Business Ownership - Is It Back to the Eighties?

Widening ownership can bring gains of productivity and also of well-being, spreading an emotional sense of prosperity. It is a 1980s theme tune worth rescuing.

Corbyn and nationalisation, Cameron and union bashing... is it back to the 1980s then?

As Prime Minister, Margaret Thatcher set a vision thirty years ago in her speech to the Conservative Party Conference for wider ownership across the UK.

"Let us together set our sights on a Britain: -- where three out of four families own their home; -- where owning shares is as common as having a car; -- where families have a degree of independence their forefathers could only dream about."

A generation later, this vision remains unfinished business. So what has happened to ownership over thirty years?

Having looked at data on ownership in more depth in our new publication, Unfinished business, it is clear to me that here is a question that is rarely asked. House prices and share prices rise and fall, prominent in the news, and with them rise and fall the hopes and fears of many. But when it comes to who owns what, and whether more people or less people do, commentators tend to fall back on assumptions rather than evidence.

The work on economic inequality, for example, is far richer on incomes than on assets - who owns what is harder to get to, particularly over time (as the 'fat finger' dispute on spreadsheet entries last year between the Financial Times and economist Thomas Piketty perhaps bears out).

First, after an initial increase in the late 1980s, individual share ownership has halved. Share ownership has not reached the level of car ownership of 1985, let alone of today - 76% of households own a car or van, whereas only 19% of adults own shares.

Second, despite an increase in private home ownership in the 1990s, home ownership has since decreased and has returned to the same level it was in 1985. The big change in housing tenure is that private landlords have replaced public landlords, with a two-fold increase since 1985 in the proportion of households renting privately.

Third, more positively, the numbers of people who are self-employed has risen dramatically in recent years to an all-time high, with 15% of the workforce now self-employed. More entrepreneurs live on the edge though, with many working fewer hours and receiving less income than employees - in a context of high, and rising costs of house rental on the private market.

Fourth, businesses that are owned by those involved tend to spread ownership more widely. Family ownership remains prevalent in the UK, with around two thirds of small business owners describing their business as family owned. There are, with 15 million members, more mutual business owners than there are individual shareholders.

Fifth, most people feel that they are out of the ownership loop and that they have little control - in their workplaces, over business, or over the economy as a whole. 58% of those in work believe that they have no influence in their workplace, rising to 70% for part-time employees.

So, the UK has changed but not significantly moved forward in terms of economic ownership in the way that Lady Thatcher had hoped. In terms of shares traded on the public market, we appear to have moved backwards. However, there are positive signs, with a rise in direct forms of business ownership, rather than through the stock market - the rise of self-employment, of private equity, the dynamic of co-operatives and mutuals as an engine for dispersed business ownership are all key building blocks of an ownership agenda of 2015.

It didn't have to be this way. The weakness of the 1985 ownership agenda was not necessarily in its conception but perhaps in its delivery. Governments, politicians lost sight of it. They certainly didn't measure it, but they also did little to address the obstacles and opportunities that arose over time. One example would be employee share ownership. From the 1990s, tax concessions, in essence costly state subsidies, were eaten up by senior executive employees and their stock options, fuelling pay at the top and concentrating ownership and control in the hands of the few, rather than spread more co-operatively across staff more widely, in the way that Lady Thatcher in fact advocated.

One of the striking characteristics of ownership is that every political party talks about it from time to time, but no party makes it a consistent theme in government. Other countries show what is possible, doubling the level of shareholder ownership. The country with the widest shareholder ownership across its population is Japan. Despite its economic challenges, Japan has a strong record in terms of inclusive ownership. The proportion of the population owning shares, now at 31%, has doubled since 1980.

The ownership agenda in policy terms is not about single measures but about a system change, across government and its partner agencies, to recognise and celebrate the contribution of new owners, such as those in self-employment and co-operative enterprise, and design policy to recognise their needs and remove barriers to their success.

Widening ownership can bring gains of productivity and also of well-being, spreading an emotional sense of prosperity. It is a 1980s theme tune worth rescuing.

Unfinished Business: the ownership agenda thirty years on, by Ed Mayo and Carina Millstone is published by ResPublica.


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