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Mr. Mark Prisk (Hertford and Stortford): I believe that it is an excellent principle to encourage greater share ownership and involvement in one's company wherever possible. My constituent, Mrs. Jennifer Parry, who works for the John Lewis Partnership, shares my support for the principle of what the hon. Gentleman is trying to achieve, but she is uncertain whether part-time employees might be able to benefit, because of the rule that shares must be held for a minimum of five years to gain tax benefit. Will the hon. Gentleman perhaps enlighten the House on that matter?
Mr. Lazarowicz: I am not sure whether I can answer the hon. Gentleman's query in detail. The Bill is designed to facilitate as wide a range of schemes as possible. Every employee whom one would want to benefit might not benefit immediately, but I hope that the Bill will put down a marker for future legislation and point in the direction in which the House wants to go.
Appointing employee-elected trustees is an extremely effective way to achieve a form of industrial democracy. It is good not only for Britain's employees but for the whole country because the evidence is that such an increase in employee ownership increases productivity—a key Government objective. The more that employees are involved in the ownership and the direction of their business, the better the productivity and the better the results for the country as a whole.
I emphasise that this provision in the Bill enables employee trustees to be elected by employees. It is an optional provision; it does not force it on any unwilling company or employees, but it is important that such employee ownership be encouraged. Employee ownership is clearly not suitable for all businesses. No one is suggesting that the traditional form of share ownership is not appropriate for very many companies, and in many cases public ownership is the way forward. However, the Bill would move forward the idea that employee ownership is also a valid way—perhaps even the third way—that needs to be encouraged and supported by the Government and the House.
Mrs. Cheryl Gillan (Chesham and Amersham): I am very interested in the Bill and in no way want to put a damper on it, but I should like to pursue the point made by my hon. Friend the Member for Hertford and Stortford (Mr. Prisk), especially on the John Lewis issues. What advice has the hon. Gentleman received? I understand that John Lewis employees are particularly concerned about two main points. First, can the company maintain and provide liquidity to an internal share market, which would have to be created to allow employees to trade their shares?
Secondly, because of their low-paid and part-time nature, many of the partners in John Lewis may not be able to wait the minimum of five years that they are required to hold the shares before any gain on disposal becomes tax free. Although I understand that the hon. Gentleman may not be able to go into great detail, I and the wider audience outside the House would appreciate it if he would share with the House the advice that he has received and tell us whether he hopes that the Paymaster General will shine light on the problem or whether he has any solutions to those two thorny issues.
Mr. Lazarowicz: I thank the hon. Lady for her intervention. I cannot offer any detailed advice at this stage. Clearly, as she will appreciate, today's debate is on the Bill's broad principles. No doubt, if the hon. Lady or her hon. Friends wished to pursue those points in detail, they could do so in Committee. However, I have no doubt that my hon. Friend the Paymaster General will be able to outline the Government's position. [Interruption.] I am sure that she will be able to do so. As I suggested to the hon. Member for Hertford and Stortford (Mr. Prisk), the Bill is intended to facilitate a range of options. Indeed, if my hon. Friend made any suggestion that fits the broader intent of the Bill, I am sure that it could be pursued at a later date.
The provisions in subsection (5) would seek to achieve the objective of facilitating employee representation on trusts. The final set of provisions are set out in subsection (6), which would support the position of companies, especially business owners who want to make a significant move towards employee ownership.
Corporation tax relief would be granted up front where a significant block of shares—10 per cent. or more—were transferred to an employee trust.Under the SIP provisions, such corporation tax relief is available only when shares are transferred to individual employees under the scheme, but that might take a very long time where a large part of the company is transferred at the outset for the benefit of employees, thus making that route expensive—often prohibitively so—for the company. Such up-front corporation tax relief was available under the previous QUEST legislation. The provisions in subsection (6) would encourage the establishment of employee ownership where businesses are owned wholly on behalf of their employees, largely through trusts.
The Bill would, if passed, be a modest but significant measure to promote active employee ownership. However, it represents something wider. As I said in my opening remarks, it was originally suggested to me by the co-operative movement. It did so because, as some Members will know, in recent years, the co-operative movement has been working closely with a wide range of organisations that do not have traditional links with the movement.
Those organisations include, of course, employee- owned businesses—what I term the employee ownership movement and many mutual businesses not only in the financial sector, but in other sectors. They include community businesses and many providers of community and social housing and community leisure facilities. Indeed, they include companies limited by guarantee—a topic of some interest at the moment. They include the exciting and innovative scheme to promote a voice for football supporters in the management and ownership of their football clubs—the supporters direct initiative. [Hon. Members: "Hear, hear."] As the hon. Members can hear, that initiative has considerable support among Labour Members. All those organisations and sectors are now working much more closely than ever before on a common agenda. In effect, a new co-operative and mutual sector is developing.
Rosemary McKenna (Cumbernauld and Kilsyth): Does my hon. Friend agree that wonderful opportunities now exist in central Scotland, with the development of the Forth and Clyde canal, which has had an impact on many communities throughout the central belt, and that that represents an ideal opportunity for such companies to develop because they will be successful if they have real support from the community?
Mr. Lazarowicz: Indeed. As my hon. Friend may well know, I, as a member of the Select Committee on Scottish Affairs, recently paid a visit, along with a number of Members present in the House today, to the Forth and Clyde canal and saw the wonderful opportunities that it presents to community business in my hon. Friend's constituency and elsewhere. That opportunity indicates the way in which the new co-operative and mutual sector is developing.
The new sector includes, of course, traditional forms of co-operative activity. It includes new and successful forms of co-operative enterprise, such as the highly successful Co-operative bank, as well as long-established companies, such as the John Lewis Partnership, which has
been discussed at some length already. However, lest anyone thinks that such a model of business ownership is valid only for century-old businesses, let me assure him or her that the involvement of employees in their business is as valid and important to what has been called the new economy.For example, Poptel—a worker co-operative set up in the mid-1980s—now offers internet services. It has 60 staff based in London and Manchester and a turnover of £6 million. It is the inventor and registry operator of Dot Coop—the new co-operative internet identity. If worker co-ops are not to the taste of every Member, let me refer to Xansa—the consulting information technology and outsourcing group, with a turnover of almost £500 million. It has been quoted on the stock exchange for some six years now, but it is still controlled to a major extent by its staff, who have a 30 per cent. stake in it.
Mr. Iain Luke (Dundee, East): My hon. Friend is listing a series of options for different types of companies, but does he agree that if we could somehow build worker share ownership into some of the larger companies—indeed, the multinational companies—it may reduce their tendency to be foot loose and to take decisions outwith a country that have an impact on the employees in the country in which they operate?
Mr. Lazarowicz: My hon. Friend makes a very valuable point. I know, from his experience in Dundee, that the problems of foot-loose companies have caused great difficulties in his constituency.
As I have said already, employee ownership offers real advantages to employees and the businesses that employ them. As we have heard again in the House today, the concept seems to have all-party support. The Government strongly recognise the value of employee share ownership and the contribution that it can make to raising productivity. Support in the House is broad and, outside the House, the Bill is backed by the co-operative movement, Job Ownership Ltd., and many successful employee-owned companies, such as those that I have mentioned. It is backed by the Trades Union Congress, the Industrial Society and many mutual companies, including Nationwide and Standard Life—one of the major employers in my constituency.
Many hon. Members will have received letters from members of the public or employees of employee-owned companies in support of the Bill. In the fullness of time, some of those individuals and the businesses may well gain some direct benefit from the Bill. Most will not—but they support this measure because they recognise that, as well as its direct impact, the Bill can be an important symbolic expression of the House's wish to support the growth of active employee ownership.
I urge the House and the Government to give a positive response to that wide coalition of support for the Bill. I hope that the House will show its support for wide employee ownership by supporting the Bill's Second Reading today.
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