In response to a recent report on employee ownership by Government adviser Graeme Nuttall, Deputy Prime Minister Nick Clegg has announced new initiatives to ‘knock down the barriers” to employee ownership.
Employee-owned companies, such as the John Lewis Partnership, are those where the employees have a “significant and meaningful” stake in the company, and distribute profits between them.
Companies can be owned directly by employees through the use of employee share plans or indirectly, where shares are held collectively on behalf of the employees, usually through a benefit trust.
And according to figures from trade body Co-operatives UK, the growth rate for employee-owned firms currently exceeds that of the rest of the economy. The employee-owned sector grew at a rate of over 1 per cent over the past year, compared to 0.7 per cent for the economy as a whole.
Some of the initiatives announced were new off-the-shelf “DIY packs,” which will be made available to help with tackling legal, tax and regulatory issues, as the report highlighted that employers are concerned about the difficulty, cost and time to set such schemes up.
Mr Clegg said: “Employee-owned firms have lower levels of absenteeism, higher productivity and growth rates and smaller gaps between the pay at the top and ordinary workers. These are important steps to help get employee ownership into the bloodstream of the British economy. We won’t stop there and it won’t happen overnight but, at last, we are on our way.”
The TUC welcomed the report, saying employee ownership “can reap benefits” for workers and for businesses. And Minister for Employment Relations Norman Lamb said: “We have already had a remarkable response from the professional bodies and representative organisations, pledging their commitment to this programme and to developing a new Institute for employee ownership.
There will be a formal response to the Nuttall report in the autumn, when the Government will set out an action plan for the implementation of its recommendations.