Ten Years of the EOT: A Decade of Great EO Commitment for and by the EO Sector

Ten years ago today, the employee ownership trust (EOT) gained royal ascent. Today we celebrate ten achievements linked to the EOT in the decade since, with huge thanks going to our growing cohort who’ve helped us to mobilise the model and change the shape of the UK’s EO sector forever.

Image: Canva Photos

From a jumping off point of 152 medium-to-large employee owned businesses (EOBs), the sector now boasts hundreds of EOBs of all sizes, represented in most UK industrial sectors and regional economies. 

By design, the EOT encourages long term employee ownership, incentivised by a sale free from capital gains tax and up to £3,600 tax free for employees in dividend payments. 

Recent research shows both the impact it’s had in supporting livelihood outcomes and economic security in regional economies. 

When our Chief Executive James de le Vingne joined the association in 2022 as the sector hit the milestone of 1,000 EOBs, he mused what it would take to create twice the growth in half the time.  

Doubling the number (1,030) in half the time from 2022 (5 years) equals 2060 EOBs by 2027, doubling the percentage growth (91% to 182%) gives us 2,904, and taken to the Nth degree, doubling the average annual growth would equal to 6,827 by 2027… the latter a perhaps a stretch too far without significant and far reaching interventions! 

However, sounding way less ambitious, just maintaining the average growth of 23% a year would see us reach 2,899 by 2027, or sustaining the higher average growth rate of 28% since 2021 gets 3,536, or nudging up to our highest growth year of 30%, we would reach 4,968 by 2027, then 9,554 in half the time again in 2029. 

James said: “The achievements of the past decade, and the momentum we have today, are built on the eoa’s long-term relationships with tenacious pioneering founders, advisers and EOB leaders from our membership.  

“To simply sustain this momentum will need significant continued efforts, and a future-proofed EOT. 

“To nudge the momentum further and amplify the benefits these EOBs deliver, we need clear government leadership and support as set out in the eoa Manifesto.” 

Today we celebrate ten milestones the EOT has supported to gain the momentum and impact of EO in the UK today:  

1. 90% Growth in the Sector

Quintessa was named as one of the first EOTs, with others celebrating their 10th anniversary including NSBRC, the first Scottish EOT Stoane Lighting, and The 1:1 Diet by Cambridge Weight Plan, which progressed to 100% employee owned in 2014 using the EOT. 

A succession of high profile media friendly EOT transitions boosted awareness and momentum - Riverford Organics (2018), Aardman (2018), Richer Sounds (2019) and Go Ape (2021) - accumulating 100+ articles across national, regional, professional, and trade media. 

A dip during the Covid pandemic as transitions slowed was reversed after many people were forced to consider the future of businesses if they were no longer around.  

Today we see about one EO transition a day. 

2. From Large to SMEs, All Types of Businesses… 

The EOT has offered a succession plan, independence, long term governance, rooting 200,000+ jobs for the longer term in regions across the UK. 

It’s present in most industrial sectors, but prevalent in manufacturing, professional service, in particular architects, plus construction, wholesale and retail trade, and information and communication. 

On its own or alongside other ownership, the EOT offers an alternative to a sale, management buyout, or simply closing the business.  

Plus, there’s a trend of business owners bringing in employee ownership much earlier to drive performance, attract and retain talent, with the bonus of succession being already built into the business for the future.  

However, while succession planning in the UK remains weak, there is a Great EO opportunity to secure thousands of livelihoods, currently at risk if the estimated 51,600 businesses cannot secure new owners in the next decade. 

3. Ownership Effect Inquiry and Ownership Dividend

As the sector grew to 300 EOBs in 2017, it was time to turn the anecdotal benefits into a more understood set of impacts.  

Enlisting academics from Bayes Business School, an engaging panel of 20 business representatives from business organisations such as the FSB and LEP Network from a across the UK, we lifted the lid on what it means to be EO. 

Through seven inquiry hearings across the UK, with questions asked of 80 EOBs and 20 advisers, the answers were synthesized into a body of evidence that concluded that EO delivered more engaged employees, higher productivity, and more resilient regional economies. 

The awareness created by the inquiry and report The Ownership Dividend  was a strong catalyst for future growth. 

4. Regions Scotland and Wales Targets and Action

In 2019, the Scottish government set a target to grow employee ownership in Scotland fivefold to 500 by 2030. 

Their latest census commissioned by Cooperative Development Scotland shows that with an average of 45 new EOBS a year they are on track to hit that target. 

Wales followed suit in 2021 with a plan to double the number of EOBs in Wales by 2026. Last month, Employee Ownership Wales reported it has surpassed that target with 74 Wales businesses owned by their employees, with more in the pipeline. 

5. Ownership Hubs Partnership and Project

Armed with evidence and support, we started to influence on getting support to grow more employee ownership, we quickly realised we were working in the same space as worker co-ops and our ‘cousins’ at Co-operatives UK. 

Coming together in 2019 we realised we were joined by a wish to give more employees a stake and a say in the place they work.  Together we bid for funding to create two-three regional pilots aimed at growing these business models forming the Ownership Hub Project. 

The project launched as we mobilised a first pilot in South Yorkshire in June 2021, chosen from six area bids, where research into lessons learned is being conducted. 

We are now working with Greater London Combine Authority launched in 2022 and West Midlands Combined Authority launching in May 2024 – both with pledges to grow employee and worker ownership in their manifestos and an Ownership Hub coordinator in location at each authority. 

6. Innovations – Adviser Become What They Innovated

As advisers started to understand and work with the EOT we saw an increase in the number of businesses using a hybrid model of employee ownership – with the EOT providing indirect ownership alongside some direct ownership, sometimes alongside a charitable trust or other ownership. 

Many LLPs advising on the EOT and understanding both how to structure the model to drive multiple benefits, were at the same time as grappling with the sustainability of the partnership model and started to talk to the SRA Solicitors Regulation Authority. 

What followed was several law firms using EOTs alongside an EOT or becoming fully owned by an EOT with about 20 of the 9,500+ law firms taking this route by 2023. 

Accountants started to follow this trend leaving the eoa with a great problem to have – are these adviser members of the eoa or are they EOB members of the eoa! 

7. International EOTs – The UK’s Great Policy Export

The EOT is becoming one of the UK’s great policy exports. The proven success of the model continues to cause waves around the world as a growing number of international economies adopt it.  

Over the years, the eoa and Graeme Nuttall (our recently appointed International Ambassador) have held positive conversations with Japan, Australia, the US and Canada, and some European countries over the past few years. 

Before the US signed the ‘Main Street EO Act’ in 2018, EO in the United States was traditionally tied to pensions and not very EOT like, however this is starting to change highlighted by this article by our US counterparts the National Center for Employee Ownership (NCEO).

The first of our international conversations to truly bear fruit was the introduction of the Australian EOT in 2021. Since then, there’s been a flurry of further adoptions in historic firsts. This includes Canada, Ireland, and Denmark. We predict seeing more countries following suit in the months and years to come. 

8. EO Knowledge Programme 2023 – the Real EO Impact

As the EO sector reached a critical mass of 1,600+ businesses, this offered a real opportunity to show its impacts and compare them with their non EO counterparts. 

As part of the EO Knowledge Programme, the groundbreaking ‘People Powered Growth’ report released in October 2023 is the most powerful research on this topic to date.  

The results make the strongest case for employee ownership we’ve so far seen. From confirming that EOBs are 8-12% more productive to offering a collective average £2,900 in the pockets of employees, the multiple impacts are felt by people, planet and place.  

But as the sector continues to grow, so too will the body of research and data we’re developing with our partners – building on this important base line. 

9. eo Learn and eo Framework – Evidence-based Practices That Deliver Great EO

eo Learn began back in 2020 with a single course – the highly successful ‘How to be an Effective Employee Trustee / Director’.  

We now boast seven bespoke courses with topics ranging from empowering employee voice to futureproofing your EO business via reward and governance. And there’s more on the way! 

This expansion was driven by our in-depth understanding of key practices gained from sustained relationships with both our members and the sector, now underpinned by evidence from the ‘Good EO’ study from our EO Knowledge Programme. 

The EO Framework evolved from this evidence, offers a blueprint of practices to drive the impacts evidenced in our recent research, is now central to our proposition, driving more courses – plus events, resources, and support. 

10. People Powered Business – 780 and Growing!

Since the introduction of the EOT, we’ve seen our membership skyrocket along with attendance of our events and participation in EO Day. 

Back in 2014, our membership was below 200. Flash forward to today, and we’ve got over 780 members and counting. This is only going to grow. 

This year, we’re anticipating over 850 attendees to the eoa Annual Conference, following on from what proved to be the biggest and best EO Day to date as businesses celebrated being Proudly EO. In fact, we enjoyed a reach of 2.1 million across the campaign. 

The Next Ten Years

The challenge to sustain this momentum is ours, the opportunity to be part of it and help increase it is yours - a legacy that together we have proved as being essential to support more sustainable growth and sharing of wealth.

Talk to us about how!