Sector leaders have given mixed reactions to proposals from the Labour party leadership to force companies to have employee representatives on their boards.

Serial sector entrepreneur Luke Johnson told MCA that Labour’s plans for business, which also include compulsory share ownership for employees, would make “Britain almost uninvestable as a country”.

TriSpan partner and former YO! Sushi chief executive Robin Rowland said that he struggled to see how the plan would work in practice.

However, Clive Watson, of City Pub Group, which already allows employee representatives access to board meetings, said companies had nothing to fear from the plans. He added that legislation was probably necessary in order to convince business leaders to make the change.

Shadow chancellor John McDonnell unveiled his proposals in his speech at the Labour Party conference in Liverpool yesterday.

Johnson told MCA: “I think the proposals to compel companies to have employee representatives on boards, and give away 10% of the equity to employees could make Britain almost uninvestable as a country.

“Assuming Labour’s plans around tax and regulation are similarly draconian, then the destruction of value, jobs and opportunity would be enormous. If private and public company owners cannot decide how their companies are run, and assets are expropriated by the state, then we will all end up poorer.

“History demonstrates clearly that countries which pursue such policies, like Venezuela or Cuba, are invariably impoverished – and governments which alienate wealth creators, as Labour will surely do, ultimately become totalitarian.”

Rowland told MCA he did not have a strong view on the relative merits of worker representation on boards but added: “As a non-executive director, I do think there is a lot of financial complexity, corporate governance and shareholder agendas to navigate and just not sure worker rep proposal works, especially in private equity.

He added: “Plus the Government track record of understanding/supporting our sector is woeful and I am concerned that thin margins are creaking and focus really needs to be on UKHospitality’s survival agenda, not this.”

City Pub Group has had employee representation on its board for the past two years. Chairman Clive Watson said it would be more complicated to allow workers to vote on all areas of the business but that it was workable.

He said: “There is always going to be opposition when there is a sense that a Government, or would-be Government, plans to introduce legislation into business. However, it is often the only way to force companies to make a change that is needed. We would not have recognition of trade bodies if it was not for legislation.

“There has been a culture of excess in boardrooms in terms of executive pay and that’s clearly what Labour has in the cross hairs. It is pretty hard to defend directors giving themselves massive pay rises when the workforce in general is getting nowhere near the same increase.

“We have found it really beneficial to have employees more involved in what we are doing. Full board representation is slightly different and there probably would have to be a system where they were only voting on certain areas. But I really don’t see anything to fear.”