§ The 1980s were years of remarkable progress in our economy, but even more striking was the change in attitudes. The crucial importance of the market is now widely accepted in this country, and even more widely accepted in the House. There is a much greater acknowledgement of the fact that market forces and competition play a vital part in shaping our economy. That remarkable change in ideas and attitudes is the lasting legacy and achievement of my right hon. Friend the Member for Finchley (Mrs. Thatcher).
§ My right hon. Friend recognised that the key to a better performance by the economy in the long term lay in improving the supply side; and, over the past decade, that has been the aim of our tax policy, trade union and labour market reform, our competition policy, deregulation and privatisation. But, if the United Kingdom economy is to perform to its full potential, we still need a more flexible labour market and a better-skilled work force. I have a number of further measures to announce to that end.
§ If wages are inflexible, the burden of recession falls disproportionately on jobs: it is the only way for employers to cut costs. There is a considerable prize if we can get pay to take some of the strain. In 1987, we introduced a new tax relief to get profit-related pay off the ground. There are now about 1,250 such schemes in total, involving nearly 300,000 employees; but there can and should be many more, so I propose to make the scheme more attractive.
§ At present, half an employee's profit-related pay is tax-free. From 1 April, PRP will be free of all tax up to the present limits. It is worth up to a full £1,000 to a basic-rate taxpayer. For some, that could be worth as much as 6p off the income tax rate.
§ There is another way in which employees can and should enjoy a stake in the companies for which they work—through becoming shareholders in them. Employee share schemes have made a great deal of progress over the past 10 years. By the end of March last year, 2¼ million employees had benefited from shares or options worth 173 more than £6.5 billion. Too often, however, employee share schemes have been directed solely at highly paid company executives. I believe strongly that valuable benefits of this kind should be extended to the whole work force.
§ I have given serious consideration to limiting executive share schemes solely to companies with all-employee schemes in place, but I have instead decided to rely on the carrot rather than the stick. From January next year, the price of shares under executive options may be set at a modest discount of up to 15 per cent. of the shares' market value if—but only if the company has an all-employee share scheme.
§ I also propose to increase substantially the limits on individual participation in approved all-employee share schemes, and to allow companies tax relief on the costs that they incur in setting up approved employee share schemes and statutory employee share ownership plans.
§ Another aspect of the supply side that needs improvement is training. A well-trained labour force is an important element in any firm's success. Employers know that and are acting on it. The 1990 labour force survey shows an 85 per cent. increase in the number of employees receiving job-related training since 1984. Despite the recession, the last CBI trends survey reported that over 75 per cent. of employers expected to spend at least as much on training in the next 12 months as they had last year and 29 per cent. expected to spend even more.
§ However, more and more individuals are also choosing to take responsibility for their own training. Employers can get relief on the training they provide as a normal business expense, yet at present the tax system generally gives no relief to an individual who decides to pay for training to improve his or her skills.
§ That cannot be right. If we want a better trained, more flexible work force, we should encourage people who want to help themselves. I propose to do just that. I am introducing a tax relief for the fees paid by an individual for training towards most national vocational qualifications and their Scottish equivalents. From April 1992, basic rate tax will be deducted automatically from the fees for qualifying courses, so non-taxpayers will benefit as well as taxpayers. Among those who stand to gain are women wishing to get back to work after having children.