Welcome to a Brave New World

Welcome to a Brave New World!

George Osborne: Workers of the world unite... and give up your rights

- Companies to give people shares worth between £2,000 and £50,000

- Employees will lose right to claim unfair dismissal and time off for training

London Evening Standard,

8 October, 2012

Job seekers will give up traditional employment rights in return for tax-free shares under plans unveiled by George Osborne today.

Companies will be allowed to hire thousands of people under contracts that exempt them from the right to claim unfair dismissal or a redundancy pay off if the firm goes under as well as any right to demand flexible hours or time off for training.

In return, companies will offer up-front parcels of shares worth between £2,000 and £50,000 which will not be liable to capital gains tax if they increase in value. Critics said there seemed to be nothing to stop big businesses from hiring entire workforces on contracts that offered vastly reduced rights providing they put up as little as £2,000 per worker in shares .

The idea was the big surprise in the Chancellor’s keynote speech to the Conservative conference in Birmingham, and appeared to revive some of the proposals made by venture capitalist Adrian Beecroft.

Mr Osborne also warned that more tough spending cuts lie ahead, particularly on welfare, signalling that benefits may not rise in line with inflation next year.

Warning there were no “simple answers” to the country’s economic problems, Mr Osborne appealed: “I ask for your support, your trust, and your resolve as we go through these challenges together.”

In another key announcement today, Mr Osborne promised “generous” tax cuts for the shale gas industry, which uses underground explosions called fracking to release pockets of natural gas. It raises the prospects of exploration around sites in Surrey and Oxfordshire as well as in the north-west.

Announcing that new laws will enable firms to offer the no-rights contracts from April next year after a brief consultation, Mr Osborne said they would create a new breed of “owner employees” enjoying a real stake in the success or failure of their firms.

“Workers of the world unite,” he joked, echoing the Marxist slogan. Industry groups welcomed the idea in principle — but union leaders were horrified by what they saw as the potentially the beginning of a “fire at will” free-for-all.

Treasury officials said the plan had been agreed by Business Secretary Vince Cable — but there was no immediate confirmation from Liberal Democrat Mr Cable that he was on board.

John Cridland, the CBI director-general, said he did not think the idea would take off. He said: “In some of Britain’s cutting-edge entrepreneurial companies, the option of share ownership may be attractive to workers, rather than some of their employment rights. But I think this is a niche idea and not relevant to all businesses.”

TUC general secretary Brendan Barber said: “We deplore any attack on maternity provision or protection against unfair dismissal, but these complex proposals do not look as if they will have very much impact.

“This looks more to be said for effect than because it will make much difference, but we will be vigilant to ensure that they do not represent the thin end of a future anti-employee wedge driven by the Beecroft report.”

Under the plans, women would be required to provide twice as much notice of a firm date of return to work from maternity leave — 16 weeks instead of eight.

The Treasury, however, said it expects that “hundreds of thousands” of people will accept the contracts.

Mr Osborne confirmed plans to squeeze £10 billion from the welfare budget — but insisted that he would treat both rich and poor fairly, saying: “We are still all in this together.”

He gave a clear signal that he wants to cap next year’s rise in most welfare benefits to wage increases rather than inflation, which is running higher. “How can we justify the incomes of those out of work rising faster than the incomes of those in work?” he asked.

And, setting out the shape of Coalition battles over the autumn statement, he asked whether jobless school-leavers should be given housing benefit to move out of their parents’ home and whether people with many children should have their benefits capped.

He asked: “How can we justify a system where people in work have to consider the full financial costs of having another child while those out of work don’t?” The Chancellor argued that real “fairness” was not just about taxing the rich more. It was also about reforming welfare so that hard-working people on modest salaries did not have to support the workshy.

“We know what the British people mean by fair,” he said. “That those who put something in should get something out.”

In a key passage he ruled out a Lib-Dem mansion tax, or any temporary wealth tax of the sort demanded by Deputy Prime Minister Nick Clegg.

He told delegates that “the economy is healing” but add that “healing is taking longer than we hoped, because the damage was greater than we feared”.

The welfare cuts signals were creating a storm this afternoon. Barnardo’s chief executive Anne Marie Carrie warned: “The proposal to remove housing benefits from all under-25s is reckless and unfair as it will leave some of this country’s most vulnerable people stranded.”

Fiona Weir, of single parent charity Gingerbread, said: “This comes at a time when families are already struggling and risks plunging even more children into poverty.”