Theresa May calls for radical changes in British economic and business policy

Martin Kettle writes: Theresa May is sometimes described as remote. Yet few incoming prime ministers have flagged up their policy priorities more clearly than May did this week. Her contest of ideas with the Thatcherite Tory leadership candidate Andrea Leadsom lasted barely an hour – from the moment May stood up to deliver her keynote speech in Birmingham on Monday morning to Leadsom’s resignation announcement at noon.

But an hour was time enough for May to reveal a hugely ambitious agenda that she very deliberately described as “a different kind of Conservatism” and “a break with the past”. And the past from which the new prime minister proposes to break is not the distant past but the recent past, when David Cameron and George Osborne set the country’s course in ways of which May revealed herself this week to be a substantial critic, in a speech whose theme was pointedly “an economy that works for everyone”.

May’s Birmingham speech was supposed to be the first of several. Now it will have to stand alone as the principal signpost to what a May government intends to do. Brexit is naturally front and centre of that. But the meat of the speech was about economic and business policy. And it set the bar for radical change extremely high, drawing on ideas more associated with Ed Miliband than George Osborne, and owing more to German business models than British ones.

Her proposals were full of echoes from the pre-Thatcher era of the 1960s and 1970s, when May herself was growing up: industrial strategy, government action to defend important UK sectors such as pharmaceuticals, and a regional strategy involving all regions not just some. But the most important test that May set herself was in business strategy, where she pointed her guns at laissez faire corporate governance and business culture in a way that no Thatcherite like Leadsom would do in 100 years.

May spelled out a succession of targets: bosses who are “drawn from the same narrow social and professional circles” as one another; a pay gap between the executive elite and the workforce that is “irrational, unhealthy and growing”; and cartels in highly consolidated markets such as energy.

Her solutions ranged from consumer and employee representation on company boards, to encouragement of mutuals in the public services, to binding shareholder votes on executive pay, and full transparency on bonus targets and pay multiples. There was also a more familiar injunction, very well expressed, on the moral case for taxation – “a duty to put something back … a debt to your fellow citizens … a responsibility to pay your taxes.”

The standout proposal here is employee representation on boards. May sounded genuinely serious. “If we are going to have an economy that works for everyone, we are going to need to give people more control of their lives. And that means cutting out all the political platitudes about ‘stakeholder societies’ and doing something radical.” [Continue reading…]

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