Ownership at Work publishes "A Partnership Fund for Jobs"
These are worrying times for the millions of employees on furlough as companies prepare for the winding down of the scheme in the coming months. Already, some big employers are starting formal consultations on redundancies in the expectation that they cannot retain all the furloughed jobs when the government’s wage subsidy ends. It’s a tragic waste of people, jobs, productive capacity – and yet it is surely only a matter of months before the virus has been beaten, whether by vaccine or by cure?
What if companies could be helped further over the coming months, once furlough has ended, to tide them over until summer 2021, by when a new version of “normal life” and normal trading should have resumed? This is not the same as bailing out failing companies, but easing the strain on cashflow for a finite period and strengthening companies’ balance sheets.
That is the thinking behind Nigel Mason’s paper, “A Partnership Fund for Jobs”, which is published today by think tank Ownership at Work with the support of the Employee Ownership Association. Nigel is a senior associate of RM2 and a former director but we ought to point out that he wrote this in a personal capacity. RM2 is happy to sponsor the publication because we are keen to lend our know-how and experience to the sector, including our pro bono work on the annual Top 50 list of employee-owned companies and the EOT Survey. We’ve added a new page to our website to show the published policy papers to which we’ve recently contributed.
The idea behind the Partnership Fund is simple: for every £ of wage concession that employees are willing to offer over the next 12 months, the Government would match that £ for £, and in return employees and Government would get an equity stake in the company in the form of convertible loans. The employee stake would be held by the trustees of an EBT, to ease administration and provide a degree of protection and oversight for employees, and the stake would be guaranteed to be converted into cash by the company at market value within a few years, possibly by way of a share buy-back, a refinancing, a trade sale or, best of all, a sale to an Employee Ownership Trust (EOT). To make the idea as “shovel ready” as possible, it is modelled very closely on the Government’s recently launched Future Fund, which has been three times over-subscribed.
The idea is presently being considered by officials in HM Treasury, the Scottish government and the Welsh government. We shall keep you posted of any developments.