Using employee benefit trusts for employee ownership

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Using employee benefit trusts for employee
ownership

• Graeme Nuttall
• Partner, Field Fisher Waterhouse LLP
• UK Government Independent adviser on employee
  ownership
• Email graeme.nuttall_at_ffw.com
• Co-operative Education Trust Scotland

31 May 2012
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Employee ownership

• Unprecedented Government support
• Role of independent adviser
• Informal consultation
• Obstacles
• Solutions?

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Unprecedented Government support

• Nick Clegg, Deputy Prime Minsters announcement
  on 16 January 2012 at Mansion House
• ...of a new Government drive to introduce the
  concept of employee ownership into the mainstream
  British economy
• Norman Lamb is leading the cross-Whitehall work
  to investigate how Government can support this
  growing business model
• The Mutuals Taskforce under Julian Le Grand and
  the Cabinet Office led by Francis Maude are
  promoting employee led mutuals
• The reform of Royal Mail and its transformation
  into an organisation in which staff have a
  meaningful stake
• HM Treasury internal review of employee ownership

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Role of independent adviser

• A new role
• The remit is to
• "work with Government to identify the barriers
  to employee ownership and help find the solutions
  to knock them down
• The independent adviser is asked to make his
  recommendations to Government in a report
  presented to Norman Lamb
• The answers and solutions will be brought
  together at a summit chaired by the DPM on 4 July
  2012
• Part-time and unpaid
• Does not provide advice on specific cases or take
  any executive decisions - he may continue to
  advise clients

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Informal consultation

• Organised by Department for Business, Innovation
  Skills (BIS)
• email employeeownership_at_bis.gsi.gov.uk
• Key questions
• What are the barriers?
• What are the solutions?

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Obstacles?

• Consistent themes, include
• Lack of awareness of the concept of employee
  ownership
• Information is often completely misunderstood
• There can be resistance due to fixed ideas about
  ownership models
• There is a lack of awareness of the solutions
  that already exist
• There may be a fundamental problem with access to
  finance to implement employee buy outs
• There are complexities in the legal structures
  needed to implement and maintain employee
  ownership.
• There probably are material obstacles in how the
  tax system applies

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Lack of awareness

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Solutions?

• Raise awareness

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Solutions?

• Increase resources and reduce complexity
• Use of an employee benefit trust (EBT)

John Lewis Partnership Employee Benefit Trusts
John Lewis Partnershipplc subsidiaries
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Solutions?
Individuals as trustees
Employees
Founders family etc.
Beneficiaries

Wilkin Sons Employee Benefit Trust
Shareholders
Donald Insall Associates Limited
Employment