Britain can be the most entrepreneurial country in the world - Sunday Times

Richard Harpin Sunday Times:

OK, I’ll admit it, I am a restless entrepreneur.

As a Yorkshireman I’ve always lived by our motto: “stop faffing and get on with it.” Persistence pays in the business world - something I have learnt first-hand, selling my company HomeServe this year for £4.1bn from £50,000 start-up capital.

It wasn’t an easy journey. My business partner and I nearly didn’t make it through our first year – which is why I’m on a mission to stop other entrepreneurs making the same mistakes, and to re-boot Britain’s economic engine. Entrepreneurs are the fuel that drives our economy forward.

Having the right idea, leadership and strategy are all crucial to business success. But whether you’re a business springing-up or scaling-up, the right conditions must be in place to help unlock growth. In a secure environment enterprise will thrive, generating jobs, prosperity, and opportunity up and down our country. The United Kingdom is one of the most attractive places in the world to do business. In a new ranking of how entrepreneurship impacts economies,the UK isfourth in the world and second among G7 countries. According to the analysis of 40 countries by Shopify , UK entrepreneurs generated £28bn worth of business activity in 2022 and £14.3bn in GDP impact.

But we need to break out of the low-growth trap and set conditions to accelerate economic growth. Ahead of this year’s Autumn statement I’m urging policy makers to alleviate the bottlenecks that are currently holding up the UK’s entrepreneurial performance.

First, we must end the VAT tax cliff-edge. One of the aspects of the tax system currently subject to a freeze is the turnover threshold at which firms must register for VAT. It reached £85k in 2017 and on the current trajectory will remain frozen at this level for eight years until 2026. This cliff-edge results in firms capping their annual turnover, which in turn suppresses innovation and stifles growth, at a time when we need businesses to be incentivised to aim higher.

Second, we must shore up investor confidence. That means ensuring the right tax incentives remain for venture capital trusts, which under current legislation will cease in 2025. It’s crucial that these productive funding channels remain open far beyond 2025 to enable free flowing capital for start-ups. The maximum limits for the Enterprise Investment Scheme (EIS) should also be raised from £5 million annually and £12 million over a company's lifetime to unlock more investment in high-growth start-ups, and ultimately create more opportunities and innovation in the long-term. These simple additions have the potential to deliver lasting impact.

Third, we must open new channels of investment into UK businesses. Every entrepreneur knows just how crucial access to growth capital is for their business. In the US, venture capital backed companies grew their employment by 960 per cent versus a 40 per cent average between 1990 and 2020.

We should learn from the US and introduce scale-up loans and expand existing schemes that are delivering results. If medium to large enterprises grew at the same rate as small businesses each year it could unlock an additional £20-50bn.

The opportunities really are endless. And we should maximise the schemes that we know are working. The Government Start-Up loans scheme has reached £1bn in small business funding. The scheme has helped more than 100,000 businesses since 2012 – a milestone we should celebrate.

Fourth, the excellent #HelptoGrow scheme, set up by the Prime Minister when he was Chancellor, should be expanded and promoted. Only around 6,000 businesses have benefitted because it hasn’t been promoted widely enough and many businesses remain unaware of the benefits of this fantastic scheme. Finally, we should prioritise our workforce and enhance skills training.

When we invest in our workforce, the dividends are huge, with the benefits reverberating far beyond the bottom line. I have seen firsthand across Checkatrade.com and HomeServe UK the freedom and success apprentices and career switchers have achieved through a career in the trades.

It’s no secret that hundreds of millions of pounds of unspent apprenticeship levy funding is returned to the Treasury each year and it’s about time this capital was used to support new pilots for #SME training. I agree with Kingfisher, more hiring incentives will support SMEs to take on and retain #apprentices. The £3,000 apprenticeship incentive that was in place during the pandemic should be re-introduced with a £1,000 apprenticeship completion bonus, to support SMEs in taking on apprentices. This will send the strongest signal to industry and to the nation that we mean business.

The impact of local entrepreneurs on GDP saw a one per cent reduction from the same period last year. To reverse this trend, we must grasp the nettle and accelerate our ambitious vision for boosting UK entrepreneurship.

I believe in Britain, and I believe in the power of business – now let’s get on with it.