Employee Shareholders (Hansard, 14 January 1985)

§ Baroness Lane-Fox
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead)
My Lords, around one-third of a million employees are estimated to have acquired shares in their companies to date through the Government's privatisation programme. The total number of all-employee profit sharing and savings-related share option schemes qualifying for tax relief is now 816, compared with fewer than 30 in May 1979. Since introduction of the new employee share option legislation in the Finance Act 1984, more than 600 applications for Revenue approval of this type of scheme have been received. The total number of unapproved schemes is not known but is believed to be over 1,000. It is estimated that over half a million employees are involved in the all-employee schemes.

§ Baroness Lane-Fox
My Lords, I thank my noble friend the Minister for that very interesting and informative reply. May I ask whether Her Majesty's Government will ensure that privatisation of British Airways will give similar opportunities for 771 participation by small shareholders and employees as did the recent successful denationalisation of Telecom?

§ Lord Belstead
My Lords, the Government will certainly make special arrangements for employees. The question of special arrangements for small shareholders would arise in the context of allocating the shares if the issue were to be over-subscribed. In that situation, the Government would bear the interests of small shareholders sympathetically in mind.

§ Lord Molloy
My Lords, can the Minister tell us the number of ordinary men and women who wish to contribute to the nation's productivity and, indeed, to increase the nation's productivity but who, because of the policies of the Government, are unable to do so? Is he aware that, whether companies are privately or publicly owned, the main feature of the Government's present policy, whether deliberate or otherwise, seems to be to increase unemployment, which therefore impedes the improvement of productivity?

§ Lord Belstead
My Lords, the trend since 1978 (this concept started under the Labour Government) of employees owning shares in their companies has gone up and up. The Government claim that this is because we have given encouragement in successive Finance Acts. We believe that that is good for productivity, and it is also good for industrial relations.

§ Baroness Gaitskell
My Lords, are there not still a great number of people—and I am one of them—who are against privatisation?

§ Lord Belstead
My Lords, I realise that the noble Baroness is against privatisation, but I point out to the noble Baroness that the firms which have been privatised have, almost invariably so far as I know, increased their turnover, which again has been good for jobs and also good for the economy of this country.

§ Lord Orr-Ewing
My Lords, will my noble friend bear in mind that some 24 million people are employed in this country, an all-time record? Although it is satisfactory that progress is being made, could the Government continue to think of schemes to encourage more individuals to take shares in companies which they believe to be prosperous and which will go on creating wealth for this country and jobs for us all?

§ Lord Belstead
My Lords, I do not think that I ought to speculate on the contents of the Budget, but I am confident that my right honourable friend the Chancellor will be carefully considering any options for further changes which would give a boost to employee financial participation.

§ Baroness Seear
My Lords, the noble Lord said, perfectly correctly, that the Finance Act 1978, which introduced share ownership schemes, came during the period of office of a Labour Government. Is he aware that it was at the time of the Lib-Lab pact? Is he further aware that it was as a consequence of considerable 772 pressure exerted by Mr. John Pardoe at that time on the then Chancellor of the Exchequer?

§ Lord Belstead
My Lords. I think I am also aware that the noble Lord, Lord Rochester, was instrumental in inserting a provision into that Bill to make sure that there was monitoring of this whole concept and system. Perhaps ahead of any debate (as the noble Lord has his name down for a Motion on a day to come) I should say on behalf of the Government that we reckon that monitoring yearly has shown that both employers and employees regard share ownership as a valuable means of employee involvement. The Government have made a positive contribution to something which is of value to this country.

§ The Earl of Lauderdale
My Lords, would it not assist the clarity of our proceedings if the noble Lord, Lord Molloy, were to define what he means by "ordinary men and women"? Are we not all of us ordinary?

§ Lord Belstead
But some are more ordinary than others, my Lords.

Lord Bruce of Donington
My Lords, could the noble Lord provide the House with the number of individuals who originally participated in these schemes but who are now unemployed?

§ Lord Belstead
No, my Lords, I am afraid I cannot.

§ Baroness Seear
My Lords, would the noble Lord not agree that some are more extraordinary than others?

Lord Oram
My Lords, is it not the case that whereas after privatisation the shareholding among employees and others is widespread, soon afterwards those shares pass into the hands of bigger shareholders? Secondly, is it not the case that ownership is not enough but the influence that the employees and others can bring to bear on policy is much more important? Will the Government therefore ensure not only wider share ownership but the ability of shareholders to exercise influence on policy?

§ Lord Belstead
My Lords, so far as exercising influence on policy is concerned, the Government believe strongly that these things should be done in a voluntary way, whether we are talking about employee participation or about the influence of those who have a financial stake in a company. The noble Lord suggests that the purchase of shares by individuals immediately passes on to other and perhaps larger hands. The recent example of British Telecom shows that the noble Lord is not necessarily correct in that concept. My advice is that twice as many applicants for BT shares applied for bonus shares as for telephone bill vouchers, indicating an intention to hang on to their shares.

Lord Wallace of Coslany
My Lords, can the Government say whether all these new investors which the Minister has listed will have an equal opportunity to decide whether their company should make political contributions?

§ Lord Belstead
My Lords, once those who get shares by these means hold those shares in full they will have the full rights of shareholders.

Lord Bruce of Donington
My Lords, in relation to British Telecom, can the noble Lord tell us how many of the individual applicants for the limited number of shares available to them in British Telecom have since disposed of their shares on a stag basis?

§ Lord Belstead
My Lords, indeed, I cannot; but in answering the noble Lord, Lord Oram, I was seeking to indicate that those who applied for British Telecom shares do not appear to want immediately to dispose of them.

Lord Paget of Northampton
My Lords, should we not be a little careful about entrusting a Government with the right to dispose of what, after all, are our shares, considering that they lost a couple of billion pounds last time?

§ Lord Belstead
My Lords, flotations of shares are made always on the best advice. In every single case they have achieved their primary objective, which is to see that the undertakings concerned are transferred to the private sector, because we believe that that is the way forward.