Pay, Nationalisation and Takeovers: How Our Politics is Failing Wealth Creation

Three separate items of news today illustrate the gaping hole that exists where the UK’s political parties should be offering their vision and agenda for stewardship to encourage long term wealth creation.


First there is all party concern about the Melrose takeover bid for GKN. The fear is that this is an asset stripping bid, not an investment in building a strong engineering business for the long term. But, because there is no recognition of the value of stewardship, unions and politicians use the language of national security.


Second there is the attack by CBI s Chairman Paul Drechsler on Labour nationalisation plans. We need to move beyond the ‘public ownership is better’ / ‘no it’s not’ debate to a discussion about new hybrid forms of ownership where employees have a stake, where a purpose beyond profit is clearly stated, and the government has some criteria for selecting private sector partners who demonstrate these values. This makes the Trust Test being developed by BSI and Tomorrow’s Company very timely.


Thirdly there is government minister Dominic Raab criticising Persimmon’s Jeff Fairburn and his £100m bonus of which he will only be taking £75m. Raab says ‘that’s why the government has introduced measures on corporate governance and is encouraging shareholders to take a greater grip’.


Only when we have pension funds and asset managers who truly offer the public the option of investing in a philosophy of long term wealth creation will shareholders be in a position to put these things right.


It’s not remuneration or nationalisation or takeovers in isolation that is wrong. It is the ownership and stewardship vacuum at the heart of our listed companies.