Growth and Infrastructure

Memorandum submitted by Andrew Gunn (GIB 65)

For over thirty years, I have been actively involved in employee-ownership and am a director and past-Chairman of the Employee Ownership Association (EOA).

Jesse Norman MP is a past director of EOA’s predecessor body, Job Ownership Limited, and is now Chair of the All Party Parliamentary Group on Employee Ownership. In his Introduction to the Group’s inquiry entitled ‘Sharing Ownership: The Role of Employee Ownership in Public Service Delivery’, published last year, he wrote

"We have come to a number of findings that we hope will inform future policy. Employee ownership offers a hugely exciting long-term opportunity to transform the way in which our public services are provided. This transformation could make a massive impact on public service employees, users and customers, and on our wider communities and society. Employee ownership is everywhere to be encouraged, and in the coming months we will pursue our recommendations with Government and with other influential bodies.

The government has declared it’s firm intention to encourage and facilitate the creation of new public service mutuals by 2015, encompassing an aggregate of over a million employee-owners.

The effect of clause 23 of the above bill – making future employee ownership of shares in their company conditional upon employee-owners surrendering their statutory employment rights – will be to strike dead immediately any prospect of the government achieving its objective. Public sector employees will find irresistible the arguments of their trade unions that they have much to loose by opting for employee-ownership and that they should strongly oppose public sector mutual status.

Employee-ownership has long had the strong support of both the Conservative and Liberal Democrat parties, and legislative measures introduced by the Conservative governments in the 1980s did much to encourage the growth of employee-ownership in this country.

These measures were introduced because that government, as well as the current government, accepted the well-proven case, both in the US and the UK, that employee-owned companies out-perform both public and private companies (without employee-ownership) and make a greater contribution to the welfare of the country than other companies of similar size. Clause 23 gratuitously besmirches the record and reputation of employee-ownership.

I hope fervently hope that parliament will hold to the commitment shown by the conservative governments of the 1980s and vote down Clause 23 of the Growth and Infrastructure Bill (HC Bill 75).

PS There has been no discussion, that I have seen, on whether or not executive directors, and other senior managers in major listed companies, with options to acquire their own company's shares will be required to surrender their statutory and contractual employment rights at the moment they take up those options. If they don’t lose those rights, why should public sector employees opting for mutual status be expected to lose theirs?

December 2012

Prepared 10th December 2012