It is no secret that I am a passionate advocate of greater employee-ownership. I was thrilled when, at the beginning of this year, Nick Clegg launched a government push to promote mutuals and I am delighted now to be the minister charged with delivering on this ambition. I am also proud that Liberal Democrats will be debating the issue at this year’s Autumn Conference. 

Employee ownership is not just a niche issue. As the title of this fringe event suggests, it has a role to play in achieving this Government’s key goal of long-term, sustainable and balanced growth.

Research by the Cass Business School has shown that employee-owned businesses are just as profitable as traditional companies and that their performance is more stable over the business cycle. Interestingly, during the recession they proved to be more resilient than traditional companies. They consistently recruited more staff, and get more out of them: productivity tends to be better at companies with an element of employee-ownership. Other evidence shows that rewards are distributed more evenly within an employee-owned business, with a smaller gap between the top and the average worker’s pay. 

The Liberal Democrats, and the Liberals before them, have long been standard-bearers for this agenda. John Stuart Mill argued that, “the efficiency and economy of production on a large scale, may be obtained without dividing the producers into two parties with hostile interests and feelings,” and predicted that, “the relation of masters and work-people will be gradually superseded by partnership.” Jo Grimond, inspired by a visit to the Mondragon co-operative in Spain, founded the organisation that developed into today’s Employee Ownership Association. At this year’s Liberal Democrat conference delegates will be debating and voting on the party’s policy in this area, which has been reviewed by a party working group over the last year.

In Government, we have already made significant progress in this area. We plan to give employees a stake in Royal Mail and have ambitious plans to establish a mutually owned Post office, giving sub-postmasters and employees a stake in the business and also giving consumers a voice. Graeme Nuttall, an expert in the field, was appointed the government’s independent advisor on employee ownership back in February and spent the intervening months investigating the barriers to greater employee ownership. He split these barriers into three broad areas: a lack of awareness of the concept; a lack of resources available to support it; and a complicated – or seemingly complicated – legal, tax and regulatory framework.

Graeme’s report is now available online, and was presented at a summit hosted by the Deputy Prime Minister shortly before the summer recess. Groups from the sector were in attendance, as were major law and accountancy firms, professional bodies, business advisors, academics, banks and policymakers whose support and expertise will be needed if we really are to drive employee ownership from the fringes into the mainstream of the British economy.

Graeme laid down a challenge to Government: to maintain the focus and the momentum on this issue and to “translate its support into concrete changes”. I hope he will not be disappointed when the Government’s response is published in the autumn. Indeed, we have already announced that an independent, expert Institute for Employee Ownership will be established; launched a call for evidence on how a Right to Request employee ownership could work in practice; and started working on new off-the-shelf ‘DIY packs’ for companies looking to adopt an employee-owned business model. The publication of the Government’s response to the Nuttall report will be another important step forward. However, there is much still to do and I am utterly determined to make this happen. We have a vital opportunity in Government to make real progress. All three main parties are broadly supportive of this agenda, and there are knowledgeable, vocal champions of employee ownership in the Conservative and Labour parties as well as in the Liberal Democrats.

It is an idea whose time has come, and one that speaks to many of our current concerns. Whether it is about securing balanced, sustainable growth; addressing the disparity of pay between the boardroom and the shop floor; moving beyond the greed and short-term thinking which led to the financial crisis; or giving people a greater voice in the workplace, employee ownership and the principles which underpin it has something new and something very valuable to offer. 

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About The Authors

Norman Lamb MP

Norman Lamb is the Liberal Democrat Member of Parliament for North Norfolk and Minister of State for Care Services...