One particular organisation has had a major influence on the popularity of mutuals and employee ownership, as Dermott Calpin reports
The Employee Ownership Association has been a major influence behind the growing interest in mutuals and employee ownership in recent years.
Founded in 1979, with the help of the John Lewis Partnership, and international polymers manufacturer, Scott Bader, and other companies, the association was originally established as a consultancy limited by guarantee, known as Job Ownership Ltd (JOL).
The organisation was the brainchild of journalist, Robert Oakeshott, who died in June this year, aged 77, but who championed the cause of worker co-operatives.
His book entitled Jobs And Fairness is generally acknowledged as the definitive study on employee ownership in the UK and overseas. Educated at Tonbridge School, Kent, Mr Oakeshott won an exhibition to Balliol College, Oxford, where he studied classics, and graduated in 1957. His career as a journalist started on the Sunderland Echo, and he later moved to the Financial Times.
In the 1970s, he visited the highly-successful Mondragón network of co-operatives in the Basque region of Spain, and in 1978 published The Case For Workers’ Co-ops, which the former Liberal Party leader, Jo Grimond, described as ‘a book all Liberals should read’.
The Employee Ownership Association now boasts strong all-party support, and has played a key role in helping shape the tax and legal environment for co-owned businesses.
It helped design the private member’s Bill that became the Employee Share Schemes Act 2002, and has participated in the Special Share Task Force and HM Treasury’s advisory group, which worked with the Inland Revenue to devise the Share Incentive Plan and the Enterprise Management Incentive scheme.
In a report published in June, the Employee Ownership All-Party Parliamentary Group, chaired by Jesse Norman, said that the mutuals programme set up by the Cabinet Office ‘is an important step forward’, but added: ‘It is not yet very well understood within central and local government.’
The report, Sharing ownership: The role of employee ownership in public service delivery, said that the programme: ‘Would benefit from more explanation, exhortation and guidance from ministers to the relevant authorities in health, local and central government.’
The MPs also suggested that the Cabinet Office should launch a major study ‘on funding and other conditions required for employee mutuals to achieve significant growth and scale’.
An earlier study of private sector mutuals by the all-party group found ‘enormous potential for the UK economy’ in setting up private sector mutuals, and said that co-owned firms appeared adept at managing change and innovation, with high levels of productive employee engagement.’
The latest report echoes many of these findings, but added: ‘The mutuals programme must be viewed as a means to drive positive change and better public services in our communities. Although many employee-led mutuals report significant efficiencies, cost cutting alone should not be the prime motivator for seeking out mutuals ownership models.’
It also warned: ‘More work is needed to create safeguards against the possibility that mutualised public assets could be sold off before they have had a chance to show their value, undermining employee ownership and the admirable intentions behind the Government’s objectives.’
