House of Commons · Westminster Hall
06 September 2022 · 2 other contributors · 3,592 words
Opened by George Howarth Lab Knowsley
Responding minister: Lucy Frazer
Summarised by AI from the official record, so it can contain mistakes.
George Howarth raised concerns about employee share ownership schemes in Westminster Hall. A government minister responded.
Key points
Key requests to Government
The Government should consider reducing the commitment required from SIP participants from five years to three years and explore one-off SAYE options lasting just one year. Additionally, they should consult widely on how to make share plans more accessible to gig economy workers and update research on productivity benefits of these schemes.
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
The number of firms and employees participating in SAYE has fallen significantly since 2011-12. Participation rates have plateaued or declined due to the modern workplace environment, where people change jobs more frequently for career advancement. The current SIP requires a five-year minimum investment period, which is unrealistic for today's workforce.
Questions the long period without an increase in take-up of employee share ownership schemes, noting the changing nature of work with more gig economy workers not on pay-as-you-earn. Asks if the Government can update the schemes to include these non-PAYE workers.
Highlights his personal experience setting up a company that awarded shares to staff, noting the complexity involved and the need for accountants. Asks if there were any proposals from external groups to simplify these schemes. Agreed with George Howarth that given changes in the labour market, a shorter qualifying period for employee share ownership might be reasonable if accompanied by other conditions.
Government Response
Lucy FrazerIt is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the right hon. Member for Knowsley (Sir George Howarth) on securing today's important debate. I have spoken to Members across the House, and there are many supporters who know the importance of this area. I want employees to share in the success of the companies they work for and businesses to reward and retain talent, driving even more success through taxation policy, including reliefs, which can drive innovation. The partnership between business, employees, and Government is important, with tax reliefs supporting employee share ownership recorded at £760 million of income tax and national insurance contribution relief in the financial year ending 2021. There are four tax-advantaged share schemes: Save-as-you-earn (SAYE) and Share Incentive Plan (SIP), which help lower earners to save and purchase shares directly, respectively. The minister also mentioned two other schemes: Company Share Option Plan (CSOP) for junior and middle management and Enterprise Management Initiative (EMI) for SMEs with a value of up to £250,000 per employee offered at a discount. These schemes incentivise and reward employees by aligning employer and employee interests in the growth of businesses, encouraging loyalty, fostering productivity, and achieving higher and faster growth compared to companies with less engaged workforces. The SIP enables a direct purchase of shares in the company rather than other options, with full tax advantages enabled at the five-year mark to encourage long-term commitment. Evidence of the impact on people taking up these schemes is welcome for further improvement. The minister stated that they would continue evaluating the schemes to ensure value for money for taxpayers and support economic aims. A review was launched in Budget 2020 to examine whether more companies should access EMI, concluding it remains effective but expanding scope to include CSOP. These employee share ownership schemes play a crucial role in driving productivity and fuelling economic growth.