4. The concentration of market power
Large corporations and their major shareholders
Power is not only concentrated in the institutions of the state; that is just where it is most visible. This chapter explores how it concentrates in the private sector, in ways that fuel public resentment, and make the government’s goals harder to achieve.
I. Problem
In post-war Britain, business leaders were expected to work in corporatist concert with government and trade union leaders, to try to manage the economy by consensus.
By contrast, most shareholders owned only a few stocks and had little power.1
The City, by comparison to today, was a somnolent gentleman’s club; production loomed larger than finance. Executives could use their power to direct profits towards promoting social goods, or to treat themselves to luxuries.
In 1970, the American free market economist Milton Friedman championed a heretical idea: that ‘a corporate executive is an employee of the owners of the business’, whose ‘responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society’.
For executives to spend other people’s money promoting ‘social responsibility’ bolstered the view that ‘the pursuit of profits is wicked and immoral and must be curbed and controlled by external forces’. This, Friedman warned, could provoke socialist coercion.2
II. Power shift
As the post-war economic model broke down through the 1970s, putting shareholders first offered a way to revive corporations’ failing fortunes. And it seemed to work: business boomed in the 1980s, and again through the 1990s and 2000s.
Over time, the focus shifted from maximising a firm’s profit to maximising the price of its shares – which was held to be a reliable indicator of its value.3 Executives’ incentives were aligned with this goal by relating their pay to the share price.
III. Overextension
Shareholder value
The logic of prioritising shareholders was that they were putting their capital at risk.
But in the decades since shareholder value was adopted, patterns of share ownership have changed radically, first through the rise of the fund manager, then the transformative concentration of power driven by the growth of huge asset management companies. These control trillions of dollars in assets, encompassing everything ‘from stocks and bonds to private equity, government debt, commodities, and real estate’.4
As the authors Adrienne Buller and Mathew Lawrence have argued, the aim of these companies is the accumulation of ‘ever more assets under management, from which their fees are derived’, and in seeing asset prices rise. According to Buller and Lawrence, their ‘structural interest in the performance of any given investment is negligible’5
The shareholder value model excludes other risks: to employees (staking their income, job security and personal safety), citizens (who lose out if the company has to be bailed out with their taxes, or pollutes the environment), customers (affected by shoddy or dangerous products), and suppliers (impacted if the company folds). As Andrew Haldane, then chief economist at the Bank of England, noted in 2015, ‘employees, customers and clients’ cannot easily diversify their risk by investing ‘in a portfolio of jobs, or products or supply lines… But under the current shareholder-centric model, these wider stakeholders are not given any control rights over management.’6
Shareholder value has also been criticised for incentivising executives not to innovate but to asset strip their own companies through squeezing pay and conditions, raiding pension funds and making use of tax relief on debt interest to borrow heavily and pay high dividends. As Larry Fink, CEO of BlackRock, put it in 2015, ‘more and more corporate leaders have responded with actions that can deliver immediate returns to shareholders, such as buybacks or dividend increases, while underinvesting in innovation, skilled workforces or essential capital expenditures necessary to sustain long-term growth’.7
This has helped to perpetuate Britain’s anaemic growth rate and the public discontent it stokes. Criticism of this approach has been strongly articulated by free market Conservatives such as David Davis MP, who has called for share price-boosting buybacks to be outlawed.8
Concentration of ownership and control
Shareholder value incentivises mergers and hostile takeovers, as both tend to boost the share prices concerned in the short-term. Market dominance, once achieved, tends to make investor returns more secure. By 2020, the 100 biggest firms in the UK accounted for almost a quarter of total revenue, a rise of 25% since 20049
The tactics of private equity companies, now also much-used by the asset management giants, have further concentrated ownership and power. At its best, private equity can bring specialist management to the rescue of a failing company, but it also has a record of extracting wealth from the firms it purchases, a practice former Conservative cabinet minister Michael Gove condemns as ‘organized theft’.10
One consequence of concentrated ownership is rent-seeking. Of the ten most important consumer markets in the UK, accounting for 40% of consumer spending, eight are classed as ‘concentrated’. These include ‘groceries, broadband, mobile telephony, landline-only phone contracts, electricity, gas, personal current accounts, and credit cards’.11 Other businesses extract rents through concentrated ownership of scarce resources like land, natural resources, financial assets, infrastructure and outsourcing contracts.12
The concept of rent-seeking was developed in the late 1960s by one of the pioneers of public choice theory, Gordon Tullock. As we saw in Chapter 1, he developed a similar thesis, which argued that politicians and civil servants are self-serving. Ironically, this concept has stuck where the notion of rent-seeking has not, perhaps because those whom the latter critiques are less visible. As a concept with which to identify concentrations of power, however, rent-seeking is invaluable.
As an American antitrust official once observed, ‘monopoly conditions have often grown up almost unnoticed by the public until one day it is suddenly realized that an industry is no longer competitive but is governed by an economic oligarchy able to crush all competition’. However, one sector where this phenomenon has become so extreme that it is visible, both to customers and to SMEs, is the US digital platform industry. Typically, the ‘commission Apple and Google take on an in-app purchase is 30% , with a lower 15% commission for small businesses’13
IV. Entrenchment
Shareholder value
Whatever its unfortunate side-effects, the pursuit of shareholder value is now thoroughly normalised. The alignment of executives’ compensation with company share price creates an accountability sink, which makes the whole approach harder to challenge. Shareholders protest that they do not run the company, while executives aver sincerely that they do not own the company, and must run it to benefit those who do.
Beneath this is a set of beliefs, such as that people are motivated solely by rational self-interest. Historically, legal liability was granted ‘because it was widely recognised that corporate activity served the public good’,14 and before shareholder value, it was common for limited companies to consider their role in society. But concentrating on share price or profit alone, excluding wider considerations, makes for a much more legible economic model.15
This is not driven by cynicism, but by an article of faith. As Rebecca Henderson of Harvard Business School writes:
‘In the majority of our boardrooms and our MBA classrooms, the first mission of the firm is to maximize profits. This is regarded as self-evidently true. Many managers are persuaded that to claim any other goal is to risk not only betraying their fiduciary duty but also losing their job. They view issues such as climate change, inequality, and institutional collapse as “externalities”, best left to governments and civil society. As a result, we have created a system in which many of the world’s companies believe that it is their moral duty to do nothing for the public good.’16
So driving the commitment to shareholder value, there is a factual claim: that executives have a legally-binding fiduciary duty to shareholders to maximise the share price.
To its critics, this is a myth. In the UK, directors’ duties were not formalised in statute until the 2006 Companies Act; Section 172 specifies that they have a duty to ‘promote the success of the company for the benefit of its members’ – the shareholders. However, directors must ‘have regard’ to ‘the long-term consequences, the interests of the company’s employees, suppliers and customers, the impact of the company’s operations on the community and the environment, the company’s reputation, and fairness as between the shareholders’.17
Competition lawyer Michelle Meagher suggests that shareholder value is unenforceable, that ‘no case exists holding a director liable for not maximizing shareholder value in the everyday operations of the company since Dodge v Ford’, and that ‘the English courts have made clear that the shareholders are definitively not owners of the company’.18 Primacy of shareholder value is merely a ‘powerful norm’. This is imposed through ‘threat of hostile takeovers’, large institutional investors reminding managers ‘who controls their appointment’, how people are socialised ‘in business schools and on the job, and through the constant utterance of the firm’s lawyers’ and indeed through directors also being shareholders.19
Concentration of ownership and control
Likewise, concentrated ownership is entrenched by a series of norms and practices:
First, the argument that profit or share price is the only measure of a company’s worth, and that it is wrong to try to distinguish between productive businesses and rentiers. Government tends to see making such distinctions as bias, or as off-putting to investors, or as an impediment to growth, and often ends up favouring those companies which are largest or best-resourced. It also sometimes fails to distinguish the interests of large, established players on the one hand, from those of dynamic market competition on the other.
Second, the concentration of market power has been reinforced by the expansion of home ownership and private pensions, which align citizens’ interests with those of asset management companies.
And third, the belief in shareholder value has been used to justify removing protections against concentration. As Henderson puts it:
‘When we told the leaders of firms that their sole duty was to focus on shareholder value, we gave them permission to turn their backs on the health of the institutions that have historically balanced concentrated economic power. We told them that so long as they increased profits, it was their moral duty to pull down the institutions that constrained them—to lobby against consumer protection, to distort climate science, to break unions, and to pour money into efforts to roll back taxes and regulations.’20
V. Public discontent
Public discontent is stoked by dying high streets and the disappearance of long-established shops, by high prices, low pay and insecure work. But it is difficult to know who to blame. This feeds the theory of power William Davies found on ‘Farage-adjacent TikTok’:
‘The simple, transparent equilibrium of the market has been replaced with the opaque disequilibrium of value extraction – or what might otherwise be called a scam.
‘This is, at least in part, what happens in a capitalist society when profits remain high but productivity and wage growth stagnate. Things no longer add up. For many, work no longer pays well enough to secure a family existence. Someone somewhere is clearly getting richer, but it isn’t clear how or why.’21
The concentration of ownership and power may have largely taken place unnoticed, but it has erected a series of obstacles to democratic politics proving itself effective:
- It exacerbates problems which corrode public trust, for which politicians are (unfairly) blamed;
- It impedes economic growth; and
- It deprives the state of desperately needed tax revenue.
Corrosion of public trust
In the eyes of the public, the declining high street appears to have become a symbol of a ‘broken’ political system, visible in the disappearance of familiar brands like Topshop, Maplin and Cath Kidston, and the closure of branches of chains like Body Shop, Wilko and Marks and Spencer.
Among those in our poll who see their high street failing, significantly more blame decisions made by national government than by big business.22
And local government, which has less power to fix the high streets’ problems than either, is blamed most. This supports the thesis that people tend to blame visible forces over less visible ones.
High streets are struggling for various reasons, including changing retail trends and consumers’ own choice to shop online,23 but another is strategies pursued, particularly in the recent past, by private equity buyers. Their consolidation of small companies under more concentrated ownership can create efficiencies, but their approach to debt has left long-term damage.
This heavily burdened chains like Debenhams, which was taken private in 2003. The funds concerned paid themselves £1.2bn in dividends, while hiking the company’s debt from £100m to £1,000m. The sale and lease-back of 23 stores then ‘raised almost £495m for the temporary owners and saddled the business with long-term leases of up to 35 years’. By 2021, post-Covid, the chain’s high street presence was finished: thousands of staff lost their jobs and the stores were sold;24 some were still sitting empty, blighting high streets five years later.25
Concentration has also left high street properties under more distant ownership, ‘with commercial property seen as an investment for pension funds or private equity groups hoping to “flip” assets quickly to cash in on rising values’. The push to extract profit ‘has frequently led to inflexible and costly rents that exclude small and start-up businesses, and to practices of irresponsible ownership where vacant properties are landbanked for their book value rather than brought back into use’.26 Jessica Craig from Power to Change suggests that this perpetuates vacancy, likely contributes to the decline of uncared-for property, and worsens the flow of wealth out of communities.
Alongside the damage to high streets, concentrated ownership hurts customers. Lack of competition allows businesses to raise mark-ups over cost. 27 Many customers feel disempowered, for instance, by the threat of being ‘thrown off course by the next energy bill rise’28
in a market dominated by a handful of companies. Our polling found that respondents thought the energy companies have more power over the quality of their lives than any other forces bar banks and national government, and blamed them (second only to government) for the rising cost of living.29 Market-dominating companies assert their power over customers by other means too, such as landlords’ tenacious defence of the long-outdated leasehold system, exploitative ‘dynamic’ pricing, and tech companies’ insatiable thirst for our personal data.
Concentrated ownership also gives companies the power to apply the discipline of competition to their employees and suppliers, even as they avoid it themselves. 30
In the context of the near-disappearance of unions from the private sector, companies in highly concentrated sectors such as resource extraction and infrastructure have been able to squeeze pay by asserting ‘monopsony’ power: keeping wages down because employees lack alternative employers. Between 1998 and 2017, ‘Higher levels of labour market concentration [we]re associated with lower pay amongst workers not covered by a collective bargaining agreement.’
’31
The decline of manufacturing and the advance of finance and rentier-isation have allowed profitability to climb far ahead of wage rises, ‘consolidating the power of a wealthy ownership class’.32 Working people’s share of incomes has fallen, from around 70% in the early 1970s to around 55% by the mid-2010s.33 This is particularly difficult to challenge if your employer is a foreign corporation.
All this feeds the widespread feeling, illustrated in our poll, that work is not properly rewarded – further stoking the public’s sense that they are being scammed.
Stagnant productivity
Rising market concentration impedes growth by removing incentives both for dominant companies to invest in innovation, and for start-ups to challenge them.34
Liberated from market competition, dominant firms can sweat their existing assets and extract rents. Dominant players can also redeploy excess profits to lobby government to maintain barriers to entry that thwart challenge from start-ups. As one specialist in regulatory policy puts it, ‘for large players in the market, regulatory complexity is a subsidy’ and ‘can be a competitive moat’. The expense involved in compliance has the effect of keeping out ‘challengers [who] cannot bear those cost burdens’.
Visibly preventing this will help to address the impact that concentrated power has on both growth and the public’s sense of unfairness, not least among entrepreneurs. As Labour MP Chris Curtis observes, lobby groups ‘only have power to the extent that the state lets them have power’.35
Lost tax revenue
A majority of the public sees even legal tax avoidance as unfair – as another scam by the powerful. In September 2025, 57% of respondents to a YouGov poll said it was ‘unacceptable’. Similar responses have been consistently recorded for the last six years.36
A growing number of the big, market-dominating companies that operate in the UK are headquartered in the United States. As well as making it harder for start-ups to grow, this costs the government tax revenue, because – in a telling expression of their power – some US corporations have in recent years found legal ways to avoid paying billions of pounds in tax, according to HM Revenue & Customs (HMRC).37 Even after a public outcry, Starbucks ‘declared no profit and paid no tax on its £1.2 billon of sales’ in the three years to 2022.38 (There is no suggestion that any of this is illegal.)
More broadly, as the businessman and investor Angus Hanton has charted, many British-born brands are now American-owned. As part of their restructuring of their British acquisitions, US private equity firms ‘split up companies so that most of the profits end up in tax havens’.39
Hanton estimates the likely tax loss from US owners offshoring profits is over £12bn annually, and charges that private equity has added a further burden to the public purse by shifting the pensions liabilities of UK companies it buys onto the books of the government’s Pensions Protection Fund. This grew from £9bn in 2009 to over £32bn by 2023.40
VI. Government response
Tackling concentrated market power offers ways to achieve two vital goals at once: removing drivers of public disempowerment and discontent, and fostering economic growth.
Through its industrial strategy, the government is seeking to break up concentrations of market power by addressing the snapping-up of British start-ups by foreign companies. As then Business Secretary Jonathan Reynolds put it when he launched the strategy, ‘We all recognise the tremendous innovation in this country, but do we always get the long-term benefits of that scale-up happening in the UK rather than going abroad? We do not, and that is what we are seeking to fix.41 The strategy proposes to do this ‘through strategically targeted public finance’ via the British Business Bank and new National Wealth Fund – ‘to encourage scale-up funds to raise more capital and lead larger investment rounds in UK businesses’.42This is now possible at scale because of the Chancellor’s November 2024 change to the fiscal rules. In her 2025 Budget, she went on to announce a series of measures designed to help ‘make Britain the best place in the world to start up, scale up, and stay’.43
Concentration is also addressed by the Digital Markets, Competition and Consumers Act which ‘will ensure that industrial strategy initiatives promote genuine market contestability rather than reinforcing existing power structures’.44 The Treasury has already succeeded in pushing ‘financial regulators to be more accommodating of new entrants and challengers – the visible result being a meaningful UK fintech boomlet’.45
Further steps depend on a clear-eyed differentiation between creating dynamic markets, and over-serving established players. The Institute for Public Policy Research (IPPR) has outlined a range of ways of ‘curbing monopolistic power’, such that ‘the government can deliver lower prices, higher wages, higher investment, and a more resilient economy’.46 The Competition and Markets Authority (CMA) has made use of its new powers under the Digital Markets Act to designate Apple and Google as ‘strategic market players’, ‘a label reserved for companies with entrenched market dominance and strategic significance’, which facilitates measures to legally require them to change their market behaviour.47
Reversing the corrosion of public trust
The government has taken significant steps to address imbalances and concentrations of power which corrode public trust as they affect employees, customers and citizens, even if they are not always presented as having that aim.
- The government is proposing measures to crack down on ‘subscription traps’, which the then Business Secretary cast as a ‘corporate abuse of power’.48 More broadly, the 2025 Budget signaled crackdowns on ‘rip-off price hikes’, and ‘the illicit businesses that blight our high streets and undercut legitimate firms’.49
- The Employment Rights Act will help to address disempowerment in the workplace.
- The Safer Streets Summer Initiative, which increased police patrols in high-crime areas, and the pledge to raise neighbourhood policing numbers by 3,000 by March 2026, alongside new powers in the Crime and Policing Bill to ban persistent offenders from town centres, should address antisocial and criminal behaviour, provided police are able to put a stop to teenagers’ sense of ‘invincibility’.50
- In the 2025 Budget, the Chancellor announced a series of reforms ‘to support our high streets’, including ‘permanently lower tax rates for over 750,000 retail, hospitality and leisure properties’, partly funded by higher rates on ‘the warehouses used by online giants’ and stopping ‘online firms from undercutting our high street businesses by ensuring customs duty applies on parcels of any value’.51
- The announcement of £5bn of ‘Pride in Place’ funding for local communities has the potential both to tackle the symbolically charged decay of high streets and local amenities – to ‘get rid of the boarded-up shops, shuttered youth clubs and crumbling parks that have become symbols of a system that stopped listening’, as the prime minister put it – and also to re-empower communities by giving them ‘more power to restore pride in where they live – and on their terms’.52 This includes new powers to block dubious gambling and vape shops from opening.
The more this money can be allocated on the basis of trust, rather than through onerously complex assessment and monitoring rules and ‘beggar thy neighbour’ competitions between authorities, the more it will re-empower people, and help to restore the public’s faith in democratic politics. As the Labour minister Kirsty McNeill, who previously worked as an executive director in the charity sector, puts it: ‘if you think the organisation actually can’t be trusted to deliver effectively, then the answer is: no money. The answer is not money really inefficiently spent, because you’re trying to micromanage.’53
Recommendations
Business and finance
- Asset management companies could be encouraged to incorporate social infrastructure and community space into real estate they own and manage, as pioneered by Platform Places. Platform Places is an organisation incubated by Power to Change which has had some success in fostering relations between communities and the public and private sectors – including a major investment management company – to make better use of assets in town centres, on the basis that thriving communities and independent businesses are mutually beneficial.
- In return for the increase in police patrols in high-crime areas and the pledge to raise neighbourhood policing numbers, leadership teams of high street chains could be encouraged to trust their branch managers to engage in place-based local schemes to rebuild a sense of community, and even incentivise them to do so.
- Facilitating the establishment of regional banks which, as FGF’s report ‘Impactful Devolution 03’ recommended, could ‘connect venture capital with regional economies’, targeting local ‘SMEs who cannot obtain debt or equity’ from existing banks.54
- Encouraging banks to play as committed a role as possible in local communities. From an enlightened self-interest perspective, rebuilding community and trust will make less likely the election of a government that would damage their interests.
Regulation
- In return, government could use its power to free Britain’s regulatory culture of its tendency to burden businesses with duplication, contradiction, safety-ism, needless complexity and making impossible demands, by creating feedback loops that bring poor drafting back to the desk of the person responsible. Potential regulation could be tested, either through consultation or common sense, by asking who it empowers.
- Well-drafted consumer regulations and swift regulatory intervention, not least in relation to profiteering, would address the public’s ‘scam’ theory of power. More in Common’s research found that ‘Majorities in almost all segments support the government introducing regulations on businesses to protect consumers from harm’.55 IPPR has called for the CMA to fast-track ‘clear consumer harm cases’ such as grocery pricing.56
- Much of this could be pulled together to offer business a Grand Bargain – a fundamental rethink of the purpose and detail of regulation, in line with the Chancellor’s ambition to free business from red tape, in return for business acceptance of regulation that focuses on demonstrable public goods, including both consumer protection and maintaining proper market competition.
- This should aim to move away from the current legalistic approach towards a more trust-based model. This would be of particular benefit to SMEs, who often experience regulation as an expression of unfair state suspicion.
- This might also involve a principle of earned self-regulation, along the lines that used to govern swathes of Britain’s professional life, and what has already happened in the financial sector. A sector that demonstrates good governance standards could earn relief from regulatory oversight.
Following the principle that Rachel Reeves outlined in her 2018 pamphlet ‘The Everyday Economy’, that ‘the way forward is… to bring capital under better democratic control’57 more radical steps might include the following:
- Encouraging companies to re-empower their workers as stakeholders, building trust, agency and respect for the difficulties faced by both staff and management. Empowering staff would help to reduce the appeal of toxic narratives about ‘rigged’ systems. Approaches might include:
- a revival of the May government’s move to put workers on company boards;
- a restoration of collective bargaining would foster more relational employer-staff contacts, however robust, which might encourage more equitable mutual respect, as was once normal in many British workplaces; and
- given the likely coming rise in graduate unemployment as AI replaces entry-level jobs, and its potential for fomenting political discontent, government may need to consider more options to incentivise businesses to hire and retain young workers.
- Limited liability’s origins as an act of trust could be restored by ruling that ‘any entity taking control of an operating company should have to guarantee its debts’. This would prevent private equity companies and others exploiting a company’s capacity for debt to ‘buy it with its own money’.58
- Alternatively, a windfall tax could be used to deter overly complex financial transactions based on leveraged financing.
- The government could do more to promote its stated objective of incentivizing employee ownership, on the basis that it ‘gives employees a greater stake in the business in which they work, improving working conditions and driving productivity’, particularly given the reduction in capital gains relief available on the sale of a majority shareholding to an Employee Ownership Trust in the 2025 Budget.59
Boosting productivity and recovering lost tax revenue
Regulating to champion free and fair markets, empowered consumers and productivity would not only address the corrosion of public trust; it would also improve stagnant growth. As FGF Director Nathan Yeowell points out, ineffective regulation ‘rewards bad businesses who ignore the rules and punishes the good ones who follow them’.60 Effective regulation can ‘can support economic growth, give confidence to businesses and encourage innovation’.
Similarly, better enforcement of tax collection could boost productivity, because companies ‘that are able to aggressively avoid or evade taxes enjoy an effective subsidy, enabling them to undercut tax-compliant rivals or survive despite low productivity’. Removing this unfairness would help to reallocate resources to more productive business activity.61
Tax dodging also harms the public more directly. The estimated loss of revenue to illegal evasion in 2022-23 was £5.5bn, but according to the Public Accounts Committee, this may be a ‘significant underestimate’.62 The government has taken steps to address institutionalised legal tax avoidance through its abolition of non-domiciled status. More broadly, it is investing £1.4bn to fund additional HM Revenue & Customs (HMRC) compliance officers to reduce the ‘tax gap’. In her 2025 Budget, the Chancellor promised that HMRC and the new Fair Work Agency will ‘track down fraudulent business owners who vanish without paying their taxes’, alongside ‘new powers for HMRC to pursue the promoters of tax avoidance schemes’ and ‘further steps to prevent and track down unpaid tax’.63
Recommendations
As a report for two all-party parliamentary groups points out, raising penalties for tax avoidance and evasion ‘so that they are based on a significant percentage of a business’s global turnover’ would both act as a deterrent and ‘help raise revenue for public investment’ – but only if new powers are enforced with more vigour than the recent application of existing ones.64 This would also signal to the public that the state does not allow the powerful to act with impunity.
In 2023, the Fair Tax Foundation estimated that ‘17.5% of UK public contracts (with a combined value of £37.5bn) are won by companies linked to tax havens’, and suggested that profit-shifting was costing the UK £12.5bn in lost corporation tax.65 The government’s February 2025 National Procurement Policy Statement specifies that contracting authorities should ‘ensure their suppliers…comply with their tax…obligations’, but this responsibility could be shifted onto potential suppliers by requiring them to demonstrate tax compliance at the point of tendering. This would be in line with the statement’s principle that ‘Suppliers that benefit from taxpayers’ money should be expected to deliver public contracts in a way that benefits the country’.66
As FGF’s report ‘Rebuilding the Nation 05’ noted, Sir Patrick Vallance (speaking before his appointment as science minister) has ‘argued that government should introduce more of a “procurement pull”, making it easier for companies using technologies that have been developed via public research funding to bid for public sector contracts’. This would allow the government to ‘catalyse the commercialisation of these technologies and realise the successes of public investment domestically’.67
Building on its industrial strategy, when the government provides expansion capital to help UK businesses scale up (especially when private no-strings capital is not forthcoming), it could take a golden share to ensure that companies that have benefitted from taxpayer investment are not then taken over by foreign firms, with all the consequences in lost investment and taxation that may follow. This problem could also be addressed through the recommendations Charlotte Holloway makes in FGF’s ‘Rebuilding the Nation 04’, including designing the proposed new pension ‘megafunds’ announced by the Chancellor in July 2025 to enable ‘high growth businesses in all parts of the country to access the capital they need to thrive’ without being forced to seek foreign investment.68
Shifting power by questioning entrenched ideas
The government’s transformative embrace of industrial strategy and employment rights signals its willingness to reverse outdated assumptions about where power should lie – in line with the declaration in Labour’s 2024 manifesto of a ‘final and total rejection of the toxic idea that economic growth is gifted from the few to the many’.69
It could take this further by addressing the damage done by too narrow-minded a pursuit of shareholder value, on the tenuous basis of fiduciary duty.
There is evidence that enterprises with social purpose make more money and are more productive; the B Corps movement has demonstrated that this can succeed in practice. Henderson notes that ‘nearly a third of the world’s financial assets are managed with some kind of sustainability criterion’.70 While UK and US company leaderships tend to prioritise shareholder value, ‘a majority of Japanese, German and French company executives put employee job security above shareholder dividends’.71 German firms also maintain works councils.
Government should encourage constructive approaches which demonstrate that businesses with empowered, motivated employees and other stakeholders can thrive.
This could be made mandatory by amending Section 172 of the Companies Act; or, less radically, company law could be revised to respond to rising ‘challenges to the shareholder-centric company model’, including from within the corporate sector itself.72 Either way, government should acknowledge the fact that many businesses have chosen a more purposeful approach voluntarily. In line with the revised National Procurement Policy Statement it could use its power to champion and procure from such businesses, and incentivise others to follow their example.
From here, we explore four broad areas where power lies:
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