Clause 8 — Electronic communications code: the need to promote growth

Growth and Infrastructure Bill (Programme) (No. 2) – in the House of Commons at 7:00 pm on 17th December 2012.

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Votes in this debate

  • Division number 123
    A majority of MPs voted to exempt those with employee shareholder status from certain statutory employment rights.

Amendment made: 6, page 11, line 31, at end insert—

‘( ) At the end of section 14 of the National Parks (Scotland) at 2000 (asp 10) (public authorities’ duty to have regard to National Park Plans when exercising functions in relation to National Parks), the existing text of which becomes subsection (1), insert—

“(2) Subsection (1) does not apply to the exercise by the Secretary of State of the power to make regulations under section 109 of the Communications Act 2003 (conditions and restrictions on application of electronic communications code) if—

(a) the power is exercised before 6 April 2018, and

(b) the resulting regulations are expressed to cease to have effect (other than for transitional purposes) before that date”’.—(Nick Boles .)

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

I beg to move amendment 59, page 32, line 9, leave out clause 25.

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

With this it will be convenient to discuss the following:

Government amendments 22 and 23.

Amendment 60 in clause 25, page 32, line 13, leave out ‘or becomes’.

Government amendment 24.

Amendment 37, page 32, line 14, at end insert—

‘(za) the individual has been an employee of a company for at least two years.’.

Amendment 61, page 32, line 15, leave out ‘the company’ and insert ‘a majority of the employees of the company’.

Government amendment 25.

Amendment 62, page 32, line 21, after ‘£2,000’, insert—

‘if the individual has been an employee of the company for less than three years, increased by an additional £2,000 for every additional year for which the individual has been an employee of the company’.

Amendment 40, page 32, line 23, at end insert—

‘(1A) The Secretary of State shall make by statutory instrument such regulations as are necessary to safeguard an employee who declines to enter into an agreement under subsection (1) from any consequential detriment.

(1B) The Secretary of State may not make any regulations under subsection (1A) unless a draft of the statutory instrument containing the regulations has been laid before, and approved by, a resolution of each House of Parliament.’.

Amendment 41, page 32, line 23, at end insert—

‘(1C) The Secretary of State shall issue such guidance as is necessary to safeguard any person who declines to enter into an agreement under subsection (1) from any consequential reduction or withdrawal of any state benefit to which they are entitled by virtue of their current employment status.’.

Amendment 63, page 32, line 23, at end insert—

‘(1A) The Secretary of State shall provide by regulations for there to be, for every company having employee shareholders, a director who is elected by those employee shareholders.

(1B) Regulations under subsection (1A) shall be made by statutory instrument and shall not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’.

Amendment 39, page 32, line 24, leave out from beginning to end of line 11 on page 33.

Government amendments 26 to 31, 64, 65, 32 and 66.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

We now come to the worst clause in a bad Bill. In the words of the Christmas song, ’tis the season to be jolly, but sadly this out-of-touch Government are dampening the festive spirit with a measure that embodies the characteristics of the classic Dickens character, the miserly employer Ebenezer Scrooge, at his worst. I would never accuse the Minister of State, Michael Fallon, of being such a character, but I hope that he will prove to the House that he is not, by removing clause 25 from the Bill.

As in that Christmas tale, let us look back at the ghost of Beecroft past. It was back at the beginning of October when, much to everyone’s surprise, the Chancellor announced the Government’s intention to introduce a new employment status. A company would be able to offer an employee shares in its business in exchange for some of that individual’s rights at work. The proposal has had a quick passage since the Chancellor’s speech, in which he spoke of

“owners, workers and the taxman, all in it together. Workers of the world unite.”

I have to give it to the Chancellor; he has certainly fostered a sense of unity. He has unified outright opposition to this policy from every quarter. It has received a lukewarm response, at best, from the business community, and it has been roundly trounced by employee organisations, trade unions, business leaders and charities. Only five of the 219 consultation responses welcomed the proposals. We therefore believe that our amendment 59 is the only acceptable option, as we can see no way in which the clause could be amended to make it more palatable. I appreciate that amendments have been tabled by my hon. Friend John McDonnell, who is in his place, but, to be honest, he is trying valiantly to make a silk purse out of a sow’s ear.

As my right hon. Friend Hilary Benn said on Second Reading, this measure is about cash for repeal. For as little as £2,000-worth of shares, an employee would be able to give up legal rights such as their right to training, their right to unfair dismissal protections, their right to a redundancy payment—even though their shares might be valued at less than the statutory redundancy payment—and their right to flexible working, which would fly in the face of announcements made by the Department for Business, Innovation and Skills only last week.

Looking at the proposal more closely, we see that the ambiguities are numerous. It is not at all clear whether the new type of employment contract would be genuinely voluntary. In Committee, the Minister said that nothing in the Bill would make the status mandatory, but I am not sure that that clarification is good enough. Paul Callaghan from the respected legal firm Taylor Wessing has commented that

“these contracts will be optional to the extent that eating and drinking is optional.”

We know that employers will be able to offer employee-owner status to new recruits, but it is far from clear how voluntary the scheme will be in reality, or whether employees or prospective employees will be offered a real choice. People will be under undue pressure to take up a position even though they might not be able fully to appreciate the rights that they will be giving up. In truth, few with family responsibilities would want such a contract. We have consistently posed the question of whether employers would be free to decide to employ all new recruits on employee-owner contracts, meaning that individuals would have no choice but to contract out of their basic employment rights if they wanted the job. The Minister has failed to address those points.

I have also raised the fear that there would be nothing to prevent employers from threatening existing employees that they will retain their jobs only if they agree to sign a new employee-owner contract. Existing employees could therefore be pressurised into agreeing to move on to such a contract. No mention is made in the Bill of safeguards for individuals who decide not to opt to become an employee-owner, and despite our tabling constructive amendments in Committee the Government rejected them outright. I appreciate that Andrew Stunell and the Secretary of State tabled amendments relating to this, but the reality in the workplace is much more difficult.

What about people who are claiming jobseeker’s allowance? Members will have received a letter from the Department of Work and Pensions only last month outlining the sanctions available to the Department if people refuse to take a job. It stated that the higher rate sanction would be put in place if claimants

“refuse or fail to apply for a suitable job”.

Would refusing an employee-owner-only contract constitute refusing to take a suitable job? The Minister said in Committee that that would be up to the discretion of the DWP, and that he would reflect on that discretion. That is simply deplorable. I am keen to hear what measures he will propose, having reflected on the matter, to ensure that the scheme is genuinely voluntary, as the Government insist, and that jobseeker’s allowance claimants will not be at a disadvantage, should they rightly refuse to accept a job in which they did not have full rights at work.

The Government are also unclear about the valuation of shares and the cost to the businesses themselves. How is the average employee meant assess the true value of the shares being offered?

Let me refer again to the wonderful contributions by Paul Callaghan when he gave evidence in Committee. He highlighted the significant potential costs to business of putting these proposals in place: the costs of valuing, issuing and allotting new shares in small numbers to a great number of employees. He said that small firms might not wish to dilute their share ownership in this way in any case, and might have internal restrictions preventing them from doing so. What happens when small businesses have additional investment, as often happens in the technology sector, at which these proposals are directed?

Critically, the loss of unfair dismissal rights may lead to grievances being construed as other claims. This could lead to an escalation in discrimination and whistleblowing claims, which are more time consuming, more costly to the employer and take up more tribunal time. This could be catastrophic for business.

Overall, the adverse impacts on employees, the disincentives for employers and the inconsistencies with existing legislation all tend to suggest that this has not been properly thought through, which is really bad for business. There are also issues with insolvency and when businesses run into trouble. Given that these contracts will mean employees giving up their redundancy and unfair dismissal rights in exchange for as little as £2,000 in shares, when a company needs to shed staff it will surely sack those on employee-owner contracts because the share value will be at its lowest, or, indeed, be completely worthless.

What about the hot topic of tax avoidance? The Institute for Fiscal Studies attacked the Government for condemning tax avoidance as they

“prepare…to put another billion pound lollipop on the table”.

The IFS said:

“Just as government ministers are falling over themselves to condemn such... behaviour, that same government is trumpeting a new tax policy that looks like it will foster a whole new avoidance industry.”

In the autumn statement, the cost of the policy was estimated to be rising to £1 billion. The IFS concluded:

“Much tax policy is made carefully and with extensive consultation. But it doesn’t take very many of these sorts of rushed, ill thought out and badly designed bits of policy to undermine the rest of the system.”

Let us move on to the Business Secretary. In “A Christmas Carol”, the Business Secretary is the Bob Cratchit to the Chancellor. He came out following the Government’s conference announcement to appease those in his own party who recognised how ridiculous the policy is. The Business Secretary wrote:

“This is categorically not a case of us allowing no-fault dismissal—a scheme championed by Tory donor Adrian Beecroft—by the back door and condemned by Liberal Democrats as introducing a ‘hire and fire’ system.”

The Business Secretary is absolutely right. This is not compensated no-fault dismissal by the back door; this is the ghost of Beecroft present. What we have here is a final attempt by the Chancellor not just to deliver his Beecroft-compensated, no-fault dismissal by the back door; instead, given the issues around the paper value of shares, particularly in non-quoted companies that might sack employees when business falters, it is a step even further than Beecroft. This is simply no-fault dismissal—without any compensation.

Worst of all is the second “Tory tax bombshell” of this Parliament, this time involving income tax and national insurance. The Liberal Democrats will remember the phrase, given that they coined it in 2010 in relation to VAT, which they subsequently put up. In Committee, the Minister read out the section from the autumn statement:

“The Government is also considering options to reduce income tax and National Insurance contributions…liabilities that arise when employee shareholders receive their shares, including an option to deem that employee shareholders have paid £2,000 for shares they receive. This option would mean that the first £2,000 of shares received under the new status would be free from income tax and NICs.”––[Official Report, Growth and Infrastructure Public Bill Committee, 6 December 2012; c. 490.]

This is, quite frankly, in the words of the Government “bonkers”. An employee who received as little as £4,000-worth of shares would be hit with PAYE and national insurance charge of hundreds of pounds in their first pay packet, despite having never realised the value of these shares—if, indeed, they ever have any value at all. Share plans expert Matthew Findley of Pinsent Masons has said:

“The Government’s decision to press ahead, despite widespread criticism, is not surprising given the amount of political capital originally invested in the idea…The level of opposition to the proposal is clear from the Government’s response to the consultation but little of what has been said so far is likely to improve the position. Critically, the income tax position of employee owner shares has yet to be finalised.”

This is simply not good enough.

In conclusion, we fully support employee ownership, but this policy has the potential to undermine all the good employee schemes that exist. There has been little or no proper consultation, as the Government rushed this through in eight weeks in order to produce a response and an impact assessment before we got here today.

Justin King, chief executive of Sainsbury, who until last week served on the Prime Minister’s business advisory group, cautioned that the policy is

“not what we should be doing”.

He continued:

“What do you think the population at large will think of businesses that want to trade employment rights for money? Our agenda, if the government want to help us, should be making employing people easier and less costly.”

Photo of David Anderson David Anderson Labour, Blaydon 7:15 pm, 17th December 2012

My hon. Friend is making a very good case. Is it not clear from what Conservative Members have said that we know exactly what this is about—it is about the complete disregard for workers’ rights by Government Members? They believe anything can be resolved by waving money at it. It is absolutely disgraceful that we even have to discuss this issue tonight. I hope the Liberal Democrats will have some of the courage that they have not shown in two and a half years so far and vote against this measure tonight.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

My hon. Friend makes an incredibly strong point. If the clause had been drafted to increase employee ownership without the exchange for rights, we would fully have supported it. What the Government are doing, however, is saying to employers, “If you wish to buy out the rights of your employees, you may do so for as little as £2,000 without any regard whatever to the protection they have against unfair dismissal and redundancy.” Crucially, in response to my hon. Friend Mr Anderson, this flies in the face of the Government’s flexible working policies that they were trumpeting just last week. In addition, the people who will be hit worst by this policy will be those who are not able to seek advice and those who are not members of trade unions or other associations.

Photo of Gregg McClymont Gregg McClymont Shadow Minister (Work and Pensions)

We Labour Members have enjoyed my hon. Friend’s Dickens metaphor. He will be aware that what Dickens disliked above all else was the Liberal party of the late 19th century, which believed in a laissez-faire economy—and the devil take the hindmost. What does my hon. Friend think Dickens would make of this Liberal Democrat party supporting such a bonkers idea?

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

That is a worthwhile intervention from my hon. Friend, who is an historian himself, so I could not possibly argue against the valuable points he has just made. It is extraordinary that the Liberal Democrats are bringing forward this proposal and are wholeheartedly supporting it. The Business Secretary is not here, and the Business Secretary was not here for the Third Reading or vote of his own Enterprise and Regulatory Reform Bill, in which provisions affecting the rights of workers were pushed through. If the Liberal Democrats do not see that this is Beecroft by the back door, they should have a look at some of the information being put out by the business community and others.

I was quoting Justin King a few moments ago. He said that we

“should be making employing people easier and less costly.”

That sounds very much like our national insurance holiday, which is part of Labour’s five-point plan.

I referred in my opening remarks to Ebenezer Scrooge—a cold-hearted, tight-fisted and greedy character who treated his employees appallingly. I believe that the overwhelming

majority of hard-working and entrepreneurial businesses in the UK are exactly the opposite, and understand that the relationship between employers and employees in the workplace is critical for good business.

We know the Minister has no appetite to take these “shares for rights” proposals forward, and I think he knows that the Government are opening the opportunity for Scrooge-like employers. Let us remember, however, the tale of that character's redemption when he sees the error of his ways. This is a Christmas tale: the Minister and Government Members should take heed and bin the ghost of Beecroft future. They still have the chance to remove this nasty, Dickensian clause from the Bill, and I look forward to them joining us in the Lobby this evening.

Photo of Andrew Stunell Andrew Stunell Liberal Democrat, Hazel Grove 7:30 pm, 17th December 2012

I tabled amendments 40 and 41. I look forward to hearing what my right hon. Friend the Minister has to say about Government amendments 64 and 65, which go a long way towards meeting the concerns that lie behind amendment 40.

I agree with Ian Murray in one respect. When the Committee took evidence, we heard from a succession of Jonahs. Neither the TUC nor the CBI was exactly over the moon about the Government’s proposals, and, indeed, all the outside organisations that gave evidence had criticisms to make. I particularly noted the words of a senior employment lawyer, who said, in plain terms, that he would not encourage any of his clients—that is, employers—to take advantage of the measure. The CBI described it as a very small niche product. However, my amendments are intended to deal not with circumstances in which it will be a niche product, but with circumstances in which all the evidence that the Committee received turns out to have been too pessimistic about its success. If that proves to be the case, it is important that the Minister’s plainly expressed intentions are clearly met, and that no employees are forced to accept a deal that they do not consider to be suitable for them and their circumstances. Amendment 40 makes it clear that there should be no detriment to such employees.

I am happy to say that Government amendments 64 and 65 appear to cover exactly the same territory, and—as is the way with Government drafting, as opposed to Back-Bench drafting—probably more thoroughly and comprehensively than I did. I therefore do not intend to press amendment 40, although whether I do so will depend on what the Minister says about the Government amendments. I assume that they are intended to provide safeguards against two possible outcomes. Amendment 64 would prevent an employee who turned down a contract of this kind from discrimination or other disadvantages in the workplace, while amendment 65 would ensure that the dismissal of such an employee constituted an unfair dismissal in employment law. That more or less covers what I was trying to do in amendment 40.

I have not yet been able to detect a Government amendment that matches amendment 41, but, again, I look forward to hearing what the Minister has to say. My amendment is designed to deal with circumstances in which a vacancy arises in a firm that has adopted the proposed structure, and a jobcentre sends someone to the firm to apply for the job. As was pointed out by the hon. Member for Edinburgh South, the current policy of the Department for Work and Pensions is, rightly, that those who are receiving benefit and are directed to vacant posts have a duty to consider them, and, if they constitute reasonable offers of employment, to accept them. If they do not do so, their benefits will be suspended or withdrawn. My amendment proposes that if people refuse jobs because they are offered an employee-owner contract, that will not be grounds for the suspension of their benefits and for them to be put at a disadvantage. If they do not have some protection of that sort, it will be impossible for the Government to fulfil their clear commitment, which was confirmed by the Minister in Committee, that no one would be forced into such a relationship. Again, I look forward to hearing from the Minister, and, having done so, I may or may not choose to press amendment 41.

I hope it is clear to the House that my central objection is not to a new or alternative type of employment contract. I have no problem with that. The problem will arise if the power relationship between employer and employee is so out of balance that the employee does not have the discretion and the free will to refuse and to do something else instead. What I wanted to do, and what my Liberal Democrat colleagues wanted me to do, was ensure that neither those currently in employment nor those prospectively in employment would suffer any detriment in relation to the state benefits system. I look forward to hearing the Minister’s response.

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

I heard what my hon. Friend Ian Murray said about the inability to amend this part of the Bill, and I sympathise with his view, but I thought that it would be useful for us to test whether the Government’s intention was to adopt a genuine approach to developing the concept of employee ownership or whether this was merely an attack on employment rights. I thought that it would be useful to set out how an employee ownership scheme could be introduced, and that if the Government’s intention was indeed to develop the concept of employee ownership they would support my amendments, or at least commit themselves to tabling amendments to the same effect.

The argument about employee ownership relates to economic democracy. I believe that we should socialise our economy. I believe that individual workers at every level should have control over their own working lives, and that that means democratic control of the firm, the region and the nation. Over the years, the House has debated a variety of methods of bringing that about. We have discussed public ownership, and nationalisation as part of that; co-operation; mutualisation, by which I mean true mutualisation and not the alternative description of privatisation employed by the present Government; and worker ownership models, which have included the extension of employee ownership. A range of models have been discussed over the years, including the Scandinavian model—in which share entitlements are given to the workers and then put in trust, gradually amounting to control of the firm itself—and the individual employee ownership model proposed in the Nuttall review.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

Will my hon. Friend confirm that none of the interesting employee ownership and co-operative models that exist throughout the world depend on individual employees giving up their statutory rights to redundancy, maternity pay or access to an employment tribunal?

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

Quite the reverse, and as employee ownership has developed in this country, all the arguments have been about the enhancement rather than the withdrawal of rights. However, that can succeed only on the basis of an open, transparent commitment to a partnership in the company concerned. The purpose of the amendments is to offer an alternative to the Government if they are serious about employee ownership.

As I was saying, my proposals are very much in line with the Nuttall review, published in July this year. I propose that when someone has worked for a company for two years, which is the normal qualifying period, and the majority of the other employees agree, that person can become an employee owner and can be awarded the first £2,000-worth of shares. As in normal employee ownership schemes, the longevity of the employee’s commitment to the company is rewarded with the further allocation of shares, usually on an annual basis.

I suggested there should be a further £2,000-worth of shares for every year of service. I am unsure about the nature of the shares that will be offered, but employee ownership shares are normally full voting rights shares; that would be the normal way of developing an overall co-operative. My amendments also suggest employee owners should have the right to elect a director employee owner on to the board, to represent the employee owners. That, too, is in accordance with the standard model of employee ownership. My amendments would also ensure there is no relationship between the award of shares and any reduction of employment rights; I have deleted the measures relating to the exchange of employee rights for the award of shares.

The model my amendments propose is the standard model for an employee ownership scheme, as called for in a wide range of consultations over the years, and recently by the Employee Ownership Association. If the Government do not accept this model, I will fear that their proposals are, in fact, designed to attack and undermine employment rights. In fact, I am now convinced that that is the case, on the basis of the Government’s responses to the consultation. The time scale for the consultation was extraordinary. The Government proposal was announced on 8 October, and the consultation started on 18 October and was completed on 9 November. That is one of the fastest consultations for a major proposal under any Government in recent times, apart from for emergency legislation.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

That is an important point. Furthermore, not only did the consultation response come in on the morning we were debating these measures in Committee, but the Government completely ignored it, because the only amendment they committed to introduce was to change the name from employee owners to employee shareholders.

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

The fact that there was just one cosmetic change shows that the consultation was ignored.

In support of my amendments, it is worth putting on record exactly what the consultation proposed. It found that the majority view was that no one should be asked to exchange their employment rights for shares. The Employee Ownership Association forged an alliance with the Fawcett Society, Family Lives, the Chartered Institute of Personnel and Development, the Family and Parenting Institute and Working Families. They described the consultation response as anti-democratic, rushed and poor quality, even containing a series of factual errors.

The Office for Budget Responsibility found that the Government proposal is more likely to be a cost for the Exchequer than a gain for the overall economy. The OBR said it will cost £1 billion by 2017-18. Others have described it as not particularly welcome. Businesses have certainly not welcomed it. Out of 184 responses to the Department for Business, Innovation and Skills, only two individuals and one organisation voiced support, saying they may take it up. There is hardly a clamour for these measures, therefore.

In none of the evidence submitted in the consultation did anyone describe the giving up of employment rights in this way as being likely to remove barriers to significant increases in employment. The Government’s reform flies in the face of the Nuttall review, too. We thought that there was to be a lengthy period of negotiation and discussion, and the Government would then come forward with proposals for the extension of employee share ownership, which would, in fact, probably receive cross-party support.

Photo of Gregg McClymont Gregg McClymont Shadow Minister (Work and Pensions)

My hon. Friend mentions the astonishing fact that the OBR says this reform will cost money at a time when, as the Government keep telling us, money is so very tight. Is my hon. Friend surprised that this bonkers reform will cost money? The reform is based on the work of Mr Beecroft, who admitted under examination that there was no evidence whatever to support his proposals, and that they were mainly based on anecdotes and personal experiences.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 7:45 pm, 17th December 2012

I am trying to find a Dickensian analogy; perhaps it should be great expectations met by hard times.

I was interested in the TUC response which was supplied to Members. It addressed the potential for this reform to be used for tax-avoidance purposes, through people switching their share schemes and entering into new ones. It appears, therefore, that although there will be no gain in terms of increased employment, this reform will be used as yet another tax dodge.

These proposals also threaten flexible working. As the Fawcett Society says, they will discriminate in particular against women and those who are carers. I thought Members across the House supported flexible working, but it is now suddenly seen as a burden that is to be negotiated away and lifted off businesses. The Equality and Human Rights Commission also expressed concerns about the potential of the Government’s proposals to allow discriminatory behaviour.

My overall assessment is therefore that these proposals are not intended to promote employee ownership at all; rather, they are an attack on employment rights. If the Government were serious about promoting employee ownership, they would either accept my amendments or work them up into a more definitive scheme. I am convinced we would then achieve cross-House consensus in favour of such a scheme. There must not be any link to an exchange of employment rights, however. As I have said, far from serving to promote employment and therefore be a benefit to the economy, it appears these reforms will be an expensive tax avoidance scheme, with up to £1 billion lost to the Exchequer.

I urge the Government to think again and to bring forward proper proposals. As on all such occasions, I give them this warning: legislate in haste and regret at leisure. That is what will occur as a result of these proposals. I am extremely disappointed that the debate has been dragged into the gutter, with attacks on working people. Over the years, so many of us have advocated democratising companies, the benefits of worker involvement in companies and the benefits of extending ownership in companies so people have greater control of their working lives. The Government have demeaned themselves by tacking such proposals on to this Bill in this way. Fresh thought is required if we seriously want to legislate for employee ownership schemes.

Photo of Gordon Birtwistle Gordon Birtwistle Liberal Democrat, Burnley

My first question is: where are all the Members who are supposed to be supporting this Bill?

I believe in freedom of choice. If an individual wishes to work for a company on a contract such as that which is proposed, they should be able to do so. That will not be the case in the big industries. Rolls-Royce and Jaguar Land Rover are not going to get involved. This scheme is for small niche companies in the high-risk sectors, such as high-tech firms and website designers, which employ recent graduates who want to get involved in such firms because they hope they will become a second Google. These companies are the gamblers that grow and create jobs in the future. I cannot understand why this Parliament should stand in the way of these people and say, “I’m sorry, but you can’t do that, even if you wish to do so.”

I think back to the 1960s when I was 24 and I had just come out of my apprenticeship. I went for a job as a contract draughtsman. I was offered two alternatives by the company. It was a good company, and it said I could have all the schemes it had, such as holiday pay and a contract for 44 hours of work a week—those were the hours we used to work in those days—and I would have a fixed rate. Alternatively, the company said I could have none of those schemes and have four shillings an hour more than everybody else was getting. I was keen to earn extra money, because I wanted to save up and put a deposit down on a house, so I decided not to have any of the conditions laid down by the company. I decided, on my own back, as I had the freedom to do so, to take extra money for working as many hours as I wished while having no contractual employment. I did that for two years and managed to raise enough money to put down a deposit on a house. That was my choice and it was the company’s choice to offer it to me. Other people worked there who wished to carry on with the conditions they had, but other young guys like me wanted to raise as much money as they could to put down deposits on houses, buy new cars and so on, and they went ahead and did it. They were free to do it—there was no pressure.

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

The hon. Gentleman’s central argument is that the proposed scheme is voluntary, but my problem, in addition to all the comments made by my hon. Friend Ian Murray, is that the Government have singularly failed to give any guarantee that a prospective employee in receipt of JSA who does not wish to take up such employment will not be penalised for not wishing to take a job without basic fundamental rights. That is, in fairness, the point that Andrew Stunell has made: we have received no guarantees whatsoever. How can Gordon Birtwistle say that this is voluntarily, if people could face such sanctions?

Photo of Gordon Birtwistle Gordon Birtwistle Liberal Democrat, Burnley

I thank the shadow Secretary of State for his observation. My name is on the amendments tabled by my right hon. Friend Andrew Stunell and I am waiting for the Minister to answer the questions they raise. I am sure he will give us some advice. If a the jobcentre advertisement for a job makes it clear that it involves giving away rights in return for shares, the person going for it will know that before they apply and will be completely open to the idea. If the jobcentre does not advertise those conditions, and the applicant is told about them only when he goes in for interview, my concern is whether he will still get his benefits when he tells the job centre the conditions he has been offered. I hope that the Minister will advise me that that applicant will still get their benefits, and if he does not I shall be extremely concerned and will have to consider which way to go. However, I am sure that the queries raised by our amendments will be answered.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

The hon. Gentleman does not appear to be aware that even if someone refuses to go for an interview for a job because they have read the details and seen that they would have to give up their rights, they could be sanctioned—that is, they could lose benefit—because of that.

Photo of Gordon Birtwistle Gordon Birtwistle Liberal Democrat, Burnley

The hon. Lady will be anxious to hear the Minister’s answer to that question, which our amendments put to him. We have tabled the amendments to tease the answers out of him—if she had proposed an amendment, she would have received an answer to her question, but she has obviously merely turned up today to try to stir things up.

Amendment 41 will, I hope, clear this question up. I hope the Minister can give us an answer, and if he does not we will have to ask other questions at another time. My main concern is about an applicant who is sent for a job by the jobcentre and finds out only when they arrive that it is a share-ownership job. Will their jobseeker’s allowance be affected if they refuse it? I am reasonably confident that it will not.

This will only happen in small niche companies. I do not think that we have the right to stand in the way of people who wish to get involved in such businesses, to get on, to take a gamble or to be involved in a company that will grow, so that their £2,000-worth of shares grows with it. There might well be a second Google somewhere, but I do not want to tell people that although they might have wanted to make those decisions, I did not want to give them the opportunity. That is why I support these proposals.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

I am very grateful to the hon. Gentleman for giving way, as he is being incredibly generous in doing so. Does he not accept that in his example from the 1960s—50 years ago—taking extra money in return for rights was completely voluntary? He could have refused that, but many of the examples we are hearing involve cases that will not be voluntary, as people might be coerced to give up their rights for worthless shares.

Photo of Gordon Birtwistle Gordon Birtwistle Liberal Democrat, Burnley

I accept that in my case it was voluntary. I could have taken holiday pay, but I would rather have had the four shillings an hour more, which is very little today but was a lot of money in those days, to save up. I am reasonably confident that what I will hear from the Minister will lead me to believe that the proposal is voluntary enough. I am sure that it is voluntary and what I have read in the Bill does not suggest that people will be forced. I think the proposal is okay, but it is a small idea for niche businesses. Major companies will not be offering the option, only small companies, and we do not have the right to stand in the way of people’s freedom to take it up if they wish.

Photo of Mary Glindon Mary Glindon Labour, North Tyneside

I want to speak about this group of amendments because in recent weeks, like many other hon. Members in the Chamber, I have been contacted by a number of my constituents who are concerned about the Bill and would rather see it rejected. In the past week, I received a constant flow of correspondence specifically on clause 25 and not one of those people had anything good to say about it.

My hon. Friend John McDonnell made a good case for his amendments and the coalition partners, Andrew Stunell and Gordon Birtwistle, have tried to ease the severity of the clause with their amendments. As my constituents have identified, however, the clause has no saving graces. The recent consultation showed that as few as five out of 200 businesses say that they would want to use such a scheme, but the Government want to see it rolled out. They want employers to take it up, as they would get a far greater pool of employees to choose from, and it is hoped that potential employees would have a better opportunity of finding employment—but at what cost? If someone has to forfeit their rights on unfair dismissal and to redundancy pay, that cannot be a price worth paying.

My constituents have asked time and again what the real value of shares could be. Once the shares are paid for, national insurance and pay-as-you-earn taxation will come into play. Forfeiting all those rights for a hefty tax bill does not make sense. One of the strongest arguments for me is that the clause is bad for women, as parents, and carers, who need flexible employment to have the dignity of working while they carry out their valuable roles. Such employment gives them the opportunity to be outside the home and to feel not only that they contribute by looking after their loved ones but that they play a valuable role in society, as well as providing them with a social link with the wider world.

By not having flexible working, people also forfeit the right to training. How does that fit into a Bill about growing the economy? Training for personal and professional development is crucial for firms to grow and expand. We cannot have a standstill work force who do not keep up with all forms of training. People do not feel valued if they do not have that development. We have seen what a difference investing in people makes to firms.

The whole scheme smacks of inequality and goes completely against the equal opportunities that have been so hard-fought for. We could go on: the loss of maternity rights would be something else that disadvantages women.

The clause should be deleted. It is completely against the rights of workers and it will do nothing to grow businesses.

Photo of Iain McKenzie Iain McKenzie Labour, Inverclyde 8:00 pm, 17th December 2012

I firmly believe that there is nothing in the Bill to address the root cause of the problem that faces us—the Government’s economic failure. Our economy is only just back to the size it was a year ago, and we have seen a double-dip recession and increased Government borrowing. Adding “growth” to the title of the Bill will not make it so. Even the Prime Minister admits that we cannot legislate for growth.

As we have seen, the Government’s economic plan has plunged Britain into the longest double-dip recession since the second world war. To cover that, they have hurriedly pulled together this flawed piece of legislation. There is nothing in the Bill to address our problems of economic failure; instead, the clause on employee owner shares for rights will only make it an attack on workers’ rights.

The proposals announced by the Chancellor will allow businesses to offer individuals contracts and a new employment status to make them employee owners. Under that new status, employee owners will receive shares in the employer’s company. However, as we know, there is always a catch: in return, employee owners will have to give up certain employment rights, including those on unfair dismissal, statutory redundancy pay and requesting flexible working and training. The scheme has not won support from the business community; a 33-week consultation had more than 200 responses but only five businesses said they would be interested in taking it up.

Labour is in favour of employee ownership, but not coupling it with slashing employment rights. Doing away with people’s rights at work is wrong in principle and will do nothing to bring about growth in our economy.

There are concerns about the full cost of the scheme. It has been said that

“the cost is expected to rise towards £1 billion,” and:

“Uncertainties abound like assumptions on take up rates, the average value of shares that are entered into the scheme, the extent of tax planning and the timing of disposals.”

According to the Office for Budget Responsibility, a quarter of the £1 billion additional cost—£250 million—is expected to arise from tax avoidance as a result of the scheme.

Slashing the rights of people at work is wrong in principle and will not help bring about jobs and growth; the proposal is yet another example of how out of touch this Government are. The scheme has not won support from business; it has received at best a lukewarm reception. Not even the CBI supports the proposals and called them

“niche…and not relevant to all businesses.”

As we have heard, the chief executive of Sainsbury’s was not exactly over the moon about them either. He was hardly embracing them when he said:

“This is not something for our business...What do you think the population at large will think of businesses that want to trade employment rights for money?”

We all know what we think about that.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Human Rights)

Earlier on, there was a reference to Ebenezer Scrooge. Is it not more a case of the grim reaper going deep into the rights of employees?

Photo of Iain McKenzie Iain McKenzie Labour, Inverclyde

The hon. Gentleman makes a very good point. There are stark connotations for employees across the country if the scheme is put into practice.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

My hon. Friend is making an important point. Does the proposal not indicate the Government’s thinking? They are quite prepared to offer the carrot to many companies that they can simply buy out rights at any time in the future. Next time it might be a cash offer or something like that. We legislate to protect all workers. We legislate for all women to have maternity rights. We legislate for everybody. It is not up to a company or a Government to pick and choose who should be eligible for those rights.

Photo of Iain McKenzie Iain McKenzie Labour, Inverclyde

My hon. Friend makes a very good point; I could not agree more.

The Chancellor proclaimed that the proposal represented

“owners, workers and the taxman, all in it together,” but the measure is divisive, goes against the spirit of one nation and risks creating a two-tier labour market across the country.

Offering employee owner contracts, where employees effectively sell their employment rights for shares, is unlikely, if ever, to deliver the highly motivated, engaged work force employers need. Ministers should be making it easier to hire employees, not easier to fire them.

Labour’s jobs plan includes tax breaks for small firms taking on extra employees. Labour supports employee ownership, but not coupling it with slashing employment rights. The US National Centre for Employee Ownership, one of the world’s leading groups promoting share ownership, has also criticised the scheme. The proposal smacks of fire at will. Although Ministers, including the Business Secretary, have claimed they are not going to take forward Mr Beecroft’s fire at will proposals, in practice they are introducing them by the back door. Ministers are trying to introduce the scheme without proper consultation or discussion, or indeed any real support.

The way the scheme will operate in practice and its ramifications are unclear. There are concerns about other ways in which the scheme could have an adverse impact on employees. Will jobs be advertised as being only employee owner and will employers be able to impose the scheme on individual employees or groups of employees? What safeguards will there be to ensure that the scheme is voluntary for existing employees, as Ministers claim?

The clause is a disaster for all, be they employees or employers, and it will not deliver growth in our economy. Businesses that utilise the scheme in recruiting will be recruiting from a smaller pool of talent, which will risk their not being able to take advantage if ever a real recovery comes about.

People giving up their hard-fought employment rights in return for a few shares beggars belief and takes this country back to the dark ages of employment practice. I ask that the clause be dropped.

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

We have had a good and reasonably balanced debate about the merits of the new employment status created by clause 25. I fully accept that there are concerns about it. Some of them are genuine and I hope to address them a little later. Some are based on a misunderstanding of the intent behind the new employment status and others take no account of the Government amendments that have already been tabled.

I will try to address all the points raised by hon. Members, but I first want to resist the casting of Ian Murray, who suggests that I represent Scrooge in “A Christmas Carol.” Perhaps I could refer him to a better character, Scrooge’s older employer, Fezziwig, who was noted for the magnanimity he displayed towards apprentices and young workers and for the generosity of his Christmas party. Such generosity, I suggest to the House, is reflected in the new opportunities we are extending for share ownership and in the very generous tax relief that comes with it.

Clause 25 creates a new employment status—employee shareholder—in addition to the existing employment statuses of worker and employee. The United Kingdom already has differing types of employment status with different levels of rights and different obligations, to allow businesses and individuals to choose the right type of contract that suits their particular circumstances. It is important, therefore, before we come to consider the new status, that the House understands the differences between existing employment statuses, because each has different employment rights.

Employees, for example, have all employment rights, whereas workers do not have unfair dismissal rights, do not enjoy the right to statutory redundancy pay and do not have other statutory rights. Workers, however, do have the right to the national minimum wage and do have protection against unlawful deductions from their pay, paid annual leave, rest breaks and protection against discrimination, including on the ground that they work part-time. The statuses of worker and employee are distinguished by the level of control and obligation that the employer has over the individual. The employer has a higher level of control over an employee—he can dictate how, when and what an employee does, whereas an employer cannot dictate in the same terms how a worker carries out his work.

The new status that we are considering carries the same level of control as an employee, but links employment with shareholding in the company. Individuals in the new status will have similar rights to employees, but they will not have the right to statutory redundancy pay, the statutory right to request flexible working unless they have returned from parental leave, time off to train, or unfair dismissal rights except for automatically unfair reasons. The new status is designed to give companies more choice in the type of employment contracts they can use to structure their work force. But the flexibility that businesses have is not restricted to different types of employment status. Businesses may already choose to take on somebody as part-time, full-time, permanent or for a fixed period. The important principle underlying the Government’s approach is flexibility. We want to allow businesses a choice of which type of employment contract to use. This new status gives companies an additional option, should they wish to use it. They do not have to use it if it does not fit their business model.

We consulted in October and November on how we could best implement the new employment status. Our consultation lasted for three weeks and we received more than 200 responses. Those were very helpful, along with the discussions that we had on Second Reading and in Committee, and helped us address the areas of the policy that need improving with the set of Government amendments before us. Before I deal with those, let me consider the points raised on the other amendments.

John McDonnell tabled amendments 37 and 60, which would limit how companies can use the new employment status so that, in effect, they could offer it only to existing employees with at least two years’ service. The Government are creating a further employment status to provide additional flexibility and choice for companies in managing their work force. Allowing businesses greater flexibility in how they manage their work force encourages growth and confidence, and the difficulty that I have with the hon. Gentleman’s amendments is that they are restrictive and remove choice from employees and employers.

The employee shareholder status is a novel way for companies to arrange their work force. From its inception, it was principally intended—I think this was the point made by my hon. Friend Gordon Birtwistle—for fast growing new companies. The amendment to limit the new status to existing employees would deter or even prevent many newer companies from making use of this innovative and flexible model. It would also prevent new or newly recruited employees from taking advantage of the status that existing employees might already enjoy. As I have just reminded the House, we decided to create a new employment status to give companies additional choice about the contract types they can use for those who work with them and for them.

Amendment 61 would cause inflexibility in the decision-making process for companies by giving their existing work force a veto over the type of employment status which the company may choose to use. The result of the inflexibility caused by amendment 61 would come at a time when companies need to be agile and innovative to respond to changing economic circumstances. Furthermore, we do not force companies to consult in this way if they decide to take on people as workers or as employees. I suggest to the hon. Gentleman that the new status should be no different. The decision on how to structure a work force is for companies to make. They are the ones best placed to determine how they go about employing staff, and the responsibility for deciding which employment status to offer should rest with them. Nor would the amendment be fair to employees in the work force who may wish to take up the option.

Amendment 62, also in the hon. Gentleman’s name, links the minimum amount of shares needed to qualify for an employee shareholder contract to the amount of time that an existing employee has spent in the company. That would introduce a heavy burden on companies wishing to use the new status and is contrary to the objective of the measure, which is designed to create flexibility and choice. We want companies to be able to offer the amount of shares that they consider will enable them to attract or retain the right person. We do not want to prescribe the amount of equity each company should give to employee shareholders. That should be at the discretion of the company and for agreement with the individuals.

However, I am grateful to the hon. Gentleman in one respect. The amendment helps us to remind the House that the value of the shares must not be below £2,000. This is a very important point. If a company issues shares worth less than £2,000 for an employee shareholder contract, the criteria for the contract would not be fulfilled and the person is likely, therefore, to have a normal employment contract. This is an important safeguard, and companies must be confident that the shares are worth at least £2,000 when they are granted to the employee shareholder.

The amendment would have two detrimental effects, first on the company, and secondly and more importantly on the individual. It would force companies to offer employee-shareholder contracts only to newly hired employees or those who have been in the company for less than three years. That would tie the hands of companies when choosing who they wanted to share their equity with. Under the amendment as drafted, an individual who had been working with the company for a long time would be far too expensive for a small company wishing to share its profitability and growth prospects with its work force.

The second problem with the amendment is that it would also hurt existing employees. An individual who had worked for a company for many years might be excluded from taking up the opportunity of becoming an employee shareholder as the company may not be able to grant such a significant number of shares to one individual. That is unfair on people, and would have serious negative consequences for how companies structure their work force and share their equity when they wish to do so.

I turn to the hon. Gentleman’s final amendment, 63. If I understand the amendment correctly, its aim is to require the Government to make a significant change to the constitution of companies and corporate governance more generally. The change would give employee shareholders the right to appoint a director. That goes against the general thrust of all company law by forcing a company to structure itself in a particular way. That is unnecessary. Company law in the United Kingdom is designed to be flexible. It allows companies to choose the structure which best meets their needs.

Under current law, a company may have directors who are appointed by employees or employee shareholders. We consider that a responsible company will have the directors it needs to operate the company effectively. The means of appointing those directors will be set out in the articles of association of the company. There may also be agreements between shareholders which determine how individual shareholders will exercise their rights when appointing directors.

I have said on many occasions and I repeat that it is not the Government’s intention with this new status to force a company to use it, but rather to offer flexibility and a new and creative option for companies. We do not want to force companies to appoint any director in a particular way, but if a company believes that it would benefit from a director appointed only by employee shareholders, that is entirely an internal matter for the company and UK company law permits that.

Let me now turn to the Government amendments.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 8:15 pm, 17th December 2012

I tabled a further amendment, amendment 39, on the breaking of the link between employee share ownership and the exchange of employment rights. Is the Minister going to deal with it?

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

The hon. Gentleman is right to chide me, because I have missed out that amendment. If I discover it in time, I will try to return to it.

The Government amendments form a package of comprehensive measures that will strengthen the Bill’s provisions for companies and people. They respond to important points raised during the consultation, on Second Reading and in Committee. I hope that they fulfil the undertaking I gave the shadow Secretary of State to ensure that amendments, whether or not he agrees with them, were at least produced before the Bill leaves the House.

First, amendments 22 to 28 would amend the Bill to change the name of the new status to “employee shareholder.”—[ Interruption. ] Hon. Members cannot have it both ways; they cannot criticise the consultation and say that we did not listen to it when we did. When organisations asked us to change the name, we did exactly that. During the consultation we received comments on the name “employee owner”. I recognise that “employee owner” might be seen as confusing in relation to the wider employee ownership agenda. It is important that we do not confuse people. The name “employee shareholder” is far better at describing the new status, as it links the concept of employment and shareholding.

Secondly, amendment 29 ensures that employee shareholders who are parents can request flexible working once they return from parental leave. The parental leave directive requires that parents should be able to request flexible working after their return from a period of parental leave. The amendment ensures that the UK will be compliant with the directive. We have decided that employee shareholders should have to make a request for flexible working within two weeks of their return. The time limit gives companies employing employee shareholders certainty about the working patterns of their work force.

Let me turn to the issue of shares and what happens to them at the end of the employment relationship, on which we sought views during our consultation. We believe that employers and employee shareholders are likely to agree sensible terms for the disposal and buy-back of shares in order to ensure that the shares have the necessary value to meet the conditions for employee-shareholder status. The Bill is drafted on that basis.

It is not the Government’s intention that employee shareholders should be left with shares that they can sell back to the company only at prices that are unfair or where the buy-back arrangements would leave the employee at a financial disadvantage if there is no other way of disposing of the shares for value. We therefore believe that it is prudent to seek a power in the Bill 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. Amendment 30 creates that power. Let me be clear for the House that the power will be used only if it is needed to safeguard employee shareholders in the unlikely event that employers behave unscrupulously.

Photo of Bob Stewart Bob Stewart Conservative, Beckenham

I have a simple question. If an employee shareholder wants to keep his or her shares, am I right in assuming that he or she can do so and sell them on the open market later?

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

That will depend on the particular arrangement that the company has.

Amendment 31 will provide clarity and certainty to employers and individuals who are considering accepting a position as an employee shareholder, as it spells out how shares will be valued. It aids employers who want to be certain that the contract will not be void because too few shares in value have been given. It will therefore reassure individuals that they are getting at least £2,000-worth of shares in consideration for becoming an employee shareholder.

Photo of Ronnie Campbell Ronnie Campbell Labour, Blyth Valley

Can the Minister tell me what happens to a worker’s £2,000-worth of shares if the company goes bankrupt?

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

If the company goes bankrupt, the shares will clearly not have their original value.

I must respond to the hon. Member for Hayes and Harlington on amendment 39—I apologise for not doing so earlier. The amendment would remove the distinguishing feature of the new employment status and deprive companies of the flexible way of taking people on, because it would link directly back to employment rights.

I will now turn to the serious points raised by my right hon. Friend Andrew Stunell and my hon. Friend the Member for Burnley, first in relation to amendment 41. The amendment seeks to ensure that individuals in receipt of benefits should not be disadvantaged if they turn down an employee-shareholder contract. I would like to reassure the House about what the Government have done to ensure that employee-shareholder status does not lead to jobseekers being deprived of benefits if they decide not to take a job they have been offered on the basis of the new status.

My right hon. Friend the Member for Hazel Grove proposed in Committee that the Government should issue guidance to ensure that an individual’s refusal to enter the status voluntarily is not used as grounds for withdrawing or reducing state benefit. He suggested that that should be made explicit in the Bill. The Government recognise that the status should not be regarded as suitable for all businesses or individuals and should therefore be entered into voluntarily and with a clear understanding of what it will mean for them.

Although I made it clear in Committee that his proposed amendment would not work, I accepted that it is a serious matter and undertook to consider it carefully. I think that the matter was also raised on Second Reading by the shadow Secretary of State.

The Government have therefore considered what safeguards would be needed to ensure that the individuals receiving benefits are not deprived of them if they reject a job offer as an employee shareholder. I can confirm that the Employment Minister, my hon. Friend Mr Hoban, has also looked at that carefully. The Government believe that jobseeker’s allowance claimants must actively seek and be available for work. That must include consideration of all suitable vacancies, and it is right that employee-shareholder jobs should be as much a part of that consideration as any other. If a claimant applies for an employee-shareholder job and is offered a position, they should normally accept the offer. If they do not, their benefit payments might be sanctioned if they do not have good reason for refusing the offer. Exactly the same rule applies now.

However, in considering whether the claimant does or does not have good reason, the decision maker will take into account the claimant’s individual circumstances and the specific terms and conditions on offer under the company’s employee-shareholder scheme. It is certainly possible to envisage situations where a job that is appropriate for one person may not be for another. For example, the right to request flexible working could well be crucial for a parent with young children and that may therefore be good reason for that parent to turn the job down if they cannot negotiate flexibility.

So that advisers are able to help claimants to make the right decision about employee-shareholder positions, we will provide guidance and information to them on what the status means and the factors that a claimant will need to take into account before making the decision. We will want to ensure that claimants make the right decision, which might be that they decide voluntarily to accept a job on employee-shareholder status. I confirm to my right hon. Friend the Member for Hazel Grove and to the House that we will provide guidance for decision makers to help them to reach consistent decisions in this area, and we will now seek views from key stakeholders to make sure that that guidance is fit for purpose.

The current guidance for decision makers, “Decision Makers’ Guide”, is on the Department for Work and Pensions website. We propose to amend chapter 34 of that guidance to ensure that it is available to decision makers in jobcentres. That safeguard can be put in place without the need for legislation, and the necessary changes will be made when employee-shareholder status is legally implemented.

Photo of Andrew Stunell Andrew Stunell Liberal Democrat, Hazel Grove 8:30 pm, 17th December 2012

My right hon. Friend is being very helpful. I think I heard him say that there was to be a process of consultation with stakeholders. Will he say a little more about that? I am sure that Members around the House would want to convey to the Department for Work and Pensions that there is sometimes a gap between the intentions of Ministers and the advice that they give, and the actual practice at individual offices. I would like to hear a little more from the Minister about that link between good intentions and good outcomes.

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

I certainly accept that point. What comes between the intentions and the outcome is the guidance. There is currently guidance to all staff in jobcentres, and I have already undertaken for my right hon. Friend that we will amend it. However, we will not simply amend it to put my words of tonight into it; we will consult all the various stakeholders involved on how we can make sure that it properly reflects what both he and I want to do.

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

I am not very comforted by the Minister’s comments, because he seems to be suggesting that there would be circumstances in which it would be unreasonable for a prospective employee to turn down a job offer if it were conditional on employee-owner status. Will he, for the benefit of Jobcentre Plus employees, make it clear that if they have a jobseeker’s allowance claimant who refuses to take a job offer because they do not wish to have employee-owner status and lose their rights, no sanctions should be levied on that prospective employee in terms of the deduction of any benefit or any other adverse consequence? Will he make that clear for the record?

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

I am happy to make it as clear as I can. By the way, I think that it is somewhat unlikely that the jobcentre applicant in this case will be offered a significant number of shares and then still find himself unable to take up the position. Let us be clear about how the jobcentre system works: these decisions about sanctions are taken on an individual, case-by-case basis. What I am announcing tonight is that the guidance will make it very clear as to the reasons that the employee had to have before having his benefit sanctioned.

Let me turn to the second point raised by my right hon. Friend the Member for Hazel Grove, which is the only really serious issue about this new employment status. As he and my hon. Friend the Member for Burnley have said, it is a voluntary status. No one on the Government Benches wants employees to be pressurised, harassed or bullied into accepting it. We therefore want to ensure that no individual can be coerced into accepting an employee-shareholder contract. Throughout all the discussions since the policy was announced, there have been concerns that existing employees—not new employees, but existing employees—might be coerced into accepting these contracts. I have been very clear that the new status is entirely voluntary, but I wholly accept that it needs to be seen as such.

Amendment 40, tabled by my right hon. Friend the Member for Hazel Grove, seeks to ensure that existing employees are not coerced into the new employment status. The principle behind the amendment is right and the Government support that principle. Indeed, we think there is a stronger way of ensuring that no detriment will arise in the Bill than by relying on secondary regulation, and that is why we have tabled amendments 64 and 65.

Government amendment 64 creates a new right not to suffer detriment if an employee refuses to sign an employee-shareholder contract. This means that if an employee has been overlooked for promotion or has been disadvantaged in any other way because of that refusal, he may then be able to present a claim to an employment tribunal.

Government amendment 65 creates a new unfair dismissal right. This means that if an employee is sacked because he has refused to accept an employee-shareholder contract, this will be regarded as automatically unfair. Importantly, both of these rights will apply from day one of an employee’s contract. That means that employees are protected from the first day of their service. I want to place that beyond doubt. Employees cannot be taken on and then, on day two, be forced to become employee shareholders.

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

I will not, because of the time.

Finally, let me turn to amendment 59, tabled by Opposition Front Benchers, and deal with their opposition to the clause. I have already outlined how the creation of the new employment status adds to the existing statuses of worker and employee. The new status gives companies a new way of taking on individuals, giving both companies and individuals greater choice and flexibility. Removing the clause in its entirety would remove the opportunity for new flexibility and choice for companies. Using the new employment status, just like using the existing status of worker and employee, is a choice for both companies and individuals. By increasing the range of employment statuses, companies limited by shares will have a greater choice about how to grow and adapt their work force. It will also create opportunities for an individual to take up an employment status that may allow them to share in the rewards of a company.

It is for the company to decide what type of contract will be most suitable for it to offer, depending on its requirements and circumstances. The clause does not prevent employers from offering more rights to their staff, such as a contractual right to request flexible work or contractual redundancy pay, just as they can now do with all other existing employment contracts.

This is not about taking away employment rights; it is about creating a new employment status with a different set of rights, just as there are different rights associated with being an employee or a worker. This Government want companies and people to share in the risks and rewards that share-ownership offers, and this is a new way to do so. The clause should remain part of the Bill, to give people and companies a new way of working together, and I urge the House to reject Opposition amendment 59.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

The Minister said that he was not Ebenezer Scrooge, but Fezziwig. Wikipedia explains that Fezziwig is

“a happy, foppish man with a large Welsh wig.”

Let us see whether that description fits the right hon. Gentleman.

The employee-shareholder schemes will not be voluntary and will have absolutely no value. How can the Minister tell the House that he knows better than the 204 respondents to the consultation who said that this policy was, as Dizzee Rascal would say, to give a more contemporary reference, “Bonkers”?

I finish by echoing the Business Secretary, who said that this provision would not be compensated no-fault dismissal by the back door. I could not agree with him more: this proposal is no-fault dismissal without any compensation. Anybody who cares about business and employees in this country will join us in the Lobby.

Question put, That the amendment be made.

The House divided:

Ayes 225, Noes 260.

Division number 123 Growth and Infrastructure Bill — Clause 25 — Employee Shareholder Status — Exemption from Certain Statutory Employment Rights

A majority of MPs voted to exempt those with employee shareholder status from certain statutory employment rights.

Aye: 225 MPs

No: 260 MPs

Ayes: A-Z by last name


Nos: A-Z by last name


Absent: 161 MPs

Absents: A-Z by last name

Question accordingly negatived.

Amendments made: 22, page 32, line 11, leave out ‘owner’ and insert ‘shareholder’.

Amendment 23, line 12, leave out ‘owners’ and insert ‘shareholders’.

Amendment 24, line 14, leave out ‘owner’ and insert ‘shareholder’.

Amendment 25, line 16, leave out ‘owner’ and insert ‘shareholder’.

Amendment 26, line 24, leave out ‘owner’ and insert ‘shareholder’.

Amendment 27, line 32, leave out ‘owner’ and insert ‘shareholder’.

Amendment 28, line 44, leave out ‘owner’ and insert ‘shareholder’.

Amendment 29, page 33, line 2, at end insert—

“( ) The reference in subsection (2)(b) to making an application under section 80F does not include a reference to making an application within the period of 14 days beginning

with the day on which the employee shareholder returns to work from a period of parental leave under regulations under section 76.’.

Amendment 30, line 13, at end insert—

“(7A) The Secretary of State may by regulations provide that any agreement for a company to buy back from an individual the shares referred to in subsection (1)(b) in the event that the individual ceases to be an employee shareholder or ceases to be an employee must be on terms which meet the specified requirements.’.

Amendment 31, line 24, at end insert—

“( ) The reference in this section to the value of shares in a company is a reference to their market value within the meaning of the Taxation of Chargeable Gains Act 1992 (see sections 272 and 273 of that Act).”’.

Amendment 64, line 24, at end insert—

‘( ) After section 47F of the Employment Rights Act 1996 insert—

“47G  Employee shareholder status

(1) An employee has the right not to be subjected to a detriment by any act, or any deliberate failure to act, by the employee’s employer done on the ground that the employee refused to accept an offer by the employer for the employee to become an employee shareholder (within the meaning of section 205A).

(2) This section does not apply if the detriment in question amounts to dismissal within the meaning of Part 10.”

( ) In section 48(1) of that Act (presentation of complaint to employment tribunal), for “or 47F” substitute “, 47F or 47G”.’.

Amendment 65, line 24, at end insert—

‘( ) After section 104F of the Employment Rights Act 1996 insert—

“104G  Employee shareholder status

An employee who is dismissed is to be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee refused to accept an offer by the employer for the employee to become an employee shareholder (within the meaning of section 205A).”

( ) In section 108(3) of that Act (exceptions to provision on qualifying period of employment), after paragraph (gl) insert—

“(gm) section 104G applies,”.’.

Amendment 32, line 26, leave out ‘205A(5A)’ and insert ‘205A(7) or (7A)’.—(Michael Fallon.)

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

I beg to move amendment 50, page 45, in schedule 4, leave out lines 21 to 27.

Photo of Lindsay Hoyle Lindsay Hoyle Deputy Speaker and Chairman of Ways and Means, Chair, Panel of Chairs, Chairman of Ways and Means, Chair, Panel of Chairs

With this it will be convenient to discuss the following:

Amendment 51, page 45, leave out lines 38 to 47.

Amendment 52, page 46, leave out lines 27 to 34.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

In Committee, we discussed at length the process of registering town and village greens, and the value of such spaces. My hon. Friend Simon Danczuk reminded the Minister of the speech by the previous Conservative Prime Minister, who spoke about warm beer, swallows overhead and cricket on the village green. We were led to think how odd it was, and how much coalition must have changed the Conservative party, that Opposition Members were having to protect precious town and village greens. Clearly, hon. Members on both sides have open spaces in their constituencies that they and their communities want to preserve. Unfortunately, it was made clear to the Committee that there are instances of vexatious applications for town and village green registration that are intended to stymie development, rather than to protect open space. Although such instances are relatively few in the grand scheme of things, they do delay much-needed development. That is why the Local Government Association and other organisations that, like us, want to encourage sustainable development are in favour of placing some limits on the registration of town and village greens, but we think that schedule 4, in particular, goes much too far along that road.

The Open Spaces Society has helpfully provided us with a long list of cherished greens that would not have been registered had the Bill been in place. I urge Members to think about land that might be lost if the schedule is passed unamended, before they vote in support of it. Some of the triggers in schedule 4 are reasonable. For instance, trigger 6 states that, if a neighbourhood development plan identifies a piece of land for development, it cannot be registered. If a neighbourhood plan is in place, it will have been drawn up by residents, published, consulted on and agreed by local people, and land that they have democratically identified for development should be kept as such, but some of the triggers go too far, and it is these that the amendments would delete to ensure that local people can still protect land that is important to them.

Photo of John Howell John Howell Conservative, Henley

The hon. Lady talked about warm beer, village greens and all that, but the sort of land we are talking about would not be wide enough even for a bowler to stand at one end.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

In the spirit of localism, I think it is up to local communities to decide what piece of land, no matter its size, is important to local people and not to take the hon. Gentleman’s word for it.

Photo of Martin Horwood Martin Horwood Liberal Democrat, Cheltenham

If the hon. Lady believes in localism, would she not encourage local communities to use the new local green space designation introduced in the national planning policy framework, which can be made use of at the time of plan-making and so is a more reliable route to protecting local valued green spaces than the village green process, which is a bit haphazard at the best of times?

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

The hon. Gentleman makes an interesting point that was also made by Andrew Stunell in Committee, but he ignores the fact that a number of communities have not yet been able to draw up a neighbourhood plan. We are terribly concerned—this is the reason for the amendments—to ensure that simply publishing a draft neighbourhood plan does not mean that a village green cannot be registered. That is really important. We asked the Minister to think about delaying the operation of the triggers to enable all communities to develop neighbourhood plans, but sadly I was disappointed once again by his response.

Photo of Andrew Stunell Andrew Stunell Liberal Democrat, Hazel Grove

I thank the hon. Lady for giving way—I know that time is short—but I draw her attention to section 87 of the Localism Act 2011, which deals with lists of assets of community value and under which any village green candidate could be listed. That has nothing to do with neighbourhood plans. I also draw her attention to sections 76 to 79 of the national planning policy framework. I think she is going for overkill on this one.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

I am afraid that the Open Spaces Society simply does not agree with the right hon. Gentleman. It made it clear in its briefing to Members on Report:

“The government claims that people would know of the threats through the neighbourhood planning process, but this process is in its infancy and is not widespread. Those who use and enjoy their local open spaces are usually doing just that and are not necessarily clued up about, or involved in, the planning process, and they cannot be expected to know or realise that there is a potential threat to their rights. Moreover those who may be aware of the neighbourhood planning process may not be the same people enjoying the use of a particular piece of land and thus would not be in a position to know that such land is being used as of right.”

It seems odd to give communities the right to register village greens under the Localism Act and the neighbourhood planning process—rights that have not yet been firmly embedded in all communities—while in the Bill taking away rights to register village greens. We ask the Minister to think again.

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

The amendments are identical to those that were moved in Committee, and I explained then that they would weaken the Bill by bringing in trigger points far later in the planning process. The Government do not understand why that is needed and we think it undermines the ability of local authorities and neighbourhoods to contribute to their own plans. The amendments were misguided when they were moved in Committee and they are equally misguided this evening. If Roberta Blackman-Woods suggests pushing the amendment to a vote, I urge my hon. Friends to reject it—

Debate interrupted (Programme Order, this day).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the amendment be made.

Question negatived.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).