Previous SectionIndexHome Page

Mr. Watson: I am grateful to my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) for clarifying the provision, which is very complex, as every member of the Committee said. They had the greatest minds of the Treasury to unpick it for them; I am afraid that I do not. I was concerned that its complexity would discourage employers and employees from taking up the offer, but clearly that is not the case. The new clause will help to lighten the burden, and it is a welcome concession. Now, those shares acquired with up-front capital tax relief can be distributed over a longer period. That will go a long way to increasing the impact of the Bill. There is consensus in the House on extending the role of share incentive plans.

In a busy workplace, the employer might have felt that the scheme was another burden on his time, so I am pleased that the Treasury has agreed to this incentive. I have talked to employers in my constituency who have said that extending the period to 10 years means that they will definitely take another look at the provisions. I hope that they will go some way to encourage the flow of shares from the trust to individual employees over time. So far, only 600 companies have applied or shown an interest. I have 4,500 companies in my constituency that would welcome the new clause, and I am pleased that it is before us this morning.

Roger Casale (Wimbledon): I put on record, as have other hon. Members, that this is a very sad day for English

21 Jun 2002 : Column 524

football. If anything has prepared me to confront that psychologically and emotionally it is the fact that I am only just recovering from another sad day for English football two weeks ago—the Football Association's decision to allow Wimbledon to go to Milton Keynes.

Mr. Watson: Does my hon. Friend agree that if the new clause had been enacted at that time, the players at Wimbledon football club might have had greater direction over the decisions of the club's management, which might have gone some way to ensuring that Wimbledon stayed in its rightful home—Wimbledon?

Mr. Deputy Speaker: Order. I congratulate the hon. Gentleman on cleverly steering his hon. Friend back into the realms of the new clause, but I hope that he will not be tempted to maintain a sporting theme.

Roger Casale: I will not be tempted, Mr. Deputy Speaker. I sometimes refer to my hon. Friend the Member for West Bromwich, East (Mr. Watson) as the hon. Member for West Bromwich Albion. The answer to his question is yes. Perhaps I shall elaborate on that on Third Reading.

Although I was not selected to serve on the Committee, I welcome the new clause, as I welcome the Bill itself. It will strengthen and widen the benefits of the Bill. The Bill will bring many benefits to those who take up the opportunity of employee share ownership, but also to the economy as a whole. As well as establishing a framework for economic stability, the Government are concerned to use the tax system to change incentives at the micro-economic level in a way that encourages enterprise and boosts productivity. The Government introduced many such tax measures in previous Budgets, and did so again in 2002, many of which enjoyed, and are enjoying, cross-party support and will help to boost Britain's productivity.

The Government's support for the Bill is entirely consistent with their approach to promoting enterprise and Britain's competitiveness. It is important to frame legislation in a way that accommodates the understandable demand to broaden share ownership consistently with the Government's overall approach to economic stability and to reforming the tax system. That is why I am pleased that my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) has had such good consultations with the Treasury and that the Government have worked with him jointly on the new clause, which is a beneficial measure that will enhance the overall benefits of the Bill. Extending income tax and capital gains tax relief for share incentive plans to 10 years will, as my hon. Friend the Member for Edinburgh, North and Leith argued so well, make it more likely that such schemes will be taken up, because early corporation tax relief will not be eroded by tax changes on the shares within the 10-year period.

The Government's support shows that they are prepared to allow, and indeed to encourage, such measures to come forward from the co-operative movement. There has also been support from trade unions, as well as a great deal of input and support from small and medium-sized enterprises—through the Small Business Federation, for example.

The new clause will make employee share ownership more viable. It will encourage more schemes and encourage more employees to participate in them. Many

21 Jun 2002 : Column 525

people in my constituency of Wimbledon support the Bill and the new clause, and perhaps some will pioneer such schemes and take them up. The newly formed Wimbledon amateur football club, set up because the professional club is disappearing, will be able to take advantage of these new measures, as well as many others that the Government are introducing, such as the tax relief announced in the Budget for participation in and donations to community amateur sports clubs.

I am pleased to support the new clause, to have the opportunity for the first time to voice my support for the Bill as a whole, and to congratulate my hon. Friend the Member for Edinburgh, North and Leith on introducing it. I also put on record my appreciation of the fact that the Government have worked with my hon. Friend and with organisations outside the House to draft the Bill so as to ensure that it works for everybody. I hope that the House will give it its support.

Mr. Howard Flight (Arundel and South Downs): I lend support from the Opposition both to the Bill and to the new clause. The Conservative party has long supported the principle of employee share ownership. As hon. Members will know, we introduced the save-as- you-earn option scheme, the approved profit sharing scheme, the company share option plan and the qualifying employee trust, two of which the share incentive plan replaces.

In my personal career, extending share ownership of the business that I led and built up for 15 years meant that it succeeded. The mentality of motivating everyone who works for a business to want to make it a success so that they are willing to work extra hours if necessary and pull together makes a dramatic difference. From 1992 until last year, and the sad fall of the stock market after the pensions crisis, the performance of companies that had substantial employee ownership was roughly double that of those that did not. However, I cannot help but make the point that people who had not previously thought about such matters become capitalists once they have an ownership stake. They understand profit and loss and that it is hard to win business; things do not simply drop into one's lap. They adopt a capitalist mentality.

Mr. Chris Bryant (Rhondda): Is it not true that if everyone shares ownership, we all become socialists?

Mr. Flight: The hon. Gentleman should return to his political studies because the essence of socialism is not the profit motive, and the essence of employee share ownership is ownership and participating directly in profits and the capitalist mentality that accompanies it. However, the possibility of crossing strands and overlap is interesting.

Linda Gilroy: Will the hon. Gentleman sign up to at least one important part of our clause 4, which states that wealth, power and opportunity should be in the hands of the many, not the few? Far from all being Thatcherites now, we are all socialists now.

Mr. Flight: I shall not stray into the realms of unreality. Business is business. As the employees of the John Lewis Partnership and the other successful businesses that have widespread employee share ownership would tell the hon. Lady, we are not

21 Jun 2002 : Column 526

considering Utopia. Hard decisions must be made and people have to devolve decision making, just as the socialist Government have devolved decision making to their Ministers. However, hon. Members should be happy that there is widespread support for the Bill.

The new clause was essential to make sense of clause 1(3) and (4); otherwise the Bill would put in place the block transfer of 10 per cent. and the requirement for attaining an SIP basis in 10 years; but if the business did not receive the same tax treatment, it is unlikely that anyone would use the measure. The new clause is sensible and in line with the Bill's intent.

A question was asked about take-up. The latest figures that I have seen for SIPs since they were introduced in 2000 show that there are 202 schemes. That is positive, but we would like a great deal more take-up. I shall be interested to hear whether the promoter or the Government have any plans for promoting the achievement of the full mechanisms that enable employee share ownership.

If I understand the position correctly, the clause that the Government deleted—I call it the John Lewis clause—tried to encourage employee share-owned companies, the shares of which were already held collectively in employee trusts, by enabling the shares to become eligible for distribution to individual employees under the SIP. I also understood that the Government's objection to that was that they did not want the SIP to allow anything other than ordinary share capital to be distributed under its provisions, because of the danger of employees having inferior shares. However, SIP arrangements permit employers to select non-voting shares and it could be argued that voting shares are more valuable and powerful than non-voting shares. The arrangements that the new clause tidies up would, in principle, enable the block schemes with their tax advantages to involve non-voting shares, so I cannot understand the logic of the Government's earlier objection to the John Lewis clause.

Next Section

IndexHome Page