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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Paul Nuttall is like his party: sad, desperate and finished

The party hope if they can survive until March 2019, they will grow strong off disillusionment with Brexit. They may not make it until then. 

It’s a measure of how far Ukip have fallen that while Theresa May faced a grilling over her social care U-Turn and Jeremy Corbyn was called to account over his past, the opening sections of Andrew Neill’s interview with Paul Nuttall was about the question of whether or not his party has a future.

The blunt truth is that Ukip faces a battering in this election. They will be blown away in the seats they have put up a candidate in and have pre-emptively retreated from numerous contests across the country.

A party whose leader in Wales once said that climate change was “ridiculous” is now the victim of climate change itself. With Britain heading out of the European Union and Theresa May in Downing Street, it’s difficult to work out what the pressing question in public life to which Ukip is the answer.

Their quest for relevance isn’t helped by Paul Nuttall, who at times tonight cast an unwittingly comic figure. Pressing his case for Ukip’s burka ban, he said earnestly: “For [CCTV] to work, you have to see people’s faces.” It was if he had intended to pick up Nigel Farage’s old dogwhistle and instead put a kazoo to his lips.

Remarks that are, written down, offensive, just carried a stench of desperation. Nuttall’s policy prescriptions – a noun, a verb, and the most rancid comment underneath a Mail article – came across as a cry for attention. Small wonder that senior figures in Ukip expect Nuttall to face a move on his position, though they also expect that he will see off any attempt to remove him from his crown.

But despite his poor performance, Ukip might not be dead yet. There was a gleam of strategy amid the froth from Nuttall in the party’s pledge to oppose any continuing payment to Brussels as part of the Brexit deal, something that May and Corbyn have yet to rule out.

If May does manage to make it back to Downing Street on 8 June, the gap between campaign rhetoric – we’ll have the best Brexit, France will pay for it – and government policy – we’ll pay a one-off bill and continuing contributions if need be – will be fertile territory for Ukip, if they can survive as a going concern politically and financially, until March 2019.

On tonight’s performance, they’ll need a better centre-forward than Paul Nuttall if they are to make it that far. 

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

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