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The Government of the 1980s did not encourage private individuals to buy shares in former nationalised companies in order to promote an interest in their expansion and development. The experiment was specifically marketed as, "Give us your money and we'll double it in a short time. You can sell your shares quickly and walk away with a far bigger profit than you would have made with a building society."
Ann McKechin (Glasgow, Maryhill): My hon. Friend makes an excellent point about investment. Does he agree that increased employee participation should tackle the lack of investment in training and in research and development that has bedevilled British industry, especially the manufacturing and construction industries, for many years?
When considering the Thatcherite reforms of the 1980s, economists say that short-termism has been the long-term problem of the British economy. When individuals are encouraged to make short-term investments in industry, we cannot hope to generate the investment that my hon. Friend mentioned. There has been a sea change in attitude, and the Government are pursuing a longer-term strategy. However, such a strategy was rarely pursued by the Conservative party when it was in government.
Ms Munn: Does my hon. Friend agree that, although the contribution of the hon. Member for Huntingdon (Mr. Djanogly) was interesting in its detail and complexity, he missed the point of the Bill? He spoke at length about share options and people selling shares, and asked whether that was a risk, and whether they would get their money back, instead of considering the benefits of longer-term investment in not only money but skills, ability and commitment to an enterprise.
Mr. Harris: I absolutely agree, and I look forward to seeing whether the hon. Member for Huntingdonwho, unfortunately, is not in the Chamber at the momentintends to support the Bill when it is in Committee.
Participation is the key factor in all employee share ownership schemes. Sadly, perhaps because of the structure of the British economy, most of the research into this has been carried out in the United States. It was mentioned earlier that there is much wider participation in these schemes across the Atlantic than here. The largest survey of which I am aware was carried out between 1983 and 1986 among 3,700 employees in 45 companies in the United States.
In its conclusions, the survey identified the three most important factors in the success of any employee share ownership scheme. The first is how much stock is transferred to employees each year. It found that contributions under 3 or 4 per cent. a year simply did not
The second important factor is the employees' involvement and participation in decision making. My very first job was as a reporter on a local newspaper, the East Kilbride News, and one of the biggest employers in the area was Motorola. Motorola had an interesting and innovative strategy on employee relations. It did not recognise trade unions, which I still believe was a major mistake. Thanks to legislation introduced by this Government, that is no longer an insurmountable problem for the trade unions.
Motorola did, however, have employee councils, and it was noticeable, on visiting the factory, that the employees were much happier and more content when they were actively encouraged to take decisions or at least consulted by the management before major decisions were taken. There was also a much lower turnover in the work force. One of the features of the Bill relates to participation. It is crucial that employees have a practical role in running the company in which they are employed.
The third factor in the American survey is how often a company communicates with employees about the decisions that it is taking, which relates to the second point about participation. Interestingly, many of these surveys have found that other factors are far less important. For example, factors such as whether a company is unionised, the size of the company, the type of business it pursues, or even the demographics of the work force do not have as much impact on the success of an employee share ownership scheme as those three main factors.
I hope that the Government will support the Bill. We shall find out when my hon. Friend Paymaster General addresses the House. Incidentally, I think that, in Committee, it should probably be re-titled the Employee Share Ownership (John Lewis Partnership) Bill. I congratulate the John Lewis Partnership on its extremely effective lobbying. When I was lobbying, in a previous incarnation, I wish that I had been half as effective as the John Lewis Partnership. Of course, I had nowhere near the resources that it has.
The Government have a long-term strategy for industry, and the Bill chimes well with that general philosophy. I hope, therefore, that when my hon. Friend comes to the Dispatch Box, she will tell us that the Government support the measure, which is essentially an amendment to existing legislation, rather than a brand new measure.
An eloquent Conservative speakerI think it was the hon. Member for South Norfolk (Mr. Bacon)spoke of the difficulty of rewarding part-time and low-paid workers, precisely the ones who often feel left out of share ownership schemes. I understand that the industries with the lowest-paid workers and with part-time workers have failed to motivate them by means of short-term measures such as one-off bonus payments. There has been a much more positive response to longer-term commitment on the part of companies. I hope that that philosophy will encourage low-paid and part-time workers to have a vested interest in their companiesalthough, thanks to the national minimum wage introduced by this Government, far fewer people than ever before now receive very low wages.
Turnover is a huge problem, especiallyparadoxicallyat times of low unemployment. The worst companies will have the highest turnovers at such times. It is difficult for a company to have a long-term healthy outlook when 20, 25 or 30 per cent. of its workers are constantly leaving and being replaced by people with, in many cases, no knowledge of or interest in the company. American surveys have shown that share ownership schemes can contribute hugely to reducing turnover.
Ms Ward: Research shows that not just turnover but absenteeism is reduced. People who want to be involved in a company in which they have a stake do not want to take time off sick as an excuse, because they have a real interest in maintaining the company's profitability.
Mr. Harris: That is an excellent point. Although we must not automatically describe all absentees as people who are not committed to their employers, it is true that those who feel they have a personal vested interest in the long-term health of their companies will be inclined to take far fewer days off sick. That will inevitably have an impact on productivity in the long run. Surveys have also shown that increases in sales and employment are much higher in companies with share ownership schemes.
Employee share ownership also gets rid of the notion of "workers against employers", mentioned earlier by my hon. Friend the Member for West Bromwich, West (Mr. Bailey). It puts workers and employers on the same side, where they should have been in the first place. It thus helps to end industrial strife in which trade union shop stewards feel that they must win concessions from the "enemy", and employers feel that they must not give an inch to the "enemy" on the other side of the table. That division has crippled British industry for a huge part of the 60 years that have elapsed since the end of the second world war.
The more that we extend share ownership schemes, the more I hope that we shall see positive industrial relations. Trade unions and employers will see the benefits of everyone working together to ensure that the owners of the sharesthat is, the employeesgain from the productivity of the company.
The United States General Accounting Office, in an ongoing series of reports, shows that productivity in companies that run share ownership schemes for employees is 52 per cent. better than in comparable firms. That alone should convince us of the value of such schemes.
It has also been suggested that employee share ownership schemes can make privatisation programmes more politically acceptableI am of course offering no advice to the Government as to future privatisation projects. However, employee share ownership can help to overcome the resistance of work forces to any new status or structure that results from privatisation. Furthermore, such schemes may encourage investors; they may be more likely to invest if they feel that there will be no conflict between the work force of a formerly nationalised company and its new private owners.
I am delighted to speak on behalf of my hon. Friend's Bill. He has put a great deal of work into it and consulted many organisations about it. The Bill has only four pages butif the House accepts itit will have a major and positive impact on thousands of workers, not only in Scotland but throughout the United Kingdom. I wish it well.