One Autumn Statement, two employee share ownership policies
The Autumn Statement refers to two different policies on employee share ownership that are contradictory but are being promoted simultaneously by the government.
The first follows from a review of employee ownership, launched by Nick Clegg in a speech earlier this year that talked about creating what he called a ‘John Lewis economy’. The Review, carried out by Graham Nuttall, set out a number of proposals that aim to increase the number and proportion of firms that offer their employees a substantial body of shares, or are indeed completely owned by their employees.
Just a few months later, the Chancellor announced at the Conservative Party Conference a new policy whereby employers would be able ask their workforce to give up key employment rights, including rights in relation to unfair dismissal, in exchange for shares worth from £2,000 to £50,000, which will be free from capital gains tax.
The IoD was the only business organisations to give clear support to this ‘rights for shares’ policy, and some business leaders have been extremely negative. Organisations that support employee share ownership have reacted critically, fearing, rightly, that allowing employers to ask their employees to trade employment rights for company shares would discredit employee share ownership more broadly. The TUC has, of course, strongly opposed the initiative.
The Autumn Statement continues this confusion. On the one hand, £340 million will be given to Employee Ownership Pilots, aiming to boost education and training on employee ownership schemes. On the other hand, the Chancellor announced tax relief for what is now being termed the ‘employee shareholder scheme’.
Meanwhile, BIS has released its response to its consultation to the so called ‘employee shareholder scheme’, which shows that only a ‘very few’ respondents supported the scheme. Looks like no one told the Chancellor though – or, if they did, that he did not care.