Profit-Sharing (Hansard, 15 December 1986)

§ Mr. Lawson

There are no reliable estimates for the whole economy of the number of profit-sharing schemes, the number of firms operating profit-sharing or the number of employees covered. Many different types of arrangement may be represented as profit-sharing, including employee share ownership schemes, profit-related pay schemes and other arrangements which are not formalised in a published scheme. Analysis of unpublished data from the 1984 workplace industrial relations survey (sponsored by the Department of Employment, the Economic and Social Research Council, the Policy Studies Institute and the Advisory, Conciliation and Arbitration Service) suggests that one in five establishments may operate profit-sharing in one form or another. Because large firms often have many establishments, the data cannot be used to infer the number of firms involved. But a survey for the Department of Employment in 1985 of companies with annual turnover exceeding £750,000, reported in the September 1986Employment Gazette, suggested that about one in five of these companies have an all-employee profit-sharing scheme of some sort. Some 6 per cent. of these companies had cash-based profit-sharing of some sort. Statistics on all-employee share schemes approved for the purposes of the Finance Acts 1978 and 1980 show that as at November 1986 1,186 such schemes had been approved, covering well over 10,000 companies, and that some 1.5 million employees had taken up shares or interests in shares under them. The Government welcome the spread of employee share ownership and will continue to encourage it. The Government would also welcome widespread adoption of profit-related pay schemes which, as discussed in the Green Paper "Profit Related Pay" (Cmnd. 9835) published in July 1986, would bring benefits to the whole economy in productivity, living standards and employment.