I was privileged to have the chance to speak at the eoa Annual Conference last week, on behalf of our team at Baxendale Employee Ownership, who were headline sponsors of the event. I took the opportunity to wish a happy birthday to Employee Ownership Trusts (EOT), which have just turned ten years old, but also to focus on the positive change that employee ownership delivers, rather than the tax benefits that have been the focus of of so much discussion recently. Here is what I had to say…

“On behalf of the team at Baxendale Employee Ownership I would like to welcome you to the Employee Ownership Association conference 2024. We’re looking forward to two days of sharing our experience and learning from our fantastic employee-owned community. At last year’s conference Baxendale celebrated 40 years in Employee Ownership.  At this year’s conference, it is the Employee Ownership Trust, the EOT (or for some people even the E-OT) that is celebrating its birthday, ten years since its introduction in 2014, following the pivotal Nuttall Review of Employee Ownership in 2012. It is evident, that without the EOT, we would probably be meeting for our conference in a much smaller room!  It is a model of employee ownership that is now being adopted in countries around the world and one that we can be immensely proud of.

As we approached this year’s conference, in the run up to the October budget, there was a lot of speculation around the tax reliefs associated with the EOT, particularly those for Sellers, and how long they can continue for.  We now know that there have been no changes to the tax reliefs and many of us welcomed the tightening of the rules around their use, which we hope will protect against abuse, and preserve the tax benefit for those pursuing genuine employee ownership for their businesses. Employee Ownership however, is not defined by a tax relief.

It was explained to me, when the EOT was introduced in 2013, that the CGT relief aimed to bridge the gap between what owners could receive for their shares on the open market and what the business could afford to pay for them – crucially it was also intended to ensure advisers presented it as a solution to business owners considering their exit alongside the other options; which at the time was rarely the case. If that was the aim, looking around the number of people in this room, it seems to have been a successful one.  The EOT is a tool we use to create employee owners.  It is a very fine, well considered tool, that suits all kinds of businesses, it is easy to use, to administrate and to understand; but on its own a trust does not constitute employee ownership.

Employees owning the businesses they work for and having a real voice in the organisations they own; employees being able share in the wealth that they create; these things are employee ownership. As we heard from James, there are more than 2,000 employee owned businesses across the UK, of all sizes, shapes and sectors, run for the benefit of their employee owners, who are demonstrating the advantages in terms of productivity, innovation, job creation and business resilience.

To assume a change in the tax regime would change this is to fundamentally underestimate the power of employee ownership. Employee Ownership is not simply a tax advantaged “succession solution” – it is a model of long-term independent business ownership that creates wealth at all levels and delivers fairer employment, better business and happier employees.

This is something we know at Baxendale Employee Ownership, not only because these are the employee-owned structures we help to create and support, but also because this is the kind of employee owned business we are ourselves, driven by our values and our partnership culture.”