Employee ownership finally gets the backing of the Government

After the "shares for rights" false start, will the Government get it right this time?

The current profile and success of employee ownership is unprecedented. Employee ownership is now being embraced as the most prominent alternative to the over-dominant PLC model.

Employee owned businesses are largely or fully owned by their workforces either through direct employee share holdings or shares held in Trust on behalf of and for the benefit of employees. Their workforces are very actively engaged in the management and development of their businesses. And economic competitiveness and high performance are a central part of the DNA of employee owned companies. The compelling success stories of employee owned businesses such as Clansman, Unipart and Arup demonstrate the very special nature of employee ownership.

More and more politicians, businesses and service commissioners are realising the contribution that employee ownership is making and can make to the growth agenda and to the delivery of world class public services. It is a realisation that employee owned organisations tend to achieve higher productivity, greater levels of innovation, better resilience to economic turbulence and have more fulfilled workers who are less stressed than colleagues in conventionally owned organisations. It is also a recognition that employee ownership works financially as over the last decade and more, investments in shares in employee owned businesses have considerably outperformed those in conventionally owned businesses.

This current interest in employee ownership has been reflected over recent weeks in two important initiatives.

Firstly the Treasury has completed its review into the taxation of employee ownership in the UK. Its conclusions, announced as part of the Chancellor’s Autumn Statement, are significant. The Autumn Statement argues that employee ownership is an important part of the UK growth agenda and explicitly confirms it as a business model that the Government supports. This is a powerful and unique endorsement of a part of the economy that contributes more than £30bn to UK GDP each year.

The Statement also undertakes to bring to the table the resources and expertise of the Treasury to work with other parts of Government to increase the number of employee owned businesses, to implement a package of simplifications to existing employee share schemes and to keep under review the possibility of introducing at the time of the next Budget further tax incentives to promote employee ownership.

Secondly, Government has accepted in full all of the recommendations for how to grow employee ownership in the UK that are contained in the recently completed Nuttall Review into the barriers to such growth.

The inaugural meeting of the group that is now accountable for the implementation of these recommendations, chaired by the relevant Minister Jo Swinson MP, has just taken place. This development brings a realistic prospect that a new future for employee ownership that many of us have been driving for will arrive. A future in which there is far greater awareness of employee ownership options, there is a simplification of those options and there is better access to finance and advice for businesses that want to implement and or fund employee ownership.

These two reviews, the Treasury and Nuttall Reviews, are ones that the Employee Ownership Association successfully pushed very hard for.

Their outcomes and the attendant commitments mark another important step along the way towards employee ownership becoming a central part of industrial policy, part of the mainstream.

Employee ownership is currently growing at an annual rate of around 10 per cent. Interest in it within business communities and amongst public service commissioners is increasing daily. The number of funders and advisors competent to engage in employee ownership is on the rise. These are exciting times.  The challenge ahead is to build on this momentum in pursuit of the big picture – 10 per cent of UK GDP delivered by employee ownership by 2020. With the right will and skill this is perfectly possible.

The Co-operative society circa 1929. Photograph: Getty Images

Iain Hasdell is the chief executive of the Employee Ownership Association the voice of employee owned businesses in the UK and a member of the Mutuals Task Force.

Photo: Getty Images
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The Fire Brigades Union reaffiliates to Labour - what does it mean?

Any union rejoining Labour will be welcomed by most in the party - but the impact on the party's internal politics will be smaller than you think.

The Fire Brigades Union (FBU) has voted to reaffiliate to the Labour party, in what is seen as a boost to Jeremy Corbyn. What does it mean for Labour’s internal politics?

Firstly, technically, the FBU has never affliated before as they are notionally part of the civil service - however, following the firefighters' strike in 2004, they decisively broke with Labour.

The main impact will be felt on the floor of Labour party conference. Although the FBU’s membership – at around 38,000 – is too small to have a material effect on the outcome of votes themselves, it will change the tenor of the motions put before party conference.

The FBU’s leadership is not only to the left of most unions in the Trades Union Congress (TUC), it is more inclined to bring motions relating to foreign affairs than other unions with similar politics (it is more internationalist in focus than, say, the PCS, another union that may affiliate due to Corbyn’s leadership). Motions on Israel/Palestine, the nuclear deterrent, and other issues, will find more support from FBU delegates than it has from other affiliated trade unions.

In terms of the balance of power between the affiliated unions themselves, the FBU’s re-entry into Labour politics is unlikely to be much of a gamechanger. Trade union positions, elected by trade union delegates at conference, are unlikely to be moved leftwards by the reaffiliation of the FBU. Unite, the GMB, Unison and Usdaw are all large enough to all-but-guarantee themselves a seat around the NEC. Community, a small centrist union, has already lost its place on the NEC in favour of the bakers’ union, which is more aligned to Tom Watson than Jeremy Corbyn.

Matt Wrack, the FBU’s General Secretary, will be a genuine ally to Corbyn and John McDonnell. Len McCluskey and Dave Prentis were both bounced into endorsing Corbyn by their executives and did so less than wholeheartedly. Tim Roache, the newly-elected General Secretary of the GMB, has publicly supported Corbyn but is seen as a more moderate voice at the TUC. Only Dave Ward of the Communication Workers’ Union, who lent staff and resources to both Corbyn’s campaign team and to the parliamentary staff of Corbyn and McDonnell, is truly on side.

The impact of reaffiliation may be felt more keenly in local parties. The FBU’s membership looks small in real terms compared Unite and Unison have memberships of over a million, while the GMB and Usdaw are around the half-a-million mark, but is much more impressive when you consider that there are just 48,000 firefighters in Britain. This may make them more likely to participate in internal elections than other affiliated trade unionists, just 60,000 of whom voted in the Labour leadership election in 2015. However, it is worth noting that it is statistically unlikely most firefighters are Corbynites - those that are will mostly have already joined themselves. The affiliation, while a morale boost for many in the Labour party, is unlikely to prove as significant to the direction of the party as the outcome of Unison’s general secretary election or the struggle for power at the top of Unite in 2018. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.