Growth and Infrastructure Bill
Debate between Baroness Wheatcroft and Lord Adonis
Baroness Wheatcroft
My Lords, my noble friend Lord King mentioned a degree of embarrassment at finding himself in this situation, which I certainly share. At least those of us who are opposed to this legislation are not alone. The Financial Times, that great bastion of employee rights, ran a leader the day after the last debate in this House in which it said that this legislation contained,
“little to like and a lot to fear”,
and it advised strongly against progressing with it, saying that if this clause went ahead,
“employee share ownership may begin to be perceived as a shortcut to strip workers of their rights”.
That is not what any of us in this House want to see. We know that employee share ownership is a good thing. We want to support the Government in everything they can do to spread it, but this clause is not the way. The number of ways in which this clause could backfire has been enumerated this afternoon. Not much attention has been paid to the potential tax avoidance involved. It has been mentioned, but the Office for Budget Responsibility itself put a label of around £1 billion on the costs that might be in there. Is that really what the Government want to see happen? How is that compatible with the current agenda of trying to cut back, quite rightly, on tax avoidance?
It is the way in which this clause could detrimentally affect the idea of share ownership that causes me the biggest problem. It might not be big companies that will use it, and it is a very strange defence of a piece of legislation to say that hardly anybody is going to use it. I have heard that rather often and it seems an odd way to go about government business. There will be unscrupulous companies below the FTSE 250 that see this as a way of getting the labour force that they want on the least good terms. That is not going to encourage good employee relations. We want to do what my noble friend Lord Deben referred to and encourage the feeling that we are all in this together. If we are to go for growth, getting that sort of motivation will be important. Depriving people of basic rights is not the way to do that.
There is a potential exception for start-ups, where everybody starts off in the same boat and you do not risk this idea of a two-tier scheme of employees. Small companies probably need a bit more flexibility. They already have two years in which they do not need to worry about tribunals or redundancy, but they might need a little longer than that. In that case, perhaps we might ask my noble friend the Minister once more to see whether he can persuade the other place and the Government that this clause should be very narrowly restricted in its implications and application. As a clause that creates something open to any business it is potentially very dangerous.
We have also heard about the problems of valuing the shares. In his valiant attempt to defend this proposal, my noble friend Lord Flight said that we might well reach a stage where the Government have to stipulate the price-earnings ratio on which these shares would be sold. This is not the role that I wish to see my Government undertake. It is fraught with problems. This entire clause needs another rethink, even at this late stage.
Lord Adonis
My Lords, the noble Viscount has been a Minister for a short time only, but I think I speak for the whole House in recommending that he be promoted to an earldom for services to masochism. We have now debated this proposal for twice as long as the House of Commons saw fit to devote to it last week. In the hours of debate in this House, there has been one Member only, besides the Minister, who has wholeheartedly supported this proposal, and we pay great tribute to him: the noble Lord, Lord Flight. Even he sounded a note of equivocation today, saying that he hoped that the many problems that there were still with the scheme could be “ironed out” while it was being implemented. This is not good advice to legislators on how we should conduct our business.
However, I am grateful to, or perhaps sorry for, the noble Lord, Lord Flight—because it weakened his case—that he did not repeat the argument that he used last time, which was that we did not need worry about the £1 billion of potentially lost tax revenue, to which the noble Baroness referred. He said:
“The Treasury will therefore not lose tax revenue as a result of the tax arrangements; it will merely not get as much as it might otherwise get”.—[Official Report, 20/3/13; col. 622.]
I am sure that is hugely reassuring to HMRC and to those of us who are loyal taxpayers and who do not need to worry about the fact that there is no money to pay for anything, because it is simply revenue that the Treasury might otherwise not have got.