CBI warns Labour plans to seize profits will send investors fleeing

Investors will ‘pack their bags’ and flee Britain if Labour’s plans to force companies to hand over 10 per cent of their shares to workers, business leaders today warned.

John McDonnell today unveiled the radical proposal, which would see workers’ boards get control of the stakes with profits shared between employees and the taxman.

But Carolyn Fairbairn, director general of the CBI, tore into the proposals which she warned would kill off investment and end up costing jobs.

And she warned that under Jeremy Corbyn, Labour is getting a reputation for being ‘anti business’. 

The Labour leader – who has already announced plans to force firms to put workers on boards and hike taxes on corporations – yesterday warned the rich they are on ‘borrowed time’.  

Ms Fairbairn – whose organisation represents British industry – lashed Labour’s plans and urged the party to work with business rather than punish it.

John McDonnell (pictured today at Labour’s party conference in Liverpool) unveiled the radical proposal, which would see workers’ boards get control of the stakes with profits shared between employees and the taxman

She said: ‘Rising wages are what everyone wants to see. But Labour is wrong to assert that workers will be helped by these proposals in their current form. 

‘Their diktat on employee share ownership will only encourage investors to pack their bags and will harm those who can least afford it.

‘Business has been resilient in the face of uncertainty, but Labour’s anti-business positioning is starting to bite. 

Carolyn Fairbairn, director general of the CBI, (pictured earlier this month at a conference on Brexit) tore into Labour's proposals which she warned would kill off investment and end up costing jobs

Carolyn Fairbairn, director general of the CBI, (pictured earlier this month at a conference on Brexit) tore into Labour’s proposals which she warned would kill off investment and end up costing jobs

‘It’s time for pro-enterprise collaboration, not public proposals that set alarm bells ringing in boardrooms at home and across the world.’

She added: ‘If Labour is really to find solutions that improve lives, they must sit down with firms and understand what will drive productivity and investment. 

‘The answer lies in the partnerships, innovation, infrastructure and skills that drive growth. It does not lie in dogma.’ 

Under the plans, launched by the shadow chancellor at Labour’s party conference in Liverpool today, companies with 250 or more employees face a double raid on their profits.

Under the share ownership overhaul, legislation would be introduced requiring  companies to hand over a 1 per cent stake of their business each year, up to a maximum of 10 per cent.

The shares would be held in an ‘inclusive ownership fund’ managed by a board of elected worker representatives.

Dividend payouts would be made at a flat rate to all employees of the firm, but would be capped at £500 each per year. Anything above this would be handed to the taxman.

Corbyn praises MP’s pro-Militant speech 

Dawn Butler (left) praised Militant Tendency

Dawn Butler (left) praised Militant Tendency

Jeremy Corbyn yesterday backed one of his shadow ministers after she praised the Militant Tendency for breaking the law in the 1980s.

Shadow equalities minister Dawn Butler applauded how Liverpool’s council had set an illegal budget in defiance of Margaret Thatcher.

Hard-Left figures including Derek Hatton brought the local authority close to collapse in 1985 by deliberately proposing to spend more than it had – leading to redundancy notices being served on its entire 30,000-strong workforce.

Miss Butler’s comments triggered a backlash from within Labour, with Labour peer Baroness Thornton tweeting: ‘Derek Hatton’s Militant colleagues were misogynistic bullies. We should not be praising them.’

But Mr Corbyn came to her defence, saying: ‘What she was doing was expressing support for the determination of the people of Liverpool.’

Labour estimates this would raise £2.1billion a year for the Exchequer after the first five years of the scheme being in place. 

But Mr McDonnell insisted that his plan would not dampen investment, but in fact help boost the economy.

He told BBC1’s Breakfast: ‘If you look at other economies, like Germany, where there’s been much more worker involvement, it’s been the reverse.

‘You get more investment, you get longer-term decision-making and you have a growing economy.

‘This is nothing unusual. It happens in other countries and it has proved to be successful.’ 

Mr Corbyn yesterday warned Britain’s rich that they are on ‘borrowed time’ as a Labour government is coming.

In a fiery speech to hundreds of activists at Momentum’s World Transformed event, he railed against neoliberalism and austerity.

And he pledged to put an end to the economic consensus which he said has been in place since the 1970s.  

He said: ‘The very richest in our society have had tax breaks, giveaways and tax havens. I tell you what – they are on borrowed time because a Labour government is coming.’

Mr Corbyn added: ‘What we’re doing is challenging a neoliberal ideology that took over the world in probably, let’s say, 1970s or thereabouts. 

‘The whole idea of tax cuts, reduce the size of the state, increase privatisation and trickle-down economics later inherited by Margaret Thatcher.’

Chief Secretary to the Treasury Liz Truss called the shares proposal ‘yet another tax rise from a party that already wants to hike taxes to their highest level in peacetime history’.

Labour also wants a £560million tax on the owners of holiday homes. 

Under the plans, second properties in England used for holidays would be subject to an average tax bill of £3,200, double the current council tax rate.

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