I welcome the debate, which has included intelligent speeches from across the chamber on the merits of employee ownership.
During our time in Government, the SNP has very much supported co-operative business models, as can be seen in, for example, the number of employee-owned businesses that are headquartered in Scotland having tripled in the past five years as a result of Co-operative Development Scotland’s work, which I am sure we all take pleasure in seeing.
Worker ownership is an important subject that is worthy of debate, and Richard Leonard’s motion is one that I am pleased to support.
Scotland has a proud and rich history of co-operation. As Richard Leonard and other members have said, it forms an important part of our enterprise heritage. I will respond to members’ positive contributions to the debate shortly, as well as outlining the commitment that the Government has made, and continues to make, to supporting employee ownership.
Way back in the middle of the huge social and economic changes that took place in the 18th century, the Fenwick Weavers Society, which Richard Leonard referred to, was formed when a group of workers decided that their best hope for prosperity lay in working together in a properly constituted society. They recognised the benefits—not just for themselves, but for their families and the wider community—of taking control of the working environment. Ever since, people around the world have looked to those same principles, and co-operation is now a worldwide movement. We might be a small part of that worldwide movement, but Scotland can and should be proud to stake its claim as the birthplace of doing business in a better way—a way that puts people first. I think that we all share that view.
Richard Leonard made some important points about foreign direct investment. I welcomed his clarification, so I will not labour the point, but we have opportunities to work with foreign direct investors on the business pledge and other initiatives, through which they can adopt the same approach in areas including workplace innovation, valuing the workforce and gaining productivity improvements—as would be delivered through employee ownership. I think that we are in agreement on that, so I will not force the issue.
Productivity is one of the best defences for companies from being attacked in a market sense. We warmly support engagement in workforce innovation. I am sure that members will be aware that there have been great successes in companies. For example, at Michelin in Dundee, where the workforce took a grip of its future, the company developed a highly successful business model that involved working with employees to innovate and to drive productivity improvements.
Maree Todd made excellent points about sustaining productivity improvements of 5 per cent to 10 per cent per annum. She also highlighted that measures such as succession planning can be implemented well before the retirement of the owners of a business, which was an important point to make.
Retention of profit in the local community also has a dramatic impact in areas like the Highlands and Islands by sustaining general prosperity in the local economy.
Jackie Baillie made some sensible and important points about the employee-ownership index. It was fascinating and extremely enlightening to hear about the difference in performance between that index and the FTSE index. She also asked me about Co-operative Development Scotland. I appreciate that she is no longer in the chamber, but I would like to address her points. Co-operative Development Scotland is now a core part of Scottish Enterprise, which means that employee ownership is now a core part of Scottish Enterprise’s succession-planning approach. That addresses a point that was made by Jamie Halcro Johnston, whom I welcome to Parliament. This is the first time that I have had the opportunity to address him directly. That development also ensures that account managers have direct access to Co-operative Development Scotland’s resources. I hope that that answers Jackie Baillie’s questions.
The Scottish Government recognises the importance of employee-owned enterprises, and the contribution that they make to the growth of our economy through providing jobs and wealth across Scotland and contributing strongly to inclusive growth. Although the number of employee-owned companies in Scotland is not high—at the last count, it stood at 86—we should, as a number of members have, recognise that some are substantial employers. Collectively, they have a combined turnover of just over £925 million and employ 6,800 staff, so the sector is important. Crucially—I stress this—it still has the potential to expand much further in the future. Richard Leonard and other colleagues made that point, and it is highlighted in the motion, which gives the examples of Clansman Dynamics and Novograf, which are important companies in Lanarkshire. Other examples have been given.
Employee-owned businesses are also unlike other businesses in their social purpose, their values, their governance and their commitment to their local communities. They are collaborative vehicles that play an important role in creating sustainable and inclusive growth. They enable employees, businesses and communities to work together to fulfil shared interests which, in turn, unlocks creativity and capacity in the workforce, creates a greater feeling of being valued in the workplace and leads to productivity improvements.
There is growing evidence that the use of employee-ownership models increases productivity, innovation and growth, while achieving wider societal benefits in local communities. I emphasise that such models make a positive contribution to inclusive growth, which is increasingly placing them in the spotlight from an economic development policy perspective. The Scottish Government has been, and remains, committed to encouraging and supporting those who choose the employee-ownership business model to drive forward their businesses and help to deliver our vision of inclusive growth—by which we mean growth that combines increased prosperity with greater equality, creating opportunities for all and distributing the dividends of increased prosperity fairly in society.
Our support is ably delivered through Co-operative Development Scotland, the Scottish Government’s delivery agent, which, working through Scottish Enterprise and Highlands and Islands Enterprise, supports company growth through employee-ownership business models. Co-operative Development Scotland’s ambition is to achieve a tenfold increase in employee ownership in Scotland over the coming 10 years. It has already delivered employee ownership at, for example, Scott & Fyfe and Stewart-Buchanan Gauges, which between them employ more than 240 people, which gives an indication of the scale of the success.
A generation of businesses faces a succession problem. As the baby-boomer generation reaches retirement age, many business owners are considering what will happen to their companies when they choose to step back. Starting the process early creates more opportunities, as Maree Todd said. The Scottish Enterprise succession expert support service provides business owners with advice on the various options, including employee ownership, which we think has real advantages.
For the record, when a company gets into difficulty and the partnership action for continuing employment framework is engaged, I often ask whether employee ownership or a management buyout might be a solution. Such models are not always appropriate, as members will accept, but we continue at least to raise them as options to consider in such situations, to see whether they can be taken forward.
There is no doubt that the co-operative movement and Co-operative Development Scotland are doing a fantastic job—I welcome the endorsement of that work that came from members from across the chamber. This is an area in which Scotland is particularly strong and is getting stronger, but I accept that we could do even more and commit to keeping an eye on how we can do so.
More than 180 businesses accessed support over the past five years, and there is a strong pipeline of businesses that are seriously considering the employee-ownership option. As a result of CDS’s promotional activity, many more businesses are aware of the model.
As members know, in recent months the Scottish Government completed phase 2 of the enterprise and skills review, through which we aimed to improve the customer journey for all businesses, including employee-owned businesses, by ensuring that delivery of business support is clear and, in practical terms, joined up, by hiding the wiring behind the scenes so that partners who collaborate to support individual businesses can do so successfully and there is a no-wrong-door approach to businesses who approach us for support.
Work is under way to put the business user at the centre of our collaborative focus on business support, which will involve a move towards a more rounded team approach to companies and their growth ambitions, with scope for specialist support where that is appropriate. Such an approach is very much aligned with our can-do framework—