The UK's private equity industry is rallying support for a new scheme masterminded by Chancellor George Osborne that will give employees ownership in the companies they work for.
Under the scheme the Chancellor proposes that employees will take equity stakes of between £2,000 and £50,000 in their employers and any gains on this equity will be exempt from capital gains tax.
Mark Florman, chief executive of the BVCA, said Osborne's announcement is a step towards putting the “entrepreneurial zeal” back into Britain.
“We need to make it as easy as possible for all businesses, but especially small businesses, to take on new staff and boost productivity,” he said.
But the proposal has come under fire from some corners for a caveat on employment rights that would make it easier for businesses to sack staff.
In exchange for equity stakes, workers would have to give up rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training. Expectant mothers would also have to provide 16 weeks' notice of a return from maternity leave, double the current two-month period.
The shares-for-rights plan is a political hot potato that has been criticised by Labour supporters for awarding employers with too much power.
The proposal echos recommendations in the Beecroft report, published a day early in May after a draft was leaked to the press.
Written by government adviser and former Apax Partners chief investment officer Adrian Beecroft, the controversial report called for relaxed employment laws to help pull the UK economy out of recession.
By making it easier to fire workers, Osborne hopes businesses will be more willing to hire new employees without fear of reprisals in the event of dismissals.
The Beecroft report led the prime minister and Labour leader Ed Miliband to clash in parliament in May, David Cameron accusing Miliband of being "in the pocket of the trade unions".Picture: Source