First two paragraphs are golden.
Bring it on.
Bring it on.
A Labour government would confiscate about £300bn of shares in 7,000 large companies and hand them to workers in one of the biggest state raids on the private sector to take place in a western democracy, according to analysis by the Financial Times and Clifford Chance.
The UK’s 2.6m landlords would also face a “moment of reckoning” if Labour won the next general election after shadow chancellor John McDonnell said he wanted a “right to buy” scheme for private tenants as well as higher taxes on landlords.
With British politics in turmoil and the chances of a snap general election fast increasing, the FT is this week examining the consequences for the UK economy of a Labour government — which would be the most leftwing in modern history.
The Labour leadership is determined to shift power away from bosses and landlords and to workers and tenants.
The £300bn share seizure would be the consequence of Mr McDonnell’s plans for “inclusive ownership funds”, where every company with more than 250 staff would have to gradually transfer 10 per cent of their shares to workers.
The radical plan would see the transfer of 1 per cent a year of shares from shareholders to workers over 10 years.
Shares would be held and managed by workers, who would receive dividends up to £500 each per year. Any income beyond that level would be redistributed to the Exchequer, representing a stealth tax by the state.
Labour has never put an estimate on the scale of the transfer of private wealth from shareholders to workers that the policy would entail. But the FT and law firm Clifford Chance have sought to gauge the size of the policy by extrapolating data from the Office for National Statistics.
The ONS estimates that financial and non-financial corporations have a book value of £5.5tn. The national accounts do not separate out large companies, but 57 per cent of overall corporate turnover derives from large companies, according to the ONS. On that basis the value of large private sector companies is about £3tn — meaning Labour would expropriate £300bn.
For comparison, the windfall tax by Tony Blair’s New Labour government on utility companies raised just £4.8bn.
“There is no historic precedent for this,” said Dan Neidle, a partner at Clifford Chance. “We are in completely uncharted territory.”
Mr Neidle predicted litigation from aggrieved companies and shareholders, challenges from other countries, including the US and China, potential WTO complaints and perhaps “retaliation in kind”.
Mr McDonnell said greater employee ownership increased a company’s productivity and encouraged long-term thinking. “It’s right that we all share in the benefits that investment produces,” he said.
The UK’s 2.6m landlords would also face a “moment of reckoning” if Labour won the next general election after shadow chancellor John McDonnell said he wanted a “right to buy” scheme for private tenants as well as higher taxes on landlords.
With British politics in turmoil and the chances of a snap general election fast increasing, the FT is this week examining the consequences for the UK economy of a Labour government — which would be the most leftwing in modern history.
The Labour leadership is determined to shift power away from bosses and landlords and to workers and tenants.
The £300bn share seizure would be the consequence of Mr McDonnell’s plans for “inclusive ownership funds”, where every company with more than 250 staff would have to gradually transfer 10 per cent of their shares to workers.
The radical plan would see the transfer of 1 per cent a year of shares from shareholders to workers over 10 years.
Shares would be held and managed by workers, who would receive dividends up to £500 each per year. Any income beyond that level would be redistributed to the Exchequer, representing a stealth tax by the state.
Labour has never put an estimate on the scale of the transfer of private wealth from shareholders to workers that the policy would entail. But the FT and law firm Clifford Chance have sought to gauge the size of the policy by extrapolating data from the Office for National Statistics.
The ONS estimates that financial and non-financial corporations have a book value of £5.5tn. The national accounts do not separate out large companies, but 57 per cent of overall corporate turnover derives from large companies, according to the ONS. On that basis the value of large private sector companies is about £3tn — meaning Labour would expropriate £300bn.
For comparison, the windfall tax by Tony Blair’s New Labour government on utility companies raised just £4.8bn.
“There is no historic precedent for this,” said Dan Neidle, a partner at Clifford Chance. “We are in completely uncharted territory.”
Mr Neidle predicted litigation from aggrieved companies and shareholders, challenges from other countries, including the US and China, potential WTO complaints and perhaps “retaliation in kind”.
Mr McDonnell said greater employee ownership increased a company’s productivity and encouraged long-term thinking. “It’s right that we all share in the benefits that investment produces,” he said.
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