A Sustainable Succession Route

We’re often asked by businesses that have discovered employee ownership (EO) and its advantages, “Why isn’t everyone doing this?” And the most straightforward answer is: “They don’t know about it yet.”

While EO isn’t right for every business, for many it’s a no-brainer. Despite significant growth of employee ownership, there’s still much more to do to raise awareness and support the wider distribution of knowledge to those who could signpost and support.

There’s a significant opportunity to grow employee ownership and save thousands of jobs across UK communities in the next decade - Ownership at Work’s Generation EO research estimates 120,000 SMEs (10-249 employees) are likely to experience ownership transition points in the next decade. 

At least 43% of business owners were clear the outcome of that transition is likely to be the sale or closure of the business – indicating at least 51,600 otherwise viable businesses could see ownership entirely change hands or end up shutting their doors. 

Business owners in an estimated 30,000 SMEs (10-249 employees) are already predicting their businesses will cease to exist during the next 10 years. 

Employee ownership could offer a sustainable succession route to prevent the dissolution of healthy companies, or from being sold out of national (and local/regional) economies.

Proposal

Government agencies should work with EO sector, its specialist advisors, and the business ecosystem to include basic information about EO as a succession option in support programmes, to feature on the Gov.UK website; National Business Support Helpline; Help to Grow; and Local/regional growth hubs. 

Additionally, the government could also support and/or mandate arms-length schemes that they fund and back to do the same.

Specialist Programmes Across to Promote UK EO and Support Transitions 

Across the UK, there have been various specialist programmes aimed to promote EO and support businesses transitioning into employee ownership.

The eoa is working to pilot regional Ownership Hubs to stimulate more employee and worker owned businesses, with our partners at Co-operatives UK. 

So far, we have established Ownership Hubs in London, the West Midlands, and South Yorkshire, where they are running awareness campaigns to stimulate enquiries, while also developing the knowledge of local and regional business support services to advise on EO as a succession option. 

In Scotland and Wales, government agencies (Scottish Enterprise and Cwmpass respectively) provide specialist services for businesses considering a transition to EO. 

In particular, the subsidised feasibility studies that both agencies offer is particularly successful in delivering transitions by offering a clear way for businesses to see how employee ownership can work for their business and generate impact.

Proposal

Government should support local and regional authorities to develop Ownership Hubs with resourcing and signposting to advice and evidence of EO and similar models. 

Similarly, government must ensure that those services in Wales and Scotland are fully resourced.

Reform the Skills and Apprenticeship Regime 

Upskilling the workforce is a vital step for unlocking economic growth and productivity and is enormously beneficial for individual employees and businesses. 

Current initiatives are underperforming. For example, the Apprenticeship Levy has delivered just half the amount of new apprenticeship starts than it intended, with a great deal of earmarked funding paid by employers going to waste. Its socially inclusive intent has been diluted with the use of high-level and degree-type apprenticeships. 

Known issues with the Levy include:

  • Inflexibility (funds must be used on courses longer than a year and include employers partially giving up their employee resource and use external providers)
  • Difficulty in understanding how to access and use
  • Apprenticeship training itself narrow; often it’s disconnected to employee or employer usability

Proposal

Replace the Apprenticeship Levy with a Future Skills Fund that is developed with a well-researched understanding of the diversity of business needs that:

  • Enables more flexible access to courses and education types that suit the specific needs of each business and individual to support career-long skills development
  • Ensures that it supports access to skills relevant to a range of business models, e.g. leadership, governance
  • That restricts its application to preserve its socially inclusive intent

Additionally, we propose that unused funds raised by each business is ringfenced to a general fund to support lifelong skills development, rather than being redirected to Treasury funds. 

This might be administered by Government itself, or by specific business models such as EOBs or Social Enterprises who may (respectively) either be found to already invest in skills development at a higher rate or face specific challenges in funding workforce skills development.

Discover more on our Manifesto page or download the full manifesto directly.