Employee Shareholding and Participation in Corporate Governance

Lord Young of Cookham Excerpts

Thursday 11th October 2018 Lords Chamber

[Lord Greaves (LD)]

My Lords, I congratulate the noble Lord, Lord Haskel, on getting this short debate on a topic that is suddenly topical again, quite rightly. The Question refers to two different ways to involve employees in the bodies they work for: greater employee shareholding and participation in corporate governance, which together might loosely be called industrial democracy. I believe they go together.

If we believe in the importance of individual people’s ability to control their lives autonomously but co-operating with other people in society in communities—this is fundamental to my political beliefs as a Liberal—this is a vital issue. Discussion of it has waxed and waned during my lifetime. Unfortunately, there has been a long period of quiescence, both in my party, the Liberal Democrats, and more generally, but in my lifetime it has ranged across the political spectrum, from the Liberal party, the Industrial Co-partnership Association, now the Involvement and Partnership Association, the Co-operative movement generally, the Institute for Workers’ Control, the Employee Ownership Association—I mention that as a plug for a wonderful pamphlet that has just been written by my noble friend Lady Bowles; perhaps she will refer to it in her speech—and, most recently, the announcements from John McDonnell, which have plonked this issue firmly back on the political agenda. He is to be congratulated on doing that.

I have some quotes that show how it has spread across the political spectrum. The Institute for Workers’ Control marched under a banner saying:

“No man is good enough to be another man’s master”.


Who can disagree with that? But look at the way we run society. The foreword of a report on the Liberal co-ownership proposals in 1948 was written by that great Yorkshire Liberal Elliott Dodds, who referred to,

“the saving sense of proprietorship”,

which says the same thing in rather different language. He goes on to write:

“This can be done in one way and in one way only—by laying it down that they shall have the opportunity to share in the direction and fortunes of the enterprises”,


in which they are employed. The motion passed at the 1948 Liberal Party assembly—before even my time—said that the employee is,

“to be entitled to elected representation on the board of directors”.

So the idea has been around for a long time, across the political spectrum.

At the first election I fought, unsuccessfully, in February 1974, the Liberal Party election manifesto said:

“Firstly, employees must become members of their companies just as shareholders are, with the same clearly defined right. Secondly, it must be accepted that directors in public companies are equally responsible to shareholders and employees. Employees must be entitled to share in the election of the directors on equal terms with shareholders”.


The high-water mark of the campaign for this kind of thing was the Bullock report in January 1977, the report of the Committee of Inquiry on Industrial Democracy, chaired by Lord Alan Bullock, which included such luminaries as Jack Jones, Clive Jenkins and one David Lea, now the noble Lord, Lord Lea of Crondall, who I look forward to hearing later. This was a thoroughgoing statement of co-partnership. The politics of that time meant that it did not succeed, but the majority report, at chapter 9, paragraph 13, reads:

“Our conclusion is therefore that there should be equal representation of employees and shareholders on company boards”.


There are lots of questions in the modern age relating to multinational companies, the global economic and financial environment, the flexible economy, the gig economy, bogus self-employment and all the rest, and how you deal with the public sector. I believe that this is a topic whose time has come again, both for employee share ownership and involvement that way, and involvement in the institutions of the companies. We had a letter this morning from the noble Lord, Lord McFall, the Senior Deputy Speaker, asking for ideas for a special inquiry committee for 2019-20. This is a brilliant topic on which the House of Lords could do a lot of useful work and I invite everybody here who is interested in the topic to write to the noble Lord, Lord McFall, and suggest that he put it forward.

[Lord Young of Cookham (Con)]

My Lords, we are constrained on time and I urge all noble Lords to participate in the corporate governance of the House and stick to four minutes.