You don't need to be an 'investor' to invest in Singletrack: 6 days left: 95% of target - Find out more
As a lefty and a SME business owner in which most of the workers (me included) are share owners this interests me.
However it has the air of something for nothing as there is no capital invested or put at risk by the individual worker's?
Thoughts folks
Plenty of shares are handed out to directors in the form of bonuses, who put no capital in so I don’t see much difference. Surely engaging employees with the profitability of a business is a good thing (similar to John Lewis members)
It strikes me as a great policy for a party that will never have to implement it. Which I guess works quite well for the current Labour party.
Not a great idea IMO. The UK needs to massively increase worker protection and rights, empower the unions again, and force companies to treat employees as stakeholders rather than commodities. But this is a pretty stupid idea and realistically unworkable.
As I said on a different thread this is often used to handcuff directors or smes to a company at the higher level but to also reduce mobility of the lower paid employees at the bottom. People feel they have s different obligation to a company if they are a stock holder. They work more unpaid overtime and for less pay overall at the bottom and become metric driven at the top. See the thatcher policy on if people own their council house they will be more responsible in society. Shares can be a tool to control the worker make them feel involved but without any influence
IF it does happen then I could see it bundled into pensions or some other kind of deferred benefit that ends up giving a cash boost to big companies...
overall no one will end up with more money just a larger part of the salary depending on company performance... shifts the risk from the owners to the normal employees
As I said on a different thread this is often used to handcuff directors or smes to a company at the higher level but to also reduce mobility of the lower paid employees at the bottom.
The way I heard it, up to an extra £500 in a workers pocket each year through share dividends, the rest going to the treasury. You wouldn't own the shares individually so a slightly different model to handcuff / share save schemes.
If every company has to do it, mobility will only be based on the profitability of the company (you wouldn't want to leave a profitable company but would leave a poorly performing one).
I don't see it as a wholly negative policy, which is unusual for me & Labour 😛
I've worked in companies where you get share options as an employee.
First thing is they're worthless unless there's a market for them. If the company is not publicly traded generally the only way of selling them is if they go public or they are bought by another company (and had experience with the latter, encouraged to sell the shares, then the new owners kicked half the dev department out).
Often share options are provided via a salary sacrifice or as part of the job offer in lieu of a chunk of salary. It's a great way of getting people to work for less with the vague gamble that they might make a bit of money in the long term.
No dividends from share options. Though Labour might insist they have to be real shares. Then depends how the shares are issued and what value they are compared to the director's shares. Likely very low, so dividend payments are going to result in a small amount to the employees compared to the directors.
If real shares you get to go to the AGM, but employees with 10% of the shareholding aren't going to have much say.
All in all, pointless, and besides many companies offer this already.
Have a I read this right...
Employees get X shares (or options?) but the dividends get split between the employee AND the Government?
Employees get X shares (or options?) but the dividends get split between the employee AND the Government?
I don't think individual employees get anything, they will be held on behalf of the employee by the company who must distribute any dividend to the workers. Any dividend above £500 per employee goes to the government.
Nice little extra company tax on dividend payments there.
I'd love some shares from where I work, but at $38,000 each, I don't see it happening.
I don’t think individual employees get anything, they will be held on behalf of the employee by the company who must distribute any dividend to the workers. Any dividend above £500 per employee goes to the government.
That's my take on it.
Doesn't seem such a bad idea to be honest, but I agree that employee rights are a bigger issue....
I’d love some shares from where I work, but at $38,000 each, I don’t see it happening.
You'd just get a share of the dividends from the 10% held in trust.
Where it would fall down is with multinationals who can just move profits about and effectively run at a loss in the UK if they so choose...
Moving profits has nothing to do with it, it's about workers getting a share of the dividend payment, which is typically around 3% of the share value per annum (this varies widely and some companies pay very little).
Nice little extra company tax on dividend payments there.
Yep. Giving employees shares is a good idea, but this plan is terrible. Suppose an employee has shares that would otherwise entitle them to a £2k dividend: that's a 75% tax rate.
At my company we give our employees shares. Real, proper shares (not options) with full voting and dividend rights. It's an utter ballache to implement, as to do it we have to get the company valued in order to value the shares, then we've got to give the employee a bonus to cover the tax on the shares, and a further bonus to cover the tax on the bonus in order to ensure that employees aren't left out of pocket.
If government wants to encourage staff share ownership, they could make this process easier, rather than this plan which is effectively compulsory nationalisation and stealth CT.
We don't want to do options, because we've taken the unfashionable business goal of building a sustainable, profitable company rather than making a company to cash out of as fast as possible.
Moving profits has nothing to do with it, it’s about workers getting a share of the dividend payment, which is typically around 3% of the share value per annum (this varies widely and some companies pay very little).
Depends who you work for though. If you work for generic overroastedcoffeflavourmilkshake-Uk or web1.0onlineashop-Uk, or someone like that then you would be getting shares in a non profitable company wholly owned by a very profitable company owned by the directors deceased pet dog in the cayman islands.
"Any dividend above £500 per employee goes to the government."
Blimey. So that's the real reason... more money to the state.
Shares not at all suitable for folks below stairs - only for the Masters.
Like a lot of policies i think it's a great idea that be terrible in practice
You wouldn’t own the shares individually
This worries me more than anything else with the theory part of it. Given who would be putting this into legislation I very much imagine this will amount to forced membership of a trade union (who i guess will be asked to manage the trust in the employees interest) and effectively be used to put trade unions in boards rather than employees.
If real shares you get to go to the AGM, but employees with 10% of the shareholding aren’t going to have much say.
In practice 10% would make the employees a very big share holder in most large companies.
“Any dividend above £500 per employee goes to the government.”
Blimey. So that’s the real reason… more money to the state.
That's not a bad thing if it's to be spent on public services. There's only so much money a person needs to live a decent life with, after that it's just hoarding pieces of paper with pictures of Mrs Windsor on them.
Workers already own shares, where do they think their pension contributions are?
Shares not at all suitable for folks below stairs – only for the Masters.
In practise ice from all share and profit sharing schemes I have seen they benefit the people at the top far more than those at the bottom. The majority of the lower paid crew cashed everything in straight away to pay bills unless it was a poor year then they scrimped or got a loan but the guys higher up could save and invest.
a higher base wage would have helped the people at the bottom rather than a chance for a bonus...
also to get £500 in dividends you need a ton of stock...
That’s not a bad thing if it’s to be spent on public services. There’s only so much money a person needs to live a decent life with, after that it’s just hoarding pieces of paper with pictures of Mrs Windsor on them.
And who gets to decide the value of "so much money" or a "decent life"?
Moving profits has nothing to do with it, it’s about workers getting a share of the dividend payment, which is typically around 3% of the share value per annum (this varies widely and some companies pay very little).
Take Amazon as an example. UK Employees work for a UK/Eire subsidiary and not Amazon Corp whose shares pay dividends. A UK government has no jurisdiction over the US Corp and could only take 10% of the UK subsidiaries shares, which pays no dividends and is just a legal entity for payroll purposes etc.
Workers already own shares, where do they think their pension contributions are?
In many cases recently, they've been swindled out of their pensions by financial engineering, e.g. collapse a company with a pre-pack and buy it back for nothing less any pension liabilities.
As a lefty ...
However it has the air of something for nothing as there is no capital invested or put at risk by the individual worker’s?
You're not a lefty. Lefties don't give a shit about capital invested, risk, etc. You're a capitalist, probably a decent one who cares about people, but a capitalist none the less.
But this is a pretty stupid idea and realistically unworkable.
Standard labour policy then, designed to appeal to the envious & unmotivated poor.
I can see all sort of issues with how it would be implemented (a bit of a theme from Messers Corbyn / McDonald, imo) but am not against employees having a bigger slice of the cake (as the wealth generators for the owners).
One side effect (possibly intentional? is that it would almost force employee collective representation? (dare I say union)
I can only imagine a scenario where this 10% of shares being held in some form of trust, and not actually owned by each individual employee (which would be an administrative nightmare? IMO) And if the shares are held in trust there must be some form of trustee / employee council to represent the shareholders / employees?
The company I work for has ~£15bn market cap, so 10% of the company would be a very significant sum to be owned by ~40,000 employees. As mentioned above would make it the single largest shareholder of the company (which is currently ~9%, IIRC) and very powerful at board level.
No idea how it would work at small, unlisted companies.
No idea how it would work at small, unlisted companies.
Not sure, but they'll need to privatise all of the schools, hospitals, local authorities etc. too, and Network Rail etc. so that *all* workers can have a shareholding in their place of work 🙂
That’s not a bad thing if it’s to be spent on public services. There’s only so much money a person needs to live a decent life with, after that it’s just hoarding pieces of paper with pictures of Mrs Windsor on them.
If you want to argue for higher taxes to fund public services then fine, but let's not have more complicated stealth taxes dressed up as a worker benefit.
Why should dividends from worker-owned shares be capped at £500 and the rest taken as tax, whereas other types of shares are not?
There’s only so much money a person needs to live a decent life with, after that it’s just hoarding pieces of paper with pictures of Mrs Windsor on them.
£500 doesn't buy much of a bike. Needs to cover bikes, spares, tools and all the gear. Then you have a decent life.
However it has the air of something for nothing as there is no capital invested or put at risk by the individual worker’s?
Most CEOs have very little invested either and get enormous salaries / share options for often doing a very mediocre job in terms of long term health of the company.
As an aside, the long term share of wealth of (non boardroom) employees has been declining year on year for decades...
Think there was a chart in one the Sunday papers recently and if salary increases had matched company profits over the last 20 years, the average employee would be paid 20% more.
Why should dividends from worker-owned shares be capped at £500 and the rest taken as tax, whereas other types of shares are not?
Because this is allowing people to own something they would not be able to access any other way.
Because this is allowing people to own something they would not be able to access any other way.
They could always buy shares assuming the company is listed but they don't because they've better things to spend their money on and still will do under this scheme which will just see salaries [starting and growth] reduce accordingly so they're no better off.
Its a huge taxation scheme dressed up as something else. I don't mind* that but don't think it's about the employee.
Royal Dutch shell 8.3 billion (us) shares
93k employees
47pence dividend.
That's 9k shares per employee approx at 10% ownership.
That's £4200 per quarter dividend per employee.
Or rather that's £125 per quarter per employee and £378m per quarter to the exchequer.
As my earlier comment though i think this is more about getting McCluskey et al onto boards than anything else. I think the tax side is just a nice little bonus.
*Well i do, there are better ways of doing it and if it's going to be a tax, call it a tax.
Yes it's a tax, a marginal rate of 10% on the total dividend paid by the company, perhaps with the aim of encouraging investment rather than being exploited as a cash cow by the capital investors. Doesn't look like a completely silly idea, and it's only a discussion point for now anyway.
They could always buy shares assuming the company is listed but they don’t because they’ve better things to spend their money on* and still will do under this scheme which will just see salaries [starting and growth] reduce accordingly so they’re no better off.
Except there are plenty of companies with no share scheme or shares available.
* like food, fuel, clothing etc,
If the government wants more money from business then just sort out the existing tax regime and tax them properly. Don't make up some shite about workers getting shares just to make it sound good for election purposes when the reality will be totally different.
rather than being exploited as a cash cow by the capital investors
Of course a lot of that investment is purely because of the dividend regularly paid out. Reducing the paid dividend (rather than paying 10% on it) would cause many shareholders to sell, reducing the value of the shares, reducing the already crap pension pots of the employees in return for a mighty £57 per month they now have to sink back into their pensions in order to have a couple of hundred a month at retirement.
All the money which comes out will have to go straight to plugging the hole it creates.
* like food, fuel, clothing etc,
Yep, and for the people for whom it's genuinely a choice between any one of those and something else the shares are worthless, they'd be vastly better off with a hike in their taxable allowance and none of the suggestion they will have more involvement etc. all of which will result in longer hours, a lack of willingness to switch employers (where options exist) reduced salaries, reduced pension pots and so on.
Except there are plenty of companies with no share scheme or shares available.
And the majority of those are small companies that won't pay dividends any way - they may currently to a single shareholder as a method of reducing tax liability but 10% tax increase on that will see that end. The far fewer big companies that don't have share schemes tend towards "family" business models and forcing a share issue will fudamentaly change the nature of those businesses and often not in a good way for employees.
*sorry that's half an answer but i really should get back to doing my job for a bit.
Given the number of people working for companies of less than 250 people (the cutoff level) or non-UK companies or in public organisations then this is a very pointless policy. Labour estimate it would bring in £2.1Bn in 'tax' which is what they are bothered about.
Of greater concern is the drive for 1/3 of all boards to be made up of workers and the stated goal that legislation would be brought in so that these workers would have to be members of a trade union! Boards should be made up of people who can contribute to the working of the company, not political appointees
Labour estimate it would bring in £2.1Bn in ‘tax’ which is what they are bothered about.
Except they won't get that. It'll just chase more companies abroad. Hard to increase revenue without competitive tax rates.
Except they won’t get that. It’ll just chase more companies abroad. Hard to increase revenue without competitive tax rates.
I think they accounted for that, the top 5 companies in the ftse alone would bring in the exchequer well over a billion a year each based on the net dividend, which of course they wouldn't get, they'd get the gross amount effectively since the deductions all go to them, in my shell example for instance the dividend was 188p i think as opposed to 47p net, so there abouts would actually be 8600 effectively paying the government 1.88 each per quarter, per employee, for 93000 employees. So £1.5 billion a quarter to HMRC from one company alone. (I'm not sure they'd get the full 1.88, I'm not sure where the deductions actually go but even then, is a lot over their estimate)
Plus it assumed they give out dividends on the shares they “gift” to the employees rather than make them a different class of share.
still all it would do would be to transfer dividends from investors (people, charities, pensions etc) to the exchequer.
How would it work for say a stocks and shares isa? I assume they generate value partially via dividends but then I don’t really know how all that works 🤨
ft reckon up to £5.9bn in 1st year for treasury
https://www.ft.com/content/2a68e830-c027-11e8-95b1-d36dfef1b89a
also article here by former Tory minister & Goldman Sachs exec arguing that Labour are the only party at least trying to fix the problems in the economy, while the Tories are consumed by Brexit
https://www.ft.com/content/bc14ef02-bc05-11e8-8dfd-2f1cbc7ee27c
double post
The shares have to come from somewhere - either the current shareholders (a lot of pension companies hold shares) - are labour suggesting just taking them - or paying market prices? or by issuing new shares - diluting the value of current shareholders - reducing the value of pension funds. It's a gimmick from a man who would like to see capitalism destroyed and see all of us dependant on the state. Who'd invest in share offerings knowing 10% could be taken from you or the value immediately slashed by 10% ?
also article here by former Tory minister & Goldman Sachs exec arguing that Labour are the only party at least trying to fix the problems in the economy, while the Tories are consumed by Brexit
Can't disagree with that but it's very easy for the opposition to concentrate on what they like and ignore the rest. The government are stuck with sorting brexit like it or not and regardless of which side of the argument you might be on, the actually dealing with it was always going to be an all consuming car crash, whether it works out better than before or the end of the world.
Even if they did have to concern themselves with brexit and the other nuisances of the country's day to day running, to paraphrase Nick Clegg on tuition fees, it's very easy to promise in opposition that which you can't deliver in power. Not surprisingly the conservatives had much better pie in the sky by about 2002 once they'd agreed who to blame for 97 and short of a geniune praise to god miracle from Labour, after a few years of a conservative opposition, Labour will look stalled and the conservatives will be making progressive policy.
Corbyn et al might do a wonderful job in government, they might be as disastrous as a rogue comet but until they're in power it's all just wind. One thing i can categorically promise is they won't fix the economy just like no-one else has in any country ever.
ft reckon up to £5.9bn in 1st year for treasury
Ah yes its incremental to 10% after 10(?) years isn't it?
"immediately slashed"
Don't let the facts get in the way of that knee jerking. As someone with significant shareholdings across a wide range of companies I'm completely unbothered by the proposal.
Well if 10% of shares are priced at zero - then the value of the other 90% are going to be reduced. If bike manufactures gave away 10% of their production - do you reckon the secondhand value of the bike you paid full price for would rise or fall ?
I'd guess most pensions allow people to move their money around every April. So I'm pretty sure I can transfer my pension out of UK listed companies and into cash investments or foreign investments. So many of us will be able to avoid the initial problem itself if we're lucky enough to get the timing right.
All the other consequences might be harder to avoid.