‘Shares for Rights’ defeated in the Lords

There is an unwritten rule that there can be no deaths in the Palace of Westminster. Well, we had one in the House of Lords on Wednesday, as the controversial ‘Employee Shareholder’ clause in the Growth and Infrastructure Bill was removed.

This pet project of George Osborne would have set up a new employment status where employees would be required to give up certain workers rights in exchange for shares in the company. Labour and crossbench Peers, plus a small number of prominent Liberal Democrat and rebel Conservative peers supported the amendment.

Crossbencher Lord Pannick, outlined four main problems with the new status:

  • employment rights were created to protect employees and should not be a bargaining commodity
  • JSA Claimants would lose their benefits if they were to refuse such a job
  • it would be damaging to ‘industrial harmony’ and would ‘negate trust’ between employer and employee
  • a lack of protection for an employee to ‘understand what they are being asked to give up

Of course there are many other problems with the policy, including liability to Income tax and National insurance on shares worth over £2,000, the cost and method of share valuation, an increase in discrimination tribunals due to the loss of the right to unfair dismissal claims and redundancy pay etc

From the Labour benches, Lord Adonis said:

In my eight years in the House I have never witnessed a government policy with less support not only in Parliament but within the Government themselves… To remove this clause today would be an act of mercy to the Government

On 6 February, Conservative peer Lord Deben (John Gummer), had said;

I cannot imagine any circumstances whatever in which this would be of use to any business that I have ever come across in my entire life.

Indeed, even the government’s own consultation on this showed a massive lack of interest in using such a status. Of the 209 respondents, 184 answered the question on whether they would take it up. Only 3 said they would.

Lord Forsyth was scathing in his criticism;

The idea in this clause has all the trappings of something that was thought up by someone in the bath, taking these two ideas together and believing that they made for a great scheme. In fact, it is damaging to both

Liberal Democrat Baroness Brinton, who has constantly opposed this proposal from the beginning, suggested that the clause would achieve the exact opposite of what was intended. She referred to her own experience;

… speaking with employees working for high-tech SMEs who are bemused that they would want to demotivate their staff during the very difficult early days of a company when it is developing products and just beginning to enter the marketplace…

Meanwhile, the Bishop of Bristol was quoting Michael Sandel in support of the amendment;

Such treatment fails to value human beings as persons, worthy of dignity and respect; it sees them as instruments of gain and objects of use.

It would also reflect badly on the employer, as Lord O’Donnell remarked;

If an employer is offering this, they are probably the kind of employer that you do not want to go near.

Conservative peer Baroness Wheatcroft suggested that it could also damage the reputation of existing successful share ownership schemes which do not require employees to give up their rights.

The amendment was put to the vote and was won by 232 votes to 178. It is now our mission to persuade George Osborne not to reinstate the clause when it returns to the Commons in April. Please sign the petition.

* Tracy Connell is a member of the Liberal Democrats in Newcastle City, and a regional officer.

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  • Please add you name to the petition. We only have about 3 weeks to collect signatures https://www.change.org/en-GB/petitions/george-osborne-do-not-resurrect-the-employee-shareholder-status-shares-for-rights

  • Alex Sabine 22nd Mar '13 - 6:30pm

    It is a silly gimmicky policy. It’s interesting that arch-Thatcherites like Lords Forsyth and Lawson provided some of the sharpest criticism of it.

    The FT seems to think that Vince Cable, though not a fan of the policy, has promised George Osborne that he will support it in return for a beefed-up industrial policy (another bad idea… as Cable himself once argued when he wanted to abolish what is now his Whitehall empire).


  • “The amendment was put to the vote and was won by 232 votes to 178. It is now our mission to persuade George Osborne not to reinstate the clause when it returns to the Commons in April.”

    Based on a small sample (can’t be bothered to waste my time on a larger one) most of the Lib Dem peers seem to have loyally trooped through the Tory lobby.

    When you say “our mission”, who is the “we” you are referring to?

  • Oh but wait – “Liberal Democrats Gain a Seat from Independents on Chorleywood Parish Council “. Everything must be OK then.

  • Martin Pierce 24th Mar '13 - 8:23am

    I spent a gruelling hour or so ploughing through the official consultation – which amidst many many dull and uninteresting questions, made sure it didn’t actually ask if you were in favour or against. I see only about 200 of my 60 million fellow citizens did the same. This is good news indeed – provided we can get it taken out on a permanent basis – but don’t hold your breath that LDs in Parliament will work tirelessly for this to happen. Indeed for someone ‘not a fan of the policy’, Vince did a very good impression in the autumn of someone who is – including not only joint press release from BIS and the Treasury expounding its virtues, but going on LDV to make the case for it. Sorry Vince, not good enough. People often ask why our society is becoming more unequal in terms of wealth – the truth is that if you put no fetters on the ‘wealth creators’ (ha ha) and take away the rights and bargaining hand of employees, that – over time – is what happens

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