Nick Clegg calls for more employee ownership
The deputy prime minister wants more companies to offer shares to their workers to improve productivity and growth, saying he hopes the measures will create what he calls a “John Lewis economy”.
Mr Clegg thinks employee ownership will counter the “crony capitalism” that contributed to the 2007/8 financial crisis and tipped the country into recession.
An “unrestrained economic elite” driven by short-termism and recklessness brought the economy to the edge and has to be restrained by a more responsible capitalism, Nick Clegg said in a speech in the City of London.
Mr Clegg hopes greater participation by employees will help rebalance a business environment “monopolised by a minority”.
“We now have an economy driven by immensely powerful vested interests … The remedy, put most simply, is a redistribution of power,” Mr Clegg said.
Firms with high levels of worker ownership had weathered the economic downturn better, had higher productivity and suffered from lower absenteeism, Mr Clegg believes.
We don’t believe our problem is too much capitalism. We think that it’s that too few people have capital. Nick Clegg
‘John Lewis economy’
He praised the model of the employee-owned retailer John Lewis, Britain’s biggest department store, saying he would like more companies to adopt its mutual structure as a way of creating a more sustainable economy.
Britain faces years of austerity to eradicate a record budget deficit following the financial crisis and risks a return to recession as its economy stagnates.
“We don’t believe our problem is too much capitalism. We think it’s that too few people have capital. We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like,” he said.
MPs across Britain’s political spectrum have been calling for curbs on the perceived excesses of capitalism, aiming in particular at executive salaries.
The political drive, accompanied by greater regulation of the banking sector, has been mirrored by public protest in the form of a global wave of “Occupy” anti-capitalist camps including one still pitched in London’s financial district.
Read more: FactCheck - why Clegg's right about the John Lewis economy?
Right to request shares
Later this month, Business Secretary Vince Cable will outline measures to force companies to detail with greater clarity how much they pay top executives, and require shareholders to vote on executives’ levels of compensation.
Mr Clegg believes the government would examine whether tax breaks should be offered to encourage more employee ownership.
It would also consider whether employees should be given a right to request shares in the companies they work for, particularly where the firms were not already publicly traded.
Britain has around 5,500 cooperatives, but most are relatively small compared to the two largest, John Lewis and the Co-operative Group, whose business ranges from food retailing to banking and funeral services.
