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Florman MarkBy Mark Florman

The
UK has some of the best entrepreneurs and brightest business minds in the
world. But to put the dynamism back into our economy we need to make it as easy
as possible to start and grow a business: which is why I am a supporter of the
Government’s new Employee-Shareholder policy.

Anyone who has
ever started their own company knows it’s a risky business. Budding new
enterprises can be tied up in red tape, struggling through the complexity of UK
employment law without an HR team, and often wary of the risks they’re taking
on.

These costs add
up to one thing – a huge barrier to hiring people. One of this Government’s
most radical policies is to do something about it.

Last October,
the Chancellor announced the creation of a new employment status – the
employee-shareholder. For the first time, employees will be allowed to give up
some of their gold-plated employment rights in exchange for shares in their
company. And, if the company succeeds and the shares increase in value, the
Government will waive Capital Gains Tax to reward their aspiration.


The idea is
simple. New start-up businesses need more freedom to hire people; and employees
don’t have a big enough stake in their companies. This policy solves both
problems. And next week, I hope the House of Lords will vote to make it a
reality – because this change could make a huge difference to the companies and
employees who choose to take it up.

If a company
decides to take advantage of the new employee-shareholder status, they no
longer have to pay exorbitant defence costs for dismissal tribunals, statutory
redundancy pay or flexible working, all of which can cripple a new business.

And if an
employee decides to take advantage of it, they keep all of their rights
regarding discrimination and the minimum wage, and gain the opportunity to
become a partner in their business, with a generous tax break if the company
succeeds.

I have seen
first-hand the huge difference having a stake in your company can make. When I
started my own advisory company in 1992, I included all of the staff in the
equity of the business – knowing that this was the way to align everyone to the
same short and long term goals . And for every company I have started since
then , in media , transportation , fund management and others , I have had the
same policy , bringing the same opportunity to everyone . People are better colleagues
and employees when they share the profits of success. And as a number of
leading businessmen who championed the policy in the Daily Telegraph last year
rightly say, employee-stakeholders are more productive, more motivated and have
higher job satisfaction.

Some people have
argued that this policy isn’t generous enough for employees or doesn’t go far
enough to help big international companies. But these people miss the point. Of
course, it won’t be right for every person, in every company. But it will make
a huge difference to many small, newly established , fast-growing start-ups,
who feel the regulatory burden of employing people more acutely than anyone
else. And it will make a huge difference to many ambitious people who want to
become partners in a thriving new business and help it grow.

Last year,
270,000 small companies were set up in the UK. The Government is right to do
everything it possibly can to help them succeed and to encourage even more
people to start new businesses in the years to come – these businesses are the new
engines of the new Britain that we must build if we are going to compete and
trade with the faster growing economies of the world.

This new
employment status makes it easier for smaller entrepreneurial companies to
innovate and take on people, encourages greater
share-ownership which will drive productivity, and sends the clearest possible
signal that the UK is open for business.

We need to turn
our attentions to small, cutting-edge enterprises that will go on to become the
future Amazons, Googles and Apples of the next generation, driving innovation
and growth and helping the UK compete with the rest of the world.

Britain needs to
find its winning entrepreneurial zeal again. The Government’s employee-shareholder
policy may just be radical enough to help deliver it.

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