An independent inquiry overseen by a group of leading business organisations has found that employee ownership can help address the “fundamental challenges” facing the UK economy.
The Ownership Effect Inquiry was led by the Employee Ownership Association (EOA) and supported by the eaga Trust and the John Lewis Partnership with the academic support of Cass and Manchester Alliance Business Schools.
The panel took evidence from more than 100 employee-owned businesses and concluded an expansion of the model would boost the economy in three ways: improving productivity; creating resilient regional economies; improving worker engagement.
Organisations overseeing the report include the Institute of Directors, the Institute of Chartered Accountants in England and Wales, the Federation of Small Businesses and the Chartered Management Institute.
It found that the EO sector has a combined turnover of more than £30bn, which is growing by 10% each year.
And – in a point also made in the recent New Economics Foundation report Co-operatives Unleashed – it calls for better succession planning for the £519bn family business sector, where 85,000 firms are sold on every year, often with poor deals. An easier transition to employee ownership would lead to more secure futures for workers and communities, it says.
The report also echoes previous calls from the movement for more coverage of employee ownership models in business education.
Baroness Bowles of Berkhamstead, who chaired the inquiry, said in her introduction: “The report could hardly be more topical or relevant at a time when UK productivity continues to underperform; the government is concerned about standards of corporate governance, low worker influence and engagement, and defaulting public service conglomerates; and regional government and business leaders are concerned about business succession, resilience and economic growth.
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“This report evidences a thriving and fertile employee ownership sector that offers positive responses to these challenges.
“That is not to say employee ownership is the ‘ideal’ business model, or that its impact is automatically and universally transformative. Employee ownership will be right for some firms, but not others – and although its benefits can be dramatic, they must be worked for.”
Measures called for in the report include:
- Direct investment by Westminster, with a capacity-building initiative to create new EO firms, as has been done in Scotland and Wales
- Regional pilot projects from the devolved authorities to support transitions to EO
- A national strategy to foster the growth of the sector
- Extra funding for the government’s Mutuals Support Programme 2, a scheme to support public service mutuals
- National trade bodies should work with the EOA to to develop training packages and other support for the sector
- A more conducive tax environment for EO businesses
- A dedicated minister with clear responsibility for EO and mutually owned business models
- Regular data collection on the state of the sector.
The report also calls for a more proactive awareness-raising approach from financial and educational institutions.
