New legislation will be included in this year’s Finance Act and will mean that bonus payments to staff of employee-owned companies will be free from income tax up to an annual limit of £3,600. We hope this will encourage the creation of more employee-owned firms and will also help existing EO businesses to thrive.
Last year, the Government-commissioned Nuttall Review revealed the link between employee-owned businesses and long-term economic success. According to academic evidence, they outperform other companies in job creation, have a lower risk of failure and are more satisfying places to work.
Employee ownership, in my experience, is most often motivated by a desire for a fairer and more responsible form of capitalism. At the John Lewis Partnership, shared ownership means engaging our partners to deliver more for our customers and the business. It means adopting a positive culture based on sharing in the rewards of success and creating a business that remains resilient in the face of challenging conditions. Giving employees a personal stake in the long-term success of their business is a powerful way of aligning their interests.
While the Government is starting to take forward many of the Nuttall Review recommendations, the playing field is still weighted against employee-owned businesses. The EO model remains relatively rare in Britain, despite evidence of benefits to the economy.
For too many and for too long, ownership has implied the right to sell, when I would contend that good ownership means the responsibility to nurture, develop and sustain organisations for the long term. This requires a change in way we perceive ownership in the UK. This shift won’t be easy but if done correctly it could mean a new generation of high-growth businesses, new employment opportunities, greater productivity and an economy better able to cope with the turbulence in decades ahead.
• Kim Lowe will present ‘Embedding a culture of ownership’, in collaboration with Co-operative Development Scotland, at Scottish Enterprise in Edinburgh today