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Forum
Why nationalisation?
A reader questions one of Militant Labour's
central demands.
Dear comrades,
In discussions in my local Labour Party, right-wingers often put forward the idea that workers own the means of production, distribution and exchange through their pensions and life assurance policies. They argue that there is no need, therefore, for a Labour government to nationalise the top 150 monopolies, banks and insurance companies, under democratic workers' control and management, as demanded by Militant Labour.
Is it true that the working class owns the assets of the big pension and life assurance companies? Have you any statistics on the size of the working
Pete Watson replies:
HE LAST TWENTY years
has seen a massive increase
in investment institutions' in Britain. These are the pension funds, life assurance companies, investment and unit trusts. They hold the majority of shares in British companies and are big property owners. They are the biggest financiers of the government's budget debt. Pension funds alone are worth an enormous £370bn.
Tory policy has had a big say in their growth. The decline in council house building and the sale of council housing stock has led to a growth of home ownership. This has not created a
class' share of the assets of pension and life assurance companies?
If the major monopolies, banks and insurance companies were nationalised, what would happen to workers' private pension policies, company pension policies, and life assurance policies? Do workers own the majority of stocks and shares through their pension funds and life assurance policies?
Your answers will enable me to combat the arguments of the local right-wing. I am sure that other comrades have faced similar arguments on this subject.
John Smithee,
Wisbech
'property-owning democracy as the Tories claim. It has merely transferred the workers' landlord from the council to the building society. Those buying a house on an endowment mortgage will take out a life assurance policy, and will therefore be giving regular income to the life assurance companies.
The Tories have also actively undermined the state earningsrelated pensions scheme (SERPS). British state pensions have flat rate' and earnings-related elements. In broad terms a British pensioner can at best expect to get between 35% and 43% of previous earnings as a state pen-
sion on retirement. The seven European community states that have earnings-related pensions give 60% plus of previous earnings. Through tax incentives and other methods, workers have been drawn into private occupational pensions in this country in the hope of getting a half-decent pension.
Even here private occupational pensions are biased against women, based on the idea of starting full-time employment at 16 and staying continuously with the same employer for 40 years. In June 1993 only 30% of women aged 55 to 69 were entitled to an occupational pension compared with 70% of men.
The Tories are not motivated in these matters by the desire to provide decent pensions and homes. They wish to privatise these state-run services so they can hand them on to their city friends. The investment institutions themselves operate as any capitalist enterprise - they invest to make a profit.
It is probably impossible to provide information on "the size of the working class share of the assets of pension funds and life assurance companies" ". It would require working out not only the company contributions to pension schemes but also the class background of every holder of a life assurance policy or pension contributor! However it is clear that workers contribute massively.
This does not mean that the working class own and control these assets. Workers may be entitled to a profit share from their savings. However, real ownership means collective control by the working class as a whole over these companies' assets. What is the real situation?
Taking life assurance companies first, there are two types of companies. The first are proprietary and include the biggest companies such as Prudential, Guardian Royal Exchange and Legal & General. These are public companies, in other words they are listed on the stock exchange. They are therefore run by a board of directors and share
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Maxwell - workers control' of pension funds? | holders. But share-holding generally is still in the hands of the rich. It is true that the number of shareholders has risen from three million in 1979 to nine million in 1988. But 60% of new shareholders own only one share, 22% only two. The second type of life assurance is 'mutual. Here each policy holder is theoretically part-owner or member of the company and expects to share in the profit. These are companies such as Colonial Mutual and Provident Mutual. If anything, however, there is even less broad ownership and control of these companies than in proprietary companies. The company is run by a selfselecting board of directors: policy holders have little say in company policy.
ENSION FUNDS ARE usually the example given when trying to prove that capitalism has changed for the better. The argument goes that at last the evil owners have gone and in their place are trustees who serve the interest of the pension contributors. A closer look reveals a different picture. Most pension funds are set up as trusts with a board of trustees managing the funds. The job of the trustees is to make sure there is a reasonable rate of 30 • Forum return for the pension fund. As long as that happens there is virtually no control over them. Real ownership means collective control by the working class.
An increasing number of schemes have worker trustees', particularly in the public and ex-public sector. According to a 1990 National Association of Pension Funds survey of over 700 schemes, 59% in the private sector and 75% in the public sector include employees other than management on the board of trustees. Of these however only 189 schemes had trustees that were chosen by employees and only 54 were trade union nominated. Even where there are 'worker trustees' they will be in a minority. Workers' control' of the pension funds is an illusion. Most of the large pension funds farm out the job of investment to managers. These obscure companies, such as Mercury Asset Management and BZW Investment Management, wield enormous power. The top six external investment management companies controlled UK pension fund portfolios worth £110bn.
About ten or twelve managers control one half of the total value of UK pension funds. Militant Labour stands for the public ownership of these vast financial institutions along with the largest 150 companies and banks that dominate the economy. This would mean the assets of the life assurance companies and pension funds could be used for the benefit of society rather than being locked up' in property or share speculation. Pensions would be improved to a minimum guaranteed £200 a week immediately and index-linked into the future. Mortgages could be cut dramatically.
An essential part of a socialist programme is the democratic control of these resources by pension contributors, policy holders and the working class as a whole. There is no guarantee that pension funds will be protected under capitalism. Hundreds of millions of pounds was stolen by Robert Maxwell from his companies' pension funds. Social security minister Peter Lilley offered a tiny £2.5m to tide over Maxwell schemes that had run out of money!
A number of companies such as National Westminster bank, Belling, and Lucas have been either using pension funds for their own use or altering scheme rules to benefit themselves. The Tories are trying to organise 'raiding parties' on coal and rail pension funds. Continuing economic crisis will in any case affect the returns of pension funds and threaten their long-term future. The growth of pension funds and life assurance has not altered capitalism. The ownership of a few shares or a mortgage does not change the fact that workers live by selling their labour for The existence of worker wages.
trustees' or mutual life assurance companies does not alter the fact that their assets are invested for and representatives of by the capitalist class. This vast socith can only be unlocked by socialism.
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