APPG for Entrepreneurship Newsletter: July 2026

In the coming weeks, Andy Burnham will almost certainly enter Number 10 as Prime Minister. He will bring with him a philosophy for government — Manchesterism — forged during his time as the Mayor of Greater Manchester. One of his first proposals has been for a ‘Number 10 North’ which he has said would be the “nerve centre for a rewired Britain”, overseeing devolution of power and resources across the UK.

Britain is one of the most centralised economies in the developed world. The National Institute of Economic and Social Research found the gap in living standards between London and the North East widened from around £4,600 to £7,300 per household over the levelling-up agenda (2019–2023). It’s clear that regional inequality is a huge challenge and there has been a cross-party consensus to tackle this across successive governments.

At the heart of this is the concept of agglomeration. That’s the productivity gains that come about when firms and workers cluster together, share infrastructure, match skills to jobs and exchange ideas.

Devolutionists argue Britain suffers an agglomeration deficit outside the capital. Almost uniquely among developed economies, size fails to translate into productivity in Britain’s big cities. The Centre for Cities has calculated that the national economy is 8.8% smaller because cities such as Birmingham and Manchester lag behind international peers such as Lyon and Frankfurt. It argues this is down to constraints such as density, transport and skills, which only city-level decision-making can fix. In European cities, two-thirds of suburban residents can reach the centre by public transport within half an hour; in Britain, only two in five can.

Sceptics, however, argue that agglomeration is not self-executing. London’s prosperity over the past century tracked national policy far more closely than local governance, and a recent evaluation of the 2017 mayoral devolution deals found no faster-than-expected growth, with any gains skewed towards already-wealthy districts. From this perspective, clustering describes where growth happens but it doesn’t tell you how to create it.

That’s why some believe that Manchesterism may prove difficult to replicate. The city’s strong economic performance rests on advantages that existed before Burnham became mayor — such as a scale that makes agglomeration beneficial and the Oxford Road Corridor (Manchester’s Knowledge Quarter). Many places Burnham will want to grow lack the scale and such high-density clusters. Even in Greater Manchester, economic prosperity has clustered around the city’s core, and the £1 billion Good Growth Fund is an admission of sorts that spillover effects were not reaching all ten boroughs unaided.

Alongside this, a key lesson from recent years is that devolution does not deliver for working people when authority, money and capability lie in different places. The competitive funds of the levelling-up era produced what the Public Accounts Committee referred to as a ‘begging bowl culture’ with bids costing councils around £30,000 each, while only about a quarter were successful.

The devolutionists have a comeback to this. If agglomeration is merely a symptom, why do Lyon, Rotterdam and Frankfurt thrive without being their nations’ capitals? For them, Britain’s single-engine economy is a policy failure rather than being down to London’s economic gravity. The solutions they propose are around trams, density and fiscal powers in the cities themselves. Fiscal powers may be the most telling of these three. Wherever decisions are made, almost no one in the system is rewarded for pro-growth ones. Local governments have little financial stake in the growth of their own economies.

There are really two kinds of devolution on offer. One hands money in the hope that local knowledge makes for better decisions. The other lets places keep the proceeds of growth — and bear the consequences of failure. Only the second changes incentives, and it is the harder sell. Letting places keep the proceeds of growth also means letting them diverge, and fears of a postcode lottery are the likeliest barrier.

APPG AGM — Monday 13 July 2026

The APPG for Entrepreneurship will hold its AGM on Monday 13 July, at 2pm, in Room Q, Portcullis House. Any Peers or MPs who would like to get involved with the group are warmly invited to attend. The formal business is brief, but there’ll be time afterwards to discuss priorities for entrepreneurship policy in 2026. If you can’t join in person let Philip Salter at philip@tenentrepreneurs.org.

Frequent changes to R&D tax relief have eroded trust

Confidence in the R&D tax relief system has been eroded by years of near-constant reforms. That’s one of the key findings from an evidence session we hosted on R&D tax relief earlier this year. These include the merged RDEC scheme, new filing requirements, reduced SME rates, overseas restrictions and the 30% intensity threshold all landing at once. That has been compounded by an aggressive compliance posture from HMRC.

Founders said the result has been a chilling effect. Some legitimate claimants are abandoning the scheme, as a relief designed to incentivise innovation is increasingly treated like a balance-sheet risk to be managed.

Specific failures were highlighted in this session. Advance Assurance is often least available where it’s most needed, such as for repeat claimants and large programmes. Retrospective investigations can drag on for years before ending in near-total vindication at huge cost. HMRC caseworkers lack sector expertise, which is a contrast to some international contexts, such as Canada’s specialist-led model. Founders also noted that the intensity threshold’s cliff edge distorts investment decisions.

Participants stressed the relief remains vital. R&D tax relief is structural to life sciences and key to retaining R&D talent, but constant changes are undermining it. The outcome was a familiar one. Entrepreneurs need more stability and confidence in the system.

Advisory Board Update

Latest news, research and events from our Advisory Board

The Entrepreneurs Network will be bringing together entrepreneurs for No Agenda Breakfasts on 23 July and 27 August. These monthly roundtables give a small group of entrepreneurs the space to talk openly about the issues they’re dealing with.

The Centre for Entrepreneurs (CfE) will be sharing their thoughts and insights on the current state of the UK’s start-up incubator and accelerator landscape. Join them at 08:30 on Wednesday, 15 July, in Central London to learn more from Tim Barnes and Dr Chris Haley, who

will be joined by a selection of ecosystem players, CfE partners and representatives of Innovate UK. Register here.

New research from Tech Hub — a partnership between Enterprise Nation, Google, Sage, Dell Technologies and Square — finds that just one in five British small businesses use AI regularly, despite over half now calling themselves highly or moderately digital. One-person businesses lag furthest behind, at a third versus two-thirds for larger firms. This research was launched at 11 Downing Street during London Tech Week, with a keynote from the Chancellor, Rachel Reeves. You can read the full findings here.

The latest Spotlight on Spinouts report is out from the Royal Academy of Engineering. It finds that UK university spinouts have nearly tripled in value to £49 billion since 2020. You can read more about it here.

The British Chambers of Commerce has just released its latest quarterly economic survey. Its main finding is that the proportion of firms planning to increase investment has fallen to its lowest level since the pandemic. Find out more here.

The Campaign for Science and Engineering has shared its views on what it believes Andy Burnham’s approach to research policy will be.

In Parliament

Questions and comments relating to entrepreneurship this month

The Chair of the Science, Innovation and Technology Committee, Chi Onwurah, urged the Ministry of Defence to support British start-ups and scale-ups in the procurement process:

“Will my right hon. Friend reassure me that the Ministry of Defence is capable of innovatively procuring innovation, with the support of our nation’s start-ups and scale-ups, rather than focusing on the bureaucratic long-term processes?”

She also raised the issue of the procurement process in relation to the NHS:

“The NHS spends £27 billion a year buying stuff that should be helping to give British patients access to innovative treatments, guaranteeing high-tech start-ups and scale-ups their first contract, and enabling clinical trials and exciting new drugs. However, in evidence to the Science, Innovation and Technology Committee, we have heard that bureaucratic processes and a culture of inertia mean that adoption is far quicker in the US, for example.”

Alan Mak questioned the impact of the reduction in Venture Capital Trust Income Tax Relief, to which Treasury Minister Rachel Blake said:

“At the Budget, the Government announced a comprehensive package of entrepreneurship tax measures, designed to provide substantially enhanced support for scaling businesses across the UK. That includes doubling the maximum amount that a company can raise through the enterprise investment scheme and the venture capital trust scheme. Overall, the changes to those schemes are forecast to generate about £100 million per year of additional investment in high-growth, scaling companies, thanks to the increased scheme limits in the Budget.”

Richard Fuller pressed the Government on microfinance and its use in financial inclusion:

“What assessment have the Government made of the use of microfinance platforms targeted at young people, to enable them to take the first steps in building up a credit record or potentially being small-scale entrepreneurs—another great thing that young people could do?”

Our Member Lord Kamall explained the importance of microfinance to entrepreneurs and urged the Government to encourage its practice:

“I am disappointed not to see an explicit reference to microfinance, which in the UK we call community development financial institutions, or CDFIs—non-profit, community-based organisations that offer financial support and credit to individuals and financially excluded entrepreneurs who otherwise might turn to payday lenders.”

Minister for Small Business Blair McDougall launched the small business regulatory taskforce, tasked with developing recommendations to reduce regulatory burdens faced by small and medium-sized enterprises, including microbusinesses. He said:

“I am committed to ensuring the Government provide the best assistance to those brave enough to start a business and it is only right our regulatory environment supports entrepreneurs.”

Looking Forward

Consultations and calls for evidence from government departments and Select Committees

Department for Business and Trade — Make Work Pay: misuse of non-disclosure agreements (NDAs) (Deadline: 8 July 2026)

Industry and Regulators Committee — The relationship between the Government and the defence industry (Deadline: 21 July 2026)

HM Revenue & Customs — Timely Payments in income tax Self Assessment (Deadline: 4 August 2026)

HM Revenue & Customs — Requiring payment of VAT and PAYE return liabilities by Direct Debit (Deadline: 16 August 2026)

Department for Business and Trade — Make Work Pay: ending one-sided flexibility – reforms of zero hours and similar contracts (Deadline: 25 August 2026)

Department for Transport — Automated vehicles: statement of safety principles (Deadline: 9 September 2026)

HM Revenue & Customs — PAYE Settlement Agreements — call for evidence (Deadline: 15 September 2026)

Department for Business and Trade — Make Work Pay: holiday pay compliance and enforcement (Deadline: 22 September 2026)

Office for Product Safety and Standards — Toys safety regulations: call for evidence (Deadline: 6 October 2026)