The idea of Employee Share Ownership Plans has become well established across the Atlantic, where there are 10 million employee share owners in 10,000 businesses. But in Britain, despite tax incentives announced in the 1989 budget, there are only 100 Esops. Only in the bus industry, where council sell-offs have favoured bids supported by employees, have they had much impact.
Developments, in the US, however - where United Airlines, TWA and North West Airlines have all been restructured with heavy employee shareholdings, in return for concessions on reduced pay and other benefits - are unlikely to have an impact in the UK, say consultants specialising in employee share ownership. Charlie Cattell, legal services co-ordinator of the Industrial Common Ownership Movement (Icom), believes there is prejudice against employee democracy among both management and staff of British industry. 'Nothing will overcome that overnight,' he said.
A spokesman for the Transport and General Workers' Union said: 'We have been involved in Esops in the bus industry, but we have a lot of reservations. We are not gung- ho for Esops as the way forward. When a proposal arises we take a view according to the company involved.'
The TWGU is reluctant to follow the example of the US, where share ownership is traded for reduced pay and benefits. US-style Esops were not, in any case, permitted under British law, explained Nigel Mason of the consultants Capital Strategies. 'There is a rather blurred overlap between Esops and personal pension provision in the US,' he said. 'Instead of a company contributing cash to a pension scheme in a diversified portfolio, it has bought shares as a form of self-investment. That wouldn't be acceptable here, thank God.'
Capital Strategies is now working with British Rail and British Coal to put together Esops as part of the privatisations. This may include reopening some closed collieries. Mr Mason believes that new Esops may also be established in some of the docks that have already been privatised.
The Esop Centre - which is backed by accountants, solicitors, banks and Esops - says the schemes would be promoted most effectively if the Government clarified their legal position and improved their tax benefits. The centre would like to see the removal of a requirement that trustees are employees.
Icom, which promotes worker democracy, is cautious about such an approach. 'The US experience, with heavy tax incentives, resulted in the wrong motivation - going for it for tax reasons, not industrial democracy,' said Mr Cattell. 'Experts over there calculate that just 5 per cent do it for the right reasons.'
Mr Mason believes both management and unions should recognise that tighter legal controls on Esops offer advantages and employee protection. He claimed the tax benefits in the UK were considerable.Reuse content