Partner Article

Government all talk on ‘John Lewis economy’?

The prospect of a ‘John Lewis economy’ is being hampered a lack of access to finance for start-up and early expansion business, suggests the Chair of John Lewis.

Speaking at a recent panel discussion organised by IPPR, chair Charlie Mayfield made the comments as he also pointed out that the much-citied German Mittelstand system was based on a strong long-term relationship between the German banking systems and the small business sector.

He called for the government to push British bands to look at alternative financing routes for a wide range of companies.

Mayfield said: “German banks have for a long time tended to lend against a business plan rather than against assets.

“Our system makes it much more difficult for smaller businesses, without established assets, to borrow money … This is a challenge if we want in the UK to have a great pluralism in ownership of businesses.”

He also noted that many lawyers and accountants had little knowledge of employee-owned business, and consequently it was difficult to seek advice on setting up such an operation.

Contrary to Nick Clegg’s recent enthusiasm over the ‘John Lewis economy’ it was suggested that negative attitudes towards cooperatives in government, was an obstacle.

Will Davies, academic director of the Centre for Mutual and Employee-Owned Business, also pointed out that business schools teach students that the purpose of a company is to maximise returns to its owners.

He called for government to do more towards breaking the “rigid orthodoxy about what companies are.”

Mr Mayfield proposed that an equivalent incentive to capital gains tax relief is needed to encourage cooperative entrepreneurs, and long-term value creation.

This was posted in Bdaily's Members' News section by Tom Keighley .