Why MPs need to know more about entrepreneurship

Which policies to support entrepreneurs do MPs value the most? Which do they feel could have a negative impact on entrepreneurial activity in the UK? Are our elected representatives knowledgeable enough on the initiatives already in force to support entrepreneurs?

These are the questions The Entrepreneur’s Network sought to answer in our 2015 Parliamentary Snapshot: MPs on Entrepreneurship, which was conducted by YouGov and supported by law firm Bircham Dyson Bell.

It came as little surprise to learn that Conservative and Labour MPs are ideologically split on tax, regulation and increased government spending. For example, 89 per cent of Tory MPs support the lowering of business taxation; but just 48 per cent of Labour MPs agree. And while 63 per cent of Labour MPs support spending more on government grants and loans, this is the least popular policy among Conservative MPs, with just 36 per cent thinking it would buy ativan mexico have a positive impact on UK entrepreneurial activity.

MPs from the two main political parties do see eye to eye on some policies, however. Spending more on the skills of the domestic workforce, for example, saw 85% support from Conservative MPs and 93% from Labour. Making it easier for entrepreneurs to move to the UK is the second most positive policy among MPs – receiving 80% support from Conservative MPs and 66% from Labour.

But the biggest divergence was in response to the UK’s membership of the EU, and the regulations coming over from Brussels. Although some commentators suggest the Labour Party is as Eurosceptic as the Conservative Party, the survey reveals Labour MPs are significantly more pro-Europe than their Tory counterparts. Over half, 58%, of Conservative MPs think withdrawing from the EU would have a positive impact on entrepreneurial activity in the UK, but 95% of Labour MPs believe it would have the exact opposite effect.

It is positive that MPs have such strong opinions: we want our politicians to analyse and scrutinise the multiple, complex policy options open to them. But our Snapshot also exposes a worrying lack of knowledge about the policies already in place to support entrepreneurs. Too often, MPs are in the dark about established initiatives – or if they have heard of them, they don’t know enough to decide whether they are effective. Which means they don’t know enough to vote on important policy changes that could affect the startup community.

Conservative MPs may believe that tax cuts offer one of the best ways to support entrepreneurship in the UK, but over half, 56%, either haven’t heard of the Seed Enterprise Investment Scheme (38%), or didn’t know enough about it to decide whether it was effective (18%). And just 45% support the Enterprise Investment Scheme, down from 68% last year. Both these initiatives offer tax relief to investors in smaller companies, and are rightly seen by startup community as essential to the UK’s entrepreneurial success.

Similarly, many Labour MPs think spending more would be the best way to boost entrepreneurship in the UK, with 63% supporting spending more on government grants and loans, and 61% supporting more spending on government support services. However, many are unaware of government spending already in place. For example, 61% of Labour MPs haven’t heard of the lauded Innovate UK (which runs competitions for government funding), or don’t know about it well enough to determine whether it is effective.

It’s certainly encouraging that MPs are increasingly vocal about supporting Britain’s entrepreneurs. But in order to improve policymaking, we need more knowledgeable MPs. And we need a more outspoken entrepreneurial community to tell them which initiatives are working on the ground.

Why the National Living Wage is bad policy

It’s the first Conservative budget in 23 years, but Chancellor George Osborne has introduced a policy that is bad for the most vulnerable workers, bad for entrepreneurs, and bad for the UK.

Studies have shown that minimum wages in fact reduce employment and slow jobs growth. The Government should leave such decisions to the Low Pay Commission – which was set up with these problems in mind.

If the Chancellor really wanted to help low paid workers, he should have cut Employers’ National Insurance, 70 per cent of which is paid for by the employees.

As Sam Bowman, Deputy Director of the Adam Smith Institute, said in response to the announcement:

“This move will condemn tens of thousands of people to long-term unemployment.. If the Office for Budget Responsibility’s estimates are to be believed, today the Chancellor will have put 60,000 people out of work.”

Read my Forbes article on the National Living Wage in full here.

Aim: Here’s to 20 more years

The Alternative Investment Market (Aim) – a sub-market of the London Stock Exchange that allows smaller companies to participate with greater regulatory flexibility than applies to the main market – is today celebrating its 20th anniversary.

Aim has seen over 3,600 companies join since its 1995 launch and is now home to around 1,100 small and midsized companies. A less tightly regulated market than the main exchange, Aim provides a lower-cost alternative for small and mid-sized companies seeking investment.

But crucially, once afloat firms can raise further finance from their shareholders without going through the procedures enforced on those listed on the London Stock Exchange. And in a bid to ensure the flexible ambitions of SMEs are served even further, acquisitive companies and those looking to be acquired encounter far fewer controls than those on the main market.

Many successful companies have listed on Aim, including:

Arbuthnot Banking Group
Arbuthnot Banking Group, previously known as Secure Trust Banking Group, listed on the Alternative Investment Market (having previously been listed on the London Stock Exchange). Over the past five years, share prices have steadily risen, and have seen a 22.66 per cent rise in the past 12 months.

Asos, the online fashion retailer, is one of the most famous success stories since Aim’s debut in 1995. Asos was initially priced at 3p and share prices once soared as high as £70 (now close to £38, after a major swing in value). Since the beginning of the year, shares have risen by 49 per cent.

Fevertree Drinks
In 2005, Charles Rolls and Tim Warrillow joined forces to change the face of tonic water, finding an alternative preserver to sodium benzoate and instead using high quality quinine. A newbie to Aim, share prices have soared 65.51 per cent in the past six months. Today, the company sells more than 60m bottles of its premium mixers in 50 markets.

Fitbug tracks sleep, steps, and estimates calories burned, and was founded in 2005 by ex-management consultant Paul Landau. At around £40, the Fitbug Orb device affordable compared to its competitors and it is now stocked by major retailers. Its share price soared late last year, and despite a correction this January, is still up 675 per cent in the past 52 weeks.

GW Pharmaceuticals
One of Aim’s great success stories, GW Pharmaceuticals – the biopharmaceutical company founded in 1998 and best known for its MS treatment product Sativex – is listed on both the Nasdaq Global Market and Aim. In the past five years, share prices have rocketed from just over a pound, to 655p today.

Majestic Wine
A favourite tipple of investors in the Aim for years, Majestic Vintners opened its first wine warehouse in Wood Green in 1980. In 1996, the company floated and it now has 200 stores and an online platform. Despite a rocky 2014, Majestic’s share price has risen 4.67 per cent in the past year.

You may be surprised to learn that a company specialising in tableware has become one of the most successful in the UK today. Over 40 per cent of its sales are to the North American market, and the company sells almost as much to South Korea as it does to the UK. Portmeirion has never cut its dividend and has been paying out since 1982.

Nevertheless, the market has been plagued by poor returns and a host of corporate failures – including buy ativan online some high profile fraud cases (the Langbar International fraud was once branded “the greatest stock market heist of all time”). And let us not forget that the market has performed pretty poorly over the years, with annualised total returns of -1.6 per cent per year when measured over the past two decades.

Nonetheless, Aim shares have surged in popularity since 2013, when they became eligible for inclusion in Isas. The high-risk factor had previously stopped the government from removing the restriction, but a desire to ensure that small and medium-sized companies – which are driving the economic recovery – have sufficient access to funding led to it reversing this decision.

It was the right choice: without Aim, there was a risk these companies would have turned to Nasdaq, or simply failed to grow. Research from Grant Thornton has also revealed that the companies listed on Aim paid £2.3bn in taxes in 2013 and directly employed 430,000 people at the end of that year.

For investors, Aim shares remain one of the most tax-advantaged options. If held through an Isa, benefits include no capital gains tax (CGT), no tax on dividend income, and no stamp duty. In addition, once certain Aim shares have been held in an Isa for a two-year period, they can qualify for Business Property Relief (BPR) and thus up to 100 per cent exemption from inheritance tax (IHT).

But the market is volatile: in 2008, for example, it lost around two-thirds of its value. Neither does the market offer plain sailing for the smaller companies that choose to list on it. Analysts predict that floating on Aim can cost anywhere between £400,000 and £1m – so for businesses with a projected market capitalisation of less than £25m, it may not be worth considering. 2014 research from accountancy firm UHY Hacker Young found that professional fees paid by companies to brokers and nominated advisers for a placing on aim accounted for 9.5 per cent of all funds raised.

And many of the mining, oil and gas companies (which account for a whopping 40 per cent of the market) that listed on Aim have since gone bust – among them ScotOil, African Minerals and Independent Energy Holdings. Firms involved in exploration for natural resources are among the riskiest of all: if a company digs for oil and there’s none to be found, the money raised for exploration has all but gone down the drain.

But should the government be doing more to serve the needs of smaller companies? Xavier Rolet, chief executive of the London Stock Exchange, certainly thinks so. Compared to the US, there are relatively few UK companies that progress to mid-size (and then on to become multibillion pound corporations like Facebook or Google). And as Rolet recently told the CBI:

“The entire business and financial community is working to nurture and celebrate these firms. But we must continue to challenge the status quo and not become complacent. We need to carry on fostering, through policy and practice, a richer, more diverse entrepreneurial ecosystem, so that the UK’s high-growth firms can take root and flourish.”

Rolet is right. Although floating your company isn’t the only way to grow a business, it needs to remain a workable option: particularly if we are to get the share-owning democracy that so many in the current government crave.

The TEN Interview: Philip Salter chats to Share Radio’s Gavin Oldham

Launching a radio station may not be an obvious choice among most entrepreneurs – but Gavin Oldham isn’t like most entrepreneurs.

As he tells TEN’s Philip Salter, Oldham has recently sold close to 11 million shares in Share plc – the retail stockbroking business he founded a quarter of a century ago – to raise finance for his radio station. He previously founded the Share Centre back in 1991, which provides investment and trading services for c. 250,000 personal investors, company employees and shareholders generally. And in 2005, Oldham established The Share Foundation, which offers a Junior ISA scheme for children and young people in care.

Read the interview in full in Philip’s Forbes column here.

The TEN Interview: Philip Salter talks visas with Migreat’s Josephine Goube

For his most recent Forbes Column, our director caught up with Josephine Goube, director of partnerships at Migreat.com and author of Open Borders to Entrepreneurs & Innovators.

First, she explains the origins of the entrepreneur visa. She then discusses how the progressive rigidity of immigration systems across the globe has made it so difficult for entrepreneurs to qualify for and receive a visa to start a new venture – particularly in Europe. And finally, where to buy ativan online in canada Goube details which countries have the best policies in place for foreign entrepreneurs – and why.

Read the fascinating interview in full here.

20 government initiatives every entrepreneur should know about

Through our work on the next Parliamentary Snapshot, we’ve come up with 20 government initiatives to ask MPs whether they support. This list also doubles up as a useful summary of government initiatives for entrepreneurs. It’s neither ranked nor exhaustive (such a list would number in the hundreds), but it should nevertheless be useful.

What Labour’s Manifesto means for entrepreneurs

Manifestos are like buses: slow and rather dull. Labour’s Manifesto, which was launched today, proved no different.

If you’re a dyed-in-the-wool Labour supporter you’ll be content enough with the content. While if you’re political predilections swing the other way, the Manifesto won’t be enough to persuade you to cancel that one-way ticket to Monaco on 8 May.

In truth, most entrepreneurs are too busy running their business to worry about Westminster’s machinations. But there is no denying that the outcome of next month’s election will have an impact on the state of entrepreneurialism in the UK.

To save you the bother of reading the eighty odd pages, following are the key Manifesto promises that could impact entrepreneurs.

Read more

March Budget 2015: Good news for entrepreneurs?

As TEN director Philip Salter writes in his Forbes column this week, the one thing that stands out from this year’s Budget is the Chancellor’s relentless commitment towards supporting UK entrepreneurs.

What we have, he writes, is a government obsessed with “innovation” and “growth”. The Budget contains details on more incubators, the introduction of an apprenticeship voucher – and, even more positively, the removal of the requirement that 70 per cent of the funds raised through SEIS must have been spent before EIS or Venture Capital Trust funding can be raised.

Octopus Ventures’ George Whitehead told TEN that such measures will “sustain the very strong entrepreneurial environment” that has been built in Britain. Now, the country just has to weather the inevitable political uncertainties in the run up to and after May’s General Election.

Why we should welcome those who can make our country greater

For many firms in my constituency, a flexible immigration policy is the litmus test for the proposition that the UK is ‘open for business’.

It was therefore only a matter of months into the coalition’s five year term before the wisdom of its immigration cap came into question. No one doubted the popular appeal of this sound-bite policy. But was it possible to reduce net annual migration to the ‘tens of thousands’ without causing economic harm?

The public commitment to this policy goal has always disguised tensions over it within the coalition government. The Treasury and Business Department understand that the free flow of talented professionals, entrepreneurs and students to the UK is vital to delivering economic growth. But the Home Office has always pushed back against attempts to loosen the rules, confident in its strong mandate from the public.

It goes without saying that immigration reform of some kind was needed. The Home Secretary has made great strides in cracking down on bogus colleges, sham marriages, health tourists and the like. The government is also making progress in addressing the ‘pull’ factors that make Britain appeal to benefits tourists – thought not fast enough for some.

However as February’s migration figures demonstrated, the coalition’s cap has been undeliverable – net migration has risen by 42% to 298 000 in the past year alone. This was always going to be the case for so long as we had virtually unrestricted movement of EU citizens. What is a mark of this nation’s success – the economic growth that is attracting young workers from across the continent – has become a badge of this government’s failure.

What is worse, however, is the consensus from businesses and higher education providers that the cap has caused damage to the UK economy and Britain’s image abroad. I represent a central London seat that contains many of the country’s top businesses and three of its best universities. For several years now they have highlighted to me the hurdles and hoops placed in their way of bringing into the UK, or retaining, highly talented individuals whether students, post-graduate researchers or leading academics.

They cannot understand why this government has led a clampdown on precisely the type of migrant that we want to attract – the skilled student, entrepreneur or worker from natural growth markets such as China and India, or the English-speaking professional from allies such as Australia, the US and Canada. Indeed they fear we are training and educating some of the world’s brightest international students, and then discouraging them from staying here to benefit existing businesses or to set up their own enterprise.

It is a cliché that a reputation takes years to build but can be lost in an instant. However, the UK has risked losing its hard-won standing as a country that welcomes trade, investment and talent from around the world as a result of the cap.

It is for that reason I set up Conservatives for Managed Migration in March last year, a group that hopes to promote a calm, reasoned debate about immigration both within and beyond the Conservative Party. As we approach the General Election on 7 May, we have been calling on the Party to drop the idea of an undeliverable cap of numbers.

However if the Party insists on keeping this type of target-based policy in place, we have been calling for students to be removed from the net migration figure. We should also like to see a partial reinstatement of the Post-Study Work Visa, focusing on specific subjects to address skills gaps. This visa’s removal in 2012 has had a detrimental impact on the graduate jobs market, driving many of the most talented students back to their home countries when they are ready to join the workforce. It had previously enabled graduates to seek employment without having a sponsor, but now students who wish to stay in the UK after their course have to prove they have a job offer from a government-approved sponsor employer. Alternatively they can apply for independent status such as tier-one entrepreneur, but that requires a minimum £50,000 investment (something we might perhaps look to lower for talented graduates who wish to stay and develop business ideas).

To encourage English-speaking professionals, such as Kiwi accountants or American lawyers, we should like to see a Professional Mobility Programme as part of the current Tier 2 entry arrangements. Beyond that, we are really encouraging the Home Office to find a way of dealing quickly and efficiently with applications. I receive a steady stream of complaints about the Border Agency from business constituents and I believe many of the concerns about our immigration system could be addressed if we simply got to grips with the processing system.

Thankfully the government is alive to many of the concerns we have raised. Last month, for instance, HQ-UK was launched, an unashamed bid to get US tech companies to base their European headquarters in London. The government programme includes a so-called ‘concierge service’ that speeds up visa applications and gives priority border control at airports. We also have the Sirius programme from UKTI which is aimed at international graduates who want to start and grow a business in the UK.  This pioneering scheme invites talented young entrepreneurs with world-class start-up ideas to get their business off the ground in the UK, helping boost Britain’s enterprise community, creating jobs and inviting foreign investment.

Immigration will not go away as an election issue over the next 51 days. So it is up to all of us here to keep steadfastly and patiently making the case that the UK’s economic future depends on our taking the right approach towards those who wish to work, study and contribute here. Flexibility in a country’s immigration system is now part and parcel of being an engaged member of the global economy. International businesses and business people, not to mention academics, expect to be able to move with relative ease between open and dynamic global cities, just as many mobile Britons would anticipate being able to work in Hong Kong, New York, Shanghai or Mumbai for a spell. Similarly, students who come here when they are young become ambassadors for the UK for the rest of their lives.

These are precious advantages we should not throw away. Simply put, those countries which restrict the flow of talent risk economic isolation in an age of globalisation.

Mark Field is MP for the Cities of London and Westminster and Founder of Conservatives for Managed Migration. This article is based on a speech delivered at a recent Power Lunch.

Budget reactions

From the moment the Chancellor sat down yesterday, there was a rush for commentators to do what they do best: comment. However, until we employ artificial intelligence for the job, there just isn’t time to read and analyse the 124 page document, the many other relevant documents, as well as reasonably crunch the numbers before the end of the day. In truth, you may want to wait until the Sunday papers for a more detailed reaction.

That said, if you’re keen to get the headline announcements, I’ve written a short article for Forbes here, and following are some other useful reactions outlining how the Budget impacts entrepreneurs: