Proposal to support employee buyouts denounced by two businessmen

A whipping boy for the proposed tax avoidance policies?

In the latest issue of the Co-operative News the Labour Party leader said that employee buyouts show how self-help and mutuality can build resilience into our economy, saving productive businesses and decent work. They can be an attractive option for business succession because they transfer ownership to people with a genuine interest in an enterprise’s long-term success.

Mr Miliband explained that co-operative and mutual enterprises differ from privately-owned businesses in one crucial respect; they exist to provide a service for their members rather than to generate profits for external shareholders.

The successful co-operative economy

ed milibandHe added that while the media focus has been on problems at the Co-operative Group, the co-operative movement as a whole continues to grow and prosper, outperforming the rest of the economy since the beginning of the global recession in 2008. Between 2008 and 2013, the size of the co-operative economy grew by 13.5%, with the number of businesses growing by 26% and a 17% increase in the number of members.

Because – over the course of this parliament – the average working family has seen their wages decline by £1,600 per year, there is a need to make the economy work for working people. Co-operative Party ideas influencing the Labour Party include:

  • promoting credit unions,
  • reforming the energy market,
  • empowering consumers,
  • increasing the voice of passengers and employees in transport services
  • putting football fans back at the heart of their clubs.

Mr Miliband expressed a determination that Labour’s British Investment Bank will not just support small business and infrastructure investment, but co-operative and social enterprises as well and a policy of giving employees a statutory right to request employee ownership should be explored.

employee ownership ass logoThe FT adds that there are 300 companies fully owned by their staff and roughly the same number are majority-owned by employees, a 105% increase in 2014, according to the Employee Ownership Association. They employ 250,000 people and the sector is worth £30bn, and is growing faster than the economy as a whole; productivity rose 4.4% last year. Employee-owned businesses include retailer John Lewis, Arup, the engineering consultancy, Tiptree, the jam maker and hundred of others in different sectors – see https://concernedcooperators.wordpress.com/reports/worker-co-operatives-directory/

As Mr Miliband took aim at tax avoidance, business figures lined up – but only to criticise his proposals for employee ownership, which they said revealed the extent to which the Labour leader did “not understand business”.

Jon Moulton, the venture capitalist who recently sold City Link, leaving the taxpayers to support employees, described the proposals as “barking mad” and Richard Bailey, a director of NM Rothschild investment bank, said the plan was “half-baked”.

Ed Miliband ended with a welcome call to tackle unaccountable concentrations of power wherever they are found : “Whether standing up to the vested interests in our economy, or devolving power in the public services that we rely on, these values are part of the fundamental change we need in the way that Britain is run and governed”.


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This entry was posted in Co-operative movement, Co-operative News, Employee buyouts, Employee ownership, Worker co-operatives and tagged , , , , , , . Bookmark the permalink.

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