Lord Monks
Main Page: Lord Monks (Labour - Life peer)Growth and Infrastructure Bill
Lord Monks Excerpts
Viscount Younger of Leckie
I am not sure I entirely understand where the noble Lord is coming from. If a jobseeker is seeking a job there are various options for him or her to look at in terms of roles, and the employee shareholder role will be treated equally alongside any other option. The only difference is that there will be absolutely no detriment to that individual if they apply for an employee shareholder role, and if they decide to turn it down. On the matter of guidance, I clarify that it remains in draft form. If this is an issue concerning the way that the guidance is written up, I am more than happy to listen to the noble Lord if he has any comments to make.
Lord Monks
My Lords, I am grateful to the Minister for giving way. Is he therefore confirming in that reply that it will be possible for an employer to advertise employee shareholder contracts only? Is that what the Minister is confirming?
Viscount Younger of Leckie
The answer is that if an employer wants to recruit an employee shareholder, he or she will decide how to advertise for that. They may decide not to advertise. They have a range of options which include advertising nationally. They may choose to send the advertisement into a jobcentre locally or to spread it nationally. That remains open just as it is if they want to recruit for any other position.
Lord Monks
My apologies for coming in again. What is voluntary about that for the jobseeker in those circumstances—the applicant for the job in an area of the country where there may not be many jobs and that is the only status available?
Viscount Younger of Leckie
It remains the case that an employee looking for a position can decide for himself or herself whether to accept an employee shareholder role. It is a separate status compared to other statuses. There is no difference in terms of them deciding themselves whether they want to accept or turn down that particular role.
Employers and individuals are free to agree to the type of contract that is suitable for the job. We are not moving away from this principle; rather, we are enhancing it by offering a further option which will be right for some, but as I have made clear in previous debates, not right for all. There are already three established employment statuses in the labour market, all of which have different rights associated with them. The employee status has wide-ranging rights, including unfair dismissal, statutory redundancy pay, TUPE, maternity leave and pay, and adoption leave and pay, to name a few. The worker status has none of these rights. However, both employees and workers have a right to the national minimum wage, paid annual leave, a right not to be discriminated against, and rest breaks.
There is a further option for people seeking work. They may wish to become self-employed. If someone chooses to be self-employed, they must accept that they have very limited employment rights, such as the right not to be discriminated against. This clause offers both employers and individuals a further option: employee shareholder. This is likely to be a long-term relationship. I would not expect anyone to enter into an employee shareholder contract without carefully considering the implications. This new employment status, with share ownership and favourable tax treatment, will provide small growing companies with a new option to attract high-calibre candidates.
Lord Flight
First of all, it depends on what is on offer. It is broadly for the company to decide the amount of employee shares that it is going to offer under this scheme. To repeat the point, the employment rights which are being surrendered, particularly as viewed by ambitious entrepreneurial types, are not perceived as of particular value. The grant of free shares is of value and, to the extent there is a tax bill, I wish it were lower, but the tax bill is not entirely outrageous. I suspect that the tax limit will be raised in due course.
It is easy to be negative and to pick holes in what has not yet been fully addressed. I would like to see some of the improvements that noble Lords have suggested. But I think to take a rather superior view of, “Oh, no, we really don’t want this”, is wrong. I think it should be given a try and the issues that need sorting out will be sorted out. There are substantial numbers of ambitious young people for whom the objective is not to work for the Civil Service or to work for Shell or Unilever and to have a secure job with a generous pension, but to have equity in the businesses they work for, to make that business work and to make their equity worth a considerable amount of money.
Lord Monks
My Lords, unfortunately, I was unable to be present at Report stage, but I was struck when I read in Hansard that the House of Lords was doing its job like it perhaps does not do enough in an admirable and exemplary non-partisan way, looking at the practicalities of this proposal, not looking for negativity but simply giving it some forensic examination, which has clearly not been done by many in the Government and many who supported it in the other place.
This proposal about shares for rights is implausible. It is difficult to see too many people showing any significant interest in it. If we want to abolish red tape, well, just look at this proposal. It is full of red tape. I believe it is also objectionable—the idea that somehow you can sell your rights or trade in your rights. It is very clear which rights you will lose. It is a lot less clear, for all the reasons that have been stated, what employees will get and how those shares will be valued.
The proposal is also perverse. In the Report stage debate the noble Baroness, Lady Wheatcroft, set out one example. If matters do come to redundancy, will the employer decide to get rid of those with shares who have given up their redundancy pay or those to whom the employer will have to pay redundancy pay? It could well be the employee shareholder who is first out of the door.
The advice that the House of Lords gave to the Government has been treated with contempt. It has just been brushed aside. That includes the advice given by distinguished former Conservative Employment Ministers who are loyal on nearly all occasions, but not on this one. That is not being negative. That is not looking for negativity. It was good advice that was given, it is good advice that is being given now and I hope that this time, if the vote goes the right way from the point of view of those of us who are critics, it will be listened to with a little more concern and consideration than it got last time.
The noble Lords, Lord Pannick and Lord Forsyth, have ably pointed out the fallacies and flaws in the proposal and I will not repeat those. However, I do not think that many employers will give it much of a second look unless there is some tax advantage which will no doubt come to light in due course. Some unscrupulous employers will do so and that is where the individual worker would need some source of independent advice about what they agree to and what they do not.
I find the position of the Business Secretary in this matter intriguing. He fought a battle against the Beecroft proposals, but let us remember—I am no fan of the Beecroft proposals—that he did not propose taking away rights to compensation for redundancy. He was talking about a single payment. It seems to me very strange and disappointing that the Liberal Democrats and the Business Secretary have let this clause slither through the processes of government in the interests no doubt of a deal with the Chancellor of the Exchequer. I hope for the Liberal Democrats’ sake that it is a good deal which compensates for their disgraceful agreement on this matter. I hope they will think again in the time that we have available and put this clause where it really belongs, which I believe is in the nearest recycling bin.
Baroness Warnock
My Lords, noble Lords may be somewhat surprised that I speak on this issue, but it so happens that I have spent a great deal of the past few months looking into employee shareholding and employee ownership and have had long discussions with Charlie Mayfield, who, as noble Lords know, is chairman of the John Lewis Partnership. He was consulted about this proposal and simply regarded it as laughable.
What kind of firms did the Government really have in mind when they invented this farrago—it seems to me—of nonsense? I believe that they had in mind the smallish high-tech firms that set up outside Cambridge, Oxford, Bristol and so on. They thought that all the people employed by this kind of firm were going to be high-tech experts and graduates of their local universities and that the company would be inventive and innovative and, when it got bigger, would probably sell itself off, having made a profit. I do not think, when this was invented, that the Government had in mind that large companies would really have any interest. In fact, I remember that on Report the Minister was reduced to saying, “Well, the good thing about this is that not very many people will take it up”. That seemed to be an extraordinary argument in favour of it. Does the Minister really think that this will be an option open universally to businesses, including retail and manufacturing ones, or is he still thinking, as I am sure the Government were at first, of these very small businesses where everyone starts off more or less equal—equally well educated, intelligent and able to get legal advice—and is anyway probably in it for the interest of the thing and its short-term life? Can the Minister answer that question?