Margareta Pagano: Why more shares for the workers is a win-win recipe

If Baroness Bowles gets her way, and she often does, the Government will appoint a minister responsible for promoting employee share ownership. It will then put the subject on the syllabus of every university and business school in the land to help boost productivity post-Brexit.

There’s more. Bowles also wants to persuade private lenders and the British Business Bank to provide more finance to employee-owned businesses and get the government to foster their growth like the Scottish and Welsh governments have done so well.

Increasing the current £3600-per-year limit on tax-free qualifying bonuses and eliminating National Insurance contributions on those bonuses would help too. So would putting more money into the government’s Mutual Support Programme 2, a scheme to support public service mutuals, which has already had so much success with EO-based mutual enterprises.

The above are just some of the head-line proposals drawn up by Bowles, chair of the Ownership Effect Inquiry, after a year-long independent review.

The report, the Ownership Dividend, is being published tomorrow and is the most comprehensive to date into the sector, which accounts for £30 billion of GDP. Headed by Bowles, a panel of 20 businessmen and women have interviewed staff from 100 or so employee-owned companies (EOs), from the most high profile such as the John Lewis Partnership, Arup, PA Consulting, to the lesser-known Lush and Gripple.

If Bowles, a Lib-Dem peer, was a champion of employee share ownership before the inquiry, she is more of a convert now.

She calls it the “whoosh” effect: within months of employees being either given or buying shares, there is a marked and positive effect on profits, investment and, perhaps most pertinently, staff happiness.

What jumps out from the report is the low level of knowledge that most professional advisers — accountants, lawyers and bankers — have about the sector. From the interviews, it’s clear that many professionals do not have the skills to help companies set up the business structures required to turn them into EOs, nor are they particularly interested in finding out.

This is a ridiculously short-term view on the part of the professions as there are about 300 of them already. What’s more, the number converting into some form of either direct or indirect ownership is growing fast at 10% a year.

It’s also bad business since owning shares in your own firm is becoming more popular with the millennial generation, so many of whom are starting their own companies; there isn’t a tech company in the world that doesn’t have staff owning shares.