Labour finds a radical new idea

John McDonnell’s speech at the Labour party conference was no triumph, but it did at least get people talking.

Dr Matthew Partridge
By
published
in Features

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John McDonnell has come up with a radical new idea
(Image credit: 2018 Getty Images)

John McDonnell's big Labour conference speech "was hardly a rhetorical triumph", says the Economist. However, the shadow chancellor's proposal to force firms to give shares to their workers "has provided the Labour Party with the closest thing that it has to a radical new idea". Although the specific plans are "badly worked out", even critics will have to agree "there is an interesting debate to be had" about employee ownership.

"To say there's problems with it is an understatement," says Sam Dumitriu on CapX. While employee ownership is common in Silicon Valley, "what works for Google might not work for Marks & Spencer". In any case, what McDonnell proposes is "stock that can't be sold on" with most of the money going to the Treasury. The new rules could also hit employment "firms that are close to reaching 250 employees "might put off hiring, or outsource jobs to a subsidiary". Overall, these measures "would see innovation squashed and workers left out in the cold".

Not so fast, says Aditya Chakrabortty in the Guardian. The proposals aren't "perfect", and caused "outright war" when they were tried in Sweden, but something needs to be done. Workers have "been getting smaller and smaller slices of the pie", as Andy Haldane, the Bank of England's chief economist, has noted.

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"Employees get proportionately less now than they did at the very outset of the Industrial Revolution in the 1770s." Yet this is not solely about money it's about giving people "a stake and a voice in the enterprises in which they spend most of their waking hours".

Dr Matthew Partridge
Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri

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