§ National Savings are, however, only part of the picture. We also need, if we are to achieve sustained growth, to encourage more people to save and invest in British industry.
§ Last year we introduced legislation to regulate employees' share option and share incentive schemes. But most existing schemes have been prepared on the basis that participation is offered only to senior staff. In any event, the terms of many schemes would make them unattractive to other employees. What is wanted is a wider share-ownership scheme which will encourage companies to make it possible and practicable for each and every one of its employees who wants to, 259 to acquire a real stake in the company for which he works. The necessary provisions for a new "Share Savings Scheme" will, therefore, be included in this year's Finance Bill.
§ The new arrangements will enable any any company with an approved scheme to offer, to all its regular full-time workers not already covered, the chance to buy shares on specially favourable terms. Indeed these arrangements will make it possible for schemes to be operated so that an employee can save up through Save As You Earn in order to buy shares for as little as 70 per cent. of the normal price ruling when he joins a scheme, but still retain the option, at a later date, either to take up his shares at a profit, or alternatively—if he changes his mind—to keep his savings in cash.
§ These schemes will work in this way. First, the shares will be bought by the employee from Trustees on the special terms available, but no substantial payment will be required at the outset. The employee will provide the purchase money for his shares by means of regular Save As You Earn payments.
§ Second, the employee's SAYE contributions under such a scheme will be limited to £20 a month, which will enable him to acquire shares costing up to £1,680. But if the company prospers, the value of the shares is likely to be greater when the SAYE contract matures.
§ Third, the increase in the value of the shares will not attract any liability to tax until they are disposed of, when the usual capital gains tax rules will apply. The SAYE rules will be revised to permit anyone who already makes the maximum SAYE contributions to join a scheme of this kind.
§ Fourth, there will be protection against a fall in the value of the shares during the saving period because there will be the right to opt out of the share purchase when the SAYE contract matures and instead to keep the cash proceeds.
§ The result is a scheme which combines the attractions and incentives of employee share schemes with the security and bonuses of SAYE. It is a further step towards wider share-ownership. It will enable all those who participate to share in the prosperity of their company—to take up their shares at a profit—but 260 always with the safeguard that, if they change their mind and decide not to take them up, there is absolute protection against losing their savings.