Margareta Pagano: It shouldn't be so taxing to bring in share ownership for the workers

Midweek view

If Nick Clegg is serious about encouraging a John Lewis-style economy and not just after a few cheap headlines, the Deputy Prime Minister needs to do a little more homework. Three telephone calls should do it.

His first one should be to Tim Watts of Pertemps, one of the country's biggest recruitment agencies, who knows more than most about the huge attractions of employee share ownership. Watts is chief executive of the Birmingham-based recruiter, started by his mother more than 50 years ago, where 300 of the 540 staff own 39 per cent of the shares. Now in his early 60s, Watts has always encouraged his staff to own Pertemps shares, either by buying them directly through Sipps, by awarding them to workers as a reward or through share option schemes.

It's been a success; Pertemps is top in the Sunday Times list of best places to work and staff turnover is low in a high-turnover industry – most workers stay at least five years. Dividends aren't paid to staff but they realise their investment when selling the shares. The internal share market is fluid, and the shares have risen year on year as Pertemps goes from record to record.

So what's the problem? Well, Watts wishes to retire soon and wants to hand over or gift the bulk of the 60 per cent shares he owns to all the employees. But he tells me that negotiating this with the tax authorities is a nightmare; he's been struggling for years to find the best way of giving the shares without either him or the staff ending up with big tax bills. Other businessmen I talk to say the same; they have wanted to hand over shares, or sell them, but have given up because of the henchmen at HMRC.

Then Clegg must chat to Andy Street, chief executive of the John Lewis stores, who will give him the best insight into what makes JL so magical. When talking to Street just before Christmas, one of my questions was why, if the JLP is the Holy Grail, aren't there more companies like it? In Street's view there aren't more because philanthropy on such a grand scale is rare, and also because of penal tax charges. The reason why the founder, John Spedan Lewis, gave away his company is key; he did so to find a new way between capitalism and Bolshevism, one that involved all staff in a "parliament" of partners. That's why the JL constitution is as vital today as it was 90 years ago; it lays down the rules, and the devil is in the detail, as it's the little things like how the boss can't earn more than 75 times the lowest paid which are intrinsic to the philosophy. Indeed, what surprises me most in this new crackdown on boardroom pay is that Clegg, and fellow ministers, are so opposed to workers' representatives sitting on company boards. John Lewis has them, as do most European companies that have much smaller gaps in salary between the top directors and workers than in the UK. What are they so scared of?

Clegg's final call should be to Brendan Barber, the TUC boss. He might ask why don't the unions demand a bigger part of the pie for their workers? I asked Barber the same thing recently and he confessed it's still a tricky issue for the unions, and indeed, many on the left. His excuse was that the unions feel uncomfortable about promoting wider share ownership because of the dangers for staff if they invest all their savings into one pot and the company goes bust. True, it's full of peril – look at Northern Rock, where staff owned shares. But it would be a pity if the Coalition's new proposals didn't have union support; they represent 7 million workers, a quarter of all the workforce.

Promoting the JL co-ownership model is a worthy ambition, and one I've been advocating for years so it's great that the politicians have at last woken up to its attractions. But if Clegg is to make such reforms real, he's got to get the tax right; it's not enough to promise tax breaks to companies which allocate shares. Instead, the tax rules, and amount of tax, on gifting companies must be reduced to make co-ownership attractive and taxes on share buying must be cut; there are four different taxes to pay when buying shares on the London Stock Exchange. Leave the rest to the philanthropists and entrepreneurs to get right.

News
people
News
people
News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
PROMOTED VIDEO
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsA Welsh town has changed its name - and a prize if you can notice how
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
peopleAt the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Time to stop running: At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity

Time to stop running

At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence