Graeme Nuttall, the government’s adviser on employee share ownership has published a report recommending that the UK should encourage more “John Lewis” type employee owned companies.

The Nuttall Review suggests that employee ownership, when combined with employee engagement will enhance business performance and improve employee well-being. It also identifies the three key barriers to further uptake of employee ownership in the private sector as:

  • A lack of awareness of employee ownership. The concept of employee ownership is not widely known, and is undermined by misperceptions..
  • A lack of resources, including guidance and finance, to support employee ownership.
  • The complexity of employee ownership,  setting up as an employee owned company was associated with legal, tax and regulatory complexity.

Nuttal makes key recommendations

1) Government and the sector should raise awareness of employee ownership, through: 

  • Promoting a clearer identity for employee ownership: it is a business model in its own right which leads to proven benefits, used by many successful businesses today;
  • Advocacy work by Government and the sector, and in particular to ensure that employee ownership is considered as an option at more stages of the business lifecycle; and
  • A new Right to Request employee ownership, aimed at encouraging employees and their employers to discuss employee ownership proposals within their companies.

2) Government and the sector should increase the resources available to promote employee ownership, through:

  • A sector-led Institute for employee ownership, to lead on information and guidance on employee ownership; and support companies adopting employee ownership as well as existing employee owned companies; and
  • Better promotion of the various sources of finance that can be well suited to employee owned companies.

3) Government should make it easier to set up and run and employee owned company, through:

  • Creating simplified ‘off the shelf’ models of an employee owned company which reduce the complexity and uncertainty of the process. Model templates and toolkits would provide all the information and guidance necessary to complete the process quickly and easily;
  • Regulatory reform to simplify the processes underlying operating an employee owned company;
  • Reviewing other regulation and tax policy to ensure complexity is minimised.

4) Measures to ensure implementation and maintain progress:

  • A one-year on report to monitor progress in implementation; and
  • A sector steering group to advise the Minister on the views of the employee ownership sector.

Links: The Nuttall Review of employee share ownership