Britain needs to improve the way its businesses are owned in order to create higher long term economic growth, declares the Ownership Commission today. Government should act to ensure that all types of business, from the PLC to family, co-operative and employee owned firms, are able to play their part in creating wealth and a strong economy. The Commission, chaired by Will Hutton, has examined every form of business ownership over the last two years. Today, at an event in London, it launches the first ever report of its type with Business Secretary Rt. Hon. Dr Vince Cable MP.
The report calls for:
- Greater plurality in corporate ownership
- Better stewardship of companies
- Greater engagement of employees and shareholders
Greater plurality in corporate ownership
UK business is dominated by the PLC as the default form of business organisation. Yet private companies, family controlled companies, employee owned firms and mutuals provide more opportunity to deliver different business models, promote more resilience in the wider economy, allow investors and savers more avenues in which to invest and give consumers more choice.
Better stewardship of companies
Shareholders, trustees, investment management companies and directors should have the definition of their fiduciary obligations widened to include better stewardship, and for this to be better enforced by closer links between the ultimate owners and managers.
Greater engagement of employees and shareholders
Engagement of employees, shareholders and other business stakeholders with management is proven to increase the performance and accountability of businesses.
Speaking ahead of the launch of the Commission Report, its Chair Will Hutton said:
“The financial crisis and the protracted problems in its wake has opened up the debate about how well our economy is owned, run and managed. Good ownership is indissolubly linked to good capitalism. The golden thread running through all our proposals is that the route to good ownership is better to connect citizens either through the institutions that invest in their behalf or as individual shareholders or as consumers and workers with their companies.
The heart of good ownership is engagement and stewardship expressed through as many ownership forms as possible. Britain will have a better performing and more resilient economy the more seriously it can develop better ownership – as important for the public as the private sector. We offer this report as our contribution to a vital national debate.”
CBI Chairman, Sir Roger Carr said:
“The Commission has proved an excellent forum for an objective review of the strengths and limitations of a wide range of ownership models. It is hoped that the recommendations will make a valuable contribution to both their effectiveness and stewardship in assisting growth in the United Kingdom.”
Co-operative Group CEO, Peter Marks said:
“The financial crisis has shown us how important it is that the businesses we rely on for growth, employment and wealth generation are well managed. We have also seen how differently owned firms responded to the risks and challenges of the economic turmoil. This report shows how we can learn from this and ensure that UK business is better placed to build a prosperous future.”
John Lewis Partnership Chairman, Charlie Mayfield said:
“At JLP we seek to balance the interests of our Partners (employees), our customers and our suppliers to achieve long term commercial success. The Ownership Commission’s report brings together vital evidence that supports the importance of “good ownership” in its various forms and sets out the rationale for appropriate intervention with proposals that have far-reaching implications for the UK’s corporate culture and performance. In particular, I welcome the call for Government to promote a greater plurality of ownership and I see employee owned businesses playing a key role within that agenda.”
Rt. Hon. Tessa Jowell MP, on whose initiative in government the Commission was founded said:
“The distinguished panel have set out the definitive argument for why ownership matters, for economic success, shareholder activism and decent capitalism. I hope its proposals will be received with widespread support and action.”
The financial crisis has forced governments in Britain and elsewhere to revisit the way our businesses are owned.
The Ownership Commission was established in 2010 to review the state of ownership in the UK, to examine the extent to which it supports or inhibits successful, long-term value creation by business in all its ownership guises. This involves assessing the governance and ownership of Public Limited Companies (PLCs) as well as considering the contribution of non-PLC forms, including family ownership, mutuals, co-operatives and employee ownership.
With a membership drawn from a cross section of senior business leaders and commentators, the Commission has undertaken research, interviewed witnesses and conducted study visits to North America and Asia.
The Commission members are:
Will Hutton (Chair) – Principal, Hertford College, Oxford
Glyn Barker – Chairman designate of Irwin Mitchell and a director of The Berkeley Group Holdings plc
Sir Roger Carr – President of the CBI, Chairman of Centrica plc
Lady Sylvia Jay – Chairman, L’Oréal UK & Ireland
Peter Marks – Group Chief Executive, The Co-operative Group
Charlie Mayfield – Chairman, John Lewis Partnership
Colin Melvin – CEO, Hermes Equity Ownership Services
Professor Jonathan Michie – President, Kellogg College, Oxford
Paul Mullins – European Chief Executive, DC Advisory Partners
Oliver Nyumbu – Chief Executive, Caret UK
Ruth Sunderland – Associate City Editor, Daily Mail