rose to move, That the Grand Committee do report to the House that it has considered the Working Time (Amendment) Regulations 2007.

The noble Lord said: Over the past decade the Government have put in place a framework of employment rights that provides decent minimum standards in the workplace while ensuring labour market flexibility and competitiveness. In 1998, we introduced a statutory entitlement to four weeks’ paid holiday for the first time, yet we are aware that some employers count time off for bank and public holidays against that four-week entitlement. We believe that that is unfair, and in our 2005 election manifesto we proposed to address this anomaly by increasing the current four-week entitlement to 5.6 weeks—from 20 days to 28 days—for those working full time and pro rata for part-time staff.

These proposals will be good news for the 6 million workers who will benefit from increased holiday as a result, particularly the low-paid, women and part-time workers who currently receive the least holiday. The benefits of holidays are clear: time away from the workplace reduces stress, increases quality of life and supports family life. However, we recognise that proposals that benefit so many will impose additional costs on businesses that currently give the bare minimum holiday entitlement. We have proposed a number of measures to help employers adjust their practices to comply with these regulations. First, we propose that the increase will be introduced in two phases with a holiday entitlement rising to 24 days this October and to 28 days from April 2009. We had intended to introduce all the additional holiday by October 2008, but on further consideration of the costs, particularly for the health and social care sector, we have delayed it until April 2009.

We are aware that some employers, particularly in the social care sector, face challenges in recruiting and training staff and are required by statute to maintain certain staffing levels. The increase in holiday entitlement may place particular strain on employers and staff in providing cover for the additional holiday, and we therefore propose a transitional period until April 2009 during which time payment in lieu of the additional holiday will be permitted. From April 2009, workers must be able to take their holiday as holiday, as our intention is to enable people to have more time away from the workplace rather than to receive additional payment instead.

Most employers already give their staff 28 or more days’ holiday a year. During the extensive consultation process on these changes, such employers expressed concern that they would face uncertainty and administrative costs as a result of these regulations, even though they may already comply. We are clear that we want to support such good employers while protecting vulnerable workers. We have therefore proposed an exclusion to these regulations. Where employers already provide staff with 28 days holiday, pro rata for part-timers, they will be excluded from the regulations. This incentive for early compliance will remove an uncertainty or administrative burden from good employers resulting from this regulation, while ensuring that vulnerable workers get the benefit of the increased entitlement.

In developing these proposals, we have consulted widely with employers and workers. These measures, along with the detailed guidance we will be providing for employers and workers shortly, balance the demands of workers for a better quality of life with the needs of business for a productive and motivated workforce. The proposals have been welcomed by the TUC and employer organisations such as the CBI, the Institute of Directors, the British Chambers of Commerce and the Engineering Employers’ Federation. A modern economy can thrive only by adopting employment practices that recognise the central contribution made by individual workers in the business’s success and rewarding their efforts in such a way that demonstrates that they are valued and respected.

These proposals deliver further fairness at work while advancing our economic competitiveness. I commend the regulations to the Committee.

Moved, That the Grand Committee do report to the House that it has considered the Working Time (Amendment) Regulations 2007. 20th report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

We generally welcome the regulations, as we have heard that they amend the Working Time Regulations 1998 to introduce a statutory entitlement to eight days’ additional paid annual leave, in addition to the four weeks’ annual leave entitlement already provided by the regulations, subject to a maximum statutory entitlement of 28 days. As my honourable friend in another place has already said, striking the right balance between family and working life is vital to the interests of the employer and the employee. In families where, often, partners are both working, holiday time is essential for people not only to recharge their batteries, but to have quality time with their children. For employers, staff are often the most important asset. Therefore, ensuring that staff are properly rested makes good business sense. We have seen in the regulatory impact assessment that stress is one of the critical drivers of sickness-related leave in this country. I suspect that we could debate the cause and effect between this measure and reducing such leave, but anything that helps to reduce sickness-related leave and boost productivity has to be welcome.

Working hours are generally a matter to be agreed between employers and employees. Britain must retain its opt-out from the working time directive. To put it on the record, employers across the UK should see and take advantage of the benefits of offering flexible employment. Government should not be regulating to require flexibility but, rather, deregulating to permit it.

Like the noble Baroness, I welcome the regulations. As somebody who has sat through the debates on working time and related matters since I first took this opposition job in 1997, I must comment on the remarkable change in the atmosphere of these debates. It is to the credit of the Government that they have changed the culture, with an acceptance by all three political parties that these changes and the protections given to workers are essential.

Reading the Committee deliberations in another place—which, as we all know, tends to be much more confrontational than this House—I thought that the way that all three political parties, particularly the Conservative Party, have now completely changed their attitude to these issues was quite remarkable. That is welcome for the good of the country, and the Government need to be congratulated on sticking to their guns in this area.

The regulations, which provide for four weeks holiday, amend the 1998 regulations. When they were brought in, no one assumed that employers would take the view that bank holidays should be included in the holiday entitlement, particularly for low-paid workers. I have seen an estimate that roughly 6 million workers—particularly the lower paid—suffer having bank holidays deducted from their statutory requirement for holiday. For that reason alone the regulations are welcome. By comparison with most of our competitors, we do not have as many bank holidays: we have eight days, whereas many of our competitor countries have 14 or 15. Indeed, the United States of America will have a major holiday tomorrow. So that provision is welcome.

I also welcome the fact that it will be made more difficult for employers to force employees to take payment in lieu of holiday, which is another reform in the regulations on which the Government should be congratulated. I very much support the regulations.

I am most grateful to the noble Baroness, Lady Wilcox, and the noble Lord, Lord Razzall, for their support and enthusiasm for the regulations.

On Question, Motion agreed to.