Carole Leslie

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  1. The danger behind “Shares for Rights” proposal

    May 1, 2013

    Many of us in the employee ownership sector are rather bemused at the government’s intent to push through the much decried “Shares for Rights” legislation. This is a proposal in the Infrastructure Bill which creates a class of employee where certain employment rights are compromised (e.g. on redundancy and dismissal) in return for a negligible shareholding in the business. The government’s own consultation was dismissive of the idea, and the House of Lords rejected the idea on the first two readings, with an eventual passing last week. I was with one of Scotland’s leading lawyers last week who dismissed the notion as “irrelevant” -take up will be less than negligible. There might be a limited application for small high tech startups, but the reality is that models already exist which fit with these organisations which are probably more tax effective.

    I agree with almost all of that. There is little danger that hundreds of employees will lose employment status in return for shares which might be worthless because the policy won’t get off the ground in the first place. A non event? Yes. Irrelevant? No.

    The idea came from nowhere at a time progress on employee ownership was gathering pace. Following a comprehensive consultation, and led by expert Graeme Nuttall, the Nuttall report had been published in July making many recommendations to promote the employee owned business model. “Employee shareholder status” was not one of them. In April this year, the Chancellor announced a £50m annual budget for the development of employee ownership. Some of this money is to be allocated to tax incentives for owners who sell to their employees – a policy we have been pushing for a long time.

    The whole nonsense idea has at best been a distraction to much of the good work going on to promote a business model that is better for our economy, our communities and our workers. At worst, it has tainted employee ownership with the tawdry brush of exploitation. Employee owned businesses tend to be better employers, with enhanced terms and conditions in comparison to conventionally structured firms.

    “Shares for Rights” is not employee ownership. It is far removed from what our growing sector is trying to achieve. Let’s put the idea to sleep and focus on positive moves that will create and sustain good jobs and shared wealth.

  2. You can’t swap rights for shares

    October 10, 2012

    For many of us in the employee owned and coop sector the announcement of the “trade rights for shares” scheme was a blow.  Is this the Government’s big plan to foster more employee ownership?

    We expected better. Following Nick Clegg’s commitment back in January to “drive employee ownership into the bloodstream of the UK economy” and the endorsement by no less than three Government Ministers (Lamb, Clegg & Maude) of the Nuttall report, those of us in the sector thought – at last – they’ve got it! The very idea that employees should have to forgo employment rights to enjoy the rewards they help create is simply ludicrous.  Where did that come from?

    If only George Osborne had attended an excellent, and busy, event in Glasgow this week, he would have heard Sarah Deas of Cooperative Development Scotland say why employee ownership is so important to a healthy economy:

    • Unlike a trade sale where relocation is often inevitable, the model roots the business in the community.
    • The ownership stake engages the hearts and minds of employees and aligns everyone with the business
    • The wealth created is distributed over a broad base of people.

    Employee owned businesses enjoy a dynamic not often found in conventionally structured businesses.  As in every business, the board is accountable to the shareholders.  In the co-owned sector, these shareholders are largely employees.  This breaks down the “them and us”.  The goals of management and workforce are aligned, reinforced by the transparency and accountability that ownership brings.   The Government’s idea that there would be a two tier organization, with managers who hire and fire, and a subservient contractor workforce rails against the very principles employee ownership stands for.  This is a huge step back to the adversarial industrial relations environments of the seventies and eighties.

    At the core of Osborne’s proposition is that share value in these companies will grow and thus compensate employees for the lack of employment security and weakened working conditions. Just about every employee owned business will tell the Chancellor that this is a faulty premise. Financial gain is not unimportant, but is not usually a priority.  The fairness, the transparency, the accountability are the reasons why most employee owners produce the remarkable results that interest the researchers.

    There is no doubt that the model proposed might fit with a very small number of firms who may be looking for that “flexibility”.  Will this really drive the benefits of employee ownership and create a fairer, more solid and beneficial economy?  I think the response so far has been overwhelmingly that it will not.