Prime minister David Cameron has announced a co-operative bill to encourage employee share ownership to be introduced by the government before the next election.

Prime minister David Cameron has announced a co-operative bill to encourage employee share ownership to be introduced by the government before the next election.

In a speech about the economy and what he dubbed as ‘responsible capitalism’, Cameron spoke about allowing ‘everyone to share in the success of the market’.

The bill will unify existing legislation covering co-operatives in an attempt to ‘build a better economy’.

Cameron’s announcement comes after deputy prime minister Nick Clegg spoke recently in favour of a ‘John Lewis’ economy, where employees are given the right to request shares in their company.

An estimated 1,300 firms have signed up for smaller share ownership schemes and Clegg plans to set up a commission to investigate the most effective forms of mutual ownership to help companies make the transition.

Sophie Murra, manager of low-cost stock market Sharemark comments, ‘[The prime minister’s] speech looks to bring back into focus the sometimes forgotten fact that employee ownership can increase productivity among staff as they take on an increased interest in the ultimate success of their employer.’

Wholesale company Palmer and Harvey operates a similar ownership model to that of John Lewis. The company’s chief executive Chris Etherington comments, ‘This is a shrewd move by the prime minister. Having the employees own part of the organisation they work for really makes a different in productivity.

‘From a business perspective, it makes long-term decisions easier and changes can be implemented swiftly without the worry of an immediate impact on share value.’

Another business leader supporting Cameron’s announcement is Rob Shaw, managing director of marketing agency Epiphany, who is rolling out a share option scheme in February.

‘We believe passionately that giving people a real stake in the company will help drive us forward into 2012 and beyond,’ remarks Shaw.

Some believe that the scheme is not without detriment. Catherine Eggar, employment partner at law firm Thomas Eggar, says that many potential costly legal issues will arise for businesses if they wish to implement an employee share ownership scheme.

‘It is clear that if this new ‘right’ is introduced, employers will need to have a formal agreement in place to adequately deal with the allocation and disposal of shares,’ explains Wilson. ‘In the case of an unlisted company then any scheme would need to include the creation of an internal market for the shares to be sold.’