May's "world leading" corporate reforms are a damp squib

The Government's hyping of them is risible

Theresa May: Her corporate reforms are a cop out (AFP)

Theresa May savages the “abhorrent greed” of “fatcat” bosses in a Sunday newspaper article, while Greg Clark's Department for Business for Business, Energy and Industrial Strategy, hails a “world leading package of corporate governance reforms” to combat the "unacceptable face of capitalism" in Britain.

Crikey! Are we talking about a revolution here? Are Ms May and Mr Clark going to link arms with TUC director general Frances O’Grady at the head of an army of workers before storming the boardrooms of Britain?

Or are we, at least, about to move towards the sort of systems that operate successfully in Europe, where some of the world’s best managed companies are based, companies that wonder why the idea of talking to their employees, and having them involved in governance, creates such a fuss over here.

That's certainly what the firey rhetoric of the PM and her Business Secretary would have you believing.

The reality is, of course, very different.

I’m sure Ms O’Grady would be only too happy to link arms with anyone prepared to push forward meaningful reforms to a system that has been failing the British people for years. Trouble is, what Ms May’s government has actually come up with doesn’t even come close. That's why the TUC leader's description of it as “feeble" was justified. Combing a couple of four letter words, one bovine, one a description of what they produce, might be still more accurate.

I dealt with the reforms to bosses' pay last week, and it turns out the leaks that I was commenting upon were accurate. We will see the publication of pay ratios between the CEO and average worker and a register will be created of companies that suffer shareholder rebellions over remuneration. The former is potentially worthwhile in that it re-establishes a link between CEO and workers’ pay, the latter is a pointless attempt to shame the shameless with information already in the public domain.

Those measures, however, are the height of radicalism when compared to what has been billed as (to quote Mr Clark's scribes again) an attempt to “ensure” the “employee voice is heard in the boardroom”.

An original proposal to legislate to put workers on boards has been replaced with little more than a tweak to the UK Corporate Governance Code.

Having an employee director is now just one of three options it will give companies in future, the others being the creation of an “employee advisory council” or the assigning of a non executive directors to represent employees.

Did I forget to mention that the Code is, to all intents and purposes, voluntary? It operates on the basis of comply or explain, so if you don’t fancy complying all you need do is explain why you don’t much like the bits you want to ignore.

Because most companies like to be seen to be doing the right thing if at all possible, they will probably pick one or other of the latter pair of options and get their PR people to make a fuss about their doing so. Some, those few that recognise that having well trained, motivated and engaged employees actually works in your favour, might go so far as taking it medium seriously.

Others will simply tick the box, put a few woolly pars in the annual report about how they love the people that work for them, and carry on regardless.

Given that employees take up half the seats on supervisory boards in some jurisdictions, and works councils have been operating for years, what Ms May and Mr Clark have outlined is world leading only in the way that Conor McGregor’s money grabbing farce of a bout with Floyd Mayweather could be described as a world leading exhibition of the noble art of boxing.

Far from creating a “Britain that works for everyone” what we have here is a cop out, and a further demonstration (if one were needed) of Ms May’s weakness.

The hyperbole accompanying it is risible. You almost get the impression that having repeatedly lied about Brexit, the Government has got its into its head that the British public are stupid and will buy anything.

That is the sort of thinking that could very soon land it in a heap of trouble.