How our emerging policy proposals will help the EOA unlock the full potential of #TheEOeffect | CEO blog

Blog by Employee Ownership Association (EOA) Chief Executive James de le Vingne

This year we will celebrate the 11th annual EO Day on 23 June with the theme of #TheEOeffect.

As we gear up for our big national day – when we will showcase the impact employee ownership has on employees, business, the wider economy, communities and the environment – I reflect on what the EOA has planned to further grow and strengthen the employee ownership sector.

Our three priority areas

In establishing the effect EO has on businesses, employees, and our wider economy and communities, one of our key priorities will be to represent the sector by engaging with policy-makers.

To do this we are working with our advisors, members and other stakeholders to co-produce a set of policy proposals that can support employee owned businesses (EOBs), strengthen the EO sector and fully unlock the full potential of #TheEOeffect.

These proposals will enable us to take advantage of the exciting opportunities for the sector over the coming months: to respond to the consultation on Employee Ownership Trusts (EOTs) announced at the end of April; to engage with and influence key stakeholders ahead of the next election; and to capitalise on the still rapidly growing interest more widely in EO across the UK.

We are focusing our developing policy proposals on three priority areas:

1. Market development

There are some fantastic fiscal levers and incentives currently in place to encourage greater employee ownership in the economy with all its beneficial impacts. The introduction of the EOT since the Financial Act 2014, in particular, has led to massive growth across the sector.

Our proposals for market development will focus on how these levers and incentives can be maintained, strengthened, and rationalised. We will be focusing on how the EOT can be simplified, strengthened, and how we can generally protect the model and its integrity.

As well as being a key component of our proposals, this work will inform our response to the government consultation on EOTs in collaboration with our members across the EO sector and our advisors.

As part of our market development priority, we will also be considering the options that currently exist for direct share employee ownership, and whether these can be strengthened in a similar way.

2. Transitions

There is already a great deal of work around supporting transitions, including the Ownership Hubs which the EOA has launched in partnership with Co-operatives UK, the work of CDS and Cwmpas in Scotland and Wales respectively, and the fantastic support available to transitioning businesses from organisations like the EOA’s Specialist Advisors.

We are currently developing proposals to how we can build on the above to support healthy transitions to employee ownership.

Firstly, we are exploring how government and other relevant stakeholders could provide support into capacity-building for businesses. We have heard that three areas of need here are:

  • Trustee capability
  • Business leadership in EOBs
  • Supporting employee owners

We are also exploring other key priorities for transitioning businesses that we might address through our policy proposals. For example, we currently understand that the business valuation process relating to EOTs may potentially pose a risk to the model’s integrity, so we’re working with our advisors to identify what the most suitable approach to address this may be.

3. Supporting the sector

While the existing fiscal levers and incentives and the support available for transitioning businesses has enabled the employee ownership sector to grow massively and prosper over the past decade, more could be done in terms of policy and legislation to unlock the full potential of the EO effect and to put EOBs on a level playing field with other businesses.

EOBs, like all businesses, need to be able to raise capital so that they can grow or adapt to changes in the wider economy.

The EOA is particularly interested in exploring how government can unlock patient capital for the sector, and the options available to EOBs to issue shares without risking dilution of their ownership model. We have welcomed recent work in Parliament on this area, most recently the Permanent Shares Private Members’ Bill, which is scheduled for a second reading in the Commons in November this year.

Consulting and engaging with the sector on our policy proposals

The work so far on the EOA’s policy proposals has largely been shaped by engagement across the EO sector and with our advisors and partners. It is vital that this continues and is expanded on so that our final policy proposals reflect the lived experience of our employee owned members, as well as the input of relevant experts and specialists.

So that our policy proposals are co-produced across all relevant voices, we will be consulting and engaging with our members over the coming months.

We are arranging interviews with specialists and experts, and roundtables with our wider membership and other relevant stakeholders to develop a full draft set of policy proposals.

This draft will then be put to all members for final feedback with the aim of having a final set of policy proposals in place for early August.

Related Articles

11 ways you can shout about #TheEOeffect and get involved in EO Day 2023 on 23 June

Robert Oakeshott Lecture provides ‘food for thought’ on employee ownership being a ‘powerful starting point’ to help redesign business

EOA expands its policy and influencing activity

EOA sets out series of asks of Government | CEO Blog

Mayor of London commits to boosting city’s economy through promotion of employee and worker ownership