Employee share ownership ‘key to unlocking growth’

‘John Lewis economy’ will boost productivity, says Clegg

Increasing employee share ownership in the UK could be the key to unlocking growth and boosting productivity, deputy prime minister Nick Clegg has said.

The Liberal Democrat leader told an audience in the City this morning that giving individuals a stake in their companies and promoting a “John Lewis economy” would lower absenteeism, staff turnover and production costs.

Clegg said he wanted to ensure that employee ownership got “into the bloodstream” of the British economy, and that the coalition planned to reduce red tape and revise the tax system to accommodate the concept.

Speaking at an event hosted by the City of London Corporation and Centre Forum think-tank, Clegg said: “We don’t believe our problem is too much capitalism – we think it’s that too few people have capital. We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like.

“And what many people don’t realise about employee ownership is that it is a hugely underused tool in unlocking growth,” he continued.

“Lower absenteeism, less staff turnover, lower production costs. In general, higher productivity and higher wages. They weathered the economic downturn better than other companies.”

Clegg added that he did not advocate employee ownership because it was a “somehow nicer” alternative to the traditional corporate world, but because those businesses were “just as dynamic, just as savvy, as their competitors”.

The John Lewis group is co-owned by all of its 76,000 permanent staff – called partners – who share in the firm’s annual profits. The model also gives workers a democratic voice in some business decisions through representation on a staff council.

Clegg suggested that the right for workers to request shares in their companies could be introduced in his bid to promote “responsible capitalism”.

Business secretary Vince Cable is expected to unveil the government’s full package of boardroom reforms next week, after recent outcry over executive pay and bonuses in relation to company performance and shareholder accountability.

Shadow business secretary Chuka Umunna claimed Clegg’s speech had followed Labour leader Ed Miliband’s calls for more responsible capitalism. “If Nick Clegg wishes to follow Labour’s lead in promoting shareholder activism and engagement, that is welcome,” Umunna added.

Michelle Stevens 16 January 2012