Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Growth and Infrastructure Bill

– in the House of Commons at 11:20 am on 25th April 2013.

Alert me about debates like this

Votes in this debate

  • Division number 226
    A majority of MPs voted for safeguards requiring those entering a employee shareholder scheme to receive independent advice paid for by the employer at least seven days before the agreement to enter the scheme is made.

Consideration of Lords message

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 11:21 am, 25th April 2013

I beg to move,

That this House
does not insist on its amendment 25E, to which the Lords have disagreed, and agrees with the Lords in their amendments 25H rev and 25J in lieu.

On Tuesday when we considered this issue the House agreed to two amendments to the employee shareholder clause. First, we ensured that individuals would receive written particulars to explain the employment rights that are not associated with an employee shareholder job. Those particulars will also explain the rights attached to shares that are given as part of that role. Secondly, we amended the clause to ensure that individuals had the space and time to consider whether or not to accept the job.

Yesterday, the other place agreed further amendments to help ensure that individuals fully understand what those employee shareholder jobs will mean for them—both the risks and the rewards. Individuals who are offered employee shareholder roles must now receive independent advice before they can accept the job. That advice can be given only by a solicitor, a barrister, a fellow of the Institute of Legal Executives employed in a solicitor’s practice, a certified adviser in an advice centre or—I am sure Opposition Members will welcome this—a certified trade union official. A person employed by the company, such as an in-house lawyer, cannot give that advice; it must be independent. In addition, the company must pay any reasonable costs incurred in obtaining that advice, even if the individual does not take up the offer of the employee shareholder job.

The amendments also clarify the process of becoming an employee shareholder. When offered an employee shareholder role, an individual must be given the written particulars in advance of receiving independent advice. We have also made it clear that the seven calendar day consideration period starts only once the individual has received the advice.

Those amendments confirm our intention that the new employment status is wholly voluntary. I have made it clear throughout the debates on the clause in the House and in Committee, and my hon. and noble Friend Viscount Younger has made it clear in another place, that we do not want people to be coerced into the new roles. It is important that they should agree to accept an employee shareholder job only when they understand what it means for them.

To that end, we have published guidance in draft. In response to the concerns expressed by some of my noble Friends, we have strengthened the measures by saying that there should be special protection for those on jobseeker’s allowance—they cannot be mandated to take that type of employment status. We have provided a written statement of the particulars and a cooling-off period, and we have now provided access to independent legal advice.

The shadow Secretary of State for Business, Innovation and Skills, Mr Umunna, kept pressing me on Tuesday on what I meant what I said that we would reflect on the concerns expressed in the other place. The new measures are the results of such reflection. We have reflected on and met those concerns.

I pay tribute to Lord Pannick and to my noble Friends Lord King of Bridgwater and Lord Forsyth. Lord Pannick has said:

“It is impossible to see what further protections this House could usefully add.”—[Hansard, House of Lords, 24 April 2013; Vol. 744, c. 1464.]

The House should support the further amendments to clause 27, so that it can form part of this important pro-growth Bill and provide companies and individuals with a new employment option.

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

Where on earth does one start with this poor excuse of a Bill? It is worth reflecting on where it all started. The Bill was a ridiculous and badly thought-out idea cooked up for insertion in the Chancellor of the Exchequer’s conference speech. It has been so badly handled and so badly thought through that people from all political parties, employers and employees have united in almost universal opposition to it.

Lord Bilimoria, one the country’s best-known business men, who voted against the plan in the other place yesterday, described the policy not just as a dog’s breakfast, but as a mad dog’s breakfast. The noble Lord is a man to whom all hon. Members should sit up and listen. I do not know whether hon. Members have partaken of Cobra beer while treating themselves to a curry, but Lord Bilimoria is the man behind Cobra. He is certainly worth listening to. He said that:

“from a businessman’s point of view, this does not make sense. It is absolutely unnecessary to do this”.—[Hansard, House of Lords, 24 April 2013; Vol. 744, c. 1450.]

The Minister referred to the concessions—that concessions have been forced out of the Government serves only to reinforce how badly thought-out the proposal was. Whether or not JSA claimants could lose their benefit if they refuse to accept job offers carrying the employee shareholder status was an obvious question. I first asked it in November, when the Government ignored it. I repeated it, and the Government said that they could not lose their benefit. When they were mauled on the point in the other place, they effectively admitted that they could. In order to get the proposal through in the face of opposition from several former Conservative Cabinet Ministers, the Government had to come to the House last week and agree to amend the guidance for Department for Work and Pensions Jobcentre Plus advisers to state explicitly that a jobseeker cannot be mandated to apply for an employee shareholder job. They should have done that in the first instance. What a total shambles.

Another issue is the advice and guidance to potential employees, and the need to ensure that they understand what they are getting into. Of course people were going to be concerned—that was obvious. If, as is the case at the moment, the law requires that people who sign away their fundamental rights on leaving employment receive proper legal advice and guidance, then of course people were going to insist on getting similar advice on entering into employment. I doubt the thought even passed through the Chancellor’s mind as he pursued his ideological fixation with watering down people’s rights at work.

Now there is a requirement for employers to pay for that advice in advance of a potential employee shareholder entering into an agreement. The point is this: these concessions are not enough and they were never going to be enough, because this entire proposal is wrong in principle. I think that most Government Members know that: it has been notable how few Government Members have stood in support of this measure.

During the passage of the Bill, no coherent explanation has been offered for why it is necessary to link employee ownership to people losing the fundamental rights at work that we all enjoy. No evidence has been put forward to suggest that this is what people want. The expert in this matter is the Employee Ownership Association, which has been a major influence behind the growth of employee ownership in the UK. Its chief executive could not have been clearer on this point yesterday, when he said that its membership have been absolutely clear that

“There is no need to dilute the rights of workers in order to grow employee ownership and no data to suggest that doing so would significantly boost employee ownership. Indeed all of the evidence is that employee ownership in the UK is growing and the businesses concerned thriving, because they enhance”— enhance—

“not dilute the working conditions and entitlements”— of the work force.

Never mind the principles, all the way through the passage of the Bill, in the other place and in this House, Ministers have simply failed to convince on how it would work in practice.

I mentioned industrial relations on a previous occasion and explained that, from a practitioner’s point of view, I do not understand how it would help employee relations if, in the middle of one’s employment, an employer suddenly says, “You know what? I think I’m going to give you some shares, but in return I want you to give up your fundamental rights at work.” No explanation has been given as to why, practically, that would work. I have said that taking away people’s employment rights, such as unfair dismissal, will simply encourage people, when they fall out with their employers, to bring spurious discrimination claims. This measure will inevitably lead to that, and there has been no explanation of how that will be addressed.

On the valuation of shares, I have asked how on earth shares given to employees will be valued. Again, very little information has been given. In fact, the Minister in the other place, Viscount Younger, last night acknowledged that for private companies there is no traded market that enables easy valuation of shares.

There is then the issue of tax avoidance. This is the Government who say that they want to clamp down on tax avoidance. The independent Institute for Fiscal Studies says that to the extent that this proposal will be used, it will foster tax avoidance on a grand scale. Viscount Younger said that the Government would not allow the scheme to be used in that way yet, as we have seen all along, he gave no specific detail whatsoever on what the Government would do to prevent it.

I want to finish by dwelling on what the Bill is all about. As the Minister said, it is called the Growth and Infrastructure Bill. We have learned that the economy has gone back to where it was six months ago and that we are undergoing the slowest economic recovery in 100 years, and the Government have come forward with this. There is no evidence whatsoever to show that the Bill promotes growth.

What of my opposite number, the Secretary of State for Business, Innovation and Skills? He has been nowhere to be seen at the scene of this crime. Where has he been? He is the man who said that he fundamentally objected to the Beecroft proposals put forward by the Conservative donor, yet he is not here and the Bill will strip away people’s rights at work in a way, some would argue, that even Beecroft did not contemplate. [Interruption.] I am told he is in Brazil. He said last February, in his famous letter to the Prime Minister and Deputy Prime Minister, that the Government had no compelling vision for growth and were coming forward with fairly piecemeal measures.

Photo of David Anderson David Anderson Labour, Blaydon 11:30 am, 25th April 2013

My hon. Friend is making a very good case. It is notable not only that the Business Secretary is not here, but that no one from his party is here. It will be interesting to see, in a few minutes when we go through the Lobby, whether the rest of the invisible men and women turn up to vote, or whether they abstain and renege again on workers’ rights.

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

My hon. Friend is absolutely right. In fairness to Conservative Government Members, at least they are upfront and frank about their purpose in taking away people’s rights at work and do not, while voting for measures that do that, claim to be doing otherwise. We will watch carefully to see which Liberal Democrat Members join us in the Division Lobby.

I return to my previous point: there is no compelling vision for growth in the Bill. On all the evidence, the comments that the Business Secretary made in his letter to the Deputy Prime Minister and Prime Minister last year are just as valid now as they were then, which is why we will not support this ludicrous measure and have resisted it every step of the way.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I rise briefly to support my hon. Friend Mr Umunna on the Front Bench. There is a parallel here with the privatisations and de-mutualisations of the 1980s and early 1990s, when consumers and partners—shareholders, if one likes—in mutual organisations were persuaded to give up their rights for shares, which were then sold. A classic example is Northern Rock, which had to be funded by the taxpayer to prevent it from being destroyed, and just recently came the disaster affecting the old Trustee Savings Bank, which was a mutual bank serving the country and its customers very well. It was forced to privatise and has now turned out to be an expensive disaster, a basket case that even the Co-op bank cannot afford to take on. This will cost the Government money. Again, a Conservative Government are persuading people to give up rights for shares that will last a few weeks, and then they will have lost their rights for good.

Photo of David Anderson David Anderson Labour, Blaydon

This section of the Bill should be called, “The shoot from the lip” section, because that is exactly where it came from—a throwaway line in a conference speech by a Chancellor whose arrogance is matched only by his ignorance. It was an anti-trade union, anti-worker comment to score cheap political points by the seaside during the Tory party conference. This is a man who has decided to run a Government along dividing lines, a man whose Prime Minister’s background is summed up entirely by the fact that he was a public relations expert—and that is how he continues to run this country.

This proposal has shown yet again that the Conservative party still believes in the cost of everything and the value of nothing. It is banana-republic stuff. We are asking people to sell their rights. It is abysmal. If we asked people to sell their rights in any other part of what has become a civilised society in the 21st century, we would be laughed out of court, but the Government are serious about doing this, despite the huge opposition from everyone who really knows about it—the people in the workplace, in businesses and in the other House, who have said very clearly that this is a nonsense.

The Minister said it was impossible to see what more reassurance we could want, but it is impossible for me to see why on earth we are bothering with this. This has been a complete and utter waste of parliamentary time. We have got lots of parliamentary time, by the way. We are going to be on holiday for another two weeks when we could have been discussing really serious things. The next motion is being pushed through in an hour and a half. This is just about a Tory party struggling to find a dividing line. Amendments 25F and 25G talk about “drag-along rights” and “tag-along rights”. As I read them, I was reminded of children’s hour on the television in the 1950s—you are probably too young to remember, Mr Speaker. There used to be programmes called, “Rag, Tag and Bobtail”, “Andy Pandy” and “Bill and Ben”, but we have been treated this week and over the past nine months to the “Woodentops”

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

I cannot match that. Reminiscences are a strong point of my hon. Friend Mr Anderson.

I want to make four brief points. First, I agree with my hon. Friend that this is a disastrous way to make legislation. It started with a stunt, and then we got to what the Minister called “ministerial reflection”. This is not an example of ministerial reflection; it is an example of ministerial retreat.

Secondly, the Minister has said again today that this will be voluntary and that protections will be in place. There are more than 2.5 million unemployed, and it is rising. People are desperate for work and will do anything they possibly can to find a job. The pressure to take the shares or perhaps lose the job—that informal pressure—will ensure that this is not voluntary. It is like putting food on a plate in front of a hungry person and saying that it is voluntary to eat it. We will monitor this and I would welcome a six-monthly report from Ministers on how many people take up the option. It will not be a long report, as this proposal is almost dead in the water already; in fact one could probably come along with a list of the few names of those who have taken it up.

On JSA, I repeat that I do not accept any assurances from the Minister. None of the assurances that we have heard about the activities of the DWP to protect people—particularly regarding the sanctions and targets that the DWP and jobcentre officials are forced to make—have held water and are not worth the Hansard record they are written on. We will monitor the activities of the DWP in this matter to see whether the Minister’s assurances stand up.

Finally, there is a lesson for the Government in these debates, and it is this; neither this House nor the other place will tolerate again proposals in which people are asked to sell, effectively, their basic human rights. I give this assurance on behalf of, I am sure, all Opposition Members, and if there are any further such proposals, we will resist them tooth and nail because they undermine a basic principle of human rights development in this country. We feel as strongly as others will feel as the Government seek to roll this out.

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, let me reply to some of the points that have been made. First, there was a suggestion that the measure is not supported. It has been supported, repeatedly, by this House, and the Opposition’s attempt to derail it yesterday in the other place was defeated by a majority of 107, including by Liberal Democrats and Cross-Bench peers. We are now in a position where both Houses of Parliament support the clause and the principles behind it.

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


The shadow Business Secretary, Mr Umunna is quite wrong to say that we moved only very late in the day to consider the position of jobseekers allowance claimants. That issue was raised in this place and in Committee, where I gave assurances in response to questions and concerns from my right hon. Friend Andrew Stunell in December. This is not something new; we have done everything we can throughout the passage of the Bill to ensure that the status is entirely voluntary. Members in both Houses were fully entitled to raise these concerns, and were right to do so. We have responded to them.

Secondly, we have introduced legal advice. Independent legal advice is not available at the moment for those considering other forms of employment status. A person is not offered independent legal advice if they are asked to make a judgment between being a worker and being an employee. I remind the House that the status of being a worker gives someone fewer rights than the status of being an employee-shareholder. People are not given independent legal advice on that, but we have introduced it in this respect because it is a new form of employment status and we want people to be absolutely sure of the risks and rewards involved.

Thirdly, the hon. Member for Streatham said that my noble Friend Viscount Younger had somehow suggested that it would be impossible to value shares. What he actually said, at column 1444, House of Lords Hansard, was that the valuation of private company shares was not particularly easy, but that it was done the whole time by expert advisers in various circumstances who have to make a valuation. That is quite standard procedure.

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


The hon. Member for Streatham suggested that the tax provisions would be open to some kind of abuse. If he looks at the Finance Bill, which clearly he has not, he will see that schedule 22 includes provisions, which we published in draft, that deal specifically with the possibility of abuse of those tax provisions. I remind him that the Finance Bill is an annual event. Where abuses occur at any point under the law, we have the ability to improve our defences against them.

It is wrong of the Opposition to be completely negative about this proposal. It is wrong indeed to focus on just one aspect. We are talking about a package of employment rights, a package of mandatory shares and a package of tax incentives. It is the interaction of all three aspects that we think will motivate staff and better involve them in the future prospects of the company.

Hon. Members:

Give way.

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

Order. I cannot hear the Minister speak. If he does not wish to give way, that is his choice, but I must be able to hear what he has to say.

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

On a point of order, Mr Deputy Speaker. Would it not be right to get it on the record that it is etiquette for one Front Bencher to give way to another Front Bencher in a debate of this sort?

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

It might be normal practice to give way, but it is still the Minister’s choice whether he wishes to or not. Obviously on this occasion he does not wish to give way.

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

Thank you, Mr Deputy Speaker. I am trying to wind up this debate in a few minutes. The House will recall that I have given way repeatedly in debates on this matter.

Nobody has claimed that this Bill on its own or any individual measure in it will by itself trigger the growth that our economy needs, but in this Bill six different Departments have come together with a package of measures that will speed up the planning process, make it easier for families who want to adjust their housing, speed up the roll-out of broadband, increase investment in our gas and electricity networks and, finally and importantly, provide a new form of shareholder-employee status for those companies that wish to bind their employees more closely into the success of their performance.

Question put,

The House divided:

Ayes 222, Noes 161.

Division number 226 Growth and Infrastructure Bill — Employee Shareholder Scheme Safeguards

A majority of MPs voted for safeguards requiring those entering a employee shareholder scheme to receive independent advice paid for by the employer at least seven days before the agreement to enter the scheme is made.

Aye: 222 MPs

No: 161 MPs

Ayes: A-Z by last name


Nos: A-Z by last name


Absent: 262 MPs

Absents: A-Z by last name

Question accordingly agreed to.


That this House does not insist on its amendment 25E, to which the Lords have disagreed, and agrees with the Lords in their amendments 25H rev and 25J in lieu.