What do businesses need to make Britain an economic powerhouse?

This article has been produced in partnership with Smith & Williamson

“Making Britain a hotbed for innovation, entrepreneurship and business growth should be a priority for the government,” says Guy Rigby, head of entrepreneurial services at Smith & Williamson. “From immigration to infrastructure to tax reliefs, there are many ways that the government can improve the environment for entrepreneurs and move Britain forward.”

1. Planning for the future

Guy Rigby: “We need both stability and ambition from the government.”

“Constant changes to policies and frameworks undermine the growth prospects of Britain’s businesses. Businesses and entrepreneurs need to understand what the rules and regulations are and should be given clear guidance on how to apply them. The government needs to create the conditions for success for entrepreneurs and then step away. 

“Policy areas that are crucially important to entrepreneurs include improving access to finance, reducing red tape, embedding supportive tax policy and modernising our education system to prime the next generation. These areas are all within the government’s ability to influence and facilitate change.

“Government needs to be ambitious and have the confidence to invest in a truly world class infrastructure – the costs are unavoidably high but the medium and longer term benefits will far outweigh these.”

 

Sir Martin Sorrell, founder and CEO of WPP: “Make a concrete economic plan.”

“The government should articulate a practical overall economic plan covering, amongst other things, education, infrastructure investment, technology, tax and immigration. 

“It should stimulate a long-term investment attitude by, for example, raising short-term capital gains tax and tapering capital gains tax the longer assets are held. 

“It should have the courage to make the case that immigration benefits the economy, and that membership of the EU is in Britain’s interests.

“It should also embrace the fact that business – be they big or small – creates wealth and employment.

“Finally, it should acknowledge that, as Britain is a mature economy, service industries are critical for future growth, prosperity and success – particularly, forgive me, in the case of the creative services industries.”

 

2. Talent issues

Tim Adams, media and tech director at Smith & Williamson: “Research suggests deepening concerns with the tech talent pool.”

“The Smith & Williamson Enterprise Index highlighted how only 45% of businesses believe there to be an adequate talent pool. This was a worrying result, considering 64% of the businesses surveyed are planning to increase headcount in the next quarter.

“The stress on the available talent pool can’t be ignored; businesses must train more people and upskill their existing workforces as capacity remains tight. We are increasingly hearing of talent moving to countries such as the US where the marketplace is perceived to be more attractive.  It would be highly beneficial if action was taken to retain and encourage highly-skilled individuals to remain in the UK.

“Tax is an area which could potentially be used to provide more support to business. However, the priorities for government must be to enable simplification and certainty on tax – there have been so many changes in recent years which make it incredibly difficult for businesses to keep up with and understand ever-changing rules. This takes owners’ and managers eyes off their priority, which must be to develop and run a successful business.”

 

Russ Shaw, founder, Tech London Advocates: “Sort out immigration.”

“London’s tech experts consistently identify talent as the single biggest threat to the city’s digital community. For a government that has been so supportive of tech startups, its current approach to immigration is a serious concern.

“Demand for talent is outstripping supply when it comes to technology jobs in London and our fastest growing digital companies will be hamstrung if the Government doesn’t allow the right people into the city from overseas.

“Reforms to immigration policies that will already restrict talent coming into London will be exacerbated by uncertainty around the EU referendum. Brexit would limit our access to a combined European population of 450 million, further threatening London’s capacity to grow and sustain global tech businesses.” 

 

3. Tax developments

Dan Wagner, founder and CEO of Powa Technologies: “Give more tax breaks to start-ups.”

“The government has more work to do to create a financial environment that fosters growth for innovative entrepreneurs and start-ups, especially in the tech sector.

“George Osborne missed a great opportunity with this year’s budget by focusing on closing a loophole in the Entrepreneur’s Relief on capital gains tax. While this will help the government recoup some lost capital, the business community would have been better served if tax on gains from investing in start-ups was reduced or abolished entirely.

“It’s well known that nine out of 10 new businesses fail, so investors are already very wary about backing new ventures – especially when the current level of tax means even smaller returns. Providing more tax breaks and other incentives for investing in start-ups, as well as for companies with high growth potential, will help the next generation of leading businesses take root and grow in the UK.”

 

Will King, founder, King of Shaves: “Overhaul VAT.”

“I’m still not sure why there is the need to charge VAT on business to business transactions.  I understand that at the point of purchase by a consumer, the 20% VAT raises money for HM Treasury, but claiming (and re-claiming) VAT on business transactions seems an out-dated notion.  

“Paperwork and administration is the bane of small businesses, perhaps the VAT threshold should be substantially increased to take many start-up, micro and SMEs out of it.”

 

4. Develop policy

Daniel Priestley, co-founder, Entrevo: “Find ways to de-risk an MBO.”

“A lot of great businesses are put in danger because the co-founders or shareholders fall out and want to go their separate ways. This can put people’s jobs at risk and an otherwise good business could be at breaking point.

“A Management Buy Out is often the only answer but funding is hard to get and can involve a painfully long and drawn out process. The faster a business can end a toxic shareholder situation, the faster it can get on with creating jobs and innovating.”

 

Edwina Dunn, founder of Tesco’s clubcard scheme and CEO of Starcount: “Encourage more women to set up businesses.”

“I would like to see a government that seeks to encourage more women to set up their own businesses.

“Recent YouGov figures found that while female entrepreneurs tend to worry more about setting up a bus
iness, they actually end up building more successful start-ups than their male counterparts.

 

Jamie Waller, CEO, JBW Group: “SMEs need a fair procurement process from the government.”

“While the Government continues to talk about this process being made easier and more cost effective for SMEs, the reality is we are yet to see a change. If they don’t change this then we will have an outsourced services world dominated by the same few eg. G4S, Capita and Serco etc.

“The processes are preventing good and fair competition which in turn will mean increased costs to the taxpayer and a significant increase in risk for government as highlighted in last year’s issues with the tagging contracts and in 2012 with the Olympics.”

 

5. Better Education

Guy Rigby: “It’s time for entrepreneurial education to take a step forward in the UK.”

“The increasingly entrepreneurial culture in the UK has the potential to bring huge benefits to our society but things need to change. Our outdated methods of education fail to recognise the full potential of an increasingly savvy generation.

“If we are to encourage future generations to start up and scale up their businesses in the UK it’s time to get Sajid David, BIS [the Department for Business, Innovation and Skills] and the Department for Education to address them.

“With greater connectivity between academia and the business world there could be benefits to both.  Our younger generation will begin receiving a practical business education whilst our business leaders will develop their understanding of the needs and wants of our future developers, entrepreneurs, owners, managers, etc.”

 

Duncan Cheatle, CEO and founder of RiseTo and The Supper Club: “Overhaul education.”

“The government needs to radically overhaul grading school exams and university degrees.

“Over half of all people sitting A-levels get an A or B grade now with over a quarter getting an A or A* last year. 20% of students get a first with another 50% getting a 2:1.

“Grade inflation over the last 30 years has meant they are no longer fit for purpose. We need to know top grades reflect the very best academically.

 

David Spencer-Percival, CEO, Spencer Ogden: “Support STEM so that Britain can get its next James Dyson.”

“I want the government to support science, technology, engineering and mathematics.

“A 2014 Institution for Engineering and Technology survey found that 59% of companies had concerns that a shortage of engineers would be a threat to their business. This is backed up by conversations I have with industry leaders, who say that jobs are waiting to be filled.

“The government must support this generation’s science and maths, firstly in higher education and then into relevant careers. This can be done through higher education grants, tax breaks for employers and better representation of career opportunities in these areas.

“Most excitingly, those in science, engineering and technology make tremendous entrepreneurs – just look at the likes of James Dyson, Joel Gibbard and Azmat Yusuf. The government must do everything it can to pave the way for the next generation.”

 

Oli Barrett, co-founder, StartUp Britain & Cospa: “Involve entrepreneurs in policy making.”

“Too often I’ve seen an interesting idea progress from business to government, sometimes via some extremely well connected politicians, only to be knocked back by HM Treasury. Why not involve entrepreneurs more deeply in the policy making process right from the start, and invite the Treasury along too.

“Right now, for example, I’m convinced that there’s a smart way to boost Britain’s exports, if only we can cook up the right ideas. Entrepreneurs, advisers, ministers and civil servants all have a role to play, and the creative process should be more collaborative than linear.”

 

Looking forward

Guy Rigby, partner at Smith & Williamson: “The government can’t rest on its laurels.”

 “Whilst there are many policies and initiatives, it’s not entirely clear how these are coordinated and promoted. In addition, complexity means that many businesses are not claiming what they’re entitled to.”

“It is vital that the government continues to develop its offering to businesses. SMEs are a vital part of our economy and we need a joined-up, entrepreneurial approach to help them develop and grow.”

This article has been produced in partnership with Smith & Williamson