My Lords, when I first heard about this scheme, my initial reaction was to give the Government the benefit of the doubt because it encourages share ownership and enterprise—all good intentions. However, I have listened to the arguments of the noble Lords, Lord Pannick and Lord Forsyth of Drumlean, and to the noble Lord, Lord Deben, who has great relations with his coalition partners, summing it up by saying, “It won’t work”. The noble Baroness, Lady Brinton, has said the same.
I cannot understand this. I have started businesses and run businesses at different levels and I have given shares to my employees, so all this about £2,000 worth of shares—even the figure itself is baffling. Who on earth is going to go through all this for something as incentivising as £2,000 worth of a share incentive, although I know that that is a minimum figure, and then to have to get legal advice? Do people understand the practicalities of offering legal advice if every time someone applies for a job they have to get legal advice
to go for the share scheme? Then the question was asked: what if these jobs are offered and the Government say that they are voluntary only? If a job is offered as an employee share job only, though, that is not voluntary. As an employee you either take that job on those terms or you do not. I think that the Government have the best of intentions, and they say that there will be no compulsion, but I cannot see this being taken up.
What research did the Government do before they came up with this scheme? We have heard from the noble Lord, Lord Forsyth, that Mark Florman says his members think that this is a great scheme. Did the Government check with Mark Florman before they proposed this scheme? Now the noble Baroness, Lady Warnock, tells us that Charlie Mayfield, who I respect greatly as one of the most successful chief executives in this country, running the John Lewis Partnership, says that this is laughable. That is the reaction of serious business to this.
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Have the Government thought through the practicalities of valuing private companies’ shares? Have they thought about the liquidity of shares and how difficult it is to sell them? In a private company you have no option. I have been a director of an AIM company. In AIM companies we have very little liquidity of shares and it is difficult to sell them—let alone for a FTSE 350, FTSE 250 or FTSE 100 company. The Government have not thought through the liquidity aspect.
What about the many wonderful share option schemes that are already in existence, which we all have used and are using today? I would not dream of giving share options to any of my employees and asking them to give up any of their employment rights. That is wrong. Asking them to give up rights is not a good way of giving an incentive to an employee. You ask them to take it on because they believe in you, in your business and in the future and that is why they want those shares, and they will benefit from them if they contribute to the success of that company—not by giving up some rights, which is fundamentally wrong in principle.
The Minister said that this is good for growth. The noble Lord, Lord Pannick, referred to the real world. I thought that there was a ban on ivory in this country. Whoever came up with this idea is living in a giant ivory tower, and has never run a business or had any interaction with a business in the real world. Can the Minister reveal the genius in Government who has come up with this amazing dog’s breakfast of a scheme?