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We welcomed the introduction of a ten-year plan, which aims to revitalise UK industry through public–private partnership, targeted investment, and sectoral transformation.  

This long-termism is something we have called for, alongside others, in our manifesto to offer a roadmap that offers continuity and assurance for UK business and investment. 

While the strategy centres on boosting business investment, unlocking regional growth, and addressing long-standing structural weaknesses in productivity, skills, and resilience, it’s clear that employee ownership can and should be a natural shoo in as a strategic enabler to deliver on these aims. 

The strategy’s commitment to supporting eight high potential sectors, improving energy and infrastructure systems, reforming regulation, and making the UK more competitive in global markets - teamed with a focus on retaining businesses through employee ownership, the health of regional economies could receive a long-term, sustainable boost. 

A Solution to a Business Growth & Retention Problem

The government’s focus on advanced manufacturing, clean energy, creative industries, defence, digital technologies, financial services, life sciences, and professional & business services is welcome.  

But do we want to risk the UK becoming just an “incubator economy” for these sectors and risk the innovation and wealth we create leaving the UK? 

EO is a proven, underused mechanism to anchor these businesses in UK regions for the long term. While there is more to be done to understand the trends thoroughly, current data shows that there is already a growing EO presence across several of these priority sessions:

• Professional services businesses have long been a core part of the EO sector, while creative industries are catching up fast - with 110 EO transitions in 2024 alone, with each having 500+ employee owned businesses (EOBs) in their sector driving regionally rooted growth.
• Financial services and digital technologies, though slower to adopt, are well-placed to scale EO models thanks to their people-centric business models. Already, the digital sector boasts 206 EO firms.
• Even in advanced manufacturing, energy, and life sciences, where EO is smaller but growing (with 50+ EO businesses each), current EOBs are role models in how to build resilient, sustainable growth in place. 

If we’re serious about both growing and retaining economic value in the UK, employee ownership is the strategic tool that can help us to get there - not just for succession, but for securing long-term national and regional prosperity. 

Business Support: A Focus on Succession Alongside Start-up & Scale-up

While start-up and scale-up stages are well supported, succession - one of the most vulnerable points in a business lifecycle - is currently an opportunity to intervene and make sure that we retain more viable businesses in the UK. 

Cynergy Bank has report that the total turnover of firms closing (£92.7bn) exceeded the contribution of start-ups (£90.4bn) over the past year for the first time in a decade. 

Meanwhile, we’re just a few years into a decade where trends show that an increased number of business owners expected to reach retirement age and look for succession plans will affect an estimated 120,000 SME businesses (with 10–249 employees). 

In the 2023 survey, 43% of owners say their businesses could close without finding new owners, while an alarming 30,000 firms – employing around 910,000 people – predict liquidation, according to thinktank Ownership at Work, in their report, ‘Generation EO’. 

Not only this, there's genuine interest in the employee ownership trust (EOT) model of EO with 18% of those looking to sell there shares in the business already preferring this as an exit strategy.

The EO Solution

EO is a practical solution to meet this strategic aim: 

• It keeps thriving businesses locally rooted and productive.
• EO companies are 8–12% more productive per employee than peers.
• If EO adoption continues at previous highs of 37% growth per year, it could yield £60bn in additional productivity and secure 33,000 successions over 10 years. 
• EO can be leveraged well in different industries such as the care sector where the case has been made that EO could support both the capacity crisis and the quality of care.

Currently projected to grow from to 5,500 by the end of this Parliament - a focus on smart policy, strong practice, and leveraging the insights and learning of our connected, values-driven community, to further accelerate and harness the full potential of people powered growth is a huge untapped opportunity.

Mutuals & Cooperatives

Work through the Mutuals and Cooperatives Business Council on growth strategies and insights from sector trade associations has identified clear barriers that can dial up the impact of these businesses.  

The UK’s 9,500+ mutuals and co-operatives contribute £93 billion to the economy - 1.5% of total GDP - despite representing just 0.2% of businesses, as documented in the ‘Harnessing the Mutuals Sector’s Potential for Growth’. 

To make sure that employee ownership can play this crucial role in establishing economic resilience and fairer more rewarding livelihoods, we’re setting our growth strategy which focusses on: 

• Capital: Ensure the National Wealth Fund and British Business Bank actively supports diverse / EO models.
• Skills: Use the Future Skills Fund to help EO businesses scale and thrive.
• Succession: Add targeted business support for ownership transitions to safeguard our SMEs.
• Policy: Strengthen the EOT and embed EO in regional industrial growth strategies 

We cannot wait to work with the sector and policy makers to drive this forward. 

Talk to us and let us know your thoughts.