Theresa May has backtracked on her plans to introduce employees to company boards, The Sunday Times has reported.
After facing fierce opposition from retail leaders over the complications of appointing workers to the boardroom, May has diluted her original plan in order to initiate a truce.
In return for a softer version of the plan, business leaders are agreeing to back the governments push for changes to executive pay. Shareholders will now have to hold a vote on company director’s fees.
This follows months of tension between May’s government and the business elite, after a new inquiry into corporate governance was announced aiming to prevent any further big name scandals like BHS and Sports Direct.
A source from the Number Ten said: “What you are likely to see is a requirement for workers and consumers to be represented on board but no mandatory policy to put workers on boards. Companies would be free to do that to meet the requirement.”
Other reforms have been proposed, and are expected to be laid out before Christmas. These include the ability to intervene in foreign takeovers and imposing a fine on company bosses who raid their companies pension schemes.
A Downing Street source stated: “If you value a market economy, and we do, and want to preserve it, and we do, we’ve got to be prepared to reform it in order to protect it.
“You need to maintain its legitimacy. The behaviour of a small minority in business is damaging the reputation of business as a whole and that needs to be addressed.
“The benefits of growth and free markets need to be felt by more people.”