Labour's McDonnell unveils employee share ownership plans
Shadow Chancellor John McDonnell unveiled a plan to force larger companies to give shares worth up to £500 per employee, in a speech at the Labour party conference on Monday.
The plan would see firms with 250 employees or more put 1% of their shares into an ‘inclusive ownership fund’ every year, capping off the total amount at 10%, with McDonnell arguing that the UK lags behind countries such as Germany where employee share ownership rates are far higher.
"1% is not particularly radical. This is an idea whose time has come but should have come 20 years ago. People feel they do not have a stake in society or their communities or their companies and that is one of the reasons we had the Brexit vote," said McDonnell on Radio 4, before delivering a speech on the subject at the party's annual conference.
Extra income from the fund would be capped at £500 per employee, with further dividends going into a national fund that would contribute to public services and welfare costs.
The Labour party, which released a 10-page consultation paper on the idea, calculated that 10.7m workers, or 40% of the UK’s private sector workforce, would initially be covered by the scheme, getting roughly £4bn a year in share dividends by the end of Jeremy Corbyn’s first term in government, while the public sector will receive an annual £2bn.
The Conservatives have branded the proposal as just another tax increase for major corporations, while the CBI labelled it as anti-industry.
Carolyn Fairbairn, director general of the CBI, said: "Their diktat on employee share ownership will only encourage investors to pack their bags and will harm those who can least afford it. If investment falls, so does productivity and pay."