Lords vote down Osborne’s shares-for-rights scheme

Chancellor George Osborne’s major plans to offer employees shares in their firms in return for handing over employment rights have been thrown into disarray after being rejected for the second time by peers.

In a vote on Monday night, Osborne’s plans were rejected by a majority of 69 (260 to 191), with LibDem peers joining in the revolt, including former party leaders Lord Steel and Lord Ashdown.

After the vote, the government looks set to be forced to table concessions to its bill in the Commons to add a legal requirement for employers to set out in “written particulars” the conditions by which the shares are being offered.

The conditions would be expected to include details on what happens to the shares if the company is wound up, as well as listing statutory rights and any restrictions on selling shares.

Cobra beer founder and crossbencher Lord Bilimoria branded the scheme “fundamentally wrong” and a “dog’s breakfast” designed by someone who had never run a company, in a barb aimed at the Chancellor.

This comes after shares-for-rights proposals were rejected by Lords in March, with former Cabinet Secretary Lord O’Donnell voicing criticism.

In last night’s debate, there were also claims voiced in the Lords that business secretary Vince Cable never supported the Chancellor’s idea but remained silent in return for Osborne backing Cable’s plans for a business bank.

Lord Bassam, Labour’s chief whip in the Lords, wrote on Twitter after the vote about a “conspiracy of silence” over the “wasteful £1bn plan that does nothing for growth”.

‘Shares for Rights’ rebuff for Osborne deserves more coverage. Conspiracy of silence over wasteful £1bn plan that does nothing for growth.

— Steve Bassam (@SteveTheQuip) April 23, 2013

Labour’s Shadow Business Secretary Chuka Umunna said that Osborne needed to “clarify the situation” regarding allegations of a “shoddy deal” being done between Cable and Osborne.

“The government’s shares for rights scheme is a badly thought out and risible scheme which commands little support. It should be dumped,” he added on Twitter.