Well if the company paid cash out to the same value, it would also get a tax 'break' because it would be a deductible expense (ignoring complications like NIC).
The employee will often pay tax, usually on exercise of the share option. Where it is tax exempt, such as with an EMI scheme, there are limits in place on the overall size of the scheme and conditions on the type of company and employee so the reliefs are targeted.
It may not be the average shopfloor worker in a large 'production line' manufacturing company that gets these options, but in my vaguely related professional experience the share options are often available to a very wide range of employees, especially where the company deals in services or is relatively young. Granted, the directors may get more beneficial share options than the rest of the firm, but then they'd get more cash if it was abolished, so c'est la vie.
I guess I'm just not sure the outrage is justified. There really *are* policy goals of encouraging share ownership, it's not just a plot by HMRC to collect less tax.