SME Policy Pitch

As the Secretariat for the APPG for Entrepreneurship, The Entrepreneurs Network is hosting a series of webinars to bring Parliamentarians and leading business owners together to explore what the future holds for start-ups and scale-ups post-COVID-19. 

In our latest APPG for Entrepreneurship session, we heard from a panel of small business experts who pitched their policy ideas to Small Business Minister, Paul Scully MP on how to support the economic recovery for the UK’s SMEs.

This session coincided with the launch of Upgrade, a new research report from The Entrepreneurs Network, commissioned by Xero on closing the digital gap and lifting productivity for SMEs. 

We heard an update from Small Business Minister, Paul Scully MP. We then heard pithy policy pitches from small business experts including Sam Dumitriu, Research Director at The Entrepreneurs Network, Irene Graham, CEO at The ScaleUp Institute, Gary Turner, Co-Founder of Xero UK and Dom Hallas, Executive Director of Coadec.

Here are some of the most thought-provoking insights from the session. You can view this on our YouTube channel.

Highlights & Insights from our Speakers

In his opening remarks, Paul Scully MP touched on the acute impact that lockdown has had on SMEs:

“76% of SMEs have seen a reduction in productivity of at least 13% and a significant decline in sales. 67% of SMEs have made less than 75% of their normal sales”

He also talked about some of the conversations which have been accelerated by COVID-19 including flexible working and digital take-up:

“We recognise the importance of rapidly improving utilisation and increasing adoption of technologies”

In the first policy pitch, Sam Dumintriu spoke about the digital revolution which has occurred since he started writing Upgrade. He started with startling statistics on the positive impact of digital take-up, not only for SME productivity but also the UK economy:

“If the UK was able to double micro-business uptake of key digital take including customer relationship management software, web-based accounting and cloud computing it would lead to a £16 billion boost to GDP”

He finished with some recommendations on how we could encourage SMEs to make the most of new technologies to improve their productivity:

“Businesses don't trust civil servants for advice on how to run their businesses. They fundamentally only really trust other business owners. Where possible the government should outsource advice to trusted business groups and fund that with support”

Xero UK’s Gary Turner stressed the importance of technology as a critical tool to help SMEs operate and plan for future disruptions:

“[COVID-19] has shown us that companies can put digital delivery at the core and will fare better in more circumstances when they do. Technology is a critical tool to help firms get, sell and operate online to be ready for future disruptions”

During his pitch, he made some key recommendations to help SMEs bounce back, including improving their financial situation, making it easier to access finance and closing the skills gap: 

“As the economy reopens and small firms look to rebuild. I believe that we must close the digital divide to help small firms bounce back more quickly”

Dom Hallas spoke about a survey Coadec conducted on R&D credits and discussed how a similar financial bonus could be used as a lever by the government to drive adoption of new technology:

“69% of tech start-ups we surveyed said that R&D tax credits were an important part of their cash flow and survival”

He pitched a tax credit for SMEs who use technologies that have been proven to increase productivity:

“If providers could prove that [a] technology solution genuinely improved productivity… they would be eligible for a tax credit”

In the final policy pitch Irene Graham of the Scale-Up Institute spoke about the importance of peer-to-peer networks and opening up data to help connect SMEs to the broad initiatives that government and the private sector have:

“We have run some really interesting pilots using the data that HMRC have in really targeting and connecting businesses into what is available”

Questions & Recommendations

During the Q&A session, we touched on a range of key issues. 

One attendee spoke about the challenges that the self-employed have faced accessing support schemes during COVID-19 and asked Paul Scully MP what the government is doing to address these gaps?

Paul Scully MP spoke about some of the government support schemes that have been designed to support the self-employed, including the Bounce Back Loan scheme, and addressed concerns that the self-employed are falling through the cracks. He reassured the audience that the government is aware of these issues.

Another attendee spoke about data transparency in the US for loans that have been taken out during COVID-19 and asked whether the UK could embrace the same level of transparency?

Paul Scully MP noted that the British Business Bank hasn’t been advised as of yet to release data on the businesses that have taken out Bounce Back loans but that they are looking at ways they can share this information.

Irene Graham added to this, speaking about the opportunity to use data to create more transparency on Bounce Back loan lending and the opportunity to also look at ways this could be done in the future in other sectors. 

Gary Turner spoke about the importance of improving and enriching data from a capital perspective. He addressed some of the issues that SMEs have faced during COVID-19, including applying for Bounce Back loans with outdated records. He stressed that open data is an important part of the journey to enriching company data.

One attendee asked how the government could address the issues that SMEs face tendering or obtaining contracts to sell their products and services to government funded services, like the NHS.

Paul Scully MP spoke about the government's plans to address these concerns. 

“In terms of government procurement, we are trying to make it easier for SMEs to access government contracts and government tendering”

Irene Graham responded speaking about how data could be used by government-funded services, like the HMRC to pinpoint SMEs that would be best placed to address and provide their goods or services.

An attendee queried whether universities could be doing more to educate and support SME owners on using technology to improve their businesses. 

Paul Scully MP agreed that it would be great to embed these types of programmes in universities. He spoke about initiatives like BeTheBusiness and suggested that advice could be filtered through Growth Hubs to link up with universities and SMEs better. 

Sam Dumintriu spoke about a study which identified the value of doing a health check on your business. He suggested that it could be valuable for people like accountants to give more support to business owners to identify potential opportunities and improve productivity.

One attendee asked how young tech-savvy people could be connected to SME owners to help improve their productivity.

Gary Turner suggested that there should be initiatives to connect unemployed tech-savvy people with SMEs to help manage their online activities. 

Sam Dumintriu agreed that it is important to support these initiatives and gave an example of a project being funded by Nominet, which was identified in Upgrade, that pays young people who are out of work to do short-courses and have placements with SMEs. 

Another attendee touched on the previous question and asked what kind of hubs were out there to connect SMEs with young people.

Paul Scully MP spoke about the importance of ensuring that government-sponsored hubs provide SMEs with quality advice:

“My challenge that I have set myself is to make sure that business advice and support on digital is consistent across the 38 Growth Hubs”

The speakers finished with some closing remarks. In his closing remarks, Gary Turner stressed the importance of improving SME productivity to create future job opportunities:

“Future employment is not going to come from big business or government, it is going to come from the SME community”

We will have more APPG for Entrepreneurship webinars coming up after recess. If you are interested in finding out about these, you can sign up here.