Royal Mail: Universal Postal Service
Debate between Lord Deben and Viscount Younger of Leckie
Lord Deben (Con)
Does my noble friend accept that those of us who live in the country are particularly at risk should there be any diminution in the strength of the universal postal service? However, could we not be encouraged to take on board the practice adopted on the continent and in America—namely, to situate post boxes at the end of driveways? That is environmentally very friendly and entails a huge cost saving.
Viscount Younger of Leckie
My noble friend makes an interesting point but the minimum requirements of the universal postal service are enshrined in law, and include six-day delivery to every address, rural and urban, in the UK. I reiterate that the protections are exactly the same for rural areas as urban areas. The Postal Services Act also ensures that universal services are offered at uniform prices throughout the UK; so universal services cannot be offered at different prices in different areas around the UK.
Growth and Infrastructure Bill
Debate between Lord Deben and Viscount Younger of Leckie
Viscount Younger of Leckie
To clarify what I said to my noble friend Lord Forsyth a minute ago, legal advice is clearly available for settlement agreements and compromise agreements. However, we have made it clear that it is not available at this time for those entering into a new employment contract.
Lord Deben
I wonder whether I can help my noble friend. When my companies give shares to our employees, not in return for anything but because they have worked for us for some time and we want them to be involved in the companies, we still find it difficult to explain the terms of those things, even though the terms, whatever they are, are a plus rather than a minus. I wonder whether it is right to suggest that this would not be a difficult thing for people to understand. That worries me considerably. I am very pleased that the Government have moved on the big thing for me, which concerned making it impossible to continue to have jobseeker’s allowance. That for me is a crucial matter. However, I wonder whether my noble friend does not underestimate the difficulty of explaining to somebody even the simplest of share options and share sales.
Viscount Younger of Leckie
I very much note my noble friend’s point. He has experience in this field. I say again that some negotiations may become complicated, but the employer and the employee shareholder will go into this with their eyes open. On the other hand, it may be a very straightforward and simple process. Indeed, the employee shareholder who is looking at this new role may decide that he is entirely comfortable with what he has seen, heard and, indeed, read. I clarify again that this is very much a matter between the employer and the employee shareholder.
Growth and Infrastructure Bill
Debate between Lord Deben and Viscount Younger of Leckie(11 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text
Viscount Younger of Leckie
I can confirm that it is an entirely new status, so the individual who agrees with their employer to a contract to be an employee shareholder is not the same as an employee.
Lord Deben
Could my noble friend help the House, before we come to Report, by giving some estimate of how many businesses the Government think will take up this proposition? Given that many of us feel there will be few, it would be helpful to know why we need this big piece of legislation if we do not think many people will take it up. How many employee shareholders of this kind do the Government expect to have in two years’ time?
Viscount Younger of Leckie
I thank my noble friend for that question. It is extraordinarily difficult to ascertain a precise figure. It can be only a guesstimate, and I hope that the House will respect that. However, from the figures that we have ascertained, we think that around 6,000 companies will look at this seriously and take up this issue. However, that is, as I say, a guesstimate.
Lord Deben
I do not disagree with that. However, I think that this proposal is going to be so unattractive to so many companies that that particular problem will not arise.
Viscount Younger of Leckie
My Lords, first, I am most grateful to my noble friend Lord Deben for extolling the virtues of employee ownership, which is very much part of the debate today.
This amendment stipulates that the clause should come into effect only once an independent assessment, conducted by the Office for Budget Responsibility, is laid before both Houses setting out the impact on the Exchequer for each financial year between 2014 and 2030.
The OBR’s role is to provide independent scrutiny and certification of the Government’s policy costings ahead of the Budget and the Autumn Statement. The OBR certified the costing of this measure submitted by HMRC using the methodology set out in the policy costings document published at the Autumn Statement, which is available on the HM Treasury website.
The main duty of the OBR is to examine and report on the sustainability of the public finances. The OBR performs this duty independently, with complete discretion to determine the content of its publications and its work programme of research and analysis.
The Government do not publish annual breakdowns of the cost of operating specific tax measures beyond the end of the forecast period, and this has been the case for some time. This will apply to the employee shareholder status in the same way as it applies to the cost of operating any other specific tax measures.
The noble Lord, Lord Adonis, is understandably concerned about the need to support the Government’s agenda for fiscal sustainability. I emphasise that we believe that investment in policies such as this one—aimed at reducing costs on business and increasing productivity —is exactly what is needed at this time. Strong, sustainable and balanced growth is the key to long-term fiscal sustainability. However, I assure the noble Lord that if further provisions are needed to limit its overall costs, we will have the opportunity to include these at a later date.
At this stage, I think it is worth picking up some points that the noble Lord, Lord Adonis, raised concerning the OBR. The OBR, with its responsibility, is right to note that predicting the take-up of new policies such as this one is very difficult. We recognise that, but its comments need clarification. First, the OBR refers to tax planning and not avoidance. Encouraging take-up of this targeted employment policy should not be misconstrued as encouraging avoidance. Secondly, any rise towards £1 billion is estimated to occur well beyond the end of the forecast period—in fact, beyond the 2020s, when national income is likely to be more than twice as high in today’s money. Finally, the draft legislation published on 11 December includes a number of anti-avoidance provisions. If further provisions are needed to address particular avoidance risks, we will have the opportunity to include them at a later date with a view to ensuring that this policy does not become disproportionately costly to the taxpayer.
Viscount Younger of Leckie
It gives me the opportunity to answer the noble Lord’s question by saying that the OBR has stated that in the long term this policy could cost up to £1 billion. That figure relates to the future period beyond the 2020s. However, there are uncertainties associated with costs so far into the future and I am sure that the noble Lord will appreciate that. The Government expect that the new employee shareholder status should help to stimulate business and entrepreneurial activity by affording businesses greater choice on the contract that they can offer to individuals while ensuring that appropriate levels of protection are maintained. If the policy achieves this aim, the cost, which is expected to reach £8 million in 2017-18, is proportionate. The draft legislation published on 11 December sets out a number of anti-avoidance provisions to prevent the manipulation of the capital gains tax exemption on shares received under the status. If further provisions are needed to address particular avoidance issues, as mentioned earlier, the Government will have the opportunity to include these at a later date with a view to ensuring that this policy does not continue.
My noble friend Lady Brinton raised the issue of whether the tax incentives were in effect a tax avoidance scam, if I can put it somewhat indelicately. She did not put it in that indelicate way. The Government have already included provisions to deal with various types of possible abuse in the draft legislation on capital gains tax exemption. If other forms of abuse come to light, the Government will make the necessary changes to combat that with a view to ensuring that the policy does not become disproportionately costly to the taxpayer.
Some concern has been raised, notably by my noble friend Lady Brinton about the capital gains tax exemption. This relates particularly to people taking up this new employment status, and although I touched on it slightly earlier, I shall address it directly. We believe that employee ownership is a good thing. We want people to become employee shareholders and to benefit from the exemption provided. Where it is used properly it should be seen as a measure of success and people should take advantage of this particular exemption. However, the draft Finance Bill published on 11 December takes a robust line on the potential misuse of the exemption and provides several measures that would prevent the misuse of employee shareholder employment status. There are rules to prevent those who control a company, such as company directors, holding exempt employee shareholder shares if they control 25% or more of the voting power in the company. Similarly, rules will prevent people connected to those who control the company, such as spouses or children, benefiting from the exemption. We will prohibit employees from benefiting from multiple £50,000 limits by entering into multiple consecutive employee shareholder contracts with related companies. Instead when related companies are involved, an employee will have a single £50,000 limit applying to all shares received by related companies. We will also ensure that those looking to get around the limit by using company liquidations to dispose of and then receive new exempt shares cannot do so. We will require two years to pass between the liquidation of the company and the employee receiving further exempt shares. This treatment strikes the right balance between preventing abuse and ensuring that genuine entrepreneurs are not unfairly hit.
Finally, the legislation will prevent the manipulation of share values, for example, by placing restrictions on them so that an employee can receive shares that are in fact worth more than £50,000. For the purposes of the capital gains tax exemption the value of shares will be based on an unrestricted market share. Taken together the measures and the safeguards outlined in the draft legislation will ensure that the tax benefits of a new employment status can be misused. I hope that that goes some way to satisfying the noble Baroness, Lady Brinton.
Lord Deben
Is not the fact that if this works, arguing about how much it costs the Treasury is not sensible? If it works, it will create jobs and make wealth, and the cost to the Treasury will be nil. If it does not work, nobody will take it up and the cost to the Treasury will be nil. It seems to me that this is not a necessary discussion. The only thing that we do not want is for it to be misused. The noble Viscount has explained how the Government intend to do that. No doubt they will do their usual thing of bringing in some more measures to stop it if that were to happen. The real fact is that this is one part of the argument that really does not hold water. We have to accept that if it does not work we have wasted a bit of time, which is not terrible, but if it does work we will have been proved wrong and I will be happy about it. The Treasury will not lose out because there will be jobs, people employed and money being made, which is really worth while.
Viscount Younger of Leckie
I am grateful to my noble friend for clarifying that and, of course, he is absolutely right. I felt that it would be helpful to the House to outline the safeguards and to reiterate that the Government have thought very carefully about these issues. Taking up some of the comments made by my noble friend Lord Deben, I emphasise again that it is a risk-reward status as the employee shareholder. The award is: yes, the opportunity is there to be given from between £2,000 and £50,000 and to be aware that if it is £20,000, £30,000, or whatever the figure might be, and the share price happened to double, the total amount, including the doubling would be free from capital gains tax. That is the reward bit, but equally, I am also realistic enough to say that it is possible that the shares might indeed be worth nothing. That is the risk, and it is best to be quite straight and open about that particular issue. With that in mind I hope that the noble Lord is willing to withdraw the amendment.
Enterprise and Regulatory Reform Bill
Debate between Lord Deben and Viscount Younger of Leckie(11 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Deben
I welcome this, and ask the Minister to carry back the message that it is extremely valuable for people to listen to the advice given by committees. He may be involved in the forthcoming Bill which is entirely incorrectly called the Growth and Infrastructure Bill, in which there are some very uncooked suggestions. It would be of great help to the Committee were he to give an assurance that he will do his best to make sure that the Government listen with the same care to some of the suggestions that come from other committees as they appear to have done on this occasion in listening to the specialist committee that has advised this particular action.
Viscount Younger of Leckie
First, I thank the noble Lord, Lord McKenzie, for his support in this respect. I also take note of the comments that have been made by my noble friend Lord Deben.
Olympic and Paralympic Games 2012
Debate between Lord Deben and Viscount Younger of Leckie
Viscount Younger of Leckie
I am delighted that the noble Lord has mentioned Glasgow; I come from north of the border. I wholeheartedly agree with the comments that he has made.
Lord Deben
Before my noble friend is led astray by those who want to complain about things or ask that they should be extended, will he repeat that this is a remarkable achievement, that it was brought in within budget—something that most people said was impossible —and that there should be very clear congratulations from this House to those who have achieved that end?
Viscount Younger of Leckie
I wholeheartedly agree with my noble friend. Indeed, it is a tremendous feat that we are looking as if we will come in well below budget. The House should remember that that particular budget was set as far back as 2007, although it was admittedly revised from the 2003 pre-bid. I pay tribute to LOCOG, which produced a balanced budget and did tremendously well in sponsorship. It should be congratulated wholeheartedly.