McDonnell wields his corporate cattle prod
While Jeremy Corbyn and Boris Johnson slogged it out on TV last night, the City was still digesting the latest softly-spoken assault by Labour’s shadow chancellor.
John McDonnell doesn’t fly into fits of outrage, not even when attacking the “obscene wealth” of billionaires. He appeared to unveil plans for the biggest revolution in company law almost with a tone of regret.
But let’s judge him on what he says, not how he says it — for nobody should be lulled into thinking that McDonnell is anything other than a dangerous firebrand.
When he says he wants to “take people with us” one is left with the feeling that this would involve cattle prods and forced marches.
It’s worth remembering that he has listed his interests as “fermenting the overthrow of capitalism.” There is no reason at all to assume he was joking. So how would he go about it?
McDonnell believes that corporate Britain needs to become democratised. For example, he wants to subject all executive remuneration packages to a binding vote by shareholders, employees and consumers.
Maybe self checkout tills at Tesco will contain a new option on the screen to vote for or against the executive’s pay. Perhaps not fully trusting that shoppers will make the right choice on executive remuneration, Labour would also bring in an “excessive pay levy” starting at 2.5 per cent on salaries north of £300,000 and rising to 7.5 per cent on packages over £1m.
McDonnell also wants to have the power to delist companies from the London Stock Exchange if they fail to adequately address climate change. Farewell to BP and Shell?
He is, so far, vague on the criteria and even vaguer on what this would mean for shareholders, pension funds and the future reputation of London’s internationally respected capital markets infrastructure.
Little wonder that one asset manager yesterday described McDonnell’s proposals as “moronic.” Another seasoned investment banker lamented that “Labour just don’t seem to understand the public market.”
On the same day that McDonnell unveiled his “rewriting the rulebook” document, the Institute of Directors (which has worked on improving corporate governance in the UK for over 100 years) released its own manifesto for restoring trust in business.
Its director of policy, Edwin Morgan, says the UK’s approach is “admired across the world” but the IoD nevertheless proposes a range of reforms that would strengthen accountability and incentivise better behaviour.
McDonnell should put down his cattle prod and listen to the experts.