Continuing his attack on 'irresponsible capitalism' the UK's Deputy Prime Minister
Nick Clegg has said that he wants to cut red tape and reform the tax system to encourage
employee ownership.
Clegg was speaking at an event hosted by Centre Forum and the City of
London. He argued that employee ownership is "a hugely
underused tool in unlocking growth" and said that he is "kickstarting
a drive in government to get employee ownership into the bloodstream of the
British economy".
Clegg believes that employees owning a stake in their company are more engaged,
with the firm in turn delivering better performance, showing lower levels of
abseteeism, less staff turnover and lower prodcution costs. He pointed out that,
in general, these firms see higher productivity and higher wages, and faired
better in the economic downturn than other companies. Consequently, Clegg would
like to make this "the decade of employee ownership."
Admitting that this is no easy task, and that it is unlikely to occur overnight,
Clegg said the government will work with professional bodies and businesses
to discover where the barriers lie to employee ownership. This, he said, will
enable the coalition to "knock them down".
The government will appoint an independent adviser to aid the government in
answering a series of questions he says the government needs answering. These
are: "Do staff and business owners know enough about employee ownership?
Are the accountants and lawyers who advise them taught enough about it? Is there
red tape we can cut? Does the tax system treat these firms fairly? Do we need
an off-the-peg model so that more ordinary people take this up?". Clegg
will chair a Summit in the summer to evaluate the answers brought forward.
Clegg stressed that the details of any future government policy must be properly
thought through. Nonetheless, he urged listeners to imagine "an automatic
opportunity for every employee to seek to enter into a share scheme, enjoying
the tax benefits that come with it, taking what for many people might seem out
of their reach, and turning it into a routine decision".
Reacting to Clegg's speech, Justin Rix, Employer Solutions Partner at Grant
Thornton, said: "In our experience, companies that operate employee share
plans report greater employee engagement and an improvement in the interest
in the performance of the business. This in turn can lead to better business
performance and increased company value. We look forward to hearing more details
of these proposals and would encourage the government to consult widely to ensure
that new arrangements will meet the commercial requirements of business of all
sizes."
LAWANDTAX-NEWS.COM
