View from City Road: Foundation short of good ideas

THE SOCIAL Market Foundation, backed by Lord Owen and David Sainsbury, has climbed awkwardly on to the bandwagon of deeper share ownership. Though it uses well-worn arguments it has drawn ill-fitting conclusions.

Like many bodies before it, the SMF has noticed that though the number of shareholders has grown from 3 million to 11 million since 1979 the proportion of the stock market they own has fallen to less than 20 per cent. What is needed is deeper rather than wider share ownership, it argues.

It wants to take general information about stock market investment out of the ambit of the Financial Services Act. But this would be open to exploitation by the unscrupulous. What is to stop someone giving information about the attractions of shares in general from going on to tip a selection?

The SMF recommends that companies should introduce a range of measures to bring about deeper share ownership. It suggests they should send quarterly newsletters as well as interim results and annual accounts to shareholders. Has the SMF worked out the postage for a company like Abbey National or British Gas?

It also recommends that companies could run a teletext information service giving individual shareholders information they have given to institutional investors behind closed doors. What would this cost?

What the SMF ignores is that most companies do not encourage individual shareholders. They may only admit it in private, but most regard them as an unnecessary expense. This is why efforts to deepen share ownership will make slow, if any, progress.