Norman Lamb

Despite plenty of gloom, the announcement from John Lewis at the beginning of the month seemed hardly surprising. Their sales for the Christmas period were up 6.2pc on the previous year. This company has been a remarkable success story. And it is owned by its employees – or partners, as they are known. It also has a positive reputation.

To send a link to this page to a friend, simply enter their email address below.

The message will include the name and email address you gave us when you signed up.

Email address

  Send link

To send a link to this page to a friend, you must be logged in.

In contrast, there is genuine anger at corporate greed and irresponsible capitalism in the wider economy. Last year, total earnings of directors of FTSE 100 companies increased by 49pc whilst their companies saw only a 3pc rise in value. There is a widespread feeling that something has to change.

On Monday, the deputy prime minister, Nick Clegg, set out his response. He made the case for a ‘John Lewis’ economy. Just as the 1980s was the decade of share ownership, so this decade should become the decade of employee share ownership.

The evidence to support his case goes much further than John Lewis. A major study two years ago compared the performance of employee-owned businesses with companies owned in the traditional way. It found that employee-owned businesses are just as profitable as traditional companies. During the recession they proved to be more resilient. Their performance is more stable over the business cycle.

When times were really tough employee-owned businesses grew sales much faster than their traditional counterparts. Crucially, employee-owned businesses consistently recruited more staff and rewarded them with higher wages.

Other evidence shows that, invariably, the pay gap between the top and the average worker is much smaller – meaning that the fruits of their labours are shared more fairly.

Productivity also outshines the traditional company. Performance is best when a share in ownership is matched by empowering staff to play a part in decision making.

And when you think about it, this isn’t rocket science. In my time as an employment lawyer, I heard countless stories of frustration from staff who knew their workplace better than anyone, who had ideas about how you could work more efficiently, yet whose ideas never got a hearing.

This experience is commonplace in both public and private sectors. Give those people some autonomy in decision-making and they are likely to rise to the challenge. Give them a stake in the business and they will feel a sense of ownership. Motivation grows. Importantly, happiness at work can grow, too.

Now, of course, there are very many excellent traditionally owned companies which treat their employees well, which take a long-term view, behave responsibly and contribute massively to the economy. But the case for encouraging more diversity of ownership models is very strong, and Liberal Democrats in government are looking at how we can do that.

First, we must make it much easier to establish an employee-owned business. For budding entrepreneurs setting out, it should be an option to consider.

One dynamic Norfolk businesswoman told me that her intention had been to set up an employee-owned business. But after seeking advice, she decided, reluctantly, that it was all too difficult.

There must be an ‘off-the-peg’ model which can be easily adopted. Advisers – lawyers and accountants – need the necessary skills and experience to guide new and existing businesses to give employees a stake. We also need to address the critical issue of access to finance for new and growing companies.

Second, we can find ways to encourage existing companies to consider setting up employee share schemes. We could give employees the ‘right to request’ that their employer considers setting up an employee share scheme. No force, just to consider it. This might encourage companies to explore the evidence of improved productivity, motivation and well-being.

Tax incentives could also make a big difference – these withered on the vine under the last government. Changes such as these could have a powerful and enduring impact in workplaces across the country.

Imagine, staff with a real say in how their company works, businessmen and women given the support to pursue a business model that suits them, and an economy that shares responsibility and reward more fairly amongst the workforce.

Norman Lamb is MP for North Norfolk