How business can help re-unite a divided UK

Brexit is happening, it's time to stop moaning and figure out how business can help shape a better and more inclusive nation.

by Jeremy Hazlehurst
Last Updated: 13 Jul 2016

And so, with a jolly little tune and a slam of the door, David Cameron is gone. We have a new prime minister, ironically a remainer too, but one who says that "Brexit means Brexit".

It’s true that some people are still working through the stages of grief following the EU referendum just two weeks ago, but there is no more time for moping.

We are going to have to re-model our economy. So let’s think about what it should look like. The bottom line is that it should address the needs of people who have been ignored for so long, and whose voice was finally heard loud and clear on June 23.

In an article written the day after the referendum, Will Davies of the The Political Economy Research Centre at Goldsmiths, University of London pointed out that many voted leave for psychological reasons.

As we all know, people in the north-east, Yorkshire and Wales, which received huge amounts of EU handouts, voted leave. That struck many as perverse, but Davies argues that you can’t expect "poor and culturally marginalised people to feel grateful towards the elites that sustain them through handouts. Resentment develops not in spite of this generosity, but arguably because of it."

He added: "In this context, the slogan ‘take back control’ was a piece of political genius. It worked on every level between the macroeconomic and the psychoanalytic."

The nostalgia in the old working class areas for heavy industry is often dismissed: our ship-yards and coal-mines are not coming back. But perhaps it is not a love of those industries themselves, but the things which accompanied them – community, shared endeavour, even strong unions - which gave people a sense of control over their own lives.

Another study found that those who voted leave tended to support capital punishment. They value "order" over "openness", and hate the freewheeling, cosmopolitan world which many remain voters love. Those people also feel they have lost control.

We should try to include them in the new UK and our economy should be re-modelled to address this loss of control. Theresa May’s idea that workers should have board representation could be a big step in that direction.

In Germany this is called Mitbestimmung, or "co-determination". Since 1976, any company with more than 2,000 employees has had to have half of its board seats occupied by workers’ representatives.

Unions are understandably excited at the prospect of introducing a version here, imagining themselves becoming far more powerful. Workplaces with no union might even have to get one.

But as we have seen in recent weeks, you can never assume anything. We simply don’t know what form "co-determination" would take in the UK, or how exactly the unions would be involved. Would workers only get a say in compensation, as suggested in the Labour Party manifesto in 2015? Or on other matters too?

Perhaps, as in some German firms, there could be a second board made up of workers’ representatives, which itself could have a seat on the board. That way shareholders would not feel pushed out, but there would be a clear forum for expressing employees’ needs and ideas, and a way to communicate it to management.

Another possibility is promoting employee ownership. During the post-2008 recession, employee-owned businesses proved more robust than shareholder-owned ones: in 2012 the government published a report saying that "aligning the interests of companies and their employees can make companies focus more on the long term, securing more sustainable growth".

Currently owners who sell a business to employees get a tax break, and there is tax relief on bonuses paid in employee-owned businesses. This has encouraged firms to convert: according to the Employee Ownership Association, we are on track for 10% of UK GDP to be produced by employee owned companies by 2020.

Should we also move towards more co-operatives? In the UK they are sometimes seen as old-fashioned. But some of the world’s biggest businesses, such as Japanese agricultural federation Zen-Noh, Dutch banking group Rabobank and America’s second-biggest food retailer, Associated Wholesale Grocers, are co-operatives.

One problem for co-ops is accessing funding. If banks were encouraged to lend to them, then co-ops could scale more easily and might become more popular.

None of this will happen by magic. Government will have to legislate or - better - nudge businesses to move in these directions. Our first female prime minister ushered in an era of free-market experimentation. Our second will have to find a way for the state to re-engage with business, and to create a new, smarter economy that is about meaning, as well as money.

Jeremey Hazlehurst is a business journalist and editor-at-large of Management Today


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