APPG for Entrepreneurship Digest: September 2023

All change! Well, some changes. Sir Keir Starmer marked the return of parliament from its summer recess last week with a reshuffle of his Shadow Cabinet. I’ll leave it up to others to pick over exactly where the refresh leaves the Labour Party, but one move that did catch our eye more than others was to see Seema Malhotra – our Chair – being handed the Shadow Skills brief.

Most of us intuitively appreciate just how important skills are to the entrepreneurial economy. It goes without saying that a more skilled workforce is going to be one which can generate stronger economic growth, and one which stands a better chance of developing the innovative technologies needed to tackle healthcare problems or climate change.

The more interesting question, however, is how to ensure the workforce is as skilled as it possibly can be. As luck (or prudent foresight) would have it, this is something that the APPG has spent a lot of time thinking about lately. We can’t claim to have all the answers, but over the last few years the issue of skills has cropped up on several occasions in the research we’ve published.

At the end of 2022, for instance, we launched Supporting SMEs Successfully – written by yours truly. This report examined how to boost productivity among smaller businesses, with one of the key areas of focus being the Government’s ‘Help to Grow: Management’ initiative, which aims to enhance skills among SME business leaders over a 12-week training course. While few could doubt the intention of Help to Grow: Management (and we certainly heard many positive testimonies about the courses when researching the report), underwhelming uptake numbers suggest that more could be done to encourage more managers to enrol on it.

In our report, we recommended exploring making the delivery of courses more flexible. As we note, while there’s no gain without pain, if potential participants are being put off by onerous requirements such as the time needed to complete the scheme, that doesn’t serve anyone’s interests. Shorter, more focused courses could still impart a great deal of wisdom, and turn the dial in upskilling the workforce.

That research concentrated on skills provision at the ‘top end’ – namely, people who’d already risen to senior positions within companies. But earlier that year we also set our sights on skills at a much more junior level. In Entrepreneurship Education, Finn Conway wrote about the benefits of teaching young people the skills necessary for starting and growing a business. He explained how England remains one of the few places in Europe that has yet to develop a specific entrepreneurship education plan for schools, and ultimately recommended that the Government should develop and publish a Youth Entrepreneurship Strategy for Schools.

Nobody would argue against striving for a more talented ‘native’ population, but for those skill sets which are either so scarce or needed so urgently, we shouldn’t begrudge having to bring them in from abroad. Immigration has been a tried and tested way to improve the country’s skills base for centuries, and foreign-born workers now represent a critical component of the UK economy. Recent research from The Entrepreneurs Network, our Secretariat, found that 39% of Britain’s 100 fastest-growing startups have an immigrant founder.

While perhaps a small sector (for now, at least), our report on Space Startups and Scaleups shone a light on how important having access to international talent is for companies in the industry. Gravitilabs’ Managing Director, Mark Roberts CBE, told us how: “Accessing talent is always tricky and we have to cast our net across the world to find the people we need,” before adding: “Having to sponsor skilled workers from overseas is also time consuming and costly for an SME.” Similarly, when researching our report on the Sharing Economy, one entrepreneur told us: “There’s a war for talent both at high-skilled (e.g. software engineers) and low-skilled levels (e.g. tradespeople). This has resulted in huge wage inflation which will filter through to pricing.”

Now, with that all being said, there are some who think the pro-skills discourse has possibly gone a little too far, and that the operative question is now more about how to ensure people can properly deploy the talents they have with maximum impact. Phrased slightly more positively, one might argue that we’ve actually already done a lot to fix skills challenges in the UK, and now the main limiting factor on economic growth is more down to our inability to build things such as infrastructure or housing, to allow people to put their skills to good use. Sam Dumitriu has written persuasively about why he’s a ‘skills sceptic’ – and I’d urge anyone to look past the (I’ve no doubt deliberately provocative) headline, and take seriously what he has to say.

Either way, what I am sure we can all agree on is that skills matter, and we should never rest on our laurels when it comes to boosting them. Certainly, we won’t let up in trying to understand what works here, and duly do our best to pass on what we learn to Seema in her new role – and indeed her counterpart in government too.

Adviser Update

The Entrepreneurs Network, our Secretariat, published two reports on the subject of immigration. The first – mentioned above, and called Job Creators 2023 – looked at the founders of the 100 fastest-growing companies in the UK, and discovered that 39% had a foreign-born founder. While the authors say this shows the importance of immigrants to the UK’s startup scene, it is down from 49% when they ran the numbers back in 2019.

The second report, called Passport to Progress, explains how immigration can enhance entrepreneurship and innovation, analyses international visa frameworks, and makes a series of recommendations for improving migration systems worldwide.

Finally from The Entrepreneurs Network, they are partnering with Fragomen to host a private tour and drinks reception at the Migration Museum in Lewisham on the evening of the 26 September. There are still some places left, and you can email to request one.

Beauhurst published Exits in the UK: IPOs and Acquisitions 2013–H1 2023, which explores the stages at which companies are exiting, the format of exits taking place, and the strategies business owners currently have in place.

The EIS Association is gearing up to host a series of ‘Ready Steady Grow!’ events around the country, bringing together entrepreneurs, intermediaries, fund managers, financial advisors, and angel investors to raise awareness and undestanding of the SEIS and the EIS. Click here to find out where and when they’ll be taking place.

In Parliament

As noted at the top of the Digest, Parliament has only just returned from recess, but Members of Parliament in both Houses have lost no time in raising issues important to Britain’s entrepreneurs and innovators.

Science Secretary Michelle Donelan told the Commons that a deal had been reached to join Horizon Europe, which: “gives the best and brightest of the UK’s scientific community access to the world’s largest research collaboration programme.” She further added: “The deal we have negotiated has been warmly welcomed by the whole of the scientific community. It gives it the certainty it needs to continue delivering long-term research and innovation, and it will enable it to change people’s lives and have a truly global outlook. Members do not need to take my word for it; today’s announcement has been supported by Universities UK, the Russell Group, all four of our prestigious national academies, leading tech businesses, including Airbus and Rolls Royce, and countless more.”

Responding was the Shadow Cabinet Office Minister Nick Thomas-Symonds, who criticised the time it took to secure the deal, saying: “today’s announcement is long overdue. It leaves vital questions outstanding. What I have no doubt about is that our brilliant scientific community can rise to the challenges and make the best of the hand that they have been dealt.”

Greg Clark, the Chair of the Science, Innovation and Technology Committee then weighed in, saying: “Science does not recognise borders, and everyone wins when the best UK scientists can work with the best in the EU and around the world, so this is a huge and positive announcement and has been greeted with delight and relief not just by the science community in the UK, but across Europe and beyond. My Select Committee, the members of which are in the Chamber, will examine the deal in detail, but may I congratulate the Secretary of State, her Minister and the whole of the Government on what seems to be a shrewd agreement that, for example, allows us to win grants even beyond our own financial contribution?”

In business questions, Scott Benton asked: “would now be an opportune time to consider holding a debate on the estimated costs of net zero and how it will affect ordinary families in this country?”

Leader of the House Penny Mordaunt responded by stressing the importance of technology in meeting the country’s climate objectives, noting: “If we want to be successful in making this transition, and helping other countries to do so, we can do that only with technology, solutions and innovation that people will love and want to adopt, and that will make their bills cheaper and their lives easier. That is the only way we will be successful in meeting our environmental ambitions. I encourage him to apply for a debate, and to focus on not just the costs, but the value of innovation and how we can encourage British businesses to be at the forefront of it, and take their ideas and sell them to the world.”

In a debate on Artificial Intelligence, Luke Evans said: “It is great to hear that the international community will be coming to Bletchley Park in November to discuss the principles and core values when dealing with AI. Given that AI is moving so quickly, with the likes of ChatGPT already impacting things like the work of school kids, what more can the Government do to make sure each Department is taking full account of the impact of AI?”

Parliamentary Secretary for the Cabinet Office Alex Burghart responded by saying: “The Cabinet Office, which is home to the Government Digital Service and the Central Digital and Data Office, takes a lead role, along with the Department for Science, Innovation and Technology, in co-ordinating work within Government so that we can take advantage of the extraordinary opportunities AI presents and guard ourselves against potential disadvantages.”

Meanwhile, in the House of Lords, Lord Bilimoria spoke in a debate on a report from the COVID-19 Committee about how the pandemic had rapidly accelerated digital trends. He said: “A hybrid world is very beneficial. We are now living in that world, where we make the most of in-person interactions and the virtual interactions that the technology allows us, which we demonstrated throughout the pandemic. The problem is that we can have a truly good hybrid world only if it is truly inclusive and everyone has access and is able to use the technology and the internet. The reality is that at the end of 2019, before the pandemic, there were more than 600,000 premises that were unable to receive decent broadband. Of course, many of those were in rural areas. I ask the Government to confirm whether they have a target of 100% broadband coverage throughout the United Kingdom, and by when they hope to fulfil that.”