Jeff Salway: Chancellor’s schemes set for disaster

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OUR Chancellor may this weekend be pondering Robert Burns’ observation that “The best-laid schemes o’ mice an’ men / Gang aft agley”.

Except, in George Osborne’s case, “the best-laid schemes” have been hastily stitched together and are liable to backfire.

Some of Osborne’s most high-profile projects aren’t even getting off the ground before crumbling under inspection, with his fellow Tories among the biggest critics.

The Help to Buy scheme that grabbed front-page headlines following the Budget last month is littered with flaws. For instance, it’s still unclear whether second-home buyers would be among the beneficiaries.

Then there’s the risk of pushing up house prices – a nasty unintended consequence if ever there was one for a proposal aimed at helping first-time buyers.

On raising this point last month, I was accused by property pundits of talking down the market. Perhaps they should ponder last week’s report from the Treasury select committee (TSC), led by Conservative MP Andrew Tyrie, which concluded that Help to Buy is “very much work in progress. It may have a number of unintended consequences.”

The absence of clarity over who will have access to the scheme “is a reflection of the need to think schemes through carefully before announcing them”. In TSC speak, that amounts to a withering attack on the government’s policymaking.

But Help to Buy is nothing compared with Osborne’s shares-for-rights proposal when it comes to government plans that should never, ever see the light of day.

The House of Lords last Monday rejected Osborne’s flagship scheme for the second time in a week. One crossbench peer described it as a “dog’s breakfast” that was “fundamentally wrong in principle”.

So why don’t they like the plan? Under the proposal, employees would qualify for between £2,000 and £5,000 of capital gains tax-exempt shares in their employer in exchange for sacrificing employment rights such as those relating to redundancy, maternity leave and unfair dismissal.

The question isn’t what’s wrong with the idea. Rather it’s a case of finding anything it’s good for other than satiating the government’s appetite for eroding workers’ rights and appeasing Tory MPs.

Companies don’t want to know about the scheme, the CBI has dismissed it as irrelevant, and large employers have baulked at the suggestion of trading shares for rights.

The government will persist in pushing shares-for-rights, despite overwhelming evidence that the scheme is not only unwanted but would have virtually no chance of getting off the ground.

What next? A first-time buyer scheme that threatens to drive house prices up and kill the nascent first-time buyer recovery stone-dead?

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