Tony Blair puts meat on the stakeholder bones

'More troubling from Tony Blair's point of view is that the word "stakeholder" is something of a term of art which has acquired a specific meaning for certain people on the left, and their interpretation may not be music to Mr Blair's ears'

Until Tony Blair's speech in Singapore last Monday, most people probably thought that a stakeholder economy was one in which everyone holds a lottery ticket. Not any more. The Labour leader caused quite a stir with his promise to create an economy "run for the many, not for the few... in which opportunity is available to all, advancement is through merit, and from which no group or class is set apart or excluded".

Mr Blair explained to David Frost yesterday that he intends the term "stakeholder" economy to be an umbrella concept, under which a multitude of more specific policy initiatives will comfortably sit. Not only will it offer a basic litmus test for new policy ideas as they arise, but it is also intended to persuade the electorate that Labour has a "big idea" to set in competition with the more brazenly laissez faire approach of the Conservatives. Note that the term stakeholder applies to the economy in Mr Blair's lexicon, to emphasise its toughness, while the term "one nation" is applied to the vaguer concept of society.

The Conservatives quickly recognised the danger of allowing the stakeholder concept a free run. But, as has been their recent habit, they were initially in two minds about how best to attack it. Michael Portillo was first out of the blocks, telling the nation that Mr Blair was simply mimicking the Thatcherite creed 16 years too late. Soon after, Michael Heseltine took an entirely different tack, claiming that this idea was Old Labour reincarnated, with powers being restored to the trade unions and other pressure groups. The fact that Mr Blair's speech had contained not one single word about the unions, or any other form of pressure group, was a disadvantage for the Heseltine interpretation, but this has nevertheless become the accepted Tory line. This will probably not worry Mr Blair too much - he is awfully hard to paint convincingly in Old Labour colours. Perhaps more troubling from his point of view is that the word "stakeholder" is something of a term of art which has acquired a specific meaning for certain people on the left, and their interpretation of its meaning may not be music to Mr Blair's ears.

One interpretation of the term is that championed by Will Hutton of the Guardian. He sees in it a new view - at least for the Anglo-Saxon economies - of the structure of the firm. In the US and the UK, the rights of the owners of the firm, the shareholders, are not only seen as sacrosanct, but company directors are required by law to protect them. This gives shareholders a primacy over other groups, such as employees, customers, or indeed the local community from which the firm derives its support services. Flowing from all this, it is claimed by the left, is the short- termism bred by Anglo-Saxon stockmarkets and the takeover culture. It is quite possible to imagine free market economies in which private firms do not operate in this way. In fact, Germany is one such example - a genuinely free market economy, but paradoxically one which requires directors on supervisory boards to represent all the interest groups that come together in a firm, not just the shareholders. The absence of any significant influence from the outside capital markets is said to have encouraged a long-term approach to investment decisions, employment practices, and customer relations. Many in the Labour Party want to see the next government take legislative action designed to import the German system of corporate governance into the UK.

So far, Gordon Brown has been very cautious about making specific commitments in this area, and yesterday Tony Blair went out of his way to rule out any change in corporate legislation. This caution is amply justified. For one thing, the two industrial economies that are built most conspicuously on the stakeholder concept of corporate control, Germany and Japan, are probably the two countries facing the most severe economic difficulties at the moment. This is mainly because both economies are plagued by overvalued currencies, which have nothing to do with the stakeholder system - but it is difficult to make a convincing political case for copying either of them just now. More important, any attempt by the Labour Party to change the statutory rights of shareholders, or to sanction the appearance of workers on company boards, would instantly play into the hands of Michael Heseltine, and justify his remarks about restoring power to the unions. Whatever the merits of the case, which are dubious anyway, it is not worth taking this considerable electoral risk - the avoidance of egregious error is probably all that is now needed to ensure a Labour election win.

There may, however, be some aspects of corporate reform which are safe ground for New Labour. It is important to distinguish sharply between measures which would trespass on the ownership rights of shareholders, which would be political death, and measures which encourage the representatives of shareholders, whether company managers or investing institutions, to display more long-termist behaviour. Mr Blair may have had this latter category in mind when he said that companies should no longer be bought and sold like commodities - a reference to Labour's plans to introduce a "public interest" criterion into the takeover code. Restricting hostile takeovers, and encouraging long-term shareholding through the tax system, are likely to be politically acceptable ways to encourage a stakeholder mentality in industry.

This leaves us with a further problematic interpretation of the stakeholder concept - that related to the welfare state. No sooner had Mr Blair sat down in the Far East than maverick Labour MP Frank Field was claiming the speech heralded a root and branch reform of pensions and benefits. It is certainly true that the present welfare system does not protect workers from summary restriction of pension and unemployment insurance "rights" which they believed the state had bestowed. While it is unthinkable in a free society for the state to rescind individual property rights - indeed they are so deeply-rooted that they have often re-emerged in eastern Europe after 50 years of communism - the same is not true of the communal pension and benefit rights bestowed under a democratic welfare state.

One way of remedying this problem is to require individuals to build up their own "provident accounts" on the Singapore model of forced savings. These can be used for unemployment insurance, education, pensions and even housing. Since they are individually assigned accounts, and fully funded by supporting investments, they cannot be lightly cancelled by the state, and would certainly be compatible with a stakeholder economy. But would a generation which is already heavily taxed to pay for the unfunded pensions of its parents now vote for a second dose of forced savings to pay for their own pensions as well? It seems rather doubtful, to put it mildly. This may be another area where New Labour needs to proceed cautiously as it puts meat on the bones of the stakeholder idea.

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Sport
sportDidier Drogba returns to Chelsea on one-year deal
News
i100
PROMOTED VIDEO
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
people
News
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
News
Tovey says of homeless charity the Pillion Trust : 'If it weren't for them and the park attendant I wouldn't be here today.'
people
Sport
Rhys Williams
commonwealth games
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little