Backlash starts over John Lewis potentially changing staff ownership structure
John Lewis Partnership (JLP) has moved fast with reassurances that any outside investor s brought in won’t mean the end of the firm’s employee ownership model as criticism of what’s not even a definite plan has begun.
To recap, JLP announced widening losses last week, said job cuts were looming and named a new CEO whose experience is largely in the private sector. Stories also emerged that Britain’s largest employee-owned business is in the early stages of exploring a plan to raise between £1 billion and £2 billion via the sale of a minority stake to an investor aligned with its values.
Such a move would require it to change its constitution but would give it access to a funding source it couldn’t otherwise tap into.
JLP’s current structure means it can’t access some funding options available to privately-held or stock exchange-listed peers.
But even before the plan has got off the ground, some observers have slammed it as the wrong move.
Labour’s shadow trade minister Gareth Thomas told The Guardian that the proposal is “very worrying” and a consequence of the country’s failure to expand the 'permanent capital’ model building societies can use to raise money.
He cited Australia where outside entities can invest in a business without affecting its mutual ownership status and called on the current UK government to expand the model to firms other than building societies.
Mutuo, an advocacy group dedicated to boosting the number of mutuals and cooperatives, also backed calls for a legislation change and called the possible plan “shocking”.
Meanwhile, John Hawksworth, ex-chief economist at PwC, told the newspaper the mooted move would be “terribly short-sighted”.
However, so far there has been no definite reaction from staff at the business and it's unclear how they might view the change. It also unclear how easy it will be to find external investors to pump in significant cash without gaining control of the business, and whether management would even decide to proceed with the plan.
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