The shadow chancellor John McDonnell unveiled the plans at the Labour Party conference in Liverpool yesterday.

The plans promise to increase productivity by giving workers a greater share in the company,

Business leaders were quick to attack the policy which is seen as being the most interventionist economic policies.

Carolyn Fairbairn, CBI director-general, said Labour’s “diktat on employee share ownership will only encourage investors to pack their bags and will harm those who can least afford it. If investment fails, so does productivity and pay.”

Under the scheme, every company with 250 or more employees will be expected to create an ‘inclusive ownership fund’ (IOF) under a future Labour Government.

This would force the company to hand over 10 per cent of its equity to workers within a timeline of ten years.

The shadow chancellor said workers would benefit from the scheme by becoming ‘part-owners’ of their employers, benefitting from up to £500 a year in dividend payments.