§ Mr. John Browne (Winchester)
I beg to move amendment No. 82, in page 41, line 20, leave out from 'issued' to end of line 13 on page 43.
Mr. Deputy Speaker
With this it will be convenient to discuss the following amendments: No. 83, in page 41, line 25, after '(a)',insert 'subject to subsection (3) below'.No. 84, in page 41, line 32, after 'director', insert 'or employee'.
No. 85, in page 41, line 42, after 'director', insert 'or employee'.
No. 86, in page 42, line 4, leave out 'and'.
No. 87, hi page 42, line 14, at end insert; andGovernment amendment No. 88.
- (f) any reasonable and necessary remuneration paid to him as a director or employee of the company in respect of his duties performed in that capacity. ' .
Amendment No. 107, in clause 57, page 50, line 21, at end insert—'(9) For the avoidance of doubt it is hereby declared that, insofar as any payments made to a director or employee of a company do not constitute reasonable and necessary remuneration for the purposes of section 52 (3) (f), the same shall not be deducted in computing for the purposes of Schedule D the profits or gains of a trade carried on by the company making such payments'.
§ Mr. Browne
The aim of this wide-sweeping amendment in cutting out pages is to urge my right hon. Friend and my hon. and learned Friend to lay much more open the qualifying conditions for individuals investing in the scheme that my right hon. Friend has initiated.
We know that the technological revolution and the need for repairing the structural imbalance in our economy requires a dramatic start in new businesses and in the growth of small and medium-sized businesses. The Wilson report states clearly that there is plenty of capital for such enterprises, but it is the wrong type of capital. It is nearly all loan capital, and what is drastically needed is high-risk equity capital.
The Government have done some work in allowing Treasury stock to be purchased by companies and the loan guarantee scheme is good, but only at the margin. Much work must be done in abolishing the discrimination in the over-the-counter market between licensed dealers and those dealing on the Stock Exchange and in reducing or abolishing the fiscal bias in favour of the insurance companies and the pension funds. They are siphoning off vast amounts of personal savings to the institutions that are, first, risk averse; secondly, out of contact with entrepreneurs and uncontactable by most entrepreneurs; and, thirdly, have few staff to manage their funds and are, therefore, the wrong vehicles to be managing small investments in small companies.
The economy needs a bombshell of incentive for individuals to steer their savings into high-risk equity investments in new and small businesses. I looked with great expectation at the scheme when it was announced in the Budget and I thought that what was to come really would be a bombshell, in clear and simple terms. I am afraid to have to say to my hon. and learned Friend that I find it very complex and unclear, so much so that it discriminates positively against the smaller investor who cannot afford an accountant to look through all the rigmarole of the investment to get the best advantage. Much more should be done to make it much clearer and simpler. I realise that much has been done in Committee, and I thank my hon. Friends who have urged these changes 1296 on the Government. I also thank my hon. and learned Friend for accepting a number of them, some of which have already been introduced tonight.
I urge my hon. and learned Friend to admit consultants as qualifying individuals, and also relations and employees, because these are the people who know the company and know the quality of the management. They will not risk their money unless they feel that it will bring a reward. I strongly urge my hon. and learned Friend to open the qualifications to them. I realise that it opens up a possible tax loophole and that it is a very complex area of tax, but I ask him to accept the offset of the tax loophole cost to the Exchequer against the increased revenues that he should be getting by reducing the fiscal bias that is now in favour of the pension funds and the insurance companies, which will be much larger than the loss of revenue that he may get by people abusing the system at the edges.
As I said, I realise that it is a difficult and complex area. I urge my hon. and learned Friend, when the Bill becomes an Act, to publish the present scheme in clear and simple form as a new system, because many people were disillusioned by the one that they read in the Bill after the Budget. Secondly, will he re-examine the whole area to make sure that we have the bombshell that is needed to revive investment in companies of this sort and is so necessary for our survival?
§ Mr. David Steel (Roxburgh, Selkirk and Peebles)
I am fully in sympathy with the amendment moved by the hon. Member for Winchester (Mr. Browne), although he admitted that it is a wide-ranging amendment and does not hold high hopes that the Government will accept it. His analysis is correct.
When the business start-up scheme was first announced to the House, it was met with considerable enthusiasm on the Opposition Benches, in my party and no doubt elsewhere. It was also met with considerable enthusiasm among the small business community and in the country at large. That initial enthusiasm was dissipated when it was discovered that the original excellent concept was hemmed around by restriction, qualification and complication. I am therefore greatly in sympathy with the general tone of the proposal.
I wish to draw the attention of the House to amendments Nos. 83 to 87, which are far more limited and specific in their purpose than the hon. Member's amendment. The purpose of the amendments is to remove the disqualification from employees in benefiting from the scheme. The matter was debated in Committee and I have read very carefully what the Minister of State said on the matter. I am grateful to our Treasury spokesman, my hon. Friend the Member for Colne Valley (Mr. Wainwright), who served on the Committee and who, with his advisers, has tried genuinely to meet the objections which the Minister of State raised in Committee. The attempt to meet the objections is set out in detail in the amendments.
In what the Minister of State said in Committee, I detected once again the general line from Conservative Ministers that if the Liberals wanted to pester them again with their theories of employee participation they were wholly sympathetic and willing to offer all assistance, short of actual help. He was very sympathetic and polite to my hon. Friend but was unable to accept the proposition, for a series of specific reasons. The main reason that the hon. and learned Gentleman gave was that 1297 the Government were worried that the inclusion of employees in the scheme could lead to tax avoidance. Like the hon. Member for Winchester, I think that this has become an almost ludicrous obsession. I do not dispute the Minister's argument, but it raises a technical and exceptional objection to a laudable principle. I ask him to reconsider the matter.
The Minister's specific objection was that a company would be able to deduct the employee's salary for corporation tax purposes and that if, therefore the employee could set part of his income against tax by taking advantage of this scheme the salary would be relieved a second time. This was a principle that the Treasury did not like. In fact, there are already instances in the tax system of a particular payment being relieved twice. For example, that part of an employee's salary on which he receives income tax relief because he is paying a mortgage is already relieved twice, in the Treasury jargon. In any case, there could be tax avoidance only if an employer paid an artificially high salary that was then reinvested in the new business under this scheme.
For that reason, our amendment provides, in effect, that if an individual who seeks relief has been artificially overpaid, the extent of the overpayment will be non-deductible against corporation tax by the company. The amendment defines the overpayment as anything over and aboveany reasonable and necessary remuneration".The Minister may say that that is an imprecise definition, but we are using the same device as the Government have used in relation to directors. The Bill already provides, in clause 52(3)(e), that a director is excluded from the scheme unless any payment that he receives is, inter alia,any reasonable and necessary remuneration which—(i) is paid for services rendered to the company".In any case, I am advised that as a matter of law section 54 of the Companies Act 1948 already decrees that any excessive payments made to an employee or a director in connection with his subscription of shares would be unlawful.
Our amendment is workable. If the Government resist it, we are entitled to take that objection as an excuse and not a reason. This is a sensible and workmanlike improvement to a scheme that we want to see made into a success. We believe it right that employees should be encouraged to have a stake in a new business and that they should not be excluded from the benefits of what is a bold and innovative scheme.
§ Mr. Richard Page (Hertfordshire, South-West)
I wish to speak to amendments Nos. 276 to 280, in the names of my hon. Friends on our Back-Bench committee concerned with smaller businesses and in the name of my hon. Friend the Member for Surrey, North-West (Mr. Grylls).
The amendments are an attempt to meet the request—I shall not say "the challenge"—of my hon. and learned Friend the Minister of State when in Committee he replied to a debate on a similar amendment, moved by my hon. Friend the Member for Luton, East (Mr. Bright). That amendment would have enabled employees and working directors to participate and invest in the company with which they were connected.
My hon. and learned Friend the Minister of State rejected the amendment on the ground that it would enable an employee to obtain income tax relief on a salary which 1298 would also attract corporation tax relief for the company. Commercially, it is unlikely that existing controlling shareholders will pay inflated salaries to employees to avoid corporation tax simply to attract a little more .risk capital, unless they are seeking to encourage greater employee participation in their business. However, I appreciate the validity of the point made by my hon. and learned Friend if the full £10,000 under the scheme were allowed to existing employees and working directors, and I appreciate that abuses could have followed from that amendment if it had been implemented in full.
The amendments proposed by my hon. Friends and myself are deliberately limited in order to gain acceptance. They restrict the annual investment by an employee or working director, for which relief will be available, to an amount not exceeding £1,000. Now that the minimum relief has been set at £500, the amendments would give a bracket from £500 to £1,000 that could be invested by an employee. The concept of the working director, which is already recognised in some tax legislation, is being repeated so that such employees claiming the proposed relief will not be allowed to own more than 5 per cent. of the company's ordinary share capital.
The amendments are important because relief for employees and working directors is essential if we are to encourage wider ownership of wealth and greater participation in companies' activities. The present disqualification of employees and working directors removes not only a valuable source of finance but the opportunity for employees to take part in the growth, enterprise and expansion of their companies.
I hope that my hon. and learned Friend the Minister of State will recognise that the amendments are a genuine attempt to get investment by a section of the working population and that they will boost the enterprise that the country needs so badly.
§ Mr. Richard Wainwright
As my right hon. Friend the leader of the Liberal Party made clear, all hon. Members who have tabled amendments to the clause, including Liberal Members and several Conservative Members, have the same aim, which we believe to be particularly important at this juncture in British industrial relations. I hope that the Minister of State has noted that many of his hon. Friends have tabled amendments with .a purpose similar to that of the Liberal amendment. So noble is the aim of Conservative Members that I was almost led into congratulating the hon. Member for Luton, East (Mr. Bright) on his knighthood. He is referred to as a knight three times on the Amendment Paper. I hope that that is an indication of the reward that awaits him for pursuing this splendid cause.
All that remains to be said about the amendments is that we stick by that in my name because we believe that ii: meets the difficulties that the Minister of State repeated so firmly in Committee. The hon. Member for Winchester. (Mr. Browne) has already made clear, frankly, that hit, amendment makes a point but he does not expect it to become law. The amendments spoken to by the hon Member for Hertfordshire, South-West (Mr. Page) have a laudable purpose, but they seem to us to make employees second-class shareholders.
In order to try to meet the difficulties that the Treasury Bench presses so hard—we think unreasonably hard—the hon. Member for Hertfordshire, South-West suggests that employees and directors should be limited to investments 1299 of £1,000 a year or less. That is better than nothing. However, in our view, it is unacceptable that the maximum for employees should be less than—indeed, only one-tenth of—the maximum for other shareholders. On those grounds, we feel reluctantly unable to support the amendments to which the hon. Gentleman has spoken.
Hon. Members will have realised that many people today receive redundancy payments running to several thousand pounds. They may have been lucky on the pools. They may have had a legacy from Aunt Agatha, who is the patron saint of the whole start-up scheme. [Interruption.] I confine myself to saying that Aunt Agatha is reasonably well off but that this does not make her a Tory. I speak from some experience in my own constituency.
It is not reasonable that an employee who has come into some money should be limited to an investment in his own job to keep his company in being of only £1,000 a year. I believe that the limit disqualifies the amendments in the name of the hon. Member for Hertfordshire, South-West and others. We intend to divide the House and to invite support from all hon. Members who have put their names to amendments with the same purpose as ours.
I should like to explain why, at 20 minutes past midnight on this summer evening, we take this matter so seriously. It was as far back as 1928 that the Liberal programme, colloquially known as the Yellow Book, from Lord Keynes, Lord Layton, Henderson, Seebohm Rowntree and many others stated:The real purpose of profit-sharing is to show that the worker is treated as a partner, and that the division of the proceeds of industry is not a mystery concealed from him, but is based upon known and established rules to which he is a party.More recently, Lord Wade and others have made clear that the Liberal aim is either that labour should hire capital or, at the very least, that labour and capital should meet each other in a mutually satisfactory bargain, as it were, to employ each other. Because we believe that the Government have hit upon the germ of a way of giving some effect to this approach, at any rate, in new businesses, we support the business start-up scheme but wish to remedy the serious defect at present within it. We shall therefore invite the House to divide on the amendment.
§ Mr. Michael Grylls (Surrey, North-West)
I wish to add my support to the amendments to which my name is attached. My hon. and learned Friend the Minister of State and his Treasury colleagues have been most forthcoming with changes introduced to the initial scheme. They have acted swiftly and with understanding. The scheme is now very good. All hon. Members, particularly those on the Liberal Benches, wish it well and hope to see a maximum take-up leading to the creation of the maximum possible number of new businesses and the encouragement of existing businesses.
I believe that the whole House would wish to encourage wider share ownership by employees and employees to take a stake in their own business. There is no difference between Back Benchers and my hon. and learned Friend the Minister of State. My hon. and learned Friend was perhaps more forthcoming than is the case normally with Treasury Ministers in responding to the amendment tabled in Committee when he said: 1300I regret very much that we have had to exclude employees and working directors, but I hope that the Committee will recognise the difficulties that we have encountered.Those were obviously drafting difficulties.Dare I throw out this challenge? If an amendment is put down on Report which faces squarely the difficulties that have defeated us, I shall approach it with an open mind."—[Official Report, Standing Committee E, 11 June 1981; c. 596.]From reading the report on that debate, it is perfectly clear that the Minister of State very much wanted to succeed in this, but he was defeated, understandably, through drafting.
A number of us have put forward these amendments in an endeavour to respond to the Minister of State's very generous suggestion—that if we tabled amendments he would consider them carefully. This is the reason—and this, perhaps, is the answer to the hon. Member for Colne Valley (Mr. Wainwright)—why the maximum that is being proposed in these amendments is £1,000. We wanted to be modest because we recognise that there is a potential problem of tax evasion. We wanted to help the Treasury to put a much lower ceiling than that on the generality of the start-up scheme of £10,000 a very modest ceiling to encourage the Treasury to say "Yes"—my hon. and learned Friend is saying "Yes"—and to give it a go.
I would much rather see it start—and Ministers accept this—at a modest level of £1,000 and gain confidence over the years ahead that there will not be a great deal of abuse, and then gradually raise it to £10,000 over two or three years, in two or three Finance Bills. We have approached this matter in a modest and sensible way. I hope that the bracket for employees and working directors will now be between the new minimum of £500—about which I am delighted—and the special maximum for the employees' stake of £1,000.
I emphasise that we must not lose this new potential for investment in start-ups which can come particularly from middle managers in some small companies. They are not necessarily minnow companies. They may be medium-sized companies. We must remember that we are going back five years. These may be companies that are on the ascendancy but may need extra capital to grow and to undertake the next stage of expansion. Why on earth should not that capital come from people who work in the business? Both sides of the House want this provision.
I beg my hon. and learned Friend the Minister—I say this in all friendliness—to respond to this debate in the way that he responded in Committee, with an open mind. I hope that he will accept the amendments, with the new maximum of £1,000. That will not lose the Revenue very much, even if there is the odd person who goes in for some form of abuse. We are talking about a maximum tax loss per employee per year of £600 if the employee is on the top rate of earned income tax, which is probably rather unlikely. We are talking about minute figures.
We want to see the principle established. I ask my hon. and learned Friend to look at the amendments as favourably as he can, for reasons which have the support of the whole House.
§ Mr. Peter Rees
I congratulate my hon. Friend the Member for Winchester (Mr. Browne) on his amendment. It has triggered off an extremely interesting debate. He did not have the privilege of serving with us in Standing Committee but obviously he has got the flavour of our debates and has added considerably to them tonight. We have had contributions from both sides of the House.
1301 I was interested to note that my hon. Friend was anxious that there should be a bombshell in the investment field. I do not know whether I quite envisage that kind of outcome to the proposals that we have devised and refined in Standing Committee, but I would be very happy if it showed the dynamism that he and I want of it.
The amendments are designed to refine one small part of the scheme, but it is none the less an important part. I notice that the Liberal Party always endeavours to stake out a particular claim in respect of share incentives. Now Liberal Members are endeavouring to stake out a particular claim to the affection and loyalty of Aunt Agatha. Perhaps we should leave each hon. Member to his or her constituency, to compete for the favours of Aunt Agatha. I am confident that when Aunt Agatha has considered what we have devised for her portfolio of investments in business start-ups she will recognise where her essential interests are best safeguarded.
§ Mr. Rees
I am sure that Aunt Agatha will have listened to the intervention of the hon. Member for Grimsby (Mr. Mitchell), which was singularly out of key with other interventions from the Opposition Benches in this debate. However, he is right to remind us that these provisions could be subject to abuse unless we strike the right balance.
Clearly, it has to be the concern of any person who is charged with my responsibilities to see that any worthwhile scheme, whether or not it be an investment bombshell—however one chooses to describe it—does not forfeit the confidence of the country because it is too susceptible to abuse. I may be encouraged at the margin by hon. Gentlemen on both sides to take a few risks. I am delighted to be encouraged by the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) not to be obsessed with tax avoidance, because all too often I receive charges of a different kind from different quarters of the House. On this occasion it is pleasant to be encouraged to discard any lingering inhibitions that I may still have.
I take up one small matter that was raised by my hon. Friend the Member for Winchester. I see no reason why consultants should not invest in companies of this kind. My hon. Friend will notice that it is possible for an unpaid director to be remunerated for professional services. I hope that that will reassure him.
Then there is the question of relations. Only those who are in direct line—great-grandparents, grandparents, parents and children—are regarded as connected and therefore debarred from participating in these attractive ventures. Wider degrees of relationship are not excluded. I hope that my hon. Friend will feel that the problem is not quite as pressing as he may at first have thought.
In answer to my hon. Friend's suggestion that we should publish the present scheme, we have endeavoured to publicise it. Indeed, I was criticised—only mildly—by the Opposition in Committee Room 10, but I said then and I shall say now that we want the maximum take-up of the scheme. We hope that the greater the take-up, the greater the activity that will be generated and the more jobs that will be created. I am sure that the whole House hopes that the charms of the scheme will be publicised widely outside the House.
1302 A delicate balance is needed in a technical Revenue handout. All too often laymen outside the House regard books of this kind as having the force of law. We are anxious that such people should not be misled in any particular. I foresee that a handbook of that nature might end up almost as complex as the provisions themselves. As I said in Committee, I regret the complexity of the provisions, but we are dealing with complex industrial investment situations.
I come to the issue that has caused most agitation among right hon. and hon. Gentlemen—the question of employees and their investments. Let me say in, I hope, ringing terms that the Liberal Party has no monopoly of concern for employee participation and share incentive schemes. The Conservative Party is happy to stand on its record. It looks back to the Finance Bills of 1972 and 1973, the considerable support given in 1978 to the measures then introduced, and the refinements introduced in last year's Finance Bill. I am sure that that will not be the end of the Conservative contribution to an important subject. We yield to none in the House in our concern for that objective.
However, on this occasion we should not confuse too many objectives. The main purpose of these provisions is to ensure a flow of fresh capital into business start-ups. It does not detract from that objective that, in the first instance, for the reasons that I outlined, we thought it right to exclude paid directors and employees. I said—and I am sure that the Committee accepted the sincerity of what I said—that if we could have devised a reasonably watertight solution to the problem we should have done so.
The difficulty that I outlined then and that I outline now is that it would be all too possible—not, of course, in every case, but in possibly enough cases—to excite the indignation and ruffle the susceptibilities of people like the hon. Member for Grimsby. He is the custodian of fiscal morality. None the less, we must take account of his susceptibility. We had an interesting debate last night. I did not notice that there was much to separate the hon. Member and myself on that issue. The Liberal Party might be engineering another Lib-Lab pact, but Liberal Members must have regard for the hon. Member's susceptibility.
If paid employees and directors were, without any constraint, permitted to invest, a double relief might be achieved. My hon. Friend the Member for Surrey, North-West (Mr. Grylls) has laboured long and hard, and my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) has contributed much to the refinement of the scheme. They say that we must take risks and that we could limit investment to £1,000.
We have considered various monetary limits. We have considered the Liberal suggestion that there might be a limit on the remuneration paid to an employee. However, if we fixed remuneration too low we would probably debar the people who are entitled to participate. Their remuneration would probably be less than the average industrial wage, so they would not be able to participate. If we imposed a high limit, abuse would be a possibility. I hope that I am not being obsessive.
§ Mr. Richard Wainwright
The hon. and learned Gentleman is in error in implying that we suppose that employees will derive their investment funds from earnings. I was at pains to point out that we have in mind the employee of a new business who has been made redundant by his former employer and has redundancy 1303 money. Alternatively, he may have a legacy, or a gift from Aunt Agatha, or he might have won on the pools. We are not suggesting that the opportunity should involve what the man can afford out of his earnings.
§ Mr. Rees
I appreciate that. We could envisage a whole range of situations in which employees or directors were anxious to invest. There is no reason why they should not invest. However, the argument is that they should not attract the generous tax relief that gilds the scheme.
It might have escaped the hon. Gentleman's keen accountant's eye that it would be possible for companies to set up a share incentive scheme and reward their employees in that way. I am not sure whether the hon. Gentleman is more concerned to ensure employee participation or whether he wishes to tap a fresh source of capital. I suspect that my hon. Friends want to tap a fresh source of capital. They want the widest possible reservoir. I have explained the possible dangers. It is for the House to judge. It may feel that I have been over-oppressive.
We are setting up a novel scheme. There is no precedent in Western Europe or even the United States for tax relief of such staggering generosity. That being so, it would be better to proceed with modesty and caution in the first instance. As the scheme develops, I hope that we shall be able to decide whether it should be broadened in scope.
I have not set my face in principle against participation by employees and directors. I want to avoid the consequences that may tarnish the scheme in the eyes of keen observers such as the hon. Member for Grimsby.
§ Mr. Grylls
May I press my hon. and learned Friend about the limited reliefs on the special ceiling of £1,000 instead of £10,000, in the amendments? The risk is so small that it is surely worth establishing a principle. We have tried to meet the point made in Committee and to ensure that the risks to the Treasury are minimal. At least the principle should be encouraged. An outside investor with £1,000 is allowed tax relief, but the employee with £1,000 is not allowed tax relief. That does not make sense. I beg my hon. and learned Friend to consider the matter again.
§ Mr. Rees
I took very careful account, as I always do, of what my hon. Friend said. He knows that during the past six weeks I have taken careful account of everything that he has said. He was generous enough to pay tribute to that. He will see in the Bill a response to points made not only by himself but by my hon. Friend the Member for Hertfordshire, South-West and a whole range of people from both inside and outside the House. There has been no question of a closed mind. We are now fastening on one particular point. I know that it is of importance.
All that my hon. Friend is doing by imposing a £1,000 limit is saying that there may be a risk but the damage will be so limited that we can afford to carry it. He is not saying that he has devised a waterproof solution. He is saying that if the water does seep in, it will not be considerable and the Treasury can paddle around in its gumboots. That may be so, but I should prefer to remain dry, at least for the first year or so of the scheme.
I wish to make a more fundamental point, which may have missed my hon. Friend's keen eye. The point of the scheme is to attract outside capital investment. The close member of the family, perhaps even the employee and 1304 certainly the working director, will in any case have an incentive to invest, because his livelihood is involved. The scheme was devised to fill a gap that was perceived even by a Royal Commission presided over by the right hon. Member for Huyton (Sir H. Wilson). If my hon. Friends want a point of principle on which to fasten, that is it. It is a scheme for outside investors.
§ Mr. John Browne
This is a crucial point. Of course we want outside capital, but surely giving the tax deduction facility is taking Revenue money from the Government along for the ride. Surely one of the aims is to get the equivalent of Government funding into the investments, which have contact with the entrepreneur. I cannot understand the objection to having a father, who would otherwise invest in the company, being encouraged to invest more in high-risk operations with which he is connected and taking the Government along for the tax-deducted part.
§ Mr. Rees
My hon. Friend makes my point. If the father will invest in any event, is there any reason why the general body of taxpayers should subsidise him up to 75 per cent? I know that my hon. Friend did not follow the matter as closely as those of us who were privileged to serve on the Committee.
It was emphasised on many occasions that the scheme was designed to attract outside capital into start-up ventures. We could have devised a quite different scheme. We could have decided to salvage companies on the downward slope. We could have encouraged people inside the companies. But the equity gap that was perceived was the difficulty of attracting outside capital into the small, usually unquoted companies. On a point of principle I ask the House, attractive though the amendments are, to reject them.
§ Mr. Richard Wainwright
Before the Minister concludes his highly reasoned speech, will he turn to the point that was not debated in Committee but is embodied in amendment No. 87? That provides the safeguard that the remuneration must be reasonable and necessary. That is the established formula, used by Government, to give the commissioners power to disregard remuneration that is extravagant.
§ Mr. Peter Rees
No, there are one or two questions that on the whole have been productive of litigation. It is not very easy for the courts to determine what is reasonable or necessary. That is not a perfect solution.
There is certainly unanimity, except possibly for the hon. Member for Grimsby, in the view that this is a scheme towards which we should move. The question is at what pace and when. I say with diffidence to the House that we should at least get the scheme off the ground before considering how it might be modified and broadened. On that basis, I hope that hon. Members on both sides of the House—
§ Mr. Rees
No. I am under great pressure. I have given way to my hon. Friend on at least three occasions. I hope that he will forgive me if I do not do so now.
There is a further amendment, standing in the name of my right hon. and learned Friend the Chancellor of the Exchequer, that is on a different matter. I commend amendment No. 88 to the House. It was tabled in response 1305 to an argument advanced by my right hon. Friend the Member for Crosby (Sir G. Page). It relates to determining the assests in the course of a winding-up operation, which determines to a degree whether a person may or may not participate arid whether he is regarded as associated with the company. It should be possible to disregard normal commercial loans. The amendment meets what I hope is an entirely uncontroversial issue. It is with profound regret that I must advise the House to resist the blandishments that have been showered on it from both sides.
§ Mr. John Browne
I thank my hon. and learned Friend for his remarks. Surely the aim should be to attract capital into high-risk investments, and not only new capital. I have great sympathy with the amendment of the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). If he presses it to a Division, I hope that he will understand that I also have great respect for my hon. and learned Friend, who is one of the foremost tax attorneys in the country. Therefore, I shall not support the right hon. Gentleman's amendment if he divides the House. I shall not be pressing my amendment to a Division.
§ Mr. David Steel
; It would be wrong if the House passed on to the next debate without registering its view on the issue before it. The argument in support of the amendment has been advanced strongly from both sides of the Chamber. I was of a mind to think that the amendment that was being pursued by certain Conservative Back Benchers had great merits as a modest, conservative and cautious approach to the same end as that which my right hon. and hon. Friends are advocating.
The Minister of State has talked about the Government's staggering generosity. It is disappointing that he should be so obsessed by the hon. Member for Grimsby (Mr. Mitchell), who is out on a limb on this issue, as to pray him in aid without taking the bold step of saying "Let us go some way to extending the scheme to employees." The objection of the hon. and learned Gentleman to the Liberal amendment is that it might cause difficulties in the courts. That is a strange objection as we took the wording directly from another part of the Bill. It is novel for a Minister to say, in effect, "We do not like the wording that we have chosen because it might cause difficulties in the courts."
The hon. and learned Gentleman says that the Liberal amendment is not a perfect solution. That may be. We do not have a perfect solution. Conservative Back Benchers said that they did not have a perfect solution. The hon. and learned Gentleman has weighed up the merits of boldness to encourage employees to invest in new businesses for which Conservative Members were arguing and he has offset that against the admitted possibility of some loss of revenue to the Treasury. He has come down on the side of safety and caution. That is sad.
The hon. and learned Gentleman said in his opening words that he yielded to nobody in his zeal and the Conservative Party yielded to no one in its zeal to move towards employee participation, but in this scheme he is introducing positive discrimination against employees. It is not simply that he is not doing anything to encourage employee participation. He is actually introducing discrimination against them.
The House has expressed its view entirely against the Minister's argument, and despite the lateness of the hour the House should have the opportunity again to express its 1306 view by means of a Division. I invite the House to support amendment No. 83, the hon. Member for Winchester (Mr. Browne) having indicated that he is not prepared to press amendment No. 82.
§ Mr. Deputy Speaker (Mr. Ernest Armstrong)
As the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) spoke after the hon. Member for Winchester (Mr. Browne) said that he would not press amendment No. 82, I must put the amendment to the House.
§ Amendment negatived.