Theresa May is to promise a crackdown on boardroom excess at large privately owned businesses as she unveils proposals intended to hold corporate Britain to account.



The prime minister said the government would look at ways to bring privately owned companies under a regime that could mimic the one imposed on major stock market companies.

While many private companies were performing well, “we have, however, seen an irresponsible minority of privately held companies acting carelessly – leaving employees, customers and pension fund beneficiaries to suffer when things go wrong.

“So we will explore ways to improve and extend good governance across big business so that everybody plays by the same rules and we create an economy that works for everyone, not just the privileged few.”

During her campaign to become prime minister in the wake of the Brexit vote, May had put corporate reform on her agenda, raised the prospect of employee representatives on boards and also of making votes on executive pay legally binding. In July, after a damning report by MPs into the collapse of department store BHS, she also prepared the way for closer scrutiny of private companies.

Proposals published on Tuesday will reopen the debate about ways to clamp down on unacceptable boardroom behaviour – although May has already told business leaders that she does not intend to force companies to directly appoint workers or consumer representatives on to their boards.

The TUC said she should press on with giving workers a greater say at the companies where they work, publishing a poll showing six in 10 people support the idea. Frances O’Grady, general secretary of the TUC, said: “Workers on boards is a policy that’s tried, tested and proven in many other countries. And it will work for Britain too, helping us build a stronger and fairer economy.”

The proposals being set out by the business secretary, Greg Clark, could raise the idea of publishing pay ratios – the difference between the chief executive’s pay and that of the workforce – and will also attempt to bring private companies under closer public scrutiny.



If stock market companies depart from corporate governance codes they are expected to explain why and the government could suggest that the largest privately owned companies adopt a similar practice under a newly created code of practice.

The green paper will have three sections: one on remuneration, one on stakeholder engagement and a third that asks what elements of these should apply to private companies.

The shadow business secretary, Clive Lewis, said: “The problems of spiralling executive pay and poor corporate governance have escalated over the last six years while the government sat idle. The prime minister already rowed back on her flagship policy of putting workers on boards.

“Sadly, this green paper looks like offering tokenism rather than a much-needed call to action.



“The real test has to be whether these proposals would have saved jobs and pensions at BHS or prevented the gross mistreatment of staff at Sports Direct, and whether they’ll tackle the scourge of low pay and escalated executive pay. Anything that falls short of doing that is just not good enough.”