At the Co-operative Party, we have long known the benefits of employee ownership. Helping both the firm and the wider economy, employee ownership can make a real difference to income and living standards. Employee ownership has been shown to be advantageous to productivity, as staff are co-owners with a stake in their businesses– making them more committed the firm’s success and profitability. This stake in the business helps when recruiting new talent and retaining existing skilled employees. Collectively, this helps to improve business performance and resilience, helping to improve local economies through productivity growth, job creation and economic development.

There are many notable examples of employee owned firms in the UK, including one of the most famous names on our high street – the John Lewis Partnership. Ranging from employee owned trusts (EOTs) to worker co-operatives, employee owned businesses make up approximately 4% of UK GDP, with firms found in all sectors of the economy. Employee ownership is even more commonplace in many of our major economic counterparts, including the United States, Italy and Spain.

We know employee ownership can work and deliver benefits for our economy, workers and businesses. That is why we are calling for a new system which will incentivise the greater uptake of employee ownership. We believed we can encourage the greater uptake of employee ownership by existing business owners and workers by implementing changes to the tax system to reward conversions to employee ownership and make it as attractive a proposition for business succession as possible. Three potential incentive changes which could be introduced quickly include abolishing stamp duty on company sales to employee owned trusts; making contributions from a company to an EOT to finance a buyout tax deductible and increasing the current limit on tax free bonuses for employees at EOTs. Combined, these incentives appeal to both company owners and employees thinking about transitioning to the employed owned model.

The next Labour & Co-operative Government can go even further – helping to put in place a legislative framework which would enable the rapid expansion of the employee owned sector. The UK should take inspiration from California, one of the world’s largest economies, which has recently passed the Employee Ownership Act. California’s new Act provides greater options for employee ownership in business succession and establishes a new Employee Ownership Hub in the state’s business advice department – ensuring greater awareness and support for employee ownership. A Labour & Co-operative Government should enact legislation which facilitates the conversion of businesses to employee ownership and provides new resources that spread awareness.

Our economy is in desperate need of change. Rising inequality and poverty demonstrate the status quo cannot continue. Employee ownership is an important tool in creating a fairer, prosperous and more productive economy which raises income and gives workers a real stake in their business. A future Labour & Co-operative Government can play a decisive role in building this economy where wealth and power are shared.