UK Investors Fear 'dangerous Precedent' Set By Jeremy Corbyn's Share-grab Policy

Stephen Payne, manager of the Janus Henderson Cautious Managed fund, suggested it would be like "robbing Peter to pay Paul". He noted the policy would "take money away from working people's pensions and give them the money now, exacerbating the acute retirement savings problem we already have".

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Indeed, almost 10%, or £31bn of the £340bn the scheme would cost investors would be borne by pension funds, according to Clifford Chance.

"It would also represent a double hit for companies, as pension deficits would balloon, presumably resulting in larger, restitutive corporate contributions," added Payne.

However, the principle behind the policy is broadly supported by the asset management industry.

"Investors have long supported the principle of increased employee share ownership as they believe it increases employee motivation, productivity and retention," said Andrew Ninian, director of stewardship and governance at the Investment Association.

Alan Custis, who manages the Lazard UK Omega fund, said he is keen the companies he invests in have a save-as-you-earn scheme in place. "At Lazard, we are all for shareholder ownership more broadly spread down the organisation. But doing so in a forceful manner is different; the market will clearly take a negative view on the outset."

However, the devil will be in the detail and depend on how the policy is implemented.

"Whether you give those shares for free is one thing, whether you take them off somebody else at a discounted price and give them for free is another thing," said head of multi-asset investments at Rathbones David Coombs.

He argued that "given what has happened since the Global Financial Crisis, with the rich getting richer while others get left behind", the policy, if done well, could readdress some of this imbalance without damaging the economy.

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Coombs said: "Using fiscal policy and finding ways of encouraging companies to share in the profits to employees, by using tax breaks, for example - that is the way to go about it. You want to make sure that a company's prospects are not damaged by doing this, and they do not need to be if you can find a way of sharing the wealth of the company with employees in a positive manner.

"It could ultimately help a company's morale and ownership through collective responsibility and accountability at that company. It could be a force for good."

In addition Franklin Templeton's Morton conceded the policy may not be as damaging as it first sounds.

Making companies issue 1% new equity each year over a ten-year period and giving it to workers, while not helpful, is "not quite the same as handing 10% of shares over the day Labour party gets in".

Of course, it could all be a moot point. Labour is currently behind both the Conservatives and Liberal Democrats, according to some polls. However, there is every chance it could gain support in the run-up to an election, and its recent opposition to a no-deal Brexit will have helped.

Still, it is unlikely Labour would be able to form a majority Government. And a Lib-Lab coalition, said Lazard's Custis, "could mean such policies are watered down".