APPG for Entrepreneurship Digest: December 2023

With Christmas and the New Year looming into view, this month’s digest will take a look back at what we’ve been up to during the previous twelve.

In terms of published research, while we only put out one report this year – we think it was a good’un, and, we also like to think, one which played a small role in affecting a big policy change. Funding to Flourish was written by Aria Babu and Sam Dumitriu and made the case for tax reliefs on equity investment. It explained why and how the Enterprise Investment Scheme, the Seed Enterprise Investment Scheme, and Venture Capital Trusts have been so instrumental in supporting Britain’s startup scene, but argued that they were in need of reform to ensure they continue to have such a positive impact going forward. I won’t delve into all of the recommendations the report made here, but I will note that many were adopted by the Chancellor at his Spring Budget. And while it’d be wrong to claim complete credit for this – a broad coalition of voices had been arguing for the changes – we were very pleased to see it nonetheless, as were the 300+ entrepreneurs who signed our open letter on the matter, which was published in The Telegraph.

We’re currently plugging away on more research due to be released early next year. That’s on the topic of the sharing economy, in a follow up to a previous report we wrote on the subject. It’s a project being led by my colleague Derin, so do drop him an email if you have thoughts.

Carrying out research is just the tip of the iceberg as far as our work is concerned, however. Just as important is the convening role we’ve continued to play this year – acting as a bridge between politicians, business groups, and other relevant stakeholders. All throughout the year we’ve held regular virtual meetings to update on what’s going on in the entrepreneurship policy space – and given the changes we’ve seen, we’ve had no shortage of material to discuss. On that note, if you’re part of an organisation focusing on how to help entrepreneurs and want to get involved more closely with us in 2024, do please get in touch – there are plenty of ways to engage.

Some of the changes we have seen and duly dissected have been those to the very makeup of government. Earlier in the year a smattering of new departments were created, giving us plenty to make heads and tails of, not least the Department for Science, Innovation and Technology, which has assumed a lot of the overall responsibility for entrepreneurship policy. We’ve also had changes in personnel, with Cabinet and Shadow Cabinet reshuffles, and we’ve done our best to keep readers informed about what these mean for Britain’s startups.

Not to be outdone, we’ve also had changes of our own. We were glad to see our Chair, Seema Malhotra MP, appointed as Shadow Skills Minister back in September, and Bill Esterson made Shadow Roads Minister. Meanwhile, Bim Afolami MP was given his first Government job as Economic Secretary to the Treasury, and Saqib Bhatti MP got a gig as Digital Economy Minister. Sadly, this did mean the latter two had to step down from our ranks, but it did at least allow more space for new additions – Brendan Clark-Smith MP, Anna Firth MP, Virendra Sharma MP, Paul Howell MP and Ben Bradley MP all joined in June.

As we inexorably draw ever closer towards the next General Election, it’s only natural that party politics is ascendant. One of the main things we hope we’ve shown over the last year, however, is that there’s still plenty of room for productive, cross-party work on a range of matters – and, for the sake of Britain’s entrepreneurial ecosystem, it’s crucial that continues. Startups can’t always operate to parliamentary timetables, but they do need support and a voice. We’ll make sure we’re doing all we can to provide it.

Thank you to all of those who’ve read our newsletters over the last year, who’ve supported our research, and who’ve come along to our meetings. We look forward to another productive programme of work in 2024, but for now, I’ll wish you a Merry Christmas and a Happy New Year.

Adviser Update

Our Secretariat, The Entrepreneurs Network, is organising a meetup for its Advisers on 24 January 2024. It’ll be hosted with OakNorth, and you can learn more about it by clicking here.

Tech Nation’s Rising Stars competition is back and open for applications – with finalists getting the opportunity to showcase their businesses on the London Tech Week (LTW) stage. Click here to learn more. 

The Tony Blair Institute published a new report called the State of Compute Access: How to Bridge the New Digital Divide. It reviews national compute capacity around the world, covering 55 countries across 25 indicators. Read it in full by clicking here.

Extend Ventures released their new report Diversity Beyond Gender UK 2023, which offers a quantitative state of the nation for entrepreneurs who are diverse by ethnicity, gender, and educational background. Read it in full by clicking here.

And last but not least, Enterprise Nation published a report of their own. Time is money looks at how adopting technology can make businesses more productive. Read it in full by clicking here.

In Parliament

In a debate on the National Insurance Contributions (Reduction in Rates) Bill, Priti Patel argued that merging NICs and Income Tax “would simplify taxes for the entrepreneurs and self-employed even further,” adding that it would also “help to make payroll much easier for businesses, and allow them to co-ordinate income and revenue in a much more straightforward way.”

In a debate on the Autumn Statement, the Business Minister Kevin Hollinrake said that: “Although taxes pay for vital public services, this Government are clear that they must not stifle business owners’ ambitions. Quite simply, our economy relies on those ready to take risks and to innovate. Time and again, these entrepreneurs tell me that a simpler tax system would make life easier for them. This autumn statement will not just reduce tax but reform it, while putting more money into employees’ pockets.” He noted that: “The abolition of Class 2 National Insurance will save the average self-employed person £192 a year. Alongside the 1% reduction in the rate of class 4 national insurance, some 2 million self-employed people will be saving an average of £350 a year from next April.”

In a later debate, also on the Autumn Statement, Wendy Morton noted that: “We started our family business back in 1991,” they did so “with an enterprise allowance of £40 a week from the Government. It is not possible to make business risk-free, but it is possible to create the conditions that support entrepreneurs. SMEs are the real wealth creators of our economy, and in this, the week leading up to small business Saturday, I am proud to support those in my constituency.” While she welcomed tax measures in the Statement, she argued for “a cut in Corporation Tax from its current high rate of 26% to its former level of 19%. That, I think, would be another tool to lead us towards the growth that we all want to see.”

In a debate on breaking down barriers to opportunity, Rob Butler told colleagues that the: “Key to opportunity is the economy. That is the case for everyone, whatever walk of life they are in. Too many people sneer at the private sector and criticise the profit motive, but it is entrepreneurs who take the risks and make the investments, and businesses that create the jobs and generate the wealth. Without them, there would be no money to pay tax and therefore no money to deliver the excellent public services we all deserve and want.” He went on to say that: “We need to remove the barriers to growth if we are to remove the barriers to opportunity. That means reducing regulation, incentivising investment and lowering taxes, all in a fiscally responsible way. I am particularly pleased that the Government have committed to addressing the drivers of low growth over increasing the national debt.”

In a debate on exports and SMEs, Ashley Dalton asked Trade Minister Greg Hands how businesses can “have confidence in the Government’s support for SMEs when Britain’s export growth is among the worst of the G7 economies and is forecast to be falling.” Replying, Hands said his colleague was “a bit off on the data. When we look at export data, we see that we had £877 billion-worth of exports in the 12 months to the end of September 2023. We are heading towards the £1 trillion export target, and that figure is up by almost £200 billion—or 29%—on the figure from five years ago, which was before Brexit.”

Meanwhile, in the House of Lords, AI Minister Viscount Camrose said that the Government’s approach to regulating AI adopts “an adaptive model which puts us not behind anyone in regulating AI that I am aware of. It is an adaptive model, and as evidence emerges we will adapt it further, which will allow us to maintain the balance of AI safety and innovation.”