APPG for Entrepreneurship Digest: March 2023

With the Budget taking place tomorrow, this month’s newsletter is hitting your inboxes a day earlier than usual. 

As is the case ahead of any fiscal event, a long list of individuals, charities, private companies, and trade associations have been doing their best to draw the Chancellor’s attention to the specific issues close to their own hearts. And we’ll admit to doing a little on that front ourselves. 

At the start of the month, we launched our latest report – Funding to Flourish – which made the case for tax reliefs on growth investment. Our headline policy ask called on the Government to lay the necessary legislation to extend and enhance EIS, SEIS and VCTs, which entrepreneurs tell us time and again are critical to the success of their business. (In fact, The Entrepreneurs Network, our Secretariat organisation, published an open letter of over 300 entrepreneurs backing the report’s chief recommendation – which you might have seen reported in The Telegraph.)  

We don’t know for sure whether Jeremy Hunt himself was thumbing through a copy of our report, but we certainly took encouragement from a letter he wrote last week to Harriett Baldwin, Chair of the Treasury Select Committee, in which he said it was the Government’s: “firm intention to extend [the schemes] beyond the current sunset on 6 April 2025.” Further details, he added, will be published: “in due course and in good time.” 

And this isn’t to claim any more credit than we strictly deserve. Countless different groups have made similar pleas of late – something which only serves to underscore the breadth and depth of support for these schemes, and their importance to the startup ecosystem. 

Elsewhere, others have been busy setting out what else they want to see from the Chancellor when he stands at the dispatch box. 

One issue that has been bubbling away since the Autumn Statement last November is the future of R&D Tax Credits. Form Venture’s Leo Ringer declared it to be “*the* item to watch out for”, while Coadec released the results of a survey of over 250 startup founders about the planned changes. Though the respondents were self-selecting, the results nonetheless make for uneasy reading: 97%  agreed with the statement: “I expect the cuts to severely impact my startup”; 89% strongly agreed with the statement: “If the cuts go ahead as planned I believe the UK will be made significantly less attractive to startups and investors”; and 93% agreed with the statement: “I am concerned that the cuts will impact the growth trajectory of my business.” Altogether, the median figure startups expect to lose annually was £40,000, and the mean figure was £100,363. 

A focus on business investment is another key subject of discussion. Nobody doubts the UK has underperformed for years on its record of investment. Half a decade ago, we published research calling for reforms to the Annual Investment Allowance to boost business productivity. And now there are widespread worries that the coming changes to the tax landscape will only make matters worse. Numerous groups since then have echoed our original calls – not least the CBI, who are asking for the Chancellor to introduce full expensing as a replacement for the super-deduction. In a recent interview, Hunt seemed to suggest that good news may be on its way – with the Chancellor rightly noting that it is the effective, rather than the headline, rate of corporation tax that should be the operative focus. 

A further perennial challenge for startups (and indeed virtually all businesses), but one that is hitting particularly acutely of late, is access to talent. Addressing skills shortages can take many forms, and the Chancellor looks set to take a multifaceted approach – with reforms to childcare and measures to encourage over-50s and benefit claimants back into the labour market already being trailed. 

One way of meeting firms’ needs is through attracting overseas workers. Following last year’s Autumn Statement, much was made of Hunt’s proclamation that immigration will be: “very important for the economy” – although chatter in the run up to this Budget about potential reforms has been relatively muted. (Some groups, for instance UK Hospitality, have nonetheless suggested small changes – such as scrapping the Immigration Skills Charge – to plug current skills gaps.)

It’s easy to spend too long pontificating about exactly what to expect for any Budget (my apologies for making you read until this point to say so). Nonetheless, it does feel as if this is a particularly important one for entrepreneurs and the entrepreneurial community – especially following the collapse of Silicon Valley Bank. 

Many founders will no doubt be watching tomorrow’s statement closely. Given recent turbulence, it’s tempting to say that a good Budget will be a boring Budget. But we shouldn’t use that as an excuse to mask the fact that our country’s innovators continue to face hurdles. Policy change to support them doesn’t have to mean revolution – and there are lots of areas where even minor tweaks could pay big dividends. 

** Be sure to follow our Secretariat organisation, The Entrepreneurs Network, on Twitter for their immediate reaction about what the Budget means for entrepreneurs, and sign up to their Friday newsletter to catch their more developed analysis by clicking here. ** 

Adviser Update

On Thursday 16 March, The Entrepreneurs Network is partnering with the Small Business Roundtable, Enterprise Nation, Intuit and Federation of Small Businesses on the Entrepreneurship Exchange 23 – which will bring together small businesses, entrepreneurs, government leaders, and subject matter experts from across the globe. You can find out more and register by clicking here.

Then, on Wednesday 22 March, they are hosting another roundtable to launch a forthcoming report written in partnership with Enterprise Nation, looking at SMEs and international trade, with Mark Garnier MP – Member of the International Trade Committee – as the guest speaker. You can request a place by clicking here.

To celebrate the launch of our aforementioned report on growth investment, we are hosting an event on Wednesday 19 April in the House of Lords. You can request a place by clicking here.

The Centre for Entrepreneurs is hosting its 6th annual Incubator and Accelerator Network conference. Learn more and register to attend by clicking here.

The ScaleUp Institute launched the 2023 edition of their Female Founders Index. Read all about it by clicking here.

In Parliament

On 7 March, the still relatively new Science, Innovation and Technology Secretary Michelle Donelan led a debate on the Science and Technology Framework which was published the day previously. She told the House of Commons that her Department’s: “work is based on improving people’s daily lives in ways they can feel and see around them,” and that the Government is: “both reactive and, crucially, proactive when it comes to science and technology, to ensure that we can be a superpower by 2030.”

Shadow Minister for Science, Research and Innovation Chi Onwurah said: “It is good to see the Government setting out the principles for identifying the scientific capabilities that we need to protect and grow, and the outcomes that we wish to see from science, as well as seeking to increase STEM skills in teaching and support for start-ups and spin-outs.” But she also added: “I fear that this framework is another wish list designed to be shelved or scrapped at the earliest convenience of a Government addicted to sticking-plaster policies.”

Last Wednesday was International Women’s Day, with tributes made across a variety of issues – not least those praising successful female entrepreneurs. In the House of Lords, Baroness Scott highlighted the Government’s record on promoting female entrepreneurship, telling colleagues about the: “considerable decline in the gender pay gap, which over the last decade has fallen from 19.6% to 14.9%, with the percentage of women in employment going up from 66.5% to 72.3%.”

In the House of Commons, Labour Members of Parliament used the moment as a chance to speak about their plans to bring in a requirement for large companies to publish and implement a “menopause action plan.” The Shadow Secretary of State for Women and Equalities Anneliese Dodds said that: “Many businesses have welcomed that measure, but so far the Government have not yet adopted it”, before adding: “The nodding of the Minister on the Front Bench leads me to hope that they may do so.” 

The Genetic Technology (Precision Breeding) Bill seeks to better regulate novel techniques aimed at, among other things, increasing crop yields. In the House of Commons, former Environment Secretary Theresa Villiers asked whether the Farming Minister Mark Spencer believed the Bill could: “release vital technological innovation” – to which he responded: “of course”. Meanwhile, DUP MP Jim Shannon also praised the Bill for the possibilities it could unlock in improving animal welfare, by preventing and protecting against diseases – to which the Minister replied: “The Government are committed to maintaining our already high animal welfare standards and we want to improve and build on that record.”