FINANCIAL PARTICIPATION
Nick Clegg calls for drive to boost employee share ownership
Deputy Prime Minister Nick Clegg today urged more companies to offer shares to their staff. Under his proposals to create what he describes as a “John Lewis economy”, workers could be given a right to request shares in the company they work.
Speaking at an event hosted by Centre Forum and the City of London at Mansion House, Clegg said: “What many people don’t realise about employee ownership is that it is a hugely underused tool in unlocking growth.” He added: “The 80s was the decade of share ownership. I want this to be the decade of employee share ownership.”
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Clegg said employee ownership could help deliver a range of organisational benefits:
“I don’t value employee ownership because I believe it is somehow 'nicer' - a more pleasant alternative to the rest of the corporate world. Those are lazy stereotypes. Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better: lower absenteeism, less staff turnover, lower production costs. In general, higher productivity and higher wages. They weathered the economic downturn better than other companies.”
On reforming the tax system to encourage greater employee share ownership, Clegg said:
“Working with professional bodies and businesses, the coalition is going to find out where the barriers are, so that we can knock them down. Do staff and business owners know enough about employee ownership? Are the accountants and lawyers who advise them taught enough about it? Is there red tape we can cut? Does the tax system treat these firms fairly? Do we need an off-the-peg model so that more ordinary people take this up?”
Clegg said workers could be given the right to request shares in the company they work for:
“Crucial to all of this, of course, will be encouraging take up. One option, to give you an idea, could be giving employees a new, universal 'Right to Request' shares. Imagine: an automatic opportunity for every employee to seek to enter into a share scheme, enjoying the tax benefits that come with it, taking what for many people might seem out of their reach, and turning it into a routine decision."
Clegg did admit that much more work needed to be done on the proposals:
“Clearly the details of that kind of policy need to be properly thought through. We need to establish which companies would and wouldn't benefit - it might not be feasible for microbusiness, for example. But we need to start by thinking big: not asking ‘why?’, but asking 'why not?' Looking across the board – tax, regulation, simplicity, awareness - to help more of these companies flourish, in order to put more employees at the helm.”
A final word
“I am kick starting a drive in government to get employee ownership into the bloodstream of the British economy.” - Nick Clegg, Deputy Prime Minister, 16 January 2012.
Want to know more?
You can read the full speech online at www.dpm.cabinetoffice.gov.uk/news/deputy-prime-minister-s-speech-mansion-house.