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Chancellor has an opportunity to recover the government’s position as champions of the “John Lewis economy”

Autumn Statement wishlist.

Employee ownership offers an escape route for so many challenges facing the government  The businesses tend to perform better, particularly in recessionary times.  Wealth created is shared amongst employees, not channeled into the pockets of tax avoiding executives and we now find that employees tend to be happier and healthier thus easing the burden on our health and benefits systems.  What’s not to like?

Indeed, this Government has been vocally supportive of employee ownership yet the only concrete proposal has been the widely derided “rights for shares” scheme.  With only two measures, the Chancellor has an opportunity to recover the government’s position as champions of the “John Lewis economy”.   These measures look at business succession and access to finance.

We need more business owners considering selling to employees as an exit route.  The Nuttall report identified the lack of knowledge from professional advisers such as lawyers and accountants as an obstacle to wider adoption.  By introducing a tax incentive to business owners who sell to their employees, such as exists in the US, would instantly create sufficient noise to ensure that employee buy-outs are on the table alongside trade sales, IPO and MBOs when it comes to discussing exit options for owners.  In this way, we would see more of our SME and family firms remaining in their communities providing sustainable employment and skills for future generations.

Even the most successful employee owned businesses report problems with  access to finance. Mainstream investors want to see a planned exit date preferably at a significant premium to the value of their investment. The employee-owned business, with its desire to maintain the jobs and investment in the local area for the long term, can find this incompatible with their plans. Similarly, one of the trends we are seeing on bank funding is that even where it is available, banks are looking to get loans paid off in full in 5 years, whereas in the past they may have offered a 10 year period. Now we are seeing some banks taking an interest in supporting employee owned models, but it’s still too local to make the step-change required.  We need a lender that considers long term sustainability over short term return and the Business Bank could be that vehicle.

The government has been telling us all year how much they support employee ownership. It’s good for business, for the economy and for individuals.  Make it happen, Mr Osborne. 

Carole Leslie is an Employee Ownership Specialist

Photo: Dan Kitwood/Getty Images
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Conservative disunity is not all good news for Labour

The Tory leadership election could squeeze Labour out of the conversation, just like Blair and Brown did to the Tories.

The first test of opposition politics is relevance. Other key yardsticks - political plausibility, economic credibility, setting the agenda and developing a governing vision - all matter greatly. But making yourself a central part of the relentless cycle of daily politics, the terms of which are generally set by the governing party, is the first hurdle. It matters not whether you sign up to new politics or old: be relevant or wither. 

The issue of relevance is becoming a pressing issue for Labour. Take George Osborne’s favoured issue of the so-called national living wage.  Leave to one side the rights, wrongs and nuances of the policy and just consider the basic political dynamic it creates.  Osborne has, quite deliberately, set up a rolling five year argument over a steadily rising wage floor. On one side, is the Chancellor arguing that his policy is the right thing for Britain’s ranks of low paid workers. Pitted against him are ranks of chief executives of low-paying big business. With each impending hike they will holler at Osborne to go no further and the media will happily amplify the row. In response the Chancellor will quietly smile.

Sure, on occasions this will be uncomfortable stance for Mr Osborne (and if the economy takes a downward turn then his pledge will become incredible; there are always big risks with bold strokes).  Yet the dominant argument between the Conservatives and big business leaves Labour largely voiceless on an issue which for generations it has viewed as its own.

We may well see a similar dynamic in relation to the new national infrastructure commission – another idea that Osborne has plundered form Labour’s 2015 manifesto. It’s far too early to say what will come of its work looking at proposals for major new transport and energy projects (though those asserting it will just be a talking shop would do well not to under-estimate Andrew Adonis, its first Chair). But there is one thing we can already be confident about: the waves of argument it will generate between Osborne’s activist commissioners and various voices of conservatism. Every big infrastructure proposal will have noisy opponents, many residing on the right of British politics. On the issue of the future of the nation’s infrastructure – another touchstone theme for Labour – the opposition may struggle to get heard amid the din.

Or take the different and, for the government, highly exposing issue of cuts to tax credits. Here the emerging shape of the debate is between Osborne on one side and the Sun, Boris Johnson, various independent minded Conservative voices and economic think-tanks on the other. Labour will, of course, repeatedly and passionately condemn these cuts. But so have plenty of others and, for now at least, they are more colourful or credible (or both).  

The risk for the opposition is that a new rhythm of politics is established. Where the ideological undercurrent of the government steers it too far right, other voices not least those within the Conservative family - moderates and free-spirits emboldened by Labour’s current weakness; those with an eye on the forthcoming Tory leadership contest – get reported.  Where Osborne consciously decides to tack to the centre, the resulting rows will be between him and the generally Conservative supporting interests he upsets. Meanwhile, Labour is left struggling for air.

None of which is to say there are no paths back to relevance. There are all sorts of charges against the current government that, on the right issues, could be deployed - incompetence, complacency, inequity – by an effective opposition.  Nor is the elixir of relevance for a new opposition hard to divine: a distinct but plausible critique, forensic and timely research, and a credible and clear voice to deliver the message. But as yet we haven’t heard much of it.

Even in the best of times being in opposition is an enervating existence. Those out of power rarely get to set the terms of trade, even if they often like to tell themselves they can. Under Ed Miliband Labour had to strain – sometimes taking big risks - to establish its relevance in a novel era defined by the shifting dynamics of coalition politics. This time around Jeremy Corbyn’s Labour is up against a Chancellor willing to take risks and pick big fights: often with traditional Tory foes such as welfare claimants; but sometimes with people on his own side.  It’s also a new and challenging context. And one which Labour urgently needs to come to terms with.   

Gavin Kelly is chief executive of the Resolution Foundation