Aaron Jacob is a solicitor, and former district councillor. He was the Conservative candidate for Sheffield Brightside and Hillsborough in 2024.
If all the preview, and speculation are to be believed, the Budget we are about to hear, will be punishing. Punishing for business, individuals and the economy, notwithstanding the promises of Labour’s manifesto. Gloom is very much the Starmerite order of the day.
Labour seems to be out of ideas already bar the triptych of tax, spend and borrow. Electing a new Conservative party leader means that the time is nigh for us to think again about our core beliefs. One of those core beliefs is personal responsibility.
The corollary of that responsibility must be opportunity, and so we need to consider anew the virtues of a capital-owning democracy. This will not only give new generations a real stake in our society, but it will also revive faith in the central purpose of free enterprise, wealth creation, particularly when many young people are pessimistic about capitalism.
The idea of a capital-owning democracy has long held real purchase in Conservative circles. Its meaning and relevance seem so obvious to so many. Its genesis, many believe, lay in the Thatcher revolution of the 1980s, namely, the privatisations of the period resulting in popular capitalism.
In fact, the idea was first conceived as an antidote to nationalisation that lay within the Conservative party subculture during the postwar ‘consensus’ years. In November 1958, the Conservative Chancellor of the Exchequer, Derick Heathcoat-Amory, stated that the “Conservative concept of a property-owning democracy may be said to include the widest possible ownership of shares in industry”.
More forcefully, some 10 years later, Nicholas Ridley, who chaired a Policy Group on the Nationalised Industries (PGNI), noted that denationalisation was a means of “obtaining large savings in Government expenditure, and will provide more equity shares for the public to own”. Nationalisation was begrudgingly accepted, but it is manifest that there were those questioning the suitability of the postwar consensus.
By the time that Mrs Thatcher came to power in May 1979, the idea of creating a ‘capital-owning democracy’ was eminently more than a campaign slogan. First came the sale of government shares in British Aerospace, Cable and Wireless, Amersham International, Britoil and the Associated British Ports. She wanted, she said, owning shares to be “as common as owning a car”. She set out her vision more fully at the 1986 Party Conference:
“The great political reform of the last century was to enable more and more people to have the vote. Now the great Tory reform of this century is to enable more and more people to own property. Popular capitalism is nothing less than a crusade to enfranchise the many in the economic life of the nation”.
This, of course, took place amidst the backdrop of the wave of privatisations of that time, as the public were given the opportunity to invest in the industrial monopolies of the day: British Telecom, British Gas, British Airways. This was the time of “Tell Sid”. “Tell Sid” had its intended effect: by the end of the 1980s, 22 per cent of UK adults held shares, up from 7 per cent a decade earlier.
Today, however, the direction of travel has gone into reverse. By 2022, only 18 per cent had market-based holdings and only 14 per cent held individual share portfolios. The Mansion House Compact by the former Chancellor of the Exchequer was manifestly a step in the right direction. We await to see what the Labour government will do. This could and should be the time that the Conservative party picks up the Thatcherite baton, if only because we now live in an inflationary world, with increased geopolitical risk and uncertainty.
Why is spreading capital ownership important?
Firstly, it would give people access to a broader range of assets. It would perhaps, if not end, then halt, the British obsession with home ownership, the only form of capital ownership that really captures the popular imagination.
Secondly, in the 2010s, for example, real interest rates were negative for much of the time, as the Western world battled deflation. Though the problem is very different today, it would ensure that capital returns were not depressed by the paltry rates of interest on offer by UK high street banks, as happened in the 2010s.
Thirdly, if share ownership were taken seriously by the UK public, this could lead to corporate governance change, as the UK public could directly demand change in the corporate sector. This may, for example, give companies an incentive to do more about sewage and pollution. Lastly, and perhaps most significantly, it would give people a real stake in the existing social structure and institutions. Never again would the likes of Jeremy Corbyn have even the remotest prospect of becoming UK Prime Minister.
By contrast, redistribution is the fulcrum around which all Labour policy turns.
Gordon Brown was its personification, and the result was the growth of the state. Time will tell whether Rachel Reeves will follow in a similar vein. It is curious, given its historic approach, that Labour is not more conceptually interested in wider capital ownership. Redistribution does by half, and via the backdoor, what wider capital ownership does in full: spreading opportunity for the generality of the population.
One seeks to promote equality of opportunity, the other, equality of outcome. Critics to the left of Labour understand the point: ‘the central problem with New Labour’s economic strategy was a political one: they redistributed money, but not power’. Conservatives understand that an economy comprises both consumption and production. The Labour approach is wrongheaded and begets a greater role for the state, ours understands that wealth must be created before it can be shared.
Capital broadly distributed across the population by giving people the chance to own assets is the right thing to do morally, economically and politically. The battle of ideas is indeed underway, and we must remember that free enterprise is a wealth creating machine that continues to lift millions from poverty.
Though times have changed, and there remains little low-hanging fruit in the form of nationalised monopolies, shareholder democracy was as right in the 1980s as it is today.
Aaron Jacob is a solicitor, and former district councillor. He was the Conservative candidate for Sheffield Brightside and Hillsborough in 2024.
If all the preview, and speculation are to be believed, the Budget we are about to hear, will be punishing. Punishing for business, individuals and the economy, notwithstanding the promises of Labour’s manifesto. Gloom is very much the Starmerite order of the day.
Labour seems to be out of ideas already bar the triptych of tax, spend and borrow. Electing a new Conservative party leader means that the time is nigh for us to think again about our core beliefs. One of those core beliefs is personal responsibility.
The corollary of that responsibility must be opportunity, and so we need to consider anew the virtues of a capital-owning democracy. This will not only give new generations a real stake in our society, but it will also revive faith in the central purpose of free enterprise, wealth creation, particularly when many young people are pessimistic about capitalism.
The idea of a capital-owning democracy has long held real purchase in Conservative circles. Its meaning and relevance seem so obvious to so many. Its genesis, many believe, lay in the Thatcher revolution of the 1980s, namely, the privatisations of the period resulting in popular capitalism.
In fact, the idea was first conceived as an antidote to nationalisation that lay within the Conservative party subculture during the postwar ‘consensus’ years. In November 1958, the Conservative Chancellor of the Exchequer, Derick Heathcoat-Amory, stated that the “Conservative concept of a property-owning democracy may be said to include the widest possible ownership of shares in industry”.
More forcefully, some 10 years later, Nicholas Ridley, who chaired a Policy Group on the Nationalised Industries (PGNI), noted that denationalisation was a means of “obtaining large savings in Government expenditure, and will provide more equity shares for the public to own”. Nationalisation was begrudgingly accepted, but it is manifest that there were those questioning the suitability of the postwar consensus.
By the time that Mrs Thatcher came to power in May 1979, the idea of creating a ‘capital-owning democracy’ was eminently more than a campaign slogan. First came the sale of government shares in British Aerospace, Cable and Wireless, Amersham International, Britoil and the Associated British Ports. She wanted, she said, owning shares to be “as common as owning a car”. She set out her vision more fully at the 1986 Party Conference:
“The great political reform of the last century was to enable more and more people to have the vote. Now the great Tory reform of this century is to enable more and more people to own property. Popular capitalism is nothing less than a crusade to enfranchise the many in the economic life of the nation”.
This, of course, took place amidst the backdrop of the wave of privatisations of that time, as the public were given the opportunity to invest in the industrial monopolies of the day: British Telecom, British Gas, British Airways. This was the time of “Tell Sid”. “Tell Sid” had its intended effect: by the end of the 1980s, 22 per cent of UK adults held shares, up from 7 per cent a decade earlier.
Today, however, the direction of travel has gone into reverse. By 2022, only 18 per cent had market-based holdings and only 14 per cent held individual share portfolios. The Mansion House Compact by the former Chancellor of the Exchequer was manifestly a step in the right direction. We await to see what the Labour government will do. This could and should be the time that the Conservative party picks up the Thatcherite baton, if only because we now live in an inflationary world, with increased geopolitical risk and uncertainty.
Why is spreading capital ownership important?
Firstly, it would give people access to a broader range of assets. It would perhaps, if not end, then halt, the British obsession with home ownership, the only form of capital ownership that really captures the popular imagination.
Secondly, in the 2010s, for example, real interest rates were negative for much of the time, as the Western world battled deflation. Though the problem is very different today, it would ensure that capital returns were not depressed by the paltry rates of interest on offer by UK high street banks, as happened in the 2010s.
Thirdly, if share ownership were taken seriously by the UK public, this could lead to corporate governance change, as the UK public could directly demand change in the corporate sector. This may, for example, give companies an incentive to do more about sewage and pollution. Lastly, and perhaps most significantly, it would give people a real stake in the existing social structure and institutions. Never again would the likes of Jeremy Corbyn have even the remotest prospect of becoming UK Prime Minister.
By contrast, redistribution is the fulcrum around which all Labour policy turns.
Gordon Brown was its personification, and the result was the growth of the state. Time will tell whether Rachel Reeves will follow in a similar vein. It is curious, given its historic approach, that Labour is not more conceptually interested in wider capital ownership. Redistribution does by half, and via the backdoor, what wider capital ownership does in full: spreading opportunity for the generality of the population.
One seeks to promote equality of opportunity, the other, equality of outcome. Critics to the left of Labour understand the point: ‘the central problem with New Labour’s economic strategy was a political one: they redistributed money, but not power’. Conservatives understand that an economy comprises both consumption and production. The Labour approach is wrongheaded and begets a greater role for the state, ours understands that wealth must be created before it can be shared.
Capital broadly distributed across the population by giving people the chance to own assets is the right thing to do morally, economically and politically. The battle of ideas is indeed underway, and we must remember that free enterprise is a wealth creating machine that continues to lift millions from poverty.
Though times have changed, and there remains little low-hanging fruit in the form of nationalised monopolies, shareholder democracy was as right in the 1980s as it is today.