360° Coverage : Shares For Rights Flops

2 Updates
Shares For Rights Flops

Shares For Rights Flops

Jan 10 2014, 1:45pm CST | by

It must have seemed like a good idea at the time. George Osborne, Britain’s Chancellor of the Exchequer, naturally wants to be seen as a supporter of entrepreneurs and employees alike. It was...

Filed under: news

 
 
 

40 weeks ago

Shares For Rights Flops

Jan 10 2014, 1:45pm CST | by

It must have seemed like a good idea at the time. George Osborne, Britain’s Chancellor of the Exchequer, naturally wants to be seen as a supporter of entrepreneurs and employees alike. It was therefore logical enough to give pride of place in last March’s Budget to his Shares for Rights scheme, which is supposed to deliver valuable benefits to both these constituencies. The problem is that almost no-one seems to be interested – and now some of Osborne’s most prominent colleagues in the Government want the scheme scrapped.

Under Shares for Rights, owners of small businesses are able to dispense with some of the regulation built into Britain’s labour market legislation, which some entrepreneurs have criticised as too onerous. The idea is that they offer to grant employees shares in their businesses worth between £2,000 and £50,000 – staff who take up the offer have to waive protections such as the right to sue for unfair dismissal, to claim statutory redundancy pay and to request flexible working.

The Government also offered a sweetener to persuade employees to consider the free shares – any profits they make on such stocks are not subject to capital gains tax.

The scheme was formally declared open in September. Government data on take-up is almost non-existent, but it seems fair to say that Treasury officials haven’t exactly been rushed off their feet. In December, civil servants conceded they had received precisely 19 expressions of interest from businesses considering taking part, though they point out that entrepreneurs do not have to give notice of their intention.

Nick Clegg, the Deputy Prime Minister – and leader of the Conservatives’ Liberal Democrat coalition partner – is certainly unimpressed. This week he called for the scheme to be scrapped, with the savings put towards more generous tax breaks for lowly paid workers.

It’s not just low take-up that has dogged the scheme. The Office of Budget Responsibility, the independent body set up by the Government to scrutinise the UK’s public finances, warned it could be used as a tax dodge that might cost the Treasury as much as £1bn a year.

Criticism has also come from those concerned about employees’ labour rights. Lord O’Donnell, the former head of the civil service, has described the scheme as a form of modern slavery.

It’s worth pointing out that employers can’t require their staff to take the free shares on offer – the deal has to be acceptable to both sides. This may be one reason why adoption rates have been so miserable. From an employee’s point of view, shares in a start-up business, which may or may not succeed, may have less value than long-cherished employment rights (or no value at all if the business fails). The tax-free offer has an element of the pot of gold at the end of the rainbow – a tax saving on purely theoretical profits on some distant day in the future isn’t much of a draw.

As for employers, it may be that they’re far less concerned about rights such as statutory redundancy pay and flexible working than the Chancellor imagines. After all, few entrepreneurs who start businesses list these issues at the top of their lists of anxieties – they have simply got bigger fish to fry.

All in all, Shares for Rights has been a pretty dismal failure. The only good news for the Chancellor is that there’s no need for an embarrassingly public u-turn – take-up has been so pitiful that it will be possible to kill off the scheme without anyone noticing. On the downside, the savings Mr Clegg is looking forward to aren’t going to amount to very much.

Source: Forbes Business

 
Update
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,000 by 30 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedi ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Ebola not to upset Africa's overall growth: IMF
Harare, Oct 23 (IANS) The Ebola outbreak in West Africa, which has claimed 4,500 lives, will have minimum impact on continent's overall growth, a top International Monetary Fund (IMF) official said Thursday.
 
 
Second MERS case reported in Qatar
Doha, Oct 23 (IANS) A 43-year-old man in Qatar has tested positive for Middle East Respiratory Syndrome (MERS) in the second confirmed case of the deadly virus in 10 days, media reported Thursday.
 
 
OPEC daily basket price falls again
Vienna, Oct 23 (IANS/WAM) The basket of 12 crude oils of the Organization of Petroleum Exporting Countries (OPEC) closed at $81.94 a barrel Wednesday compared to $82.09 Tuesday, the OPEC Secretariat said.
 
 
Music therapy reduces depression in kids, adolescents
London, Oct 23 (IANS) Music therapy reduces depression in children and adolescents with behavioural and emotional problems, a study found.
 
 
 

Latest from the Network

Second MERS case reported in Qatar
Doha, Oct 23 (IANS) A 43-year-old man in Qatar has tested positive for Middle East Respiratory Syndrome (MERS) in the second confirmed case of the deadly virus in 10 days, media reported Thursday. The patient had...
Read more on Business Balla
 
Two people die in Pakistan bomb blast
Islamabad, Oct 23 (IANS) At least two people were killed and 12 others injured in an explosion that took place in Pakistan's Balochistan province Thursday, media reported. The bomb was planted on a motorcycle, Dawn...
Read more on Politics Balla
 
Trott extends contract with Warwickshire till 2017
London, Oct 23 (IANS) England batsman Jonathan Trott, whose mental issues led to his abrupt departure from last winter's Ashes tour, has confirmed his successful comeback to competitive cricket by signing a new three-...
Read more on Sport Balla
 
Srikanth, Kashyap big movers in BWF rankings
Kuala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest Badminton World Federation (BWF) rankings released Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Alvin Stardust dead
London, Oct 23 (IANS) English singer Alvin Stardust died after a short illness. He was 72. Stardust's manager confirmed the news about his demise Thursday, reports mirror.co.uk. He was recently diagnosed with...
Read more on Celebrity Balla
 
Indian man reunited with family after 40 years
Dubai, Oct 23 (IANS) An Indian man, who had disappeared from his hometown in Kerala nearly 40 years ago, has been found by his family at a hospital in Dubai in the UAE, a newspaper report said. Now in his 60s, Abdulla...
Read more on Politics Balla
 
Srikanth, Kashyap, Saina rise in world rankings
Kala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest released Badminton World Federation (BWF) rankings Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Flintoff signs for Big Bash side Brisbane Heat
Brisbane, Oct 23 (IANS) Former England captain and all-rounder Andrew Flintoff, who retired from international cricket in 2009, Wednesday confirmed that he will play for Brisbane Heat in the Big Bash League (BBL) this...
Read more on Sport Balla
 
OPEC daily basket price falls again
Vienna, Oct 23 (IANS/WAM) The basket of 12 crude oils of the Organization of Petroleum Exporting Countries (OPEC) closed at $81.94 a barrel Wednesday compared to $82.09 Tuesday, the OPEC Secretariat said. The new OPEC...
Read more on Business Balla
 
Lopez to sign multi-million dollar deal?
Los Angeles, Oct 23 (IANS) Singer-actress Jennifer Lopez is reportedly in the final stages of securing a multi-million dollar deal to perform in Las Vegas. The 45-year-old is being offered $350,000 per show at The...
Read more on Celebrity Balla