Jonathan Djanogly is a former Minister, and is MP for Huntingdon.

The importance of promoting corporate best practice is an issue close to my heart. The All-Party Parliamentary Corporate Responsibility Group, which I chair, is always looking for ways to challenge and encourage businesses to improve their Environmental, Social, and Corporate Governance (ESG) reporting. One of the ways that many companies enhance the “S” in ESG is to give their employees the chance to invest in the company through what are known as Employee Share Ownership (ESO) plans.

There are several plans designed to accommodate different types and size of business. Two of the most important and transformative (for both employers and employees) are Save As You Earn (SAYE) and Share Incentive Plans (SIPs). They are known as “all-employee” plans because companies that offer them must make them available to every single employee. This differentiates them from other option schemes where management or owners decide which (generally small and targetted) pool of employees (typically managers) are to be offered options.

For 40 years and 20 years respectively SAYE and SIP have enabled millions of people to invest in the companies they work for. In so doing, they have enhanced company productivity, encouraged long-term savings and, crucially, shared the proceeds of growth and corporate success with employees at all levels – a vital component of good workforce engagement and, responsible corporate governance.

But these schemes are now facing a crisis point: established in the days before mobile share trading apps were widely available, designed for a world before the gig economy and at a time when people moved jobs much less frequently, SIP and SAYE need to be modernised to appeal to staff in the 21st century workplace.

Why now? Crucially, SIP and SAYE are proven to have a positive impact on productivity, estimated at 2.5 per cent in a Treasury study. As we look at the economic uncertainty ahead there is one thing of which we can be certain: the UK must reverse its slow rates of productivity growth. Over the past decade output per hour and real wages are no higher today than they were prior to the 2008 financial crisis. While the US and other advanced economies have experienced similar productivity slowdowns, our slowdown has been more dramatic (we rank 31st out of 35 OECD countries in growth of output per hour between 2008-2017). SAYE and SIP can play a part in helping to address this.

The problem? Employer and employee participation in ESO is falling. From the Government’s own data, we know that firms offering an SAYE scheme in the last measured year (2018-19) is flat-lining, while the number of employees granted a new SAYE “option” was 310,000 and you have to go back as far as 1986-7 to the last time that take up was that low.

With Share Incentive Plans (SIPs), the picture is similar: in 2018-19 there were 470 companies where employees were either awarded or purchased shares – down from 530 firms in 2015-16, part of a long-term downward trend. What’s more, the initial value of shares offered is also on a worrying downward trajectory: in 2018-19 the initial value of shares offered was down to £660 million. The last time it was that low was 2002-3, when SIP was in its third year of operation.

Of particular concern is the need to attract younger workers towards ownership of and engagement in their employing companies. Recent reports indicate that nearly one in 10 young British adults started to invest because of the recent GameStop saga. Given also the easy availability of trading apps and the fad for investing in digital currency – my instinct tells me that the problem is not the principle of share ownership, nor a missing appetite for risk. Rather what we see is an inadequate offering to cater for the needs of today’s younger generation.

So, what can be done? The Social Market Foundation has made a series of interesting recommendations in its new report, A stake in success: Employee share ownership and the post-COVID economy. It put forward some bold ideas designed to make ESO schemes more appealing to both employers and employees. These include recommending shorter scheme lengths, the inclusion of gig economy workers in plans, annual reporting requirements on the health of the employee share ownership plans firms operate and a review of the accounting treatment of SAYE share plans, to remove disincentives to their implementation.

The existing schemes tend only to be adopted by larger companies, with managers of smaller and younger companies often complaining that the schemes are too complicated to establish. Rules need to be revised to encourage simple formation and participation and education of companies and employees is required to explain the possible benefits for all parties through ownership and mutual engagement.

These changes cannot be piecemeal. We need wholesale reform and we need it urgently. That’s why I am also backing the SMF’s call for the Government to establish an Employee Ownership Commission, tasked with developing the necessary institutional support needed to generate wider rates of employee ownership.

This would be good for employees, good for companies, good for corporate governance, good for UK productivity and good for the wider economy. As we plan how to build back better after the pandemic, it’s in all of our interests that we have a real shake-up of Employee Share Ownership schemes as part of our reinvigoration of a share owning democracy.