The Employee Ownership Association (EOA), the trade body for the UK’s employee owned sector, has launched their new policy proposals for the upcoming 2024 General Election. Unlocking the Potential of Employee Ownership: The Why and How for People Powered Growth provides ambitious plans for how the next Government can continue to support the sector and enable growth in all industries and regions of the UK.

Employee-owned businesses (EOBs) come in several different forms – including direct employee ownership; employee ownership trusts (EOT) and worker co-operatives. Each model has different benefits, but all are renowned for their high productivity and engaged staff. A recent WPI Economics report found the employee-owned sector to be 8 – 12% more productive than non-EOBs – demonstrating the important role employee ownership can play in unlocking the vital productivity growth needed to restore rising living standards in an equitable way.

Recent years have seen strong growth of the employee-owned sector – with more and more businesses converting to the model in clear recognition of the benefits it brings to businesses and their workers. In October 2023, there were over 1,650 EOBs across the UK – with this expanding by 30% over the previous year.

The impressive growth is in part driven by a generation of business owners departing and selling their firms to their workers – with this trend likely to accelerate during the next parliamentary term. The Manifesto lays out a plan for how a new Government can seize on this opportunity to scale up the sector and spread its benefits.

The EOA recommends the successful Employee Owned Trust (EOT) model be strengthened and future proofed by a new Government – with improved incentives to encourage both employers and employees to take up the model.

Like co-operatives, EOBs face a capital raising challenge, which can impact business growth and stymie employee buyouts. A new Government could help overcome this barrier by unlocking further capital from the British Business Bank (BBB) and external investors – with new BBB funds and an extension of the Enterprise Investment Scheme eligibility threshold to cover larger EOBs.

Access to tailored business support has often been difficult for social economy businesses, whether they’re EOBs, co-operatives or social enterprises. The Manifesto recommends improving the bespoke support available for EOBs from mainstream business support services, so that people are aware of the model and can have the assistance needed to either establish start-up EOBs or convert existing businesses to employee ownership.

The next General Election provides a clear opportunity to build a fairer, more equitable economy. With a commitment to double the size of the co-operative sector and unleash the social economy, a Labour & Co-operative Government represents a real opportunity to break away from the economic status quo of the last 14 years. Delivering a new generation of employee-owned businesses must be integral to achieving this vision.