Deputy prime minister Nick Clegg has urged firms to increase employee share ownership in a bid to create a “John Lewis economy”.
Liberal Democrat ministers are planning to bring employee ownership “into the bloodstream” of Britain’s economy. During an event hosted by the City of London Corporation and the Centre Forum think-tank on Monday, Clegg suggested this will assist growth as employee-owned companies tend to perform strongly.
He claimed such a move would bring a new dawn of “responsible capitalism”, adding that this kind of ownership has been a “touchstone” of liberal thinking since the 19th century. Clegg is planning to host a summit on the issue later in the year.
“We don’t believe our problem is too much capitalism – we think it’s that too few people have capital,” he said. “We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like.”
Clegg stressed that the idea of employee ownership is an undervalued alternative to increasing growth. He said: “I don’t value employee ownership because I believe it is somehow ‘nicer’ – a more pleasant alternative to the rest of the corporate world. Those are lazy stereotypes.
“Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better.
“Lower absenteeism. Less staff turnover. Lower production costs. In general, higher productivity and higher wages. They weathered the economic downturn better than other companies.”
Lib Dem business minister Ed Davey has been placed in charge of finding potential stumbling blocks to employee ownership so that they can be removed. In particular, he will be examining the possibility of employees being given a universal right to request shares in the firms for which they work.
Shadow business secretary Chuka Umunna said Clegg was following Labour’s lead on responsible capitalism.
“Ed Miliband has led calls for a more responsible capitalism and, despite having first scorned Labour’s initiative, David Cameron now claims he has become a convert to the cause,” he said.
“The question for both him and Nick Clegg is whether they have the courage or the conviction to make the change that is needed. If Nick Clegg wishes to follow Labour’s lead in promoting shareholder activism and engagement, that is welcome.”