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Mrs. Cheryl Gillan (Chesham and Amersham): I am pleased to have caught your eye, Mr. Deputy Speaker, as I want to join other contributors to our debate in congratulating the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz) on his success in getting a high position in the ballot and introducing the Bill. There is an unusual consensus across the Floor of the House that it has merit and deserves further examination in Committee. I hope that the Minister will allow it to make progress and be examined in more detail in Committee.
I do not want to delay the House long, but having intervened earlier, I wish to make a brief contribution to echo concerns already expressed about the Bill as drafted. I do not need to reiterate the points that my colleagues and I have made about the John Lewis issues; the Minister has taken them on board and I am sure that she will address them later. Like other contributors, I am concerned about red tape and the cost of the proposal. I hope that there will be an opportunity to address those issues.
For understandable reasons, a regulatory impact assessment has not yet been carried out for the Bill. I should like to be sure that a company which chose to take part in the schemes introduced by the Bill would not be subject to onerous red tape requirements. Although I am in favour of employee share schemes, I believe that we should do all we can to reduce the red tape associated with them. After all, there is no point in implementing worthy employee share schemes in the interests of raising productivity, for example, if the amount of red tape created in other areas overwhelms businesses and ends up reducing productivity.
Real examples support the concern about red tape. For example, let us consider the problem of tapers. When the 2000 Budget was introduced, all shareholders in an unquoted trading company became eligible to qualify for a higher rate of capital gains taper relief for the benefit of start-up companies. Although welcome, the relaxation in the definition of business assets in itself created complications. Gains may be subject to different rates of taper, depending on the relative periods of ownership, as a business or a non-business asset.
The apportionment is on a strict time basis and does not take account of the asset's value at any given point in time. There are pitfalls, and it is easy to trigger anti-avoidance provisions inadvertently—for example, giving employees shares that carry conversion rights could result in any gain on the ultimate sale of the shares being taxed as income, not capital. Depriving the employee of all taper relief may also produce a national insurance charge for the Chancellor.
Overall, schemes can sound great in principle, but as soon as the complex tax rules or the compliance rules come into play, there can be unfortunate side effects, as we all know, which result in extra red tape or unnecessary complexity.
Finally, I am concerned about the possible costs of the measures to the taxpayer. As I understand it, the intention of the tax measures is to address the problem whereby many firms, especially the small family-owned ones, are eventually handed over to their employees, with expensive corporation tax liabilities incurred on the transfer of a block of shares to an employee trust. The Bill would remove that legal technicality, making it
possible for more businesses to be transferred into employee ownership. That seems a perfectly acceptable proposal, but I should like to know the cost to the Exchequer of this aspect of the Bill.I am pleased to have had the opportunity to make a brief contribution. Overall, I support the measures, which spread the benefits of employee share ownership. However, as with many Bills, the devil is in the detail. I look forward to hearing the Minister's response.
12.42 pm
Mr. Tom Harris (Glasgow, Cathcart): I am grateful to be offered the chance to speak in the debate. Like most other speakers, I begin by congratulating my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on coming near the top of the private Members' ballot. I entered Parliament at the same time as my hon. Friend and chose not to submit my name for the ballot—a decision that I have not regretted. As was said earlier, I cannot imagine a worse feeling of panic than being in the House for a week and discovering that one is near the top of the private Members' ballot. I congratulate my hon. Friend on his staying power and self-control.
I declare an interest as a member of the Co-operative party, although I am not a Labour and Co-op Member. The Co-operative party supports the Bill, as do I personally. I would have supported it, whether or not I was a member of the Co-operative party.
I should have liked to welcome the presence of representatives of the Scottish National party here at Westminster. I find it incredibly discouraging that a party that claims to stand for Scotland does not see the need to come to the House on a Friday to represent its constituents' interests and to discuss a measure that will have an effect throughout the United Kingdom, including on many thousands of workers in Scotland. It is a disgrace that SNP Members are not present. They are showing their contempt for this Parliament by showing their contempt for the interest of their own constituents. I hope that that will be noted by hon. Members in all parts of the House.
It would be useful to put this debate into context. As a Labour party member of 18 years standing, it is difficult for me to think about the debate on share ownership without remembering some of the debates that have taken place in the Labour party, the House and the country as a whole in the past 20 years and even before that. I am delighted that we are having this debate and that the Bill's promoter is a Labour Member. We should be very proud of that. However, the Labour party has not always been as far-sighted and open-minded on share ownership. For example, when I joined the party in 1984, if any Labour candidate or, even worse, Member of Parliament, was discovered to own shares in a private company, especially on the eve of an election, it was something of an embarrassment and certainly a cause for media concern. At that time, Lord Healey had to admit publicly on television that he had used the private health service to carry out an operation on his wife, and similarly, that was considered to be a huge embarrassment for the party. I am extremely grateful that we have moved on leaps and bounds since those times, not least because we have moved from opposition and into government as a direct result of having done so.
Ms Claire Ward (Watford): Will my hon. Friend confirm that some of our Labour party colleagues have
sometimes misunderstood the concept of holding shares in the Co-operative party? When one admitted that one was a co-operator and held shares in that organisation, some people began to worry in just the way that he describes in relation to the private sector.
Mr. Harris: My hon. Friend is correct. I shall add that to the very long list of deliberate misinterpretations of various actions that hon. Members in all parts of the House have had to put up with, whichever party we belong to.
The hon. Member for Aylesbury (Mr. Lidington) mentioned the profound impact of the Thatcher Government on the country's attitude to share ownership. It would be churlish to deny the impact that Baroness Thatcher and her Government had in that regard. I do not agree, however, with his suggestion that all of the innovations that the Conservative Government introduced in this area were entirely positive. Even that statement would not have been couched in such moderate terms 20 years ago, but I shall leave it at that, and say that their actions were not entirely positive. For example, in 1985, The Observer reported that, within two years—coincidentally, this was to happen in the run-up to the 1987 general election—the Conservative Government would have contrived to create 5,000 new shareholders in previously nationalised companies in every marginal seat in the United Kingdom.
It is appropriate to suggest that, although it was part of the Government's agenda at that time to create a property-owning and share-owning democracy, there was a very large element of cynical manipulation of the electorate. I am happy to take any interventions on that point. Perhaps credit is due to the Government of the time, as the strategy was very clever. However, it was also balanced. It was intended to promote share ownership and an understanding of how the economy works, and to encourage people to have a financial interest in the economy, but it was also an attempt to ensure that the Conservative Government were re-elected. It was a successful attempt, so I cannot bang on about it for too long, but we should acknowledge the cynicism.
Mr. Luke: Does my hon. Friend accept that the 5,000 new shareholders that the Conservative Government said they had created in constituencies throughout the United Kingdom still believed in the welfare state and free health care for all? Despite the change in capital ownership, people have remained true to core values.
Mr. Harris: My hon. Friend is right, and I do not want to be interpreted as saying that we lost the 1987 election because of share ownership. People who perhaps continue to own shares in the private companies to which I referred have largely voted Labour in the past two general elections. I congratulate them on their judgment.
Employee ownership is different from what is commonly known as share ownership. One of the problems with the Conservative experiment in the 1980s was that it was based on short-termism. People with no interest in British Telecommunications, British Gas or British Nuclear Fuels were encouraged to buy shares in them.
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