My Lords, I have put down a Motion that Clause 27 should not stand part of the Bill to stimulate a last, wider debate on the issue. I note that the noble Viscount has gone over the same ground
several times and I feel for him at having to do it yet again. Perhaps our remarks before he speaks will encourage him to make some new points that will help inform the Committee.
There are three essential points to be made on Clause 27, the first of which relates to the extension of employee share ownership. This is an objective that noble Lords in all parts of the House support. Indeed the Government had an official review—the Nuttall review—which reported last year on the extension of employee share ownership. That review made some 30 recommendations. I have the report here. Most of them were excellent recommendations, some of which the Government accepted and some of which they were unable to accept. I simply note that not one of those recommendations of the review that the Government set up specifically to promote wider share ownership related to the creation of an employee ownership scheme akin to the one that we are debating today, involved issuing shares in return for the giving up of employment rights.
The question I want to ask the noble Viscount is: if this is such a good idea, why was it not recommended by Nuttall? Secondly, I want to reiterate all the specific problems relating to the scheme, which have become very clear in our debates this afternoon. There is the problem of compulsion in respect of benefit claimants and the opening to discrimination claims, which the noble Lord, Lord Pannick, highlighted. That could mean that there will be an explosion of very expensive and difficult cases before employment tribunals because of the removal of essential rights that will leave employees with no other recourse than discrimination when they believe that they have been badly treated. There is the problem of cost which we have just debated in the previous group of amendments, and a whole set of issues that we have not debated but which were debated in the House of Commons about the status of the shares themselves, such as the voting nature of the shares and how the shares will be tradable, given that most of them are intended to be among the 6,000 companies that the noble Viscount has highlighted. There are start-up companies whose shares will not be listed, so we must ensure that there is a market in which they can sell shares and terms under which they sell them, given that they may have to sell them back to their own companies when those companies are under some stress. There is a whole set of issues relating to the working of the scheme which makes it highly problematic and which may leave small shareholders, in particular, who do have not much money themselves without resources to take independent financial and legal advice. They could be very seriously exposed.
The noble Lord, Lord Flight, told the Committee earlier that if he was 40 years younger, he would relish the opportunity to take advantage of the status and that it would have spurred him to the creation of new companies and new employment. If they were the groups we are talking about, that would be one case. But, as legislators, we are concerned that substantial numbers of employees who do not have access to financial and legal advice will be straightforwardly exploited by these provisions.
The third point I make on the clause as a whole is that almost nobody to whom this proposal is targeted welcomes it. The Government’s own consultation showed that an overwhelming majority of those who responded, including those who responded from within the business community, either thought that this proposal was irrelevant or were actively hostile to it. The noble Viscount cited a few instances earlier of individuals who support it. However, of the 219 consultation responses, only five welcomed the proposal. Five out of 219 is about the same ratio of supporters to opponents as we have seen in your Lordships’ House as this proposal has been debated. That seems to me a compelling reason why the Government would be wise to withdraw the proposal before we debate it again at Report. I beg to move.
6.30 pm