APPG for Entrepreneurship Newsletter: August 2025

Prosperity has many parents, but perhaps one of the most important variables for long-run economic growth is a competitive business environment. When firms are forced to vie for customers, their standards increase, product offerings widen, and costs fall.

Competition, too, comprises a range of determining factors. How easy or difficult it is to establish a business, however, must surely rank as one of the more consequential. While it would be wrong to simply equate competition as a measure of how many firms there are in any given market, as a rule of thumb, anything that makes it easier for new businesses to start up and begin challenging incumbents is probably going to be a good thing.

Here in Britain, we can pat ourselves on the back for doing a reasonably good job at fostering conditions that are conducive to people starting new companies. Excluding micronations, Britain ranks third after only Estonia and Hong Kong in terms of new business density, and we have much higher total early-stage entrepreneurial activity rate than many other European countries and comparator economies like Japan or Australia.

Important as it is for competition that entrepreneurs can launch startups, it counts for little if they are unable to stay above water and grow into productive businesses. Industry incumbents will not necessarily feel the invisible hand of competition on their shoulders if challengers stand little chance of maturing into serious threats.

Successive governments have long tried to make life easier for entrepreneurs to start small businesses and ensure they can fulfil their growth potential. The latest endeavour in this mission was the publication last week of the Small Business Strategy.

Sixty-two pages long and accompanied by annexes for the evidence underpinning it and the policies it sets out, the Strategy leaves little ground uncovered – from access to finance, to skills provision, to regulatory reform, to action on late payments, to our approach to international trade. It’s beyond the scope of this single newsletter to comprehensively cover off on all of the pledged policy changes, but a few stand out as worthy of closer inspection – particularly those that are of most relevance to the sort of high-growth potential startups that we index towards as an APPG.

Access to capital. One of the Strategy’s headline announcements was that more funding would be made available for Startup Loans, and the eligibility criteria would also be expanded. An estimated 69,000 more loans will be issued over the next four years thanks to this measure. Last year the British Business Bank published an evaluation of the Start Up Loans scheme, which found that recipients experienced higher survival rates than comparator businesses, as well as higher growth in both assets and employment.

One category of startups that can particularly struggle to get the capital they need is those whose business models are based on intellectual property. This is because unlike a factory or machinery, intangible capital like ideas, brands and processes are harder to secure lending against. Solving this challenge has preoccupied economists for some years, and now the Government is throwing its weight behind efforts to find a solution. It promised to “work closely with industry, financial institutions, and regulators to address regulatory and non-regulatory barriers to lending to IP-intensive SMEs,” and noted that: “the British Business Bank and the Intellectual Property Office (IPO) will explore how to best support lending to IP-intensive firms and encourage new IP-backed lending products. We will publish an update on this work and the next steps by the end of the year.”

Access to skills. Even with the right capital in place, small businesses can’t grow without the right skills to take advantage of it. At a time when technologies like artificial intelligence show promise of radically reshaping labour markets, it’s critical that workers have the capabilities to turn that transformation into a positive rather than a negative. In the Strategy, the Government promised to introduce short courses designed in partnership with Skills England, which will also carry out an authoritative assessment of national and regional skills needs.

To complement home grown skills, the Strategy also acknowledges the fact that small businesses also require international talent – and to that end lists a series of ways the Government will work to simplify visa routes for highly-skilled individuals who wish to contribute towards growing Britain’s economy,

Access to government. Recent years have seen considerable changes with respect to making it easier for small businesses to sell into government. To double down on the steps taken in the Procurement Act 2023, the Government will: “launch an SME Procurement Education programme to equip SMEs with the knowledge and tools to navigate the new procurement landscape, enhance their competitiveness, and increase their chances of securing public sector contracts.” It also noted that it has been piloting a system of new AI tools to quality assure statements of work and provide better feedback to small businesses, which should help entrepreneurs when bidding for public contracts. The first tool is due to be rolled out in Autumn 2025.

Access to markets. As well as selling into government, selling overseas can also be a vital way for small businesses to grow. There is strong evidence of the productivity gains that firms can make when they begin exporting, too. Another of the Strategy’s headline intentions is to facilitate more international trade from Britain’s small businesses. As well as seeking dedicated ‘SME chapters’ in future trade agreements, the Government will aim to increase the number of small businesses that receive UK Export Finance (UKEF) to 1,000 SMEs per year by 2029. To help do this a new, more efficient and accessible Export Insurance Product has been launched, and UKEF’s overall capacity will increase by £20 billion to a total of £80 billion.

Research Request

We’re working on our latest project – compiling an ‘A to Z of Entrepreneurship’ to demystify key concepts, jargon and policies relating to entrepreneurship. Think ‘A’ for Accelerators, ‘B’ for Business Asset Disposal Relief, or ‘C’ for ‘Companies House’.

We’re crowdsourcing ideas for each letter, so if you think there’s something in the world of entrepreneurship that needs to be explained better, do get in touch – we might even ask you to write it up for us.

Adviser Update
Latest news, research and events from our Advisers

The Enterprise Investment Scheme Association is hosting a string of events up and down the country as part of its Ready, Steady, Grow 2025 series. Find out where your closest one to attend is by clicking here.

The Campaign for Science and Engineering released a report mapping the economic returns of R&D, and also analysed how public investment in R&D is divided up.

The Entrepreneurs Network published a report looking at how government-backed support schemes for startups – like accelerators and incubators – could be made more effective. Read it in full by clicking here.

In Parliament
Questions and comments relating to entrepreneurship this month

In a Lords debate on the Employment Rights Bill, Lord Pitkeathley said:

“AI is happening, regardless of how we feel about it, and the opportunity it provides makes it all the more important that firms are based and regulated here rather than elsewhere. Jobs in this area tend to be highly skilled and well paid, but that does not mean workers do not need some protections. In many cases, the things that matter most are not issues such as minimum wage and paid leave but how easily people can move between companies, start their own ventures and work across several fast-growing enterprises. Here, it is non-compete agreements which pose a particular challenge. Understandable concerns over safeguarding intellectual property have led some firms to restrict employee movement, yet this comes at a cost to innovation, competition and the free flow of ideas that underpin these industries. I know the last Government carried out a review of these clauses in general terms, but no meaningful reform followed. Does the department have a view on how widespread these clauses now are, particularly in fast-moving and competitive sectors? Has any formal assessment been made of their impact on innovation, start-up activity, and people’s ability to move freely and fairly between roles?”

In the same debate, Lord Moynihan said:

“Platform employers are investing hundreds of millions in their activities per country, per platform employer, in other countries around the world, yet are not doing so here in the UK. One platform company recently contacted me to say that they had withheld £170 million of investment from this country precisely because of this Bill and the threats it imposes on it. We are falling further and further behind other modern economies, and it is precisely because of ever-increasing taxes and regulation, and the threat of more to come, from this and future mooted Bills. Removing the middle-stage worker status would both increase unemployment and deter further inward investment.”

Speaking in a debate on the Pension Schemes Bills, APPG for Entrepreneurship Member Callum Anderson MP said:

“The UK has long needed catalysts for a modern economic renaissance. The Government have taken important first steps through their industrial and infrastructure strategies, the artificial intelligence opportunities action plan and the reforms of our planning system, but the common ingredient that is required to ensure their success is a reliable source of long-term capital. Even a modest rebalancing of that £3 trillion could unlock billions in investment for domestic growth. In real currency that our constituents can understand, that means investment in digital, physical and social infrastructure, and it means greater opportunities for entrepreneurs to not only start up businesses but scale them into something globally consequential, providing better jobs and higher incomes for families throughout the country.”

When debating Primary Stock Exchange Listings, Baroness Bowles said:

“In addition to the pull of US investors, does the Minister recognise that there are push factors making the UK a hostile environment for innovative, high-tech growth companies? There are neither public nor private sector customers, as the chair of GSK told our Science and Technology Committee recently. Excessive government retention of IP exploitation rights in procurement and grant contracts undermines companies’ growth prospects. We are 45 years behind the US, which ended such emasculating IP contract terms in the Bayh–Dole Act, leading to the boom in revenue-producing high-tech companies and university spinoffs. Will HMT put its weight behind the economic benefit and long-term value for money that growth-friendly licensing contracts would have? Will the Minister meet to discuss these and how the UK can get its own Bayh–Dole effect?”

In a debate on London’s contribution to the national economy, Danny Beales MP said:

“There is a growing view that London should take a back seat in investment compared with other parts of the economy, but that is a false economy. When London grows, other regions grow too. The links between regions and nations in the United Kingdom are clear in terms of jobs, tax revenues, exports and supply chains. I remember being the cabinet member for the economy and regeneration in Camden for seven years, when I was involved, to my pleasure, in the knowledge quarter developing around life sciences, tech and AI, with huge multinational businesses, spin-outs and start-ups. It was not just a story about the growth of London and King’s Cross; businesses there were connected to the Cambridge and Oxfordshire arc, and places such as Leeds and other northern cities. Growth in the knowledge quarter benefited the whole UK economy. That is true of so many of London’s economic growth clusters.”

Looking Forward
Consultations and calls for evidence from government departments and Select Committees

Joint Committee on Human Rights – Human Rights and the Regulation of AI (Deadline: Friday, 5 September 2025)

Cabinet Office – Public Procurement: Growing British Industry, Jobs and Skills - Consultation on Further Reforms to Public Procurement (Deadline: Friday, 5 September)

Science, Innovation and Technology Committee – Innovation and global food security (Deadline: Sunday, 7 September 2025)

Competition and Markets Authority – Draft guidance for businesses on price transparency (Deadline: Monday, 8 September 2025)

HM Treasury – Financial Services Sector Strategy: Regulatory Environment - Cross-Cutting Reforms (Deadline: Tuesday, 9 September 2025)

Business and Trade Committee – Financing the real economy (Deadline: Friday, 12 September 2025)

Financial Services Regulation Committee – Growth of private markets in the UK following reforms introduced after 2008 (Deadline: Thursday, 18 September 2025)

Office for Digital Identities and Attributes and the Department for Science, Innovation and Technology – Adoption of trust services: call for views (Deadline: Saturday, 20 September 2025)

Cabinet Office – Consultation on the NSI Act Notifiable Acquisition Regulations (Deadline: Tuesday, 14 October 2025)

Department for Business and Trade – Late payments: tackling poor payment practices (Deadline: Thursday, 23 October 2025)