How Osborne's shares for rights scheme has flopped

Only six companies have enquired about the Chancellor's plan to allow workers to give up employment rights in return for shares.

The centrepiece of George Osborne's speech to last year's Conservative conference was his plan for employees to give up their rights in return for acquiring shares in their companies. While losing rights and protections, including unfair dismissal, statutory redundancy pay and the right to request flexible working, they would gain shares worth between £2,000 and £50,000.

The Chancellor said:

This idea is particularly suited to new businesses starting up; and small and medium sized firms. It's a voluntary three way deal. You the company: give your employees shares in the business. You the employee: replace your old rights of unfair dismissal and redundancy with new rights of ownership. And what will the Government do? We'll charge no capital gains tax at all on the profit you make on your shares. Zero percent capital gains tax for these new employee-owners. Let shares and become owners of the company you work for. Owners, workers, and the taxman, all in it together. Workers of the world unite.

The policy was attacked from all sides in parliament, with former Tory Scottish secretary Lord Forsyth describing it as "ill-thought through, confused and muddled", Lord O'Donnell, the former head of the civil service, declaring, "In the old days the price of slavery was 20 or 30 pieces of silver – is it now £2,000?" and crossbencher Lord Billamora memorably warning, "This is not just a dogs's breakfast, this is a mad dog's breakfast". Andrew Adonis noted that "The idea that depriving employees of these basic rights is somehow going to boost growth is not supported by a single employer I have met, let alone [an] employee".

It turns out that the government is having trouble finding any too. With just two months to go until the scheme launches, today's FT reports that only six companies have enquired about it.  The Treasury had expected thousands of employers to sign up, pencilling in lost capital gains tax receipts of £135m in the three years to 2017/18.

Responding for Labour, Chuka Umunna said: "It was a ridiculous policy that had the support of very few people indeed. It was condemned by business and by people on all sides and it should be dumped. I am not at all surprised that it has attracted little interest from businesses who on the whole do not want to rob their employees of their fundamental rights at work."

The government rather optimistically remarked that its "approximate estimate" is that "around 6,000 companies" could choose to use the scheme, adding that "it could be more, it could be less."

In the absence of a 1,000 per cent surge in interest in the next two months, it looks like it will be less.

A member of the PCS union wears a George Osborne face mask at a demonstration on Whitehall on June 27, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.