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.

Nicola Sturgeon. Photo: Getty
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Nicola Sturgeon's half-hearted "reset" is not enough to win back voters to the SNP

Election campaigners report that the doorstep feedback suggests the First Minister is now seen as aloof, with little interest in the average voter’s concerns.

In Scots law, under a charge of robbery, theft, breach of trust, embezzlement, falsehood, fraud or wilful imposition, the accused may be convicted of "reset". It’s not clear which of these particular terms Nicola Sturgeon had in mind this week when she used that word to describe her reformed plans for a second independence referendum. Fraud seems a little too strong. Breach of trust or wilful imposition are perhaps closer to the mark.

It’s been many, many years since the SNP has seemed this unsure of its footing. Fair enough: who in politics isn’t, these days? But the slow-motion car crash that is Scotland’s governing party deserves a prime-time slot all of its own. "The SNP has squandered what was an extraordinarily strong position," says a thoughtful observer from the opposition benches.

If Sturgeon’s authority hasn’t gone – and she continues to rule Scotland’s most popular mainstream party, both at Holyrood and Westminster – it has undeniably taken a shellacking. The aura of invincibility that surrounded the First Minister’s early years in power is no more, both within and without the SNP. "What struck me as she announced her 'reset' was that a woman who was often listened to in respectful silence in the past found herself being shouted at by Labour, the Lib Dems and the Tories," says a source. "There was giggling and mockery, which is new. She seemed diminished."

My own judgement is that the reset proposal, which amounts to little more than extending the deadline for a second indyref by six months to a year, will do almost nothing to woo back the half-million voters who deserted the Nats between the 2015 and 2017 general elections. In my experience, these people don’t want the referendum delayed for six months, they want it off the table. They also want the SNP to shut up about it, and they want to see the public services and the economy given full attention. That is the challenge they have set the First Minister in the four years left of this Holyrood parliament. In an enlightening article in the Guardian this week, Severin Carrell quotes voters from the "Tartan Tory" areas that recently unseated Alex Salmond and Angus Robertson. "Fed up with the SNP, simple as."

Fed up. Sturgeon’s greatest error – a charge levelled by internal critics – was to force and win a vote at Holyrood on the holding of another referendum, after the Brexit decision but before Article 50 was triggered. In the minds of voters already worried about leaving the EU and looking for what we might call strong and stable leadership, this merely confirmed the SNP’s monomania: that it saw literally everything as a pretext for independence. The step looked cynical, it looked rushed, it looked, well, desperate.

To be fair to the First Minister, she was playing a double game. Obviously, she supports breaking up the UK and needs to continually feed the beast that is the separatist movement, but she also hoped the looming threat of another referendum would give her leverage as the UK negotiated Brexit, perhaps to secure a distinct deal of some kind for Scotland. She was wrong. "Theresa May would show up for meetings with the various leaders of the UK’s nations, read from a script and then refuse to take questions," says an SNP insider. "The whole thing has been a shambles. The British government just isn’t interested."

This deliberate mutual misunderstanding is a problem not just for the SNP, but for the smooth running of the UK. Pre-devolution, a deal such as that struck with the DUP would have been discussed in Cabinet where powerful Scottish and Welsh secretaries would demand and usually emerge with some goodies for back home. Now, each nation is run by a different tribe, the relationships are oppositional and antagonistic, and no side wants to make things easier for the other. Britain has stopped talking to itself, and stopped trading with itself. We have spiralled off into our own mini-cultures, which often bear little resemblance to each other.

Ultimately, though, Sturgeon looks like the author of her own misfortune. Her tone in Holyrood as she announced the ‘reset’ was unapologetic and belligerent. There was no real humility or admission of error, and no sense that an indyref was in any way off the table. Election campaigners report that the doorstep feedback suggests she is now seen as aloof, with little interest in the average voter’s day-to-day concerns or in listening to them. Her team seem unable or unwilling to absorb this. "They’re still pushing far too hard," says one Tory source. "The only way I can make sense of it is that they’re playing it like a poker hand. They’ve come too far and feel they have no choice but to go all-in. But it’s a losing hand."

There are only two routes I can see that might, perhaps, make something of a difference. The first is a comprehensive reshuffle that brings some of the smarter, younger MSPs into the government. Many of them, as newcomers to the cause, speak differently about independence and their reasons for joining the SNP than do the generation of Sturgeon, Salmond, John Swinney and Mike Russell.

The second is to return to the debate about devo max or federalism. Again, in conversation with the new generation of Nats you are more likely to discuss these options. A number of them are technocrats who have a view of the way Scotland should be governed. They might see independence as the best way to achieve this, but they are also open to a looser relationship within the UK, one that might involve greater powers around taxation, spending and borrowing. With every UK region outside London running a chunky deficit, Scotland could set its own deficit-reduction target and develop a plan to get there. Not only would that be good for the UK economy, it would also allow the SNP to demonstrate that a separate state could work - and indeed, would work.

In short, the SNP will not whine its way to independence. Its best option now is to do what the Scottish people are asking it to do: make a better job of running the place, and stop talking about independence for a while. First, though, that requires the party to listen.

Chris Deerin is the New Statesman's contributing editor (Scotland). 

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