BADR Idea

A few years ago, after we’d released our first Job Creators report, we invited the foreign-born founders of the UK’s fastest growing companies for a series of roundtables to talk about their decision behind choosing the UK to start and scale their business.

While they were an eclectic bunch, they had a few things in common. Notably, every single one of them was acutely aware before picking Britain to grow their business about the personal tax benefits of doing so, and cited it as a major contributing factor. At the time, we still had Entrepreneurs’ Relief and it didn’t look to be going anywhere. They were just stating facts: incentives matter.

Then, in 2020, Entrepreneurs’ Relief got downgraded to Business Asset Disposal Relief (BADR) with the lifetime limit reduced from £10 million to £1 million.

It’s Treasury orthodoxy that most people prior to starting their business don’t know about Entrepreneurs’ Relief. That might well be true on average, but what about extraordinary people? From those meetings I know for a fact that they know in detail what the UK’s offer is around personal taxation, and with the Chancellor on the lookout for £20 billion in cuts, there is a very real risk that even the diminished BADR could be under threat.

As The Economist argues (paywall), it was a mistake to rule out raising things like income tax and VAT, as these specific raids risk concentrating the pain: “The more levers Ms Reeves yanks, the higher the chance that she will experience what Lord Cameron faced with the Cornish pasty. Perhaps it will be farmers, dragged into inheritance tax for the first time. Maybe doctors, who now have a taste for striking, will not like their pensions being pilfered. Grumpy businessmen whacked by capital-gains tax may prove a formidable lobby group. Better to pick a larger tax – whether national insurance or vat – and make any outrage worth it. If a revolt is possible over a pasty, it is possible over a pension.”

Last time this was on the agenda, many entrepreneurs kicked off (paywall – The Times). 

If I were the Chancellor I would do two things with BADR. First, I would change the rules so that it’s not available to those who are using it to disguise income tax. If you’re not a proper entrepreneur and taking proper risk, you shouldn’t be able to claim it.

Second, I would make BADR unlimited. Entrepreneurs who are building and selling companies for millions have an outsized impact on all our lives, and we should want as many of them in the UK as possible. 

Finally, there are obviously ways of legitimately moving your company to a country with low or no Capital Gains Tax rates before sale. And while many entrepreneurs will prefer to exit in the UK and pay tax, don’t be surprised if more start to consider this option if we lose BADR. While I don’t think this negative argument is the one to lead on – the likely retort from the public is unlikely to be positive to people who are already rich – the Treasury should be alert to the fact that some entrepreneurs will feel justified with leaving given the risk that they’ve taken in choosing to be an entrepreneur.

Onward & Upwards
I’m delighted to share that Anastasia Bektimirova has joined us. She previously worked as a Senior Researcher in the Science and Technology team at Onward, focusing on emerging technologies, AI policy, and the UK’s R&D ecosystem. She was the lead researcher on a report exploring how the UK can build strategic advantage in the five priority technologies set out by the previous government: AI, engineering biology, quantum, semiconductors, and future telecoms. 

Follow her on X or connect with her on LinkedIn. Her first project is focusing on how to bolster the special relationship between the UK and US. Drop her an email if you want to contribute to that or discuss any of the other areas she will be working on.

I’m also delighted to announce that Eamonn Ives has been promoted to Research Director. If you aren’t already doing so: follow him on X, connect with him on LinkedIn and drop him an email if you want to chat about our research agenda.

In addition, Cordelia Meacher, Founder of Fieldhouse Associates has become a Patron. As many of you will know, she is one of the most experienced and well-connected communications experts in the fast-growth tech ecosystem, with deep expertise in venture capital and investment. We’re going to be hosting some events together, so get in touch with me if you want to host us and our networks.

Finally, Anita Tiessen, CEO of Youth Business International (YBI) has joined us as an Adviser. Anita leads the only global network dedicated to youth entrepreneurship to develop and scale the most effective solutions to the critical challenges facing young entrepreneurs today. We’ve partnered with YBI on a number of reports, most recently Empowering the Future.

Tough enough
Are you an ambitious founder who can share your experience – potentially through a case study – on the mental toughness needed to build one or multiple companies? Or perhaps you’re an ecosystem influencer (for want of a better term) interested in contributing to a report on the topic? Or maybe you’re working in a corporate, VCs or accelerator with the power to act on the findings? 

If so, we’re hosting Christina Richardson, Entrepreneurship Fellow at UCL, founder of entrepreneur-support community weare3Sixty, and Adviser to The Entrepreneurs Network to share preliminary insights from her latest research and give you the chance to get involved.

Unhidden Gems

This week, the UK’s annual Global Entrepreneurship Monitor hit the press. The largest single study of entrepreneurial activity in the world has been running for 25 years, and for the first time 30% of working age individuals (well almost) either intend to start a business within the next three years, are actively trying to start a business, or already running their own business.

Driving this has been a remarkable threefold increase in the level of early-stage entrepreneurial activity by women in the UK since 2002 – from just over 3.5% to 10%. This is above France and Germany (both 8%), but lagging the US on 18%. More women now highlight the desire to build wealth as an important driver of their engagement in early-stage entrepreneurial activity. Well, to misquote Adam Smith, it is not from the benevolence of the female founder that we expect our innovation, but from their regard to their own interest. As the resort suggests, this may be attributable to shifts in society with old gender-based perspectives changing.

That said, as serial entrepreneur, Chair of the Invest in Women Taskforce and Member of our Female Founders Forum Debbie Wosskow notes in response: “these entrepreneurial efforts can only go so far if they don’t then receive the funding to scale. There is still significant gender disparity in accessing investment, with fully female founded teams receiving only 2% of total capital in the UK, and we need to break this decades-long cycle.”

The next generation is increasingly entrepreneurial too, with the entrepreneurial activity rate for 18-29 year olds, which was stable at around 5% for the decade until the global financial crisis, rising and more than doubling to just over 13%. And despite changes in the demographic composition of migration due to the post-Brexit overhaul of the immigration system, immigrant and non-white ethnic populations continue to be the most entrepreneurial groups in the UK. (Watch with space for an update to our influential Job Creators report for more on this.)

London increasingly dominates the entrepreneurial landscape. And while we shouldn’t do anything to dent our megacity – without which the country would be significantly poorer – the ecosystem is more than able to sustain other entrepreneurial hubs.

While the term levelling up is being unceremoniously dumped by the new Government, whatever rubric you put it under – rebalancing, regional development, bridging the North-South divide, industrial strategy, devolution – the challenge remains the same (as do the overarching solutions).

As luck would have it, we’ll have a new report out soon to offer fresh insights on what entrepreneurs across the UK say they need to succeed – including where they agree and where they diverge. We’ll be launching it in the House of Lords.

What’s Up?
We’re trialling out a public WhatsApp group to share updates on our reports and events. Anyone can join – sign up here.

In addition, Patrons, Advisers, Supporters, Partners, and long-term sponsors, partners and collaborators who want to join our “friends” Slack channel, drop me an email and I’ll send you an invite.

Coming to America
Are you the leader of a high-growth firm that exports to the US? Or are scaling fast but reticent about expanding to the US? Or perhaps you’re a leading investor or someone who provides professional services for businesses working across both jurisdictions? Or a past or present policymaker with expertise on international growth? Or are you a trade expert or in a leadership role  facilitating UK-US relations? 

If you’re any of the above – or something else relevant – we would love to interview you for an upcoming report delving into the special relationship. Your insights will form the backbone for the report, and with your agreement some interviews will be turned into case studies and shared with the media.

Drop Eamonn Ives an email to share your interest and we will be in touch.
 

Message from our Partner

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Bills, Please

This week’s King’s Speech contained no fewer than 40 Bills as the new Labour Government seeks to make its mark on the country. So what’s in it for entrepreneurs? Well, quite a lot depending on your sector, but today I’ll just focus on three that caught my eye – all of which will impact most businesses.

Skills England Bill (page 66): “My Government will establish Skills England which will have a new partnership with employers at its heart, and my Ministers will reform the apprenticeship levy.”

Businesses will be brought in to try to ensure that we have “the highly trained workforce that England needs.” The key challenge here will be ensuring that the employers promised to sit at the heart of the partnership are not limited to our current crop of large corporates. Of course they should be in the room, but sooner or later they will be the relics of our economy as they get displaced by innovation. To that end, we need to ensure that the entrepreneurs and innovators are involved. This isn’t the same as big tech – though they should be in the room too.

On the second point, we’ve long argued for the replacement of the apprenticeship levy with a skills levy – most recently with Enterprise Nation in Access All Areas: People. It’s good to see things potentially moving in this direction.

Digital Information and Smart Data Bill (page 39): This Bill establishes Digital Verification Services which supports the creation and adoption of secure and trusted digital identity products and services, and sets up Smart Data schemes, allowing the secure sharing of a customer’s data upon their request, with authorised third-party providers. 

As I argued last week, the former has the potential to massively reduce and ultimately end bureaucracy for individuals and businesses. The latter builds on the success of Open Banking, and brings to mind From Open Banking to Open Everything, a short paper by John Fingelton from 2018. Proof, perhaps, that good ideas find a way.

Employment Rights Bill (page 20): “My Government is committed to making work pay and will legislate to introduce a new deal for working people to ban exploitative practices and enhance employment rights.”

This Bill promises to do a lot. It will ban zero-hour contracts, ends ‘Fire and Rehire’ and ‘Fire and Replace’, make parental leave, flexible working (within reason), sick pay and protection from unfair dismissal available from day-one on the job for all workers, strengthen protections for new mothers, establishes a new Single Enforcement Body (also known as a Fair Work Agency), and updates trade union legislation.

Alongside potential changes to capital gains tax, this is probably the area of policy that entrepreneurs are most concerned about with the new Government. As noted in the background briefing, the UK benefits from labour market flexibility – not least when it comes to startups at the cutting edge of innovation. While it’s too early to know how this Bill will play out in practice, we shouldn’t kid ourselves – some of its provisions will add to the burden on employers when it comes to taking on more staff.

Local Matters
We’re writing a research paper on the contrasts – and similarities – entrepreneurs experience between the different regions of the UK. If you’re a business owner, we want to hear from you about the challenges you face on a local level. Perhaps it’s poor transport connectivity, difficulties finding the right skills, or something else entirely. If you’d like to feature in the research, let us know by getting in touch here. 

Here’s Jonathan
Jonathan Reynolds MP, the new Secretary of State for Business and Trade wants to hear from you. It doesn’t matter if your business has one or one thousand employees, he wants you to tell him: how we should use our Industrial Strategy to kickstart Britain’s economy; how you have supported your teams while also growing your business so we can take forward the best examples to inform our work; what’s stopping you growing if you’re a small business owner; and how we should use our trade strategy to drive up exports and sell more British-designed, British-made products and services to markets around the world? Drop him an email with the answers.

You Better Not Miss
The Department for Business and Trade have also asked us to share an online event taking place on Thursday 25th July between 2pm-3.30pm to encourage applications to the King’s Awards for Enterprise. You can request a place by emailing them with your name and company.
 
Merci, De(rien)
After a year on the coalface of policy, our researcher Derin Kocer is leaving us. He was mightily productive: kicking off with Job Creators: 2023, then delivering his magnum opus Passport to Progress, before co-authoring the Risk Readiness Report 2023, Entrepreneurs Unwrapped, Building Blocks, and most recently Backing Breakthrough Businesses. Appropriately enough, his last report for us will be the forthcoming Job Creators: 2024. Beyond the reports, Derin’s smarts and joie de vivre have left a mark. As our latest Adviser he will continue to have a positive influence.

Message from our Partner
OakNorth’s mission is to help entrepreneurs and ambitious businesses achieve their growth goals. That's why they built OakNorth business banking: to support growing businesses that have outgrown neobanks and are underserved by high-street banks, enabling them to scale at speed. 

Here’s how they’re different:

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Siren Sounds

Growing the size of the economy was a central promise from the Labour Party during the election campaign. This week, they hit the ground running, with Chancellor Rachel Reeves announcing the creation of a National Wealth Fund (NWF). It will align the UK Infrastructure Bank and the British Business Bank to invest £7.3bn in the ‘new industries of the future’, aiming to attract £3 of private cash for every £1 of public funding put in via the NWF, which, if successful, would take total investments to around £29bn. 

In theory, all very nice. But the devil, as always, will be in the detail. 

The NWF isn’t a Sovereign Wealth Fund, which I’ve previously cautioned against in the case of the UK. Nevertheless, as Emma Duncan warns in The Times (paywalled), even this isn’t without risk. Germany, for example, channelled around €200bn of subsidies into the solar panel industry, only for China to outflank them. China’s largesse has been good for consumers outside of China who are being subsidised by Beijing, but less good for the German government (or, rather, German taxpayers).

When it comes to government-backed investments, we need to ensure the right governance structures, talent and incentives are in place. Singapore’s GIC is proof that this is eminently possible, but this interview with Managing Director Lim Chow Kiat shows how disciplined we would need to be: “The unique thing is not what most people see. The most unique thing is the governance arrangement. The government makes it very clear and is very disciplined about that – to leave GIC alone to just focus on making money. It is hard for a lot of governments to do that.”

(One of our ten recommendations in Backing Breakthrough Businesses was to bolster the independence of the British Business Bank to enable it to act in the best possible way and over a longer time horizon.)

Last week, UK Finance and Global Counsel argued that the government should consider ways to force early-stage growth companies to repay tax breaks if they leave the UK. This would have the unintended (though obvious) consequence of making the UK less attractive for entrepreneurs and investors, as well as set a bad international precedent for protectionism.

The rise of economic protectionism is also something that The Economist raised this week around UK pension funds. It can see the case for removing barriers that prevent funds from investing in domestic assets (for example, we think Stamp Duty Reserve Tax should be abolished), or the consolidation of small private-pension plans to give them economies of scale to invest in private markets as we saw in France, but it warns against increasing calls to limit their ability to invest outside the UK.

Protectionism, even if not explicitly badged as such, is one of those ideas that often sounds like common sense for many people. There’s a reason why, centuries after economists first exposed its folly, politicians of all stripes are attracted to it. But something making for a good sound bite doesn’t necessarily mean it makes for good policy. It’s heartening to see our leaders so focused on the pursuit of growth – but that focus can’t be a substitute for rational decision making.

On the Cards
After an intervention from Tony Blair, Business Secretary Jonathan Reynolds has ruled out introducing digital ID cards. 

First and foremost, we don’t need cards (digital or otherwise). We already have lots of digital identities – i.e. unique identifiers, attributes, and credentials that represent us in digital interactions. Currently, those associated with the government are fragmented – e.g. GOV.UK Verify, NHS Login, HMRC Government Gateway, your Council Tax account etc. We just need to bring some order to it by giving each person (and business) a singular digital identity that sits above all this.

Blair framed this around controlling immigration, but I respectfully disagree with this approach. As I argued in an essay collection for which he wrote the foreword, the prize of getting this right is much more appealing: the end of bureaucracy. To name just a few: health check-ups based on age and medical history automatically scheduled; tax forms automatically filled in; benefits paid automatically; training offered based on individual skills and trends. Things could only get better.

Great Minds
As reported in The Guardian, Rachel Reeves is poised to announce an economic advisory council to boost UK growth. It will be headed by innovation expert John Van Reenen, who is a strong pick. His work on Lost Einsteins shows why we need to take seriously our failure to support the best and brightest born into low-income families. Meanwhile, he was a (all too rare) level head during Brexit debates on EU immigration. Great hire.

Maestro, please
BBC Maestro has asked us to share an opportunity. They are working with a (as yet unnamed) major entrepreneur on a new course and are looking for entrepreneurs at different stages of their journey who would like to have the opportunity to speak to this person about a particular challenge or decision they are facing. This won’t be a pitch so much as a chance to get insight and advice from a serial entrepreneur who built a $250 million dollar business in four years.

They are looking for a mix of entrepreneurs at different stages. Drop them an email to find out more.
 

Message from Our Partner

Launched in 2015 and founded by entrepreneurs, OakNorth is a digital bank focused on serving and empowering businesses with £1m-£100m in turnover, that are seeking to scale but are routinely underserved or overlooked by traditional banks. 

Since its inception, the bank has backed countless trailblazing businesses, injecting over £10bn into UK communities. Now, they’re empowering high-growth businesses with a turnover of £1m+, assets over £1m if operating in the real estate sector, or those ready to deposit £100k or more, to scale at speed with their business current account, up to 5%* AER interest on business savings, Visa debit cards, and more. 

What sets OakNorth business banking apart?

• Be up and running in days, not weeks or months

• Get access to a dedicated Business Partner on speed dial

• Customise your account to suit your business needs with multi-users, payment approvals, and multiple payment schemes

• Competitive rates: Earn up to 5%* AER interest on business savings 

* 3.85% AER on easy-access savings and 5% AER on 95-day notice account. Variable rates correct as of 10-Jul-24.

All Change

In his first speech as Prime Minister, Keir Starmer acknowledged that now is the time for action: “Our work is urgent, and we begin it today.” So here are three action points aligned with Labour’s manifesto promises.

Chip Off
As we set out in Building Blocks, the UK needs its most successful towns and cities to expand – delivering growth by boosting the scale at which we operate.

Nobody could accuse Labour of ignoring this agenda. As their manifesto stated: “Britain is hampered by a planning regime that means we struggle to build either the infrastructure or housing the country needs.” The slogan “get Britain building again” has been emblazoned across everything. Investors are betting on Labour being true to their word. Yesterday, the shares in housebuilding companies rallied in response to news of the Labour landslide.

Labour has even promised to build on Green Belts, something that once felt impossible under the Conservatives as they had too many MPs with their constituencies there. (Incidentally, our Green Belts aren’t very green – hence the useful new term: Grey Belts.) Labour has also promised new towns, but if new towns are going to be successful they need to be built close to existing cities with suppressed demand – as was the case with Edinburgh New Town – or connected by fast, frequent and reliable rail services.

Regulating Innovation
Labour’s manifesto stated that: “Regulators are currently ill-equipped to deal with the dramatic development of new technologies, which often cut across traditional industries and sectors. Labour will create a new Regulatory Innovation Office.”

There are good and bad ways to do this. David Stallibrass, now Deputy Chief Economist of the FCA, and regulation supremo John Fingleton CBE have some ideas on how to do this properly (as they wrote for us on this very topic). 

Whatever the structure, we need to ensure the objectives of outcome-focused regulation are clear and unambiguous; reduce the number of each regulators’ objectives; increase use of sandboxes to inject bounded and targeted discretion into otherwise rigid regulatory regimes; and increase the use of block-exemptions to inject clarity into more discretionary regulatory regimes. Simple.

Our NHS
According to their manifesto: “Labour’s reforms will shift our NHS away from a model geared towards late diagnosis and treatment, to a model where more services are delivered in local communities. We will harness the power of technologies like AI to transform the speed and accuracy of diagnostic services, saving potentially thousands of lives.” 

Delivering on this would near enough guarantee a second term. The Tony Blair Institute has undertaken a lot of important work on this, and Blair himself raised the role of technology – specifically AI – in a recent podcast interview:

“This is a huge agenda for a government and a really exciting one. I keep saying this to people that are in politics today. Sometimes people get a bit depressed about being in politics because you have all this criticism. Certainly people in the West feel that society’s not changing fast enough and well enough. I say no, it’s a really exciting time to be in politics because you’ve got this massive revolution that you’ve got to come to terms with.”

The Politics Bit
While the Government is our primary target for policy recommendations, the opposition still matters. 

Despite all the seats, the turnout looks to be just shy of 60%, the lowest in 20 years, and Labour got around 34% share compared to 24% for the Conservatives. It has been argued that this means “Starmer is in the same position as Boris in 2019, but even more so. Massive majority, world at his feet, but incredibly hard in longer term to see how he can cling on to voters on both left and right at once.” 

It’s a fair point. The lesson to learn here for Starmer is don’t obsess over constant polling and pandering to new voters (e.g. the so-called Red Wall, which is unsurprisingly once again red).

Applying this to housing, journalist Lewis Goodall suggested: “Labour winning all over the south. RIP planning reform.” Dan Tomlinson – new MP for Chipping Barnet – was quick to offer hope: “No. We won a landslide majority on a mandate of solving the housing crisis and growing our economy. People voted for change, for prosperity and for a party that was honest about what needed to be done. Now is the time to do, not duck, the hard choices.”

For Starmer, the political battle has been won – now is the time for policies.

Still Believe

On Thursday the nation goes to the polls. Regular readers will know we aren’t going to tell you where to put your cross – but we will be informing whoever enters Downing Street what policies would help the UK’s entrepreneurs.

Access to talent is key. Talk to the founders of Britain’s startups and scaleups and they will tell you getting the right people in to help them grow is their number one issue. Part of the solution is education and training – which we covered last week – but there is no getting away from the fact that we need to be welcoming to talented individuals who want to come to our country and contribute to our economy. In Passport to Progress we set out in detail how to do this.

The competition for talent will only get more intense, which is why Germany has just launched the Opportunity Card. It allows those who qualify to live in the country for up to one year while looking for work, rather than requiring an employer to sponsor them beforehand. If Trump returns to the White House, we need policies ready to roll to pinch any of their disaffected coastal entrepreneurial talent who have had enough. Not least because Trump has revealed that he wants to let more top international graduates stay in the US. 

Money matters too. In Backing Breakthrough Businesses we sought to tackle the challenge of why some companies aren’t able to scale to their full potential in the UK. It had a number of recommendations, including bolstering the independence of the British Business Bank to enable it to act in the best possible way and over a longer time horizon, which was covered in The Times. There is a playbook on how to do this (and how not to) that should be required reading for everyone in government: Josh Lerner’s Boulevard of Broken Dreams.

In The Way of the Future we covered other areas where state capacity could be increased, including in my essay on the (digital) future of the state with Kirsty Innes. There is much to write – and I will – about improving the functioning of the state. (Some of which I picked up at today’s Civic Future conference, where Lord Adonis and Dominic Cummings spoke, agreeing on a lot more than you might expect.)

A new government also needs to get Britain building. In Strong Foundations we made the case for policies like liberalising Green Belt rules and community land auctions to get housing and office space in places and at prices businesses and employees can afford. Also, watch this space for an upcoming report with ideas that would significantly boost the UK’s clean energy capacity.

Finally, we need responsive regulators. As Andrew Bennett argued in our Operation Innovation essay collection it’s time to properly ​​fund and empower the regulators. As he wrote at the time (though it's risen up the agenda since), this might be one of today’s most neglected policy levers, but one which has a disproportionately high return on investment. As Sir Patrick Vallance told Andrew this week: “If you're a regulator, the incentive to take risks is virtually zero.” We’ll also continue to make the case for turning the UK into a ‘testbed nation’.

All this is a rather long-winded way of saying there are lots of ways to make the UK better. As our Patron Steve Rigby wrote in the The Times this week: “there is plenty of hope out there. The economy is heading to better times, inflation has been largely tamed, interest rates will fall and we will see political stability for the first time in half a decade. Now is the time to gain a head start on the global stage and take this fight out to the world.”

Magic Number
We’re advertising for three roles: a researcher; someone to run our events and head of our Female Founders Forum; and we’ve launched an internship programme. Please share far and wide.

We obviously hope that people stay forever, but anyone joining will be following in some impressive footsteps. Our alumni have gone on to advise Prime Ministers, become a senior editor on a national newspaper, work within government, and much else besides.

Sign up to our newsletters here.

Empowering the Future

Yesterday we launched Empowering the Future: a punchy briefing paper setting out ten policies that the next government should adopt to help inspire the next generation of entrepreneurs.

With support from Youth Business International (YBI), it was launched with Lord Mawson and over 100 entrepreneurs (and those supporting them) in the House of Commons yesterday evening.

In my speech, I went through the ten policies we think would go a long way to making the UK more entrepreneurial. Here’s a taster of three.

First, following calls by Young Enterprise and others, we think under-18s should be able to open business bank accounts – without credit facilities – so they can separate personal and business finances from a young age.

The latest Global Entrepreneurship Monitor UK Report shows that youth entrepreneurship has been increasing over the last 20 years in the UK – as it has across most of the world – with technology making starting and growing a business relatively easy. A business bank account is essential for running a business – not least to pay taxes, which is something that you would think HMRC would be lobbying for.

Second, we need to give innovative edtech entrepreneurs more and better opportunities to pitch to government and schools. Back in 2008, Clayton M. Christensen’s Disrupting Class was published. In it, he and his co-authors argued that online learning and other technological innovations would disrupt the traditional classroom model by providing personalised, student-centric education to the benefit of all. Not only does technology have the potential to better build essential skills, but it can also free up teachers’ time, crucially enabling them to offer additional pastoral support in the process. However, we haven’t seen the promised revolution (at least not in formal education).

As we argued in Procurement and Innovation, we need more ‘meet the buyer’ roadshows. These would allow buyers to see what is possible and enable innovators to tailor or contextualise their offers to better match buyers’ needs. Also, the format of these events needs to change – even when these events take place, innovators aren’t always given a chance to pitch their products.

Third, the incoming government should ensure that the essential skills necessary to be entrepreneurial are embedded across the curriculum from primary school. This is something we explored in a detailed report for the APPG for Entrepreneurship.

If the polls are right, and Labour wins power next month, they’re committed to reviewing the national curriculum. The briefing paper references the Skills Builder Partnership, whose Universal Framework is already used by over 500 schools. We need to make sure that the new curriculum design draws on the rigorous research like this.

This paper is an opening salvo. Soon we’ll build a forum of entrepreneurs and experts to help put these policy ideas – and others – into practice. Watch this space for how you can be involved.

Join the Team
Would you like to work with us, or know someone who does? Now is the time, as we’ve opened up three positions you can apply for on the new jobs section of our website. 

We are looking for a researcher, someone to lead our Female Founders Forum and coordinate events, and we’ve formalised our internships process.

Relatedly, if you are looking to get into the world of public policy, Tom Westgarth of the Tony Blair Institute and co-founder of the excellent TxP community has some timely advice for those near the start of their policy careers.

Empowering the Future launch speech

This is an edited version of a speech I gave at the launch of Empowering the Future.

Sit down with any group of entrepreneurs and ask them ‘how can we make the UK the best place in the world to start and grow a business?’ and soon enough, we’ll be talking about education and skills.

That’s why over the decade we’ve been championing Britain’s entrepreneurs, we’ve produced half a dozen substantial reports on enterprise and entrepreneurship education.

A big thank you to Youth Business International (YBI) for supporting this latest briefing paper, which came about because we identified a window of opportunity after the election for policy changes.

I’m going to blitz through the papers’ ten policy recommendations now, but the coming weeks, months and years will be all about making them a reality. I hope many of you will be a part of that.

First: Now is the time to bring back the Enterprise Allowance Scheme and ensure it is more generous than other out-of-work benefits.

The Enterprise Allowance worked. Nearly two thirds of participants continued to run their businesses 18 months after enrolling, and one fifth of these businesses employed at least one additional person. It supported well-known entrepreneurs like Superdry’s Julian Dunkerton, Creation Records’ Alan McGee, and artists like Tracey Emin.

Second: The incoming government needs to clarify the future of the UK Shared Prosperity Fund for Enterprise Support Organisations. Uncertainty is a cost on doing business – in this case supporting entrepreneurs. And the lack of clarity is damaging.

Third: Enterprise Support Organisations should be brought in at an early stage to advise on the desired outputs and measurements of national and local government interventions. Positive impact is often curtailed by being measured on outcomes which aren’t always the right metrics to deliver the most value for young people. National and local government needs to get better at tapping into this expertise.

Fourth: We need to fund rigorous trials to allow charities and the private sector to test out new ways of supporting young entrepreneurs. This could be modelled on the Business Basics Fund. From this we can all learn from the successes – and just as importantly, failures – of interventions. Interventions that have been particularly successful can then be copied by others.

Fifth: Following calls by Young Enterprise and others, we think under-18s should be able to open business bank accounts – without credit facilities – so they can separate personal and business finances from a young age.

Sixth: And this is a big one! An incoming government should ensure that the essential skills necessary to be entrepreneurial are embedded across the curriculum from primary school. If the polls are right, and Labour wins, they’re committed to reviewing the national curriculum. Our paper references the Skills Builder Partnership, whose Universal Framework is already used by over 500 schools. We need to make sure that the new curriculum design draws on the most rigorous research like this.

Seventh: We call on the government to invest in further long-term research into the educational, social and economic impact of what works in practice.

Eighth: We need to give innovative edtech entrepreneurs more and better opportunities to pitch to government and schools. Back in 2008, a book was published that had a big influence on me: Clayton Christensen’s Disrupting Class. He argued online learning and other technological innovations would disrupt the traditional classroom model by providing personalised, student-centric education. Crucially, this wasn’t about replacing teachers, but freeing up their time.

Ninth: We need to undertake a mapping exercise to determine the extent to which young people across different ages and locations are being exposed to entrepreneurship. We already know we are missing out on many people with huge entrepreneurial potential.  We know that exposure to innovation activities in childhood is a primary predictor of individuals becoming entrepreneurs in adulthood, so we should double down on ensuring as many young children from different backgrounds get that exposure they need. Crucially a lot of research on this shows that much of the most impactful work here is done outside of formal education.

Tenth: We think we should incentivise young people to solve big problems by funding challenge prizes From previous research we carried out with YBI, we know that entrepreneurs under the age of 35 are more than twice as likely to say their business’ primary aim is to solve a social or environmental problem than older entrepreneurs. We also know that this isn’t incompatible with pursuing growth. In fact, we found with YBI that the more a business turned over the more likely they were to agree that their business’s primary aim was to tackle a social or environmental problem.

So what next? This paper will be a springboard for us doing a lot more work in this area. We’re going to build a forum to take these policy ideas – and perhaps a few more – into legislation. I look forward to working with you on this.

Whose tagline is it anyway?

For over a decade, our tagline has been “to make Britain the best place in the world to start and grow a business.” We’re not alone. In their manifestos released this week, both the Conservatives and Labour claim verbatim to want the same thing. And yet, in truth, none offer enough in themselves to really deliver on that. You can read them for yourself: Labour, Conservative, Liberal Democrats, Green.

Maybe we should be thankful that none of the mainstream manifestos are too radical though. As the excellent Dan Neidle shows, there is plenty to criticise, but ultimately most – though by no means all – of the promises are reasonable. No party was going to commit to more than they felt was necessary – they will want some room for manoeuvre. After all, a lot of what is announced doesn’t actually make it through to law anyway.

Just ahead of the last election, we hosted a roundtable on the topic of immigration with a crossbench peer. Based on the discussion, I asked him who should get the ‘entrepreneurs’ vote’. He gave the very reasonable reply that people shouldn’t just vote based on immigration; nor should they just vote based on what is best for their business. There are other considerations such as education, health and crime.

Fixing these are just as important. They’ll shape the extent to which people want to live, work and raise a family in the UK. Get them right and we can ensure that the country becomes a more attractive place to remain, as well as to attract others from around the world who would like to live the ‘British dream’. 

On this point, most politicians are currently missing a trick. Whether they like it or not, entrepreneurs are essential to delivering on nearly every area of policy: ed-tech entrepreneurs will deliver personalised learning, freeing up teachers’ time to mentor the next generation; health-tech entrepreneurs will increasingly create personalised medicine so that we can all live longer and healthier lives; and crime-tech entrepreneurs will ensure that the crime can be better predicted and combatted.

It’s not just about innovation though. More broadly, business owners of all sectors and sizes are the backbone of their communities. Their success reflects on all of us.

This is what’s missing from all manifestos. Yes, let’s make the UK the best place in the world to start and grow a business – but to what end? 

We can tell you. Making Britain the best place to start and grow a business is really about making the UK the best place in the world to live. That’s what entrepreneurs can deliver. If only we would let them.

AI Impact
Now for a bit of policy. We recently hosted an event at the House of Lords in collaboration with MDRx, a technology consultancy, on what a future Labour government’s potential approach to artificial intelligence (AI) might look like, and what its implications for productivity in both the private and public sectors could be. Attendees included top entrepreneurs innovating in AI, venture capital investors and policy experts.

In a blog post, our Derin Kocer says that “one of the key takeaways from the event was that neither Labour nor the Conservatives have a clear and coherent agenda on AI yet. This is largely because AI is a novel technology with still-unclear potential. However, overall, AI is an opportunity to enhance public services without significant increases in spending – an opportunity yet to be harnessed.”

Here’s MDRx’s write-up of the event.

Them’s The Breakthroughs

This week we were treated/subjected (delete as you see fit) to the first televised debate of the general election campaign. Prime Minister Rishi Sunak faced off against Leader of the Opposition Sir Keir Starmer, the man who all the polls suggest will be waltzing into Number 10 in exactly a month’s time. 

Not unsurprisingly, economic policy featured as a key battleground issue between the two men. Sunak repeatedly attacked his opposite number on taxation – claiming a vote for Labour was a vote to increase every family’s taxes by £2,000. Starmer hit back with an even bigger number, saying that the Conservatives have pledged to make £71 billion of unfunded tax cuts by abolishing National Insurance Contributions and Inheritance Tax. 

The veracity of both allegations quickly came in for scrutiny. The Prime Minister got a ticking off from James Bowler, the Treasury Permanent Secretary, who requested that the £2,000 figure should not be presented as civil service analysis. Starmer’s costings, meanwhile, rely on some pretty unlikely assumptions – such as NICs being junked from day one. Truly, there really is nothing inevitable in life apart from death and taxes (and dubious claims about them).

What is not up for debate, however, is that if the state is to pay its way without increasing the tax burden, meaningful economic growth is utterly indispensable. Even fractions of a percent can make a world of difference. Official forecasts currently estimate medium-term growth of 1.8%, but as noted in this week’s Economist, most analysts expect a figure closer to 1.5%. If the gloomier outlook proves correct, a £30 billion gap is left in the public finances. (What’s more, if we stick to the post-2008 growth trend of just 1.1%, that gap becomes a gaping £60 billion chasm.) 

Clearly, whoever comes to power will need an ironclad plan to get the economy whirring again. As luck would have it, just yesterday we published our latest report, which includes more than a few ideas on how to do just that. 

The culmination of months of research, roundtables and digesting Call for Evidence responses, Backing Breakthrough Businesses looks at a particular segment of Britain’s business community – namely those businesses which have scaled to mid-size, and are now at a crossroads in their growth journey. They could either plateau, satisfied with what they’ve managed to achieve so far. Founders could sell up, and move onto something new. Or they could double-down, and have a crack at breaking through and becoming genuinely large in size, and a significant part of the domestic – and possibly international – economy.

It’s not for us to tell entrepreneurs what to do, but a lot do tell us that they often feel Britain doesn’t do enough to incentivise founders who want to choose the latter of those three options. Certainly, that’s the opinion of Steve Rigby, Chair and supporting partner of the Private Business Commission, which we set up specifically to oversee this research. As he writes in his foreword to the report, Breakthrough Businesses “have the potential to become structurally important in their region or industry. By focusing on removing barriers to business growth, we can support this critical but frequently overlooked cohort and help the UK regain its standing on the world stage.”

Our policy proposals focus on four distinct areas – access to funding, the state of our capital markets, tax incentives and employee ownership schemes. I won’t trot through all the recommendations, but to whet your appetites, here’s a couple we see as being particularly important. 

First up, whoever forms the next government should commit to increasing the independence of the British Business Bank. You might have seen this covered by The Times, with Sam Smith, finnCap founder and one of our Commissioners, saying: “Everything becomes more difficult, and you’re less able to really drill down into what private companies actually need, when it’s government owned,” and: “There is a nervousness around whether [capital] is going to the right places, and backing the right things.”

Second, the investment limits for the Enterprise Investment Scheme (EIS) and its seed-stage equivalent SEIS should be increased. On this point, Chris Hulatt, co-founder of Octopus Group and another Commissioner, notes: “Even if you simply adjusted the limits to reflect inflation, you could get to a higher figure and remove this cliff edge that businesses can face.” He goes on to say that fixing this would improve the environment for follow-on funding, which he argues is one of the reasons why many businesses fail to reach their potential in Britain, and feel they have to sell out to overseas investors where capital pools are larger.

You’ll have to read the report in full for the other recommendations, but suffice to say, we’d love to hear what you make of them. And to everyone who engaged with us on it along the way – thank you.

Red Letter Day?

This week we saw 120 business owners give their backing to the Labour Party. Among the signatories are some impressive names. But as Brent Hoberman pointed out, they weren’t all high profile figures, who understandably would want to see what’s in the manifestos before "blindly going with the flow". 

I would go a step further. Entrepreneurs would be better off not publicly backing political parties at all – but instead focus on backing or attacking particular policies. There is an important difference.

Putting aside the not insubstantial risk of alienating employees by backing a political party, business leaders would also be taken more seriously if they focused on the particulars of manifesto commitments. For example, a prominent retailer could explicitly back the policies of a party that had a coherent plan to regenerate highstreets or cut crime. Importantly, they have expertise in this area, and doing so would give critical information to the wider public about which party is best placed to solve a particular problem. It would also be helpful if they pointed out where the policy gaps were and caution about why similar plans might have failed in the past.

This cuts across many policy areas. The country can learn from entrepreneurs in the construction sector about which policies are most likely to ‘get Britain building’. We should hear from hospitality entrepreneurs about who has the best plan for dealing with their ongoing challenges around labour shortages. And tech entrepreneurs are well placed to tell the country which – if any – manifestos address their need for capital and top talent. 

While manifestos have got longer and more detailed over the years – check out the 1900 manifestos from the Liberal Party, Conservative Party and Labour Party for a window into a different age – when this year’s come out, they won’t include every area of policy relevant to every business or industry. Where there are omissions, there are future opportunities to influence the incoming Government. Famously, what’s not said during an election campaign matters more in government than what is. That’s why business groups and think tanks work throughout the length of a parliament, not just the relative sprint of an election campaign.

If you can’t wait for the manifestos, check out this policy tracker that our friends at Public First have created.

The Future Once
Entrepreneurs and the wider ecosystem aren’t just in it for themselves. I’ve been overwhelmed by the number of entrepreneurs who want to ensure the next generation are given entrepreneurial experiences and skills – both in the education system and more broadly – to prepare them for the future.

After all, you can't be, what you can't see.  As reported in The Times this week – quoting data from our recent report with American Express – 71% of current business owners say they knew a friend or family member who owned a business while growing up, compared to less than half of the general public.

To that end, with Youth Business International (YBI) we’ll soon release a pithy briefing paper on what we think the next Government should do to empower the next generation. But this is just going to be the beginning. We have ambitious plans on how we can effect policy and practical change for the next and future generations. 

This isn’t something that will be solved over the course of an election cycle, nor is it something that is just about policy change. Charities and the private sector are already doing incredible work here and will be vital for much of the delivery.

Join us in the House of Commons to find out more (yes, we can still hold this in the House of Commons even though Parliament is prorogued).

All About It
Next week we’ll release the first report of the Private Business Commission. We can send you a copy fresh off the press (or when the embargo is released), but we only send these out to those who have signed up. Joining us also helps us know what you’re interested in. Becoming a member is free, but we won’t complain if you sign up to support us while you’re there.

King’s Ransom
The Department for Business and Trade has asked us to promote the King’s Awards for Enterprise. Categories include innovation, international trade, sustainable development, and promoting opportunity through social mobility. Among other things, winners get invited to a Royal reception and are able to fly The King’s Awards flag at your main office, and use the emblem on marketing materials (for example, on your packaging, advertisements, stationery and website). Find out more.

Voting Blocks

If proof were needed that a week can be a long time in politics – this was it. On Thursday, Parliament will be dissolved and then we’ll jump headfirst into the carnage of a General Election.

I don’t have any unique insights on the politics of the decision to call an election now. Nor will we be recommending which way you should vote on 4th July. But I would like to reiterate what I think should come next and state something we can all do to make politics a bit better.

It’s trite to write, but whoever wins needs to harness the power of entrepreneurs to innovate, create jobs and grow the economy. Luckily for whoever wins, our recent publication Building Blocks sets out how to do just that.

First, and arguably foremost, an incoming Government must address under-agglomeration, namely the housing and infrastructure crisis in our big cities. Agglomeration is the basis of all productive economies, and will only become more important in a world increasingly characterised by intangible capital. But a wealth of evidence shows that Britain falls short of its potential, with political incentives making it harder to build entrepreneurial hubs, connect them with one another, and allow them to grow.

In fact, if you’re equally passionate about ‘getting Britain building’ then request a place for this private dinner we are co-hosting with Britain Remade on Thursday. Their policies have been backed by politicians across the political spectrum and they will continue to have influence whoever wins.

Building Blocks also calls for the next Government to rationalise the tax system, get innovative around innovation funding, and double down on attracting and training top talent.

Getting all this right will create the wealth to upgrade our public services, but it goes deeper than that. Our public services themselves could be revolutionised by entrepreneurs and innovators. Whether genomic medicine and diagnostics for healthcare; AI-driven personalised learning for education; or autonomous vehicles for travel – we could see huge changes to the way we live over the course of a Parliament. Or we might not. A lot comes down to politics.

This brings me to what I think you could do about it. It’s easy to be cynical about politics, but this doesn’t get us anywhere. Whether you have a party affiliation or not, you can make a difference by seeking out candidates and supporting them. This support doesn’t need to be financial or involve knocking on doors (though it could). It might just be a matter of acknowledging publicly when they are doing admirable things.

We all know that many very good people are being put off going into politics because of the toxic environment of being a politician. We all have a role to play in making that environment more conducive to good policymaking.

You will be able to find the names of your Prospective Parliamentary Candidates here. And while I don’t expect you to read Hansard, you can subscribe to our All-Party Parliamentary Party Group for Entrepreneurship digest, where we update you from the Commons and the Lords on speeches relevant to entrepreneurs.

Your involvement in politics need not be confined to voting. By getting involved in our work you can have an influence. We regularly host events with MPs and Peers where you can be heard. But we are not alone – there are plenty of other think tanks you can get involved with. Sign up for their newsletters too and you’ll be invited to events like the ones we put on (although I can’t guarantee they will all be as good as ours).

If you Build it
Another way you can get more involved is by becoming an Adviser. We are busy growing our base of supporters and this week Raphael Dennett has joined us. He is a Senior Lecturer in Entrepreneurship and Innovation at the University of Exeter and Deputy Director of the Centre for Entrepreneurship there. 

His areas of expertise are focused on regenerative and sustainable entrepreneurship, intrapreneurship and the application of entrepreneurship education to inspire a new generation of entrepreneurial and innovative graduates. The Entrepreneurship and Innovation Programmes that Raphael delivers at Exeter now have thousands of students per year with graduates delivering impact in every sector imaginable. 

Find out about becoming an Adviser here.

Lilac Review
The Lilac Review was launched earlier this year to understand the key changes required to make the world of entrepreneurship more equitable to disabled entrepreneurs. I sit on the steering board and am delighted to share that its interim report has been published. Let me know if you have any feedback. I'll be writing more about it in due course.

Hit For Six

This week Keir Starmer set out the ‘six steps’ Labour would take if it wins the next general election. They’re understandably focused on things like cutting NHS waiting lists and recruiting more police officers and teachers, but the fallout has been all about how we would pay for those promises.

Jeremy Hunt hit back, releasing a dossier claiming Labour had a £38bn black hole in its costings and would have to increase taxes as a result. He then hinted at another cut to National Insurance before the next election. Labour then returned fire, claiming that the Conservatives had their own £46bn unfunded tax plan in their promise to scrap National Insurance altogether.

We don’t have a horse in this race, but I mention it to remind our intelligent readers (who are no doubt already aware) that when it comes to elections, it really is the economy, stupid.

A few years ago, Sam Bowman and Stian Westlake made the case in Reviving Economic Thinking on the Right that the Conservative Party needed to refocus its efforts on economic growth. The lessons of that excellent paper are as relevant today as when they wrote it, and their policy prescriptions as applicable to people of all political persuasions.

As they stated (and the current polls attest): “Slow productivity growth is not just economically toxic but politically toxic too: it leads to a sense of malaise and that the system is not working for ordinary people. Conversely, strong productivity growth cures all sorts of problems. Faster productivity growth would lead to higher wages, better returns for savers and pensioners, lower taxes, and lower deficits with higher public investment. And, perhaps, more confidence in the liberal economic model.”

In many ways, running a country is very different to running a business. However, the best politicians are similar to the best entrepreneurs in their ability to focus on what really matters. Whoever wins the next election will be pulled in many directions – many superficially worthwhile. But nothing is more important than raising productivity, as without this there will be no money for spending pledges or tax cuts.

In our own report Building Blocks we took a step back to share what we think is needed: addressing under-agglomeration, alleviating fiscal headaches, accelerating innovation and acquiring new skills. On Tuesday 4 June we’ll get back into the weeds, launching the first report of the Private Business Commission. But, once again, it’s all about raising productivity.

Of course, no political party would say they’re against increasing productivity. But to actually deliver, the next government must ruthlessly pursue it from day one. Both for our benefit, of course; but also so the fruits of their labour are realised by the time of the next election. 

All Aboard
This week we held the AGM for the All-Party Parliamentary Group (APPG) for Entrepreneurship, which we are the Secretariat of. Seema Malhotra MP was re-elected as Chair; and Lord Bilimoria, Lord Leigh of Hurley and Jo Gideon MP were re-elected as Vice-Chairs. We also have a growing list of Members too long to mention.

Seema, who is the shadow skills minister, was also interviewed in FE Week this week. It’s worth reading in full, but I want to just focus on a policy mentioned in the article: “Training providers are desperate to understand the nuts-and-bolts of Labour’s biggest and most controversial skills policy: replacing the apprenticeship levy with a growth and skills levy that businesses could spend on non-apprenticeship training.”

I don’t think this is controversial at all.

As we wrote with Enterprise Nation in Access All Areas: People: “Apprenticeships in all age groups have fallen considerably despite the Apprenticeship Levy. To increase uptake, the government should widen the scope to include other forms of accredited training. Consequently, as suggested by others – including the British Retail Consortium, CIPD, and the Learning and Work Institute – the Levy should be reformed into a broader Skills Levy and better focused on younger people.”

Metro Elite
In case you missed it, Eamonn Ives, our Head of Research, wrote a cracking May Digest for the All-Party Parliamentary Group (APPG) for Entrepreneurship, setting out why localism matters.

Eamonn thinks there are strong grounds to believe metro mayors can have a meaningful economic impact: “the OECD suggests that cities with fragmented governance structures have productivity levels that are up to 6% lower than those that do not, while polling data from the think tank Centre for Cities shows that people living under a metro mayor support further powers being devolved down from central government.”

Winds of Change

Perhaps it’s just the change of weather, but let’s talk up Britain. After all, this week a British company secured Europe’s largest ever AI funding deal, with Wayve raising $1 billion. This is great news for the UK, but it’s also another nod to the potential of the AI revolution.

This is clearly a big bet on driverless cars, which Matt Yglesias thinks are underhyped, but more broadly it’s a bet on other robots, so-called ‘embodied AI’, which Wayve will help drive. Robot workers, humanoids, robotics animals and bio-inspired robots are already here and will become increasingly commonplace, but it may turn out that speculative forms like swarm, soft, nano, modular or biohybrid robots are more useful.

All of this is going to have a profound impact on every aspect of our lives. The potential upsides are genuinely mind blowing – as are some of the risks, which can’t be ignored. (This article by Benedict Evans on ways to think about AGI does a good job of articulating how hard it is to weigh up the risks and benefits.) 

Whoever wins the next election is going to face completely new policy challenges. We’re not affiliated to any political party; nor are we pollsters. Nevertheless, the polls still suggest Labour are going to win (our survey with Mishcon de Reya showed that the Party was most trusted among entrepreneurs too), which is why we’re hosting a roundtable with MDRx and led by Benedict Macon-Cooney of the Tony Blair Institute, who we’ve worked with on a number of reports.

Be Our Guest
Your country needs you. More specifically, we need you. 

First, come to our meetup with Growth Hub Global and LSE IDEAS on 21 May 6.30pm to 8.30pm at the London School of Economics. You don’t need to be an entrepreneur; you just need to be supportive of our aims of making the UK the best place to start and grow a business (request a place here). We’ll be hosting a similar meetup on 27 June at mccglc (request a place here). Advisers and Supporters get priority but there should be space for more, so feel free to share it with colleagues, friends and anyone who you think will be interested.

For any entrepreneurs who have views on the UK’s planning system we’re hosting two events with Britain Remade. First, in Quo Vadis on 30 May from 6.30pm to 9.30pm (request a place here), then at The Brasserie on 19 June from 6.30pm to 9.30pm (request a place here). One of Labour’s five missions is to ‘get Britain building again’. Britain Remade is setting the agenda on this topic, so you will be in the room with the people who matter. If you or your business would benefit from building more, this is your chance to change Britain.

There are lots more events on our website. We’re also planning events around the country through our Female Founders Forum, but we’re keen to do a lot more. Any partners who are keen to host us for these events should get in touch.

Culture Shock
Gordon Hurst, the chairman of Darktrace, the cyber security company that recently sold to US private equity, thinks: “the UK has a culture problem with business. It is just not talked about positively enough. I don’t think it is given the support and the accolades it should be given.”

We also think culture matters. And while acknowledging that politicians don’t have all the levers to change culture – it has a few. That’s why we think the Crown should give more honours to innovators and why the state should back (but not necessarily pay for) a new Great Exhibition. 

Formal and wider education is another lever. To that end, we’re partnering with YBI (Youth Business International) on a short paper setting out what we think is needed on this front from whoever wins the next election. Get in touch if you would like to get involved in this project.

Kein Vorsprung Ohne Technik

This week John Barstow of the Union of Shop, Dis­tributive and Allied Work­ers wrote to the Financial Times calling for the restriction of Sunday trad­ing online, and not just for bricks and mor­tar. Barstow was responding to another FT letter by Daniel Lidón, who argued that Sunday trading bans have no place at all in Germany’s secular society, which in turn was a response to an FT report where it was revealed that Germany had banned retail robots from working on Sunday. (Yes, you read that correctly.)

Barstow’s letter claims that banning Sunday trading – including online – makes commercial and entrepreneurial sense: “More goods would be bought before Sunday clos­ure and thus feed into pro­ductiv­ity. Ger­many has the repu­ta­tion of being a highly pro­duct­ive eco­nomy — and their respect for Sundays through retail clos­ure could be deemed a factor in that.” 

I don’t even know where to start with this. Back on planet earth, while banning Sunday trading would no doubt see some spending shift to other days, we would expect to see less spending overall due to the added inconvenience, leading to less economic efficiency and certainly less consumer satisfaction.

The suggestion that Sunday closure is somehow connected to Germany’s overall productivity is beyond parody. Forget its historically strong industrial base, its dual education system, its labour relations, and dozens of other orthodox reasons. Nope. Barstow claims it’s because shops are closed on Sunday.

And the idea that this should be extended to e-commerce leaves me speechless.

Defend Sunday closing in Germany – and the many restrictions that still exist in the UK –  for religious, conservative and paternalistic reasons if that’s what you believe. But you need to account for the fact that these restrictions aren’t good for the economy, and most certainly not for productivity – quite the opposite.

Planning Eh!
Building in the UK is prohibitively expensive, mostly due to the wall of bureaucracy that policymakers have, instead, managed to construct. We know these regulations are unnecessarily complex because our good friends at Britain Remade compared them with other developed economies like France, Germany and Japan. Check out Ben Hopkinson giving damning evidence to the House of Commons Transport Select Committee this week.

For our part, we’ve argued for a long time that shortages of housing, office space and infrastructure are holding back Britain’s entrepreneurs. It was a major block in our recent Building Blocks report.

But policymakers don’t just want numbers. They want to hear from people at the coalface: the businesses. That’s why we’re hosting a couple of events with Britain Remade. The first will be a dinner at Quo Vadis on 30th May. If you’re a business that has had challenges with the planning system, request a place. If you can’t make this one but would like to attend another, do let us know. Britain Remade works around the country, so get in touch no matter where you are.

Spin Doctorates
Beauhurst and the Royal Academy of Engineering have just released their Spotlight on Spinouts 2024. It reveals that the stake taken by a university during spinout formation increased from 19.1% in 2022 to 22.2% last year. 

We think this is a big problem. So much so that we investigated it in our paper Academic to Entrepreneur, making the case for academics, rather than universities, to have ownership of the intellectual property they create.

The Government also knows there’s a problem. That’s why they launched a spinouts review. But although it made encouraging noises, the final report lacked teeth. The recent rise in university stakes, despite the report calling for more standardised agreements with lower ones, means it’s already showing its gums. I increasingly think the best model for understanding the actions of universities is to see them as long-established businesses in a highly regulated industry, rather than learning institutions devoted to the public good. Nothing is going to change unless change is forced upon them. 

Take Your Advice
A few new Advisers have joined us. From the law firm Fragomen, we have Partner Louise Haycock and Shuyeb Muquit who is a barrister and UK Government Affairs Strategy Lead. We’re going to be undertaking an exciting piece of research with Fragomen on immigration policy.

Dr Eren Kocyigit, Founder of NBT (Next Big Thing) has also joined as an Adviser. Eren supports us because: “The Entrepreneurs Network provides crucial support to entrepreneurs and also plays a vital role as a bridge between politicians and the business community. This function is particularly critical, considering that entrepreneurs are the lifeblood of the UK economy. By supporting startups, The Entrepreneurs Network not only sustains current employment but also seeds the creation of future job opportunities. Thus, my support for their work stems from a profound appreciation for their ongoing contribution to economic growth and innovation in the UK.”

If you’re considering getting more involved in our work join us in the evening for a drinks event at the London School of Economics on 21st May.

Deep Impact

It’s understandable that regulation isn’t a fit topic for dinner parties, but there is no excuse for the lack of scrutiny it gets from politicians and policymakers. Perhaps it’s because the costs are so widely distributed and often unseen. To quote, ahem, Wikipedia, “concentrated minor interests will be overrepresented and diffuse majority interests trumped, due to a free-rider problem that is stronger when a group becomes larger.”

A new report from the Centre for Policy Studies makes the case for why we need to tackle this. As Robert Colvile writes in an article summarising the report:

“Think of the biggest obstacles to growth this country faces. Why can’t we build houses in sufficient numbers? Why does it take so much time and money to build new power plants, roads or railways? Why is so much of the money from our pension funds locked up in bonds, rather than being reinvested into the productive economy? All of these issues matter far more for our national future than whether we take a few pence off a given tax, or pour a few more million down the maw of the NHS.”

The report chastises Regulatory Impact Assessments as insufficient, and calls for: a beefed-up Regulatory Audit Office; a senior minister who can challenge and veto new regulations; a full audit of the regulations that are already in place; a system of regulatory monitoring that covers every measure introduced; and full reviews after a set period to see whether they are working properly.

Also, following the former head of the Office of Fair Trading John Fingleton CBE, the report suggests bringing existing regulatory sandboxes together into an economy-wide innovation agency and exploring the idea of replacing sector-specific regulators with a new generation of regulators focused on core, economy-wide objectives.

In their contribution to our Operation Innovation essay collection, John and David Stallibrass – now Deputy Chief Economist at the FCA – set out how regulators need to be ‘innovative by design’. One thing I would emphasise is their call to reduce the number of objectives we give our regulators. It cites the example of Ofcom, whose objectives have ballooned from two primary and six secondary objectives in 1984 to two principle objectives, ten other duties, and six principles of community obligation, many of which are in tension with each other and require delicate discretionary balancing.

It’s not about rhetoric and gimmicks like bonfires of red tape and red tape challenges. And it’s not about shouting into the void that all regulations are bad – good regulation can create certainty and markets. It’s is about getting the apparatus of the state right, reducing rent-seeking and ensuring incentives point in the direction of innovation and competition.

Founders’ Fuel
Adviser to the network Christina Richardson is looking for founders to contribute to the largest study yet on founder resilience. This research, led by Imperial College London and weare3Sixty, aims to influence policy and inform how our whole startup ecosystem can better support and fuel founders to achieve sustainable growth​. 

We will be convening a roundtable on the topic with Christina as we think there are going to be policy implications to her findings. So once you’ve responded, drop me an email so I can make sure you are invited. It took me about 10 minutes to fill in, but it was worth it. The questions are also great for taking stock of your life as an entrepreneur. Fill in the survey here.

Class Act
In August, our friends at Works in Progress are hosting a week-long residential seminar in Cambridge for people aged 18-22 years old. Classes will be led by our Head of Innovation Research, Dr Anton Howes, as well as Saloni Dattani and Stuart Ritchie. Topics covered will include: how the world got rich; what is going wrong with science today; and how to design public policies so they have a chance of being implemented. Find out more here.

Essential Toil
The Department for Business and Trade has launched the new Help to Grow: Management Essentials course, a short online course with practical tips and resources for small business leaders. The course is developed by experts from accredited business schools. We’ve argued in the past that there needs to be a more flexible option for Help to Grow, so this is good to see. Find out more here.

Your Call

This week, instead of you reading what we think, we want to read what you think. Regular readers will know that we recently launched our Private Business Commission to investigate why some companies don’t maximise their growth potential within the UK. We aren’t saying the UK isn’t an incredible place to start and grow a business – it clearly is. We’re just saying things could always be better. On 23 April, the Commission’s call for evidence closes, so now is the time to reply.

The call for evidence asks no fewer than 27 questions across four policy areas – access to funding, tax incentives, employee incentives and the state of our capital markets – but don’t let that put you off. We don’t expect you to reply to them all – just those where you have something substantive to add. Perhaps you have experience of applying for government grants and know how that could be improved. Or maybe you have some insights about how the Enterprise Investment Scheme or Venture Capital Trusts could be improved. You might have some experience of employee incentives and ownership schemes in other countries that the UK could learn from. Whatever it might be, we’re keen to listen. 

Responses to the call for evidence won’t just inform our own thinking, but will also be directly quoted – anonymously, or not, if you’re happy to – in the text of the report which the Private Business Commission is ultimately working towards.

I should also stress that while we obviously want to hear from entrepreneurs, we’re also interested in what anyone with something in the entrepreneurial ecosystem has to say too. Maybe you’re a business consultant who has experience supporting scaleups, an accountant with knowledge of how the tax system could be improved, a lawyer with unique insights on how a piece of legislation should be tweaked, a marketing expert who has something to say about how the UK can better position itself internationally, or an investor who has views on where the funding gaps are. 

I could go on, but as promised at the top of the newsletter, this week is about us hearing from you, not the other way around – and I don’t want to distract you from responding to the consultation. 

Engineering Biology

Welcome back. Now that you have responded to that one, Ralph Lucas – or ‘Ralph Matthew Palmer, 12th Baron Lucas and 8th Lord Dingwall’ to his friends – has asked us to share the Science and Technology Committee’s call for evidence on engineering biology. The opening question might be of particular interest to a few of you: “Are there innovative companies, start-ups, or spin-outs that you think are of particular promise or significance using engineering biology in the UK today?” You can respond here.

Further Thoughts

While universities are a great source of entrepreneurs, so too are our Further Education colleges. And like our universities – see our report on spinouts – we think there’s room for improvement. 

That’s why we’re hosting a virtual meeting on this topic with Gatsby. We know we need to work with the world as it is, and appreciate FE staff time and freedom to take the initiative is often limited. The event is on Monday, 29 April from 11:30am – 1:00pm. Drop us an email to register your interest.

Be Our Host

Currently, the largest events we tend to do are on the Terrace of the House of Lords, where we can squeeze in around 150 people. However, we need space for closer to 250 – perhaps more if you have room – for an upcoming event with the nation’s most ambitious founders. Drop me a message if you can host, or know someone who might.

Take AIM

Ali Mortazavi, CEO of e-therapeutics, set a small corner of X ablaze this week with a brutal thread on his intention to delist from London Stock Exchange’s AIM market.

According to Mortazavi: “the UK markets are not just illiquid, they’re completely broken and closed. The situation is worse for small growth companies (in particular biotech) but even sizeable companies such as Shell and many others are saying the same thing.” I would recommend reading the whole thread.

On the same day, City A.M. provocatively asked: Is the London Stock Exchange’s AIM in terminal decline? After all, the market’s total value has fallen by over 50% since its peak in 2021, while the number of firms listed on AIM has shrunk 30% since 2015. As reported, AIM doesn’t come cheap: “An IPO on AIM will cost about £500,000, and fees for RNS announcement, legal costs, and other expenses add around £200,000 a year to that. Given that about 400 companies listed on AIM have a market cap below £50m, that’s a high price to pay for the UK’s small businesses.”

I know some people who read this will be more bullish on AIM. Whether you agree with Mortazavi or not, I hope we can all agree that there is room for improvement.

I don’t want to depress you even more but Mortazavi’s tweet thread highlights another issue that’s holding back British entrepreneurs: With one of his investors now above the 25% threshold, the National Security Investment Act (NSIA), which he describes as a “shocking piece of legislation,” means an extra 45 working days will be added to the process. He says the legislation is “particularly punitive to biotechs, referred to as ‘synthetic biology.’”

With the right policies, we could all be a lot better off (in every meaning of the term). That’s why we set up the Private Business Commission. Whether it’s access to funding, tax incentives, the functioning of capital markets, employee incentives, or anything else you think matters, respond to the Call for Evidence here. The deadline is Tuesday 23 April 2024. Help make the change you want to see in the UK.
 

Message from this Week's Partner

Yesterday, employee relocation platform Jobbatical published a report (which The Entrepreneurs Network was happy to contribute to) exploring an issue that many of you reading will be very passionate about. It looks at the UK’s approach to skilled immigration, what’s going wrong, and what UK businesses need to plug the talent gap. With immigration being a big electoral battleground, the report looks at how those with different voting intentions feel about the impact of current immigration policies on their businesses.

The report is based upon a survey of hundreds of senior business professionals of mid-to-large businesses in the UK. Findings include the fact that a similar proportion of Labour (63%) and Conservative (62%) voters believe that UK businesses need more international workers – but despite this, almost seven in 10 (69%) Labour voters say that the UK government has made it too difficult for businesses to hire international workers (compared to 42% of Conservative voters).

Politics aside, the report also explores the global skills crisis and how different countries are responding to this from an immigration perspective. It raises concerns from business professionals about the cost and complexity of the UK’s immigration system.

You can read the full report here.

As a friend of The Entrepreneurs Network, you’re also invited to Jobbatical’s panel discussion and networking event around this report at Sea Containers London on 18 April, 6pm to 7.30pm followed by networking and drinks. Grab your free ticket here.

Britain's Lost Talent

We just published a letter we’ve written to the Home Secretary alongside our friends at Startup Coalition. It argues that the new salary requirements will cut off international talent to many UK startups.

As covered by UKTN, we think the Government should allow companies to count equity towards the salary requirements for the Skilled Worker Visa. This would enable startups to continue to sponsor foreign workers whose salaries meet the new general salary threshold (£38,700), but not the occupation threshold if they are also compensated through equity stakes in the business.

As the letter states: “Founders frequently tell us that access to talent is a key barrier to scaling their businesses. Startups need staff with the right skills to develop and execute innovative ideas. They often compete with larger, more established companies for talent too – yet these changes could see dynamic startups miss out on the skills they need, while established tech giants will be unencumbered by them. Startups based outside of London, where data shows tech salaries are lower, will be disproportionately impacted by these changes.”

“Equity is a standard form of compensation for many startup employees. Not taking this into account could dramatically underestimate their actual earning potential. Allowing equity to be counted towards salary requirements provides a more accurate reflection of an employee’s total compensation package, and ensures that startups are not unfairly disadvantaged in accessing talent. It would also help to facilitate startups’ ability to access talent from abroad – especially those who are interested in the high earnings potential enabled by equity stakes.”

The threshold hikes are incredibly shortsighted and show a lack of understanding of the UK’s startup scene. Ambitious startups will be hit hardest by the changes as equity compensation is often the only way they can compete with large companies to attract top talent. As ​​Bella Rhodes, Talent Policy Lead at Startup Coalition, says: “UK startups are already struggling to access skilled workers, and the changes that come into force today make it more difficult to fill vacancies.”

I should point out, this isn’t the only policy change we want. We also think the government needs to reduce visa fees, expand the High Potential Individual visa and the Youth Mobility Scheme, and much, much else besides. All are focused on targeting proven and high potential talent.

Whatever is going on in the national debate on immigration, the demand from businesses and returns to the economy for high-skilled immigration is only increasing. There is absolutely no sign of this slowing and every sign that it’s intensifying. 

We won’t rest until the UK has the best visa system in the world for founders (and even then we will need to defend it). To that end, next week I’ll share a link to a Jobbatical report on this topic (sign up for the launch at the Sea Containers in London on 18 April here); later this year with Fragomen we’ll release the next edition of our Job Creators report; we’re working with UK Day One Project on building out some of our policy proposals for the next Government (whoever wins); we’ll continue our MP immigration roundtables with Kingsley Napley; and hopefully one or two more projects. Get in touch with my colleague Derin Kocer if you’re equally passionate about this topic.

Dis Credit 
This week nine startup founders told the Financial Times that HMRC’s failures in administering R&D tax credits has left them exploring moving overseas, scrapping plans to create jobs or rethinking investment decisions.

Matthew Millar, co-founder of Really Clever, said that he was considering moving its operations abroad after his fungal discovery platform was asked to repay £44,000 in relief: “[The process] just pressurises the entire situation the business is in, from a resource perspective, for us having to explain it to investors [and...] our board.” 

There are many more such cases and it’s not a new phenomenon. As regular readers will know, esteemed organisations like the Chartered Institute of Taxation (CIOT) have been highlighting the dysfunction for a while now. All the way back in July 2023, the CIOT was pointing out that HMRC is rejecting legitimate claims and stone-walling other genuine claimants with a bureaucratic system driving them to give up on their claims. For additional reading, check out their 12-page letter to HMRC and the efforts of Lord Leigh and others in Parliament.

There is a way out of this mess. As well as giving insights on the latest R&D in key sectors like tech and life science, the Spring Budget 2024 document promised that a new panel would “help review guidance to ensure HMRC and its directives remain up to date, while also giving clarity to claimants.” The CIOT recommended that this panel should help with the training of caseworkers at HMRC to ensure that the rules are applied consistently and address some of the issues that we have seen in the compliance approach. It’s time that some feet were held to a metaphorical fire.

Talk of becoming a ‘Science Superpower’ is dirt cheap when the government isn’t even getting the basics right.

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