Sir Charlie Mayfield: In for an early Christmas present?

John Lewis's chairman hopes the Chancellor will be more hare than bear when he makes his Autumn Statement

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The Independent Online

Is George Osborne going to be the hare or the bear when he gives his mini-budget tomorrow? Sir Charlie Mayfield laughs out loud and says his money is on the Chancellor being the hare; the kind one in the John Lewis Christmas TV advert that gives the bear an alarm clock so he wakes up from hibernation to enjoy the festivities with his friends.

It's rare that the Chancellor gets to be the good guy, but years of lobbying by Mayfield, chairman of the John Lewis Partnership (JLP), seems to have finally persuaded him to side with the angels and bring in tax reliefs making it easier to set up baby, John Lewis-style businesses.

As Mayfield says, one of the great ironies of our time is that it's more difficult for great philanthropists to give away their businesses today than it was for John Spedan Lewis, who gave his company to staff in 1929, as they are penalised because of the disadvantageous and complex tax regime.

But that's about to change. The Chancellor is expected to confirm two tax measures in tomorrow's Autumn Statement which should help spawn a new generation of indirect employee-ownership companies like JLP – and make it fairer for those who work in them.

The first one is to give capital-gains tax relief on the sale of a controlling interest in a business into an indirect employee-ownership structure owned by a trust. Such a relief, says Mayfield, will be a powerful incentive for owners to sell some or all of their shares to an employee-benefit trust.

"At present, it's far more tax efficient for a company owner to sell his or her business or list it on the stock market. I'll give you an example: the owner of one of our biggest fish suppliers to Waitrose, who employs around 120 people, on the west coast of Scotland is keen to pass his business to his staff.

"Yet under present tax rules it doesn't make sense for him to do so – it's more advantageous for him to sell to a big multinational rather than his own workers.

"That doesn't make sense –it's bonkers. Ownership should be more focused on the responsibility to invest in and develop organisations for the long term."

The second change Mayfield expects is that the 80,000 or so John Lewis partners will be treated more fairly with regards to their famous annual "bonus" and given tax relief on payments up to a £3,000 limit – the size of the average bonus. At present, JLP partners – and other people who work in employee-owned businesses – have to pay full income tax and national insurance contributions on their profit-related pay, whereas shareholders in limited companies pay a lower corporate tax rate.

"Making these changes is not just about being nice," he adds. "I make no bones about it – this is a hard-nosed commercial agenda and would help create a more plural and rebalanced economy."

It's no wonder the retailer walks with the angels – JLP's head office sits in the shadow of Westminster Cathedral in Victoria. The offices are what you would expect – smart, utilitarian chic – and so is Mayfield, aka Sir Andrew Charles Mayfield.

He's tall and clean-cut, an ex-Scots Guards officer who spent time in Northern Ireland, yet like everyone you meet at John Lewis, a jolly and reconstructed crusader for the group's values where profit and worker happiness seem to sit so comfortably together.

After studying for an MBA, he joined SmithKlineBeecham, learning the hard way how to sell – his division was Lucozade. He then switched to McKinsey before being parachuted into John Lewis nearly 10 years ago, climbing quickly to the top.

He's been battling ever since to get JLP's case to the top of the Government's agenda which, considering all the evidence showing that employee-owned firms like John Lewis actually outperform more traditionally structured firms in times of recession and show increased productivity levels, should have been an easy task.

With the Coalition, though, he's seen a big change, and the Government is even pushing its own departments into John Lewis-style mutuals.

Yet only 3 per cent of GDP comes from employee-owned businesses – and that's mainly made up of JLP and, more recently, the Mace Group, the architectural practice.

He would like to see that rise to around 10 per cent and was encouraged to hear that Julian Richer of Richer Sounds recently announced he would be giving the music business away to staff on his death.

Mayfield adds: "Employee share ownership works well for knowledge-based businesses – those which are disproportionately vital to job creation – which is just what the Government wants to promote."

Of course the changes will cost – about £100m to £200m a year – although Mayfield reckons this can be more than made up by long-term benefits to the economy.

As chairman of the Commission on Employment and Skills and a big employer himself, he's also been pushing for simpler schemes for businesses to hire apprentices.

"We hope government will change it so that companies are paid through PAYE for their apprentices in a similar way that women are paid on maternity leave."

There are more reforms on his wish-list – changes to business rates, making it easier for youngsters to work part-time among others.

Right now, though, Mayfield is concentrating on another record-busting Christmas; on the day we meet – Black Friday – the retailer doubled it's daily sales and saw an 18.4 per cent rise in the week's sales to £147m compared with same period last year.