Inclusive Ownership Funds are a classic, almost pointless Corbyn Labour policy that plays well to the gallery that elected Jeremy Corbyn Labour leader, twice, many of whom work or worked in the public sector.
IOFs deserved to be mocked in the same way we used to deride Margaret Thatcher’s share owning democracy. Although to be fair to Thatcher, one only had to be 18 or over with a few quid to invest in order to participate in her pipe dream.
Where Thatcher spoke of a share owning democracy for all, regardless of employment status, McDonnell speaks of inclusive capitalism, whatever that means, for those employed by a minority of large businesses in the private sector, defined by the number of people they employ.
The IOF would only apply to businesses in the private sector employing 250 staff or more.
Only 10,220 or 0.4% of all the businesses in the UK registered for VAT employ 250 staff or more.
Ergo, the vast majority of those in work in the private sector, in the UK, work in Small and Medium Size Enterprises, employing 249 or fewer staff.
As at 2018:
- 2,384,805 or 89.3% of businesses employ between 0 and 9 staff
- 233,040 or 8.7% of businesses employ between 10 and 49
- 41,380 or 1.6% of business employ between 50 and 249.
It will not, therefore, “deliver, and widely, a form of employee share ownership” in the private sector and that before we consider its zero impact on those working in the public and voluntary and community sectors.
That minority of beneficiaries drawn from the private sector would obviously dwindle further as a result of Labour nationalising their employers.
Odds on, the beneficiaries of this policy would be overwhelmingly male, given the nature of the businesses in the private sector, employing 250 staff or more.
Moreover, the EU definition of a Small and Medium Size Enterprise is broader than that Labour proposes to employ in the case of IOFs.
The main factors determining whether an enterprise is an SME are:
- staff headcount
- either turnover or balance sheet total
A business may employ 249 staff or less, but, if its annual turnover exceeds 50m Euros or its balance sheet value is more than 43m Euros then it is not an SME.
Labour’s more tightly drawn definition of an SME would, therefore, exclude highly profitable businesses, relative to their headcount.
Would the, for example, family businesses of someone like Jon Lansman, founder of very white, very middle class, self appointed People’s Momentum, be excluded from IOFs?
This risible scheme is clearly based on the assumption that bonus schemes improve productivity and do not result in, for example the mis-selling of PPI. At least with the schemes that resulted in PPI mis-selling the workers knew what they had to do to earn a bonus.
In the case of Labour’s scheme they would have no idea of what they would need to do to generate an increased dividend for their company. A dividend in which they would not always fully share.
The possibility of at most an extra £500 pa (not subject to tax in any form?) is a bonus scheme by any other name and an approach, by definition, limited to (a minority of) profit making companies in the private sector.
There is no empirical evidence that worker share ownership actually results in improved productivity, certainly in comparison with other ways in which to improve it. The now 70 year old, evolving management practices at Toyota, Burnaston, are a case in point.
An inclusive management approach is one that devolves power and responsibility down to the lowest levels within an organisation, maximising the autonomy which an individual worker exercises over how they carry out their daily work.
Poor productivity in all the three sectors of the UK economy is down to poor management practices in all three sectors of our economy. A point Boris Johnson once made when saying leaving the EU would not be a remedy to a century old tradition of under investment in staff, capital, innovation and at low points in the economic cycle, bizarrely, staff training and advertising.
Is there any connection between the unwillingness of our political class to place the blame for poor productivity where it mostly lies and the fact that that class happens to be drawn from the same strata of society that dominate middle and upper management across all sectors of our economy?
I gather the trades unions, the majority of whose members are to be found working in the public sector, expect to have a key role in managing these Inclusive Ownership Funds?
Labour are very coy about the likely negative impact of this policy and its proposed nationalisation plans on the value of the occupational and private pension pots of current and future (working class) pensioners.
Most public sector pensions, those of civil servants and NHS staff, are paid out of general taxation so are immune from the impact of policies like those Labour are currently espousing.
Mrs Thatcher’s Sids, her army of small investors new to the joys of venturing it all on red in the casino that is the Stock Exchange, invariably sold their shares rather than holding on to them. An option that will not be open to workers participating, willingly or unwillingly, in IOFs. They will not be able to sell their shares; use them as security; take them with them should they leave their current employment or have the right to transfer them in life, or death, to another person.
Not so much reheated pap then as cold, congealing, thin gruel the morning after the night before.
This is very much a policy for the few and not the many. And more evidence that ‘Honest’ John McDonnell and his way out left economic advisers know next to nowt about effective, inclusive, worker participation; management; business, trade and industry.
In that regard, the brains behind Corbyn’s hand-picked Shadow Cabinet and those behind Johnson’s hand-picked Cabinet now mirror each other exactly.