Graeme Nuttall, Partner, Tax and Structuring group, Field Fisher Waterhouse LLP, London and author of ‘Sharing Success: The Nuttall Review of Employee Ownership’ shares his views about his role in developing the UK Government’s employee ownership (EO) policy
What is the Nuttall Review?
I became the UK Government’s independent adviser on EO in February 2012. Everyone knows about the John Lewis Partnership. I was asked to identify why EO was not a mainstream idea in the private sector and what could be done to change this. The Nuttall Review was my report tothe government. It set an agenda for promoting EO, which was formally accepted as government policy in October 2012. The One Year On Report found significant progress had been made. In addition to non-regulatory changes there have been changes in law; changes to the Companies Act 2006 and when this year’s Finance Bill is enacted; new tax exemptions.
What is a City tax lawyer doing creating public policy?
I agree it is not an obvious mix. Most lawyers advise on share plans that deliver only financial participation, typically for key executives. But a former managing partner of my firm asked me to co-write the first UK book on the legal and tax aspects of EO and introduced me to the persuasive founder of the Employee Ownership Association, Robert Oakeshott. I became hooked on the idea that there is more to share plans than tax breaks. Deputy Prime Minister Nick Clegg succinctly described EO as ‘a big chunk of the company belonging to a significant number of staff’. This is a powerful ‘win-win’ combination: it produces better business outcomes and happier staff.
Why take on this challenge?
I could see the opportunity to work withthe government to create more awareness of EO, to increase the resources available to support it and to simplify its implementation. I knew a combination of legal, tax and sector expertise was needed and thought, correctly, that it would be exciting and fun. It was after I said yes, I remembered I became a solicitor, rather than a barrister, to avoid public speaking.
Why so many non-tax recommendations?
In the 2012 UK Budget, the Chancellor of the Exchequer announced that HM Treasury would carry out an internal review of UK tax law to see what might be done to promote EO. I contributed separately to that review. This meant the Nuttall Review could concentrate on non-tax recommendations. This strategy was for the best. I want EO to be accepted as a business model in its own right; not one dependent on tax breaks.
Is EO a mainstream idea?
Definitely. A company with EO has a conventional board of directors. What is different with EO is that employees have a significant and meaningful stake in the company held either or both directly and through a trust. Whatever the business or the stage a business has reached EO can work well. It works in start-ups; as a growth strategy; in business rescues and in particular as a business succession solution. Why should ageing baby-boomers sell out to a competitor when they can sell to an employee ownership trust? And it is not just the private sector where the benefits are seen – there is a growing number of public service mutuals.
Has the Nuttall Review had a broader impact?
It has shown how public policy can be created and implemented in a relatively short time-period. It has encouraged others to askthe government to move from piecemeal encouragement of particular business models to the systematic promotion of diversity.
Have other countries taken an interest in what has been achieved?
Very much so. In Australia there is an initiative to promote public service mutuals. American companies are looking at the UK’s trust ownership model as an alternative to the US ESOP. The Irish ProShare Association believes EO can boost the Irish economy. I was a key note speaker at a European Commission conference in Brussels this year which debated concrete policy options in the context of the EC Action Plan on Corporate Governance.
How have you combined your roles?
The Nuttall Review role was voluntary and supposedly part-time. But I remained a full-time partner at Field Fisher. So the answer is, I combined my roles with some patience and understanding from clients and my work colleagues.
What’s next for you internationally?
I would like to visit Mondragon. The Basque Country has a well-established co-operative movement. If I can help promote EO in private companies that will be life turning full circle. Robert Oakeshott’s enthusiasm for EO was inspired by Mondragon.
The views are the views of the author and not those of the Law Society.