EOA sets out series of asks of Government after appointment of new Prime Minister | CEO Blog

Blog from Employee Ownership Association (EOA) CEO James de le Vingne

It’s great to see the end of uncertainty for the leadership of the Conservative Party and the country.

As Liz Truss becomes the new Prime Minister, we will use this change in leadership and ministerial roles to kick-start a national conversation around employee ownership.

Now is a fantastic opportunity for the EOA to articulate what we would like from the Government, as well as demonstrate how we can use our insights and connections to support business resilience in the UK.

As we seek to capitalise on the accelerated growth and impact of the employee ownership sector, we need to anchor our conversation with Westminster.

Employee Ownership is one of the fastest growing parts of the economy. Back in 2019, when we in partnership with Co-operatives UK  launched the #1million Owners Campaign, there were fewer than 400 EO businesses – now we’re at more than 1,000.

As the supporting project linked to the campaign – the Ownership Hub – starts to build, our needs for support from the Government have changed. We believe employee ownership creates the opportunity to respond to some of the challenges facing our country right now, especially the cost-of-living crisis, which we know has been exacerbated by extractive business models.

Employee ownership, through offering a stake and a say, offers a different approach than leaders being pitted against workers. The mechanism for employee voice means there is a shared understanding of the imperative to balance the individual and collective needs.

Not only this, the ability of employee-owned businesses to make decisions and plan to grow sustainably for the longer term is driven by the collective conscience of the business.

Our members tell us that during times of difficulty and uncertainty, employee ownership leaves them in a better position to flex and adapt during challenging times, while also having an eye on the future direction of the business and the needs of all the business’ stakeholders.

There’s a real opportunity in the near future to catalyse change – for the national government in England to build on examples we’ve seen adopted in Scotland, Wales and in the regions with our metro mayors around growing employee ownership.

As well as interventions to grow employee ownership, we need to be able to connect the dots and develop robust evidence that builds on that of the Ownership Dividend report of 2018, something we will be working with the sector and beyond to achieve over the next 18 months.

Here’s where we think we can support Government and how they can support the growth of employee ownership:

An APPG (All-Party Parliamentary Group) on succession

We’ve heard it said that the next five years are critical for 120,000 businesses in relation to succession. Tackling this issue is going to be critical to the stability of our economy.

The Government should be concerned that there are a considerable proportion of family owned or small to medium-sized enterprises that don’t have succession plans with founders or business owners retiring in the next five years.

The EOA wants to be at the centre of a collaborative conversation around succession and the vulnerability of SMEs as we don’t want these businesses to fall off a cliff.

If we and others collaborated with the Government on succession planning, this would leave businesses in general less vulnerable. Without either a leadership or ownership succession plan, businesses face an uncertain future. Early planning gives owners peace of mind as well as financial security for their employees and family.

This would also likely increase the number of employee-owned businesses making sure it is one of the options considered as part of a change of ownership.

Succession is a regular conversation we have with stakeholders such as the Federation of Small Businesses (FSB) and the Institute for Family Business (IFB). By forming an APPG with cross-party support and a cross-section of the economy, we could educate businesses on being better planned. It would help to address what has been described as a “succession timebomb”.

If businesses cannot plan for the longer term, they will never make the brave decisions that employee-owned businesses make when it comes to investing in their people or pursuing innovation in either products or practices that benefit both people and the planet.

As we seek to better understand the impacts of employee ownership through the EO Knowledge Programme, we will be able to understand what about EO helps productivity, innovation and the social impact and if any of that relates to having some certainty about the long-term plans of the business.

Investment in training

When talking about succession, we need to think about the things that support businesses on that succession journey. We are calling for investment in training for business advisers via a national programme, potentially delivered in partnership with others, to help identify and support the succession route.

This has been one of the standout successes with the Ownership Hub and our work in the South Yorkshire Mayoral Combined Authority. How we train these advisers in the regions is critical for them understanding businesses that need to plan for both leadership and ownership succession. The learning has been two-way on what support businesses need in a particular region.

By supporting business advisers to connect with businesses that do not have a clear succession plan, we could facilitate increased economic resilience by supporting more businesses to transition to employee ownership.

A minister for EO

The latest shake-up is a chance for us to re-affirm who is the Minister for Employee Ownership. There have been a lot of changes to ministers in both Treasury and BEIS, so it is not clear who currently will hold this title.

Our aim is to grow this to re-establish this link to partner with them to further the growth of the sector as well as represent the needs of the EO sector/EOA membership.

British Business Bank investment

We know businesses are not just becoming employee owned for succession purposes, they’re also doing it for growth and performance. We know there is a gap regarding patient growth capital for employee-owned businesses, so this is a great opportunity to talk about the success of employee-owned businesses and younger businesses transitioning to EO as part of their growth.

The British Business Bank – the government-owned, but independently managed lender that helps smaller businesses to invest and grow – needs to engage with this as a growing part of our economy and I feel that’s a clear ask.

There is an investment opportunity for the Government to support this growing segment of the economy. It has got the mechanism with the British Business Bank, but the lending opportunities it offers aren’t currently aligned with some of our members, there’s a disconnect there.

We know access to capital is a challenge. The private sector is responding with some niche opportunities, but that’s insufficient to facilitate further growth.

We’d like to talk to the Government on how the British Business Bank, as a patient lender, can work more closely with the EO sector to support growth of EO businesses with high growth ambitions.

As we build our conversations with new ministers, it would be great to hear from you as members about the above, or any issues you can see for employee-owned businesses on the horizon.

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