But I can’t stay quiet after John McDonnell’s speech at this week’s Labour party conference, in which the shadow chancellor proposed that companies with more than 250 employees give a tenth of their equity to workers. My main concern is that this 10 per cent is, of course, someone else’s money – quite possibly yours.
Yet as my colleague Chris Dillow wrote on his Stumbling and Mumbling blog, there is popular support for this idea. There may well be more holes in its proposed workings than Swiss cheese, but its “direction of travel” – as Chris puts it – resonates with many voters who believe that corporate capitalism is somehow failing vast swathes of society. The current government has done little to challenge this notion; Theresa May’s much-trailed and ultimately abandoned idea of putting workers on company boards has arguably further fanned the flames of dissent.
Indeed, giving employees more ownership of the companies they work for seems like a very good idea, aligning employee interests to the business and encouraging them to stick around for longer. It’s such a good idea, in fact, that many companies do it already through various employee share schemes. Employees are rarely given the shares free, though, but either as an attractive and low-risk vehicle for saving, or as a tax-efficient alternative to cash pay.
What Mr McDonnell and co would prefer is a version of the co-operative model employed by companies such as John Lewis – this, they believe, is the solution to Britain’s corporate ills, low productivity underinvestment and out-of-control executive pay chief among them. It may be, who knows – but the model will be put to the test as the department store retailer attempts to navigate seismic shifts in the retail landscape that have already claimed House of Fraser and left Debenhams on the brink.
Remember, too, that John Lewis was built this way – co-operative ownership will not be easily retrofitted to most companies. And the proposal to cap the dividends workers would receive falls short of John Lewis’s profit-sharing model anyway – a cynic might suggest that Mr McDonnell’s plan is little more than a grab for money and influence that gives workers no real opportunity to share in growth.
The reality is that the current corporate model largely works – capitalism can’t be failing that badly if Mr McDonnell wants a share of its spoils. It’s certainly not perfect, but regulation is constantly evolving to protect all stakeholders from its worst excesses. Governance has never been higher on the corporate agenda, either, and investors are increasingly demanding that companies earn their profits in a responsible way. And plc employees who want to engage more can already do so – buy a share and head to the AGM.
