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?”

APPG for Entrepreneurship Digest: November 2022

November heralds the start of a frenzied flourish of activity, bringing together millions of people drawn from around the world, with only one thing on their minds. No, I’m not talking about the FIFA World Cup – but the 15th year of the Global Entrepreneurship Network’s Global Entrepreneurship Week. Kicking off next Monday (14th), GEW describes itself as: “a massive campaign to celebrate and empower entrepreneurs in every country and community around the world – especially those individuals who face structural barriers or may have never considered the idea of launching their own startup.”

GEW will prioritise four themes this year – education, ecosystems, inclusion, and policy. From our perspective at the APPG for Entrepreneurship, we’re delighted to see each of these being plumped for – given how closely they map onto our own interests.  

Education was the subject of one of our most recently published reports. In Entrepreneurship Education, we drew attention to how teaching the skills necessary for preparing the next generation of successful entrepreneurs is not properly integrated into the English curriculum. It also noted the confusion over where responsibility for this sits within government, either BEIS or DfE – and how links between the two departments on the matter are “tenuous at best.” 

Entrepreneurialism may seem like a trait people are either born with or not, but study after study suggests that even small interventions early on can instil an innovative spark and equip younger – and even not so young – people with the tools and mindset necessary to start and build a successful business.

GEW refers to ecosystems as the communities, networks and markets that underpin enterprise. We echo the importance of all of these. In our last report, Space Startups and Scaleups, we looked at the burgeoning community of entrepreneurs working in that most cutting edge of industries – the UK’s space sector. We made a series of recommendations which would cultivate the space ecosystem, from lowering barriers to immigration so that firms could more easily and more cheaply bring in the talent they need (networks are nothing if not living and breathing people), to changing how the government purchases space technologies (in other words, opening up the huge ‘market’ that is public procurement). 

Inclusion is, again, a primary focus for us too. If swathes of the population are arbitrarily excluded from entrepreneurship – whether by dint of race, background, or gender – it shouldn’t be surprising if the economy is less fruitful than it otherwise could be. Our work on this can be seen most obviously in our Women in Leadership report, which not only argued for increasing the number of women-owned businesses, but also for raising their performance and growth potential. To achieve this, we identified solutions such as lowering the cost of childcare to allow mothers to return to work more quickly, and tackling STEM drop-off rates. 

Our secretariat organisation, The Entrepreneurs Network, has also worked tirelessly over the years through its Female Founders Forum to advocate for women-led businesses – as well as shining a spotlight on how to empower entrepreneurship among Britain’s most socio-economically disadvantaged communities.

With respect to policy, this is frankly something which cuts across just about everything we do. More than simply drawing awareness to challenges various entrepreneurs face – itself an important job nonetheless – our APPG exists to champion specific policy changes which the government could implement to actively improve the business landscape entrepreneurs find themselves in. Despite the turbulence Westminster has seen of late, we will continue to put forward practical, evidence-based policies that we think everyone with an interest in seeing British entrepreneurs succeed can get behind.

GEW might just be a week-long thing, but the importance of such initiatives can last a lifetime. If an individual is inspired to become an entrepreneur off the back of attending an event, that can only be a good thing. We’re looking forward to seeing the ideas that come out of GEW – and hope that some of our own thinking finds its way into the multitude of discussions and debates that will be had over the week. If you’d like to find out more about GEW, just click here – and GEW events happening in the UK can be found here.

Friends of the Network

Our friends at Enterprise Nation have published a piece of work looking at the impact of mentoring on UK businesses. In Mentoring Matters, they note that 66% of SMEs they surveyed who had accessed mentoring agreed that it was crucial in helping their business to survive, while 76% agreed that mentoring was vital to their business’s growth.

Meanwhile, the Centre for Entrepreneurs and Founders Forum Group have launched a new partnership to support entrepreneurs at every stage, and will be working together on new research projects and events. You can find out more here.

The CBI is hosting its Annual Conference 2022 later this month in Birmingham – promising ample networking opportunities and in-depth insights from the UK’s top business and policy leaders. We have 25 complimentary tickets (normally £325) that we would like to offer to newsletter recipients on a first come first served basis. This is for Day 2 of the conference, on November 22, which is focused on startups, scaleups and unicorns. It will feature talks with Deborah Meaden (Dragon’s Den), Euan Blair (Metaverse), Greg Jackson (Octopus Energy), Mark Bailie (Compare the Market), Romi Savova (PensionBee), and Poppy Gustafsson (Darktrace). More information can be found here and if you would like to attend or ask any questions, please get in contact with Kapila Perera from the CBI.

In Parliament

Entrepreneurs and entrepreneurship have received a healthy smattering of attention in both Chambers over the past four weeks. 

We were pleased to see a number of MPs standing up for entrepreneurs. Virginia Crosby MP asked whether the government agreed that “entrepreneurs are the backbone of our economy,” to which the then Minister for Women, Katherine Fletcher MP, gave a resounding “yes”. Paul Bristow MP, meanwhile, raised the importance of entrepreneurs in a debate on economic responsibility and the Plan for Growth – noting “entrepreneurs create jobs, pay people and grow our economy”, and adding that “we need to be more positive and to recognise the efforts made by businessmen and women.”

Two of our very own Officers made references to entrepreneurship. Jo Gideon MP highlighted how “a young entrepreneur must wait until they reach the age of 18 before they can open a business bank account”, before asking the Rt Hon Penny Mordaunt MP if she would “set aside parliamentary time for a debate on how we can encourage and support young entrepreneurs.” 

The new Leader of the House of Commons responded positively, saying: “We want to support all young people in their talents and ambitions. She has identified a barrier that stops people setting up their own businesses and starting to develop their ideas at a young age. I shall certainly write to the new Secretary of State and raise the matter with him.”

Then Jerome Mayhew MP spoke of the importance of “pro-growth reforms to back entrepreneurs and businesses”, and asked whether “the Government will continue to review EU-inspired regulations to make them bespoke for the UK economy, deliver pro-growth investment zones right across the country, and boost our energy supply?” Penny Mordaunt again replied approvingly, noting the “enormous number of expressions of interest” investment zones have already received. 

Finally, in a debate on international students and their contribution to the UK, MPs were quick to identify the role they can play in entrepreneurship. Carol Monaghan MP spoke of how she was pleased that the government “reintroduced the post-study work visa”, affirming that its absence meant the UK “lost brain power and entrepreneurs.” In the same debate, Matt Western MP cited research from our secretariat, arguing that: “international students add enormous value to the UK economy and research base. The Entrepreneurs Network estimates that nearly half of Britain’s 100 fastest-growing start-ups have at least one immigrant co-founder. That leads me nicely on to the economic value of international students. Their precise economic value is really secondary to the wider social and cultural benefits that they bring, but it is still an important contribution to the UK.” 

APPG for Entrepreneurship Digest: October 2022

You can put away the warm white wine and questionable canapes – party conference season has drawn to a close for another year. But whether you’re a veteran conference goer, or someone who avoids them like the plague, there’s no escaping the policy pronouncements declared by ministers, shadow ministers and backbenchers alike.

Whether they were made on the conference floor, at fringe events, or simply overheard in corridors, during the last few weeks we’ve got a flavour of the shape of things to come on a whole range of policy areas – including those that will affect Britain’s entrepreneurs.

If I can start at the end with Liz Truss’ closing speech to Conservative Party Conference, she was at pains to make clear her three priorities for the economy: “growth, growth, and growth”. It’s plain to us that entrepreneurs will need to play a vital role if the Prime Minister is to make good on this ambition – after all, it’s only through new and innovative ways of doing things that the size of the economy can reliably expand in the long run.

Truss also went on to state that she: “love[s] people who take responsibility, start their own businesses and invest”. We wholeheartedly agree – and will continue to champion policies which give British entrepreneurs a better shot at doing just that.

Her Downing Street neighbour, Kwasi Kwarteng, used his speech to reiterate many of the themes made during last month’s mini-Budget. The Chancellor took aim at “barriers for entrepreneurs looking to scale up” and “burdens on our finance sector stopping it from investing in key projects”, before concluding that “when Britain’s innovators, job creators, entrepreneurs and risk takers are held back – so is Britain”. Again, it’s encouraging to hear the recognition that entrepreneurs are central to the future economic success of the country, and we look forward to promoting ways in which Kwarteng can help deliver for them.

Elsewhere in Birmingham, Business Secretary Jacob Rees-Mogg announced a change in the Government definition of small- and medium-sized enterprises (from businesses employing up to 250 employees to ones employing up to 500), and Culture Secretary Michelle Donelan revealed plans to replace GDPR with a new, “British data protection system”, which would be “simpler and clearer for businesses to navigate”.

Looking northwards, the Labour Party pitched up in a windy Liverpool. Inside the relative calm of the conference hall, however, Sir Keir Starmer also took time in his remarks to sing the praises of economic growth. He pledged that a Starmer-led Government would unleash Britain’s “entrepreneurial spirit”, and capitalise on “the jobs, the industries, the opportunities of the future”.

Meanwhile, the morning before Starmer took to the Stage, his Shadow Chancellor Rachel Reeves was ploughing a similar furrow, speaking about “supporting innovation” and being “proudly pro-business”. She highlighted the importance of “people feeling the confidence to take risks, to change career, to learn new skills, or to start a business”.

Alongside the warm words, however, the Labour Party also served up cold, hard policy. Of particular interest to us was the publication of their new Industrial Strategy. Writing in its foreword, Shadow Business Secretary Jonathan Reynolds set out Labour’s vision of harnessing “the technological frontier to transform challenge into opportunities”. The section on ensuring that “future successes” – from firms in clean tech, robotics, quantum computing and more – are able to both start and scale in the UK caught our eye, as did the announcement of Labour’s ambition to see 3% of GDP spent on R&D.

Out of respect for HM Queen Elizabeth II, the Liberal Democrats took the decision to cancel their party conference – which would have otherwise clashed with the Royal funeral.

Call for Evidence

Equity investment is essential to financing Britain’s high-growth startups. We are writing a report looking at targeted tax reliefs for equity investment, namely the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCTs).

This Call for Evidence will feed into the report. We are interested in knowing what works and what needs reform. You can find the questions here.

We are interested in hearing from entrepreneurs, investors, researchers, or anyone who is part of the ecosystem. There is no expectation that you answer all the questions – short responses focused on specific issues are often the most useful.

The closing date is 7th November.

Friends of the Network

Last week, our friends at Beauhurst published not one but two reports. The first takes a look at high-growth companies in Nottinghamshire, while the other focuses on the Warwick Innovation District. Do give them a read.

The UK Business Angels Association are hosting their Early-Stage Investment Summit – in Manchester on Thursday 1 December, and in London on Thursday 8 December. To view the agenda and book an early bird ticket, click here.

To mark National Mentoring Day on Thursday 27 October, Enterprise Nation is hosting an event on the Help to Grow: Management scheme. You can sign up to attend for free here.

In Parliament

The House of Lords debated The Economy and the Government’s Growth Plan. Last month’s mini-budget was criticised and defended.

The Lord Bishop of Birmingham in his valedictory speech said that: “Devolution of power and influence is very close to my heart. The new Investment Zones are welcome, as are the infrastructure projects listed, which in our own region are led by Andy Street, the West Midlands mayor. We will do well, but I ask the Government to go further and to make local influence part of an equal partnership, putting responsibility and resources where they belong in the local regions”.

Lord Londesborough, a crossbench peer said: “Let us reflect for a moment on the impacts of the proposed tax cuts, especially amid a cost of living crisis. Do we give a £20,000 tax break to one person – let us say a mid-ranking City lawyer earning £500,000 a year – or a £1,000 tax break to 20 people earning the median average salary of £26,000? The cost to the Treasury is the same but I argue, as an entrepreneur and business investor, that the impact on growth will be much more significant if you reward at the margins. I do not have time to preach the theory of marginal utility but I urge the Ministers to brief both No 10 and No 11 on its relevance in relation to taxation and growth”.

And Lord Bilimoria, also a crossbench peer said: “In February 2021, I said to the Chancellor at the time, Rishi Sunak, when I was president of the CBI, ‘Do not increase taxes. Increasing taxes will hamper the recovery and hamper growth’. What did he do? He kept putting taxes up, up and up, to the extent that they are the highest in 70 years.

“Before the financial crisis in 2008-09, we in this country had a growth rate of 2.5%. Since then, we have had a decade of no growth, low productivity and low inflation. What a state to be in. We had austerity. That achieved nothing. So the Government are absolutely right to target a growth rate of 2.5%. They are absolutely right to reverse the 2.5% – 1.25% and 1.25% – National Insurance: it is a tax on jobs. Even the Labour Party said it would not have done that. The Government are absolutely right not to increase corporation tax from 19% to 25%. They are absolutely right with Investment Zones. They are absolutely right with the reform to IR35.

“But – and there are ‘buts’ – what about speeding up the move to alternative energy, such as small modular reactors? That is not being spoken about. What about investment: replacing the super-deduction of 130% that will go in April with a 100% write-off to encourage businesses to invest? What about labour shortages? We kept saying to the Government, ‘Activate the shortage occupation list’. Now the Government say they are going to do it. I ask the Government to confirm in their response that this will actually happen”.

In the Commons debate on the The Growth Plan, Rachel Reeves said: “Labour believes in wealth creation. We will always support enterprise, creativity and hard work. We want British businesses to grow, to be successful and to contribute to our country’s prosperity. What we do not believe, as the Chancellor and Prime Minister do, is that British workers are idlers. We understand that it is the workers, who turn up every day to make a great product at a factory or deliver a great service in the store, who generate growth. It is the teachers giving the young people the skills they need, and the doctors and nurses keeping people well. It is the entrepreneur taking a personal risk to start a new business. These are the people who generate growth, and they all deserve to share in it too.

“This statement is more than a clash of policies; it is a clash of ideas – two different ideas about how our country prospers. If you are a pensioner worried about the cost of living, a working family seeing your mortgage rate going up or a small business whose costs are spiralling, the Government’s announcements today do little to reassure you: bigger bonuses for bankers, huge profits for energy giants shamelessly shielded by Downing Street, and all the while Ministers pile the crushing weight of all those costs on to the backs of taxpayers”.

To which Kwasi Kwarteng replied: “You cannot grow the economy if you keep taxing families. You cannot grow the economy if you see business as the enemy. We have to reiterate very clearly to our friends on the Opposition Benches that you cannot tax your way to prosperity. You cannot help workers by increasing their taxes. Far from denigrating British workers, our measures are relieving burdens on our workers and our people by intervening on energy prices and relieving the burden of taxation. We have to unshackle the creative energies of this country and that is what we are 100% focused on”.

And the Conservative Chair of the Treasury Select Committee, Mel Stride said: “There is a great deal that will help millions of families and businesses up and down the country. There is, however, a vast void at the centre of the announcements that have been made this morning: the lack of an independent OBR forecast. At a time when the markets are getting twitchy about Government bonds and the currency is under pressure, now is the time for transparency and making it very clear that whatever tax cuts or otherwise there may be, they are done in a fiscally responsible manner”.

APPG for Entrepreneurship Digest: September 2022

This month’s newsletter comes to you after significant changes to our government. The passing of the Queen has, of course, been felt throughout the nation.

Prime Minister Liz Truss has taken up residence in Downing Street. She will have a lot to think about, with inflation, an energy crisis, and war with Ukraine. But Truss’s campaign did not rely exclusively on solutions to immediate problems. Like many Prime Ministers before her, she has said that she wants to support British businesses and we will make sure to keep you up to date with them as they arise.

With all the news at the top, you may have missed the Centre for Entrepreneur’s report Incubation Nation. Three of their authors, Dr Christopher Haley, Timothy Barnes, and Matt Smith are advisers to the APPG. Unsurprisingly, the findings are interesting.

Incubators and accelerators are shown to be engines of growth. Around 5% of all new companies started have gone through some form of accelerator or incubator. Interestingly, the sector is moving away from general or regional support to sector-specific support, bringing together experts, for example, in FinTech or Sustainable Innovation.

Another interesting trend is that incubators and accelerators operate somewhere in the intersection between the private and public sectors. The pure equity-based model is now somewhat rare. Only about 7% are purely private organisations. Instead, many are backed by some form of government funding, philanthropic contribution, or university.

The report warns that policymakers should carefully consider the evidence when deciding which initiatives to support – not all accelerators are as successful as each other and as most receive public funding, they should make sure that the taxpayer is getting good value for money. In particular, they warn that small incubators in under-developed ecosystems are not able to give startups the support they need.

They recommend that policy makers, entrepreneurs, and people working in the industry should push for support-organisations to gather evidence for impact so that we are better able to determine which accelerators are adding value and which are not.

Additionally, they say that policymakers should urgently evaluate the provision of wet-labs for UK biotechs, and investigate whether anything more can be done to speed their construction or to simplify the transformation of other spaces into such facilities. Similarly, in my report for The Entrepreneurs Network Strong Foundations, also found that the lack of lab space was causing severe problems for the UK’s entrepreneurs.

Call for Evidence

Equity investment is essential to financing Britain’s high-growth startups. We are writing a report looking at targeted tax reliefs for equity investment, namely the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCTs).

This Call for Evidence will feed into the report. We are interested in knowing what works and what needs reform. You can find the questions here.

We are interested in hearing from entrepreneurs, investors, researchers, or anyone who is part of the ecosystem. There is no expectation that you answer all the questions – short responses focused on specific issues are often the most useful.

The closing date is 7th October.

Friends of the Network

Enterprise Nation is working on a piece of research called 'Mentoring Matters' which seeks to understand the benefits of mentoring for businesses and also for those that mentor. If you would like to help them gather data on the impact of mentoring, you can fill out their survey here.

And if you would like to be a business mentor through the government’s Help to Grow: Management Scheme you can sign up here.

In Parliament

Accelerators have been a topic of interest in parliament over this past month. Gavin Newlands, the SNP MP for Paisley and Renfrewshire, asked the then Minister for Defence Procurement, Jeremy Quin, if he thought that the RAF’s ambition to reach Net Zero should be supported with a defence and security accelerator. The minister responded that they were investing a lot of money into the area and would look into such initiatives.

In a later debate he said: “Underpinned by a ring fenced £6.6 billion commitment to defence research and development, we are determined to innovate effectively and at scale. In addition to the well-established Defence and Security Accelerator programme this summer, we are launching the Defence Technology Exploitation programme, geared to supporting small and medium-sized enterprises and their innovative role in defence.”

In a debate on Procurement in the House of Lords, Conservative peer Baroness Neville-Rolfe talked about how we need procurement to be more pro-SME, saying: “We have to find some way to help SMEs. The Minister mentioned the billions going to SMEs, but that is compared to the £300 billion opportunity. There is a huge opportunity to grow the SME and social enterprise sector in the procurement area and to do it in a way that represents value for money – I am coming from that angle as well.”

The new Leader of the House of Lords, Lord True, disagreed with many of the amendments being brought forwards by the Lords, because he felt that they increased the burdens on small businesses. He said: “The paradox is that seeking to include extraneous requirements, which this and other amendments in the group risk, could make it harder for small businesses to bid for public contracts. One cannot talk the small business game, which noble Lords did strongly and fairly, while adding compliance requirements that make things harder for small businesses and help larger organisations to corner the market.”

APPG for Entrepreneurship Digest: August 2022

It’s a shorter digest than usual this month as Parliament is currently in Recess. But just as MPs continue to work in their constituencies over the Summer, we are busily preparing for Parliament to return with a series of papers and events.

We are launching our long-awaited paper on Space Startups and Scaleups in the House of Lords on Sept 8th at 9am. The UK space sector has nearly quadrupled since 2000 to £16.4 billion in income, employing over 45,000 people, with satellites underpinning £360 billion per year of wider economic activity. Attend the event to find out how we can support space startups and scaleups to deliver on the government’s grand ambitions for the sector. This event is for MPs, Peers and space entrepreneurs. Contact us to request a place.

We have a Call for Evidence on SME productivity open till September 1st. We want to know what is the best way to improve the productivity of Britain’s small-and medium sized enterprises?

This Call for Evidence will feed into an APPG for Entrepreneurship Briefing Paper, which will review recent progress on the Government’s business productivity agenda and look at programmes such as Help to Grow: Management, Digital and the Business Basics programme. We plan to draw on insights from entrepreneurs and organisations which support them to identify what entrepreneurs want from the programmes, whether they are working, whether they are being properly evaluated, and if such programmes are the best way to improve productivity among the UK’s business population. (Send all submissions as PDFs to philip@tenentrepreneurs.org)

We are also starting a project looking at tax breaks for equity investment. In a few weeks, we will be releasing a call for evidence looking at the impact of reliefs such as the Enterprise Investment Scheme, Seed Enterprise Investment Scheme, and Venture Capital Trusts. In fact, we have a virtual roundtable Tomorrow at 11am that you may want to attend. Just drop us an email to register your interest. If you want to find out more and get details on the Call for Evidence as it’s launched then I recommend signing up to The Entrepreneurs Network’s Friday Newsletter.

APPG for Entrepreneurship Digest: July 2022

Growth. It seems everyone in Westminster is talking about it. The past few days have seen countless Conservative leadership contenders set out plans designed to stimulate the economy and lift sluggish growth rates. Labour’s leadership is at it too. In a speech this week, Keir Starmer said: “The most important goal of my Labour government will be to grow the economy.

At the APPG for Entrepreneurship, we have some ideas of our own about the best way to achieve growth. In many ways, everything we do is ultimately about growing our economy. Whether we are talking about educating the next generation of founders, making sure regulations around the sharing economy are fit for purpose, or removing the barriers which keep women out of leadership positions, it all links back to growth.

Our next event is no different, but the link between it and growth is hopefully easier to spot. This Thursday (i.e. tomorrow) at 2pm, we are partnering with Virgin Money to host an online expert roundtable on SME Productivity.

At the roundtable, we will ask: what is the best way to support business owners to upskill and adopt better technology? This could be transformative. In 2019, the Government published its Business Productivity Review, which found that if the UK's 5.9 million small and medium-sized businesses became as productive as their German counterparts by adopting better management practices and technology, it would add £100bn to the economy.

The discussion will input into the questions we ask as part of a Call for Evidence and will eventually feed into a briefing paper.

Note: This event has now happened.

Liftoff
Two weeks ago, we launched our report Entrepreneurship Education. It highlighted the key benefits of integrating entrepreneurship into the curriculum and set out credible policy proposals to move the agenda.

It was great to see so many entrepreneurs and educators in Parliament supporting Finn Conway’s excellent report. We thank APPG Officer Jo Gideon MP and APPG Vice-Chair Lord Leigh for speaking at the launch. The report was sponsored by finnCap and it was easy to see how much expanding entrepreneurial opportunity mattered to finnCap’s group CEO Sam Smith in her speech at the launch.

To ensure the launch of the report wasn’t the end of the journey, finnCap and The Entrepreneurs Network organised an open letter signed by over 250 leading British entrepreneurs. The letter was covered in The Times and you can read the full letter here.

In Parliament

In the debate on Support for the Welsh Economy and Funding for the Devolved Institutions, Stephen Kinnock, the Labour MP for Aberavon said: “There has been a strong performance by the Welsh Government, who have made a commitment that ‘no one would be held back or left behind…in a recovery that is built by all of us.’

“We have seen the creation of the young person’s guarantee—the offer of work, education, training or business start-up help for all under-25s—and ReAct Plus, which will provide practical and bespoke employment support as unique as the person looking for work. The ReAct Plus programme will offer up to £1,500 for training, £4,500 to help with childcare costs and £300 for travel costs.”

As the Minister for Levelling Up, The Union and Constitution, Neil O’Brien, as part of the committee for the Levelling Up Bill took evidence from experts and asked: “One of the other missions for which the Bill is creating statutory requirements is to increase domestic public R&D investment outside greater south-east England by a third over this spending review period. Alongside that, there has been the creation of an innovation accelerator centred on the Glasgow city region. How can we best harness the large public investment in research and development to drive growth right across Scotland?”

Mairi Spowage, Professor of Practice and the Director of the Fraser Allander Institute, an academic who works on on economic policy, economic statistics, national accounting, public sector finances, and economic and fiscal forecasting said: “That is a great question, and one that policy makers in Scotland have been grappling with for a long time, particularly given the quality of our universities in Scotland and their international prowess in research and development. We seem to have an issue between the development of the ideas, the start-up, and the translation of that into commercial opportunities that can be scaled up into medium-sized businesses. In Scotland, we often find those opportunities are lost, particularly to the south-east of England, because the infrastructure is there to scale up that business to the next step. I think the sorts of investments that you are talking about, not just in Glasgow but in other locations in Scotland, will be really important. We have to think about how we take all of the great advances that have been made in academia in Scotland and turn them into commercial opportunities, have them scale up and feel that there is the infrastructure and capacity in Scotland so that they do not have to move or be bought by companies outside Scotland.”

The Committee for the Bill on Genetic Technology (Precision Breeding) also took evidence from experts. Daniel Zeichner, Labour MP for Cambridge asked: ”The argument is that innovation will happen because obstacles are being removed. Is that enough to foster the kind of innovation that you would hope to see, based on your passion and excitement for this technology?”

Professor Napier, a plant biotechnologist said: “I spend an enormous amount of time thinking about IP because it is an area that I have to think about a lot. The beauty about the UK is that we have a really strong research use exemption, which allows us to operate in a way that is not encumbered, at least at the research level, by IP. We are in a really good place. I think the bigger barrier to innovation is what I have already mentioned: it is not IP but the cost of regulatory approval. That is why I am so worried that in new legislation, if we start building in layers of costs associated with more regulation, we are just replicating what we had previously under the EU regulation. I think that would be an enormous missed opportunity if we go down that road. That is my personal view.”

Minutes from the APPG for Entrepreneurship AGM 2022

Minutes from the AGM for APPG for Entrepreneurship

Date: 27th April 2022, via Zoom

Present: Seema Malhotra MP, Jo Gideon MP, Duncan Baker MP, Alan Whitehead MP, Lord Leigh of Hurley, Philip Salter (The Entrepreneurs Network), Katrina Sale (Coordinator, APPG for Entrepreneurship).

Elections:

Seema Malhotra was re-elected as Chair and Registered Contact for the APPG.

Lord Bilimoria was re-elected as Vice-Chair.

Lord Leigh of Hurley was re-elected as Vice-Chair.

Bim Afolami MP was re-elected as an Officer.

Gagan Mohindra MP was re-elected as an Officer.

Jerome Mayhew MP was re-elected as an Officer.

Saqib Bhatti MP  was re-elected as an Officer.

Baroness Kramer was re-elected as an Officer.

Lord Cromwell was re-elected as an Officer.

Baroness Neville-Jones was re-elected as an Officer.

Jo Gideon MP was elected as an Officer.

Bill Esterson MP was elected as an Officer.

Selaine Saxby MP was elected as an Officer.

The following Parliamentarians kindly support the APPG as Members:

Ian Liddell-Grainger MP

Catherine West MP

Bob Blackman MP

Fiona Bruce MP

James Daly MP

Katherine Fletcher MP

Nick Fletcher MP

Dr Rupa Huq MP

Dean Russell MP

Craig Williams MP

Baroness Donaghy

Baroness Kingsmill

Baroness Wolf

The Earl of Erroll

Lord Luce

Lord Aberdare

Lord Lucas

The Secretariat produced an Income and Expenditure statement for 2021 - 2022.

APPG for Entrepreneurship Digest: May 2022

Dear Members of Parliament, Peers and Friends of the APPG for Entrepreneurship,

As Parliament opens for a new session, the APPG for Entrepreneurship welcomes two new Officers: Bill Esterson MP and Jo Gideon MP.

It is hard to think of two better additions to the APPG with both MPs bringing deep entrepreneurial expertise and experience.

As the Labour MP for Sefton Central, Bill Esterson MP has been a strong voice for enterprise and small businesses in the chamber. Between 2015 and 2020, he served as the Shadow Minister for Small Business and is currently a Shadow International Trade Minister. Like many of the Officers of the APPG for Entrepreneurship, Bill has a background in business and ran a customer service training company, Leaps and Bounds, with his wife.

Speaking of entrepreneurs-turned-politicians, our other new officer, Jo Gideon ran a handmade paper import and wholesale business for ten years before entering Parliament as the Conservative MP for Stoke-on-Trent Central. She has extensive experience working with SMEs, including for university enterprise centres, as a leadership mentor. Jo also spoke at the APPG’s roundtable on Levelling Up.

Queen's Speech
There were a range of bills in the Queen’s Speech that entrepreneurs will be interested in.

It was announced that “public sector procurement will be simplified to provide new opportunities for small businesses.” Keep your eye out for upcoming research from The Entrepreneurs Network and Enterprise Nation among others for details on what this could and should involve.

There were also measures to support new technologies such gene editing and precision agriculture, a new bill designed to improve corporate transparency, and reforms to data protection. Post-Brexit changes to financial services rules to make it easier for insurance companies to invest in SMEs were also announced.

As with all things, the devil will be in the details. But one thing is for certain, as new legislation that affects businesses goes through Parliament, we will keep you updated and make sure the views of entrepreneurs are heard.

Coming Soon
The next few months will be busy for the APPG for Entrepreneurship with briefings on Space Startups, Entrepreneurship Education, and Levelling Up all to come. And that’s just scratching the surface, keep your eyes peeled in future newsletters where we will be announcing even more events and research.

From Our Advisers
In June, the Incubator and Accelerator Network, run by the Centre for Entrepreneurs, will convene in Birmingham for its fifth annual conference, bringing together incubator managers, investors, entrepreneurs, and policymakers from across the UK. Speakers will include Roxanne Varza, Director of Station F and Andy Street, Mayor of the West Midlands. You can find out more and reserve a place here.

In Parliament
In a Commons debate on the Future of Rail, Rachael Maskell, the Labour MP for York Central, talked about the high-tech developments that she has seen, taking place in her constituency. “My recent visit to Holgate engineering works showed me how the most advanced trackside safety developments are being integrated into the fleet, with robotics, digital and high-end scanning equipment filling these yellow mechanical engines. That will give the UK the reputation for having the safest railway anywhere in the world. Again, that will be priceless when exporting our safety capability.

“York’s Rail Operating Centre—the largest in the UK—has tech that mirrors that of a spaceship. Every inch of the network is mapped live, overseen and monitored across a series of sophisticated digital tools, which enhances rail operations. It is preparing us for the future, playing a key role in plans to introduce the next generation of digital signalling on the east coast and beyond. Network Rail’s training centre for professional development is already in the city and helping to take this revolution forward, with more than 1,000 Network Rail staff already working in York.

“Every time I meet York’s engineers, excitement for the next development greets me. My thinking is transformed, my mind left marvelling. This is what we can do when we build a sustained rail cluster. When the network’s guiding mind is anchored and embedded in the midst of such developments, and the sparks of each rail entrepreneur are joined together, the future of our rail is set ablaze. That is why I am calling for investment for the rail bicentenary. The Minister will see its return.”

In a debate on B2B selling, Mark Pawsey, the Conservative MP for Rugby, talked about some of the APPG for Professional Sales’ findings on the issue. Among them was a shortage of management skills, on which he said “Covid-19 made it urgent for businesses to adjust their sales model, but many business Toggle showing location ofColumn 24WHowners were too busy and needed help developing a strategy. The majority of SME owners are yet to adopt efficiency-oriented management practices and do not use customer relationship management software. The software exists, and it needs to be used. In addition, a lack of understanding of sales often leads SME owners to make mistakes when hiring salespeople, because the business owners themselves do not understand the sales process fully.”

Lawrence Robertson, Conservative MP for Tewkesbury, asked Penny Mordaunt, the Minister for Trade Policy, what steps the government was taking to increase trade with African countries. To which Mordaunt said “Overall UK-Africa trade stood at £32 billion last year. We will increase that and achieve our investment goals. By 2030, Africa will have 1.7 billion consumers, and our post-Brexit trade policy will enable those nations to grow their economies and create opportunities for UK businesses.”

Along the same lines, Ben Everitt, Conservative MP for Milton Keynes North, asked Ranil Jayawardena, The Parliamentary Under-Secretary of State for International Trade, about what steps the government was taking to reduce barriers to trade, saying “Breaking down barriers to trade and providing businesses with the right tools and support to reach global markets is exactly what we should be doing.”

To which he replied “Bulldozing trade barriers enables countless British businesses to export goods and services around the world with greater ease and at lower cost. We resolved more than 200 barriers in the year ending April 2021—a 20% increase on the previous year. From securing British access to Japan’s poultry market, estimated by industry to be worth up to £13 million per year, and lifting the decades-long ban on British lamb exports to the US, estimated to be worth £37 million over five years, to cutting costs in services trade, an export of £304 billion in 2021, by up to 7% annually, we are getting on with the job.”

There was a debate in the Lords on the Covid-19 financial support schemes. Baroness Kramer, a Lib Dem peer asked “Can the Government now tell us what they are putting in place in preparation for the next crisis and the next need to put out emergency funding, to make sure that the systems have within them decent checks and safeguards? For example, the British Business Bank estimates that it could have saved nearly all of that fraud had it waited 24 to 48 hours before actually issuing the money, and used that time for essential checks.”

The Earl of Clancarty, a Cross-bench peer, added “My Lords, following on from the question from the noble Baroness, Lady Kramer, would the Minister not agree that the Covid-related government support has been entirely necessary, and I hope very much that the Government would not be dissuaded from rolling out such schemes if required in the future, and at the pace they did, because of concerns about fraud.”

Baroness Penn, a Conservative peer replied saying “I agree with the noble Earl, and I recognise that, particularly with bounce-back loans and the CJRS, the speed at which the Government needed to act was one of the trade-offs with the checks that could be put in place. We will make sure that lessons are learned, to ensure that we got that balance correct, but one of the reasons we introduced the Bounce Back Loan Scheme and reduced the checks on it, was that original government support programmes that had greater levels of checks were not getting the money to people who needed it, and the scheme prevented the loss of businesses and livelihoods in our economy.”

APPG for Entrepreneurship Digest: April 2022

Our world-class universities are a rightly prized national asset, but could they be doing more to promote entrepreneurship? We have covered (and are still covering) the topic of training and teaching the next generation of entrepreneurs – one area where universities can have a powerful impact. But that’s not the only way they can support entrepreneurship. The ideas generated by faculty often have real-world applications from which new businesses can be formed. Indeed, there’s a decent chance you are using the services of a spinout (Google) as you read this APPG digest.

How can we get more academic spinouts and give them a better chance of succeeding? It’s a question that prompts a lot of debate. Take this provocative essay from Air Street Capital’s Nathan Beinach, in which he argues that universities treat spinouts as problem children. Not everyone agrees, and some university leaders have pushed back against his characterisation. Whatever side you stand on, finding the right answer will require us to have good data.

That’s why I was happy to see Beauhurst has released the latest instalment of their Spotlight on Spinouts. It’s full of useful data on how universities compare on spinning out startups. Particularly interesting was their comparison of university policies on equity and IP. It revealed that the average equity stake taken by universities has dropped by 20% (5pp) over the past decade and many universities have adopted new ‘founder-friendly’ policies which take a smaller stake. The jury’s still out on whether that’s the right approach, but it's certainly worth watching.

What do we need to know about entrepreneurship education?
There is still time to contribute to the APPG for Entrepreneurship’s Call for Evidence on Entrepreneurship Education. We have already received dozens of great contributions that will give us food for thought when we produce an APPG briefing paper on the topic in the coming months.

You can find out the questions we’re interested in having answered here. As we’ve said before, please don’t feel obliged to answer all the questions. We would prefer that you focus on one or two questions where you feel you can add the most value, rather than answer them all without detail/evidence. That said, don’t let this deter you from answering them all if you want.

Submissions should be sent to sam@tenentrepreneurs.org before Friday 15th April.

Calling all Parliamentarians
In a few weeks on Wednesday April 27th at 11am, we will be hosting our virtual Annual General Meeting. It is a chance for MPs and Lords to get more involved – for instance, by becoming an Officer of the APPG. It’s also an opportunity to help shape the work the APPG will embark on over the next year.

If you would like to attend, please get in touch with katrina@tenentrerpreneurs.org

From our Advisers
The Centre for Entrepreneurship is undertaking a new project to review the landscape of business incubators and accelerators in Britain. They have a survey for incubators and accelerators, which you can fill out here.

Nominations are open for the UK Business Angels Association’s Angel Investment Awards. You can learn more, nominate someone, or even buy an early bird ticket to the ceremony here. You can also attend their upcoming half day Future Forward session on DeepTech. The full details are here.

Mike Spicer of Policy Department has a new podcast on local economic development. You can listen to the first episode here.

In Parliament

Due to inflation, Mary Glindon, the Labour MP for North Tyneside, asked Paul Scully, The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy, what the government was doing to help small businesses with rising costs.

He said that the government was “cutting fuel duty, at a cost of £5 billion over the next 12 months; raising the employment allowance to £5,000; and zero-rating VAT on energy-saving materials. That builds on existing support, including business rates relief worth £7 billion over five years.”

She said that specifically, businesses in her constituency had hoped that VAT would be cut to 12.5%.

Seema Maholtra, the Labour MP for Feltham and Heston, and Chair of this APPG, added” “Businesses face a barrage of rising costs: inflation at a 30-year high, taxation at an 80-year high, and rocketing prices for materials, energy, food and fuel that are hitting businesses and consumers hard.” She complained that there was no clear plan to support businesses and workers.

During Topical Questions, Labour MP for South Shields, Emma Lewell-Buck asked: “When the Government set up the coronavirus business interruption loan scheme, they recklessly failed to agree any guidance on early repayments. As a result, businesses are now being charged extortionate fees and are facing bankruptcy. Why is the Chancellor putting the profits of unscrupulous lenders above the recovery of our small businesses?”

In a debate on Investment for Businesses: Female and Minority Entrepreneurs, Ruth Edwards, the Conservative MP for Rushcliffe, asked: “What steps the Government are taking to reduce the barriers faced by female and minority entrepreneurs in seeking investment for businesses”

Kemi Badenoch, the Minister for Equalities replied “The Government’s flagship start-up loans programme, delivered through the British Business Bank, has been instrumental in reducing access-to-finance barriers faced by all entrepreneurs, including those faced by female and minority entrepreneurs. Since the launch of the programme, around 40% of the loans issued, valued at approximately £320 million, went to female entrepreneurs. Black, Asian and ethnic minority businesses have received around 20% of the loans issued, valued at £160 million.”

In a House of Lords debate on export support for small businesses, a Labour Lord, Lord Bassam of Brighton, accused the government of providing insufficient support to help SMEs with exporting. He said: “Exports across the world have bounced back strongly coming out of the pandemic, yet the UK is the only country tracked by the CPB where goods exports remain below the 2010 average. As a result, the UK has become a less trade-intensive economy. Those are the facts. With no evident plan—the Prime Minister’s comments yesterday rather suggested complacency—can the Minister tell the House what steps the Government are taking urgently to address this and other export-related issues?”

Many in the Lords had issues with the new proposed Public Procurement standard 95009, which is meant to be a new, non-sector-specific standard for all procurement. Conservative Lord, Baroness Scott of Bybrook said “My Lords, the Government consider that the adoption of British Standard 95009 may place additional burdens and barriers on small businesses and the expertise of charities, public services, mutuals and social enterprises, as there is a cost to becoming fully accredited.”

In a Commons debate on Small Businesses Bids for Government Contracts, Jim Shannon, a DUP MP for Strangford, asked: “In my Strangford constituency and across Northern Ireland, we have large numbers of small and medium-sized businesses, with excellent people and entrepreneurs with talent and ability. What can be done to enable such businesses in Northern Ireland to obtain Government contracts and reinforce the fact that the United Kingdom of Great Britain and Northern Ireland is always better together?”

To which Steve Barclay, the Chancellor of the Duchy of Lancaster, replied “There is around £250 billion-worth of public procurement and around £50 billion-worth of central Government public procurement, and I am extremely keen that SMEs in Northern Ireland are able to get visibility of that pipeline, so that we can tap into the talent and entrepreneurial spirit of which the hon. Gentleman speaks.”

APPG for Entrepreneurship Digest: March 2022

The APPG for Entrepreneurship is embarking on a new project looking at the current state of entrepreneurship education in the UK and we want to hear your views. Today, we are publishing a call for evidence designed to bring together the views and insights of leading entrepreneurs, charities, and researchers on the role of entrepreneurship in the education system. In my experience, education is a topic where everyone has an opinion. After all, we have been through the education system at one stage in our lives.

Our aim with the call for evidence is to keep it practical. We want to know what’s working and what isn’t, so we can produce tangible recommendations for Parliamentarians.

We’ve put together a list of questions that we’d like to see answered, but we find that the best submissions to our Calls for Evidence are short and typically focus on a single question or a narrow point. If you’ve looked at our list and only have a strong view on a single point, we still want to hear it.

This project is being kindly supported by finnCap. As a firm of entrepreneurs, they are proud to partner education programmes which focus on developing youth entrepreneurship and enhancing social mobility.

The Call for Evidence closes on Friday April 15th. You can find more information here. Please send your submissions to sam@tenentrepreneurs.org

Anyone for Tea?
A few months back we released a paper on the best way to support entrepreneurship in the sharing economy to realise the potential benefits for consumers and businesses. It featured a range of ideas from tax simplification and modernisation to a smarter approach to regulation. Next week, we’re holding an Afternoon Tea in the House of Lords to discuss the ideas of the report and the best way to support sharing economy entrepreneurs in the UK.

The event will take place in the Lords on Tuesday March 15th at 3.30pm-5pm. MPs, Peers and sharing economy entrepreneurs should send an email to events@tenentrepreneurs.org to register if they would like to attend.

From our Advisers
Emma Jones from Enterprise Nation draws attention to their StartUp Saturday events. They are fun and friendly workshops for aspiring entrepreneurs to learn everything you need to get started on your business – in just one day. The free events are being hosted in cities across the country. You can find out more details here.

Ben Macon-Cooney from the Tony Blair Institute notes that today they are launching their latest instalment of Moonshots. Contributions include those working in technology, such as Balaji Srinivasan, Graphcore’s Nigel Toon and Wayve’s Alex Kendall, as well as from politicians such as Congressman Ro Khanna, Audrey Tang and Luukas Ilves. The subjects covered range from AI, satellites through to how to do clinical trials.

Mike Spicer of Policy Department has a useful article on how to prepare for the UK Shared Prosperity Fund. It unpacks the details of what we do and don’t know about future funding for local business support as well as what local government, Growth Hubs and others need to do next.

In Parliament

In the Lords, in a debate on the Health and Care bill, Lord Mawson, a crossbench peer, told the story of how in 1997 he set up the first online facility for the voluntary and social enterprise sector. “When we started this, we naively thought that this online environment was going to solve all our problems, as if it sat “out there” somewhere. We bought 12 computers: they came in very big boxes at that point, as noble Lords might remember. We put them in a room in a conference centre - we were in the Cotswolds - and I invited 12 entrepreneurial people working in the social sector to come and share a few days with them. We connected them all up. We thought it was about technology, but we actually discovered that it was all about people and relationships; that this technology was simply a tool—an enabler—to facilitate a marketplace that we needed to build between us. We began to understand that this was not about large systems up there that you plonk in the middle of things in some separate way. It is actually organic: they are very connected, and you need to co-create it and invent it together around the real needs and opportunities that are presenting themselves. I think this technology is telling us something about what needs to happen to the health service. It is organic; it is entrepreneurial; it is about creating a learning-by-doing culture. My colleagues and I have seen examples in the NHS and other parts of the public sector where millions of pounds have been spent on systems that have landed from Mars and have not worked.”

Baroness Cumberledge, a Conservative peer, talked about the first healthcare centre in the UK that was owned by the patients. “Founded in 1984, it began with just 12 elderly patients, a rundown church, and just £400 in the bank. Today, by applying entrepreneurial principles to challenge social and health issues, it now has more than 250 staff. It is responsible for 43,000 patients … and four health centre sites across Poplar. It operates on 30 sites even more widely across east London. It has supported local entrepreneurs. What is really interesting is that it has built 93 small and medium-sized enterprises. This is people helping themselves and ensuring that there is employment through a charitable structure, a housing company, which is controlled by the residents and now owns 10,000 properties and 34% of the land in Poplar.”

Last year the government created a scheme that allowed lots of people to move to the UK from Hong Kong. Over the last three months, 90,000 people moved here via this scheme. This was brought up in the Lords debate on Nationality and Borders. Lord Patten of Barnes, a Conservative peer, said “The latest figures in Hong Kong suggest that, of those working for medical services, the number of doctors has decreased by 5% and the number of nurses has decreased by almost 8%, and there has been a huge drop in the number of teachers – 1,000, I think, have left. Most of them have come here. It may be a matter of amazement to the Chancellor that fewer of the young entrepreneurs have come here than have gone to Australia, Canada and the United States.”

APPG for Entrepreneurship Digest: February 2022

Are we doing enough to inspire young people and equip them with the skills to start and grow their own businesses? Many prominent business leaders believe the answer is no. Virgin founder Richard Branson recently told The Times that the education system stamps out creativity and builds in a fear of failure that discourages people from taking risks. One issue is that young people are rarely exposed to entrepreneurs. Multiple polls have found that most young people can’t name an entrepreneurial role model.

Yesterday, we brought together a range of experts and entrepreneurs for an APPG for Entrepreneurship roundtable on Entrepreneurship Education. As is often the case with discussions around education, strong opinions were expressed.

However, there was also widespread agreement particularly on the issue of the wider applicability of entrepreneurial skills. Creativity, teamwork, leadership, and self-motivation are valuable in every line of work. There was recognition as well that entrepreneurship education helped highlight the relevance of more academic knowledge by showing how the learning could be applied in the real world.

The roundtable kicked off a new APPG for Entrepreneurship research project into Entrepreneurship Education. The research, which is kindly supported by financial advisers finnCap, will look at how we can improve the quality of entrepreneurship education in British schools. It will build upon past work from the APPG for Entrepreneurship such as our review of best practice for enterprise education in universities.

We will be putting out a call for evidence shortly, so if you want to contribute to our research into entrepreneurship education then get in touch and we will update you next month.

Calling all Officers
As we plan our AGM, now is the time for MPs and Peers interested in getting more involved in the APPG to get in touch with us to let us know. Drop Katrina Sale an email to express your interest.

Sharing Economy Lords Launch
Following the launch of my Sharing Economy report last year, on 15th March from 3.30pm to 5pm we will be hosting an afternoon tea for Sharing Economy entrepreneurs, MPs and Peers. If that’s you, just let us know if you would like to attend.

From our Advisers
Mike Spicer of Policy Department has published a list of five business trends to watch in 2022. He has also published the first episode of his South Yorkshire PolicyPod featuring Careers and Enterprise Company CEO Oli de Botton and City & Guilds CEO Kirstie Donelly.

In Parliament

The Minister for Women and Equalities, Kemi Badenoch, was asked by both Dame Caroline Dineage, the Conservative MP for Gosport, and Simon Bayes, the Conservative MP for Clwyd South, about what steps she was taking to support women in enterprise.

She said “The Government continues to support women in enterprise by implementing the recommendations of the Rose review. Our start-up loans company has advanced more than 35,000 loans to women since 2012, worth nearly £300 million, and that represents 40% of all loans.”

She also congratulated a constituent of Simon Bayes saying “Kerry Mackay is inspirational and I congratulate her and all her colleagues at ScrubbiesUK. She is an exemplar for small businesses, leading the way to help the UK tackle plastic pollution and reach our climate goals. I am glad to hear that she benefited from Government mentoring support, and I will ask the relevant Business Minister to write to my hon. Friend with more details. In the meantime, I hope that people like Kerry Mackay will raise awareness of this opportunity through their own networks, which is often the most effective way to spread the word.”

When Caroline Dineage asked a follow-up question about the impact of COVID-19 on sectors with a higher proportion of female founders in them, the Minister replied “Some of the sectors most impacted by covid, such as the arts and hospitality, include a high proportion of women-led businesses. She will be aware of the targeted measures to help these sectors that were announced just last month by my right hon. Friend the Chancellor, including one-off grants of up to £6,000 per premises for the hospitality sector and £30 million through the culture recovery fund. That support will help female entrepreneurs to keep trading through the current difficulties and make the most of future opportunities as they look forward to the end of the pandemic.”

Andrew Gwynne, the Labour MP for Denton and Reddish asked “when [will the Commons] have an opportunity to scrutinise the allocation of levelling-up funding? Stockport Council put forward a superb bid for the refurbishment of the Edwardian Reddish baths, fire station and library buildings into a new employment start-up space, learning centre and community hub. It ticked all the boxes: civic pride, employment generation, skills, community. No funding was given.”

The Leader of the House, Jacob Rees-Mogg, replied that “There is £4.8 billion in the levelling-up fund to help to regenerate town centres and high streets, upgrade local transport and spend money on cultural and heritage assets, and there is £2.4 billion in 101 town deals, investing taxpayers’ money in local economies. It is important to help our towns and cities in restoring local pride across the country. There are always more applications than ability to fund. That is a good thing—a good competitive spirit—and it shows that towns and cities are full of pride for their efforts, successes and histories, but there is not unlimited taxpayer money.”

Following the release of the Levelling Up White Paper, Mary Robinson, Conservative MP for Cheadle, said “I welcome this White Paper and the multi-billion pound investments in brownfield regeneration, connectivity, research and development, and especially the innovation accelerators, which in Cheadle and across Greater Manchester will make a real difference to all those businesses that want the extra help to start up.”

In a debate on Rockets and Satellites, Jerome Mayhew, Conservative MP for Broadland, praised a business called Graitlab in his constituency, saying that “space is no longer just for Governments and multinationals”. He then asked if the government would ensure that our regulation of the sector would encourage start ups.

APPG for Entrepreneurship Digest: Jan 2022

In the world of politics and policymaking, it is often tempting to focus on what isn’t working and ignore what is. There’s a straightforward reason for this. When, for example, energy prices skyrocket, it suggests something needs to change. But, it is a mistake to only focus on problems. If we spend too little time looking at success stories, it can lead to two shortcomings.

First, many solutions from one area of policy could apply in two other problems. For example, FinTech’s regulatory sandbox, which allows startups to test innovative propositions in the market with real consumers, has inspired similar sandboxes in other sectors such as drones and data.

Second, if we do not spend time understanding why certain markets and sectors are successful, we might undermine them in the future. The author GK Chesterton makes the point that we should not tear down fences until we know why they were put up in the first place.

The UK’s tech sector is a success story, which I think deserves more attention.

Last year, research from the Digital Economy Council revealed that:

• UK startups raised and scale-ups raised £26bn last year, nearly double the figure raised in Germany (£13.5bn) and more than three times that raised by France companies (£8.6bn).

• In fact, UK tech investment made up more than one third of all investment into the European tech sector.

• There were 29 unicorns (firms valued at over $1bn) created last year, bringing the total number of UK unicorns to 116.

The UK’s tech sector is a source of new jobs too. Advertised tech vacancies hit 160,887 in November and tech jobs are now half of all vacancies outside London and the South East according to online job board Adzuna. In fact, the tech sector plays a key role in levelling up the UK with the rest of the UK seeing nine new unicorns and nearly £9bn in new investment.

It’s worth then looking at what the ingredients of our startup successes are.

I can think of three.

1. Immigrants play an outsized role in the UK’s tech ecosystem, both as employees and as founders. Two years ago, I surveyed the founders of Britain’s 100 fastest growing startups and found that half were born overseas. Reassuringly, the message has got through to government with the Chancellor citing the research at the last Budget.
   

2. Universities are important too. Growth is concentrated around the UK’s leading research universities. As well as training the next generation of tech founders, they are also a magnet for international talent. In my research into immigrant founders, it was striking to see how many moved to the UK to study and then stayed. The restoration of the Post-Study Work Visa is a positive step on this front. Our universities are truly world-beating and many tech ecosystems wish they had the same. We shouldn’t take them for granted.
   

3. Tax breaks such as the Enterprise Investment Scheme, the Seed Enterprise Investment Scheme and VCTs play an important role too at the early stage for tech startups. Many startups and investors see the reliefs as essential. Yet, there is some uncertainty around the schemes as they are set in April 2025. Worryingly, awareness among Parliamentarians is often low. A 2017 poll suggested a sizable proportion had never heard of EIS and a majority had not heard of SEIS or VCTs.

Over the next year, the APPG for Entrepreneurship will continue to produce briefing papers highlighting challenges for entrepreneurs. But it shouldn't all be gloom and doom. Alongside the policy recommendations we’ll also be working to improve understanding and awareness of the key ingredients in the UK’s startups successes.

In parliament

In a debate on Cooperatives and Mutual Societies, Steve Baker, the Conservative MP for Wycombe, made the case for the government to do more to support cooperatives. “By international comparison, [the UK’s] co-operative economy is small and growing slowly. Less than 1% of businesses in the UK are co-operatives. Germany’s co-operative economy is four times bigger than the UK’s, and France’s is six times larger. That might well derive from history, but I say to the Government that now is a moment when we can choose positively to take a path that makes it more possible for co-operatives in the UK to grow. The UK’s co-operative start-up rate is also comparatively low. In recent years, South Koreans have created 12 times more co-operatives per head of population than we in the UK have. Perhaps the co-operative model is underused and is something of a best-kept secret in our society and economy.

“Co-operatives are great vehicles for creating and sustaining decent, rewarding and empowering livelihoods. For example, after five years of trading, the average worker co-operative in the UK supports six times more livelihoods and is almost twice as likely still to be trading as start-ups generally. According to a multi-country study, although they are currently far fewer in number than businesses generally, worker cooperatives are on average larger and employ more people. There are examples of cooperative entrepreneurship, for example the taxi drivers in Cardiff who clubbed together to set up their taxi-hailing co-operative, and of participation in existing freelancer co-operatives, such as the new co-operative mutual aid platform, We-Guild, or the creatives’ co-operative Chapel Street Studio.”

He also says that cooperatives are more resilient than other businesses .“A growing body of data shows that co-operatives are especially resilient businesses. At a time like this, resilience could not be more important. Official data in our country shows that co-operative start-ups are twice as likely as start-ups generally to survive the first five years of trading, for example, with similar findings in other countries. Separate research shows that co-operatives in the UK that raise equity via community shares—a crowdfunding model unique to co-operatives—are more resilient still, with a 92% survival rate.”

The Labour MP for Plymouth, Luke Pollard, described some work being done in Plymouth to support social enterprises. “In Plymouth, we have co-operatives such as Nudge Community Builders, which works to transform life chances in one of our poorest communities—not just in Plymouth, but in Britain—by rebuilding and refurbishing buildings along Union Street and Stonehouse. It is transforming that community by not only improving the buildings, but creating spaces for start-ups, social enterprises and community services. It is helping to restore pride in something by allowing people to invest in their own community through that effort.”

In a debate on Financial Services, Conservative MP for Cambridge, Anthony Browne said that now, post-Brexit, it is time to reconsider some of the EU financial rules which we copied over upon leaving the bloc. He said “I personally support allowing two classes of shares to encourage investment in start-up companies. The Government are now consulting on regulatory reform of wholesale financial markets, particularly the second markets in financial instruments directive, MiFID II, and the rules on the capitalisation of the insurance market—Solvency II. If we get the reforms of Solvency II right, that promises to unleash productive investment across the UK, especially in high-growth firms. MiFID II and the European market infrastructure regulation are extraordinarily detailed and prescriptive, and could be simplified without harm. Excessive detail can prevent beneficial innovation. We should avoid gold-plating international standards, unless there are clear reasons to do so. Rules on pre-trade transparency can be counterproductive. The share trading obligation can be safely removed.”

APPG for Entrepreneurship Digest: November

It is Global Entrepreneurship Week. In almost 200 countries across the world, 10 million people are taking part in more than 40,000 events and campaigns to celebrate entrepreneurship. As Jonathan Ortmans, President of the Global Entrepreneurship Network, points out, entrepreneurs are needed more than ever before.

“They are more than glass-half-full optimists – they are natural leaders made for times like these. While some of us get frightened during uncertain times, entrepreneurs thrive on disruption and overnight changes in the rules. They see hundreds of thousands of possibilities, countless solutions to test, and a lot of work to be done. We need more entrepreneurs in the world - people with the aptitude, courage and resilience to help us innovate our way through challenges. This week is all about them.”

If you want to get involved, you can find out more about some of the 50 plus events that are taking place in Britain this week here, and you can show your support through the hashtag #GEW2021.

Budget 2021

Last month saw Chancellor Rishi Sunak deliver his third Budget speech to Parliament. While the general focus was on the outcome of the Comprehensive Spending Review and what that meant for public services, there were a few major announcements for entrepreneurs.

APPG Adviser and Coadec’s Executive Director Dom Hallas summarised some of the key announcements in a short Twitter thread.

Among the policies announced were an expansion of the R&D Tax Credit to cover cloud computing and data costs and new reforms designed to encourage more pension fund money into venture capital. These two issues have come up at multiple APPG for Entrepreneurship events, so it was positive to see movement here.

For me personally, it was an exciting budget, as the Chancellor cited data from a report I co-authored on immigrant entrepreneurship when he set out the details for the new Scale-up visa, which simplifies the visa system for fast growing companies.

The Budget also saw more money pledged to the British Business Bank’s regional funds to provide more equity and debt finance to SMEs and to expand the bank’s regional angels programme.

Calls for Evidence

We want to better understand how we can ‘level up’ the UK’s entrepreneurial ecosystems and promote job creation across the UK. The call closes this Friday.

We want to hear from both entrepreneurs and researchers. So if you have any insight to offer we would really appreciate a submission.

From our Advisers

The CBI has launched Big Fish Little Fish, a new project designed to share best practice on facilitating innovation partnerships between large and small businesses.

New research from Enterprise Nation and Dropbox highlights the benefits of adopting tech for small and micro-businesses. By turning manual working processes into digital ones, a small or micro-business could save around 150 hours each year.

In Parliament

In a debate on the Income Tax charge, Nick Fletcher a Conservative MP, takes a moment to give a shout-out to people who start businesses. “Let me express my gratitude to all the businesses out there—from the white van man to the entrepreneur; from the young people setting up a start-up to the loyal employee of a private enterprise; from the chief executive who is sweating about his next board meeting, to the salesman who has just lost or won their latest order. This is not some cheap talk from a politician: I know what it is like. I have been there: no days off; sleepless nights worrying about getting paid; fretting about being able to pay staff; the thought of reading that tax bill. I know that literally thousands of people have those thoughts on a regular basis, and they are members of our business community. We must not forget them, and neither must we forget to thank them for all the work they are doing to prop up this great country and help to fund the services that we hold so dear.”

In a debate in the Lords on the Budget Statement, Lord Londesborough, cross bench, said: “drawing chiefly on [his] own experience in the private sector—30 years as an entrepreneur and employer, and the last seven years as an adviser and investor in start-ups” that “to boost living standards in real terms, we need sustained growth and productivity, something that we have not seen in more than 10 years. Since 2010 the UK’s productivity, as measured by GDP output per hour, has grown by just 4%, according to the OECD. That seems extraordinarily low when you consider the huge advances in technology and communication over that period. Let us put it in context: France had an 8% gain in productivity in the same period, Germany almost 10% and the US more than 10%. This spells trouble for global Britain’s place in the world marketplace, and indeed for building back better.”

Not everyone is as pessimistic. In the Commons debate on Budget Resolutions, Bill Wiggin, a Conservative MP, said: “Now, as we make our way out of the pandemic, it is encouraging to see signs of our economy recovering at a great pace: record numbers are in work, job vacancies are at a record high and we have the fastest-growing economy in the G7.”

In a debate on Carbon Emission Charges, Conservative MP and APPG for Entrepreneurship Officer Jerome Mayhew, gave an impassioned case for a border adjusted carbon tax. He said that: “too often, the market has been seen as the villain. We talk about business profiteering at the expense of the environment, or businesses trashing the world’s resources, and that applies not just to carbon net zero but to biodiversity … It is true that historically, the market has been almost totally blind to the cost of carbon in its economic transactions. When I buy a product—such as this glass—I pay for the raw materials, the design process, the manufacturing, the marketing, the transport and the profit, but I do not pay for the cost of the carbon emission, because that is described as an externality: it dissipates into the atmosphere and there is no significant cost attached to it. The result of that misallocation of resources is that the transaction is incomplete. As a purchaser, I am not having a true economic exchange with the supplier, because I am paying for only part of the product, not all of it.”

He described the current situation as “plans from Government, who are picking technology winners by investing in hydrogen, for instance.”

He said that he “hopes that hydrogen will be a key part of the solution in our progress towards net zero by 2050, but it might not be. The real problem is that we are currently relying on the Government to take those kinds of decisions because the market is substantially blind. We need to unleash its power through a price for carbon … As an economy, we have been very timid in our approach to applying a cost of carbon. We do apply it in some sectors—about a third of our manufacturing base is affected in some way by carbon pricing through the emissions trading scheme. But that is only a third: two thirds of our manufacturing base has no carbon pricing attached to it at all, and none of this country’s imports are assessed or priced for their carbon content.”

APPG for Entrepreneurship Digest: October

Over the past few weeks I have been reviewing the submissions to the APPG for Entrepreneurship’s Call for Evidence on the Sharing Economy. It has been, to me, a testament to the valuable insights that entrepreneurs can provide to the policy process. From nitty-gritty details on tax breaks that most parliamentarians (almost two-thirds by last count) have not even heard of, to insights into international best practice – exporting is a great way to learn about which policies work and which do not.

It is a good reminder of why the APPG for Entrepreneurship was set up. Every politician we speak to understands the value of entrepreneurship and wants to support it, but entrepreneurs are often hard to reach. They understandably are more focused on doing right by their customers and employees than engaging in the policy process. Too often, their voices are lost in the debate and only the biggest businesses can get their views across.

Help to Grow: Digital

Our friends at The Coalition for a Digital Economy (Coadec) highlight one case where active engagement with entrepreneurs could improve policy. The new Help to Grow: Digital Scheme was recently debated in Parliament and Science Minister George Freeman MP was right to explain why a scheme was needed: “a key reason for the UK’s level productivity gap is the low adoption of basic digital technologies and weak digital leadership and management practices. While we excel at innovation, being eighth in the world, we are only 31st for ICT adoption. Our small business sectors are lagging in adopting digital technologies, and our tech adoption rates are far behind leading competitor countries.”

However, the scheme, which provides vouchers for SMEs with 5 or more employees, may be missing an opportunity. Coadec complain that the software covered by the scheme is too limited. They write: “The 50% discount vouchers to just three types of software: Customer Relationship Management (CRM), e-commerce and accountancy software… This narrow list of software products is typically dominated by larger corporate suppliers - sticking with this narrow list risks cutting out UK providers whose products can deliver immense value.”

They find that broadening the categories of software covered would boost the UK’s fast-growing tech startups, and calculate that it could also have significant productivity benefits: an increase of nearly £2bn increase in GVA.

Green Entrepreneurship

At The Entrepreneurs Network we are launching a new Forum: the Green Entrepreneurship Forum. At 10am on 14th October we’ll hold our launch event. Any MPs or Peers who would like to speak or attend should get in touch with Katrina Sale.

Calls for Evidence

We are looking at levelling up. We want to better understand how we can ‘level up’ the UK’s entrepreneurial ecosystems and promote job creation across the UK. The call closes on November 3rd.

We want to hear from both entrepreneurs and researchers. So if you have any insight to offer we would really appreciate a submission.

From our Advisers

Coadec is one of the many groups who advise the APPG for Entrepreneurship to keep us up-to-date on the issues that matter to business.

Each month, we highlight some of the best events, research, and programmes they have on offer.

Tech Nation launched its annual Jobs and Skills report during London Tech Week and revealed that 1 in 8 job opportunities are in the digital sector. As Birmingham Tech Week takes place this week, they note that the West Midlands has the fastest growing tech sector in the UK and is on track to create 52,000 jobs by 2025. Tech Nation has also been busy announcing the best and brightest companies that have joined its Future Fifty, Applied AI and Libra programmes. To find out more, here's the latest audio update from their CEO.

In Parliament

Kemi Badenoch MP (Conservative), the Minister for Equalities, announced the appointment of LGBT business champion Iain Anderson. “[He] will work with the Government, building the evidence base on how to ensure that LGBT people can be themselves in the workplace. Among his first priorities will be kick-starting a business-led mentor network, including small and medium-sized enterprises, supporting the global LGBT conference and engaging businesses to highlight the economic case for LGBT inclusion.”

There was a debate in parliament about Help to Grow: Digital. Parliamentary Under-Secretary of State for Science, Research and Innovation, George Freeman MP (Conservative), said “In 2019, the Department for Business, Energy and Industrial Strategy/Her Majesty’s Treasury business productivity review found that a key reason for the UK’s level productivity gap is the low adoption of basic digital technologies and weak digital leadership and management practices. While we excel at innovation, being eighth in the world, we are only 31st for ICT adoption. Our small business sectors are lagging in adopting digital technologies, and our tech adoption rates are far behind leading competitor countries.” He said that this was the rationale behind the Help to Grow: Digital initiative.

Chi Onwurah MP, the Shadow Minister for Science, Research and Digital (Labour), had some questions about the scheme. First, she wanted to know about the limits of the programme. “specifically whether it extends to charities, mutuals, co-operatives and other organisations that need to grow and have significant economic outputs and make a significant contribution to our economy.”

Second, she wanted to know about the take-up of the scheme. “It has been open for registration since March. How many SMEs have registered, and how many do the Government expect to register in future? What measures are being applied to ensure that businesses that are under-represented by sector, female-led and ethnic minority-led businesses, or businesses led by disabled people, are accessing the programme? Furthermore, given the Government’s commitment to levelling up –we have a new Department with that in its title – what provisions are there to ensure that this funding makes its way across the country rather than focusing on growth in London and the south-east? What is the Minister doing to encourage regional take-up?”

Third, she wanted to know about the procurement process for the technology: “Are the technologies purchased at the high street price or have discounts been achieved?”

Fourth, she wanted to know if provision was being made for sector specific digital technologies. “I worry that there is something of a one-size-fits-all approach. While there are many things that are common to SMEs, such as basic accounting, others may need more tailored support.”

And fifth, she wanted to know what other support is being made available to help SMEs. “Many SMEs are in debt having taken out Government loans and so on, or are facing rent arrears and even problems hiring staff because of the double impact of the pandemic and leaving the European Union. If businesses do not have support on these fundamental features of any business, my concern is that spending money on digital may prove fruitless or more likely that the programme will be taken up by businesses that are already doing well while others suffer.”

George Freeman (Conservative) replied to say that “this is designed specifically for businesses, so charities are not eligible, but I am delighted to say that all social enterprises – businesses that recycle their profits back into good causes – are eligible, which sends an important message.”

On her second point, he said that “[he] does not have the exact figures, but hundreds of companies have already registered” and about the scheme helping the whole UK, he said: “I could not agree more. This project is not just for the golden triangle, golden and important though it is; it is absolutely about reaching companies across the Union, in Scotland, Northern Ireland, Wales and all the regions of this country. On her point about monitoring, one of the key assessments will be to ensure that we are reaching all across the country, so take-up will be monitored in that way.”

On her third point about procurement, Freeman assures her that “Her Majesty’s Treasury, which is not quick to hand out taxpayers’ money, has been through this with a fine-toothed comb and is satisfied that the procurement process has been done properly.”

He did not touch upon the fourth and fifth points.

APPG for Entrepreneurship Digest: September 2021

The All Party Parliamentary Group for Entrepreneurship was set up to encourage, support and promote entrepreneurship in the UK. One of the ways we do this is by making sure Parliamentarians are kept up-to-date with the latest research on entrepreneurship and innovation.

If I was forced to pick out an essential read for every MP, Baroness, or Lord on entrepreneurship in the UK, then I’d probably pick the Global Entrepreneurship Monitor’s UK Report. Each year, it provides a clear picture of the UK’s entrepreneurial ecosystem.

This year’s update was particularly interesting for a few reasons. First, entrepreneurship will play a key role in the economic recovery. Second, some data (i.e. Companies House registrations) suggested that we saw a bit of an entrepreneurial renaissance with more companies than usual being founded during the pandemic, which was surprising.

Before the pandemic, GEM’s research found entrepreneurial activity was at a high. Just under one in ten (9.9%) of us was engaged in some sort of entrepreneurial activity. Social distancing, lockdowns, and the like appear to have put a dampener on that with total entrepreneurial activity falling by close to a quarter. A decline in nascent entrepreneurship, when someone first tries to turn their idea into reality, was the key driver of the decline.

There are, however, silver linings when you look to the future. More people expressed the intention of starting a business in 2020 than in previous years, from 11% in 2019 to 16.2%. On top of that, the share of those agreeing that starting a business would be a good career choice in 2020 also jumped significantly from 58% to 75% of those surveyed.

The report also highlighted some of the key disparities in entrepreneurship. Women run businesses at 68% the rate of men. This was an improvement on past years but driven more by fewer men starting businesses, rather than more women.

Ethnic minority entrepreneurship is a key interest for many members of the APPG for Entrepreneurship and many will have been curious about the impact of the pandemic upon it. Interestingly, and perhaps surprisingly, the rate of entrepreneurial activity among ethnic minorities remained strong at 14.1% compared to 6.1% for the white ethnic population. Elsewhere, research finds that despite their high rate of entrepreneurship, ethnic minority communities face major barriers when scaling their businesses and remain under-represented among high-growth equity-backed businesses.

This is just a taster. The annual study also has important information about attitudes toward entrepreneurship, whether or not the UK is a conducive environment for entrepreneurship, and more. You can check it out here.

Green Entrepreneurship

At The Entrepreneurs Network we are launching a new Forum: the Green Entrepreneurship Forum. At 10am on 30th September we’ll hold our launch event. Any MPs or Peers who would like to speak or attend should get in touch with Katrina Sale.

Calls for Evidence

This week saw the Call for Evidence for our research into the Sharing Economy close. I’ve been reviewing the thought-provoking submissions and they’ll help form the APPG’s upcoming report.

We still have two more Calls for Evidence Open.

First, we are looking at entrepreneurship within the UK’s Space sector. We want to know how the UK can best support startups and scaleups in the space sector. The call closes on October 8th.

Second, we are looking at levelling up. We want to better understand how we can ‘level up’ the UK’s entrepreneurial ecosystems and promote job creation across the UK. The call closes on November 3rd.

We want to hear from both entrepreneurs and researchers. So if you have any insight to offer we would really appreciate a submission.

In Parliament

In a debate on the Co-operative Purchase of Companies, Christina Rees MP (Labour) endorsed the idea that workers should be able to buy-out companies at a risk of closure. She said: “Such employee buy-outs can hardwire resilience and productivity into our economy by preserving productive businesses and giving employees greater motivation and incentive through their stake in the organisation.”

There was a debate on Careers Guidance in Schools. It was generally agreed that business owners and entrepreneurs should be more involved with this.

Sally-Ann Hart MP (Conservative) said that Careers Guidance is an opportunity for volunteers to come into schools: “Lawyers, business owners, doctors or people who work in the Foreign Office can come in and speak to those schools in their local areas and show children what is out there for them to do.”

Mark Jenkinson MP (Conservative) agreed with her and said that we have been increasing the number of entrepreneurs coming into schools: “More than 3,300 business professionals from local businesses are working with schools and colleges as enterprise advisers to strengthen employer links. Almost 3.3 million young people are now having regular encounters with employers, which is up 70% in two years.”

Esther McVey (Conservative) added to this, and quoted Clare Haywood, the chair of the Chershire and Warrington LEP, who said: “We need to inspire young people about an array of jobs, new emerging jobs, roles they might never have been thought of in tech, digital, life science, jobs of the future. We need schools to engage with the business community who are alert to these future opportunities and have staff who can talk passionately and excitedly about these jobs.”

APPG for Entrepreneurship Digest: June 2021

Dear Members of Parliament, Peers and Friends of the APPG for Entrepreneurship,

In today’s newsletter we are going to be talking about our new officers and the APPG themes we have planned for the next few months.

On the 18th we held our virtual AGM which brought us a new group of officers; Saqib Bhatti MBE MP, Gagan Mohindra MP and Jerome Mayhew MP. Saqib is the former President of the Greater Birmingham Chambers of Commerce, Gagan has held a number of leadership roles in local government, and Jerome is the former managing director of Go Ape. They join Lord Leigh of Hurley, Dr Lisa Cameron MP, Baroness Kramer, Lord Cromwell, Lord Bilimoria, Bim Afolami MP, Baroness Neville-Jones, and our re-elected chair Seema Malhotra MP.

We have lots of exciting plans for the APPG over the coming months. We are running programmes based on three key themes; The Sharing Economy, Space, and Levelling Up.

Soon we will be putting out a Call for Evidence on the Sharing Economy theme. If you would like to know more about that, get in touch.

We will be hosting a virtual roundtable with the Space APPG and the Satellite Applications Catapult which will help to shape a briefing paper on Space Startups. We will be discussing what barriers are currently holding back the creation and scaling of startups in the Space sector, what the pinch points for funding are, and what the government can do to support innovation in the sector. If you are interested in attending, get in touch with Philip.

We have put out a Call for Evidence on the Levelling Up theme. There is more information here for entrepreneurs and here for researchers and business groups.

Next Wednesday, we will be hosting a webinar on New Beginnings. This will be the chance to discuss the findings of our forthcoming report which has been informed by extensive surveys and interviews with business leaders and people interested in starting a business or becoming self-employed living in areas with high levels of deprivation. The report confirms that Covid-19 has exacerbated already existing inequalities in many parts of the UK but argues that new businesses can offer a route out of this.

We’ll discuss how to make a real difference to investment, job creation and wellbeing in deprived communities and look at:

• Priorities for mental and physical wellbeing, job satisfaction and empowerment;

• Financial assistance to start a business (e.g. capital investment);

• Views of bureaucracy and administration;

• Attitudes to risk;

• Access to skills, training and networks.

From our advisers

Research commissioned by The Coalition for a Digital Economy (Coadec) shows that 95% of SMEs will be locked out from accessing the Help to Grow Digital scheme (due to launch in Autumn 2021) in its current form. The research shows that by lowering the eligibility criteria to include businesses with 2-249 employees, and expanding the range of productivity-boosting software available through the scheme, it would deliver an additional £1.9bn in GVA.

The Ubele Initiative Business Group, Extend Ventures, Lendoe, and Black SouthWest Network are working together to deliver the Black Business Matters Initiative. These businesses historically suffer from capital shortages and reduced access to credit. Over the next two months they will conduct a national survey and a series of focus groups of black businesses to gain insight into the banking, finance, and commercial needs of black businesses, and work with HSBC and other partners to innovate and deliver the banking products, services, and future engagement that these businesses need. Find out more and take the survey here.

Tech Nation is currently looking for 160 companies to join its next 6 growth programmes: Upscale 7.0, Future Fifty 10.0, Net Zero 2.0, Applied AI 3.0, Fintech 4.0 and new programme Libra 1.0. Find out more here.

In Parliament

In a Commons debate on A Bright Future for the Next Generation, Jo Gideon MP (Conservative) talks about a local entrepreneur she met who said that when he first went to school all the careers advice was focused on finding a job, any job, to pay the bills. She is happy that there are a far greater range of choices available. She said “Many new industries and creative businesses are built on intuitive digital and media skills and aptitude, rather than formal qualifications … some of the most successful businesses in the past year have been online businesses.”

Sally-Ann Hart MP (Conservative) asked how the government was planning to facilitate levelling up by small businesses, looking specifically at startups and growing SMEs. She asked specifically about issues arising from late payments, employment costs, improving digital skills, and apprenticeships.

Paul Scully MP (Conservative), the Parliamentary Under-Secretary of State for Small Business, Consumers and Labour Markets said that “it is very important that SMEs play a massive role in levelling up around the country”. He said that he has already discussed strengthening the prompt payment code and is looking at other ways to support small businesses.

In a separate debate, Paul Scully celebrated the start up loans programme which he said “has a phenomenal track record of backing budding entrepreneurs. [They] have supported more than 83,000 people across the UK with £733.5 million in loans.”

Sarah Olney MP (Liberal Democrat) lamented that there was “very little in the Queen’s Speech to help our thousands of small businesses all over the country with the real help they need to recover from the pandemic”. She said that the total debt burden for businesses is estimated to be about £100bn and that 40% of the Federation of Small Businesses’ members describe their debt burden as unmanageable. She urges the government to provide additional support to struggling businesses.

APPG for Entrepreneurship Digest: May 2021

This week marks the start of a new Parliamentary Session. Over the next year, the APPG for Entrepreneurship will be working to keep entrepreneurs at the heart. We will be embarking on an ambitious research and events agenda over the next twelve months.

To start, we are working with the Enterprise Research Centre to produce a report on Levelling Up and why supporting new business creation will be key to it. To that end, we have put out a Call for Evidence asking entrepreneurs, business groups and research for information about what is and what isn’t working to support entrepreneurs across the UK.

You can read the full terms of the Call for Evidence on the APPG for Entrepreneurship website. We have two separate sets of questions: one for entrepreneurs and one for researchers and business groups. All responses must be submitted via email.

But that’s not the only research programme we are embarking on. Next month, we are kicking off a new APPG theme focusing on the Sharing Economy on 25th May. Any MPs, Peers, entrepreneurs or experts should get in touch with Philip Salter to request an invitation.

We plan to do a lot more too. If you are a MP or Peer and want to get involved to help shape the direction of the APPG for Entrepreneurship then you might like to attend our upcoming Annual General Meeting next week.

Our virtual AGM will take place on Tuesday 18th at 10.30am to 11.30am. It will be an opportunity to elect new Officers and discuss plans for the next 12 months.

Any MPs or Peers who are keen to attend should drop Katrina Sale, the Coordinator of the APPG for Entrepreneurship, an email so she can send you a diary invitation.

From our advisers

Each month, we keep you updated on the latest initiatives, events, and research relevant to entrepreneurs from our advisory board.

Applications are now open for Tech Nation’s growth and sector programmes. Tech Nation is currently looking for 160 companies to join its next 6 growth programmes: Upscale 7.0, Future Fifty 10.0, Net Zero 2.0, Applied AI 3.0, Fintech 4.0 and new programme Libra 1.0. Find out more here.

Tech Nation is also hosting an event entitled “The UK and AI: What’s Next?” on 2 June 2021, where they will explore how the UK is scaling up and levelling up our AI ecosystem as we prepare for a future built on deep tech.

Enterprise Nation is working in partnership with Dell Technologies to offer “nine inspiring, re-energising lunchtime sessions designed to help small businesses rest, recharge and come back, ready to take on what's next.” Business owners can register for free to learn from a host of business experts and entrepreneurs offering their expert advice.

In Parliament

The bill for the new Advanced Research and Invention Agency (ARIA) bill had its first sitting. The committee called a range of witnesses. Tris Dyson, the managing director of NESTA, is enthusiastic about ARIA. He believes that ARIA might be able to generate a culture that is more nimble, agile, and able to take risks. He thinks that it will therefore be more entrepreneurial.

He said it is important to find the right people to lead ARIA, and is clear that this is not about finding people with the right private sector or scientific background, but instead finding people with the right “creative and entrepreneurial mindset”.

In a debate on the Office for Investment, Julie Marson MP, praised the government’s aims to attract more FDI into the UK. She said “we have long been a global centre of FDI in this country. FDI stock levels reached £1.6 trillion by the end of 2019. We have traditionally been the top FDI destination in Europe, and according to the World Bank we are second only to Denmark in offering the best business environment in the world. That has been so crucial to the success of our startup ecosystem, and it is why so many businesses want to come here.” However, she cautioned that global FDI levels fell during 2020, and that between 2018 and 2019 the UK’s FDI flows had already fallen by £6bn. She called on the government to take action to reverse this trend.

Marson welcomed the establishment of the Office for Investment and suggested that, in order to take advantage of assets already in the UK, that we establish a domestic version of the office as well, and this office should encourage pension funds and other asset managers to invest in the UK.

Richard Fuller MP criticised the government’s plans to increase corporation tax, saying that “hardworking business leaders [have emerged] from a torrid 12 months” and that “essentially the government is putting a tax on success”. Sarah Olney MP disagreed and criticised the government for delaying the corporation tax increase for a couple of years while freezing the personal tax allowance, and therefore increasing taxes on ordinary people “by stealth”.

Greg Hands, the Minister for Trade Policy, was asked what he was doing to promote professional business services in free trade agreements. He said they were “seeking ambitious FTA commitments in cross-cutting areas like mobility and digital, as well as tackling specific behind-the-border regulatory barriers such as recognition and professional qualifications.”

APPG for Entrepreneurship Digest: April 2021

In this month’s APPG for Entrepreneurship Digest, we look at what the recent Sewell Report on Race and Ethnic Disparities says about entrepreneurship.

The Commission on Race and Ethnic Disparities final report, published last week, has certainly sparked debate. Set up in the wake of last year’s Black Lives Matter’s protests, the Sewell review looked at the impact race and ethnicity plays across a range of fields, one of which was entrepreneurship.

Some of the stats in the report were stark.

• Aspiring Asian and ethnic minority entrepreneurs were twice as likely to cite difficulties in accessing finance as the reason they gave up on their idea compared to white British entrepreneurs.

• Black-owned businesses turned over £10,000 per annum less than White owned-businesses.

• Female ethnic minority entrepreneurs were more than twice as likely (33%) to report making no profit in 2019 compared to white female entrepreneurs (15%).

• Only 38 Black entrepreneurs, in a sample of 3,784, received venture capital funding in the past 10 years.

The last stat comes from Extend Ventures research. Their Diversity Beyond Gender report is an essential resource on this topic and contains even more sobering stats.

The report identified a range of barriers that ethnically diverse entrepreneurs face. This includes a lack of communication between high street banks and entrepreneurs with many fearing rejection. The report argued that “there is work here for high street banks and lending institutions in making themselves more accessible to these community groups who currently do not consider lending to be a viable access route for them”.

The report’s key recommendation on entrepreneurship was focused on the fact that seed capital for entrepreneurship was concentrated at elite or ‘tier 1’ universities. However, many universities are recognised for promoting small businesses and operate in areas with large ethnic minority populations, but lack the large endowments that research-focused elite institutions have.

To correct for this, they have proposed pilot schemes with HSBC UK to provide these institutions with better funding to “1) bolster their offer of support to aspiring entrepreneurs; and 2) further enable them to nurture entrepreneurial talent.”

The idea is that these pilots can act “as a model for other banks and financial institutions to emulate in collaboration with universities as a way to nurture talent, encourage innovation, and offer support to aspiring entrepreneurs from underrepresented and low-income backgrounds across the UK.”

The reception for this idea has been mixed, with some suggesting it was overly simplistic. A working group on enterprise and employment, led by the British Business Bank, said that their 11 evidence-based recommendations, including greater access to capital for aspiring and existing minority ethnic entrepreneurs and mandatory reporting by employers on ethnic pay gaps, were ignored.

Still, we think enterprise education is important and a few years back we published a report looking at the way it is taught at higher education. One of our key findings was that too few university students are exposed to enterprise education. Breaking down silos and ensuring that enterprise is embedded in the curriculum, rather than being treated as a bolt-on extra will be key to delivering the ambition of ‘enterprise for all’.

One area where I would have liked to have seen more thinking was on the need to intervene at an earlier age. My colleague Anton Howes emphasises the importance of upstream innovation policies, e.g. inspiring more people to become entrepreneurs. Researching my report, Educating Future Founders, I learnt about a range of positive schemes to get young people interested in entrepreneurship at an early stage. Many of which, such as the Prince’s Trust Enterprise Challenge and Ultra Education, serve a diverse range of students and introduce a wider range of people to the idea of entrepreneurship.

From our advisers

New research from Enterprise Nation, in partnership with Starling bank, found that Bounce Back Loans have been used to adapt and grow businesses. Almost a third of recipients have used the funds to invest in their businesses with 27% of them introducing new products and services, 13% bringing in new technology and 24% using the funds to increase marketing efforts.

In Parliament

There was a debate in the Lords on the National Security and Investment Bill. The Bill would require people investing in UK businesses in strategic industries to file for approval by the Secretary of State.

Lord Vaizey of Didcot believes that UK nationals should be exempt, as UK investors investing in UK businesses are unlikely to pose a great national security risk. He also believes that investors from allied countries, he named Australia, Canada, the US and New Zealand, should be exempt. Baroness Noakes disagreed and said that investors from the UK and allied countries should still have their deals reviewed by the Secretary of State in case the larger investing company uses their money to buy and kill new innovative technologies to “avoid disruption in lucrative markets”.

Lord Leigh of Hurley believes that people who are investing very small amounts should also be exempt. He said that many entrepreneurs, who may start businesses in strategic industries, raise their first round of investment from friends and family. Sometimes these people will want to put in amounts as small as £1000 into companies and they may be deterred by the paperwork burden and wait-time.

In the commons, Ruth Edwards MP praised the super-deduction, she said it was “setting the stage for our future economy” while Mel Stride MP fears that it does this by just pulling forward future investment into a more recent time period.

Lord Sarfraz praised the whole budget and said it was “one of the most start up friendly budgets in years''. He said that the future fund for breakthrough technologies will encourage people to invest in diverse founders and that there are several refreshing ideas around R&D tax credits, the EMI scheme, and pension fund asset allocations.

Also in the Lords, Baroness Doocey said that much of the tourism industry has “fallen through the cracks”. She said that touring coach operators, English language schools, and events organisers have not been eligible for measures taken to support hospitality and leisure, even though they have been just as impacted by the pandemic. She asked the government to address these anomalies and target support to these businesses.

APPG for Entrepreneurship Digest: March 2021

In this month’s APPG for Entrepreneurship Digest, we are focusing on the key policy changes announced at Wednesday’s Budget that affect entrepreneurs. We are also going to highlight some of the consultations announced on topics that will be of interest to most entrepreneurs.

To help break down the key news for entrepreneurs in the budget, we are relying on the many business organisation representatives that sit on our Advisory Board.

One issue raised at the Budget which the APPG has discussed before is the importance of management. A couple of years back we hosted the launch of my report Management Matters. It was interesting then to see the announcement of Help to Grow, a new scheme to help SMEs access better management training from business schools and acquire new digital tools.

Advisory Board member Emma Jones of Enterprise Nation commented: "We welcome Help to Grow and look forward to working with government to ensure this scheme is relevant for businesses and delivered in an environment in which they already operate, i.e. through existing small business networks and private sector advisers.”

While broadly welcoming the move The Entrepreneurs Network cautioned: “It is vital that startups are involved in the design of the scheme and that software vouchers do not only go to tech giants.”

For high-growth tech entrepreneurs, there was a lot of interest in the Budget. Dom Hallas who runs Coadec, the lobby group for tech startups, and also sits on our advisory board picked out a few changes of note.

He welcomed the announcement of the Future Fund: Breakthrough, the sequel to the Future Fund, a policy which provided matched convertible loans to venture-capital and angel backed businesses. He said: “It’s great to have more capital available for growth companies but we want to make sure that it’s the right kind of support going into the companies that need it not propping up ones that don’t”. Jenny Tooth of the UK Business Angels Association said: “It was especially heartening to see the Chancellor’s commitment to addressing the funding gap for innovative scaling businesses”. However, she also noted that if the scheme copied its predecessor then it would exclude EIS and SEIS investors.

Entrepreneurs deterred from listing on public markets due to fears around loss of control will have welcomed the announcement that the Chancellor provided backing to the Hill Review’s recommendations on dual-class share structures. Dom Hallas backed the move saying: “If we miss this opportunity, the UK’s pipeline of high-growth companies will continue to go to the US or be sold to private equity or competitors.”

Our friends at Tech Nation described the news that a proposed UK Infrastructure Bank is set to be located in Leeds as “a promising recognition of the need to channel more support into the regions and should help local tech ecosystems to build sustainably.”

Arguably, the most important aspect of the Budget was the continuation of business support throughout the covid period. The CBI welcomed the news, stating: “Thousands of firms will be relieved to receive support to finish the job and get through the coming months.”

However, issues were raised around competitiveness with the announcement of 25% Corporate Tax Rate, with the CBI arguing "The government must now have a laser-like focus on the UK’s competitive position in the round, including fundamental reform of the unfair Business Rates system.” The inclusion of a 130% super-deduction for investment will act as a powerful incentive. But some groups, including Coadec have raised concerns that intangible investments may not be covered. It’s important now for the Treasury to clarify this as intangible investment is increasingly important to businesses.

The Capital Gains Tax changes we discussed last month were not featured in the Budget, which will have been a relief to many of the entrepreneurs we have spoken to.

Many of the entrepreneurs I’ve spoken to tell me that access to talent is the number one issue for them. As such, Philip Salter of The Entrepreneurs Network welcomed the new changes to the visa system: “Allowing holders of international prizes and winners of scholarships and programmes to automatically qualify for the Global Talent visa will offer the necessary assurance to the very best and brightest that they are welcome in the UK”.

He also mentioned the importance of immigrant entrepreneurs, who research shows were involved in the founding of half of the fastest growing businesses in the UK, welcoming a review of the Innovator visa, stating “the Innovator visa is currently unfit for purpose, needing fundamental reforms to align incentives so the pricing is clear and more high-quality organisations become endorsing bodies”.

The Budget is also a time when entrepreneurs can gain some clarity on future policy with reviews and consultations announced. There are a few relevant to entrepreneurs.

First, the Treasury will consult within the next month on the pension charge cap, in order to crowd in more institutional capital into startups and scaleups. This is an issue many business groups have campaigned for.

Second, the Chancellor also announced a review of the EMI scheme and the Government will look at allowing more businesses to access it. Other countries in Europe, Finland the latest, are upgrading their equivalent schemes so it’ll be interesting to see where we end up.

Finally, the Chancellor also announced that the Government will look at bringing data and cloud computing costs into the scope of the R&D Tax Credit. This is an issue that Coadec in particular has campaigned on for years.

There’s a lot to take-in and I’m sure more information will come on the specifics of scheme such as the Future Fund and Super Deduction over the next few weeks. As the Secretariat for the APPG for Entrepreneurship we’ll make sure we pass on any information how the policies actually function to Parliamentarians from entrepreneurs on the ground.

In Parliament

In the run-up to the budget, Lord German (Liberal Democrats) argued for fundamental business rates reform in a debate on Non-Domestic Rating (Designated Area) Regulations 2021 he said: “The crisis facing our high streets and the burden business rates place on companies compound the problems that we have with this tax. Business rates, by taxing the value of a business’s machinery and premises, are a tax on investment itself. The result is a higher bill for the ambitious entrepreneur who decides to expand factory space or add solar panels to the roof and a lower bill for the speculative landowner who chooses to leave their commercial plot derelict or unused.”

Echoing the recommendation in the APPG for Entrepreneurship’s Tax Reform paper he said: “The replacement of business rates with a new tax based solely on land value and paid by landowners, would remove the existing disincentive to invest. It would also spare millions of small businesses which rent their premises the unhelpful administrative burden of business rates.”

In a debate on High Growth Global Markets, Dr James Davies (Conservative) asked Trade Minister Graham Stuart MP: “Can he assure me that the Department for International Trade regularly engages with businesses of all sizes across the UK, including in north Wales, to ensure that the objectives of the Department are closely aligned with the needs of industry?”

In the same debate Bill Esterton MP (Labour) said: “His Department telling exporters to open an office in the EU is not good practice when it is its answer to delays at the border that it was warned about. When are Ministers going to sort out the problems at the border that mean businesses are drowning in red tape?”

Dr Rupa Huq MP (Labour) highlighted the issue for freelancers and SMEs in the creative sectors: “Mounting costs are killing one of our biggest exports—culture—with additional duties on physical product and performers. My constituent Andy Smart has regularly performed at two comedy/ski festivals, but now one of them no longer accepts Brits, preferring the Irish, and the other has been cancelled as unviable because of Brexit obstacles. Can we work cross-departmentally to abolish these levies, because, as one of those festivals is called, it is literally taking the piste?”

At Prime Minister’s Questions, Danny Kruger MP (Conservative) asked: “The last time the UK hosted the G7 in 2013, the then Prime Minister launched the social impact investment taskforce to catalyse a market for private capital seeking social outcomes as well as financial returns, and this country now leads the world in the development of financial innovations for public good. Will my right hon. Friend therefore confirm that the social investment tax relief, which was launched after that summit, will continue beyond April? Will he use this year’s G7 to trumpet to the world the benefit of social investment, social enterprise and the social economy in general?”

APPG for Entrepreneurship Digest: February 2021

One of the functions of the All Party Parliamentary Group for Entrepreneurship is to ensure that Parliament is kept up-to-date on what is needed to create and sustain the most favourable conditions for entrepreneurship.

Part of the way we do that is by improving the understanding of the policy issues that matter to entrepreneurs through research and events. For instance, we’ve published multiple briefing papers on topics such female entrepreneurship, tax reform, and enterprise education. We’ve also held virtual roundtables and hosted multiple report launches over the past year.

Over the past few months, two policy issues have been raised with us by entrepreneurs, business groups, and angel investors.

First, it has been rumoured that the Government is considering equalising the rate of tax on Capital Gains with Income Tax. The recent Office for Tax Simplification Simplifying by Design set out some of the choices on offer to the Chancellor. The reaction from entrepreneurs has been mostly negative. An open letter from entrepreneurship organisation E2E’s Shalini Khemka and APPG for Entrepreneurship Vice-Chair Lord Leigh has set out a number of concerns. In particular, they raise the issue that a higher rate of Capital Gains may discourage entrepreneurs from launching new businesses in the future.

This is an area of policy where there have been a number of changes over the past decade. Most recently, we saw Entrepreneurs Relief replaced with the less generous Business Asset Disposal Relief. In the Times, Paul Johnson of the independent Institute for Fiscal Studies (IFS) makes the important point that if rates were to rise without any wider reform of the tax system then “higher rates would deter investment and risk taking”. A recent report from the IFS attempts to ‘square the circle’ by explaining how the tax base can be modified to eliminate the negative effects of equalising rates. For The Entrepreneurs Network, I have written something along similar lines, highlighting the ways a Capital Gains Tax rise would affect entrepreneurs.

As an All-Party grouping, it is inevitable members will disagree on many issues, including tax. But we hope that through the APPG, Parliamentarians will at least come away with an understanding of how upcoming Capital Gains Tax changes could affect entrepreneurs and ways to mitigate those impacts.

Second, the National Security and Investment bill, which passed through the Commons this month and is currently under consideration in the Lords, creates new powers for the government to intervene in foreign takeovers and investments on the grounds of national security. A recent article from former competition regulator John Fingleton in the Financial Times raised a few concerns about how this will impact entrepreneurs. A key issue is the low investment threshold for mandatory notification. For example, if a US VC bought a 15% stake in a British AI startup, the company would have to notify regulators. Some angel investors have raised concerns to us that the risk of government intervention delaying the deal may discourage legitimate overseas investors. If any Parliamentarian wants to hear more about the concerns of business groups, entrepreneurs, and investors on this issue, we are happy to facilitate meetings.

Our next event

The APPG for Entrepreneurship is hosting a virtual roundtable with Baroness Chalker on Wednesday, March 10th to consider the following issues:

• Are there regional barriers to finance for SMEs?

• Can university research support growth for SMEs in underperforming regions?

• What is the impact of agglomeration effects on regional SME growth?

• What is the role of digital adoption in supporting growth for SMEs across the UK?

This webinar will inform a subsequent Call for Evidence and Briefing Paper on the theme of Levelling Up.  It’s part of a project the APPG is undertaking with the Enterprise Research Centre (ERC).

If you would like to attend, you can find out more here or get in touch with us.

From our Friends and Advisers

Octopus is asking Members of Parliament to nominate entrepreneurs in their constituency who they feel have made the most of lockdown, by starting or growing their business, innovating to survive the challenges, or supporting their staff and local community. Find out more here. 

The CBI’s Director-General Tony Danker will be holding a speech on Wednesday February 3rd from 14:00 to 15:00 on why the UK needs its first ever economic strategy. Find out more here.

Our new advisor, Roderick Beer of the Business Angels Association, draws our attention to their Business Angel Market 2020 report, produced in partnership with British Business Bank. It highlights the impact of COVID-19 on angel investment and issues such as gender, ethnic and regional diversity among angel investors.

In Parliament

In the Lords on January 20th, APPG Vice-Chair Lord Leigh (Con) asked the Government “what steps they have taken to ascertain the impact of the equalisation of Capital Gains Tax to income tax on entrepreneurs starting new businesses”. In the debate, he added: “while we all want tax to be as simple as possible, one has to recognise that capital gains tax is different from other taxes: it is to reward capital that is invested and is at risk… we need entrepreneurs, particularly serial entrepreneurs, to start new businesses in the UK.”

In response, Lord Sikka (Lab) asked “Does the Minister agree that by taxing capital gains at the same marginal rates as income tax, the Government could end many tax avoidance schemes?” and also raised the issue of the  regional impact of capital gains tax.

Lord Northbrook (Con) suggested to Baroness Penn (Con) that she “encourage [the Chancellor] also to take the view that, within reason, lower rates of tax, particularly capital gains tax, can lead to higher revenues for the Treasury”.

Lord Palmer (LD) argued that Business Asset Disposal Relief was not fulfilling its aim of stimulating investment and that it “has become a form of retirement relief for successful and wealthy entrepreneurs”.

CBI Chairman Lord Bilimoria (CB) made the point “raising taxes will stifle our recovery from the pandemic and hamper business investment and inward investment into the country, making our economy and businesses less competitive.” He stressed that “We need to encourage entrepreneurship and investment into businesses; that will create the jobs that pay the taxes, which will increase our tax take.”

Upcoming Events in Parliament

Treasury Committee - Oral evidence

Budget 2021

February 3rd - 2pm - 4.30pm

Virtual Meeting