Labour would scrap shares scheme

Updated: 
Ed BallsA Labour government would scrap a scheme in which employees give up certain rights for shares, Ed Balls has said.

An apparent tax cut for hedge funds introduced by the Government would join the "shares for rights" policy on the scrapheap should Labour emerge victorious at the 2015 general election, the shadow chancellor added.

Mr Balls said costings compiled by the Government indicated ending these two "unnecessary measures" would save hundreds of millions of pounds each year.

He also claimed Prime Minister David Cameron and Chancellor George Osborne have been "standing up for a privileged few" in the last 12 months.

Mr Balls said: "Not only did they give a top rate tax cut to the richest people in the country, they also announced a tax cut for hedge funds and a 'shares for rights' scheme, which has been widely criticised by business.

"The shares for rights scheme also seems to have become a tax avoiders charter.

"As the OBR (Office for Budget Responsibility) has pointed out, it could end up costing the Treasury up to £1 billion. We should be cracking down on tax avoidance, not opening new ways for it to happen.

"So the next Labour government will scrap the shares for rights scheme and cancel the tax cut for hedge funds.

"The Government's own costings show that by ending these two unnecessary measures we can save hundreds of millions of pounds a year. And we could save up to a further £1 billion being lost to the exchequer, as the OBR has warned."

Labour is also promising to close a loophole it says is costing the taxpayer almost £400 million a year in tax and national insurance by allowing construction workers to claim falsely to be self-employed.

It believes as many as 300,000 are treated as self-employed subcontractors - often hired via an intermediary payroll firm - despite in effect operating as direct employees.

"False self-employment in construction is a scandal that is costing the taxpayer hundreds of millions of pounds each year, at the same time as undermining responsible employers and the sustainable development of the UK construction industry," shadow chief secretary Rachel Reeves said.

"The Tory-led Government has ignored the evidence and refused to take action. A Labour government will put this right.

"In tough times like these when there is less money around, we cannot afford to leave loopholes in the tax system that allow vital revenue to be lost.

"It is also unfair on the majority who do the right thing and play by the rules if some are able to avoid paying their fair share of tax. After three wasted years of flatlining which have seen living standards falling and deficit reduction stalling, this is even more important.

"This measure would not only close a costly tax loophole. Removing a perverse financial incentive for workers whom most would regard as being in an employment relationship to be classed as "self-employed" would be good for the construction sector and its workforce too.

"As things now stand, the majority of employers in the sector who do the right thing and pay the right level of tax are vulnerable to being undercut by those who do not. This is not fair and it's not good for the long term strength and sustainability of the industry.

Labour is also promising to close a loophole it says is costing the taxpayer almost £400 million a year in tax and national insurance by allowing construction workers to claim falsely to be self-employed.
It believes as many as 300,000 are treated as self-employed subcontractors - often hired via an intermediary payroll firm - despite in effect operating as direct employees.

"False self-employment in construction is a scandal that is costing the taxpayer hundreds of millions of pounds each year, at the same time as undermining responsible employers and the sustainable development of the UK construction industry," shadow chief secretary Rachel Reeves said.

"The Tory-led Government has ignored the evidence and refused to take action. A Labour government will put this right.

"In tough times like these when there is less money around, we cannot afford to leave loopholes in the tax system that allow vital revenue to be lost.

"It is also unfair on the majority who do the right thing and play by the rules if some are able to avoid paying their fair share of tax. After three wasted years of flatlining which have seen living standards falling and deficit reduction stalling, this is even more important.

"This measure would not only close a costly tax loophole. Removing a perverse financial incentive for workers whom most would regard as being in an employment relationship to be classed as "self-employed" would be good for the construction sector and its workforce too.

"As things now stand, the majority of employers in the sector who do the right thing and pay the right level of tax are vulnerable to being undercut by those who do not. This is not fair and it's not good for the long term strength and sustainability of the industry."