Industrial and Mining Towns

Debate between Lord Flight and Viscount Younger of Leckie

Thursday 13th February 2020 Lords Chamber

[Viscount Younger of Leckie]

Absolutely—that will definitely be looked at. I make the point that, as the noble Lord will know, we are publishing a White Paper and setting out our strategy to unleash the potential of our regions. This will look at further devolution across England and levelling up powers, and will also include liaising and engaging with local businesses and getting their buy-in to what we plan to do.

[Lord Flight (Con)]

My Lords, are the Government aware that SMEs in the north of England are already doing better than those in the south? Exports are up something like 50% on average over the last two years; a whole lot of incredibly good statistics have been confirmed by the Office for National Statistics. So we are on the right track already.

[Viscount Younger of Leckie]

Yes, and, indeed, many SMEs have started up after the changes in some of the big industrial companies. The LEPs have also played their part; that informs investment decisions and drives economic growth. As I say, the White Paper will explore how we can align future local growth with further devolution and the institutional reforms entailed.

Sharia-compliant Student Finance

Debate between Lord Flight and Viscount Younger of Leckie

Thursday 25th July 2019 Lords Chamber

[Viscount Younger of Leckie]

I have been pressed on that matter before and I am unable to give a date for the review. But on the tuition fees process and system, I have said that we will announce the results of the Augar review at the spending review and this, of course, is included in that. So, it makes sense to make the announcement when we are ready to do so and to give an update at that point.

[Lord Flight (Con)]

My Lords, might the delay result from it being too difficult to find a substitute for interest to match the two student loan models? If there is not something similar, it can be argued that one side or the other is benefiting more.

[Viscount Younger of Leckie]

It is helpful to hear that from my noble friend. It is a complex issue, but we have made progress. As I said earlier, we have legislated to make the introduction of the system possible but we need to work through these complex issues. There is no point rolling the system out when it is not fit for purpose.

Unpaid Work Experience (Prohibition) Bill [HL]

Debate between Lord Flight and Viscount Younger of Leckie

2nd reading (Hansard): House of Lords
Friday 27th October 2017 Lords Chamber

[Viscount Younger of Leckie]

I will write to the noble Lord about the specific figures relating to interns. I sought to make the point in general that in having the naming scheme, when the names go up on the board or when they are broadcast, particularly in local newspapers, it is damaging in itself. It is perceived as being more damaging and obviously can sully the reputation of employers in terms of both recruitment and the products that they are selling.

We also recognise that we have a responsibility to make sure—

[Lord Flight]

My Lords, I thank my noble friend. Can he clarify a point? Is he effectively saying that in the future interns will count as workers? The problem, as I understand it, is that of greyness in the area.

[Viscount Younger of Leckie]

That is true, and the point I am making is that the existing legislation does allow for a distinction to be made between who is defined as a worker and who is not. I have already made it clear that there are employers who try to get around this, a point which has been made by other noble Lords. However, the law is clear: if there is evidence to show that an individual can be defined as a worker in that work is being done that is not work experience, actions can be taken.

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[Viscount Younger of Leckie]

The description is that any complaint goes to HMRC and, if a complaint has been made, a distinction has to be made and HMRC has to take a view on whether meaningful work is being carried out—in other words, a nine-to-five day is being done, not just work experience where somebody is looking over somebody’s shoulder. That distinction has to be made. Again, I make the point that we could go down the route of having a new definition under the heading, “Work Experience”, but that would lead to all kinds of unintended consequences.

[Lord Flight]

I am sorry to bother noble Lords again. The fundamental issue seems to be whether the Government want interns to get paid. We all know what interns do. They are not workers because they are not on contract; but, if they are not paid, the problems we have all talked about arise.

[Viscount Younger of Leckie]

We are not taking a view on that. We are saying that there is no definition of work experience and it is left for others to decide whether the work is proper work that deserves remuneration or whether it comes under the description of somebody coming in for a couple of days and looking over somebody’s shoulder.

Child Welfare

Debate between Lord Flight and Viscount Younger of Leckie

Wednesday 5th July 2017 Lords Chamber

[Viscount Younger of Leckie]

My Lords, poverty is something that the whole House needs to take seriously, as we do. We are very aware that despite record levels of employment, there are still around 1.3 million children in workless households across the UK. This is something that we are really looking to address. We need to ensure that children are in households where work gets them out of poverty.

[Lord Flight (Con)]

My Lords, is the Minister aware of the excellent work being done by the charity Malachi in the West Midlands in addressing the problems of families and children and the lack of help they have often had from the Birmingham local authority?

[Viscount Younger of Leckie]

It is helpful to know about that. I am not aware of it but I will certainly look at it after this session.

Universities: European Union Students

Debate between Lord Flight and Viscount Younger of Leckie

Wednesday 15th March 2017 Lords Chamber

[Viscount Younger of Leckie]

I would be delighted to take up the noble Lord’s offer and visit my alma mater again. I am aware of the concerns expressed not just in Scotland but south of the border. Again, my honourable friend in the other place is taking note of all the concerns expressed.

[Lord Flight (Con)]

My Lords, the last figure I saw of the estimates of student loans likely to have to be written off was a pretty horrific £45 billion. What is the Government’s present estimate?

[Viscount Younger of Leckie]

I will need to write to my noble friend to give that figure.

Living Wage

Debate between Lord Flight and Viscount Younger of Leckie

Monday 9th June 2014 Lords Chamber

[Viscount Younger of Leckie]

The noble Lord makes some good points about enforcement. We are taking strong action on this front. He will be aware that 25 other firms have been named and shamed in the past few days. The case of the Premier League football club that the noble Lord raises was dealt with under the old naming policy, pre-October 2013, and did not meet the financial criteria of £500 per worker so could not be considered for naming.

[Lord Flight (Con)]

Does the Minister accept that there is an element of chicken and egg in the comments of the noble Lord, Lord Haskel, and that it is actually since the Labour Government brought in tax credits that productivity has been flat, wages have not risen in real terms and the situation has been much the same as in the early nineteenth century when wages were subsidised?

[Viscount Younger of Leckie]

The noble Lord makes a good point. It is fair to say that Labour’s plan for encouraging tax breaks to encourage employers to pay the living wage applies for 12 months only and will cover less than one-third of the increased cost to the employer. Increasing the cost of employment could encourage businesses to employ fewer people. Labour’s estimates of the cost of this policy ignore these issues, and the party has considered only potential benefits to the Exchequer.

Economy: Manufacturing

Debate between Lord Flight and Viscount Younger of Leckie

Monday 10th February 2014 Lords Chamber

[Viscount Younger of Leckie]

I will need to write to the noble Baroness about that specific example, but I hope she will be greatly encouraged by the huge amount of work going into progressing the UTCs. There are 50 of them, creating 30,000 opportunities for young people to train as engineers and scientists for the future. These are the skills that we need to build up.

[Lord Flight (Con)]

My Lords, I wish to ask the Minister about the definition of manufacturing versus services. A lot of the new technology sector that I am aware of does not really fit into either category, and I suspect that the overall assessment of manufacturing is underassessed as a result of technical developments.

[Viscount Younger of Leckie]

My noble friend makes a very good point. Indeed, manufacturing has changed enormously. Although I do not have a precise definition for him, it is true that manufacturing includes myriad small businesses that are working very hard not just within the UK but in helping our export drive.

Growth and Infrastructure Bill

Debate between Lord Flight and Viscount Younger of Leckie

Wednesday 20th March 2013 Lords Chamber

[Viscount Younger of Leckie]

That takes me back to the question raised by my noble friend Lady Brinton. If there are too many employee shareholders to make this work, there may indeed be no room for another employee shareholder. I say again: the opportunity is voluntary and the terms are to be agreed between the employer and the employee. That is all that needs to be said. It is exactly why we are not being too prescriptive with this system. We are providing an opportunity for employers to take up this scheme and for employees to share in its risks and rewards.

[Lord Flight]

My noble friend Lord Forsyth makes a fair point. If tax is to apply, it is difficult to determine how the value of the shares in question is to be assessed, given that they may have certain characteristics. However, I will turn that point on its head, in that it is an argument for there being no tax bill at all because the problem goes away if there is none. My basic point is that common sense states that no one will be much interested in a deal whereby you give up your employment rights for just £2,500 of equity. There should be potential for much greater gain. Something like seven out of 10 smaller businesses in this country tend to fail as a result of taxation being too high and the public sector too large. The situation is not like that in Hong Kong, which is much more successful.

The equity element would be of high risk for people in SMEs. I repeat my point: it is not a question of the Government losing revenue; they will not get any revenue under the clause as it stands because not many people will take advantage of it. Therefore, the Government will not lose any revenue. If they believe in the principle, which I believe in very strongly, there has to be an attractive risk/reward ratio. To my mind, one way or the other, that requires the value of shares on which there is no tax charge to be more than £2,500, although my figures are essentially for illustration.

Growth and Infrastructure Bill

Debate between Lord Flight and Viscount Younger of Leckie

Wednesday 6th February 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

Noble Lords will not be surprised to know that I was expecting a somewhat lively debate on this general issue of shares for rights. I very much appreciate noble Lords’ contributions. Before I turn to the amendments in the group—Amendments 81D, 82A, 82B, 91 and 92—I should take this opportunity to inform the House about the clause. I will have the chance to expand on this during a stand-part debate, but the House might like to understand why the Government are creating the new employment status and what it is aimed to achieve.

The Government are creating a new form of employment contract that companies limited by shares can use. This new status will be known as “employee shareholder”. The employee shareholder will be granted shares in the employing company or the parent company but will not have all the rights of an individual with employee status. The Government are taking this action to offer companies and people more choice, and are giving choice to companies on how they structure their workforce to ensure maximum growth and flexibility, more choice for people in the type of jobs that are on offer to them and new opportunities to benefit from growth and meet their long-term aspirations.

This Government, from the outset, have committed to reforming employment laws, and are doing so through the employment law review. Establishing the employee shareholder status is different. With this change, the Government are creating a new type of employment relationship. It is an employment relationship where both the company and person share the risk and rewards for business more than any other employment type.

I now want to address the amendments tabled by my noble friend Lady Brinton and the noble Lords, Lord Adonis and Lord Pannick. This clause is not about making a new employment status compulsory for all. It is about adding to the employment statuses that already exist. It sits alongside existing employment statuses such as employee and worker.

Employment law does not stipulate that individuals should have legal or financial advice before accepting a job with the employment status of either employee or worker, or taking up share ownership possibilities. It would be anomalous to impose these requirements for the new employee shareholder status. Neither do we want to stipulate that employers must pay for legal advice. Noble Lords will appreciate that legal expenses can be high, which would be a burden both in administrative and cost terms, in particular for the type of fast-growing company to which this is most likely to appeal.

There is nothing in the clause that prevents individuals from seeking independent advice. This is about creating a new voluntary employment status and not about creating additional burdens for employers.

As for employment contracts, it is important to leave these to employers and individuals to negotiate, discuss, and agree to, although employees are entitled to receive a written statement of employment particulars within two months of the start of their employment. Government are committed to reducing burdens arising from regulation and therefore wish to keep administration requirements to a minimum.

The status, as we have already said, will be most attractive to fast-growing businesses, which will spend time looking for and investing in the right people to help their business grow, and will be willing to give fully paid up shares to the right candidate. These employers will have to invest in employee shareholders by giving them shares, which is a cost to them. It is likely that they are exactly the type of employers who would then struggle to find the additional cost and time to fulfil the amendments my noble friends and the noble Lords are suggesting.

[Lord Flight]

Just before my noble friend passes over this matter, I would like to raise one issue that is not clear to me. When the grant of shares is given, is the value of them treated as taxable income? If so, I certainly think that it should not be part of the deal as something that is tax attractive.

[Viscount Younger of Leckie]

I thank my noble friend for that question. The shares are treated as taxable income, although they are shares, so there would be tax at whatever level payable on the shares received.

I should now like to answer some questions that have arisen. The noble Lord, Lord Pannick, stated that there was no demand for this new status. I can understand his concern from other comments made this afternoon. This new employment status will not be appropriate for all companies or be taken up across the board. It simply adds to the options and flexibility available to companies and individuals in determining their employment relationships.

My noble friend Lord Flight has eloquently mentioned this particular issue in his speech. The new status will probably appeal mainly to fast-growing and small start-up companies and individuals as this is the level where employment rights are seen to impact the most.

I would like to address directly the points raised by my noble friend Lady Brinton to say clearly that this particular employment shareholder status will not suit the examples that she cited in or near the Cambridge area. My noble friend Lord Strasburger also cited some example and I suspect it would not suit—

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[Lord Flight]

My Lords, the amendment was intended to be part of the debate on Clause 27. Given that the employee shareholder status is new and that there are still differences of view about its structure, it is obvious that there will be a need for guidance and, in particular, a need for a model employee shareholder contract for early-stage companies. I beg to move.

[Viscount Younger of Leckie]

My Lords, in Amendment 95 my noble friend Lord Flight proposes a new clause relating to the publication of guidance on the new employment status. He makes a good point on the need for guidance. The Government agree that guidance should be available to help companies and employee shareholders fully understand all the implications of offering or accepting these contracts. It has always been our intention to publish guidance on the new status. The issue of guidance is an important one. Good, clear and accessible guidance will be vital to both companies and employee shareholders. We want to ensure that people enter into these contracts with their eyes open.

I will outline what the Government propose to publish by way of guidance and explain what that guidance will cover. The .gov.uk website is the new centralised place for publication of government services and information. The website already has a number of pages that provide an overview of the different types of employment status—such as worker and employee—and list the rights that are attached to them. We will provide an equivalent page on the new employee shareholder status.

Within these overview pages there are links to more detailed information on each individual employment right, and these pages will also be updated to take account of the new employment status. People who look for information on employee shareholder contracts will be very clear which rights they are entitled to and which rights do not apply to the status. This will help them to decide if an employee shareholder position is suitable for them.

Changes to these pages are being revised at the moment and we will be in a position to share draft copies with you before this clause is debated on Report. The Government will also update guidance on the tax treatment of shares and capital gains tax to make it clear to employee shareholders what their obligations are and to set out how the associated capital gains tax exemption and other relevant tax treatments will work.

Any contract of employment is an agreement between an employer and employee and is the basis of the employment relationship. We believe that contracts work best when people and companies are free to decide the terms that best suit their business needs, and to attract the right people to their companies. We will provide guidance for companies to enable them to understand the new status. Companies would do well to take note of the comments of my noble friend Lord Flight on the importance of drawing up good employment contracts that apply equally to the statuses of employees and workers.

While I understand my noble friend’s intention behind this amendment, we believe it is not necessary to legislate on this matter. To state this in the Bill would just introduce more legislation, which in turn would create more red tape for businesses. As the Government have already committed to publish guidance, I hope that with these assurances my noble friend will be willing to withdraw his amendment.

[Viscount Younger of Leckie]

My noble friend makes a very fair point. Of course I will copy in all noble Lords who should or would like to be copied in.

[Lord Flight]

I thank the Minister for his response. I am pleased to find that the matter is in hand. I therefore beg leave to withdraw the amendment.