Rich on borrowed time, warns Jeremy Corbyn

Harry Yorke
Labour leader Jeremy Corbyn in Liverpool - Copyright ©Heathcliff O'Malley , All Rights Reserved, not to be published in any format without p

Jeremy Corbyn has warned that the rich are on “borrowed time” as Labour unveils plans today for a multibillion pound raid on companies which would force them to handover 10 percent of their shares to workers.

The Labour leader last night said he would break the mould of “neoliberal economics” which had dominated political thinking since the Seventies, adding that a Labour government “was coming” for the “very richest in our society”.

Speaking at The World Transformed rally at the party’s conference in Liverpool, Mr Corbyn said: “What we're doing is challenging a neoliberal ideology that took over the world in probably, let's say, 1970s or thereabouts.

"The whole idea of tax cuts, reduce the size of the state, increase privatisation and trickle-down economics later inherited by Margaret Thatcher.”

In a day dominated by Brexit and his party’s anti-Semitism row, Mr Corbyn also made clear that Labour would back a second referendum if its members demanded it and refused to apologise to the Jewish community for his previous remarks.

Meanwhile, John McDonnell will unveils plans on Monday for mandatory share ownership schemes for up to 11 million employees, which critics have described as a “marxist” plot  to “control businesses”.

In one of the most interventionist moves in recent times, the shadow chancellor will put forward radical proposals which would force companies with more than 250 employees to set up so-called “inclusive ownership funds”.

Labour Party Shadow Chancellor John McDonnell  Credit: Neil Hall/EPA

On Sunday the Confederation of British Industry (CBI) warned that Labour’s proposals were a “diktat” which would send “alarm bells ringing in boardrooms” across the world, adding that they only encouraged “investors to pack their bags” and take their custom elsewhere.

Carolyn Fairbairn, the organisation’s director-general, said: “Business has been resilient in the face of uncertainty, but Labour’s anti-business positioning is starting to bite. It sounds like yet another new tax that adds to the impression that Labour sees business as a bottomless pit of funding.”

Addressing party delegates, Mr McDonnell will promise to introduce new legislation to make the schemes mandatory as he calls for workers to be given a greater “say in the management and direction of their company”.

The dividends paid to each shareholder will be capped at £500 per year, while Labour envisages an annual surplus of £2.1bn, which will be placed in a national fund to be redistributed on public services.

Workers' fund representatives will also have voting rights in companies' decision-making processes in the same way as other shareholders.

However, there are fears that the plans, which will force companies to handover at least one percent of shares annually over 10 years, will cause a downturn in the markets this morning, as investors digest the prospect of share dilution.

Critics also pointed out that unlike many stock ownership plans, which are already widely available, employees would not be able to sell their shares due to them being placed in an “asset lock”.

Last night Robert Jenrick, the Exchequer Secretary to the Treasury, dismissed the proposals as a “highly interventionist...Marxist approach” which showed that Mr McDonnell was attempting to “control businesses” rather than empower workers.

“If this policy were to go ahead it would make the UK a much less attractive place to invest, without giving people a greater stake in the free market model,” he told The Daily Telegraph.

“These plans aren’t empowering workers, in fact they show that the Labour Party doesn’t actually trust working people to own shares at all.

“Workers won’t benefit from this, in the sense that they cannot sell their shares to purchase homes or look after themselves. Their shares will be a convoluted, centrally controlled trust.

“It is highly interventionist, it will damage businesses and strangle entrepreneurs, without giving working people real shares which they can sell when they want to.”

His comments were echoed by Liz Truss, the Chief Treasury to the Treasury, who said: “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.”

Addressing the gathering in Liverpool, Mr McDonnell will say that the creation of the funds will help redress the growing inequalities in society and a decade of wage stagnation.

"Workers, who create the wealth of a company, should share in its ownership and, yes, in the returns that it makes,” he will say.

"The evidence shows that employee ownership increases a company's productivity and encourages long-term thinking. The shareholding will give workers the same rights as other shareholders to have a say over the direction of their company.

“We believe it's right that we all share in the benefits that investment produces. That's why a proportion of revenues generated by the inclusive ownership funds will be transferred back to our public services as a social dividend.

"Mobilising billions that could be spent directly on the social security system which supports those who have retired, are unable to work, or need society's support in other ways."