Miliband unveils plans to allow workers to buy out companies and turn them into co-ops

6th February, 2015 11:38 am

Miliband devolution Leeds

Labour want workers to get automatic rights to buy out firms if they go up for sale or floated on the stock market, according to Ed Miliband. The new plans would mean employees have a statutory right to the opportunity to turn their company into a co-operative.

In an article for Co-op News today, the Labour leader says he a “proud member of the Co-operative Party” and that he wants to “put co-operative values at the heart of Labour’s platform for government.”

He writes:

“I am determined to ensure that the election of the next Labour and Co-operative government marks the beginning of a new culture of co-operative entrepreneurship in the UK, with a growing co-operative, mutual and employee-owned sector. This will help to raise productivity and ensure that more working people are able to reap the rewards of economic success.”

Miliband argues that employee buyouts are often favoured by departing business chiefs, as they ensure that the their successors have “genuine interest in an enterprise’s long-term success”. He pledges to explore handing workers the right to request ownership:

“Employee buyouts show how self-help and mutuality can build resilience into our economy, saving productive businesses and decent work. These buyouts can be an attractive route for business succession because they transfer ownership to people with a genuine interest in an enterprise’s long-term success. That’s why we should explore giving employees a statutory right to request employee ownership during business succession.”

Miliband’s intervention comes during a week in which he has come under fire for supposed “anti-business” leanings. However, in an article for LabourList yesterday, business leader John Mills argues that the attacks are a result of a Conservative Party that is “staring defeat in the face”.

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  • Alex Agius

    So the plan is to:

    1. Allow employees to make an offer to purchase the business if it is being sold – something they can do now.

    2. Allow employees to buy shares in a publicly traded complany – something they can do now.

    Genius! Makes you wonder why no one has thought to it before…..

    • keggsie

      It isn’t about share ownership about cooperatives. I suggest you learn more about them rather than criticising.

      • treborc1

        Your having a go at people but socialism as you put it, pray tell me when was the last time labour had had socialist idea was it, lets see in Falkirk….no of course not it was ATOS of course it was, dam I forgot.

        Think you need to get a bit educated.

        Labour is the party of the hard working it’s in the name.

        Mind you do not ask to many in the labour party front bench what work they did, a few would say banking, or of course nothing.

        The Coop bank was we are told once the back bone of the labour party that went down hill fast, mind you it was under New labour.

        I know what your getting at local Coop in business like Remploy, who was it that shut most of them ah yes Labour.

        I know about COOP’s but the fact is we are in election mode

        yes Coops and working together is at the heart of socialism the problem is the labour party is not socialist.

    • Mukkinese

      Is that the plan?

      Or are you just assuming that is the plan because it is easy to be cynical about what you assume the facts are than asking for actual facts?

  • treborc1

    We are really going for it now Coop in jobs we will be taking over banks next and the financial sectors as well how about BT .

    Most Co-ops are set up by workers because the company cannot be sold for millions and are dragging down the owners who cannot wait to get rid of it.
    Pity Brown did not offer Northern Rock to the workers or RBS.

    Workers want and need is better pay, better conditions and a future.

    We only need to look at the mess of the Rover sell off to see how thing can go so badly wrong and how people who but thing cheap then stuff the workers,

    I mean why did labour not offer the Royal Mail or the post office or the Royal mint to the workers because they needed the money.

    Now look at the Coop to see a mess the coop bank

    • keggsie

      Bullshit Treborc. Coops are the whole basis of Socialism. If you haven’t figured that out then go back and educate yourself.

      • treborc1

        Great shame then labour is not a socialist party is it not…. Blair and Miliband Jesus these pair would not know about socialism if it hit them on the ass.

  • bikerboy

    If you have a startup you might offer shares to the initial employees because you can’t afford to pay them any other way, or because you want to attract a certain type of person/skills. They are then taking part of the risk so they should be able to reap any reward. That happens now.

    Is Ed saying that if you build something and then want to sell it, any employee who has not taken any risk gets the upside anyway? How is the value of the business taken into account in a statutory case? Ok it’s exploratory. Alright.

  • Sheik Rhat el Anrhol

    I am struggling to to see what he is offering which does not already exist.

    • Mark Reilly

      Making it a statutory right for employees to be offered the chance of a buy out, rather than turing up at work one day to find you now work for a Private Equity firm run by an Millionaire living in Monaco

      The mechanism for the buy out will not change.

      • Sheik Rhat el Anrhol

        Anyone can buyout any company if their offer is accepted.

        • Mukkinese

          In theory, but that does not often occur in practice.

          You need to know that the company is up for sale, very often the first that workers hear of this is after it is sold. Secondly, with rail firms private companies have a definite advantage as prefered owners.

          Also we do not know the details of the proposal.

          What does

          “giving employees a statutory right to request employee ownership during business succession.””

          Mean? Does it mean a level playing field a prefered owner or what?

          They are just setting out the idea that encouraging cooperatives is a good thing…

  • ColinAdkins

    Good but more radical please. The antidote to the era of privatisation and demutualisation is not nationalisation but co-operisation. It is likely the circumstances above suggest the business is being sold as it is failing in some way. Why not enshrine the same right in more successful businesses?
    We can also turn the right to buy on its head by giving the same right to those with private landlords.

  • Bernie Evans

    No co-determination? Wrote this recently

    How typical of this wealth-obsessed society of ours that, when a company`s “collapse in profitability” occurs, the ” former chief executive” blames the “failure of leadership under his successor”. (Leahy blames successor for Tesco`s woes,20/01/15) Also nothing to do with Leahy, of course, was the huge reputation Tesco gained for its use of aggressive tactics in acquiring land and/or planning permission, its apparent lack of concern for the thousands of local small companies it put out of business, its bullying of farmers and suppliers, shareholder revolts over the obscene levels of executive pay, and the company`s failure to pay a living wage to its employees. Then there`s the small matter of how Leahy, for the majority of his tenure, did not have the stiff competition of discount supermarkets waging a price war against his company.

    Such arrogance and hubris clearly underscore our business system today,and explain, too, the glaring inequality in society. Polly Toynbee and Aditya Chakrabortty both stressed the problem of pay which is so low it leads to tax receipts falling, and increased reliance on in-work benefits.(Inside the National Gallery, a portrait of modern equality,Ghost jobs,half lives. How shadow workers get by in today`s Britain,20/01/15) Toynbee suggests “restoring power to unions”, but why not go further and follow the German example of co-determination, which involves workers` representatives in the running of companies, including the determinimg of pay levels? In Germany, despite unemployment levels similar to our own, tax receipts have increased so much, government borrowing is down, and the federal budget has been balanced.(Tax revenues help balance federal budget,14/01/15)

    Is there not, too, a need for a Fair Pay Commission to replace the Low Pay one which has allowed the minimum wage to “fall £1000 in real value since 2008”, and an immediate increase in the minimum wage, sufficiently high as to enable working families to enjoy life without having to resort to taxpayers` supplements? There is also the requirement for an efficient system whereby employers are properly punished for failing to pay this increased minimum wage, instead of measly fines like the £1400 imposed on H&M and other prosperous firms, recently. With higher rates of pay, there would be much less need for the austerity-inspired cuts which most of our political parties have in store for us, especially if allied to these proposals was the restoration of all jobs lost at HMRC under the present government, and the addition of a thousand more to tackle what Margaret Hodge describes as the tax avoidance “industry”, currently costing the country around £35bn a year.

  • Michael Worcester

    As ever socialism helps those in work not those that want work by taking what rightfully belongs to others. This would create a elite class of people who were there when the co-op was founded. I have seen this in the Kibbutz where talent leaves or if it joins gets no benefits and all the dirty jobs lead by the bolshie workshy politicos. It is also like strong employment laws which in Spain leads to two groups the unsackable old-timers and new people on part-time contracts and overall leads to less employment. This conversion would only happen to companies on their death-bed and lead to throwing good money after bad. Very poorly thought through policies, which have no depth or realism, are what I expect from SWP type parties not a social democratic party of government which labour was.

  • Tommo

    Seriously nutty idea from the Tont Benn book of nutty ideas.

  • Quiet_Sceptic

    Well intended but I suspect rather limited in actual use because of the high cost to employees of buying out the existing owner. You can imagine employees buying out a failing company for small amounts to secure their jobs but once you get to bigger, successful companies the cost to each employee would probably be thousands, tens of thousands or even hundreds of thousands in up front investment – how many have that sort of cash to invest or indeed would be willing to invest?

    Certainly some focus on the Cooperative movement is long overdue, its been in steady decline for decades and for all the talk about its perceived advantages is increasingly irrelevant.

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