Co-op Policy Blog: Securing jobs through worker co-ops 

Business closures in the UK are at historically high levels. Corporate insolvencies are at an all time high since 2009 and voluntary liquidations are at the highest level since records began in the early 1960s. In many cases, viable jobs are being lost because owners decide to let business die.

Transitioning businesses to worker ownership is a proven way of saving jobs that would otherwise be at risk. Since 2014, government has supported these transitions by a giving a capital gains tax relief to owners who sell their business to an employee-owned trust (EOT). This is an increasingly common exit route for business owners. However, the EOT option doesn’t work for all businesses. For micro businesses, with 10 employees or less, transitioning to this model can be prohibitively complicated and expensive. 

Worker co-operatives offer a solution, by providing a cheaper, more straightforward legal arrangement for transitions. We estimate that, by adopting a worker co-operative model, businesses can save millions of pounds each year in cumulative costs.

During the recent government consultation on EOTs, Co-operatives UK and workers.coop teamed up to ask government to extend the tax relief to business owners who sell their businesses to a worker co-operative. This could unlock more conversions and save jobs, particularly where cost and complexity are a barrier. 

Research by WPI Economics suggests that worker buyouts facilitate happier, fairer and more productive workplaces as well as saving jobs and businesses. Compared to alternative forms of business, worker co-operatives are 8-12% more productive. They give bonuses that are twice as large, and are more than twice as likely to have fair pay accreditation and a decarbonisation plan. They are also more likely to support flexible working and offer financial support to employees during the cost of living crisis. 

This Autumn Statement, the Chancellor has the opportunity to save jobs, support businesses and help build a more resilient and inclusive economy by expanding opportunities for co-operative ownership.

Will he do it?