What a terrible mess the Government has got into over the Railtrack affair.
One of the dimensions not much discussed so far has been the impact on
Railtrack employees. More than 90 per cent of staff own shares and are set to
lose their investment now that the Government has decided to wind up the firm.
It is ironic that this should come about as the Government launches a new
cross-industry group to promote employee share ownership in the run-up to its new
All Employee Share Ownership Plan, which becomes law next year.
Both this Government and the last have encouraged employees to own shares
and most HR people would agree that share ownership can be a powerful,
tax-efficient way to boost staff involvement and improve company results.
Railtrack’s HR team has enough on its plate trying to motivate and retain
staff without having to deal with this problem. It is not surprising that
compensation and benefits chief Peter Turner says staff feel as though they
have been mugged by the Government of income that was earmarked for their
children’s weddings or to pay off mortgages.
Of course employee share ownership always has an element of risk for staff,
but the Railtrack case is an exceptional one where employees were given
incentives on flotation to buy, and where the company’s fortunes were dependent
on factors well beyond the influence of staff or managers.
If the Government wants to maintain credibility for further attempts to
introduce private finance to public services, and for employee share ownership,
it should take action. Transport Secretary Stephen Byers should bear in mind
his recent experiences before burying the issue of Railtrack staff shares. The
fair thing would be to compensate staff for their loss of income.
By Noel O’Reilly
