THE GREAT LABOUR SHARES GRAB
McDonnell unveils plan for large firms to hand over a 10% stake to workers
SHADOW Chancellor John McDonnell will today unveil plans to snatch 10 per cent of shares in all large firms in an extraordinary raid on business.
Under the radical proposals, workers’ boards would be handed control of the stakes – with dividends shared between employees and the taxman.
It is estimated the scheme would lead to a £4billion-a-year grab on company profits by the end of a Labour government’s first term.
Business leaders warned the order would ‘only encourage investors to pack their bags’ and could actually cause a fall in pay for the poorest workers.
Mr McDonnell will announce the policy in his keynote speech to Labour’s annual conference in Liverpool as he pledges to make the party manifesto even more radical. The party is also proposing a £560million tax on holiday homes.
Under the share ownership overhaul, legislation would be introduced requiring all private companies with 250 or more employees to hand over a 1 per cent stake of their business each year, up to a maximum of 10 per cent.
The shares would be held in an ‘ inclusive ownership fund’ managed by a board of elected worker representatives.
Dividend payouts would be made at a flat rate to all employees of the firm, but would be capped at £500 each per year. Anything above this would be handed to the taxman.
Labour estimates this would raise £2.1billion a year for the Exchequer after the first five years of the scheme being in place. The CBI business group last night accused the party of seeing companies as a ‘bottomless pit of funding’. Its director-general Carolyn Fairbairn said: ‘Rising wages are what everyone wants to see, but Labour is wrong to assert that workers will be helped by these proposals in their current form.
‘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.
‘Business has been resilient in the face of uncertainty, but
‘This will set alarm bells ringing’
Labour’s anti-business positioning is starting to bite.
‘It’s time for pro-enterprise collaboration, not public proposals that set alarm bells ringing in boardrooms at home and across the world.’
In his address Mr McDonnell will say that workers ‘who create the wealth of a company should share in its ownership and, yes, in the returns that it makes’.
But he will add that those out of work should also benefit from the share grab.
He will say: ‘We all know it’s not just the workers of a company that create the profits it generates.
‘It’s the collective investment that we as a society make that enables entrepreneurs to build and grow their businesses, maintaining the roads and investing in the infrastructure we rely upon, educating the workforce, caring for them when they’re sick and investing in the research and development that enables technological innovation.
‘So we believe it’s right that we all share in the benefits that investment produces.
‘That’s why a proportion of revenues generated by the inclusive ownership funds will be transferred back to our public services as a social dividend, mobilising billions that could be spent directly on the social security system which supports those who have retired, are unable to work, or need society’s support in other ways.’
Labour leader Jeremy Corbyn supported the proposal last night ahead of its announcement as he suggested he wanted to take Britain back to the 1970s, before Margaret Thatcher’s reforms rescued Britain from economic decline.
He told a fringe event organised by his Momentum supporters that a Labour government would also require big firms to reserve a third of seats on boards for workers’ representatives.
He said: ‘The very richest in our society have had tax breaks, giveaways and tax havens. I tell you what – they are on borrowed time because a Labour government is coming.’
Mr Corbyn added: ‘ What we’re doing is challenging a neoliberal ideology that took over the world in probably, let’s say, 1970s or thereabouts. The whole idea of tax cuts, reduce the size of the state, increase privatisation and trickledown economics later inherited by Margaret Thatcher.’
Chief Secretary to the Treasury Liz Truss called the shares proposal ‘yet another tax rise from a party that already wants to hike taxes to their highest level in peacetime history’.
Labour also wants a £560million tax on the owners of holiday homes. Under the plans, second properties in England used for holidays would be subject to an average tax bill of £3,200, double the current council tax rate.