Although it is dated June 2014, BIS has just published the Government’s response to the consultation last November asking whether it would help the cause of employee ownership were the limit on the life of an employee benefit trust (currently 80 years) to be removed.
There weren’t many responses (28) and no strong feeling/evidence either way, so the Government is shelving this idea.
The report concludes that:
- “the main challenge facing employee ownership is not complexity but lack of awareness of the benefits of employee ownership, to business and society” and
- “we also agree that action to raise awareness of the benefits of employee ownership is of greater significance to the sector, and look forward to supporting stakeholders, as they decide on next steps in this regard”.
So over to the stakeholders then ….
Responsibility for employee ownership not being more widely known about is usually laid at the advisers’ door. We think this is a bit unfair. Advisers are not known for being backward in coming forward with new ideas that they can sell to their clients. The fact is that not every business is, or could be, a John Lewis. Not every owner is philanthropic enough to want to hand his or her company over to the employees. The tax breaks for a shareholder transferring a majority holding in a company to an employee ownership trust are encouraging, but do nothing to solve the issue, highlighted in our January post on this topic, of how a company is to finance the purchase of such a large stake. Hopefully, if the long-promised fund for this purpose emerges, it might just prove that employee ownership is not dead yet.