Via Gareth Epps, and also reported here, it looks like there’s even more evidence building up to show how George Osborne’s ‘shares for rights’ (or employee ownership, to give the official name) is going to cause a lot more problems than it solves. (Indeed, I’m not sure that it’s solving any actual problems)
I’ve concentrated before on the issues this could have for people at the lower end of the pay scale – those likely to be forced to give up employment protection in exchange for a bunch of shares that could well turn out to be worthless when they’re dismissed. The reports today look at the higher end of the scale, where the up to £50,000 in shares that people can take in exchange for their rights could well be a very useful way for them to dodge Capital Gains Tax. This could cost up to £1bn in lost tax revenue, with the report pointing out that this would become part of regular ‘tax planning’ for accountants. Is this the real reason for pushing this in the face of so much opposition? Finding a new tax dodge for the rich?
As Gareth says:
This presents Liberal Democrats, who have been queuing up to rubbish Osborne’s plans too, with a dilemma. Should they hasten the demise of this unloved piece of legislation? Or should they indulge in a spectator sport, as the Beecroft-lite plan is attacked from every angle until even Osborne himself admits it makes no sense?
In the longer game of Coalition engagement and disengagement, there is actually much to be said for the latter approach. The Bill of which shares for rights is part has a long way to go through Parliament, and while it would be sensible for Liberal Democrats to formally signal the party’s view of it, there is potentially more to be gained for leaving this dogma-driven plan hanging out to dry.
That seems like a good idea, but the problem is that this also has the BIS Department’s fingerprints all over it – maybe even more so than the Treasury – and both Vince Cable and Jo Swinson have given support for it. Any attacks on it are going to be targeted at Liberal Democrat ministers as much as they are at George Osborne, and we’ll be just as associated with it. Letting it carry on through Parliament could give it an irresistible momentum to pass – especially if it’s tied in with other proposals – and we should be working to kill it off as quickly as possible.