Using employee benefit trusts for employee ownership Graeme Nuttall Partner, Field Fisher Waterhouse LLP UK Government Independent adviser on employee ownership Email: graeme.nuttall@ffw.com Co-operative Education Trust Scotland 31 May 2012

Employee ownership Unprecedented Government support Role of independent adviser Informal consultation Obstacles Solutions?

Unprecedented Government support Nick Clegg, Deputy Prime Minster’s announcement on 16 January 2012 at Mansion House: “...of a new Government drive to introduce the concept of employee ownership into the mainstream British economy” Norman Lamb is leading the cross-Whitehall work to investigate how Government can support this growing business model The Mutuals Taskforce under Julian Le Grand and the Cabinet Office led by Francis Maude are promoting employee led mutuals The reform of Royal Mail and its transformation into an organisation in which staff have a meaningful stake HM Treasury internal review of employee ownership

Role of independent adviser A new role The remit is to: "work with Government to identify the barriers to employee ownership and help find the solutions to knock them down” The independent adviser is asked to make his recommendations to Government in a report presented to Norman Lamb The answers and solutions will be brought together at a summit chaired by the DPM on 4 July 2012 Part-time and unpaid Does not provide advice on specific cases or take any executive decisions - he may continue to advise clients

Informal consultation Organised by Department for Business, Innovation & Skills (”BIS”) email: employeeownership@bis.gsi.gov.uk Key questions: What are the barriers? What are the solutions?

Obstacles? Consistent themes, include Lack of awareness of the concept of employee ownership Information is often completely misunderstood There can be resistance due to fixed ideas about ownership models There is a lack of awareness of the solutions that already exist There may be a fundamental problem with access to finance to implement employee buy outs There are complexities in the legal structures needed to implement and maintain employee ownership. There probably are material obstacles in how the tax system applies

Lack of awareness

Solutions? Raise awareness

Solutions? Increase resources and reduce complexity Use of an employee benefit trust (“EBT”) John Lewis Partnership Employee Benefit Trusts John Lewis Partnershipplc & subsidiaries

Solutions? Individuals as trustees Employees Founder’s family etc. Beneficiaries Wilkin & Sons Employee Benefit Trust Shareholders Donald Insall & Associates Limited Employment