Member Article

Government promote employee ownership

The Government is set to remove the barriers preventing British businesses from becoming employee-owned co-operatives.

During a summit held today at the Institute of Chartered Accountants, the final report from the Nuttall Review of Employee Ownership was put forward and plans to make employee-owned businesses commonplace.

Graeme Nuttall was commissioned by Deputy Prime Minister Nick Clegg earlier this year to examine how to promote employee ownership in the private sector and spread the benefits into the wider economy.

Mr Nuttall said: “Employee ownership has proven to be a great idea. The Nuttall Report provides a framework to move this successful model into the mainstream of the economy.

“I am calling upon the Government to ensure implementation of all my recommendations, maintain its focus upon employee ownership and translate its support into concrete changes that make a real difference to employee owned companies and those considering employee ownership.

Nick Clegg said that the government will set up an Institute for Employee Ownership in order to strengthen the skills of people to harness the opportunities available through employee ownership.

In a speech during a summit, Nick Clegg said: “We need to find the right levers to drive a kind of culture shift where going down the employee ownership route isn’t a eureka moment, but is much more normal, commonplace.”

He added: “Not everyone wants to set up their own company, but we all know we could; we all know someone else who has.”

In response to Nick Clegg’s announcement regarding the setting up of Institute for Employee Ownership, secretary general of national trade body Co-operatives UK Ed Mayo said: “We are delighted to see the government’s commitment to support and develop employee owned businesses.”

With employee ownership, employees own a significant stake in the company they work for. Sometimes called co-owned businesses, they now account for a combined annual turnover in excess of £25 billion, more than 2% of the GDP and are still growing in numbers.

This type of business can take one of three forms, the first being direct employee ownership, employees become registered individual shareholders of majority shares in their company, indirect employee ownership where shares are held collectively on behalf of employees usually through an employee trust and combine direct and indirect ownership which combines the above methods.

The Institute for Employee Ownership will provide information and advice to managers, employees, lawyers, accountants, business schools researchers and Ministers. It will be a professional body which offers accreditation to its members.

Minister for Employment Relations, Norman Lamb said: “Today is a key milestone in the development of what I consider a very important and growing part of the economy. Graeme’s report sets the immediate agenda and we must now respond - both in Government and the stakeholder community - to deliver the work needed to create a successful, flourishing and growing employee owned sector.”

Alongside the summit, the London Stock Exchange have announced plans for a new FTSE employee share ownership index.

Xavier Rolet, Chief Executive Officer, London Stock Exchange Group plc said: “A new FTSE Employee Share Ownership Index will highlight some of the key benefits of encouraging employees to take an active interest in the future success of the companies in which they work.

“This new FTSE index will help raise awareness of how significant employee equity ownership can be advantageous for both companies and employees.”

Simon Walker, Director General of the Institute of Directors, said: “Employee ownership can be extremely positive for the productivity and morale of a business, so the Nuttall Review’s exploration of how to deliver that is very welcome.

“Helping people to have a stake in the company they work for is a great aim, and more information and support to bring that about can only be a good thing.

“Our aim as a nation should be to have a more participatory, more accountable and as a result more popular model of capitalism.

“Involving employees more closely in the future of the businesses for which they work is a great way to do that.”

This was posted in Bdaily's Members' News section by Francesca Dent .