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Is a ‘Property-Owning Democracy’ Enough?

22nd March 2013

ResPublica's Caroline Julian writes the Friday guest blog for Bright Blue

Amongst the critique, commentators have given a cautious welcome to the Chancellor’s plans to support a ‘property-owning democracy’. With home ownership for the 25-34 age group down by a third in the last ten years, measures set to encourage construction and attainable mortgages for first time buyers have been endorsed by some.

But whilst promoting individual ownership plays a crucial role in delivering assets and market-entry to many across the country, there is a much bigger crisis at hand: a crisis of market concentration and increased homogeneity within both private and public sectors, which has in turn seen a crisis of trust, competitiveness, productivity and accountability in recent years. The standardisation of the‘plc’ and the development of the ‘one size fits all’ model of public services have in part contributed to the creation of monopolies in the private and public sectors respectively. With many businesses owned by shareholders and public services by the state, little is left for communities whom such markets should benefit.

Means of delivering asset ownership to individuals are commendable, but not enough. To deliver real benefits to our society and the economy, a whole new ownership revolution is needed – one that engages not just with individuals, but employees, citizens and wider communities, and one that draws on principles of plurality, mutuality and ‘shared ownership’ for both public and private markets.
ResPublica’s recent essay collection sets out to make this case. Making it Mutual: The ownership revolution that Britain needs convenes leading commentators and practitioners to highlight the benefits of the mutual, co-operative and employee-owned models, and to set out their own policy innovations for community and shared ownership.

As indicated by the Minister for the Cabinet Office, Francis Maude MP, the present Government has thoroughly embraced the importance of such models and of participation, mutuality and co-operation more broadly within and across the services accountable to the public purse. The mutual model has been adopted by the Cabinet Office as crucial to public service reform, and has engendered much-needed debate regarding the fundamental nature and role of the State. Professor Julian Le Grand, Chair of the Government’s Mutuals Taskforce, highlights within his essay the transformative impact that public service mutuals can achieve.

Within the business and community sectors, we have witnessed unprecedented interest in the employee-owned model, primarily advocated by the Deputy Prime Minister, Nick Clegg, and the Ministerial teams at the department for Business, Innovation and Skills. Graeme Nuttall, the Government’s Independent Adviser on Employee Ownership, promotes the incontestable case for the economic benefits of employee ownership in terms of productivity, innovation and the wellbeing of the workforce. Employee-owned businesses now contribute £30bn to UK GDP each year – a much needed contribution in tough economic times. The announcements made in the Budget to introduce new capital gains tax relief for companies sold into employee ownership, and tax incentives for businesses that transition into employee ownership, are a good start, but much more can be done.

Amongst the Shadow Ministers too, the importance of mutuality, trust and transparency in banking and energy market reform has gained great momentum. There is an appetite to restore faith in the long-term social and economic value generated through such engagement, beyond the short-term pursuit of ‘shareholder value’ which has come to characterise the plc model.

Diverse and devolved ownership, power and capital, alongside user, consumer and employee participation in governance and decision-making, are principles that we can all agree with. Unlike any other policy agenda, mutual, employee-owned and co-operative models, and their underpinning ideals, have attracted cross-party support and have been promoted as foundational players to our public institutions, private services and businesses, not just in this Government’s lifetime, but the ones that have preceded it also.

Although not a ‘silver bullet’ for all of our economic and societal problems, mutual and employee-owned models can be capable of transforming the foundation of such markets from what has often been a consumerist, individualist and self-interested enterprise, to one where communities, employees and users can take control and shape such markets for themselves. Beyond proposals for individual ownership alone, mutual models should be mainstreamed to incur the ownership revolution that this country needs.

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