At the Conservative Party conference in October, the Chancellor, George Osborne, grabbed a few headlines by announcing plans to create a new ’employee-owner’ status, under which workers will be able to give up some key employment rights such as protection against unfair dismissal in return for some tax-free shares in the business.

Initial reaction to the announcement did not bode well for the idea, with the chief executive of supermarket giant Sainsbury’s among those expressing not just a lack of interest in using the new status, but concern that the move would give credence to the view that ‘businesses only want to do bad things’.  Vince Cable’s Department for Business, Innovation & Skills (BIS) didn’t seem terribly impressed either, promptly issuing a somewhat cursory and evidence-free consultation on implementing the new status that read to me as an open invitation to employers to tell the Government why the idea is such a bad one.

And so it has proved, with the Government’s response to the consultation – published by BIS last week – revealing that employers and business organisations such as the CBI have blown a collective raspberry at the idea.  BIS received 209 formal responses to the consultation and, of the 184 consultees who answered the question ‘would you be likely to take up the new status’, only three – one business and two individuals – indicated that they were. And only 21% of consultees agreed that the new status will have a positive impact on labour market flexibility.

So, an overwhelmingly negative response from the business community to what is supposed to be a pro-business initiative. Will the Chancellor take heed? It seems unlikely, given that he didn’t wait for the results of the consultation before introducing legislation to implement the idea (clause 23 of the Growth & Infrastructure Bill). But the Daily Telegraph reports unnamed ‘government sources’ as saying that the idea is now on ‘life support’.

Maybe Santa Claus does exist after all.





Author: Richard Dunstan

Richard Dunstan is a policy wonk who has worked for Citizens Advice, the National Audit Office, the Law Society, and Amnesty International UK.

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