HC Deb 06 April 1989 vol 150 cc323-4
4. Dr. Reid

To ask the Chancellor of the Exchequer what percentage of the work force is currently participating in profit-related pay schemes as defined by the Inland Revenue.

The Financial Secretary to the Treasury (Mr. Norman Lamont)

Take-up of profit-related pay has been encouraging. So far, about 121,000 employees are participating in PRP schemes. In his Budget statement, my right hon. Friend announced several improvements and simplifications to the tax relief for PRP. We expect those further to encourage take-up.

Dr. Reid

Why does the Minister not answer my question and say what percentage of workers are involved in such schemes? I have worked out that a total of 121,000 participating employees out of a work force of 28 million represents less than 0.5 per cent. Is that not an indication of the scheme's dismal failure? Why does not the Chancellor admit that the abolition of the 5 per cent. rule is an indication of yet another failure of one of his pet schemes? Why does he persist in throwing good money after bad, when there is no evidence that it has any beneficial effect on the economy? Why does he not get down to tackling the real problems facing the British economy?

Mr. Lamont

I did not give the precise figure for which the hon. Gentleman asked because he is such a brilliant mathematician that I thought that he could work it out. When he gave his figure, he worked it out wrongly. As one of my hon. Friends said, it is over ½per cent. but under 1 per cent.—[Interruption] This is just over a year after the scheme was introduced. The take-up is ahead of that of the all-employee share scheme when it was a year old. This scheme is being taken up more quickly than other schemes when they were introduced. I do not know why the hon. Gentleman wants to make out that the scheme is a failure. I should have thought that any Socialist Opposition might be interested in the idea of profit-related pay, which gives people a stake in their company and helps to make pay bargaining more flexible. Any sensible person should want to encourage that.

Mr. Ian Taylor

Will my right hon. Friend note that this Budget has done an immense amount to boost the participation of workers in the success of the companies for which they work? Will he urge companies and trade unions to take up such schemes more often? It is not the Government's fault that the take-up rate has been slow, it is the fault of those in industry who have not realised that, in the long term, workers participating in the success of their companies, and not dependency on the annual wage round, is the way forward.

Mr. Lamont

I know of my hon. Friend's great interest, particularly in employee share ownership plans. Again, we have introduced some tax reliefs, and we will certainly do everything we can to encourage employees and employers to take them up. I repeat the point that I made earlier. After 18 months, it is not surprising that only that proportion has taken up PRP. Contrary to what the hon. Member for Motherwell. North (Dr. Reid) said, the changes that were introduced in the Budget and the 5 per cent. rule will encourage more people. That is a good thing.