Investors will find it easier to identify and invest in UK businesses which have adopted employee ownership following the launch of a new FTSE compliant UK Employee Ownership (EO) Index by Business Minister Jo Swinson today.

The Business Minister announced the new Index alongside the EO One Year On Report at a launch event at the City of London today. The Index will enable investors to easily identify the 69 UK public companies listed on the London Stock Exchange that have at least three per cent of their issued share capital held by, or for, the benefit of employees other than main board directors.

Employee ownership, where workers have a voice as well as a stake in the success of their business, is widely recognised as a sustainable business model which helps drive staff commitment, productivity, resilience and innovation. This Index demonstrates that in previous periods businesses in the sector that have embraced employee ownership regularly outperform the comparable FTSE 100 and All-Share indices.

At the launch event, Graeme Nuttall, the author of the Nuttall Review into Employee Ownership, announced a new ‘health check’ to monitor ongoing progress by government and the EO sector towards making employee ownership a mainstream part of the UK economy.

The report, which measures the progress made by government and the EO sector against each of the 28 Nuttall Review recommendations made in October 2012, found that significant progress has been made against all of the recommendations. In particular:

  • Raising awareness of employee ownership through the first national Employee Ownership Day on 4 July 2013
  • The allocation of £50 million annually from 2014-15 to introduce tax reliefs for businesses adopting the employee ownership model
  • The publication of joint government and industry-led guidance to help businesses adopt the employee ownership model.

Business Minister Jo Swinson said: “As we build a stronger economy, there has never been a more important time to promote successful ways of running a business. Evidence shows that businesses that adopt the employee ownership model can be more profitable, create more jobs and are more resilient to economic shocks.

“The Nuttall Review set us an ambitious challenge a year ago but I am delighted to say the government and the sector have risen to meet it. We have made substantial progress in laying the foundations for a thriving and growing employee ownership sector in the UK, but there is more to do to raise awareness.

“The Employee Ownership Index will now mean investors can identify thriving employee ownership businesses and be part of their success. I hope more businesses recognise the value of this model and give their employees a greater stake in their future and the success of their company.”

The Business Minister, who was joined by four new employee ownership companies at the launch event, committed to examining remaining issues faced by the sector. She also called on businesses to tell government what they can do to further reduce the complexities of employee ownership.

Paul Dolman-Darroll, owner of new employee-owned start-up Gamevy said:  “I’ve always known that I wanted to work in an employee-owned business. When we set up Gamevy we know building a really brilliant team was going to be the biggest challenge. So employee ownership, where attracting good people is easier, seemed like the right move. We’ve had contact from several people wanting to copy our model and awareness is growing that this is a viable alternative to the traditional approach.”

Graeme Nuttall, author of the Nuttall Review on Employee Ownership said: “One year on from the government’s response to the Nuttall Review, it is right to say that much has been achieved. I thank all those who have helped make the Nuttall Review recommendations move from the page to reality. However the bar has now been raised and there is more to do if we are all to succeed in making this the decade of employee ownership.”

Iain Hasdell, CEO of the Employee Ownership Association: “The EOA is the voice of employee owned organisations across the UK and we are very pleased with the momentum achieved since the independent Review we called for in 2012. Awareness is expanding on a daily basis. The priority now is to make even more progress towards the EOA target of growing UK employee ownership to 10% of UK GDP by 2020; a target which has been widely endorsed by our partners.”