Employee Shareholding and Participation in Corporate Governance

Lord Liddle Excerpts

Thursday 11th October 2018 Lords Chamber

[Lord Liddle (Lab)]

My Lords, I think some people will find the reason that I put my name down to speak in this debate amusing. I felt that the reaction to the proposals put forward by Jeremy Corbyn and John McDonnell at the Labour conference on these questions was harsh. I thought that the employers’ association made a great mistake in condemning them. It is unusual for me to agree with Mr Corbyn and Mr McDonnell but I agreed with them on this question. It requires rigorous thinking, however, about how we go forward and the idea of a Lords committee is a very good one.

Workers co-ops can work in some circumstances but they do not work in all of them. I am in favour of employee shareholding but we have to make sure that employees do not build up such a big stake in one company that all their eggs are in one basket if that company gets into trouble. You have to have means of dealing with that. I do not think that proposals for employee shareholding should get mixed up with proposals to increase tax on the corporate sector, which are in the McDonnell plan. We should look again at the Meidner plan, which the Swedes put forward in the 1970s, and think about why they backed off from that and how it could be improved.

As far as workers on the board go, as someone who learned about industrial relations in the Oxford school I was initially very sceptical. There are inevitable conflicts of interests in business, which is why trade unions exist, so we cannot always assume that we would get a unity of purpose between worker representatives and management. But I changed my mind about that in the 1970s and was a great enthusiast for the Bullock report—indeed, my first job as a special adviser in government was to write briefs for Bill Rodgers, now the noble Lord, Lord Rodgers, who was on the Cabinet committee deciding what to do about it.

I make two reflections on that. First, as well as putting workers on the board you have to have a bottom-up involvement of workers at all levels of the company. We could have done more in government to build on the European information and consultation directive to ensure that. Secondly, if there are to be trade unionists on the board—and I support that—they should be elected by the workers in the company, not appointed by general secretaries. That is an important principle. When it comes to international companies, we have to look at the experience of European works councils and see how they can be built on and improved.

This is an enormously important subject. I am very sorry that there are not more government Members present in the Chamber today because we have to build a consensus. Just as Keynes reformed capitalism in the 1930s to help it survive, we have to do the same today—and part of that includes serious examination of proposals for employee shareholding and workers on the boards.