New Research Finds Employee-led Businesses Outperform Rivals

PRESS RELEASE

EMBARGOED until 00:01 Wednesday 29th February

New research published today by the Employee Ownership Association calls on Ministers to put money behind the rhetoric and develop a single route to employee-ownership supported by legislation, improved tax treatment for employee shareholders, and better access to bank lending for co-owned firms.

The study conducted by William Davies (Academic Director at the Centre for Mutual and Employee-Owned Business, Oxford), urges Government to consider new policies to support and grow the £30 billion employee-owned sector.

The report - ‘All of Our Business, Why Britain needs more private sector employee ownership' – will be launched by the All Party Parliamentary Group on Employee Ownership in Parliament on Wednesday 29 February by APPG Chairman Jesse Norman MP, with remarks from BIS Employee Relations Minister Norman Lamb MP, and Labour’s Tristram Hunt MP.

Making the case for the re-introduction of tax relief for Employee Benefit Trusts, the research further calls for the extension of the Enterprise Investment Scheme (EIS) to employees (currently limited to external investors), and demands more accessible bank lending for employee led businesses in need of patient capital but without the ability to sell equity.

Sponsor of the report, Mike Thompson OBE, Chief Executive of employee-owned business Childbase Nurseries, said: “This report highlights what employee-owned companies have long believed - that enduring and dependable relationships with colleagues that are a company’s most valuable resource. However, the reality is that without incentives for entrepreneurs to pursue employee ownership, few companies are willing to take the financial risk of drastically changing their ownership structure.”

He continued: “Childbase have run our employee scheme for 15 years and the level of contribution staff can make through the share scheme has not changed in that time. If Government really wants to reap the benefits of increased employee engagement, reduced absenteeism and increased productivity resulting from co-owned business, it needs to invest time and resource upfront to offset set-up costs and introduce entrepreneurs relief for employee owners and those selling companies into employee ownership.”

Hugh Facey, founder of employee-owned Gripple Inc who feature in the study, said, “The employee ownership model helps to define this company and I want to ensure that we never lose sight of our founding principles. I would not run this company any other way.”

Report author Will Davies argues that the new enthusiasm for credit easing needs to be extended to employee-owned companies. He said: “The credit squeeze has hit the sector hard. It is essential that employee owned companies are able to borrow money from banks who are sympathetic to their needs, rather than equity investors who seek rapid entry and exit. I hope an extension of credit easing would be the first step in helping to boost a sector that can play a vital role in shaping a more balanced, egalitarian and prosperous economy”.

Ends

Notes to editors

1. For further information or interviews, please contact The Employee Ownership Association press office: 020 7922 7762// 07944 381743 or sam.dowling@employeeownership.co.uk

2. The Employee Ownership Association is the voice of co-owned business in the UK – a network of over a hundred companies with significant employee ownership and a sector of the economy worth over £30 billion annually. For more information visit

3. Members include co-owned Gripple, Childbase, John Lewis, Waitrose, Unipart and Arup, plus a host of successful enterprises from many sectors of the economy. The Association’s role is to serve its member companies and promote the growth of employee ownership in the UK.

4. For more information visit www.employeeownership.co.uk