§ Mr. BercowTo ask the Chancellor of the Exchequer what assessment he has made of how employee share ownership can be encouraged in sectors of the economy with relatively high employee turnover. [14441]
§ Ruth KellyThe share incentive plan and enterprise management incentives introduced in Finance Act 2000 were developed on the basis of extensive consultation. This ensured the design of both was flexible to enable companies in all sectors, including those with relatively high employee turnover, to adapt the schemes to suit their particular needs. For the share incentive plan companies can set a qualifying period of service for employees to benefit from the plan. They can also include forfeiture and pre-emption conditions if they wish.
The new plans are being closely monitored to assess how far they are meeting the needs of companies of all sizes and sectors.
§ Mr. BercowTo ask the Chancellor of the Exchequer what recent representations he has received on, and what plans he has to reduce, the qualifying period for SIPs. [14440]
§ Ruth KellyThe share incentive plan was introduced to encourage greater share ownership among employees. Employees must retain their shares in the plan for five years to earn full exemption from tax and national insurance contributions. We have received one representation to reduce this period from five to three years. This would work against the aim of encouraging employees to retain shares in the company they work for over the long term, and it would be costly in terms of tax forgone.
There is no requirement for companies to set a qualifying period of service before employees may benefit from the plan although they may do so if they wish, up to a maximum of 18 months.