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.

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Do you see yourself as British or English? The answer could help define modern politics

The rise of English identity has left a glaring space in politics for an English nationalist party. Who is going to fill it?

Political scientists call it the “Moreno question”. In the 1980s, the Spanish academic Luis Moreno Fernández came up with a test for identity, which was originally applied to gauge interest in Catalan independence. In its English incarnation, it asks voters to grade themselves from “I feel more British than English” to “I feel more English than British”. Unsurprisingly, Ukip does best among those who describe themselves as “English, not British”, while Labour’s vote rises the more people see themselves as British. In the biggest group – the 47 per cent who see themselves as equally English and British – the Tories lead.

The Moreno question helps us make sense of three interlinking trends in modern politics. First, the stark fact that in the 2015 election, a different party won in each nation of the United Kingdom: Labour in Wales, the SNP in Scotland, the Tories in England and the Democratic Unionist Party in Northern Ireland. Second, Ukip’s lack of success north of the border: the Herald reported in July that Ukip’s only elected representative in the country, David Coburn MEP, had been forced to take on the role of treasurer at his local branch in Fife because it has so few members. Third, Labour’s declining performance in its historic northern heartlands. Many voters there want a party with a distinctively English flavour and don’t feel that Labour is it.

Devolution has had many unexpected consequences, but the rise of an English identity is one of the least explored. Because of its demographic dominance, mainstream politicians have long argued that it would be unfair to give England its own parliament. Labour is particularly resistant to the idea because it would magnify the Conservatives’ power. As it is, the principle of “English votes for English laws” will exclude the SNP and Plaid Cymru from the grand committee-stage hearings on grammar schools, because education is a devolved matter.

However, the last general election showed that there’s a problem with English voters feeling ignored. In Worcester, the Tory MP Robin Walker told me in April 2015 that arguments about the SNP holding Labour to ransom cut through on the doorstep. “There is a real concern if [voters] are saying, ‘The proceeds of the mansion tax are all going to go on nurses in Scotland. That doesn’t help us,’” he said. Many English voters felt that the SNP would be a successful lobby group at Westminster for Scotland’s interests. Where was their equivalent?

For John Denham, the former Labour MP who now leads the Centre for English Identity and Politics at the University of Winchester, the same dynamic applied this summer in the EU referendum campaign. “Scotland got ‘Scotland Stronger in Europe’,” he tells me. “England had to put up with ‘Britain Stronger in Europe’. That was an elite campaign run by people who think Britain and England are the same thing.”

Once again, the Moreno question helps us understand a fundamental divide among English voters. Denham says that 80 per cent of people who defined themselves as “English only” voted Leave, while 80 per cent of those who called themselves “British only” voted Remain.

Denham thinks that this presents an enormous challenge for Labour in northern seats where Ukip is in second place, given that its intellectuals and leading politicians feel so squeamish about Englishness. “If Labour continues as a cosmopolitan, liberal party that doesn’t want anything to do with the politics of identity,” he warns, “it won’t reach those voters.”

Other politicians worry that if Labour doesn’t occupy this space, another party will. “As nationalists go, the SNP is pretty good,” a senior left-wing politician told me recently. “An English nationalist party could be something altogether more nasty.”

In this light, the election of Diane James as the leader of Ukip looks like a rare stroke of luck for Labour. She is a southerner, educated at Rochester Grammar School, and an MEP for south-east England. Although she is polished and professional – albeit prone to outbursts of admiration for Vladimir Putin – she seems unlikely to appeal on an emotional level to working-class white voters in the north, where the greatest potential for an English nationalist party lies. Thanks to Ukip’s Caligulan internal politics, the deputy leader, Paul Nuttall (from Bootle), did not stand and the charismatic Steven Woolfe (from Burnage) was excluded from the race after the party’s executive committee ruled that he had submitted his nomination papers 17 minutes after the deadline. (Another potential candidate, Suzanne Evans, was suspended by the party, and pretty much everyone else in Ukip seems to hate its only MP, Douglas Carswell.)

If not Labour, or Ukip, perhaps the Conservatives? Theresa May’s rebranding of the party, complete with articles on bringing back grammar schools in the Daily Mail, shows that she is pitching for Ukip-leaners. “In terms of language and biography, she has a better understanding of that struggling, socially conservative, English nationalist voter than Cameron did,” says Robert Ford, a professor of political science at Manchester University and co-author of Revolt on the Right. He believes that any party that thinks a simple economic message can sway these voters is underestimating the “emotive” nature of identity-based politics. “It’s no use going to Sunderland and saying, ‘We’re going to nationalise the trains,’ and thinking, ‘They’ll come back to us.’”

There is another option. A new party could be born, perhaps even out of the ashes of post-referendum Ukip: Arron Banks, its mega-donor, has said that he fancies the idea. With the right leader, nationalist sentiment could spread like wildfire among the “English, not British”. And, as Nigel Farage has shown, you don’t need to get elected to Westminster to have an effect.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times