LONDON (Reuters) - Britain will encourage greater worker ownership in companies to counter the “crony capitalism” that contributed to the 2007/8 financial crisis and tipped the country into recession, Deputy Prime Minister Nick Clegg said on Monday.
An “unrestrained economic elite” driven by short-termism and recklessness had brought the economy to the edge and had to be restrained by a more responsible capitalism, Clegg said in extracts of a speech released in advance by his office.
Clegg, leader of the coalition’s left-leaning Liberal Democrats, said greater participation by employees would help rebalance a business environment “monopolised by a minority”.
“We now have an economy driven by immensely powerful vested interests ... The remedy, put most simply, is a redistribution of power,” he said.
Firms with high levels of worker ownership had weathered the economic downturn better, had higher productivity and suffered from lower absenteeism, Clegg said.
He praised the model of the employee-owned retailer John Lewis, Britain’s biggest department store, saying he would like more companies to adopt its mutual structure as a way of creating a more sustainable economy.
Britain faces years of austerity to eradicate a record budget deficit following the financial crisis and risks a return to recession as its economy stagnates.
“We don’t believe our problem is too much capitalism. We think it’s that too few people have capital. We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like,” he said.
Lawmakers across Britain’s political spectrum have been calling for curbs on the perceived excesses of capitalism, aiming in particular at executive salaries.
The political drive, accompanied by greater regulation of the banking sector, has been mirrored by public protest in the form of a global wave of “Occupy” anti-capitalist camps including one still pitched in London’s financial district.
Later this month, Business Secretary Vince Cable will outline measures to force companies to detail with greater clarity how much they pay top executives, and require shareholders to vote on executives’ levels of compensation.
The government would examine whether tax breaks should be offered to encourage more employee ownership, Clegg added.
It would also consider whether employees should be given a right to request shares in the companies they work for, particularly where the firms were not already publicly traded.
Britain has around 5,500 cooperatives, but most are relatively small compared to the two largest, John Lewis and the Cooperative Group, whose business ranges from food retailing to banking and funeral services.
Reporting by Tim Castle; Editing by Dale Hudson