At the start of every year we recall the vivid image of Janus the Roman god after whom the month of January is named. His two faces set in opposite directions, one that looks back to the year just gone and the other forward to the brand new year ahead, are chilling and inspiring at the same time.
Adopting the Janus approach is a highly instructive thing to do when considering employee ownership.
Looking back 2013 was a seminal year in what is undoubtedly the decade of employee ownership in the UK. Together we shifted the debate away from political and social ideology in 2013 on to the economic business case for more employee ownership. Consequently in 2013 more people than ever before understood that we need more employee ownership in the UK because of the higher productivity, greater levels of innovation and outstanding financial performance it delivers. As a direct result, 2013 saw the profile of employee ownership rise to unprecedented levels. It was not a coincidence that the year culminated in the UK Coalition confirming that it will implement in 2014 all of the tax incentives to encourage employee ownership that the Employee Ownership Association have advocated. These new measures will make a major contribution to the growth of employee ownership in the UK.
But, as ever, there is more to do, much more. In looking forward it is worth remembering that Janus, as a god of gates and doors, had a key in his right hand. So, what might unlock further progress for employee ownership in 2014? Perhaps above all else three things are going to be vital to keeping up the excellent momentum attained in 2013.
Firstly we must continue to encourage an honest diagnosis of the future challenges across our economy. It is fantastic and wonderful that the UK is slowly but surely pulling out of recession. It is also marvellous that the UK economy is likely to return to the levels of economic output that we had before the latest financial crash sooner than expected. But there are still some brutal structural realities that we are not making progress on. We remain, for instance, around 20% behind the productivity levels of many of our main overseas economic competitor countries. We have not had a real international trade surplus for a generation. And our economy is blighted by a disproportionately high number of businesses that operate with a dominant goal of driving near term shareholder and investor value. An economy obsessed with short termism.
Secondly, in parallel, we need to keep raising awareness of the brilliant economic performance of employee owned businesses out there in the real economy and the way employee owners think and act for the long term. All of us have a massive role to play in this awareness raising agenda and we must seize every appropriate opportunity to celebrate and publicise employee ownership for what it is, namely a tremendously successful business model that is flourishing in every sector of the economy. This is incontestably the optimum way to encourage more and more businesses to be employee owned from inception or to transition into employee ownership. It will inspire the creation of thousands more employee owners.
Only if this economic success story continues to be heard, understood and believed will the officials and politicians who frame or aspire to frame UK industrial strategy listen and engage further. And we need them to listen and engage further so that we can, thirdly, have an even more constructive dialogue with them in 2014 about the significant role employee ownership can and should play in restructuring our economy. Because the economy desperately needs higher productivity, more innovation and a larger number of long term businesses, part of the future industrial strategy must be to have much more employee ownership. We have to improve how effectively we promote that argument.
But the three priorities are interdependent. Honest diagnoses will encourage open minded searches for solutions. Employee ownership only has a chance of being embraced as one of the solutions if awareness of its success and potential is high. And politicians and officials will not automatically prescribe employee ownership as part of the way forward. They will not necessarily see that more employee ownership is part of the blueprint for creating a modern, highly competitive economy. Instead we must further establish the economic rationale in dialogue and partnership with them.
Finally for now I am going to end on very practical note. The Government is consulting at the moment about the detailed implementation of the tax incentives I mentioned above. It is vital that the legislation maximises the number of employee owned businesses that are eligible to benefit from the new measures. Finalising an acceptable definition of what constitutes an employee owned business is at the heart of this. If you have any views on the way the legislation is currently drafted then please do find a few minutes ahead of the deadline of February 4th to respond to the technical consultation on p5 here. (NB do not be deterred by the "Consultation concluded" message on the website.)
I wish you a happy and prosperous 2014.