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1.7 pm

Mrs. Patsy Calton (Cheadle): I am delighted to be able to make a short speech. I must first declare an interest. I may have received more effective lobbying about the Bill than any Member in the Chamber, as my son works at John Lewis. He is employed at one of the most successful branches in the country—which happens to be in my constituency.

John Lewis's workers are motivated. They are called partners and they are indeed regarded as partners. The company's principles and values have already been mentioned. Every week, the Cheadle store issues a staff magazine. I shall quote from an interview with a member of the work force. He was asked:

He replied:

That was the positive side. He was then asked: "What's your pet hate?" He answered:

We need that kind of attitude in this country. We need managers and work forces to share a common aim and to be jointly informed.

Earlier, my hon. Friend the Member for Kingston and Surbiton noted that John Lewis attaches great importance to part-time workers. We need to explore in Committee the effects of the Bill on part-time workers. I should support that, as would John Lewis.

The hon. Member for Sheffield, Heeley (Ms Munn) said that we could avoid stress by exercising control on our lives. In my earlier life I was a teacher. One sees a great many more stressed people in teaching than one does on these Benches. The hon. Lady accurately identified what makes the life of a Member of Parliament less stressful than that of a teacher: we work just as many hours as teachers do, but we control our lives. We are the ones who decide when and how we put those hours in, and we have much greater freedom in that regard than teachers do. The issue of control and of being able to play an equal partnership role in one's life is important.

This country's future lies in the work force, its leaders and the managers and owners of companies realising that their long-term interests are shared. Work is more than earning money. It takes up more than time. A work force who own their company and are truly involved in decision making and sharing in its success will be happier, healthier and more committed. The managers and work force of the future, and those who are successful now, recognise that their partnership is key. They respect each other's contribution.

I applaud the Bill's aims and very much hope that it will meet with success.

1.11 pm

Mr. Andrew Love (Edmonton): I seem to have been left out in that I am the only hon. Member who has not been circulated with information by the John Lewis Partnership; I shall write to draw the matter to its attention.

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I join other hon. Members in offering my congratulations to my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz)—I am sure that when he is in Leith, that title would change to "the hon. Member for Leith and Edinburgh, North". I congratulate him not only on his luck as a new Member in being drawn sixth in the first ballot that he entered—I could see the frustration on the faces of colleagues who have been in this place considerably longer and have never been drawn in the ballot—but, more important, on his choice of subject for his Bill.

Inevitably, as a private Member's Bill it will be only a limited measure, but employee participation is an extremely important issue, for two reasons. First, as has been said, it is crucial to the efficiency of the economy. Productivity, which is central, can be improved by employee participation. The performance of our companies—their ability to compete—is at stake. The measure also chimes in well with the direction that the Government have been taking.

Why is employee participation important? First, it engages with all the employees of a company—with their skills, their special knowledge and particularly their commitment to the company. If it is conducted properly, it can improve employees' motivation and drive innovation from the shop floor, which is where most of the best ideas in good companies come from.

At its best, employee participation provides a genuine workplace partnership between the owners and those who represent them and the management and workers of a company. That has very important benefits for the company. First, as many hon. Members have said, it reduces employee turnover. Not only are workers retained for longer, but the effectiveness of their training increases. They do not go off and work for someone else as soon as they have completed their training. Therefore, investment in staff can pay dividends if one can keep hold of those staff.

Secondly, and perhaps most important, employee participation fosters a more co-operative ethos. When we discuss the workplace in this country, we continually talk about confrontation. The Bill will help to develop a more co-operative ethos.

Employee share ownership can assist employee participation in several ways. First and most obviously, it incentivises employees. In doing so it also, if properly structured, aligns the interests of both sides of industry in the same direction. To return to an aspect that has been central to the debate, it also increases performance and productivity.

We normally have long discussions about productivity at the time of the Finance Bill and the pre-Budget report. The Treasury is on record as saying that we are not doing as well with productivity as we should and could be. The economy is going well, but we need to improve productivity. Even though it is a small measure, the Bill will go some way to achieving that.

Share ownership and, in particular, some of the aspects of the Bill can have a beneficial impact on several issues that have been discussed today. First, short-termism plagues the British economy. Our competitors all take a much longer look at what is best for their companies. Shareholding by employees, who have a longer-term interest in their companies, will have a beneficial impact on the short-term outlook of many in power in this country.

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Secondly, such share ownership will help company investment decisions. We all know about the dearth of research and development and about the need to ensure that we have adequate capital, especially behind our manufacturing industry. Every time that we compare the capital used per employee in Britain with that used in Germany or the United States, we see that we are failing in this country. The Bill would bring home that fact in boardrooms throughout the country.

Thirdly, corporate governance is an extremely important facet of the future of the company sector in this country. A wider stakeholder voice—whether for employees, or for customers and others—is very important.

All that will assist company performance, but I do not want to give the impression that it will revolutionise things overnight. We ought not to overstate the benefits, but there is a lot of evidence—such as that cited by hon. Members on both sides of the House today and that from the United States, where significant numbers of employees are involved in such plans—to show the benefits that employee share ownership can bring.

Many hon. Members have said that such schemes have been with us for a very long time. They go back to the early 1980s—a fact that Opposition Members have drawn to our attention. Indeed, three different schemes operated in this country when the Labour party came to power in 1997: the approved profit-sharing scheme, which has been placed in abeyance, the save-as-you-earn scheme and the company share option plan. About 2.5 million employees enjoy the benefits of those three schemes. That is to be commended, but the shortcomings of those schemes was the theme of the consultation document on extending share ownership that the Government issued in 1998.

Several facets of those schemes were considered in that document. The first issue is providing a greater reward for the long-term commitment of employees to their companies. Many hon. Members have mentioned that issue and explained how it is reflected in new legislation. The second issue is creating an enterprise culture, which we talk about a lot. Often—certainly in the past—our debates have been about creating an enterprise culture in the boardroom, but we need to create that culture on the shop floor, and the schemes, as currently structured, go some way to doing that.

Perhaps the most important issue that the Government highlighted was the need to extend such schemes to a much wider range of companies in our economy. We often talk about the importance of small and medium-sized companies to the United Kingdom economy, yet the existing schemes did not really involve them, and the schemes introduced in 1999 and 2000 represented an attempt to do so.

Experience in the United States shows the benefits that can be produced. A report on research into those results states:

I shall return to that point later, because the Bill refers specifically to active employee participation.

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There are other facets of the Government's concerns about the schemes that existed before 1997, the first of which relates to fairness. We cannot have fairness if only a limited number of senior managers are allowed to participate in a scheme. The only fair and proper mechanism is to have all-employee share schemes. Inevitably, they will be different for different employees, but they need to include everyone if they are to be fair.

I am a little surprised by some of the comments of Conservative Members, because the new SIPs were an attempt to reduce complexity and to reduce the cost to companies of share ownership schemes so that they could be extended to the smaller companies that were obviously concerned about such issues. It was to recognise the concerns expressed in the consultation exercise that the new scheme was developed. It has several features that were not in any of the previous schemes.

I wish to highlight some of the new features, and the first is that share awards can be performance related. I am sure that everyone will join me when I say that I am a little disappointed that many of the companies that have taken up the new schemes have not related awards to performance. The Government may wish to look at that in the future. Secondly, the new scheme gives companies the freedom to design schemes to suit their particular circumstances. One of the great difficulties with previous schemes was their rigidity, but companies now have much greater freedom.

Forfeiture and the need for employees to stay in a scheme are an important aspect of the new scheme, and it is one that I strongly support. The new scheme provides flexibility for the employer and employee and, perhaps most important for the employees, it allows them to buy shares out of gross income.

The Bill considers some of ways in which the 1999 and 2000 legislation can be improved. It talks about extending SIPs and the opportunity to take up a SIP for companies owned by employee trusts. That is important. We need to extend the schemes to a wider range of models of corporate ownership. We should not think that the share ownership company is the only corporate entity or that it is the most competitive, efficient or productive. There is plenty of evidence to suggest that there are other models, and the Bill will allow employee trusts to take part in employee share ownership. According to a parliamentary answer that I received in November last year, that could extend to as many as 60,000 employers. I shall return to that important consideration later.

I referred to United States research about active employee participation. Extensive research has also taken place in the United Kingdom and I wish to quote from the research carried out by Birkbeck college, which appears in the mutual pamphlet from Employees Direct. It states:

That is an academic way of saying that we need to involve employees and give them a meaningful voice in their company. Only if they have a role and some influence—each company will have to structure how it provides that—will they commit to the company.

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The hon. Member for Aylesbury (Mr. Lidington) spoke—I believe that he thought eloquently—about the distribution of shares through privatisations. The vast majority of employees sold their shares at the earliest opportunity, which does not benefit companies and is clearly not in their interests. Electing employee representative is one way to foster a commitment that will achieve the objective of getting employees to hold on to their shares. As democrats, we should be in favour of that.

My hon. Friend the Member for Edinburgh, North and Leith is right not to be prescriptive about that. No doubt there will be many views, as there are in the Chamber today, on what would be an appropriate election. We need flexibility, which is at the core of any development in this matter and needs to be maintained. The important principle is employee representation. Experience suggests that until now management has represented employee interests on a trust. The Bill would give employees a voice.

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