In the first in our new series of Co-op Policy blogs, James Wright reflects on what the UK government's underwhelming business reforms say about the Prime Minister's stated ambitions to foster a more inclusive economy.
Last week the UK government published its final plans for business reform. These changes to corporate governance rules could be welcomed as small steps in the right direction. But they also point to a big gap between globally accepted conceptions of an inclusive economy and what the government is practically doing to make this a reality in the UK.
"Top-down tinkering with company law and corporate governance for large businesses can make improvements at the margins, but government needs to be much bolder."
Corporate Governance Reform was presented as a flagship part of the Prime Minister’s declared ambitions to create an ‘Inclusive Economy That Works For Everyone'. From the outset many co-ops liked the sound of the ‘workers and customers on boards’ rhetoric. So we are somewhat disappointed to see the government’s ambitions diminished in its final policy choices.
In the end we are supportive of policy that opens executive pay and stakeholder impacts in big business to greater scrutiny and gives employees more of a voice at board level. But while this top-down tinkering with company law and corporate governance for large businesses can make improvements at the margins, if the UK government is serious about creating a genuinely inclusive economy - one that offers more opportunity, power and a share of wealth for workers and communities - it needs to be much bolder.
For one thing it could start with what we already have - 7,000 co-ops - and make it easier for people to run co-ops and establish new ones. The government's recent proposal to ease audit burdens on growing co-ops points the way and we urge all co-ops to respond positively to the consultation.
Plus the recent very sensible decision not to force mutual societies to file 'persons of significant control' registers with the FCA - the whole point of co-ops is to ensure such persons don't exist - demonstrates that Whitehall can be made to understand and accommodate the co-operative difference when properly pressed. But there is a lot more to be done.
"When it comes to developing practical systems of governance that give voice to a range of stakeholders, policymakers and big business can learn a lot from co-ops."
And when it comes to developing practical systems of governance that give voice to a range of stakeholders, such as workers, customers and communities, policymakers and big business can certainly learn a lot from the co-op movement.
What government can do right now
The UK government has practical opportunities right now to pursue a more inclusive business policy by:
- Granting a Co-op Sector Deal under the Industrial Strategy, focused on making co-op options more user-friendly through improvements to the co-op corporate framework
- Supporting the development of co-op forms of 'WorkerTech' in response to the Taylor Review
- Providing people in, or transitioning to, self-employment with better information on their co-op options
- Reversing recent changes to Social Investment Tax Relief that have withdrawn support for communities to pool their resources to own land and assets for community benefit
- Scrapping exclusive tax breaks that award £230m a year to a handful executive shareholders and instead investing in support for broad-based worker ownership
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