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Categories:Politics

Clegg: More individuals must have stakes in their firms

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Deputy Prime Minister Nick Clegg has called for employees to be given the right to request shares in their firm.

As the debate on how to tackle what is becoming known as crony capitalism mounts, Clegg’s intervention aims to redistribute capital, and by extension power, to help undermine the danger of the economy becoming “monopolised by a minority”.

In a speech to the Corporation of London today, Clegg said the economy is in danger of serving only the narrow interests of a few “immensely powerful vested interests” at the expense of the majority.

He said: “We do not believe the problem is too much capitalism, we think it is that too few people have capital. We need more individuals to have a real stake in their firms.

“That is the core of responsible capitalism, power in the hands of the people.”

All three main parties have moved onto the political battleground of creating a more responsible capitalism, with the Coalition to set out plans for shareholders to have a binding vote on executive pay and Labour calling for a company’s main shareholders to be given responsibility for appointing board members.

Employment relations minister Ed Davey and Treasury chief secretary Danny Alexander - both Liberal Democrats - are working on proposals for the Coalition. Extending the various tax reliefs on the Enterprise Investment Scheme from external investors to employees and restoring tax breaks to employee benefit trusts are both being examined.

CMS Cameron McKenna partner Nicholas Stretch says firms will be wary that if Clegg’s plan is made compulsory, it might end up becoming a burden on firms.

He says: “The imposition of compulsory pension savings, for example, has come at a significant cost to employers. Companies would be concerned if they had to make share scheme awards to all employees without having flexibility to reduce cash earnings. This would amount to an across the board pay increase, which they may not be able to afford.”

In his speech, Clegg also attacked the FSA’s “spectacular failure” to properly regulate the City.

He said: “Regulator’s are meant to guard vigilantly against industry excess. But they turned soft - either captured by or intimidated by those they were supposed to keep in check. And, just like the politicians, just like the industry, the FSA ignored the alarm bells ringing.

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Readers' comments (3)

  • Capitalism by its very nature relies on a high degree of greed from investors who want to profit, employees investing in their own firms sounds good on paper, but as most are only small cogs in big machines, can they bring anything to the table to generate profit.

    Profit, for those who don't understand capitalism, is the engine of growth and the generator of employment.

    To invest in an employers firm, would probably challenge the understanding of most ordinary working people, who just want to go to work, do their job, get paid and go home to the families and enjoy life.

    Would employee investors have protection against redundancy or liquidation, employees have these risks at the forefront of their minds nearly all the time, especially in the middle of the worst recession since the 30's

    Clegg should get re-registered as a Labour MP and get real.

    Most employees do not have the resources to invest in their employers firm.

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  • I heard a snippit of his speach today. He says that this will help cut sick days. Just cut off all sick pay. You will then see a marked reduction in the number of days industry and public sector lose each year. Never mind giving them a stake in the company. All that will happen is that the lazy will benefit from those who have to cover for them and get the job done.

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  • If the company is publicly quoted, there is nothing to stop employees buying shares in their employer now.

    If it is not publicly quoted, employees would be foolish to buy them (difficulties of sale), unless they were taking over the company.

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