This is the second in a series of essays from the Rt Hon Kit Malthouse MP on how to fix the British economy. You can read the other instalments in the series here:
1. Growth is the Child of Capital
3. The Friendly Giants: Breaking Free from Our New Masters
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Ownership & Nationhood: The Fight for Economic Belonging
A nation is woven not merely from the threads of its laws or the lines on its map, but from the stories its people carry – a shared past, a common hope and the invisible bonds of heritage. In the United Kingdom, it is this tapestry of experiences, from those who have called this land home for generations to those who are newly planting their roots, that defines us. Through a shared respect for our sometimes-complex history, a commitment to our values and a dedication to our common future, we all find our place in this unfolding narrative.
But there is another, profound form of belonging – one that is not just emotional but material. It is the sense of ownership, the ability to say that a piece of the nation’s prosperity is truly one’s own.
To be a coherent nation, we need both forms of attachment. One anchors us in our history and mores while the other secures our future. Today, however, while our vivid national story continues, the foundations of personal ownership are crumbling. If people are locked out of home ownership, excluded from financial assets and unable to build wealth, they are left with only sentiment, and no equity in the present. This is an unsustainable fracture – one that, if left unchecked, will continue to erode not just our prosperity but national cohesion itself. If a citizen has no stake in their nation’s success, how can they be expected to fight for its future?
Previous generations of Conservatives understood that economic participation was fundamental to national identity, and that our democracy and economy depended on it. A homeowner felt a sense of stability, a shareholder felt vested in national success and an employee with company shares worked not just for their own wages, but for collective wealth.
The great political battles of the late 20th century were not just about managing the economy but about expanding ownership – of homes, of shares, of businesses. The entire economic franchise was central to our Party’s mission.
The Thatcher revolution of the 1980s saw a quarter of the adult population become shareholders, as state industries were privatised and ownership was put in the hands of millions of ordinary people. Employee share ownership schemes boomed with more than two million employees benefitting, a cascade worth an initial £6.5 billion. Three million households claimed the keys to their front doors, including a million council tenants who broke free from a lifetime of renting to finally call their homes their own.
But, as with so many of what we thought were our foundational beliefs recently, our vision became clouded. We assumed that this trend would sustain itself, that the logic of capitalism would be enough to keep ownership broad. We were wrong. Today, the dream of a property-owning, shareholder democracy is slipping away, and with it, the economic roots of our political stability and our electoral support.
The brutal reality is that millions of Britons are not owners but mere renters in their own country – not just of their homes, but of their entire financial lives. They live payday to payday, balancing liabilities with little to no assets. The Office for National Statistics (ONS) reports that the wealthiest 10% of households now hold 43% of all wealth in Great Britain, while the bottom 50% share just 9%. Home ownership, once a staple of British life and a powerful symbol of aspiration, has become a luxury. Property prices have ballooned to nearly six times the average household income, making it impossible for many young people to own a home without an inheritance windfall.
But it is not just home ownership that has collapsed: Britain’s stock market participation is anaemic. Fewer than 8% of Brits have direct stock market holdings compared to 33% in the United States, and fewer and fewer retail investors own shares in British companies, despite the FTSE 100 sitting at record highs. The decline of popular capitalism means that too many are locked out of wealth creation altogether.
In the past, even if employees did not own shares, they often felt that their companies would look after them. There was a deep, unspoken contract between employer and employee that hard work would be rewarded with lifelong security. The job-for-life ethos, with stable wages, pensions, and progression, gave workers an emotional stake in their company’s future, even without financial ownership. But it was a two-way relationship, and that relationship has frayed. The workplace has become transactional, reducing both parties to little more than economic units. The emotional connection to one’s employer has disintegrated, and with it, the belief that prosperity is shared rather than hoarded at the top.
As I asserted in my first essay on our future economy, ‘Growth is the Child of Capital’, this crisis of ownership has been pushed to the brink by the Bank of England’s frantic embrace of Quantitative Easing (QE). What began as an emergency measure in 2009 has since morphed into a drug to which our economy is hopelessly addicted. QE flooded the system with cheap money, inflating asset prices beyond all quantifiable logic. While stock markets boomed and property prices soared, wages stagnated, leaving those without capital utterly stranded. The average home now costs over 8.6 times average annual disposable household income, and in London, that figure is a staggering 12 times. The dream of homeownership, once within reach for working families, has drifted into fantasy, while the Bank still squats on 80% of the billions in artificial money it created in a panic.
What is the result? A rentier economy, where wealth begets wealth, and those without assets are condemned to financial serfdom. The cost of entry to the capitalist system is now so high that many see no alternative but state dependency, renting for life or simply leaving the country in search of better opportunities abroad. The country is being divided into two classes: those who own and those who never will.
This is not just an economic challenge – it is a fundamental test of who we are as a nation. The spirit of Britain has always been rooted in the idea that hard work, thrift, and enterprise can lead to personal security and prosperity. Yet for too many, that promise now rings hollow. Ownership is no longer the birthright of the many, but the privilege of the few. This must change.
In my previous essay, I lamented the absence of risk-taking in the UK, since it is the operation of capital that brings growth and productivity, and prescribed capitalist electric shock therapy for our economy. But if that is the first pillar of a new Conservative economic approach, in my view the second must be this: we need a radical programme to democratise wealth and re-establish ourselves as a nation of owners, restoring economic dignity and self-determination to the millions who feel locked out of the future. If capitalism is to survive, it must work for everyone, not just those at the top.
First, we must radically overhaul employee share ownership.
Capitalism thrives when those who create the wealth have a stake in it, and nowhere is this clearer than in businesses where employees have real ownership. Richer Sounds, the specialist Hi-Fi retailer, is a prime example. In 2019, its founder, Julian Richer, made an extraordinary move: transferring 60% of the company into an Employee Ownership Trust. Overnight, workers were no longer just wage-earners but co-owners, with a vested interest in the company’s success. They now share in the profits, have a say in decision-making and benefit from the long-term success of their labour. Company revenue has grown significantly as a result.
Kevin Hollinrake MP, now the Shadow Secretary of State for Levelling Up, Housing and Communities, is another example of a business leader who understood the power of shared ownership. When floating his chain of estate agents, his accountants advised against establishing an employee share ownership plan because it would be complex and tax inefficient. But he did it anyway, driven by the conviction that he had a duty to the employees who had helped him build his business. His decision is a testament to the idea that businesses thrive when wealth is shared, not hoarded at the top.
This model should not be an anomaly; it should be the rule for companies over a certain size. Indeed, companies in which employees own at least 20% of shares should enjoy significantly lower corporation tax as an incentive for broader share distribution.
A 2020 report by the Social Market Foundation found that most employees in listed companies would like to own shares in their workplace, yet nearly four in ten declined the opportunity when offered, simply because they couldn’t afford it. This exposes a fundamental issue: employee ownership should be an accessible route to wealth-building, not a privilege reserved for those with spare cash. The current tax structure acts as a barrier rather than an incentive, making share schemes unnecessarily complex and out of reach for many. Transfers of shares to employees should be tax-free, and indeed completely free.
If we want capitalism to be truly popular again, we must give workers a direct share in the wealth they help create. Employee ownership fosters commitment, reduces income inequality and strengthens the social fabric between employers and employees, restoring the very sense of shared purpose that has been lost in modern corporate Britain.
Second, we must reignite public participation in the stock market. British investors have fled domestic markets in droves, preferring to leave investment to institutional players. In my previous essay, I explained why. In contrast, American retail investors remain highly engaged, with over half of US households owning stocks directly or through pension schemes. The UK needs a new campaign to reinvigorate public participation in the stock exchange and private investing, encouraging direct share ownership through tax-free investment incentives and educational initiatives.
Technology can help with this, leveraged to encourage savings and investment. Modern apps make putting money aside and share buying in small increments very easy, removing barriers that once made investment the preserve of the wealthy. Platforms that allow people to invest spare change or allocate small amounts regularly into diversified portfolios must be promoted. If we can generate some growth in our economy, and the relative value of wages rises, this will become even more of an opportunity. Additionally, a portion of employees’ National Insurance payments should be directly investable by them – similar to the old contracting out of SERPS – giving individuals a genuine sense of managing their own financial future, rather than simply handing money to the state.
Third, the rise of fractional ownership must be embraced. The digital world now enables individuals to own a portion of hard assets and intellectual property, broadening access to wealth creation. Blockchain-based platforms like Lofty already allow individuals to purchase tokenised shares in real estate, bringing property ownership within reach for many.
But this model extends beyond property. Imagine an individual owning a fraction of the future licensing income from a breakthrough pharmaceutical drug or a hit pop song – earning a share of royalties just as institutional investors do today. Intellectual property – an increasingly vital component of Britain’s future economy – could be split into tradable units, ensuring that the wealth generated by innovation is not concentrated in the hands of a few, but shared widely. As Britain shifts toward an economy driven by ideas, patents and digital assets, ensuring widespread access to IP ownership will be critical to fostering a nation of capitalists, not just workers.
Fourth, we must address the impact of Capital Gains Tax (CGT). Since the Osborne era, CGT has crept up while the tax-free allowance has shrunk, making investing less attractive for ordinary people. At the same time, taxes on dividends have steadily risen, further squeezing returns and making wealth-building through investment increasingly unappealing. The double burden of higher CGT and dividend taxation discourages ordinary workers from becoming investors, entangling them in complexity and diminishing the rewards of their own labour. Worse still, employees who invest in their own companies are penalised, taxed both on the growth of their shares and the income they generate. CGT on shares in the company that an employee works for should be abolished outright. If we want to shift the focus from wages to wealth, we must ensure that people see capital as a more reliable source of long-term prosperity alongside their short-term earnings.
Finally, we need to recognise that QE inflated asset prices to absurd heights, severing the natural link between wages and the cost of living. Quantitative Tightening, its supposed remedy, now tinkers at the edges while leaving the damage intact. Nowhere is this more disastrous than in housing, where prices have spiralled beyond reach, locking millions out of home ownership. Yes, we must urgently build millions of new homes, but construction alone won’t fix a market still bloated by years of artificial money. We must actively unwind these distortions, allowing house prices to gradually realign with wages, even if that risks a painful but necessary market correction. At the same time, we must remove the punitive taxes and bureaucratic hurdles that make intergenerational property transfer needlessly complicated. A home should be a foundation for family stability, not another opportunity for the state to take its cut. Without decisive action, we will deepen generational inequality and push yet another wave of young people out of the reach of capitalism.
Popular capitalism isn’t just an economic model – it is the very foundation of Conservative philosophy. A Britain where only a privileged few own artificially-inflated assets is not just economically unstable; it is politically unsustainable. Ownership fosters independence, responsibility and a genuine personal investment in the nation’s success.
We Conservatives once knew this, but today, that memory has dimmed, and with it our connection to the voters who once saw us as the party of opportunity. If we are to win the next election, we must restore that promise: a nation where hard work leads to ownership, where capital is widely held and where every citizen has the chance to build and secure their own future.
The beating heart of our economic policy must be a clear, bold commitment to making Britain a country of homeowners, shareholders and wealth-creators once again. A failure to make this our mission will risk not just electoral defeat, but the loss of the very principles that define us, and a nation that turns its back on capitalism.
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