Nick Clegg plans more employee ownership
Deputy Prime Minister Nick Clegg has urged more companies to offer shares to their employees, saying it will improve productivity and unlock growth.
He told an audience in the City that the government planned to cut red tape, and reform the tax system to accommodate employee ownership.
It is hoped the measures will create what he called a "John Lewis economy".
Shadow business secretary Chuka Umunna said Mr Clegg was following Labour's lead on responsible capitalism.
Department store group John Lewis is owned by its employees and distributes its profits between them.
The Lib Dem leader told the event hosted by the City of London Corporation and Centre Forum think tank: "We don't believe our problem is too much capitalism - we think it's that too few people have capital.
"We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like.
"And what many people don't realise about employee ownership is that it is a hugely underused tool in unlocking growth.
"I don't value employee ownership because I believe it is somehow 'nicer' - a more pleasant alternative to the rest of the corporate world. Those are lazy stereotypes.
"Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better.
"Lower absenteeism. Less staff turnover. Lower production costs. In general, higher productivity and higher wages. They weathered the economic downturn better than other companies."
Mr Clegg said the concept of employee ownership had long been a "touchstone" of liberalism and he wanted to get it "into the bloodstream" of the British economy.
That could include the introduction of a right for workers to request shares in their companies, he said.
The move would challenge the corporate culture and help usher in a new era of "responsible capitalism", he added.
Ministers have already announced plans to give shareholders more power to curb executive pay, following public anger over excessive boardroom pay and bankers' bonuses.
The government's full package of boardroom reforms is expected to be announced by Business Secretary Vince Cable next week.
Lib Dem Business Minister Ed Davey will spearhead work on removing barriers to employee ownership.
And Lib Dem Chief Secretary to the Treasury, Danny Alexander, will study the tax arrangements.
Shadow business secretary Chuka Umunna said Labour leader Ed Miliband had led calls for a more responsible capitalism.
"Despite having first scorned Labour's initiative, David Cameron now claims he has become a convert to the cause," he said.
"The question for both him and Nick Clegg is whether they have the courage or the conviction to make the change that is needed.
"If Nick Clegg wishes to follow Labour's lead in promoting shareholder activism and engagement, that is welcome."
Charlie Mayfied, chairman of the John Lewis Partnership, said greater diversity in the ways companies were owned and run should be welcomed.
"Employee ownership is not a silver bullet to the economy's ills, but it could be one solution to the problem of building a more sustainable economy built on long-term foundations.
"Employee ownership can also help fulfil the increasing desire we have for more influence in our work so as to unleash our potential and productivity," he said.
Michael Stephenson, general secretary of the Co-operative Party, said: "We welcome the recognition from the government that crony capitalism needs reform, but Nick Clegg's ideas barely scratch the surface of employee ownership or co-operative businesses.
"There are one billion members of co-operatives worldwide and only 328 million shareholders: the Tory-led government are clueless about giving ordinary people a real say in running businesses."