The government has announced a blueprint to make it easier for more companies to become employee-owned like the John Lewis Partnership and Palmer & Harvey.

It has approved plans for a range of activity including: the possible establishment of an independent Institute for Employee Ownership an off the shelf model for setting up an employee-owned business, work to examine the guidance on tax issues relating to employee ownership a guide for staff and employers to request and agree an employee ownership takeover and work with the John Lewis Partnership to examine the barriers to funding for private sector employee-owned companies.

“Businesses that are owned by their employees produce more, grow faster, keep their workforce happier and pay staff more fairly,” said deputy PM Nick Clegg. “Our economy suffered a massive heart attack - now we have to build our strength back up. To pump oxygen back into the system and get Britain working again, it’s got to be out with the old and in with a new, more diverse economy that is fairer for all.”

Cabinet Office minister Francis Maude added: “Since 2010, the number of public service mutuals has increased six-fold. We know very few want to go back because they now have much more freedom to do their jobs how they know is best.”

The government has also launched a consultation on amending company law to reduce the regulatory burden faced by employee-owned companies. The consultation ends on 16 November.