Nick Clegg to announce tax break for employee ownership

 

Bosses who sell their companies to their workforce will be rewarded with tax relief under a £50m government plan to be announced by Nick Clegg today.

The Deputy Prime Minister will unveil proposals to boost the number of employee-owned firms as part of his drive to create a “John Lewis economy.” Owners who hand their workers a controlling stake will pay lower capital gains tax, which is normally charged at up to 28 per cent when assets are sold.

Firms in which employees own a significant stake have a combined annual turnover of £30bn, more than 3 per cent  of GDP. Mr Clegg will endorse plans by the  Employee Ownership Association to raise this  to 10 per cent of GDP by 2020. 

Speaking in London, he will say: "My goal in government is to help lay the foundations for a stronger economy and a fairer society and employee ownership helps do both. We know our economy needs to be rewired to properly assess and share risk, to properly motivate and reward workers and to think for the long term.”

George Osborne, who included the £50m fund in last week’s Budget, came under fire yesterday over his plans to boost home ownership after the Office for Budgetary Responsibility (OBR) warned they could raise house prices in the short term and suggested they would not tackle housing shortages.

The Chancellor defended his plans when he was quizzed by the all-party Treasury Select Committee.  Andrew Tyrie, its Conservative chairman, asked him: "You are not concerned that we are just ploughing money back into the boom-bust property cycle?" 

Mr Osborne replied: “"I don't detect that we are in the middle of a housing boom. I think we are in a very unusual situation after the financial crisis. Families are being priced out of the housing market and that is neither economically right nor socially fair."

The Chancellor insisted his £12bn plan to guarantee mortgages by helping buyers raise their deposit would be time-limited to three years. He refused to promise a ban on allowing people to use the scheme to buy a second home, despite Labour branding it a “spare home subsidy for millionaires.”

Mr Osborne said  families sometimes had two mortgages for a limited period when couples divorced or people moved to a new area to take up a job. “The absolutely clear intention of the scheme is to help people buy their first home or move home as their family grows,” he said.

The Chancellor said: “Mortgages and the availability of mortgages are not just a demand issue they’re also a supply issue. It’s difficult for builders to build new homes if they’re not sure there are people out there who can afford them.”

But the OBR’s Steve Nickell told the committee “The key issue is, is it just going to drive up house prices? By and large in the short run, the answer to that is yes. But in the medium term, will the increased house prices stimulate more house building? And our general answer to that would probably be a bit, but the historical evidence would suggest not very much.”

Mr Osborne said the Treasury’s long-standing  practice of pre-briefing Budget measures to selected media outlets "clearly can't continue" in the same way, after the London Evening Standard’s front page, including details of last week’s package, appeared on Twitter before his Commons statement.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
voices
Sport
Roger Federer is greeted by Michael Jordan following his victory over Marinko Matosevic
tennisRoger Federer gets Michael Jordan's applause following tweener shot in win over Marinko Matosevic
News
peopleJustin Bieber accuses paparazzi of acting 'recklessly' after car crash
Arts and Entertainment
Oppressive atmosphere: the cast of 'Tyrant'
tvIntroducing Tyrant, one of the most hotly anticipated dramas of the year
News
i100
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Technical Manager – Heat Pumps

£40000 Per Annum dependent on experience: The Green Recruitment Company: They ...

Test Job

TBC: Test Recruiter for iJobs: Job London (Greater)

Senior Developer - HTML, CSS, PHP, JavaScript, VBA, SQL

£30000 - £35000 per annum + benefits: Ashdown Group: We are working with one o...

Senior Developer - HTML, CSS, PHP, JavaScript, VBA, SQL

£30000 - £35000 per annum + benefits: Ashdown Group: We are working with one o...

Day In a Page

Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
Rachael Lander interview: From strung out to playing strings

From strung out to playing strings

Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
The science of saturated fat: A big fat surprise about nutrition?

A big fat surprise about nutrition?

The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
Emmys 2014 review: Can they genuinely compete with the Oscars

Can they genuinely compete with the Oscars?

The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
On the road to nowhere: A Routemaster trip to remember

On the road to nowhere

A Routemaster trip to remember
Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

Hotel India

Mumbai's Taj Mahal Palace leaves its darker days behind
10 best pencil cases

Back to school: 10 best pencil cases

Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

Arsenal know battle with Besiktas is a season-defining fixture

Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

Pete Jenson: A Different League

Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
This guitar riff has been voted greatest of all time

The Greatest Guitar Riff of all time

Whole Lotta Votes from Radio 2 listeners
Britain’s superstar ballerina

Britain’s superstar ballerina

Alicia Markova danced... every night of the week and twice on Saturdays
Berlin's Furrie invasion

Berlin's Furrie invasion

2000 fans attended Eurofeurence
‘It was a tidal wave of terror’

‘It was a tidal wave of terror’

Driven to the edge by postpartum psychosis