By Daniel Hunter
The successful employee ownership model will be easier to understand and quicker to set up following the publication of new guidance by Business Secretary Vince Cable today (Thursday).
Speaking at the Employee Ownership Conference in London, Dr Cable marked the first national Employee Ownership Day. He announced the publication of joint government and industry-led guidance which will help businesses move to the employee ownership model.
The documents that will reduce the complexity of moving to employee ownership include:
- BIS guidance for employees who want to request a move to employee ownership that had been endorsed by Acas;
- Model documentation on a move to employee ownership by Pett, Franklin and Company with accompanying BIS and HMRC guidance;
- Guidance from the Employee Ownership Association explaining the different models of employee ownership;
- Guidance from Co-operatives UK on how co-operative principles and ways of working can be implemented into employee owned businesses.
The government is committed to supporting this business model and will today launch a consultation on providing two new tax reliefs to encourage employee ownership. This sector has the potential to benefit the wider economy therefore the government is seeking views from people both inside and outside the employee ownership sector to ensure the reliefs are supportive and effective.
The Employee Ownership Association in conjunction with the government, have helped to organise a number of events in the UK where employee owned businesses are opening their doors to showcase the benefits of their business model.
Deputy Prime Minister, Nick Clegg said: “The benefits of employee ownership are clear. Staff who have a stake are more motivated and are rewarded for thinking in the long-term. That’s good for business and good for families, as it means lower absenteeism and lower levels of staff turnover.
“That’s why from next April, the government has set aside £50 million each year to give businesses and employees an incentive to adopt employee owned models. We’ll be providing Capital Gains Tax relief for those who sell a controlling stake in a company to their staff.
“Giving hard-working people a real stake in their company is a hugely underused tool in unlocking growth. This straightforward new guidance will help firms of all sizes realise their potential, boosting staff motivation and laying the foundations for growth.”
Business Secretary Vince Cable said: “As we rebuild the economy, there has never been a more important time to support different ways of running a business. The evidence is that clear that employee owned businesses not only help us build a stronger economy, but boost the retention, innovation and motivation of their employees.
“The Nuttall Review set us a challenging agenda a year ago. Today we are helping to meet those challenges. I hope more businesses give their employees a greater stake in their future and the success of their company.”
Employee Ownership Association Chief Executive Iain Hasdell said: "Employee owned businesses contribute around £30bn to the UK economy each year and I am delighted that the importance of employee ownership has been recognised. By publishing today's "How To Get Started" guide for businesses interested in becoming employee owned we are shining a light on how easy it is to implement employee ownership in the UK.”
Co-operatives UK Secretary General Ed Mayo said: "We are delighted to be supporting Employee Ownership Day and will be encouraging our members to take part throughout the country. Co-operative employee ownership is where the majority of the business is owned by the staff. We will also be launching Simply Buyout, an essential guide to employee buyouts and becoming a co-operative employee owned business.”
Employee Ownership Day is part of the government’s commitment to help boost the size of the sector, by ensuring employee ownership is more widely understood and easier to establish.
The London Conference, held during Co-operatives Fortnight, will also showcase the pioneering approach to public service delivery that the Cabinet Office is leading on through public service mutual and outline progress made since the publication of Graeme Nuttall’s report into Employee Ownership in July 2012.
As part of the Day, the Business Secretary and Business Minister Jo Swinson will be visiting employee owned engineering company Arup, where they will tour the firm’s facilities and see some of the ground-breaking work the firm undertakes around the world.
Research also published by Co-operatives UK’s in their Economy Report showcases the benefit co-operatives provide for employees and the economy. Key findings include:
- Co-operative businesses in the UK together turnover more than £37bn a year — an increase of 3.3% in 2012;
- The sector has grown more than 20% since the start of the recession in 2008;
- 65% of conventional businesses survive their first three years compared to 90% of co-operatives which are still in business;
- Gender diversity — 37% of directorships held by women in co-operatives compared with 13% of leading UK companies.
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