The deputy prime minister today called on the legal profession to gain an understanding of employee ownership of businesses to help clients set up John-Lewis style enterprises.
Delivering the first Robert Oakeshott Memorial Lecture at the Law Society this morning, Clegg backed a target to raise employee-owned businesses’ share of the economy from 3% to 10% of GDP by 2020.
He said that one obstacle was a lack of professional expertise to advise businesses on employee ownership. ‘We need to create a critical mass of people who are trained in this area,’ which he said provides a ‘great commercial opportunity’ for professional services.
Clegg announced that the government will consult shortly on new options to encourage ownership by employees. These may include tax breaks for bonuses.
Last week’s budget set aside £50m from 2014 to support staff ownership initiatives, mainly through relief from capital gains tax for entrepreneurs selling businesses to their staff. Clegg said that today ‘too many businesses fail at the point of succession’.
Clegg was quick to distinguish employee ownership arrangements from chancellor George Osborne’s ‘shares for rights’ proposal, under which staff will trade in employment law rights for a stake in the business. ‘Without unduly belittling [the chancellor’s scheme], this is a much bigger canvas,’ he said.
In a report published today, the Employee Ownership Association, which represents co-owned businesses, identifies lack of awareness among intermediaries as a key barrier to the sector’s growth.
It calls on the education sector and professional bodies ‘to ensure that employee ownership is adequately covered in postgraduate business, legal and accounting qualifications and through continuous professional development requirements’.