APPG for Entrepreneurship Digest: December 2022

To say the least, this year has been more turbulent than most. But as far as our APPG has been concerned, we’ve continued to do what we always do – championing entrepreneurship by producing high-quality research on the issues most important to Britain’s startup community.

We published our third and final report of the year last week. Supporting SMEs Successfully, which was kindly supported by Virgin Money, examines how well the government is doing with regards to helping SMEs to improve their productivity levels. 

Our headline finding is that policy is – pleasingly – pulling in the right direction and focusing on the right issues. But based on our conversations with experts and entrepreneurs, there’s room for improvement – and we make a handful of recommendations for what that improvement could look like.  

We were thrilled to launch the report in the House of Commons in front of a packed audience of policy experts, entrepreneurs and Parliamentarians. We’re especially grateful to Selaine Saxby MP, an officer for our APPG, and Chi Onwurah MP, the Shadow Minister for Innovation, Research and Digital, for giving two excellent speeches – praising the report and leaving us in no doubt that tackling Britain’s productivity puzzle is at the forefront of their, and their parties’, minds.

Below is a modified version of the speech I also gave on the night:

Over the last few months, we’ve spoken to countless experts, policy makers, and of course entrepreneurs themselves to understand where they think government policy for SMEs is working well, and where it could be doing better.

Because while we can point to some truly fantastic businesses in Britain, the fact remains that the UK fares dismally when it comes to productivity growth. As Bill Esterson MP points out in a foreword for the report, the UK is forecast to have the slowest economic growth in the G7 for the next two years, in large part due to poor productivity rates.

I urge you all to read the report in full, but if there’s one piece of information you take away from it, I think it should be this: from the 1970s up to the 2008 financial crisis, labour productivity grew, on average, by 2.7% a year. Since then, however, it has plateaued – down to a rate of just 0.5% a year.

This has left us less competitive – with the average worker here producing in a week what, to pick another country at random, a French worker can get done by the end of a Thursday. Though I guess we’ll find out on Saturday evening whether this holds true on the football pitch. [Editor’s note: so close, yet so far.]

Within all this, evidence suggests that small businesses in particular have been a drag on productivity growth. In fact, if we could even just close the gap between the least productive businesses and ones which are bang average, the country will be significantly better off as a result.

So that’s the bad news.

The good news, however, is that I think the government – and indeed as we’ve heard tonight its shadowing ministers – understands this. That’s encouraging, and the optimist in me likes to think it means there’s a real opportunity for cross-party action here. 

Our poor performance on productivity hasn’t been for want of trying either. As Chancellor, Rishi Sunak introduced two new schemes aimed at boosting productivity. The Help to Grow schemes were focused on areas where British SMEs seem particularly weak – in our management skills, and our rates of tech adoption. Our research heard plenty of positives about them. But few of the experts and entrepreneurs we spoke to thought they were working perfectly.

So in our report, we have made a series of recommendations about how they could be reformed to ensure that they’re performing as well as they can be. I won’t go through them all now, but what I will say is that the proposals we make are not necessarily radical or flashy. Most are actually quite small tweaks, which work with the grain of existing policy, to make a difference at the margin – rather than saying that we need to start everything afresh. 

As I mentioned earlier, the bulk of the ideas have come from talking directly with the very entrepreneurs they are designed to help, and it’s in their interest that the support on offer is consistent, clear, and durable.

You can read Supporting SMEs Successfully here, or get the tl;dr here. Virgin Money, who supported the research, run a programme – Levelling Upstarts – to help SMEs boost their productivity. If you’d like to learn more, get in touch with us here.

Friends of the Network

Emma Jones of Enterprise Nation met with the new Small Business Minister, Kevin Hollinrake, to present him with a copy of their Plan for Growth.

James Phipps and Rob Fuller of Nesta’s Innovation Growth Lab published a blog covering the latest from Business Basics and the Innosup experimentation fund.

Our friends at the Enterprise Research Centre have been busy, publishing papers on family policy and women’s entrepreneurship, and on well-being workplace practices within family firms. Tomorrow they will release a new episode in their Exploring Enterprise podcast series, looking back at the Autumn Statement and ahead to 2023. And if that’s not enough, they will also publish their State of Small Business Britain report for 2022 on 20 December – keep your eyes peeled for it. 

The Global Entrepreneurship Congress 2023 takes place in Melbourne next year from the 1st to the 4th May. There’s still time to register, by clicking here. 

In Parliament

Over the last month, entrepreneurship was mentioned a number of times in both Houses of Parliament. 

In his maiden speech, the Lord Leong said that: “It is those young entrepreneurs whom I will be seeking to encourage, develop and support, as it is they who will need to find innovative ways of delivering on the commitments made by today’s political leaders, not least on climate change, a heavy responsibility indeed, and one not necessarily of their making.” 

He went on to say: “I want to find ways to harness the creativity, passion and energy of our young people to enable them to become environmental entrepreneurs; to equip them with the skills they need to survive in the rapidly changing world of their future and to be as agile, responsive and nimble in running their businesses as the avatars in their virtual worlds; and to empower them to meet the environmental challenges, known and unknown, that they will face through their lifetimes and into the 22nd century.”

Also discussing technologies to tackle climate change was the Minister for Energy and Climate, Graham Stuart MP, who reminded colleagues of the: “Energy Entrepreneurs Fund, which provides small grants to developers of innovative energy technologies.” 

The former Small Business Minister, Dean Russell MP, asked the Leader of the House of Commons, Penny Mordaunt, if time could be made available to discuss small- and medium-sized enterprises, adding that: “It would provide an opportunity to see how we can support them through the procurement process, make sure the Government are hiring small businesses to deliver local government and Government needs, and ensure they can focus their time on transforming their business, not just filling out forms for their business.” Mordaunt replied positively, thanking him for raising the issue.

Back in the House of Lords, the Lord Leigh spoke in a debate on the recent Autumn Statement. He thanked the Chancellor for listening to “Real concerns from British entrepreneurs and investors in both public and private companies, who said that an increase in capital gains tax would have been a disaster for SMEs, which, as has just been described to us, are the engine of growth for our economy.”

And finally, in a debate on ‘Levelling Up Rural Britain’, Simon Hoare MP raised the importance of entrepreneurs and small businesses having adequate access to the people they need to function properly. While describing it as the “thorniest issue,” he asked: “Will the Minister make sure that, when the Home Office is sculpting immigration policy, over which we perfectly properly have control in this place, it has a focus on the needs of the rural economy, to ensure that farming, innovation and the entrepreneurs of our rural areas can create investment, make jobs, pay into the Exchequer, create the opportunity of aspiration, and therefore level up rural Britain?”