Ian Murray
Main Page: Ian Murray (Labour - Edinburgh South)Growth and Infrastructure Bill
Ian Murray Excerpts
Michael Fallon
I do not think we would know in those circumstances whether that was the exact reason why somebody had not been offered the position, but what I did last week—and I hope my hon. Friend accepted this—was make it absolutely clear that nobody who had jobseeker status could be mandated to have to accept a job.
Our second amendment prevents an employee shareholder contract from taking legal effect until seven days have elapsed from when the offer is made to the individual. The amendment affords an individual a period to consider the risks and rewards of the contract. That removes any question that individuals might be pressurised into accepting a contract.
These amendments mean that an individual who has chosen to apply for, and has been offered, an employee shareholder job has both the information and the time they need to consider whether the job is right for them. Noble Lords, including my noble Friends Lord King and Lord Forsyth, also expressed a concern about the employee shareholder receiving independent advice. I want to reassure them and all noble Lords that the Government are taking that concern seriously and are reflecting on the remarks made in the other place yesterday evening.
This new status gives in particular young and new companies a fresh option that they may use to attract high-calibre employees who can share in the growth potential of the company, and I urge the House to support these amendments.
Ian Murray (Edinburgh South) (Lab)
I shall start with the issues that the Minister raised on permitted development. We welcome the Government’s change of heart. This is a victory not just for Opposition Members but for Members who are sitting behind the Secretary of State who have helped us to protect the gardens of England from inappropriate developments. [Interruption.] The Secretary of State laughs, but he was dragged kicking and screaming to table the amendments.
I still find it puzzling that the honeyed words from the Secretary of State last week were so mysterious and vague when the new arrangements unveiled look very much like the planning permission system. First, the house owner will have to provide plans and details to the planning department, including details of the materials to be used, just as happens now. Secondly, the planning department will have to notify neighbours, just as happens now. If there are objections, the planning authority will take the decision whether to grant planning permission, just as happens now. The only change is that in the absence of objections from the directly adjoining properties, the development will automatically go ahead, notwithstanding any objections from other affected neighbours, or from the council, or from the wider community—and, of course, the absence of the £172 planning fee.
I have a couple of questions for the Minister, which I hope he will answer if he has time to sum up, on how neighbours might be affected by the proposals. First, by limiting the possibility of objecting to an extension to those who share the immediate boundary with the property in question, the Government are taking rights away from other neighbours whose amenity or light may be affected. Remember that we are talking about extensions 26 feet long and 13 feet high, Mr Speaker—about the size of the Speaker’s Chair. Why are the Government not even giving those affected in that way the right to express a view that may be considered material by the planning committee? Secondly, what about neighbours who are away when an application is put in, and who come back 21 days later to discover that work has already started on a structure that will seriously affect their amenity and enjoyment of their back garden? Does the Minister not think that unfair?
The Minister decided to talk for some 15 minutes on permitted developments, on which the Opposition will not be objecting this afternoon, and very little time on shares for rights. I wonder why. Let me tell the House why I think he did so, because it is clear that the Government are in a total shambles with their ill-thought-out shares for rights proposals.
Let us remember the origins of the proposal, dreamt up by the Chancellor at Conservative party conference because he had absolutely nothing to say about the economy, growth or unemployment. He proclaimed, let us remember:
“Workers of the world unite.”
The Chancellor got his wish. The workers of the world did unite, along with businesses and organisations, to tell the Chancellor that his proposals were wrong. And it is not just the workers that have united, but his own Back Benchers and, of course, the noble Lords in the other place. The narrow 27 majority for the proposals last week in this place highlighted the extent of the discontent with the proposals in this House.
The Minister’s concessions on jobseeker’s allowance claimants not being forced to take up the shares for rights proposals were welcome, but if the proposals were truly voluntary in the first instance, it cannot be seen as a concession at all. The question that the Minister just avoided, from my hon. Friend the shadow Business Secretary, is whether an employer can make agreement to such a deal a condition of anyone, let alone a jobseeker’s allowance claimant, taking up a job. He refused to answer that question; perhaps, in his summing-up, he may be able to take that on.
What did the concession manage to achieve in the other place last night? Let us see. An increase in the majority against the proposals in the other place last night from 54 to 69—a triumph for the Minister, and it emphasised that Lord Forsyth was correct when he said that the policy
“has all the trappings of something that was thought up by someone in the bath”.—[Official Report, House of Lords, 20 March 2013; Vol. 744, c. 614.]
I disagree with Lord Forsyth on that. I think it was thought up by someone in the bar, and not at the start of the evening but close to closing time. In fact, if we analyse the figures from last night, we see that Cross Benchers voted 59 to 1 against the proposals, as well as the former Liberal Democrat leaders Ashdown and Steel—and this current Lib Dem leader wants them and so does the Business Secretary. Will the public not ask why?
Yesterday, the Lords sent a powerful message to this House that the Government are wrong on shares for rights. Their message, for the second time, is loud and clear: “Dump this awful policy now.” Or will the Treasury not allow the Minister to dump the policy? The results of the vote give the Minister the out he was looking for. We know that the BIS Department is not keen on the proposals, we know that the Minister is not an enthusiastic supporter and we certainly know that the businesses of this country do not want it, following a consultation exercise.
Let us examine what some of the noble Lords said in the other place yesterday. Lord King said,
“I am not the only Member”
of this House
“who feels some embarrassment at finding ourselves in this situation.”—[Official Report, House of Lords, 22 April 2013; Vol. 744, c. 1267.]
Baroness Wheatcroft shared Lord King’s embarrassment when she said:
“My Lords, my noble friend Lord King mentioned a degree of embarrassment at finding himself in this situation, which I certainly share.”
She went on to say that 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’.”—[Official Report, House of Lords, 22 April 2013; Vol. 744, c. 1269.]
That was not all in the other place last night. Lord Deben, on shares for rights, said:
“Frankly, it does not matter much what we decide on this because I do not think anyone is going to take it up and I do not think it is going to happen.”—[Official Report, House of Lords, 22 April 2013; Vol. 744, c. 1262.]
Ian Murray
I am delighted to receive the intervention, because it is the Treasury that says that £1 billion will be lost and Lord Deben, a Member with whom the right hon. Gentleman probably shared time in government, who said that perhaps no one will take this up. So it is not we who are saying it but Conservative peers in the other place and the Treasury’s own assessment of what will be lost. Whether someone takes it up or not, the Treasury is saying that there will be £1 billion of lost taxation. Perhaps Ministers in this House might want to go and chat to some of their colleagues in the other place and decide what they are going to do with it.
Critically, there was a hint in the Lords that some kind of deal had been done between the Business Secretary, who incidentally has said nothing on these proposals, and the Treasury. Can the Minister tell the House what that deal is? The public deserve to know what deal has been done between the two senior Government Secretaries of State to push the proposals through. I will take an intervention from the Minister now if he wishes to tell the country what that deal is, but I suspect he will not take up that opportunity.
Let me highlight another comment from the other place last night. The shadow Minister, Lord Adonis, who took the report through the other place yesterday, said:
“Where does this report come from? We all know: it is on the rebound from the Beecroft proposal to do away with certain employment rights in respect of unfair dismissal and instead to substitute a single payment that would have resulted from it. The Business Secretary was not prepared to go along with that. Then, as we have heard from various parts of the House”—
including from the Government side of the House last night in the other place—
“some kind of deal was apparently done between the Chancellor and the Business Secretary to resurrect a version of the Beecroft proposal in return for shares.”—[Official Report, House of Lords, 22 April 2013; Vol. 744, c. 1271.]
The House needs to know, before the legislation is passed, what that deal was.
Lord Forsyth emphasised it when he said:
“the Government seem determined just to railroad this through and not deal with the arguments.”—[Official Report, House of Lords, 22 April 2013; Vol. 744, c. 1258.]
Those arguments are not diminished by the amendments that the Government tabled this morning—amendments that were only confirmed at 11.27 this morning. They are scurrying around, trying to find solutions, when the best solution is to consign the policy to the dustbin.
Under the scheme, which creates a third type of employment status, as the Minister mentioned, employers may award employees at least £2,000 in shares in exchange for the employee’s giving up a bundle of employment rights, including ordinary unfair dismissal, the right to a statutory redundancy payment, the right to request flexible working, and the right to training. The Government are determined to pursue the scheme, but the list of concessions that they have produced today, and which they hope will get it through the Lords, is completely inadequate and does not address the fundamental issues of the giving up of employee rights for a few worthless shares.
There were many interventions in the House last week. The Opposition wholeheartedly support employee ownership, but there does not have to be a link between employee ownership and giving up one’s employment rights. Many Government Back Benchers who are in their place this afternoon made the point about how wonderful employee ownership was, but the fundamental point is that employee ownership does not have to be increased by giving up fundamental rights at work.
Let me go through some of the concessions that have been presented to the House today. First, there is a provision that the employee cannot accept the offer within seven days of it being made. How that would work in practice is completely unclear. An employer remains free to refuse to offer the job to a prospective employee who does not want to take up employee shareholder status. That is a critical point about whether it is voluntary. With the employment market as depressed as it is, why would an employee want to turn this down? People are desperate to get back into work. That is why the proposal cannot be seen as voluntary. Why would an employer not just say that this has to be accepted or the job offer will be withdrawn? Perhaps the job will be offered to a number of candidates, and the candidate who accepts the shares for rights proposal will ultimately get it.
Nick de Bois (Enfield North) (Con)
May I challenge the hon. Gentleman to think about his premise? He said earlier that these are worthless shares. I do not think that any business or entrepreneur in the country who takes such a risk would believe that shares are worthless. That is the big difference on the Government Benches. Does he agree that the fact that the Opposition think the value of the shares is zero colours their judgment of how an employee who wants to take a risk and an opportunity would see great value in having a stake in a business?
Ian Murray
There is a misconception among Government Members that no Opposition Member has run their own business. Well, I have run several businesses before I came into the House. At the start, of course the value of shares was high, because we were investing in the businesses, but that is not always the case. Ultimately, when businesses shed staff or employees have to leave, shares will be worth less. That is a fundamental principle of business. When I come on to the concessions that the Government have put together, it will be seen that that is absolutely right.
Nick de Bois
The hon. Gentleman is talking about the end of a business. When one starts a business—as I am sure he has done, given what he just said—it is to achieve success and growth. That is when the shares offer their greatest opportunity. They will be offered for no cash in return for a stake and the potential of profit later, with a tax-free advantage. It really is a win-win.
Ian Murray
I have a lot of respect for the hon. Gentleman, who undoubtedly has a lot of business experience, but he clearly has not read the legislation or understood what it is trying to achieve here. He is right that when the shares are being given out, they will have a high value. But at the very time that employees need to cash in those shares because, for example, they have given up the right to redundancy, their value will be lower than when they were first given, or they will be worthless. The residual value of the shares will be far lower when an employee is effectively being sacked than it was when the employee was being taken on. That is why some of the concessions have been made.
Let me come to the written statement that the Minister has suggested to set out the details of the shares being offered, including whether they are voting or non-voting shares, whether they carry a dividend, whether they carry a right to a share in a company’s assets if it is wound up, whether pre-emption rights are excluded, and details of drag-along and tag-along rights. Most employees will not understand the implications of this information, and there is nothing to prevent employers from issuing pages of gobbledygook about the shares that buries the information somewhere within.
I am struck by the provision about winding up, which is specifically mentioned in the concessions. Surely this is the crux of the matter. [Interruption.] Members are chuntering away, but if they wish to intervene, they may do so. How can it be right to give up the right to a redundancy payment at the same time as the shares may not be worth anything at winding up. The term “winding up” is used in the Government’s amendment to the proposals. Shareholders tend to get nothing in the winding up of any business after the creditors are taken into account. Why would any employee want to do this? We end up with a situation where, at a time when an employee would want to cash in the shares, the company is in real financial trouble and the shares are worth far less than the initial value or nothing at all.
Nick de Bois
The short answer is that if one takes shares, one takes a risk. The difference is that employees are not being asked to part with a cash investment up front.
Ian Murray
That might be the case, but one does not have to give up one’s fundamental worker’s rights to take the risk in shares in businesses. Many employees take shares in businesses, but they do not give up the rights to redundancy, to request flexible working, to training and to unfair dismissal and maternity rights. Last week, the hon. Gentleman made an impassioned speech about his running of businesses and the fact that his employees are always at the forefront of his mind. The vast majority of those in this country who start a business have employees at the forefront of their minds. But relationships do break down and businesses do run into trouble. I agree with him to a certain extent, but missing from the jigsaw is the fact that fundamental rights at work still have to be given up in order to take on those shares. He fails to recognise that that is part of the overall equation.
Let us examine the issue of tax avoidance that my hon. Friend the shadow Business Secretary mentioned in the House last week. The Treasury says—it is a Treasury document—that this will cost £1 billion, but the true cost may be more than that, as my hon. Friend said. As the Treasury’s December 2012 policy costing document says,
“It is hard to predict how quickly the increased scope for tax planning will be exploited.”
Let me examine this:
“increased scope for tax planning will be exploited.”
That sounds to me like tax avoidance and it was picked up by Paul Johnson, the director of the Institute for Fiscal Studies, who said:
“just as government ministers are falling over themselves to condemn such behaviour”—
tax avoidance—
“that same government is trumpeting a new tax policy that looks like it will foster a whole new avoidance industry.”
The Treasury document, by using the terminology
“increased scope for tax planning will be exploited”,
emphasises what Paul Johnson has said.
Mr Ward
Is not the value of shares very much up to those who control the shares? The value can be controlled by the majority shareholders, who often are directors of the company and can devalue a company at a moment’s notice by transferring assets out of the business into another company that they can set up.
Ian Murray
The hon. Gentleman makes a valuable point. He voted with the Opposition last week, on which he should be commended. The other issue around the concept of dilution of shares is that when new investment comes into a business, shares can be diluted. There is no provision for employees who are shareholders to be informed of that. Assets can be transferred out of businesses and there is nothing to stop employers, when they wish to make large scale redundancies of employee owners in the business, diluting the shares before they do so.
Nick de Bois
The hon. Gentleman will remember that, under his Government, the Companies Act 2006 had some clear safeguards for minority shareholders, which specifically protect their interests and allow resort to court if minority shareholdings are unfairly diluted.
Ian Murray
We are back to the same point from the hon. Gentleman. He still refuses to recognise the equation here. That may all be correct, but at the same time fundamental rights still have to be given up. Indeed, those safeguards in the 2006 Act have been wrapped around by many companies in terms of the dilution of share ownership.
Mr Redwood
I am interested in the hon. Gentleman’s attack on the idea of some tax privilege in the scheme. I imagine that he is a member of the House of Commons pension scheme, and there is tax relief on all contributions that he makes into the scheme, and full tax relief on gains and income in the fund. That seems perfectly reasonable. How does that differ from the tax advantages of this scheme?
Ian Murray
Being a member of the House of Commons pension scheme does not mean that I give up my rights at work. The equation is not there. I am not even sure whether the right hon. Gentleman has spoken in favour of these proposals. Does he support them? I am not sure that he does.
Mr Redwood
I am asking about tax avoidance. The hon. Gentleman has just condemned the scheme as tax avoidance. I am asking whether he is against all tax avoidance, or does he practise it as well?
Ian Murray
It is a little disingenuous to ask a Member of the House who is at the Dispatch Box whether he practises tax avoidance. That is stretching it a bit far. I am merely quoting from the Treasury’s 2012 policy document, which says that:
“It is hard to predict how quickly the increased scope for tax planning will be exploited”.
The Institute for Fiscal Studies says that there will be a whole new avoidance industry in terms of the capital gains tax on these shares, and in terms of PAYE and national insurance. If Government Members do not believe me, they can listen to what Lord Forsyth—as a Scottish Member of Parliament, I never thought that I would agree so much with him—said last night in the other place:
“I remain concerned as to whether the estimate made that this could result in more than £1 billion disappearing in tax-avoidance schemes is correct. It is not clear to me whether the Treasury has found ways of ring-fencing this scheme, which provides for up to £50,000 of capital gains tax to be relieved, and whether this could not be used as a great tax-avoidance scheme.”—[Official Report, House of Lords, 22 April 2013; Vol. 744, c. 1257.]
Michael Fallon
I would hope that neighbours would talk to each other and discuss any proposed developments. They should not feel that they are not able to object. As I have said, it is hard to understand why those who live further away should have, or should be entitled to register, stronger objections than those who live next door to the property concerned.
My hon. Friend raised two other issues, the first of which was what would happen if the extension turned out to be larger than or different from the original proposal. Under the notification, the plans have to be deposited with and approved by the building control regime, which will exercise supervision in exactly the same way as it does for a normal planning application. It would also be able to require modifications to an extension that did not fit the original plans.
Secondly, my hon. Friend raised the issue of fees, which I addressed when I opened the debate. I repeat that if she turns out to be right about the actual cost to local authorities, we will, of course, discuss any concerns or new pressures on them with the Local Government Association in the normal way. Our position, however, is that there will be considerable savings as a result of a number of applications not going through the normal planning route.
Finally, on the employer shareholder clause, the hon. Member for Edinburgh South (Ian Murray) was a little cavalier in some of his arguments. First, he suggested that my noble friend Lord Deben opposed the clause, but he voted for it in a Division last night, so the hon. Gentleman was not accurate about that. Secondly, he suggested that people would be forced to give up their employment rights for what he called “worthless shares”, but they cannot be forced to surrender their employment rights unless those shares are worth at least £2,000. If they turn out to be worth less than £2,000, the employee shareholder would, of course, be fully entitled to be considered to have the rights that he or she previously had.
Ian Murray
On the surrender of rights, the Minister just said that if the shares are worth less than £2,000 the employee would have all their normal rights. Surely that is not accurate. Will he correct the record?
Michael Fallon
I did not say that. I said that the value of the shares must be worth at least £2,000. It was the hon. Gentleman who used the word “worthless”. These shares cannot be worthless, or the employee shareholder will not be forced to give up the rights that he or she currently enjoys.