Growth and Infrastructure Bill

Business without Debate – in the House of Commons at 12:34 pm on 16 April 2013.

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Votes in this debate

  • Division number 202
    A majority of MPs voted to permit employers not to extend certain otherwise statutory rights to employees with a new employee shareholder status.

[Relevant document: the Seventh Report of Communities and Local Government Committee, The Committee’s response to Government’s consultation on permitted development rights for homeowners, HC 830.]

Consideration of Lords amendments

Photo of Michael Fallon Michael Fallon The Minister of State, Department for Business, Innovation and Skills , Minister of State, Department of Energy and Climate Change 12:48, 16 April 2013

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 from the beginning 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 job seeker’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 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 job centres 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 the noble Lords in that debate. 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 job centre advisers will not be able to mandate job seekers 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.

Photo of Andrew Stunell Andrew Stunell Liberal Democrat, Hazel Grove

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?

Photo of Michael Fallon Michael Fallon The Minister of State, Department for Business, Innovation and Skills , Minister of State, Department of Energy and Climate Change

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.

Photo of Julian Smith Julian Smith Conservative, Skipton and Ripon

Will the Minister confirm that there has been great excitement in many areas of the business community, especially in smaller tech companies, which is a positive reinforcement of the Government’s enterprise policies? We should pay tribute to the Minister for bringing this exciting proposal forward.

Photo of Michael Fallon Michael Fallon The Minister of State, Department for Business, Innovation and Skills , Minister of State, Department of Energy and Climate Change

I am grateful to my hon. Friend. We have never specified the type of company that is most likely to take up this new status, but obviously younger companies at the beginning of their lives will be able to use this status at a time when they might not be able to pay their staff more than competitor companies, or those already established in the marketplace. They will therefore have an extra edge to offer to those individuals whom they wish to recruit. We have had much interest already from such companies, who see the new status as an exciting way to motivate their new work forces.

Protections for people do not end there. The Bill confirms that someone can be an employee shareholder only if they are given at least £2,000 worth of shares, and if they are not, the person will not be an employee shareholder and will have all the normal employment rights that are associated with employees.

Clause 27 also stipulates that a person can only be an employee shareholder if they receive fully paid up shares. This means that the employee shareholder will not be liable for any debts should the company fold. Of course there will be circumstances where an employee shareholder leaves the business. It should be apparent from all that I have said that it is not the Government’s intention that employee shareholders are left with shares that they can sell back to the company only at prices that are unfair or where the buy-back arrangement would leave the employee shareholder at a financial disadvantage if there is no other way of disposing of the shares for value.

On Report in this House, we introduced an amendment to make a power to allow the Government to set a minimum value for the buy-back of shares if the company and employee shareholder enter into a buy-back agreement. That reserve power will be used, if it is needed, to safeguard employee shareholders in the unlikely event that employers behave unscrupulously. By including these protections we are ensuring that individuals understand the implications of employee status and are genuinely free to decide whether to accept it. No one can be pressurised, bullied or coerced into accepting this new status.

With this announcement of further explicit protection for jobseeker’s allowance claimants, I urge hon. Members to disagree with the other place and reinsert clause 27 into the Bill. The new employment status gives young companies in particular a new option that they can use to attract high-calibre individuals to help grow their business. It is important that we give companies that choice, but it is also important that we give people this opportunity to share in the growth potential of the company they work for. The clause should be part of the Bill.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

The Opposition agree with Lords amendment 25, which seeks to remove that part of the Bill that provides for the new status to which the Minister referred.

Let me start by making an observation. We are debating the Bill the day before many in the country will pause to observe the funeral of the late Baroness Thatcher. Coincidentally, in supporting the Lords amendment to dump the Government’s proposal, we find ourselves in the extraordinary position of being on the same side of the fence as at least four of her former Ministers: Lord Lawson, Lord Forsyth, Lord Deben and Lord King. The reason for this unusual state of affairs is simple. Notwithstanding the admittedly notable concession that the Minister has just given, this is an ill-thought-out and bad idea, and that is why there is strong cross-party opposition. Lord Forsyth put it well in the Lords when he said that the proposal

“has all the trappings of something that was thought up by someone in the bath”.—[Hansard, House of Lords, 20 March 2013; Vol. 744, c. 614.]

I have to say that I agree with Lord Forsyth on another matter, too. I cannot understand why my opposite number, the Secretary of State for Business, Innovation and Skills, Vince Cable, who I note is not here today, is going along with this. The Business Secretary engaged in some considerable media in respect of the Beecroft proposals, and said how outrageous they would be. I am, of course, aware that the Minister perhaps has a different view. As Lord Forsyth said, at least Beecroft did not take away entitlement to redundancy payments. This is worse than Beecroft because it does.

There are a number of reasons why we support the Lords amendment. They were all mentioned in the other place and we wholeheartedly agree with them. First, this is supposed to be a “growth” Bill. No evidence whatever appears to have been adduced by the Government to show how this measure would boost growth. The attitude of businesses, at its most generous, is divided; at its worst, it is overwhelmingly opposed to the measure. In the latest published survey of 700 companies by Barclays Corporate, which was published this week, the proposal appears to find favour with just 25% of respondents. In the Government’s own consultation, only five businesses out of the 200 responses received showed any interest in taking up the scheme.

Secondly, why connect employee ownership, for which there is widespread support in all parts of the House, with giving up rights to not be unfairly dismissed, redundancy pay, flexible working and time off for training? No coherent answer has been provided by the Government during the Bill’s passage through this House or the House of Lords. In fact, as the Conservative Baroness, Lady Wheatcroft, said, their proposal simply risks giving employee ownership a bad name. After all, if businesses with employee shareholders are looking to carry out a redundancy programme, who are they likely to let go first?

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

The hon. Gentleman gives me a choice of things to argue about, but I will pick up on just one—the survey. He refers to 25% of companies supporting the measure. He is overlooking the fact that it is designed to attract small and medium-sized enterprises—niche companies. It will never enjoy full use by 100% of companies. We should focus on the small businesses that will take advantage of it and become tomorrow’s medium and large enterprises.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

With the greatest respect to the hon. Gentleman, my understanding is that the survey was conducted among the very businesses to which he refers. As far as I am aware, the Government have not claimed that it is specifically for small businesses. I am happy to be disabused if I have got that wrong.

Thirdly, the proposal could do immense damage to workplace relations and to the standing of business more generally. I say that from a common sense point of view and as an employment lawyer. What on earth are employees to think if suddenly, out of nowhere, their employer says, “Will you give up all your fundamental rights in this workplace if I give you some shares?” What signal will that send to the employee? [Interruption.] Julian Smith says from a sedentary position that it is voluntary, but what does that say about one’s relationship with an employer if they are talking about taking away fundamental rights at work? As Justin King, CEO of Sainsbury’s and until recently a member of the Prime Minister’s business advisory group, said, what will the population at large think of businesses that want to trade employment rights for money?

Fourthly, and this applies more generally to the Government’s moves to destroy the unfair dismissal regime, removing people’s rights to claim unfair dismissal, or a redundancy payment for which compensation is capped, will simply increase the likelihood of employers facing spurious discrimination claims brought against them, for which compensation is unlimited. That was a point made by Baroness Brinton in the other place.

If an employee is to be offered this special type of employment status, it is important that they should be able to access proper advice on it, particularly in this climate when jobs are few and far between. That point was made by the noble and learned Lord Pannick, who proposed the amendment. The Government have refused to accept that statutory rights should be lost only if the agreement is in writing and the person concerned has received proper independent legal advice on its consequences. That is how it applies in relation to compromise agreements.

Then there is the issue of the shares themselves and tax. How on earth are these to be valued, particularly given—if the hon. Member for Enfield North (Nick de

Bois) is right that the measure is aimed at small companies—that many are unquoted. How will the value of shares be determined without incurring exorbitant fees that would render the whole exercise worthless? According to the Treasury, it will cost the Exchequer £l billion by the end of the forecast period, but the true cost may well be more because, as the Treasury’s December 2012 policy costing document says, it is hard to predict how quickly the increased scope for tax planning will be exploited. That point was picked up by Paul Johnson, the director of the Institute for Fiscal Studies, who said that

“just as government ministers are falling over themselves to condemn” tax avoidance

“that same government is trumpeting a new tax policy that looks like it will foster a whole new avoidance industry.”

Photo of Andy Sawford Andy Sawford Labour, Corby

My hon. Friend is absolutely right to raise the issue of tax avoidance. Is there not also an implication for lower paid workers? The Minister has just told us that only the first £2,000 of shares will be exempt from PAYE and national insurance. Does that not mean that workers with, say, £4,000-worth of shares will be hit with a tax bill?

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

That is absolutely right.

My final and principal objection to the proposal is this: last November, I put it to the Business Secretary in this House that an employer in his Twickenham constituency would, under these arrangements, be able to make acceptance of job offers conditional on people agreeing to accept employee owner status. He denied that that was the case, yet patently the arrangements allow for it. The risk in the current jobs market of people being pressurised, or feeling under pressure, to take jobs with this type of status will be increased.

I am pleased about the Minister’s concession today. I raised the point with him on Report, but did not get the kind of assurance or concession that he just gave, and it is good that he gave it. Lord Forsyth said he was astonished that the coalition was even thinking of bringing forward a measure under which people could have their right to jobseeker’s allowance withdrawn if they did not accept a job on this basis. Of course, we will need to study the guidance. We have not seen it yet, and the first we heard of the concession was from the Minister just now. Notwithstanding the concession, however, and for all the reasons I have just given, we continue to support Lords amendment 25.

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

I am grateful for the opportunity to highlight a couple of points in favour of the Government’s measures. Judging from the comments of Mr Umunna, obviously the Opposition see this fundamentally as an attack on rights, whereas I see it as a chance to empower individuals and workers to become owners and shareholders and to move from employment to entrepreneurialism, which is something that should be encouraged, not fraught with fear.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

I absolutely agree with the hon. Gentleman, but I fail to understand why we have to withdraw people’s rights in order to achieve that.

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

I will come to that. I know that the hon. Gentleman has a history in corporate mergers and acquisitions. When I started my business some time ago, engaging with individuals and offering them a stake in my business was fundamental. It was all about the people I worked with, so I gave away shares to individuals to whom I wanted to give them in order to make them part of the company. I did not have the advantage of what is being offered today, but neither did I have the disadvantage of the market we are in today. Back then, we had not seen the massive increase in employment regulation that came in from Europe under the previous Government.

Photo of George Freeman George Freeman Conservative, Mid Norfolk

My hon. Friend, like me, has experience of running small businesses. On the connection between rights and responsibilities in a small company, does he agree that it is fundamentally in start-ups and micro and small businesses, where regulations and red tape hold back progress, that we need to help employees to understand the link between the two? Furthermore, does he agree that that is why the measure has been welcomed by entrepreneurs and senior business people, such as Brent Hoberman, the co-founder of Lastminute.com, and Stuart Rose from M&S? Brent Hoberman said that this imaginative new proposal would be welcomed by British entrepreneurs and entrepreneurial employees alike and that it will encourage workers to be company owners and give fast-growing businesses more flexibility in return.

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

I agree. The point I am trying to make, in as balanced and fair a way as I can under the circumstances, is that, like many people, when I started a business, I did not worry about employment rights and legislation. I tackled it with enthusiasm; I went for it. When I did that, however, in the late ’80s, I did not have to think about the issues that are now facing many people and which are now at the forefront of their minds. That is why I welcome the proposal.

I want to stick to my main premise, in response to the comments from the hon. Member for Streatham. I do not believe that anyone will lightly give up shares in a business. It is not something that employers do. They give shares up only in return for value, and they get that value from people or by selling them. It is perfectly reasonable to assume that employers will look for value from what they give up. As he will know with his background, however, we also have to bear it in mind that by transferring shares, employers also transfer rights—in contrast to what he said about employment rights—under the Companies Act 2006, which was introduced by the last Government, which enhanced the rights of minority shareholders, such as on matters of prejudice. Employees can even form quasi-partnerships through small minority shareholding. Employers do not lightly give up shares, and when they do, they actually give rights to individuals.

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

If the hon. Gentleman wants to intervene, I would be happy to take up his point.

Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills 1:15, 16 April 2013

I do not disagree with many of the hon. Gentleman’s points, but I still fail to understand—he will have to forgive me—why, despite what he says, we need to link giving up shares and allowing employees to participate in the way he describes with taking away their fundamental rights at work.

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

I hope that the hon. Gentleman will understand, as I am sure he does, that the best chance of success for a micro niche business—the people who will benefit from this measure and become tomorrow’s medium businesses—is to be in the most flexible market possible. The supply side has to be flexible, so that employers can afford to take the risk.

These very modest removals being offered to individuals—they will not be compelled to take them—will be attractive to entrepreneurial, non-risk-averse employees as well as to small, flexible business leaders wanting to start a business.

Photo of Andy Sawford Andy Sawford Labour, Corby

The hon. Gentleman makes the point—it is a legitimate point, but I happen to disagree with it—that these regulations are over-burdensome. One person’s regulation is another person’s basic employment protection. The critical issue, however, is surely the link. His argument might well be worth hearing in this place, but why link the two? That is the critical issue that my constituents do not understand.

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

The biggest step someone takes when they start a small business is employing someone. They cease to be a sole trader working in their own environment; their own boss without responsibility for anyone else and having to meet only their own needs and those of their family. They do not want to take that step chained by too many onerous responsibilities too early on. They seek therefore to strike a deal with their investor or partner, and in return for that flexibility, they do not ask for a single penny in cash to invest in the business. That is a good deal. I would have taken it, had it been on offer to me and had I faced these regulations.

Photo of Julian Smith Julian Smith Conservative, Skipton and Ripon

My hon. Friend is describing very effectively the challenges facing a new small business. Does it not surprise him that the Opposition, particularly the shadow anti-business Secretary of State, are so negative about these supply-side changes?

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

I am not surprised that the hon. Member for Streatham, who speaks very eloquently, expresses his support for employee and share ownership, but neither am I surprised that while expressing their support, the Opposition will probably vote against it.

I want to leave the House with one thought. We all want Britain to succeed. We know, from the statistics that we have traded across the Floor many times, that growth will come from the small and medium-sized enterprises that dominate our economy. The small businesses that I believe will take up this offer—I believe the Government also recognise this—will become the medium enterprises that are so critical to our growth.

Photo of David Ward David Ward Liberal Democrat, Bradford East

One of the most significant features of the current recession has been the flexibility in the labour market. In contrast to the ’80s, when there were widespread redundancies, as people were just laid off, we have seen remarkable flexibility and partnership between management and employees, with reduced working hours and pay. It has been a great tribute to employees and management. That flexibility has been proven to work. Would not the temptation be, under these proposals, simply to get rid of those staff?

Photo of Nick de Bois Nick de Bois Conservative, Enfield North

No responsible employer would ever relish the prospect of losing the experience that he has invested in to help to develop his business. I have had the pleasure of offering people jobs and of recognising that in some cases, if they have come from unemployment, it can be a life-changing experience for them. However, I have also shared the pain of having to lose people, often through no fault of their own, and I will take no lectures from anyone about how employers relish losing people. It does not happen.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

I want to make four simple, brief points. The first is about share ownership. I tabled amendments when the Bill was debated in this House to try to extend share ownership without connecting that with the loss of rights. It is noticeable that the Government opposed those amendments. As people look to reconstruct the economy and learn the lessons from what has happened in this economic crisis, there is a genuine willingness to look at greater involvement by the work force in the management of companies. Part of that is about extending share ownership to workers. That is a development that we have welcomed in both Houses. The problem is that linking the two things in this way will not act as an incentive for companies to recruit the best; in fact, it will act as a deterrent. If someone faces the choice of going to a company that offers them share ownership without the loss of rights, they will go to that company. If they have the opportunity of going to a company where they will have to sell some of their rights, that will obviously act as a deterrent.

Photo of Andy Sawford Andy Sawford Labour, Corby

I agree with my hon. Friend’s point about workers in that situation, but we should also challenge the account that is being given about how attractive this measure will be to small businesses. I have run a small business. The idea that I would have to work out the tax and other implications of this measure with my work force when I had far more important things to do—building a good, strong work force and running a business—does not stack up to me.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

I was going to make that point. There is an element of complexity in this scheme which will lead to small businesses coming to us in about six months’ time and saying that it is part of the overburdening of regulation.

Photo of Mark Lazarowicz Mark Lazarowicz Labour, Edinburgh North and Leith

On that point, the assumption has been made that all employees will opt for this status, but in many cases some workers will, while others will refuse, leading to two types of worker in the same business and even more complexity for the very small businesses that we are trying to support.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

That leads on to my second point—I do not want to delay the House. This measure opens up the process of recruitment, retention and promotion to potential victimisation and abuse. Despite the formal protections that the Government assure us will be put in place, the reality is that informal pressures will be put on those who wish to be recruited, retained or promoted and these will override the formal protections. Those who have represented people at tribunals and elsewhere will know that it is extremely difficult to prove victimisation and bullying in the work force. Those informal pressures will eventually undermine the credibility of the scheme. My fear is that they will also undermine the credibility of employee share ownership schemes overall.

Thirdly, I look forward to reading the draft regulations and guidance on protections for jobseeker’s allowance. However, ministerial statements on JSA protections in recent months, as recorded in Hansard, have proved not to be worth the paper they are written on. I refer to assurance after assurance we were given that there were no targets for sanctions in individual jobcentres, when we now have concrete evidence that that is the case. Ministerial assurances on the operation of JSA have so far not proved to be effective. I believe that, at the end of the day, they will prove not to be effective in this case either, because the same informal pressures will be put on jobcentre workers to meet targets for sanctions overall.

Finally, this measure sets an extremely dangerous precedent. The idea of selling rights could creep into other areas of policy making. For example, will landlords in future be able to offer reduced rents for reductions in security of tenure? Will consumer rights be sold for a reduction in the price of particular goods? That is much more significant than the scheme being proposed in this debate. The idea that rights can be sold in any sphere of government activity sets a dangerous precedent for the future development of rights in this country.

Photo of Julian Smith Julian Smith Conservative, Skipton and Ripon

Does not the hon. Gentleman agree that businesses throughout Britain have been laden down with regulation, particularly in employment, and that we have to try constantly to make it easier for them to take people on, particularly at the moment, when we need to do that to create jobs?

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

With the greatest respect to the hon. Gentleman, I disagree. We have heard this argument about the overburdening of regulation year after year, and it is usually used as a justification to give employers the facility to sack people, cut their wages or undermine their employment rights.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington

It is, but I was trying to be a bit more subtle about the process of allegation—I appreciate that it does not really suit my style of speaking.

The point I am trying to make is that, in addition to the process of selling rights, the scheme will not just be unworkable—because its implementation will increase burdensome regulation even more, as my hon. Friends have said—but will act as a deterrent against positive moves towards the development of share ownership and worker engagement in companies. On that basis, I think that, apart from being iniquitous, this measure will be counter-productive. That is why I wholeheartedly agree with the points my hon. Friend the shadow Secretary of State made in support of the Lords amendment.

Photo of Julian Smith Julian Smith Conservative, Skipton and Ripon

I want to speak briefly in support of my hon. Friend Nick de Bois and talk about the narrative that is developing among Opposition Members. We heard the same bleating for settlement agreements and we have heard the same rhetoric for these proposals. We have heard no tangible idea from the Opposition of how we might make life easier for the thousands of small businesses in North Yorkshire that are creating the bulk of the jobs in my constituency or for the tiny companies across the UK that are struggling with the six regulations a day that Labour piled upon them.

The proposals that we are discussing are part of a suite of proactive measures to make business easier in this country. Business was laden with regulation, taxation and more and more bureaucracy by the Labour party in power. We—our party and this Government—are doing absolutely the right thing by looking at every opportunity to find ways to make life a bit easier for the hard-working men and women who are waking up in the middle of the night, worried about whether they can pay staff the next day. I commend these proposals and the others that the Government are making across the range of their enterprise policies.

Photo of Mark Lazarowicz Mark Lazarowicz Labour, Edinburgh North and Leith

I, too, would like to say a few words about this proposal of shares for rights. Of the various types of employment legislation that have come before this House over the years—these provisions are basically employment legislation—there can scarcely have been any with as few friends, on either side of industry. I welcome the fact that the House of Lords did its revising job well and removed the offending clause. I am only sorry that the coalition parties, Conservative and Lib Dem, have chosen to bring it back today, instead of withdrawing quietly and gracefully.

Given that this provision has so few friends, I suspect that very few employers will want to make use of it. That is because employers who want to extend employee share ownership, of which I am a great supporter—the year after I entered this House I introduced a private Member’s Bill to promote it—will not want to do so in ways that force their employees to give up important rights at work. The type of employer who wants to work with their employees is not likely to be one who at the same time wants to alienate them by taking away their rights, which is what this measure would force such employers to do if they made use of it. Of course, it is hard to see any employees volunteering to adopt such an arrangement either. I suspect that employers who would make use of the measure would be those who are in difficulty.

I take the point that was made earlier about businesses that want to start up and take on more workers making use of the scheme, but the problem is that, although a new business could behave with the best will in the world in involving its workers in a collective enterprise, it will be when things go wrong and people fall out that those workers will need the protection that is enjoyed by the workers of this country. That is why we should be loth to throw that protection away.

One objection has involved the suggestion that tax dodges and loopholes could be taken advantage of as a result of the measure being introduced. The Government say that they will ensure that that does not happen, but we all know that tax lawyers will find new ways round legislation and that Governments will have to try to catch up with them, no matter what measures are introduced to prevent that from happening. I suspect that, in a couple of years’ time, measures to deal with new loopholes and tax dodges will have to be quietly introduced in a Finance Bill, in the hope that no one notices the embarrassing results of the changes.

There is a possibility that the scheme will lead to a growth in the number of workers with fewer rights, and to the deregulation of the labour market to which Jonathan Edwards referred. If that were to happen, it would be insidious to see a spread of businesses or employers giving up some of the most important rights to be won by workers and their trade unions over many decades. Incidentally, a different Liberal party was proud to speak up for those rights in the past, but in its current guise it seems happy to see them taken away.

It is also foreseeable that businesses making use of the scheme might eventually have to implement redundancies and lay-offs in which people lost their jobs. It is precisely at such times that the potential for legal challenges would arise. I do not have time today to go into all the possibilities, but it does not require much imagination to understand the prospect of all sorts of legal challenges—

Photo of Mark Lazarowicz Mark Lazarowicz Labour, Edinburgh North and Leith

Thank you, Mr Speaker. I shall end by saying that I hope the House will not support the Government’s proposals today.

Photo of Michael Fallon Michael Fallon The Minister of State, Department for Business, Innovation and Skills , Minister of State, Department of Energy and Climate Change

With the leave of the House, I should like briefly to respond. I am afraid that we have had a fairly predictable debate today. We have heard the voices of the employment lawyers on the Opposition Benches, and the voices of entrepreneurs on this side of the House. I have made it absolutely clear that the proposed status will be entirely voluntary and optional, and I have introduced a further change today to make it absolutely clear that those who are on jobseeker’s allowance will be fully protected. Nobody has to take up this status. Nobody can be harassed or bullied into taking it up, but there are plenty of businesses that are ready and willing to do so.

I should like to finish by citing Miss Becky McKinlay, who said that she would have welcomed such a scheme when she set up her company six years ago, because she could not afford to outbid her peers on wages. Her company is called Ambition, and we should be ambitious—

Forty-five minutes having elapsed since the commencement of proceedings on consideration of the Lords amendment, the debate was interrupted (Programme Order, this day).

The Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House disagrees with Lords amendment 25.

The House divided:

Ayes 277, Noes 239.

Division number 202 Growth and Infrastructure Bill — Employee Shareholder Status

A majority of MPs voted to permit employers not to extend certain otherwise statutory rights to employees with a new employee shareholder status.

Aye: 277 MPs

No: 239 MPs

Aye: A-Z by last name

Tellers

No: A-Z by last name

Tellers

Absent: 129 MPs

Absent: A-Z by last name

Question accordingly agreed to.

After Clause 4