George Osborne unveils employee 'shares for rights' scheme
Proposal would allow firms to make new staff forfeit key rights, such as redundancy, in exchange for tax-exempt shares
Businesses will be allowed to remove "gold-plated employment rights" in exchange for handing out shares to employees which will be exempt from tax, George Osborne has said.
In his Tory conference speech on Monday, the chancellor unveiled a £100m "employee-owner" scheme that will allow shares worth £2,000 to £50,000 to be exempt from tax if employees give up certain work rights, such as the right to claim unfair dismissal. He said the measure was aimed at the tens of thousands of small and medium-sized firms.
The chancellor's plan would allow businesses hiring staff to insist they forfeit employment rights in two broad areas in exchange for the shares, which would be exempt from capital-gains tax. Existing employees would have the right to refuse.
Employees would:
• Give up their rights under UK law on unfair dismissal, redundancy and the right to request flexible working and time off for training.
• Women would have to give twice as much notice of the date when they want to return from maternity leave. Women currently have to give eight weeks, but this would increase to 16.
During his speech, Osborne also confirmed he would seek an additional £10bn of welfare cuts from 2015-16, and that 80% of the deficit reduction would be borne by spending cuts rather than tax rises.
The last budget had outlined detailed plans for £6bn of welfare cuts in 2015-16 and £10bn the year after but Osborne would like to go faster.
Tory sources said senior Liberal Democrats had agreed these broad numbers, but none of the detail of how they would be achieved.
These announcements were coupled in Osborne's speech with a promise to stick to his plans to cut the deficit. He said he would not repeat the mistake of Edward Heath in 1972, who "two years into office was faced with economic problems and over powerful unions buckled and gave up".
He signalled that some of the cuts would come from freezing benefits. He said: "How can we justify the incomes of those out of work rising faster than the incomes of those in work?"
"Where is the fairness, we ask, for the shift worker leaving home in the dark hours of early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits".
The chancellor also indicated he would cut child-tax credit for larger families and maintain the current housing benefit budget by withdrawing benefits to those aged 25 and under. He defended his strategy and claimed the economy "is healing", but "we will finish the job we have started".
Osborne said taxes for the most well-off would be increased over the next few years, but he ruled out a mansion tax or temporary wealth tax. "Even Denis Healey thought this was a bad idea," he added.
He said he would not introduce a tax on homes because "it would be sold as a mansion tax, but once the tax inspector had his foot in the door you'd soon find most homes in the country labelled a mansion. It's not a mansion tax, it's a homes tax, and this party of home ownership will have no truck with it." He promised to look for more income from tougher tax evasion.
He added: "Just as we should never balance the budget on the backs of the poor, so it is an economic delusion to think you can balance it only on the wallets of the rich."
Discussing the coming spending review, Osborne said: "Our published plans require us to find £16bn of further savings and ... the broadest shoulders will continue to bear the greatest burden."
More broadly, the chancellor admitted his forecasts had been blown off course. "The truth is, the damage done by the debts and the banking crisis was worse than we feared. The rise in world oil prices has been larger than anyone forecast. And sadly the predictions that you made, I made, that almost everyone has made, about the euro turned out to be true".
He attacked critics such as Ed Balls, the shadow chancellor, saying: "Our critics gamble everything: our credibility, our financial stability, our low interest rates, the cost of our debt – they would risk everything on the dubious idea that a few billion more of spending would dramatically improve the fortunes of a trillion and a half-pound British economy."
He said he wanted the Conservatives to be a one-nation party that speaks for the corner-shop owner, the teacher, the commuter and pensioner. "They are all part of one nation – one nation working together to get on."
Osborne also made a surprise announcement that he would be consulting on generous tax breaks for the shale gas industry, a move designed to mirror tax deals being offered in the US.
It was not clear how much the energy department knew about the proposal, but Ed Davey, the energy secretary, told a gas conference in London on Monday that he hoped to lift a suspension on shale gas exploration that had been imposed last year amid concerns over the technology used to exploit it.
"I hope it will prove possible for me to give a green light to shale," Davey said.
Britains 'Shares for rights' scheme
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