George Osborne's 'Shares For Employment Rights' scheme is falling flat on its face. Unite Assistant General Secretary, Tony Burke, looks at why.
The Business, Innovation and Skills Department is reporting that only “a handful of companies” (in reality a total of just six) have enquired about the scheme – due to come into force in September.
Putting a brave face on things a spokesperson for BIS said limply: “We have been very clear that the Employee Shareholder status is a targeted measure that will appeal mainly to innovative new start-up businesses which are keen to grow and share ownership. We know that status will not be appropriate for all businesses or be taken up across the board, it simply adds to the options available to companies and employees in determining their employment relationships.”
Labour’s Shadow Business secretary Chuka Umunna countered: “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 event will provide the opportunity for manufacturing leaders to come together and discuss employee engagement and empowerment, workforce planning and strategy and maintaining a talent pipeline to safeguard the future workforce.
The scheme limped its way through Parliament with one peer debating the scheme in the Lords describing it as “fundamentally wrong in principle – a dog’s breakfast, dreamed up by someone who had never run a company”
Unite’s Len McCluskey said at the time that the bill was wending its way through Parliament: “Even arch-Thatcherites such as Michael Forsyth have agreed with business that this ‘sell your rights for pennies’ plan is ludicrous. This is an absurd policy without friends and which makes absolutely no sense”.
The plan, was a flagship announcement in the Chancellor’s speech to the Conservative Party conference. The idea is that workers will be invited to accept shares in companies in return for waiving their rights to redundancy, or peruse a case for unfair dismissal. Osborne had expected hundreds of thousands of employees to sign up within the next few years, at a cost to the Treasury of about £100 million a year.
The hare brained scheme was proposed by Wonga.com boss Adrian Beecroft, a venture capitalist, part of a package of measures which called for many employment regulations to be scrapped.
The reality is that companies quickly worked out the countless pitfalls in the scheme, including, legal issues related to shares, the position of employees as shareholders and many employers are worried that the scheme will be seen a form of tax avoidance scam.
Although the Prime Minister said in Parliament that the CBI had welcomed the scheme they qualified their comments by saying: “the number of businesses who adopt the scheme may be small and described it “not relevant” – pretty prophetic!
One employers group recently told me (off the record – so I am not giving anything away!) that the Chancellor having been knocked back by so many employers and employment lawyers had to work the phone and beg to get one employers organisation to come out and publicly support the idea. They did so, but only after a lot of arm twisting and favours being called in! Expect to see the scheme shelved quietly.