The General Election on 12 December is rapidly approaching. All the main national political parties have now published their manifestos (at the time of writing, only Plaid Cymru has done so among the main regional parties).
All the manifestos contain a considerable number of commitments that could impact on the different sectors and organisations in which the Institute’s members work. This briefing does not attempt to cover all of those commitments; rather, it focuses only on those that have a specific governance angle.
The below note summarises some of these commitments. The level of detail provided for each party reflects the length of their respective manifestos. The Labour, Liberal Democrat and Green Party manifestos are all around 100 pages long. The Conservative manifesto is two-thirds that length, and the Brexit Party’s only one-fifth.
Probably the main commitment to note in the Conservative manifesto is the intention to reform insolvency rules to provide customers and suppliers with more protection, and to legislate to protect the assets in company pension schemes. No details are provided, but this presumably means that they would implement the proposals set out in the Government’s ‘Insolvency and Corporate Governance’ feedback statement in August 2018.
Companies’ responsibilities to their stakeholders is a theme in most of the other manifestos as well. Both Labour and the Liberal Democrats state that they would introduce some form of general duty on companies relating to their impact on society and the environment (as would the Greens). Both would also require large companies to have employees on the board. Both parties also propose action to promote (or in Labour’s case require) greater employee share ownership.
With the exception of the Brexit Party, all the manifestos address fair pay. The Conservatives commit to continue their efforts to tackle excessive executive pay. Labour states that it will introduce a maximum pay ratio between highest and lowest paid employees in public sector organisations, and the Greens make a similar commitment covering all sectors.
Labour and the Liberal Democrats also link pay to diversity and equality, with both saying they will extend pay gap reporting to BAME groups and others. The Liberal Democrats also commit to increase the number of women and ethnic minorities on boards.
Another example of what might broadly be called the stakeholder agenda is the presence in most manifestos of proposals intended to give local communities a greater say in matters affecting them.
This takes different forms. The Conservatives will introduce a Community Ownership Fund to support local takeovers of community assets; the Liberal Democrats will support the establishment of local banks and community energy cooperatives; while the Greens will enable local citizens to decide how to allocate part of the council budget.
Finally, the Conservatives and Labour have found rare common cause over football, with both committing to review the ‘fit and proper’ test for owners and to give supporters a greater say in the governance of clubs.
SUMMARY OF MANIFESTO COMMITMENTS
- Reform insolvency rules and the audit regime so that customers and suppliers – and UK taxpayers – are better protected when companies go into administration, and introduce legislation that protects pension pots from being plundered.
- Improve incentives to tackle excessive executive pay and rewards for failure.
- Through the Red Tape Challenge, ensure that regulation is sensible and proportionate, and that the needs of small businesses are considered when devising new rules.
- Create up to ten freeports around the UK.
- Establish a Community Ownership Fund to support local takeovers of civic organisations or community assets that are under threat.
- Set up a fan-led review of football governance, to include consideration of the Owners and Directors Test.
- Amend the Companies Act, requiring companies to prioritise long-term growth while strengthening protections for stakeholders, including smaller suppliers and pension funds.
- Change the criteria a company must meet to be listed on the London Stock Exchange so that any company that fails to contribute to tackling the climate and environmental emergency is delisted.
- Require large companies to set up Inclusive Ownership Funds. Up to 10% of a company will be owned collectively by employees, with dividend payments distributed equally among all, initially capped at £500 a year.
- Require one-third of boards to be reserved for elected worker-directors and give them more control over executive pay.
- Require all employers with over 250 employees (reducing to over 50 employees from 2021) will have to obtain government certification on gender equality or face further auditing and fines. Pay-gap reporting will be extended to BAME groups and disabled people for companies with over 250 employees.
- Enforce maximum pay ratios of 20:1 in the public sector.
- Review the ‘fit and proper person test’ for football club owners and directors, and legislate for accredited football supporters’ trusts to be able to appoint and remove at least two club directors and purchase shares when clubs change hands.
- Separate audit and accounting activities in major firms and impose more robust rules on auditors.
The Liberal Democrats
- Require all large companies to have a statement of corporate purpose and establish a general corporate duty of care for the environment and human rights; and require these companies to report on the wider impact of the business on society and the environment.
- Require all companies registered in the UK and listed on UK stock exchanges to set targets on climate change and to report on their implementation, and create new powers for regulators to act if banks and other investors are not managing climate risks properly.
- Give staff in listed companies with more than 250 employees a right to request shares.
- Require all UK-listed companies and all private companies with more than 250 employees to have at least one employee representative on their boards, and require staff representation on remuneration committees.
- Require binding and public votes of shareholders on executive pay policies.
- Push for at least 40 per cent of board members being women in FTSE 350 companies, and implement the recommendations of the Parker review on ethnic minority representation.
- Require companies with more than 250 employees to monitor and publish data on gender, BAME, and LGBT+ employment levels and pay gaps.
- Give communities the ability to take charge of aspects of their own local development through, for example, establishing local banks and community energy cooperatives.
- Overhaul financial services regulation and cut red tape.
- Create freeports in certain regions to encourage investment and create new jobs.
- Require businesses to take account of other stakeholders – including the ecosystem – and the impact of their activities on the climate and on communities.
- Require all large and medium size companies to carry out equal pay audits and redress any inequality uncovered both in terms of equal pay and recruitment and retention practices.
- Install a 40% quota for women on major company boards.
- Legislate to ensure the maximum wage paid to any member of staff in an organisation should not exceed ten times that paid to the lowest paid worker in the organisation, and ban any bonuses exceeding the annual wage of the lowest paid worker.
- Introduce participatory budgeting in local government, to enable local citizens to decide how to allocate part of the council budget.
- Replace OFSTED with a collaborative system of assessing and supporting schools locally, to improve standards and be accountable to the communities in which they serve