Chancellor, George Osborne suffered the setback as his much debated scheme was rejected by the House of Lords by 232 to 178 votes amid widespread criticism.
The scheme was intended to encourage employment, with businesses less wary about taking on staff since they would not be subject to expensive hiring costs and would be able to lay off people more easily. Workers would give up training, redundancy and flexible working rights.
The former Cabinet Minister, Lord Forsyth of Drumlean, one of several senior Conservatives to criticise the plans, described the idea as “ill-thought through, confused and muddled”.
He added:
“I am astonished the Coalition would even think of bringing forward such a measure.”
Responding to the House of Lords’ vote, TUC General Secretary, Frances O’Grady, said:
“This proposal was the flagship policy in the Chancellor’s speech to the Conservative Party Conference. Indeed in today’s budget he announced further sweeteners.
“This humiliating defeat reflects the near universal thumbs-down it has received from business and unions. Some employers have said that employment rights should not be for sale, and many others have said that they simply see no use for the scheme as anything other than a tax dodge.”
O’Grady added:
“The margin of defeat – a big victory for union campaigning – suggests that ministers should quietly abandon this policy.”
The Government will now have to decide whether to overturn the defeat in the Commons.
