Companies will not be forced to put workers on boards, prime minister Theresa May has said at the CBI annual conference, watering down the pledge she made during her campaign to win the Conservative party leadership.
In her speech to the CBI May said: “While it is important that the voices of workers 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.
“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.”
She added that the government will be releasing a consultative green paper in the autumn, and is looking for business’s opinions on employee voice, executive pay and accountability to shareholders.
“It is about establishing the best corporate governance of any major economy, ensuring employees’ voices are properly represented in board deliberations,” May added. She said that the UK would not be following Germany’s binary board system, “which separates the running of the company from the inputs of shareholders, employees, customers or suppliers”.
This clarification about worker representation on boards appears to be a watered down version of May’s original pledge. In a July 2015 campaign speech she said: “If I’m prime minister we’re going to change that system – and we’re going to have not just consumers represented on company boards, but employees as well.”
Stefan Stern, director of the High Pay Centre, expressed disappointment at May’s backtracking.
“We will have to see what this will look like in practice,” he told HR magazine. “It would be disappointing if the clear words used by the prime minister since the summer are being rather hastily dropped at the first sign of disapproval from some in business.
“There's a reason there is frustration at the lack of change in corporate governance practice in this country: it is because there has been inertia for so long. Reform will take courage and persistence. We shall see if this government is up to the task."
In her CBI speech May also spoke about the need for stronger corporate governance to rebuild public trust in business, due to the bad behaviour of “a small minority of businesses and business leaders undermining the reputation of the corporate world”.
She also announced a boost for government spending in R&D, saying she wants “Britain to become the global go-to place for scientists, innovators and tech investors”.
“We will continue to welcome the brightest and the best – but can only do so by bringing immigration down to sustainable levels overall so we maintain public faith in the system,” she added.