The UK is struggling to deliver high-quality social care in a sector which is under pressure due to staff shortages and rising labour costs, not least the planned increase in employers’ National Insurance contributions, which takes effect in April. With two in five care business owners considering exiting the market, the Government is actively exploring alternative delivery models in a bid to diversify the market and increase its resilience.
In a sector where additional investment is necessary to ensure sustainability, employee-owned organisations could unlock significant benefits for both service providers and recipients of care by increasing productivity and boosting staff loyalty. They could also help to address worker shortages. However, for the sector to take advantage of the benefits of employee ownership, the Government needs to consider ways to promote it as an effective, alternative delivery model.
Current delivery models in the care sector
Traditionally, the UK’s care sector has been made up of a range of organisations, including public, private and charitable or not-for-profit providers with only a small number of employed owned businesses operating. Currently, the potential benefits of employee ownership in the sector are not widely understood. For example, care business owners might choose to transition the business to employee ownership in order to preserve the character of the business and consolidate staff loyalty.
If a business owner is considering a sale, they should consider what they want the legacy and culture of the business going forward to be, including the outcomes for their staff and residents. As well as protecting their assets, they may also want to protect the people who deliver the services they provide. If this is the case, then transitioning to employee ownership could help to realise these outcomes.
Benefits of employee ownership in the care sector
Whilst it is still early days, employee ownership has recently been attracting more attention from policymakers as an alternative delivery model for social care services. With Anna Dixon MP, Anthony Collins convened a roundtable in January 2025 to hear the benefits of market diversification and the advice of professionals with experience of employee ownership.
Employee-owned organisations have been shown to have tangible benefits. For example, data in the new White Paper People Powered Care issued by the Employee Ownership Association (eoa) shows that the employee ownership sector is experiencing productivity growth, whilst it also leads to positive impacts on staff engagement, discretionary effort and recruitment and retention.
In the care sector, where the workforce is vital to the quality of service, employee ownership can provide stability and enhance productivity. Giving employees a sense of ownership can allow them to have input into how the organisation is run and motivate them to perform at a high standard, leading to improved outcomes for those receiving care services.
This type of ownership also has the potential to improve staff morale. Having a voice in decision-making and a share in profits, research shows that employees tend to experience higher job satisfaction. A positive work environment can also help to reduce burnout, a common issue in the care sector.
In addition, employee-owned delivery models can provide financial stability too as profits generated are typically reinvested back into the organisation, ensuring financial resources are directed towards improving services and outcomes.
The need for Government support
With costs rising and staff shortages worsening, many care businesses are struggling to remain viable, and the sector desperately needs a long-term solution. The Government recently launched a commission to transform social care services. While this indicates an awareness of the issues affecting the sector, action is needed now to address the considerable funding shortfalls many providers are facing.
There is an opportunity for Government to raise awareness of employee ownership as an alternative delivery model. With the right package of support and incentives, employee-owned organisations could help to address some of the systemic challenges affecting the sector.
Promoting employee ownership
There are several ways that the Government could support the adoption of employee ownership in the sector. For example, it could offer financial incentives to help care organisations transition to employee ownership. These incentives could be particularly valuable for small and medium-sized care providers that may otherwise struggle to find the upfront financial investment required to make such a shift.
Moreover, the Government could introduce and encourage policies to promote awareness of the benefits of employee ownership, ensuring that care providers understand the advantages it could bring. By way of example from a different sector, when the last Labour Government used a positive tone to promote the benefits of its new Community Asset Transfer Policy, this sparked a positive reaction in the community sector and improved understanding significantly on the part of local authorities. By taking a similar approach now and making it clear that there are no legal blocks involved, this could encourage providers to consider employee ownership.
More support for providers transitioning to employee ownership is also needed. For example, advisory bodies or resource centres could provide guidance to organisations considering employee ownership, ensuring they have access to best practices and legal frameworks.
Alongside the tax advantages in converting to an Employee Ownership Trust (EOT), there are additional levers that the public sector could pull to make employee ownership even more attractive as an alternative delivery model. For example, extending tax reliefs for employee-owned social care businesses to incentivise take-up.
Views from the eoa
The eoa actively advocates the expansion of employee-owned models across the care sector. The organisation has publicised a number of sector-specific success stories and provides resources to organisations interested in employee ownership.
One notable example is Shaw Healthcare, the largest employee-owned care provider in England. Transitioning to an EOT has enabled the business to retain its independence and significantly improve staff retention rates. The provider’s annual employee satisfaction surveys show increased engagement scores, demonstrating that the employee-ownership approach is fostering a positive workplace culture.
To realise the value of employee ownership in the care sector, the Government must work to promote its benefits through the introduction of positive policies, guidance and financial incentives. Meanwhile, business owners in the sector should stay open-minded and consider the benefits that shifting to an alternative delivery model could bring.
Whilst employee ownership and market diversification could help to improve resilience in the sector, the Government must also look at improving the commissioning framework to solve funding issues. For example, removing some of the constraints on commissioning authorities could help to accelerate funding decisions and support providers that are striving to provide quality services in their area.
Ultimately, it is those organisations that consistently put the people who receive care at the centre of their decision-making that deserve to be supported and incentivised wherever possible.
Would you consider transitioning your business to employee ownership or would you have any reservations? Leave a comment on this feature or join the conversation to share your thoughts
David Alcock is a Partner in the Governance, Funding and Corporate Team at Anthony Collins.  Email: [email protected]  Linkedin: David Alcock, Anthony Collins Solicitors