the principle that we raise throughout the amendments and to make sure that the anomalies that we identified in Committee are removed. That is more important than being able to say that we are treating people in exactly the same way for invalidity benefit, when they are not under the same circumstances.

Amendment No. 9 may have resulted from some misunderstanding of why the Government have tabled amendment No. 10. Our amendment is a drafting amendment, designed to avoid possible ambiguity in the existing wording. It does not affect the aim of the provision as drafted. However, we think that the amendment tabled by the hon. Member for Derby, South (Mrs. Beckett) would, taken with the provisions of section 15A(2), have the effect of disadvantaging certain young people and other recent entrants to the national insurance scheme by preventing them from qualifying for invalidity benefit. I am sure that that is not what the hon. Lady intends. I can perhaps best explain why amendment No. 9 has that undesirable effect by setting out what led us to table amendment No. 10.

Section 15A(1) enables regulations to be made to provide that days of entitlement to statutory sick pay may be deemed to be days of entitlement to sickness benefit and thus count towards the 168-day qualifying period for invalidity benefit. The regulations will spell out precisely which days of SSP can be treated in this way. The intention will be to ensure that an employee who has been sick for 28 weeks in the same period of entitlement will become eligible for invalidity benefit, subject to the requirement in the following section 15A(2) that he satisfies the contribution tests for sickness benefit.

Our advice is that the existing wording of "any days" might be construed as meaning precisely what the hon. Lady's amendment provides, that is that all the days on which there was entitlement to SSP will automatically be deemed under the regulation as days of entitlement to sickness benefit. We do not intend or want this to happen. Although in most cases all days of SSP entitlement will be deemed in this way, there will be occasions when regulations will need to provide that only part of the period on SSP will be so deemed. This is to cater for young people and recent entrants into national insurance who may only satisfy the first contribution test for sickness benefit as a result of the national insurance contribution conditions they have paid on the SSP itself. Hon. Members who have served on the Standing Committee will recall that we gave the assurance that these people would not be excluded from invalidity benefit and would be eligible for the special credits to get them on to state sickness benefit in the same way as at present. I am happy to repeat this assurance. This will be provided for in regulations.

If the hon. Lady's amendments were accepted, it would mean that some of these new entrants would not be covered for invalidity benefit because they would fall foul of the provision contained in section 15A(2) that the employee must have satisfied the contribution conditions for sickness benefit on the first of the days deemed to be days of entitlement to that benefit. He might not have satisfied that test on the first day of SSP entitlement but would do so during the course of such entitlement.

9 pm

I hope that I have said enough on this extremely complex matter at the very least to persuade the hon. Lady that it is not not quite as clear-cut as she sought to suggest and to make it clear also that the Government are acting with good will and with intended generosity in the prosposals which they have put forward. I think I have now spoken to amendment No. 10 as much as I need to in the course of speaking to amendment No. 9.

In regard to amendment No. 11, I considered carefully the extremely well set out and argued letter that the hon. Lady sent me recently and to which I responded as fully as I could two or three days ago. There is some difference of opinion between us about the importance of different considerations. She has raised a number of possible difficulties on one side of the balance. I have emphasised our concern to ensure fair play between those in receipt of sickness benefit and those in receipt of statutory sick pay on the other side of the account.

I am not at the moment persuaded any more than I was when I read the hon. Lady's letter that we should change the legislation, but I would not rule out considering a change at some time in the future if she can persuade me that she is right and I am wrong. As she has come close to doing so on at least one issue that we discussed earlier this evening, she should not lose all hope. I am afraid I cannot more completely fulfi I those hopes at this point in our discussion.

I may not have made myself completely clear. Amendment No. 9 was tabled before I had the opportunity to see amendment No. 10. In my opening remarks I suggested that amendment No. 9 might be defective but that I simply wanted to use it as an opportunity to raise the issue of whether the Bill was correctly drafted with regard to the way in which SSP days would be considered. I hope that the Minister is right. No doubt if people still think that the Bill is not adequately drafted they will come back to both of us on that point. Having said that, and recognising that on amendment No. 11 we continue to differ, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 10, in page 9, line 37, leave out 'any days' and insert
'such days as may be prescribed'.—[Mr. Newton.]

I beg to move amendment No. 12, in page 10, line 12, leave out 'larger'.

With this amendment it will be convenient to consider amendment No. 13, in page 10, line 12, after 'weeks', insert 'not less than 13'.

These are simple amendments by which we hope to extend the linking period in statutory sick pay. Even if the Minister cannot accept the amendments, which we believe have merit in that they would restore the original linking period of 13 weeks which was in force before the Social Security Act 1980, I hope that he will at least be able to tell us what the current position is with regard to the Department's proposals. So far as I recall, the Department in its consultation paper believed that we should retain the existing eight week linking rule, but it had not put that in the Bill in case it received representations that the period should be reduced.

We sought in Committee, and we do so again now, to encourage the Government to retain the period of eight weeks and preferably to consider restoring the 13-week period. Certainly they should not reduce the period, as I believe some people might have been urging them to do.

Over the period that the Government have been in office they have made a substantial number of reductions and cuts in sickness and invalidity benefit entitlement. I can think of the abolition of earnings-related supplements, the cuts in industrial injury and sickness benefit, the abatement of 5 per cent. in sickness benefit and the phasing out of additions for children. None of those has been restored.

To go back to the 13-week linking period, which was of assistance to people in linking separate periods of sickness, would mean that people would less often have to serve fresh waiting days. There would be a substantially shorter period before people who have frequent spells of sickness would become entitled to qualify for invalidity benefit.

This would be a beneficial change. The Government have made so many disadvantageous changes that they could well make at least one beneficial change. We hope that they will use this opportunity to tell us that they do not intend to make a further reduction in the period in the legislation.

I am sorry that the hon. Lady referred to the disadvantageous changes that she alleges the Government have made when she seems to have spent quite a lot of time this evening congratulating my hon. Friend the Minister of State on the generosity shown by the Government on some matters.

We accept that there is a strong case for extending the linking period from the present two weeks. We do not think a 13-week period would be justified. As the hon. Lady knows and as my hon. Friend the Minister of State said in Committee, the Government have a strong preference for eight weeks. It is important to consult carefully. The consultations which are continuing should not pre-empted. I am not in a position to say more at present than that we are still in consultation with the appropriate parties. We certainly believe that the 13-week period proposed in the amendment would not be justified.

I must, of course, accept that the Minister was unlikely to accept the restoration of the 13-week period. But I am sorry that he still cannot tell us whether the Government intend to stick to eight weeks. I hope that they will do so. However, I beg to ask lease to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment No. 14, in page 10, line 14, at end insert—

  • '(4A) The following subsection shall be inserted after subsection (4) of section 3 of that Act (period of entitlement)—
  • "(4A) The Secretary of State may by regulations —
  • (a) specify circumstances in which, for the purpose of determining whether an employee's maximum entitlement to statutory sick pay has been reached in a period of entitlement as between him and an employer of his, days falling within a previous period of entitlement as between the employee and any person who is or has in the past been an employer of his are to be counted; and
  • (a)direct that in prescribed circumstances an employer shall provide a person who is about to leave his employment, or who has been employed by him in the past, with a statement in the prescribed form containing such information as may be prescribed in relation to any entitlement of the employee to statutory sick pay."..
The amendment arises out of one of the proposals contained in the consultation paper that the Department issued to employers in employees' interests at the end of last year. It enables regulations to be made to define the circumstances in which periods of entitlement to SSP with different employers are to count as one in calculating the employee's maximum entitlement of 28 weeks. It also enables the regulations to lay down the circumstances in which the employer is required to issue to his employee, at the time he leaves, a statement about the period for which he had entitlement to SSP.

I commend the amendment to the House.

Amendment agreed to.

I beg to move amendment No. 15, in page 10, line 26, at end insert —

  • '(6) Leave out section 7(1) to that Act and insert —
  • "(1) Statutory Sick Pay shall be payable by an employer at the weekly rate of —
  • (a)£54.80, in a case where the employee's normal weekly earnings under his contract of service with that employer are not less than £68;
  • (b)£46 in a case where those earnings are less than £68, but not less than £50.50;
  • (c)£37 in any other case.".'.

With this, it will be convenient to discuss amendment No. 16 in, page 10, line 26, at end insert —

'(7) In section 26(2) of the Act leave out "in the relevant period" and insert "over the 24 weeks prior to the beginning of the period of illness or the eight weeks so prior, whichever gives the higher sum.".'

In these amendments we seek to improve the rates of statutory sick pay and to find out whether it is possible to get the Government to agree to changes in the way that normal weekly earnings are assessed.

I have already mentioned the disadvantageous changes. I am sorry if I hurt the Under-Secretary of State's feelings, but the Government's record is there for all to see. The Government have made disadvatageous changes in sickness and invalidity provision. As a result of those changes, people have lost quite substantially in the recompense available to them when sick. Therefore, we thought that we now had a good opportunity to raise the issue of the inadequacy of rates of statutory sick pay. We recognise that there are people who are low paid or who are single and who might, in some circumstances, be better off under SSP than under sickness benefit. But unfortunately those who are likely to be worse off are those who are most vulnerable, or those with families.

In our amendment we suggest that the top rate of SSP should be raised to the married rate of invalidity pension, and we have made similar adjustments in the proposal for the other levels of statutory sick pay. Amendment No. 16 refers to the assessment of normal weekly earnings. Although I do not expect much change from the Minister over amendment No. 15, I hope that he will agree to consider the issues raised in amendment No. 16. What was perhaps not wholly desirable but liveable with in terms of statutory sick pay extending over eight weeks becomes much more difficult and an injustice when dealing with statutory sick pay paid over 28 weeks. As things stand, the level of statutory sick pay to which one becomes entitled is governed by normal weekly earnings. They are worked out according to what someone receives in the eight weeks before he becomes ill. At any time there will be occupations that involve people being on retainers. For example, dinner ladies in the school meals service may spend a substantial period of time on retainers, when their earnings are not only nowhere near their normal level, but very low indeed. As we move more and more towards short-time and part-time working, there will be greater variations in the level of earnings that someone might receive immediately before becoming ill. The situation is not very good at the best of times, but given that we are talking about someone who might be receiving this level of statutory sick pay for six months or for the full period before he becomes entitled, say, to invalidity benefit, it is a serious matter.

I understand that the TUC has put forward a proposal involving a perhaps more sensible period of 24 weeks that would provide a fairer basis for calculating normal weekly earnings. But we thought it right to put forward either eight or 24 weeks, depending on which is the more beneficial figure for the claimant. That would make a change from the way that most things work under the Government, and it would be a beneficial change too. I hope that the Minister will look seriously at this issue because it is causing problems now and the Bill will cause much more serious problems.

Amendment No. 15 proposes that there should be an increase in the statutory sick pay rates from April 1986 of over 23 per cent. The rates set out in section 7(1) of the 1982 Act were carefully selected so as to ensure that at the start of the scheme employees as a group would receive broadly the same extra income from the SSP scheme after the deduction of tax and national insurance contributions as they would have received by way of sickness benefit had that been taxed. I estimate that the hon. Lady's proposals would result in an additional cost of about £100 million in a full year. These changes in the rates would disrupt the financial relationship between statutory sick pay and sickness benefit and would mean that we were treating differently people in much the same situation when sick for short periods.

As for the second amendment, I believe that it would have unfortunate effects that were not intended. We believe that eight weeks is a reasonable period. It is long enough to give a fair indication of what average earnings are but it is not so long as to put any further and onerous problem of accounting on to the employer. If employers are to stand a chance of operating the scheme correctly and if employees are to get the right amount of money, it is a consideration that has to be borne in mind. I believe that the eight week period is entirely justified. The 24-week period would have undesirable effects, including the imposition of an unnecessary burden upon employers.

I cannot accept the Minister's argument. He cannot properly have considered the effect on these groups of workers. Although there may not be many of them, the effect upon them will be serious when they find themselves in circumstances in which they are given a retainer for a period of weeks. However, since we are unlikely to make any headway with the Minister on this point, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.