Growth and Infrastructure Bill

Baroness Wheatcroft Excerpts

Tuesday 8th January 2013 Lords Chamber

[Baroness Wheatcroft]

My Lords, I will restrict my remarks to Clause 27, which has nothing to do with planning, but is an attempt to foster growth. As we have heard, it creates a new class of employee shareholders. The concept of turning workers into shareholders is not new. At one extreme is the John Lewis Partnership version, in which a business is entirely owned by its staff. There is plenty of evidence that the model works. The latest Christmas trading figures show John Lewis to have been one of the stars of the season. There are several other companies, from booksellers to jam-makers, that now follow that model. However, there are many other versions of employee shareholders. There are SIPs, CSOPs, SAYE schemes and EMI schemes. Indeed, there are so many versions of employee shareholder schemes and tax benefits that evolve around them, and so complicated are the rules surrounding them, that last year the Office of Tax Simplification decided that it had to try to bring some logic to bear on them. This year there will be legislation to tidy up the tax regime relating to these schemes. But just as these complications are being ironed out, this legislation brings us a new category of employee shareholder—the one who opts to give up most of an employee’s rights in return for stock.

I think that I understand the thinking that may have given rise to this idea. It is a wish to do away with the antiquated us-and-them attitude that still colours the difference between management and labour in some businesses. It is an effort to remove the threat of industrial tribunals and potential redundancy payments, which certainly hangs over young businesses and makes them feel unduly as if their hands have been tied behind their back. It is an effort to engender the spirit of the John Lewis Partnership in its go-getting new-business way, the sort of thing that will bring us the growth that we need.

Yet we need to look more carefully at what the clause is trying to do and whether it will have the desired effect. As it is currently drafted, a gift of shares with a minimum value of just £2,000 would be sufficient to buy out a package of employment rights. Imagine, if you will, a worker with family responsibilities bounding home to tell his partner that he has signed away any rights to redundancy for a package of shares that, if he is lucky, may be worth something one day but could eventually be worthless. I am reminded of that Tom Lehrer song where he bumps into Walter Raleigh, who is trying to explain to him about tobacco. “What?”, he says; “You do what?”. If someone goes home and announces that they have sold their rights for a few shares, that is the sort of response that they might get—“What?”.

We need to look again at this proposal. First, if companies wish to take advantage of this new employee status, it should be an annual commitment between employer and employee. Agreeing an annual payment of shares in lieu of employment rights may enable workers to build meaningful stakes in businesses, but that cannot be a one-off transaction, a small payment to buy—potentially—many years of servitude. Secondly, it is wrong to make part of the deal sacrificing the right to demand training. If the aim of this measure is to get everyone working towards the same end, surely an acceptance of the desirability of training is key. We need our businesses to be skilled; we need the workforce all to be aiming to be the best at the job, constantly adding to their abilities and skills, not signing away their rights to more training but, on the contrary, begging for more and more, and prepared to give their time to learn.

The object of this clause should not be to create a new underclass of employee shareholder but to generate a wider concept of ownership. It should be truly voluntary. I have listened to the qualms raised by the noble Lords, Lord Adonis and Lord Monks, and the noble Baroness, Lady Brinton, but I hope and trust that my noble friend will put their minds, and mine, at rest. This provision must not be allowed to be a bullies’ charter. It would fail in its ultimate aim if it were allowed to be used that way, inflicted on an unwilling workforce. There should be no compunction on those on jobseeker’s allowance to accept an employee/owner job. I hope that many of those would like the idea of ownership and be tempted to take that job, but we should not force them to do so. We need to find a way to make the employee/owner option an attractive one, so while some rights are sacrificed, others should be conferred—perhaps membership of a works council, for instance.

I do not like to see legislation wasted, but in its current form Clause 27 runs the risk of dying on the vine. Yet there is no need for that. With some effort, the clause could be turned into a worthwhile extra weapon for employers to use to help them build businesses with a loyal, dedicated workforce that saw itself as on the same side. We need to look again at Clause 27. As it is, it will not achieve anything. However, I hope that the Minister will see it as a beginning rather than an end.