§ Mr. Fred Silvester (Manchester, Withington)
I beg to move amendment No. 204, in page 22, line 39, at end insert—`(aa) if, before the date on which the alteration takes effect, a person who held such rights on 18th March 1986 ceases, in either of the circumstances set out in the said paragraph 10(1)(e), to hold an office or employment by virtue of which he was eligible to 1264 participate in the scheme, then, so far as concerns the rights so held, the scheme may permit him to take advantage of the provision in question as if the alteration had been made immediately before he ceased to hold that office or employment; and'.I wish to discuss a small matter, similar to that raised by my hon. Friend the Member for Richmond and Barnes (Mr. Hanley). It affects relatively few people, but it is based upon a more hopeful premise. The Government have wisely and sensibly embarked upon a change in the Finance Bill which will make it possible for people who have been thrown out of a company through no fault of their own because the company has been sold to another company to have the benefit of a share option scheme after one year rather than after three years. That is the gist of the matter. When the measure was announced, those likely to be affected by the Budget said, "Whoopee, that puts us on the right side of the law," only for it to dawn upon them that, alas, it would not come into effect until July or August and that they were caught between March and August. That happened to people in my constituency, who were employed by Fairey Engineering, which was a subsidiary of the Pearson Group. It has now been sold, and was caught being sold between March and August.
We made representations to my right hon. Friend the Financial Secretary, and he was generous in the amount of time and thought that he gave the matter. I pay tribute to my hon. Friend the Member for Stockport (Mr. Favell), who led the charge from his side of the constituency boundary, and to Pearson's lawyers, who were most generous in helping to draft the amendment.
The amendment holds water and it would make it possible for people to claim this additional benefit from the date of the Budget. I stress that those few people who have been caught unwittingly between the devil and the deep blue sea should be given this relief.
§ Mr. Favell
I rise to join my hon. Friend the Member for Manchester, Withington (Mr. Silvester) in commending the amendment to the House. I also thank him for his help in the battle. The amendment is relatively minor on a national scale, but to the employees of Fairey Engineering, who, through no fault of their own, have seen their company sold, it is a matter of great moment.
I pay tribute to the way in which Fairey Engineering has helped my hon. Friend the Member for Withington and me to bring this issue to the Government's attention. I should mention, in particular, Mr. Vincent Meadows, the works convenor at Fairey Engineering, and Mr. John Parsons, the managing director, who have worked hard together to ensure that fellow employees, who have been members of the share option scheme for only one year, can take advantage of it. As my hon. Friend the Member for Withington said, without the assistance of the Pearson Group plc, nothing would be possible. Although the Pearson Group has disposed of Fairey Engineering and no longer has any interest, the group has made it clear that it will do all that it can to assist the employees of its former subsidiary to exercise their options in the company. I pay tribute to the Pearson Group for that.
Perhaps it is because Fairey Engineering has the best brass band in the north of England that it has been able to make a noise that has reached the Treasury's ears. Mr. Nigel Rudd, the chairman of Williams Holdings plc, came here last night and, I am glad to say, assured me that 1265 Fairey Engineering's brass band would receive the support of the Williams Holdings and would be as good and as great as ever, albeit under the new name of Williams Fairey Engineering Band. I am sure that that is of interest to the House and of interest, in particular, to hon. Members from the north.
It gives me great pleasure to commend the amendment to the House.
§ Mr. Norman Lamont
Clause 25 eases the provisions of the Finance Act 1980 governing approved savings-related share option schemes. At present, these schemes may not permit employees to exercise options which have been held for less than three years if the company or part of its business in which they are employed is sold from, or otherwise leaves, the group operating the scheme. The Bill abolishes that time limit. As a result, a company introducing a scheme will in future be able to permit the exercise of options in those circumstances. The company with an existing approved scheme will be able to alter its rules to include a new right for scheme participants to exercise their options in the same circumstances.
As drafted, the clause will become operative on receiving Royal Assent, enabling companies then to seek Revenue approval for alterations to their schemes to take advantage of the new provision. This follows the normal course that, except in very special circumstances, legislation should receive full debate and approval before implementation. In any consideration of the starting date for the clause it is necessary to note that before the new provisions can be used to confer a new right on any scheme participant the company must first change the rules of the scheme under which the option was granted to allow participants to take advantage of the facility.
In following the normal course, we had intended to give companies time to assess their position and to put in hand, if they wished, their own procedures for changing scheme rules. Companies which agreed to sell subsidiaries, or parts of businesses, in the meantime would have done so in full knowledge of the consequences for those holding options less than three years old.
We received many representations. Indeed, the noise of the brass band from Withington and Stockport reached our ears. Initially, as will be known, I was a little resistant to this idea, but after talking to my hon. Friends the Members for Manchester, Withington (Mr. Silvester) and for Stockport (Mr. Favell) on more than one occasion, I was persuaded that the timing was a bit accidental and unfortunate. Incidentally, this amendment is quite different from the previous one. Some companies' plans were publicised on 18 March, and it is proper that their scheme participants should be able to take advantage of the new provisions if the company operating the scheme decides to alter its rules retrospectively, as would be permitted by the amendment.
Budget day is the natural choice for a revised starting date for the amendment. Another relevant factor in support of that timing is one which I must stress and invite interested companies to note. Rights have to be exercised—if they are to be exercised at all—within six months of the subsidiary company or business having been sold, or otherwise leaving the group. The six-month period is of general application for the exercise of options under the 1266 1980 legislation. Any scheme alteration that is intended to take advantage of the amendment must be made in time for that six-month rule to be observed.
Where, for example, a subsidiary company is sold at the end of March and the approved scheme is to be altered to enable the subsidiary's employees to exercise options under the scheme, the alterations will have to be made and approved by the Inland Revenue, and the options exercised, before the end of September. After a little initial reluctance, I have been wholly persuaded by my hon. Friends the Members for Withington and Stockport, and I commend the amendment to the House.
§ Amendment agreed to.