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Clause 23 - Employee owners

Part of Growth and Infrastructure Bill – in a Public Bill Committee at 12:00 pm on 6th December 2012.

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Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills) 12:00 pm, 6th December 2012

This group of amendments brings together some anomalies in the Bill. My hon. Friend the Member for Sheffield Central, in his early intervention, hit the nail on the head. There is so little appetite in the business community—in any community, for that matter—for these changes, that we could have finished the entire Bill by lunch if the Minister had withdrawn the clause. We are unclear why the clause relates to the Bill, in any case. The Minister gave a robust response, saying that the Government consult and listen, but they have not really listened to the consultation results produced late last night, with only five out of 209 responses even remotely welcoming the proposal.

The Government amendments will resolve the following anomaly. As the Bill stands, employers who take up the employee-owner scheme could be issued with shares that are not fully paid up. The Government’s own consultation states:

“If an employee owner is given shares that are not fully paid up, they could be left with a financial liability if the company becomes insolvent” under company law. As the Minister said, the other amendments in the group expand the availability of the employee-owner scheme to overseas companies and parent companies.

The consultation is yet another perfect example of the mistakes and problems surrounding the Bill because of the Government’s haste in introducing parts of it. The Chancellor stood up at the Conservative party conference and announced a policy that, I suspect, had everyone in the Treasury and the Department for Business, Innovation and Skills holding their foreheads in their hands, as they tried to find a way of implementing it quickly. There is little doubt that the Beecroft agenda, which underpins this policy, was cobbled together rather quickly to drive home some ideological point about workers’ rights. The Department’s consultation response states that, if the amendments were not included, employers would be left carrying the can for any issues with regard to financial liability if the company became insolvent.

The Opposition do not object to these tidying-up amendments, but I would like to ask the Minister some questions. The amendments extend the scheme to parent companies and overseas companies, so how can he assure us that he will deal with any tax avoidance issues? Where a subsidiary company has shares allocated in it for employee owners, will it actually be the employer of those employees, rather than just an opportunity for tax avoidance and to deal with PAYE and national insurance through a different subsidiary of a parent company?  There is also the case law on establishment, in terms of where an employee works and who they work for. Can the Minister give us some assurances on that?

What guidance will be given about the scheme to make sure that subsidiary holding companies, particularly overseas companies, use the scheme properly, for the benefit of not only themselves but employees who may take up employee ownership contracts in the future?