Nick Clegg to announce tax break for employee ownership
Andrew Grice has been Political Editor of The Independent since 1998. He was previously Political Editor of The Sunday Times, where he worked for 10 years, and he has been a Westminster-based journalist since 1982. His column, Inside Politics, appears in The Independent each Saturday.
Wednesday 27 March 2013
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.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...
£15000 - £25000 per annum: Recruitment Genius: This is a unique opportunity fo...
£50000 per annum + 26 days holiday,pension: Ashdown Group: A highly successful...
£27000 per annum + pension + holidays: The Jenrick Group: A Quality Technician...