Growth and Infrastructure Bill

Ian Murray Excerpts

Monday 17th December 2012 Commons Chamber

(b) the resulting regulations are expressed to cease to have effect (other than for transitional purposes) before that date”’.—(Nick Boles.)

[Ian Murray (Edinburgh South) (Lab)]

I beg to move amendment 59, page 32, line 9, leave out clause 25.

[Madam Deputy Speaker (Dawn Primarolo)]

With this it will be convenient to discuss the following:

Government amendments 22 and 23.

Amendment 60 in clause 25, page 32, line 13, leave out ‘or becomes’.

Government amendment 24.

Amendment 37, page 32, line 14, at end insert—

‘(za) the individual has been an employee of a company for at least two years.’.

Amendment 61, page 32, line 15, leave out ‘the company’ and insert ‘a majority of the employees of the company’.

Government amendment 25.

Amendment 62, page 32, line 21, after ‘£2,000’, insert—

‘if the individual has been an employee of the company for less than three years, increased by an additional £2,000 for every additional year for which the individual has been an employee of the company’.

Amendment 40, page 32, line 23, at end insert—

‘(1A) The Secretary of State shall make by statutory instrument such regulations as are necessary to safeguard an employee who declines to enter into an agreement under subsection (1) from any consequential detriment.

(1B) The Secretary of State may not make any regulations under subsection (1A) unless a draft of the statutory instrument containing the regulations has been laid before, and approved by, a resolution of each House of Parliament.’.

Amendment 41, page 32, line 23, at end insert—

‘(1C) The Secretary of State shall issue such guidance as is necessary to safeguard any person who declines to enter into an agreement under subsection (1) from any consequential reduction or withdrawal of any state benefit to which they are entitled by virtue of their current employment status.’.

Amendment 63, page 32, line 23, at end insert—

‘(1A) The Secretary of State shall provide by regulations for there to be, for every company having employee shareholders, a director who is elected by those employee shareholders.

(1B) Regulations under subsection (1A) shall be made by statutory instrument and shall not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’.

Amendment 39, page 32, line 24, leave out from beginning to end of line 11 on page 33.

Government amendments 26 to 31, 64, 65, 32 and 66.

[Ian Murray]

We now come to the worst clause in a bad Bill. In the words of the Christmas song, ’tis the season to be jolly, but sadly this out-of-touch Government are dampening the festive spirit with a measure that embodies the characteristics of the classic Dickens character, the miserly employer Ebenezer Scrooge, at his worst. I would never accuse the Minister of State, the right hon. Member for Sevenoaks (Michael Fallon), of being such a character, but I hope that he will prove to the House that he is not, by removing clause 25 from the Bill.

As in that Christmas tale, let us look back at the ghost of Beecroft past. It was back at the beginning of October when, much to everyone’s surprise, the Chancellor announced the Government’s intention to introduce a new employment status. A company would be able to offer an employee shares in its business in exchange for some of that individual’s rights at work. The proposal has had a quick passage since the Chancellor’s speech, in which he spoke of

“owners, workers and the taxman, all in it together. Workers of the world unite.”

I have to give it to the Chancellor; he has certainly fostered a sense of unity. He has unified outright opposition to this policy from every quarter. It has received a lukewarm response, at best, from the business community, and it has been roundly trounced by employee organisations, trade unions, business leaders and charities. Only five of the 219 consultation responses welcomed the proposals. We therefore believe that our amendment 59 is the only acceptable option, as we can see no way in which the clause could be amended to make it more palatable. I appreciate that amendments have been tabled by my hon. Friend the Member for Hayes and Harlington (John McDonnell), who is in his place, but, to be honest, he is trying valiantly to make a silk purse out of a sow’s ear.

As my right hon. Friend the Member for Leeds Central (Hilary Benn) said on Second Reading, this measure is about cash for repeal. For as little as £2,000-worth of shares, an employee would be able to give up legal rights such as their right to training, their right to unfair dismissal protections, their right to a redundancy payment—even though their shares might be valued at less than the statutory redundancy payment—and their right to flexible working, which would fly in the face of announcements made by the Department for Business, Innovation and Skills only last week.

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[Mr David Anderson (Blaydon) (Lab)]

My hon. Friend is making a very good case. Is it not clear from what Conservative Members have said that we know exactly what this is about—it is about the complete disregard for workers’ rights by Government Members? They believe anything can be resolved by waving money at it. It is absolutely disgraceful that we even have to discuss this issue tonight. I hope the Liberal Democrats will have some of the courage that they have not shown in two and a half years so far and vote against this measure tonight.

[Ian Murray]

My hon. Friend makes an incredibly strong point. If the clause had been drafted to increase employee ownership without the exchange for rights, we would have fully supported it. What the Government are doing, however, is saying to employers, “If you wish to buy out the rights of your employees, you may do so for as little as £2,000 without any regard whatever to the protection they have against unfair dismissal and redundancy.” Crucially, in response to my hon. Friend the Member for Blaydon (Mr Anderson), this flies in the face of the Government’s flexible working policies that they were trumpeting just last week. In addition, the people who will be hit worst by this policy will be those who are not able to seek advice and those who are not members of trade unions or other associations.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

We Labour Members have enjoyed my hon. Friend’s Dickens metaphor. He will be aware that what Dickens disliked above all else was the Liberal party of the late 19th century, which believed in a laissez-faire economy—and the devil take the hindmost. What does my hon. Friend think Dickens would make of this Liberal Democrat party supporting such a bonkers idea?

[Ian Murray]

That is a worthwhile intervention from my hon. Friend, who is an historian himself, so I could not possibly argue against the valuable points he has just made. It is extraordinary that the Liberal Democrats are bringing forward this proposal and are wholeheartedly supporting it. The Business Secretary is not here, and the Business Secretary was not here for the Third Reading or vote of his own Enterprise and Regulatory Reform Bill, in which provisions affecting the rights of workers were pushed through. If the Liberal Democrats do not see that this is Beecroft by the back door, they should have a look at some of the information being put out by the business community and others.

I was quoting Justin King a few moments ago. He said that we

“should be making employing people easier and less costly.”

That sounds very much like our national insurance holiday, which is part of Labour’s five-point plan.

I referred in my opening remarks to Ebenezer Scrooge—a cold-hearted, tight-fisted and greedy character who treated his employees appallingly. I believe that the overwhelming majority of hard-working and entrepreneurial businesses in the UK are exactly the opposite, and understand that the relationship between employers and employees in the workplace is critical for good business.

We know the Minister has no appetite to take these “shares for rights” proposals forward, and I think he knows that the Government are opening the opportunity for Scrooge-like employers. Let us remember, however, the tale of that character's redemption when he sees the error of his ways. This is a Christmas tale: the Minister and Government Members should take heed and bin the ghost of Beecroft future. They still have the chance to remove this nasty, Dickensian clause from the Bill, and I look forward to them joining us in the Lobby this evening.

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[John McDonnell]

Quite the reverse, and as employee ownership has developed in this country, all the arguments have been about the enhancement rather than the withdrawal of rights. However, that can succeed only on the basis of an open, transparent commitment to a partnership in the company concerned. The purpose of the amendments is to offer an alternative to the Government if they are serious about employee ownership.

As I was saying, my proposals are very much in line with the Nuttall review, published in July this year. I propose that when someone has worked for a company for two years, which is the normal qualifying period, and the majority of the other employees agree, that person can become an employee owner and can be awarded the first £2,000-worth of shares. As in normal employee ownership schemes, the longevity of the employee’s commitment to the company is rewarded with the further allocation of shares, usually on an annual basis.

I suggested there should be a further £2,000-worth of shares for every year of service. I am unsure about the nature of the shares that will be offered, but employee ownership shares are normally full voting rights shares; that would be the normal way of developing an overall co-operative. My amendments also suggest employee owners should have the right to elect a director employee owner on to the board, to represent the employee owners. That, too, is in accordance with the standard model of employee ownership. My amendments would also ensure there is no relationship between the award of shares and any reduction of employment rights; I have deleted the measures relating to the exchange of employee rights for the award of shares.

The model my amendments propose is the standard model for an employee ownership scheme, as called for in a wide range of consultations over the years, and recently by the Employee Ownership Association. If the Government do not accept this model, I will fear that their proposals are, in fact, designed to attack and undermine employment rights. In fact, I am now convinced that that is the case, on the basis of the Government’s responses to the consultation. The time scale for the consultation was extraordinary. The Government proposal was announced on 8 October, and the consultation started on 18 October and was completed on 9 November. That is one of the fastest consultations for a major proposal under any Government in recent times, apart from for emergency legislation.

[Ian Murray]

That is an important point. Furthermore, not only did the consultation response come in on the morning we were debating these measures in Committee, but the Government completely ignored it, because the only amendment they committed to introduce was to change the name from employee owners to employee shareholders.

[John McDonnell]

The fact that there was just one cosmetic change shows that the consultation was ignored.

In support of my amendments, it is worth putting on record exactly what the consultation proposed. It found that the majority view was that no one should be asked to exchange their employment rights for shares. The Employee Ownership Association forged an alliance with the Fawcett Society, Family Lives, the Chartered Institute of Personnel and Development, the Family and Parenting Institute and Working Families. They described the consultation response as anti-democratic, rushed and poor quality, even containing a series of factual errors.

The Office for Budget Responsibility found that the Government proposal is more likely to be a cost for the Exchequer than a gain for the overall economy. The OBR said it will cost £1 billion by 2017-18. Others have described it as not particularly welcome. Businesses have certainly not welcomed it. Out of 184 responses to the Department for Business, Innovation and Skills, only two individuals and one organisation voiced support, saying they may take it up. There is hardly a clamour for these measures, therefore.

In none of the evidence submitted in the consultation did anyone describe the giving up of employment rights in this way as being likely to remove barriers to significant increases in employment. The Government’s reform flies in the face of the Nuttall review, too. We thought that there was to be a lengthy period of negotiation and discussion, and the Government would then come forward with proposals for the extension of employee share ownership, which would, in fact, probably receive cross-party support.

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[Gordon Birtwistle]

The hon. Lady will be anxious to hear the Minister’s answer to that question, which our amendments put to him. We have tabled the amendments to tease the answers out of him—if she had proposed an amendment, she would have received an answer to her question, but she has obviously merely turned up today to try to stir things up.

Amendment 41 will, I hope, clear this question up. I hope the Minister can give us an answer, and if he does not we will have to ask other questions at another time. My main concern is about an applicant who is sent for a job by the jobcentre and finds out only when they arrive that it is a share-ownership job. Will their jobseeker’s allowance be affected if they refuse it? I am reasonably confident that it will not.

This will only happen in small niche companies. I do not think that we have the right to stand in the way of people who wish to get involved in such businesses, to get on, to take a gamble or to be involved in a company that will grow, so that their £2,000-worth of shares grows with it. There might well be a second Google somewhere, but I do not want to tell people that although they might have wanted to make those decisions, I did not want to give them the opportunity. That is why I support these proposals.

[Ian Murray]

I am very grateful to the hon. Gentleman for giving way, as he is being incredibly generous in doing so. Does he not accept that in his example from the 1960s—50 years ago—taking extra money in return for rights was completely voluntary? He could have refused that, but many of the examples we are hearing involve cases that will not be voluntary, as people might be coerced to give up their rights for worthless shares.

[Gordon Birtwistle]

I accept that in my case it was voluntary. I could have taken holiday pay, but I would rather have had the four shillings an hour more, which is very little today but was a lot of money in those days, to save up. I am reasonably confident that what I will hear from the Minister will lead me to believe that the proposal is voluntary enough. I am sure that it is voluntary and what I have read in the Bill does not suggest that people will be forced. I think the proposal is okay, but it is a small idea for niche businesses. Major companies will not be offering the option, only small companies, and we do not have the right to stand in the way of people’s freedom to take it up if they wish.

--- Later in debate ---

[Michael Fallon]

I will not, because of the time.

Finally, let me turn to amendment 59, tabled by Opposition Front Benchers, and deal with their opposition to the clause. I have already outlined how the creation of the new employment status adds to the existing statuses of worker and employee. The new status gives companies a new way of taking on individuals, giving both companies and individuals greater choice and flexibility. Removing the clause in its entirety would remove the opportunity for new flexibility and choice for companies. Using the new employment status, just like using the existing status of worker and employee, is a choice for both companies and individuals. By increasing the range of employment statuses, companies limited by shares will have a greater choice about how to grow and adapt their work force. It will also create opportunities for an individual to take up an employment status that may allow them to share in the rewards of a company.

It is for the company to decide what type of contract will be most suitable for it to offer, depending on its requirements and circumstances. The clause does not prevent employers from offering more rights to their staff, such as a contractual right to request flexible work or contractual redundancy pay, just as they can now do with all other existing employment contracts.

This is not about taking away employment rights; it is about creating a new employment status with a different set of rights, just as there are different rights associated with being an employee or a worker. This Government want companies and people to share in the risks and rewards that share-ownership offers, and this is a new way to do so. The clause should remain part of the Bill, to give people and companies a new way of working together, and I urge the House to reject Opposition amendment 59.

[Ian Murray]

The Minister said that he was not Ebenezer Scrooge, but Fezziwig. Wikipedia explains that Fezziwig is

“a happy, foppish man with a large Welsh wig.”

Let us see whether that description fits the right hon. Gentleman.

The employee-shareholder schemes will not be voluntary and will have absolutely no value. How can the Minister tell the House that he knows better than the 204 respondents to the consultation who said that this policy was, as Dizzee Rascal would say, to give a more contemporary reference, “Bonkers”?

I finish by echoing the Business Secretary, who said that this provision would not be compensated no-fault dismissal by the back door. I could not agree with him more: this proposal is no-fault dismissal without any compensation. Anybody who cares about business and employees in this country will join us in the Lobby.

Question put, That the amendment be made.