John McDonnell: Workers in line for £500 payouts under Labour employee ownership scheme
A Labour government would force big firms to make their employees part-owners in a move which could be worth up to £500 a year for almost 11 million staff, John McDonnell will say today.
The Shadow Chancellor will say companies with 250 or more staff would have to sign them up to an ‘Inclusive Ownership Fund’ shareholding scheme.
Employees would receive dividend pay-outs at the end of the year worth up to £500, with any excess paid into a national pot that would go towards improving public services.
The shares would also give employees voting rights to help steer the direction of their company.
In his keynote speech to the annual Labour conference, Mr McDonnell will say the plan would give workers “a greater say, and a greater stake, in the rewards of their labour”.
But the Conservatives branded the proposal “another tax rise from a party that already wants to hike taxes to their highest level in peacetime history”.
Labour said the mandatory IOF scheme would apply to at least 10.7 million people – while firms with fewer than 250 staff would be free to sign up voluntarily.
The party estimated that excess cash from the scheme would hand a £2.1bn boost to government coffers by the time it is fully rolled out over the course of a five-year parliament.
Mr McDonnell will tell the conference hall in Liverpool: “Workers, who create the wealth of a company, should share in its ownership and, yes, in the returns that it makes.
“The evidence shows that employee ownership increases a company’s productivity and encourages long term thinking.”
He will say the “collective investment that we as a society make” also helps businesses to grow – and should be paid back for its efforts in a “social dividend”.
Excess cash from the shareholding pots would go towards “the social security system which supports those who have retired, are unable to work” or need other help, he will explain.
“We will be a Labour government committed not just to meet the challenges facing today’s generation but to secure the long-term future prosperity of the next,” Mr McDonnell will say.
But Chief Secretary to the Treasury Liz Truss blasted: “This proposal is yet another tax rise from a party that already wants to hike taxes to their highest level in peacetime history.
“It would make it harder for local businesses to take on staff and pay them a good wage.”
Labour has already announced it would force companies to allocate a third of their boardroom seats to workers.