Workers promised annual bonuses of £500 under Labour's plan to force companies to give shares to staff

First £500 from the rising value of shares to go to workers – with the remainder ploughed into public services, John McDonnell will say

Workers will receive a bonus of up to £500 a year under Labour’s plans to force all large companies to give staff shares in their firms.

John McDonnell, the shadow chancellor, will reveal details of the dividend payments that will flow from the scheme – vowing that 11 million workers will enjoy “the rewards of their labour”.

The “inclusive ownership funds” are a key plank of Mr McDonnell’s determination to make Labour’s manifesto for the next general election “more radical than the last”.

The idea is for the first £500 from the rising value of company shares to go to each worker – with the remainder ploughed into “a social dividend”, to be spent by the government on public services.

Speaking at the Labour conference in Liverpool, Mr McDonnell will say: “Workers, who create the wealth of a company should share in its ownership and, yes, in the returns that it makes.

“The evidence shows that employee ownership increases a company’s productivity and encourages long term thinking.

“The dividend payments workers will receive will be up to £500 a year. That’s 11 million workers each with a greater say, and a greater stake, in the rewards of their labour.”

The shadow chancellor will say that the shares will be “managed collectively by the workers” and deliver the “same rights to have a say over the direction of their company”.

The promise comes despite Mr McDonnell revealing, a year ago, that he was war-gaming for a run on the pound and the flight of capital from London if Labour wins the election.

Aides acknowledged that the £500 pledge depended on the stock market rising, with the exact amount paid out varying from company to company.

The estimate of reaching and exceeding the £500 cap for workers’ dividends was based on companies’ past and expected performance, the aides said.

Companies would not be forced to pay out dividends but, if they did, the policy would ensure that staff - as well as private shareholders - benefited from the firms' success.

The “ownership funds” would have to be set up by every company with more than 250 employees, as part of Mr McDonnell’s plans for an “irreversible shift in wealth and power in favour of working people”.

He believes the 2017 manifesto – while popular, by pledging the renationalisation of water, energy and rail services and higher taxes on top earners and corporations – was not radical enough.

In July, as The Independent revealed, he backed a trial of universal basic income – replacing means tested benefits with an unconditional flat rate payment to all citizens – to combat work insecurity.

Labour is also exploring more rapid automation of jobs, to improve the UK’s miserable productivity record, and a shorter working week.

The compulsory ownership funds will cover at least 40 per cent of the private-sector workforce, Labour believes, but smaller companies will also be urged to set them up.

Every year, companies would transfer at least 1 per cent of their shares into the fund, up to a maximum of 10 per cent.

Workers would not be able to sell or transfer their shares, which will be held through an “asset-lock” mechanism similar to the one used by the department store John Lewis.

Labour believes that national fund – for dividends above the £500 cap – will deliver £2.1bn for public services by the final year of the next parliament.

The Conservatives condemned the proposal as “yet another tax rise from a party that already wants to hike taxes to their highest level in peacetime history”.

“It would make it harder for local businesses to take on staff and pay them a good wage,” said Liz Truss, the Chief Secretary to the Treasury.