Worker Ownership

Part of the debate – in the Scottish Parliament at on 28 September 2017.

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Photo of Richard Leonard Richard Leonard Labour

Today, we face a state of affairs in which we are witnessing a growing centralisation and a growing concentration—I would argue that it is a growing overconcentration—in the ownership of Scotland’s economy.

Too much power rests in too few hands, and, increasingly, that power rests in boardrooms that are thousands of miles away, with more than a third of Scotland’s economic and industrial base now overseas owned. There is nothing intrinsically wrong with foreign direct investment, which can bring innovation, investment and employment. However, all too often, it is the result of mergers and acquisitions, including, in recent years, the acquisition of public utilities that we, the people, used to own—a transfer of ownership, rather than the source of new investment.

If our economy becomes—as it is increasingly becoming—a branch-plant economy, the result will be that we are more vulnerable to international shocks. The truth is that economic ownership matters, because with economic ownership comes economic power. If we are to achieve, as I believe we must achieve, a redistribution of wealth and power to the many from the few, decisive action will be required to challenge and change the ownership structure of our economy. That is why it is time that we put in place a Scottish investment bank that is worthy of the name, working as a proactive agent of economic change, investing patient capital and taking strategic public interest shares in private companies.

It is also time that we put in place different frameworks and ownership structures to build up business resilience to takeovers and to build in greater democracy and accountability in our economic system. It has long been my view that, in order to do that, it is time to promote direct employee and worker ownership in the Scottish economy.

I am therefore delighted to bring the debate to Parliament and to have secured some cross-party support for it, so that together, in this Parliament, we can all recognise the contribution that is made by employee-owned companies to the Scottish economy in the present and consider the even greater contribution that worker-owned businesses could make with a bit more support from the Parliament in the future.

The motion that we are debating was prompted by my recent visit to two employee-owned firms in East Kilbride: Clansman Dynamics and Novograf. One is now well-established as a worker-owned business and one is just starting out on that journey. In both cases, the catalyst for the transfer of ownership was the far-sightedness of the existing owners. In each case, the owners were looking for a succession plan that did not entail selling up the business only to see the assets stripped, the order book stolen and the local jobs lost for ever. To their great credit, the owners believed that they had a moral obligation to the working women and men who, with them, had built those businesses up.

The question for Parliament is this: what can we do to put that radical idea into action more widely? Can we make that moral obligation on some a legal obligation on all? How can we move the idea from the fringes to the mainstream of our economy?

What can we learn from international experience? In Italy, the Marcora law, introduced in 1985, gives workers whose business faces closure a statutory right to buy the company. Alongside that legal right is funding from the state to match a contribution from the workers. In France, the social and solidarity economy law, passed in 2014, gives legal recognition and incentives to workers to buy the business that they work in when it is to be sold off. In the Basque country of Spain, Mondragon has been a shining beacon of co-operative ownership for six decades. More than 83,000 workers are employed in over 250 worker-owned enterprises, where surpluses are reinvested in the business rather than redistributed to absentee shareholders, with the result that jobs have been retained during the current economic slump.

I say this: in Scotland, which was home to the Fenwick weavers, and where Robert Owen wrote “A New View of Society” and established New Lanark, why should we not set ourselves the ideal—the goal—of becoming the Mondragon of the north? Let us have a vision of Scotland as a northern European beacon of co-operation. If we can have a community right to buy land, why can we not have a workers’ right to buy business? Why should those who create the wealth not have a right to own the wealth that they create? Support for that idea, whether as a statutory right of first refusal for workers when an enterprise is put up for sale or facing closure, or simply its wider promotion on a voluntary basis, will demand a better resourced and more powerful Co-operative Development Scotland, with access to investment and technical support and with statutory underpinning from this Parliament.

There are sound industrial and economic reasons to promote worker ownership, boost employment and forge a sustainable alternative to footloose and speculative capital ownership. There are underlying political and social reasons, too. A century ago, GDH Cole declared that if democracy

“is good in the State and local government, it is good ... in industry also.”

I believe that we need industrial and economic as well as political democracy. We can and we must build a future in Scotland that is based on equality and greater common ownership. It is a future that working people across this country, who all too often encounter drudgery, alienation and exploitation at work, will strive for and reach out for, because it is a message of hope and a message of change, and real hope and real change are what I believe the people of Scotland expect this Parliament to deliver.