Labour unveils shares plan for workers: And 2BN 'social dividend' fund for the government
Labour would force all large firms to give workers shares worth up to £500 a year each, John McDonnell has said. In his main party conference speech, the shadow chancellor set out plans for “inclusive ownership funds”.
He also announced that the water industry in England would be the first to be re-nationalised under Labour. Existing bosses would be fired and control handed to workers, local councils and customers, with new executives hired on reduced salaries.
He told Labour delegates: “There will be unprecedented openness and transparency in how the industry will be managed. “We are ending the profiteering in dividends, vast executive salaries, and excessive interest payments.
“Surpluses will be reinvested in water infrastructure and staff, or used to reduce bills. Real investment will allow the highest environmental standards.”
Ownership of the existing water and sewerage companies would be transferred to new Regional Water Authorities, with day-to-day operational management in the hands of professional management and the wider workforce.
Existing shareholders would be compensated with bonds and all staff would be transferred to the same jobs, “except for senior executives and directors, whose posts will be re-advertised on dramatically reduced salaries capped by our 20:1 pay ratio policy”, Labour sources said.
The new authorities would be self-financing, along similar lines to Transport for London, which manages the London Underground, rail and bus services.
Labour also plans to nationalise the railways, energy and mail industries.
Mr McDonnell also announced:
- Plans for a new Public and Community Ownership Unit at the Treasury to bring PFI contracts in-house
- Plans to force companies to “sign up to the Fair Tax Mark standards, demonstrating transparently that they pay their fair share of taxes”
- A new international forum to deal with future economic crises, headed by Nobel prize-winning economist Joseph Stiglitz
Plans to give workers in private industry more of a say – and a financial stake – in industry are a key plank of Labour’s industrial strategy.
Since its conference opened in Liverpool on Sunday, Labour has already announced plans for worker representation on company boards and to make employers provide up to 10 days’ paid leave for victims of domestic violence.
Under Labour’s “inclusive ownership fund” proposal, Mr McDonnell said workers would be given a financial stake in their employers and more say over how companies are run.
The amount of share capital available to workers would be capped at £500, with the rest – estimated at £2.1bn a year by the end of a five-year Parliamentary term – going into a fund to pay for public services and welfare.
‘Broadening of ownership’
The scheme would apply to companies with more than 250 workers, although smaller firms could set up inclusive ownership funds if they wanted to.
Labour calculates that 40% of the UK’s private sector workforce – some 10.7 million people – would initially be covered by the scheme. Dividend payouts would be made at a flat rate to all employees of the firm.
The funds would be held and managed collectively, with a bar on selling or trading their shareholdings. The system would be similar to that operated by employee-owned retailer John Lewis.
But payments from the fund would be made to individual, eligible employees, Labour sources said.
Workers’ fund representatives would have voting rights in companies’ decision-making processes in the same way as other shareholders. Labour aides said the creation of the funds would help redress growing inequalities after a decade when average pay has not increased in real terms.
But the dividend payments would not be available to state employees – including workers in industries such as water, which Labour hopes to nationalise.
Labour sources say the £2bn social dividend fund would ensure public sector workers and employees of smaller firms also benefited from what the party calls a “broadening of ownership in our economy”.