Jesse Norman as well as being one of the new intake of Tory MPs is also one of the key thinkers (yes, they do have them) in David Cameron’s new liberal Tory project. In what looks like a kite flying exercise ahead of Wednesday’s UK Budget he has some interesting ideas (not least because some of it could have been served up just as easily by Will Hutton):
The government now has a huge opportunity to redress the balance, by promoting employee ownership. This does not mean new share option schemes as such; or fancier approaches to executive remuneration, of which we have too much already. It means measures that extend the core values and the culture of employee ownership. It is striking that the level of non-plc ownership in Germany is three times that in the UK.
Such “deep” employee ownership is often indirect and collective. John Lewis is an overused example, but it illustrates the point well: how many of its shares are directly owned by its employees? The answer is none. The shares are owned by a trust, whose beneficiaries are the staff. The firm succeeds not because individuals own shares directly, but because of its employee-led values and culture.
This is no panacea. But evidence suggests that employee-owned firms grow as fast as plcs, are more resilient and do better at creating and keeping jobs. They have higher levels of staff wellbeing and fairer pay. Deep employee ownership works especially well in smaller knowledge-based companies, on which the UK increasingly relies.
He concludes with some practical suggestions, which amount to tweaking the system to favour mutual over cruder joint stock models… And he says:
…we need to raise public awareness. A full-scale campaign might involve the creation of co-op-style “Rochdale principles” for employee-owned firms; more work on creating a social investment asset class; and above all a new Institute of Employee Ownership, which can work through existing organisations to train employees, business owners and advisers, conduct research and promote the sector.
Rochdale is a reference to the Rochdale Society of Equitable Pioneers who set up to the Co-operative movement in earnest… It’s also worth noting that the fully mutualised Nationwide Building Society and the Co-operative Bank have virtually no bad debt…
So whatever happens further up the chain (and given his overall commitment to austerity, the Chancellor has little room for manoeuvre either way), this will be worth keeping an eye out for…