Theresa May abandons promise to mandate workers on boards

Theresa May has gone back on her Tory leadership campaign pledge to have worker representation on company boards. Speaking at the Confederation of British Industry’s (CBI) annual conference...

Theresa May has gone back on her Tory leadership campaign pledge to have worker representation on company boards. Speaking at the Confederation of British Industry’s (CBI) annual conference on 21 November, the prime minister said that firms would not be forced to install worker representation on their boards.

“While it is important that the voices of workers and consumers should be represented, I can categorically tell you that this is not about mandating works councils, or the direct appointment of workers or trade union representatives on boards,” Ms May said.

She added: “Some companies may find that these models work best for them – but there are other routes that use existing board structures, complemented or supplemented by advisory councils or panels, to ensure all those with a stake in the company are properly represented. It will be a question of finding the model that works.”

In July she had promised to change the system if elected leader of the Conservative Party. Addressing the Tory Party conference, Ms May said she aimed to ensure consumers and employees would be represented on company boards.

Responding to the shift in the prime minister’s approach, Ed Mayo, secretary general of Co-operatives UK, said: “This is a major U-turn from the speeches of Theresa May just months ago, when she looked as if she wanted to respond to public concerns that big business is out of everyday accountability and control.

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“In itself, it was only ever a half-way house. Worker co-operatives have workers on the boards, but their power comes from the fact that the ownership lies with the workforce. It is the same for consumer co-operatives – and after all, the Prime Minister had also suggested consumer directors. In political terms, it was never going to be easy for British companies that have put shareholders above society, employees and the environment to accept representatives from their stakeholders around the boardroom table. And this is what has now been ruled out.”

Mayo added that Co-operatives UK has been active on this issue, making submissions to the business select committee, engaging with partners such as Which, for consumers, and the TUC, for workers, and raising the matter in the Times newspaper.

“Our approach has been to welcome steps that make big business more accountable to those affected by their actions,” he said.

“In that spirit, we will also engage with the watered down proposals when they emerge later in the year. It remains positive that it may be written into what PLC Boards do that there should be a process for considering the impact of decisions on workers and customers. Co-ops have done that from the start. We want everyone to join in.”

TUC General Secretary, Frances O’Grady, also responded to May’s speech. She said: “Theresa May made a clear promise to have workers represented on company boards. The proposals in her speech do not deliver on this. This is not the way to show that you want to govern for ordinary working people.”

The Co-operative Party has also criticised the prime minister for the U-turn. In a blog post for the Party, policy officer James Scott highlights that the business case for employees on boards is a “straightforward” one.

“First, employees have an interest in the long-term success of their employer,” he wrote. “Their presence on boards encourages decision-making based on long-term interests over short-term gains.

“Second, putting employees on boards can improve the relations between managers, owners and their workers. This is a critical relationship for business performance.

“Third, boardrooms tend towards the homogenous. Putting employees on boards can diversify the experience of those involved in decision-making, shown to lead to better outcomes.”

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