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Labour conference: John McDonnell unveils shares plan for workers Labour conference: John McDonnell unveils shares plan for workers
(about 4 hours later)
Labour would force all large firms to give shares to their workers worth up to £500 a year each, John McDonnell will say later. 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 will set out planned "inclusive ownership funds". In his main party conference speech, the shadow chancellor set out plans for "inclusive ownership funds".
Firms would have to put 1% of their shares into the fund every year up to a maximum of 10%. He also announced that the water industry in England would be the first to be re-nationalised under Labour.
The Confederation of British Industry said Labour's "diktat" would "encourage investors to pack their bags". Existing bosses would be fired and control handed to workers, local councils and customers, with new executives hired on reduced salaries.
But Mr McDonnell told the BBC the UK was lagging way behind countries such as Germany in terms of rates of employee share ownership and it would boost productivity and encourage longer-term corporate decision making. He told Labour delegates: "There will be unprecedented openness and transparency in how the industry will be managed.
"1% is not particularly radical," he told BBC Radio 4's Today. "This is an idea whose time has come but should have come 20 years ago." "We are ending the profiteering in dividends, vast executive salaries, and excessive interest payments.
"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." "Surpluses will be reinvested in water infrastructure and staff, or used to reduce bills. Real investment will allow the highest environmental standards."
He said that the policy was about local control, saying he did not want to "swap one remote manager for another".
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 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.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.
Further announcements are expected to include: 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 party's power brokers have also agreed on wording for Tuesday's motion on what the party should do about Brexit if it cannot get a general election. It keeps "all options on the table" on Brexit, including the possibility of campaigning for a new referendum. 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.
In Monday's speech, Mr McDonnell will tell delegates that Labour's inclusive ownership plans would give workers a financial stake in their employers and more say over how companies are run.
The amount 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''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.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.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.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.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.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.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.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".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".
'Another tax rise''Another tax rise'
Mr McDonnell will tell Labour delegates in his speech at 12:15 BST: "Workers, who create the wealth of a company, should share in its ownership and, yes, in the returns that it makes. Mr McDonnell told Labour delegates: "Workers, who create the wealth of a company, should share in its ownership and, yes, in the returns that it makes.
"We believe it's right that we all share in the benefits that investment produces.""We believe it's right that we all share in the benefits that investment produces."
Ahead of the speech, he dismissed claims of an anti-business agenda, telling the BBC that a future Labour government would support the vast majority of "entrepreneurial and ethical" British firms to the hilt.Ahead of the speech, he dismissed claims of an anti-business agenda, telling the BBC that a future Labour government would support the vast majority of "entrepreneurial and ethical" British firms to the hilt.
But he said those which engaged in aggressive tax avoidance and whose "standards did not match up to the rest" could expect a tough response from the government.But he said those which engaged in aggressive tax avoidance and whose "standards did not match up to the rest" could expect a tough response from the government.
Carolyn Fairbairn, director general of the CBI, which represents big business in the UK, said Labour was "wrong to assert that workers will be helped by these proposals in their current form".Carolyn Fairbairn, director general of the CBI, which represents big business in the UK, said Labour was "wrong to assert that workers will be helped by these proposals in their current form".
She 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."She 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."
The Conservatives said Labour's proposal was "yet another tax rise" that would make it harder for firms to "take on staff and pay them a good wage".The Conservatives said Labour's proposal was "yet another tax rise" that would make it harder for firms to "take on staff and pay them a good wage".