Growth and Infrastructure Bill

Chuka Umunna Excerpts

Tuesday 23rd April 2013 Commons Chamber

[Michael Fallon]

Yes, I can confirm that, and I can also assure my right hon. Friend that I was not heavy-hearted; I was simply keen to move on to the employee shareholder clause, and I was wondering how long I was going to be occupied in explaining how my right hon. Friend the Secretary of State for Communities and Local Government had fulfilled his commitment last week to listen to the concerns expressed in this House and to come forward with what I suggest is a very reasonable compromise.

Let me now, finally, turn to the employee shareholder clause. It establishes a new employment status between employee and worker. The Government have always been clear that this measure is entirely voluntary, and that it is open to both individuals and companies to use it if they choose to do so. I emphasised that again in our debate a week ago. In response to concerns expressed by my right hon. Friend the Member for Hazel Grove (Andrew Stunell) and peers in the other place, last week I reassured both Houses about the wholly voluntary nature of this new status. I made a commitment that no one can be forced to apply for, or to accept, an employee shareholder job. I announced that the Government had revised and clarified the position for those claiming jobseeker’s allowance. The position now is that jobseekers cannot be compelled to apply for or accept an employee shareholder job if they do not consider it right for them.

[Mr Chuka Umunna (Streatham) (Lab)]

The Minister has 977 people claiming jobseeker’s allowance in his constituency, and long-term unemployment is up by 10%. Can he confirm that employers in his constituency will be able to make job offers conditional on JSA recipients accepting employee shareholder status, thus giving up most of their fundamental employment rights at the same time? That is the point of departure for many people with the Minister on the issue of whether or not this is voluntary.

[Michael Fallon]

It is not only voluntary, but I made it clear to the House last week that jobseekers cannot be mandated to accept a job in those particular circumstances, and I cannot make it clearer than that.

In addition, I want to reassure the House that we will not allow individuals to use this employment status for tax avoidance. The Finance Bill includes several measures, such as excluding those who already own 25% of a company and connected persons from benefiting from the capital gains tax exemption.

The will of the elected House has now been expressed twice. However, the other place has again rejected this measure. After considering the concerns expressed by noble Lords, we have laid further amendments to ensure that individuals entering into this employment status fully understand the opportunities and risks involved. I will now set them out.

First, the company must give the individual a written statement of particulars, setting out the employment rights that are not associated with this status and detailing the rights attached to the shares. That will include whether the shares being provided as part of the employee shareholder status have any voting or dividend rights, whether there are rights to have the shares bought back or redeemed, and whether an individual may freely sell the shares to anyone, or if there are restrictions. This written statement is separate from that already required under the Employment Rights Act 1996, which sets out the terms and conditions of the job, and which the employee is entitled to receive within two months of starting work with the employer.

This employee shareholder statement of particulars must be provided in writing before the potential employee shareholder starts the job. It means that an individual can only become an employee shareholder if that has taken place and if the other criteria in the clause are met. The clause ensures that potential employee shareholders understand precisely what the new employment status involves.

[Mr Umunna]

I am grateful to the Minister for giving way again, but I respectfully completely disagree with him. What guarantee is there that the prospective employee shareholders will even understand that statement? It will be explaining dividends, pre-emption rights and other technical and complex matters. What guarantee is there that they will understand the information in the statement, or know whether to seek further legal advice and have a proper discussion about these matters?

[Michael Fallon]

I am grateful to the hon. Gentleman for raising that point, and I will come on to the issue of the advice that may be available to the employee in those circumstances.

--- Later in debate ---

The hon. Gentleman was also wrong about the suggestion that this would somehow cost £1 billion. That estimate comes not from the Treasury, but from the Office for Budget Responsibility, which estimated that between now and beyond the 2020s—that is, the next 30 years—the total cost of the policy might amount to about £1 billion. The actual Treasury estimate is that the cost of the policy is expected to reach about £80 million by 2017-18.

[Mr Umunna]

I want to return to my previous question about the provision of legal advice to people before they agree to accept employee shareholder status. The Minister said that the Government are reflecting on what advice can be given to such employees, but what is he actually going to do?

[Michael Fallon]

The hon. Gentleman has seen how we reflected on concerns about permitted developments, and concerns about legal advice were expressed extremely cogently last night. We have sought throughout the passage of the Bill to make absolutely sure—I stressed this as long ago as Second Reading—that nobody should be harassed or bullied into accepting this status. I have made it clear that guidance will be available and our amendments improve that by making sure that there will be a statement of written particulars. There will also be a cooling-off period of some seven days, and we are further considering how we might improve the advice available to those who are considering taking up this status.