Labour drives for worker directors

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A LABOUR government would press ahead with plans to put workers on the boards of British companies and might even offer tax incentives to employers introducing German-style two-tier boards.

News yesterday that Labour wanted to introduce the necessary framework for two-tier boards in a new Companies Act was greeted with hostility by business leaders, who dubbed such boards cumbersome and unaccountable.

Stuart Bell MP, a front bench industry spokesman, said in a speech yesterday that Labour would legislate to introduce two-tier boards. Workers would elect representatives to sit with conventional directors on supervisory boards overseeing executive boards.

Representatives from local communities would also be given places on supervisory boards. The new structure would be optional, not mandatory, Mr Bell said.

However, earlier he hinted that companies adopting the new structure would be offered tax advantages over traditional companies. 'We would hope that would happen, but it still has to be sorted out with our Treasury team.'

More details of the plan would be available at the Labour Party Conference in a week's time, when Labour's revised Winning for Britain document is presented.

Ann Robinson, head of the policy unit at the Institute of Directors, said: 'I'm amazed they're resurrecting this.' Supervisory board members were often ill-informed about the companies they were meant to be overseeing, she said.

Colin St Johnston, managing director of Pro Ned, the ginger group promoting non-executive directors, was also dismissive: 'It's a step in completely the wrong direction. It is ironic they should be doing this just as continental companies are realising two-tier boards don't work very effectively.' Supervisory boards met only quarterly, he said, and had very little contact with any manager other than the chief executive.

The Confederation of British Industry declined to comment. However, it was opposed to German-style boards in 1992, favouring unitary boards where all directors have equal responsibilities and obligations.

Mr Bell said the Cadbury Code on corporate governance was already leading in the direction of two tiers 'because executives are concentrating on management and non-executives are focusing on supervision. However, we want non- executives who are part of the work force and part of the community and therefore we see a larger role for the two-tier board than envisaged by Sir Adrian Cadbury.'