The Inclusive Ownership Fund, announced today by John McDonnell at Labour conference, has the potential to be the left’s Right to Buy: a totemic policy capable of building a new political constituency for the party while creating a durable shift in how power and wealth flow in society. Critically, it puts democratic ownership at the heart of a deep institutional turn capable of driving a transformative progressive economic agenda. Of course, there are important questions of detail to work through, but it rightly puts models of ownership at the heart of questions of political economy and opens a vital new terrain for political debate and action.
The policy – drawing on a report I co-authored with the New Economics Foundation – would require companies with 250 workers or more to establish an Inclusive Ownership Fund, with firms required to transfer 1 per cent of equity annually into the company’s fund, up to 10 per cent of the total. The funds would be held and managed collectively, with a bar on selling or trading their shareholdings. The fund would have voting rights in companies’ decision-making processes in the same way as other shareholders, embedding labour interest in the governance of the firm.
At the same time, workers – as part-owners – would receive a proportionate individual share of any dividends, providing a real material benefit for ordinary workers, with 40 per cent of the UK’s private sector workforce covered by the policy. Labour has said that the worker dividend bonus would be capped at £500; any further dividends would go to a national fund to broaden common ownership and help fund public investment. The Inclusive Ownership Fund model, therefore, would act as a powerful mechanism to broaden ownership and control of businesses to workers and other key stakeholders over time.
The idea is a political Rorschach test. For its critics, it is animated by a politics of hate and confiscatory, with apocalyptic scenes painted of companies decamping. Yet the Inclusive Ownership Fund also has the potential to have broad political appeal and drive a new economic common sense. For some, it can make real the promise of a share-owning democracy, which given the collapse in UK ownership of the FTSE – both individually and through pension funds – is a dream on life support.
For others, it is a mechanism for the John Lewis-isation of the economy, increasing share ownership and building long-term partnerships between labour and capital. More radically, it can be seen and act as an institution of socialisation, the potential bleeding edge of “Corbynism 2.0” that can democratise economic power and reward in the UK.
Critically, given the concentration of economic ownership in the UK and stagnant real wages, giving workers and broader society more of a stake and a say in the economy seems likely to be a political sweet spot for the left. The richest 10 per cent own nine times more wealth than the bottom half of the population combined, while most people have little meaningful economic control or corporate governance rights to shape their place of work.
The reshaping of the modern corporation into a vehicle for the maximisation of external shareholder value – with no governance rights for labour and little opportunity to share in the wealth they create – combined with highly unequal ownership of capital opens the opportunity for a more pluralistic and inclusive vision of the firm to take shape. The policy, moreover, builds on the back of an increasing recognition of the centrality of ownership in shaping the distribution of power and reward in society, and the nature and purpose of enterprise. For example, IPPR’s Commission on Economic Justice recommended a wide range of common ownership models, from a national Citizens’ Wealth Fund paying a social dividend to scaling employee owned firms.
There are important questions and details that need to be ironed out, from the pace and scale in which the funds would be built up, whether the dividend would increase over time or remain capped, to how the share issuance would work in practice, including how it would treat multinationals and subsidiaries operating in the UK. This is an important challenge, but if people are serious about broadening ownership, extending power, and giving people more tangible forms of control, then this is an idea that deserves serious consideration.
Ownership matters. Who owns and controls the productive wealth of nations and communities is fundamental to how an economic system operates and in whose interests, intimately shaping the distribution of power and reward within society. Today’s announcement is a crucial opportunity to debate and ultimately reshape economic ownership in the UK, to ensure everyone can have a stake and say in the wealth they create. Scaling inclusive, rooted and democratic models of ownership in place of the concentrated, footloose and extractive status quo is the institutional turn we need to own the future.
Mathew Lawrence tweets @dantonshead
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