The much-criticised shares-for-rights scheme, and effective tax cuts for hedge funds, would be scrapped under a Labour government, Ed Balls will say on Monday as he attacks George Osborne for “standing up for a privileged few”. The shadow chancellor will seize on these – as well as touching on the 45p tax rate – as evidence of how the chancellor and David Cameron are out of touch with ordinary people and too cosy with those who have the most in society.
“David Cameron and George Osborne have been happy to write cheques on behalf of the taxpayer to their friends and Tory party donors. They’ve been standing up for a privileged few while ordinary families have struggled with a cost of living crisis,” Mr Balls will say when he takes to the stage at the Labour party conference in Brighton.
Mr Osborne has made great play of the shares-for-rights scheme, which he unveiled to great fanfare at the Tory conference last year. But the scheme, which allows workers to receive shares in return for giving up some employment rights, has come under fire from businesses and think-tanks which have warned that it could end up as little more than a tax dodge for private equity companies.
“The shares-for-rights scheme also seems to have become a tax avoider’s charter. As the OBR has pointed out, it could end up costing the Treasury up to £1bn. We should be cracking down on tax avoidance, not opening new ways for it to happen,” Mr Balls will say.
Earlier this week, the Financial Times reported that managers of Whitworths, the century-old supplier of dried fruits and nuts, had become one of the first adopters of the scheme. Eight of its executives were offered “shares for rights”, worth up to £50,000 each, by its new private equity owner Equistone.
The Liberal Democrats, meeting for their conference in Glasgow, said they, too, would campaign to scrap the scheme at the next election. One Lib Dem minister called it “half-baked nonsense”.
Mr Balls also plans to cut the £145m tax cut offered to hedge funds in the last Budget and will tell delegates that he plans to use the “hundreds of millions of pounds” in savings to “focus resources on our priorities”.
The party is also expected to announce a reversal of the so-called “bedroom tax”, which reduces benefits to those living in council homes with spare rooms.
Elizabeth Rigby, Deputy Political Editor, Financial Times