A leading expert explains the advantages of employee ownership and the growing interest in the subject
I visited Scotland recently to speak to professional advisers on the uptake of employee ownership trusts, the vehicle introduced in the Finance Act 2014 specifically to promote employee ownership within companies. The event, part of a programme organised by Scottish Enterprise to raise awareness of employee ownership in Scotland's adviser community, was very well attended, indicating a healthy interest in co-owned business structures.
Employee ownership in the UK is in a healthy state. In 2017 the UK's 50 largest employee owned companies had combined sales of £22.7 billion, and 176,000 employees. Most of this Top 50 have no net debt. These firms come from diverse sectors: professional services, health and social care, manufacturing and retail. Employee ownership can be found in all areas of business; indeed, it is now difficult to identify sectors where there are no examples of employee owned companies.
It is estimated there are currently over 300 employee-owned firms in the UK. Scotland does appear to be doing particularly well in growing the number of employee owned businesses. It was good to learn that 2018 should see Scotland's 100th employee owned company - a remarkable number and particularly so in light of the fact that employee ownership in Scotland is exclusively private sector, for-profit businesses. The mutual, the employee owned spinouts from public service organisations, is not a feature in Scottish public service delivery.
I believe this prevalence of employee ownership can be attributed to the higher levels of awareness that exist in Scotland. The Nuttall Review of Employee Ownership (2012) identified that lack of knowledge of this business model amongst advisers was a major barrier to the growth of employee ownership in the UK. There is evidently a real enthusiasm amongst Scottish lawyers and accountants to promote employee ownership. The cross-party political support is excellent; the recent Holyrood debate demonstrated that MSPs know what employee ownership is and were able to speak eloquently about employee owned firms in their constituencies. It appears that Co-operative Development Scotland, working with Scottish Enterprise and Highlands & Islands Enterprise, are together really making inroads in getting the message out that employee ownership offers a stable, fairer and often more successful form of business ownership.
Forms of trust
It helps to understand what the term "employee ownership" means. The Nuttall Review defined employee ownership as where there is: "a significant and meaningful stake in a business...