With 581,000 new firms registered last year, there is little doubt that Britain is in the throes of an exciting entrepreneurial purple patch. But how much credit can government take for the surge in new companies?
Business secretary Sajid Javid recently remarked that the entrepreneurial boom was “down to individuals alone”. Yet the state of entrepreneurship does rely heavily on the regulations and laws passed in Westminster. It matters what our policy-makers think about taxes or spending. And it matters how familiar they are with the policies that exist to support entrepreneurship.
However, our annual Parliamentary survey has revealed a persistent – and worrying – trend.
Once again, MPs are too ignorant about the key initiatives in force to help entrepreneurs: 44 per cent haven’t heard of Entrepreneurs’ Relief, a tax break for successful entrepreneurs who sell their business. And almost half are in the dark about the Seed Enterprise Investment Scheme (SEIS) – which grants up to 50 per cent tax relief on investing in smaller companies, and which is seen by most in the startup community as essential to Britain’s entrepreneurial success.
Such uncertainty becomes all the more concerning when you consider that most Tory MPs think tax cuts offer one of the best ways to support entrepreneurship in the UK, with 89 per cent in favour of lowering personal taxation and 86 per cent in favour of lowering business taxation. Yet 38 per cent of Tory MPs haven’t even heard of SEIS. And just 45 per cent think that the lauded Enterprise Investment Scheme (EIS) – which grants investors up to 30 per cent tax relief on investing in smaller companies – is effective.
While many Labour MPs think increased state spending would be the best way to support entrepreneurship – with over 63 per cent in favour of spending more on grants and loans – they are often unaware of important schemes already in place.
As many as 61 per cent, for example, haven’t heard of Innovate UK (which runs competitions for government funding), or don’t know enough about the initiative to say whether it’s effective. It’s hardly surprising that Tory and Labour MPs are ideologically split on the relative merits of tax cuts or increased spending.
But perhaps the most interesting divergence, particularly with a referendum around the corner, is on the benefits of leaving the EU for UK entrepreneurship. Although David Cameron will make the case for staying in, 58 per cent of Tory MPs say a Brexit would be positive for UK entrepreneurship. Just one per cent of Labour MPs agree.
Such strong opinions are vital if the UK is to create a better environment for entrepreneurs: we want our politicians to analyse and scrutinise the multiple, competing policy options open to them. But they jar with the lack of awareness of initiatives already in place. We cannot expect MPs to know about every policy, but too often they are inadequately informed to vote on changes affecting entrepreneurs.
We need more knowledgeable MPs, and a more vocal entrepreneurial community to tell them which initiatives are working on the ground.