A record number of employee owned businesses have been created in the last twelve months.
HM Revenue data analysed by accountancy firm Price Bailey, revealed a total of 312 employee ownership trusts (EOTs) were created in 12 months ending 31 March.
This number is nearly double the 181 formed in 2020-21 and substantially more than the 50 created in 2018-19.
In the last three years overall, the data found there had been a twenty-fold increase in the number of employee owned businesses in the UK.
Introducing employee ownership:
Hot topic: employee ownership
Why we launched an employee share scheme
Becoming employee-owned: Why and how to do it
EOTs were first introduced in 2014 following the 2012 Nuttall Review into employee ownership.
Under an EOT arrangement, an employee-owned trust takes a controlling stake in a business. Not only can employees benefit from income tax-free bonus of up to £3,600 per annum, but the employee owned model can improve greater employee engagement and productivity.
The 4 July will be the 10th anniversary since the Nuttall Review, and speaking exclusively to HR magazine, author Graeme Nuttall said this latest data proves the EOT model has now become mainstream.
He said: “There is momentum at last. This new data proves the model is one the adviser community now has confidence in.
“I like to think we’ve reached the point I originally set out to achieve – to make employee ownership a mainstream business model.”
According to the Employee Ownership Association (EOA) the recent spike in EOTs, the most popular employee ownership model, brings the total number of employee owned businesses to 1,030.
Speaking to HR magazine, EOA chief executive James de le Vingne said: “HMRC data isn’t always the most up-to-date, but our own data chimes with what Price Bailey finds.
“We believe employee owned businesses have more than doubled in the last three years. Many employers say they look to the employee ownership model to increase resilience and support productivity.”
Vingne argued growth in EOTs has been impacted by the pandemic.
He said: “The pandemic has put company values much more front and centre.
“Businesses are looking to create certainty and be more ethical in their approach to employees.”
Nuttall added: “A post-pandemic effect on employee ownership is much talked about, but there is every reason to think it’s true. Business owners have reflected, and have become much more aware of their wider corporate purpose.”
Following Employee Ownership Day 2022 last week, the Welsh government announced intentions to double the number of employee owned businesses by 2026.
There are currently 38 employee owned businesses in Wales, eight of which were created in the last six months.
EOA data shows that amongst employee owned organisations, 96% say that looking after their workforce is a key measure of business success.
The University of Leeds also recently found the mean productivity increase amongst the top 50 employee owned businesses was 5.2% last year, double the UK average.
