Business ownership declines over the past 30 years, says report

A report into the state of ownership over the past 30 years has found that while business ownership has declined, personal ownership has increased.

Following the 30 year anniversary of a speech by Margaret Thatcher at the Blackpool Conservative Party conference in which she set out a vision for wider ownership, the Co-operatives UK report reviews data on the different forms of ownership between 1985 and 2015.

Unveiled at this year’s Conservative Party conference in Manchester with think-tank ResPublica, the document said the Household Ownership Index has risen from a base of 100 to 120, while the Economic Ownership Index has declined by a third, down from 100 to 65.

Ed Mayo, secretary general of Co-operatives UK, said: “Ownership is fundamental – it gives people an emotional and a financial stake. Alongside other models, co-operative offer an effective way to give people ownership over the things that matter, whether in their local communities, their workplaces or businesses at large.”

The report’s key findings are:

• After an initial increase in the late 1980s, individual share ownership has halved; and only 11% of the total value of UK traded shares is now owned by individuals.
• What has displaced it is foreign ownership. At the end of the 1980s, 13% of the total market value of UK shares was foreign owned. Now it is over half, 53%.
• Share ownership has not reached the level of car ownership of 1985, let alone of today – 76% of households own a car or van now; only 19% of adults own shares.
• The numbers of people who are self-employed has risen dramatically in recent years to an all-time high, with 15% of the workforce now self-employed.
• Family ownership remains prevalent, with around two thirds of small business owners describing their business as family owned.
• With 14.9 million members, there are more co-operative business owners in the UK than there are individual shareholders.

At the Conservative Party fringe meeting, Mr Mayo told delegates: “We have not had a consistent focus on the ownership agenda since the 1980s. Governments have come and gone, but they’ve failed really to focus on that prospect of widening business ownership.”

On the discussion panel was Conservative MP Tom Tugendhat who discussed the different types of ownership structures. He believed that family-owned businesses and shareholder-owned companies were obviously “conservative”.

But, “the co-operative movement is not,” said Mr Tugendhat. “And I think that is an illusion because, as Mrs Thatcher demonstrated very clearly, co-operatives do empower the workforce into a property owning democracy. It is a very welcome idea.

“But how do you trade your ownership? Co-operatives, like partnerships, can buy each other in and out. And I’m very interested in the trading element. Although there are problems in the city, the difference between share ownership and share trading are very important. And the idea that an individual should have a stake in his labour, and collective labour, is very important.

“We all know when you bring a group together you don’t get the sum of the parts, you get greater than it. That’s why teams work. If you don’t get that greater than the whole, you only get a collection of individuals, you don’t actually achieve what companies achieve. So sharing in that collective whole, as well as sharing in the individual effort is a very important understanding into what it means to have a stake in something.”

Phillip Blond, director of ResPublica, added: “Lady Thatcher’s vision for an economy with wider ownership is a work in progress. There have been increases in the number of family business and co-operative owners, but ownership of homes and shares has not grown as expected. If we want to extend economic ownership then we need a more focused policy framework that extends ownership.”

• Download the full report from Co-operatives UK.