Branson sends shockwaves around the business world.
In a shock four-page statement issued today, Sir Richard Branson has stated that the business structure on which he built his fortune is “not fit for purpose” and announced that he will be buying back shares in all Virgin companies to facilitate their conversion into employee-owned concerns.
This comes only a few days after the Virgin boss's outspoken response to losing the West Coast rail franchise to the First Group, but analysts are already saying that the implications of his announcement dwarf anything the maverick billionaire has done in the past.
Grossly unequal
Branson, with an estimated personal fortune of over £3bn, condemned the “grossly unequal distribution of money and influence that our present business structures bring about”, stating: “South African miners are right to strike – why should they not be able to sell their labour at a fair price while those at the top of the tree accumulate far more wealth through miners' sweat than they can sensibly use?
“Once companies issue shares they are under enormous pressure to simply amass money for their shareholders, regardless of the effects of this on employees, the communities dependent on them, society at large, or the environment.”
This comes only a few days after the Virgin boss's outspoken response to losing the West Coast rail franchise to the First Group, but analysts are already saying that the implications of his announcement dwarf anything the maverick billionaire has done in the past.
Grossly unequal
Branson, with an estimated personal fortune of over £3bn, condemned the “grossly unequal distribution of money and influence that our present business structures bring about”, stating: “South African miners are right to strike – why should they not be able to sell their labour at a fair price while those at the top of the tree accumulate far more wealth through miners' sweat than they can sensibly use?
“Once companies issue shares they are under enormous pressure to simply amass money for their shareholders, regardless of the effects of this on employees, the communities dependent on them, society at large, or the environment.”
This video set Branson on his road to Damascus.
Tax havens, climate change and the education of girls
Sir Richard – no stranger to tax efficiency – also criticised the effect of tax havens on global wellbeing and said that he would “be taking a leaf from the book of Andrew Carnegie” and giving away most of his wealth. He hinted that he will be focusing on the education of girls in the developing world, while continuing his quest to find a solution to global warming.
The former climate change sceptic – reportedly converted to green fuels campaigner after meeting Al Gore – attributed his latest radical change of outlook not to a book by Carnegie, or a meeting, but to a short YouTube video, as he explained in an exclusive interview with Deep Truth: “A colleague of mine chanced on a TEDx talk by David Erdal, an expert on employee-ownership, and suggested I watch it.
“I have often argued that entrepreneurs do best when they are not told what to do and how to do it, when they have control over their businesses and a significant stake in them.
Sir Richard – no stranger to tax efficiency – also criticised the effect of tax havens on global wellbeing and said that he would “be taking a leaf from the book of Andrew Carnegie” and giving away most of his wealth. He hinted that he will be focusing on the education of girls in the developing world, while continuing his quest to find a solution to global warming.
The former climate change sceptic – reportedly converted to green fuels campaigner after meeting Al Gore – attributed his latest radical change of outlook not to a book by Carnegie, or a meeting, but to a short YouTube video, as he explained in an exclusive interview with Deep Truth: “A colleague of mine chanced on a TEDx talk by David Erdal, an expert on employee-ownership, and suggested I watch it.
“I have often argued that entrepreneurs do best when they are not told what to do and how to do it, when they have control over their businesses and a significant stake in them.
I got hold of his book and read it in a couple of days.
Overwhelming evidence
“Well, what Erdal says is blindingly obvious, really, and I am ashamed not to have thought too much about this before. He says that the same applies to everyone else who works for a company – that they will be at their happiest, most creative and productive when they have a real say in what they they do and a stake in the company's success.
“The only way to do this effectively is to make employees co-owners, and Erdal has assembled a vast amount of evidence demonstrating that the most creative, long-lasting and resilient companies are those owned by their employees and not by shareholders.
“After watching Erdal's video I got hold of his book, Beyond the Corporation, Humanity Working, and read it in a couple of days. The evidence really is overwhelming.
Italian towns
“One of the most interesting bits was when Erdal compared the communities of three Italian towns differing in the proportion of people working for employee-owned businesses. Where many people worked for these, people lived longer, they had better social networks, they were more likely to have a favourable attitude to political authorities, more of them voted, they had the impression that domestic violence was less common, they gave more blood, their children stayed longer in school and were academically more successful, and to a far greater extent, they continued with education throughout their lives.
“Well, what Erdal says is blindingly obvious, really, and I am ashamed not to have thought too much about this before. He says that the same applies to everyone else who works for a company – that they will be at their happiest, most creative and productive when they have a real say in what they they do and a stake in the company's success.
“The only way to do this effectively is to make employees co-owners, and Erdal has assembled a vast amount of evidence demonstrating that the most creative, long-lasting and resilient companies are those owned by their employees and not by shareholders.
“After watching Erdal's video I got hold of his book, Beyond the Corporation, Humanity Working, and read it in a couple of days. The evidence really is overwhelming.
Italian towns
“One of the most interesting bits was when Erdal compared the communities of three Italian towns differing in the proportion of people working for employee-owned businesses. Where many people worked for these, people lived longer, they had better social networks, they were more likely to have a favourable attitude to political authorities, more of them voted, they had the impression that domestic violence was less common, they gave more blood, their children stayed longer in school and were academically more successful, and to a far greater extent, they continued with education throughout their lives.
Corrosive effects of inequality
“As someone concerned about climate change, the thing I found most interesting was the fact that people in communities where there was a high incidence of employee-ownership didn’t buy large and expensive cars, despite being better off!
“My interpretation is that status-related consumption is reduced when people feel more in control of their lives, and employee-ownership gives people this control.
“I have long believed that business should serve the broad and long-term interests of society, and I am now convinced that the PLC model (companies run for the profit of shareholders) is not fit for this purpose. That is why I am consulting on the conversion of all the companies in which I have a stake into employee-owned concerns.”
Branson also said that his thinking had been greatly influenced by The Spirit Level by Richard Wilkinson and Kate Pickett, a book highlighting the corrosive effects of inequality on society, and continued, “I shall be urging Westminster to do what it can to support employee-owned businesses, which have much flatter pay structures than other businesses, and to close down offshore tax havens. We really all should be in this together.
“As someone concerned about climate change, the thing I found most interesting was the fact that people in communities where there was a high incidence of employee-ownership didn’t buy large and expensive cars, despite being better off!
“My interpretation is that status-related consumption is reduced when people feel more in control of their lives, and employee-ownership gives people this control.
“I have long believed that business should serve the broad and long-term interests of society, and I am now convinced that the PLC model (companies run for the profit of shareholders) is not fit for this purpose. That is why I am consulting on the conversion of all the companies in which I have a stake into employee-owned concerns.”
Branson also said that his thinking had been greatly influenced by The Spirit Level by Richard Wilkinson and Kate Pickett, a book highlighting the corrosive effects of inequality on society, and continued, “I shall be urging Westminster to do what it can to support employee-owned businesses, which have much flatter pay structures than other businesses, and to close down offshore tax havens. We really all should be in this together.
Branson now champions employee ownership for UK railways.
Offer to fund more HMRC employees, and support for employee-owned railways
“If the UK Government won't fund the necessary extra HMRC employees, I may well just stump up myself, and claim back 10% of the additional revenue they are bound to generate. This would be a far more progressive way of tackling unemployment than lining the pockets of the likes of A4e boss Emma Harrison.
"Finally, while I know I shall be accused of sour grapes, let me repeat that I think it was a huge mistake to award the rail franchise to the First Group, whose bid was wholly unrealistic. I would not be so bitter about Virgin not being awarded the franchise if the government were to encourage the formation of an employee-owned business to run the railways. The evidence suggests that such an enterprise would not be interested in sucking the railways dry for all the short-term profit they could get, but in the long-term viability of the service, which is a natural monopoly and a public good."
Approached by Deep Truth, Lonmin (the company 34 of whose striking workers were recently shot dead by the South African police) and the UK Government both declined to comment on Branson's remarks.
Deep Truth comments: If Branson is serious about supporting the education of girls in the developing world – and we applaud him for this – he could do worse than donate to Camfed and the Central Asia Institute.
“If the UK Government won't fund the necessary extra HMRC employees, I may well just stump up myself, and claim back 10% of the additional revenue they are bound to generate. This would be a far more progressive way of tackling unemployment than lining the pockets of the likes of A4e boss Emma Harrison.
"Finally, while I know I shall be accused of sour grapes, let me repeat that I think it was a huge mistake to award the rail franchise to the First Group, whose bid was wholly unrealistic. I would not be so bitter about Virgin not being awarded the franchise if the government were to encourage the formation of an employee-owned business to run the railways. The evidence suggests that such an enterprise would not be interested in sucking the railways dry for all the short-term profit they could get, but in the long-term viability of the service, which is a natural monopoly and a public good."
Approached by Deep Truth, Lonmin (the company 34 of whose striking workers were recently shot dead by the South African police) and the UK Government both declined to comment on Branson's remarks.
Deep Truth comments: If Branson is serious about supporting the education of girls in the developing world – and we applaud him for this – he could do worse than donate to Camfed and the Central Asia Institute.
Why not send Sir Richard an email of support?
If you agree with Sir Richard...
why not send him a short email to congratulate him on:
We suggest you use the following email addresses:
why not send him a short email to congratulate him on:
- his support for employee-ownership,
- and his pledge to give away his fortune in support of educating girls in the developing world?
We suggest you use the following email addresses:
- If you're in the Asia-Pacific region: [email protected]
- If you're in North, South or Central America: [email protected]
- If you're anywhere else, including the UK: [email protected]