It would be easy to stick the boot in. After all, even her strongest backers have turned against her. But while Liz Truss’s mistakes and shortcomings are clear and present, there are two things from her briefest of times leading the country (well, sort of) that her successor should keep.

First, Truss was right to focus on growth. We live incredibly privileged lives compared to previous generations, with entrepreneurial endeavours taking humanity from subsistence to relative affluence. I want to stay on this ride, raising the long-term living standards of the current, next, and future generations. And I think you should too.

Obviously all past and future Prime Ministers will say they want growth. But most have and will fail to prioritise it. Who knows if Truss would have been true to her ‘three words’, and while the concoction of unfunded tax breaks, spending commitments and unconvincing promised cuts clearly weren’t the right choice to get there, this doesn’t mean we should give up on growth.

I’m optimistic about the future though. With the advent of Progress Studies – which is investigating “the combination of economic, technological, scientific, cultural, and organisational advancement that has transformed our lives and raised standards of living over the past couple of centuries” – we have a growing intellectual base on which to build the right policies. Whoever comes next may want to pick a synonym for growth, given the short-term damage done to it, but the underlying intention is correct.

Second, the disastrous Mini Budget did nevertheless contain some good ideas. I’m not talking about the headline announcements that spooked the markets and have already been rolled back on, but the micro changes that a broad coalition of organisations, including ourselves, campaigned for. I’m talking about the increase in Seed Enterprise Investment Scheme, reforms to employee options and reforming the pensions regulatory charge cap. These are uncontroversial ideas that any pro-entrepreneurship government should back.

Fair Pay to You
You may have missed it, but Keir Starmer gave a big speech to the Trades Union Congress this week. In it he committed to a series of labour market reforms entrepreneurs should be aware of, including banning zero-hour contracts, extending parental leave, strengthening entitlements for flexible working, creating stronger protections for pregnant women, creating a single “worker” status for all but the most obviously self-employed, getting rid of one-sided flexibility, creating statutory sick pay for all, repealing 2016 restrictions on unions, and enforcing mandatory reporting on ethnicity pay gaps.

Starmer has also promised to create sector-specific “Fair Pay Agreements” (FPAs). As Anton Howes, our Head of Innovation, writes: “FPAs would entail unions and industry representatives getting round the table to negotiate industry-specific minimum wages and minimum worker entitlements, which would then be applied to the rest of the sector – regardless of whether the sector’s other workers were represented by those unions at the negotiating table, and regardless of whether the sector’s other employers were represented by the industry bodies that took part.”

The devil will be in the detail, but as Anton argues: “there’s a very big risk that larger firms able to swallow much higher labour costs may use FPAs to bury the firms that are less able to do so. This anticompetitive process – of big businesses pushing for higher and more costly regulations to benefit themselves – may ultimately benefit big businesses and hurt workers’ bargaining position in the long run.”

£132m+ Problem
Anton has also written about the shocking state of R&D tax credits. It’s an issue we’re increasingly hearing from entrepreneurs. Approval windows have increased from 28 up to 40 days, and tax credit payments are painfully slow, creating major cashflow problems for startups.

Many businesses are having to take out loans using the expected credit as security. Based on the interest rates, Anton has done the sums:

“For 2020-21, HMRC paid out £6.6bn in R&D tax relief support, so we are looking at a total market for R&D tax credit loans of about £5.28bn (80% of that figure). The loans themselves often vary in duration, but typically charge a loan facility fee of about 2.5-3% followed by an interest rate of 1.25% per month. Given this monthly interest rate, and generously assuming that total delays have averaged only an extra two months, the total cost to UK startups and small businesses is in the order of £132m – and probably higher, especially if they have been forced by delays to take out new loans to tide them over, incurring more rounds of loan facility fees.”

This is a very conservative (with a small ‘c’) estimate. It’s time for a Conservative (with a big ‘C’) to sort this out.