Baroness Jones of Whitchurch (Lab)

My Lords, we have had a really good debate on these issues, and I hope that I can do justice to all the questions and points that have been raised. I begin with Amendment 75, tabled by the noble Lords, Lord Sharpe and Lord Hunt, on independent reviews into the effects of SSP reforms on small and medium enterprises. As noble Lords will be aware, the Government have already undertaken a regulatory impact assessment, which was published on 21 November 2024 and can be found on GOV.UK. This considered the likely direct business impact of the SSP changes, including on small and medium enterprises. In the regulatory impact assessment, the Government estimated that delivering these measures will cost businesses a modest £15 extra per employee. I assure noble Lords that the Government remain committed to monitoring the impact of these SSP measures. We intend to conduct a post-implementation review of the measures in the Employment Rights Bill within five years of implementation. Additionally, the Department for Work and Pensions conducts regular employer and employee surveys and will continue to do so, providing further monitoring of the impact of the SSP changes on a range of employers and employees. I draw attention to the Keep Britain Working review. We asked Sir Charlie Mayfield to lead this independent review, which will consider recommendations to support and enable employers to promote healthy and inclusive workplaces, support more people to stay in or return to work from periods of sickness absence and retain more disabled people and people with health conditions. While I am speaking about the variety of illnesses that people on sick leave incur, let me address the issue of mental health absences, which was raised by the noble Baronesses, Lady Cash and Lady Smith, the noble Lord, Lord Sharpe, and my noble friend Lord Davies. Our proposals have to be seen in the wider context of the Bill. The Bill is intended to improve the experience of employees at work, so measures such as flexible working, guaranteed hours and protection from harassment could—we believe will—reduce stress at work, potentially leading to fewer incidents of burn-out and better employee mental health, and therefore fewer related absences. For us, that is an important challenge that we intend to monitor. Amendment 73, in the name of the noble Baroness, Lady Coffey, would introduce a rebate scheme to reimburse SMEs for the cost of SSP for the first four days, although I think she clarified that she meant three. I thank her for her interest in SSP, and of course I appreciate her extensive knowledge and experience in this area, as a former Secretary of State for Work and Pensions. As previously mentioned, regarding waiting days, the changes we are making to SSP will cost businesses around an additional £15 per employee, a relatively modest amount in comparison with the benefits of reduced presenteeism and the positive impact that this will have on our lowest paid members of society. As the noble Baroness may recall, we previously delivered SSP rebate schemes such as the percentage threshold scheme. This was abolished due to SMEs underusing it, and feedback that the administrative burden was complex and time consuming. So I suggest that a rebate scheme that covered only the first three days of sickness and absence would also be quite administratively burdensome, both for businesses to claim and for the Government to process. Previous SSP rebate schemes also did not encourage employers to support their employees. We know that employers having responsibility for paying sick leave helps maintain a strong link between the workplace and the employee, with employers encouraged to support employees to return to work when they are able. Sticking with the theme of rebate schemes, Amendment 74, from the noble Lord, Lord Fox, would introduce an SME rebate scheme for the whole duration of sickness absence. I reiterate the points I made earlier about the limited cost to business as a result of SSP changes and the experience of previous rebate schemes. I agree with the noble Baroness, Lady Lawlor, that we have moved a long way from the Beveridge system of social insurance. The costs and the mechanisms are very different now. A rebate for the full cost of SSP could cost the Government up to £900 million a year. I do not believe that a rebate scheme is the best way to support our SMEs at this time. We will be considering the findings of the aforementioned Keep Britain Working review, which is expected to produce a final report with recommendations in the autumn. The noble Lord, Lord Fox, challenged me to keep talking about this, and of course I am very happy to do so. Amendments 71A and 71B were tabled by the noble Lords, Lord Sharpe and Lord Hunt. As they may be aware, the Government consulted on what the rate of SSP should be for those who currently earn below the lower earnings limit. There was no clear consensus from stakeholders on the percentage. The Government believe that the 80% rate strikes the right balance between providing financial security to the lowest paid employees when they need to take time off work to recover from illness and limiting the cost to business. As the noble Lord, Lord Fox, said, if we are not careful, we will be penalising the very poorest in our society. Crucially, the total amount saved by business, if the rate were set at 60% compared to 80%, would be around £10 million to £30 million per year. That is about a £1 difference per employee per year, or less than 0.01% of total spending on wages annually by businesses. On the noble Lord’s Amendment 71A, which would set the rate at 60% for the first three days of a period of incapacity for work, the amounts potentially saved by business become even smaller, with the difference in cost being a matter of pennies. Given the minimal savings for businesses, the complexity for employers in administrating different rates is difficult to justify.