DISCUSSION A vision of value creation

by Mark Goyder _______4th May 2017

On 4 May Mark Goyder was an opening speaker in the 30th EU Corporate Governance Conference, held in Malta. The theme of the session in which he spoke was ‘Long-term value creation – determine the future of our economic and political systems’.

We need a vision of long-term value creation. The EU needs it. The UK needs it. Scotland needs it. So, do Wales and Northern Ireland and the regions of England and every EU country.

In the UK, where a General Election is due to be held, wealth creation deserves as important a place in the debate as the future of the National Health Service, or the state of education in this country. The nearest we get to a debate on wealth creation will be the ritual condemnation of the greed and short-termism of big business.

And yet there are some simple and obvious things that we need government to do. I don’t think that they are controversial. They are not the issues that get much attention. Giving them attention in everyday policy, and in the approach to the Brexit negotiations, could make a huge difference.

In simple terms the issues are these

Imprinted on all its actions like the words in a stick of rock should be this idea: our economy and society and the wealth of our citizens are only as good as our companies, and the companies that all our policies will encourage will have clear purpose, strong values, a commitment to successful stakeholder relationships and a long-term approach. That doesn’t mean we want all our companies to be the same: far from it. We want them to be different. We want them to explain clearly and publicly what they stand for, so that in the world of Glass Door and involuntary exposure, United Airlines -style, we can hold them to account.

The danger of current government policy is that through its actions it unintentionally promotes or facilitates companies which focus on the short term.

It does this through its own procurement policy – government buys too short-term and focuses on price, not value or quality. Its approach to takeovers – this still leaves strong UK-based listed companies looking over their shoulder and does not strengthen the stewardship authority of company boards. Its inaction on the interpretation of fiduciary duty – layers and advisors still tie pension trustees up in knots by frightening them away from a focus on creating long-term value and the needs to be clarified. Its approach to remuneration – while it has helped to stimulate action by investment institutions on the pay of directors, the asset managers in those investment institutions continue to be paid and incentivised in ways that encourage quarterly capitalism.

So here are five points for a party manifesto focused on wealth creation.

In seeking election our party will do everything through our range of policies to encourage: