Growth and Infrastructure Bill

Lord Stunell Excerpts

Tuesday 16th April 2013 Commons Chamber

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I beg to move, That this House disagrees with Lords amendment 25.

Back in October, the Government introduced a Bill to this House that contained a number of important growth measures designed to help stimulate the economy. I am very pleased to report that both Houses of Parliament have given the Bill the priority it deserves, and that six months after its introduction both Houses have completed their consideration. We must now reach agreement with the other place on the final version of the Bill.

Let me explain that the Government agree with 38 of the 40 amendments that have been made. My right hon. Friend the Secretary of State for Communities and Local Government will address those in the second group of amendments for debate. It is right that we set out our reasons for our disagreement with the other place in two important respects.

The Government do not support amendment 25, which seeks to remove clause 27—a clause that this House supported and that would establish the new employment status of employee shareholder. I urge the House to confirm its view that this imaginative proposal should continue to be made available and clause 27 should be retained.

Clause 27 establishes a new employment status in our labour market—the employee shareholder—in addition to the existing categories of worker and employee. Employee shareholders will have more employment rights than workers but fewer rights than employees. Importantly, employee shareholders will be given at least £2,000 of shares in the company they work for, or in its parent company. The first £2,000 of value will not attract income tax or national insurance contributions, and the first £50,000 of shares will not be subject to capital gains tax.

British companies are competing in a global race to increase their competitiveness and create wealth. What is at stake here is choice and a new status that companies can use to give themselves a competitive edge and more flexibility in deciding how to structure their work force. By combining share ownership and favourable tax treatment—with appropriate steps to prevent any tax avoidance—we are giving companies, especially young companies, a tool that may tip the balance in their favour as they seek to attract high-calibre individuals who can have a disproportionately positive impact on how the company performs. That is why the Government want to create the new employment status—to promote enterprise and aspiration.

Much has been said about the new employee shareholder status. Throughout the scrutiny in this House, I stressed that we do not want people coerced into this new type of status. That is why the Government chose to add protections to the status on Report. We added protections for existing employees by creating a new unfair dismissal right and by inserting the right not to be subjected to any detriment if they turn down an employee shareholder contract. Those protections are important. They allow existing employees, if offered an employee shareholder contract, to say no, in the knowledge that the law will protect their decision.

The Government have always been clear that this measure is voluntary for both individuals and companies to use if it suits their circumstances or business needs. For people on jobseeker’s allowance, our priority is to minimise periods of unemployment by helping them to move into work as soon as possible. During proceedings in this House, I listened carefully to concerns raised by, among others, my right hon. Friend the Member for Hazel Grove (Andrew Stunell), who is in his place today. In response to the concerns he expressed in Committee, I agreed that guidance to decision makers in jobcentres would make it clear that an individual should not be mandated if there were good reasons for refusing an employee shareholder offer. However, the other place was unconvinced that this employment status would be truly voluntary for jobseeker’s allowance claimants if there was the possibility—however remote—that a claimant could lose their JSA if they turned down an employee shareholder job.

I want to make it absolutely clear that this new employment status is voluntary. That is why the Government have looked at all this again in the light of comments and speeches by noble Lords. We have decided now to remove any remaining ambiguity, which I hope will reassure both this House and the other place. I can tell the House that as a result of considering the policy further we have decided that jobcentre advisers will not be able to mandate jobseekers to apply for employee shareholder positions. The Government will amend the guidance for DWP jobcentre advisers to state explicitly that a jobseeker cannot be mandated to apply for an employee shareholder job. Draft guidance will shortly be placed in the Library.

[Andrew Stunell (Hazel Grove) (LD)]

I thank my right hon. Friend for giving way and, in particular, for having listened carefully to what was said in this House and in the other place. Will he say a little more about the guidance that will be provided, the timetable and the implementation? Can he give us an assurance that it will be in place before the Bill receives Royal Assent and comes into force?

[Michael Fallon]

I certainly can. It is not possible, under the procedures of the House, to place the guidance in the Library before I have first explained it to the House, but I will lay the draft guidance in the Library as soon as the transcript of this afternoon’s debate is available.

Let me be clear about what the draft guidance will mean. It will mean that a jobseeker cannot be compelled to apply for an employee shareholder job, nor can their jobseeker’s allowance be reduced or cut if they turn down an offer of an employee shareholder job or refuse to apply for an employee shareholder job. This explicit change to the guidance puts beyond any doubt our intention that no one should be forced into this new status.

While the benefits of the new status are considerable, it will not suit all companies or individuals—and we have never pretended that it would. It is up to companies and individuals to decide, and we have published guidance for individuals so that they fully understand the implications. That guidance sets out the employment rights associated with these jobs, the risks and rewards of being a shareholder, and other factors they may wish to consider before deciding whether to accept an employee shareholder position.

We are now, therefore, debating an employment status that is absolutely voluntary. Jobseeker’s allowance claimants will not be penalised if they do not want to apply for employee shareholder roles. Existing employees can turn down the offer of an employee shareholder contract from their current employer without fear of suffering a detriment or being dismissed if they say no.