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Mr. Shaw: I give way to my hon. Friend.
The First Deputy Chairman: Order. Before thehon. Gentleman gives way, I am afraid that he has allowed himself to stray from the amendment, probably because of the question from the hon. Member for Rotherham(Mr. MacShane). He should now relate his remarks to the amendment before us.
Mr. Marshall: On Asda and share options, will my hon. Friend confirm--to answer those who are concerned about Asda shareholders--that, under the guidance ofMr. Norman, Asda shareholders have seen the share price treble, which is quite a good achievement? Even thehon. Member for Rotherham might give an alpha double plus.
Mr. Shaw: There is no doubt that, if "stakeholder" has any meaning whatever, one can truly say that all the stakeholders in Asda have truly benefited under Archie Norman and the Conservative Government who have made the environment right for them to benefit.
I now return to some of the key points. My hon. Friend the Financial Secretary was kind enough earlier in the summer to see me to discuss share options and to listen to some of my concerns and those of a number of organisations and others. I realised that he had considerable experience of option, incentive and share schemes from his involvement in companies--in the years before he came into Parliament--and that he had observed the benefits that tying in staff, in a way that gives them an interest in the company, can produce. I was grateful to him for the sympathetic way in which he listened.
When a Minister moves to a new Department, especially the Treasury, it is always interesting to see the extent of his commitment to some of our fundamental policies, and whether perhaps the Treasury atmosphere rapidly gets the better of him. I was delighted that my hon. Friend the Financial Secretary was able to assure me of his commitment to a shareholding democracy. He was able to assure me that he, like me, is proud of the fact that there are 11 million shareholders compared with3 million when we got into office, and that 16 million people have life assurance policies and pension policies. I was also pleased that the Prime Minister is committed to widening share ownership. I felt, therefore, that there was a chink of light, that it was possible to push open the door, not only in relation to keeping share schemes but to seeing whether they could be better targeted at the very people whom we want to help.
It was apparent from discussions with my hon. Friend the Financial Secretary that he wanted to look after the thin cats and even, perhaps, one or two of the thinner cats who were putting on just a modicum of weight but were well short of becoming fat cats. I am delighted that his work during the summer and the work on the Budget have produced this share option scheme. It is important that my hon. Friend has recognised that share options are about giving people the incentive to create jobs. It was apparent that he had some knowledge in that area.
Let me recap some of the benefits of share option schemes and their purpose. The fat cat/thin cat debate has sometimes taken us off the main track.
The First Deputy Chairman:
Order. This is not a clause stand part debate but a debate on the amendment. The hon. Gentleman should confine his remarks to that.
Mr. Shaw:
I shall try to ensure that I keep to the point. The implications of the amendment are in danger of not being fully understood unless one focuses on the purpose of share option schemes.
One of the key purposes of share option schemes is to help lower and middle income employees. Another is as a source of equity finance. I am not saying that the amendment would necessarily damage those, but it would begin to move the share option schemes away from some of their original purposes.
As well as encouraging a share-owning democracy, the number of share option schemes demonstrates how effective they are. My hon. Friend the Financial Secretary said that the amendment could damage the number of share option schemes that people might want to set up in the future, so we should not support it.
Loyalty is regarded as a key issue in the awarding of share options, but the amendment would remove the loyalty incentive. It would mean that everyone could have share options regardless of their loyalty to the company and regardless of how management and directors saw that loyalty helping the company's performance.
In addition, there must be flexibility within high technology companies. The amendment might remove such flexibility, because high-technology companies will have to reserve the share options with a little bit extra for some of the high-tech and skilled staff that they need to retain.
We also need to consider whether the amendment would encourage the development of the common interest between employees and shareholders. If employees feel that they will get something automatically as of right simply because they work in the company, it is not quite the same as if they are given an incentive to produce the extra value in the company which will benefit its shareholders and employees. The amendment is not in line with the basic philosophy behind share option schemes, so I cannot support it.
Share option schemes are often used as a substitute for pension schemes in small companies that cannot afford conventional pension schemes. That may not be contrary to the amendment, but the amendment will not necessarily assist.
As I discovered, share option schemes are often used to help inward investment. American companies are keen on United Kingdom employees benefiting from the share option schemes of the parent company in America, and that is possible under the law. I am not certain that the amendment would work in favour of such an arrangement. My hon. Friend might wish to consider that when he replies.
The amendment might make life difficult for such American companies, many of which want to put their British employees on parallel employee remuneration and incentive packages as the American companies' employees in the United States. All those arguments show why the Government are right to bring in the new scheme and why the amendment is not quite right.
Sir Richard Greenbury was mentioned earlier. I remind the House that his report concerned directors. When I spoke to him, he told me that he did not intend his proposals to affect arrangements for share options further down the income scale and further down the hierarchy within companies: he did not intend them to have any impact on shop girls, supervisors or even junior managers. The amendment is rather dangerous. Some companies will want to make share options available to all employees; others will want to make them available to only a small number, which I do not think is necessarily wrong.
I am delighted with the way in which the Government have approached the matter so far, and I hope that I can express further delight when we debate a later amendment tabled in my name. Amendment No. 6 would make share option schemes too rigid, and might damage some of them. As my hon. Friend the Financial Secretary has suggested, some companies might even not implement schemes as a result. If the amendment were passed, people might be entitled to share options regardless of their performance. Schemes should operate with some flexibility, allowing the benefit of share options to be earned only by employees whose performance makes their companies successful. I shall vote against the amendment if it is put to a vote.
Mr. Mike O'Brien (North Warwickshire):
As the Financial Secretary said, this has been a good and thorough debate.
The Government's main objection to the amendment seems to be that it would benefit too many people. So much for their idea of a shareholding democracy. After 16 years of Tory government, only 17 per cent. of shares are owned by individual shareholders; that is the lowest percentage for a very long time, perhaps the lowest percentage ever.
My hon. Friend the Member for Edinburgh, Central (Mr. Darling) welcomed clause 105 as far as it went, but Opposition Members feel that it does not go far enough--hence the amendment. In an effective speech, myhon. Friend the Member for Sheffield, Hillsborough(Mrs. Jackson) pointed out that the Labour party approved not only of employee share ownership, but of the granting of share options. She also said that most employee shareholdings were small or even token. She pointed out that Asda, for instance, has 36,000 shareholding employees, which is welcome, but none of those employees is in the same league as the fat cats in the privatised utilities. As the hon. Member for Dover(Mr. Shaw) observed, a distinction must be drawn between the fat cats and those whom he described as the thin cats. I shall return to the hon. Gentleman's speech when he is less busy than he appears to be at present.
My hon. Friend the Member for Hillsborough also spoke of her experience of the hypocrisy issue, as she described it, at the Yorkshire Water annual general meeting. Our agenda deals with the points that she raised: it seeks to help all shareholders, not just employee shareholders. The amendment fits well within that overall agenda.
The hon. Member for Stamford and Spalding(Mr. Davies) suggested that Labour's policy was "populistic". I suspect that it will indeed be popular, just as I suspect that his and the Financial Secretary's appeal for selectivity in granting share options will have much less popular appeal.
9.15 pm
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