The government’s stampede to placate big business post-Brexit risks overlooking growth firms

David Ewing
Nissan's Car Manufacturing Plant In Sunderland
Nissan secured a deal from the government to guarantee investment – details unknown (Source: Getty)
hen Theresa May struck a grand bargain to secure Nissan’s commitment to manufacturing in the North East, she helped to save 7,000 jobs. She also triggered a debate about the level of support the government should provide for businesses in a post-Brexit world.

After all, what is fair for Nissan should probably also be fair for Ford, Toyota and other foreign carmakers operating in the UK. And why stop at car-making? The government has also committed to maintaining farm subsidies to 2020 at least.

Sweet deals for select industries may help to calm nerves in Britain’s boardrooms and keep “big business” onside, but who is looking out for Britain’s legion of SMEs and entrepreneurs? What they want and need post-Brexit should arguably matter more – and here’s why: they create more jobs and pay their taxes in the UK so are more crucial to our economy.

Read more: Supporting Britain’s scaleups must be a national priority post-Brexit

Research shows that high growth businesses, which make up just 1 per cent of the total business population, generated 36 per cent of new jobs between 2008 and 2013. So called scaleups (rapidly expanding companies) added almost £60bn to the UK economy from 2010 to 2013.

So how are these companies coping post the referendum, and what do they want and need?

ECI surveyed growth companies after the referendum and found that, while sentiment has taken a hit – almost half have downgraded their revenue forecasts – many are still looking to invest and grow (67 per cent expect to grow revenues over the next 12 months and 43 per cent expect to grow by 10-plus per cent).

In order to continue to grow and create prosperity, however, these businesses are clamouring for post-Brexit Britain to be an open, outwardly looking country (82 per cent want the government to prioritise access to the Single Market).

Read more: The Single Market battle is the Remainers’ last stand in the Brexit war

Comments by individual companies reflect the pressures on their sector but also the need for Britain to remain open to the world, from a software business calling for free access to skilled staff outside the EU, to a space business calling for continuing collaboration between the UK and the European Space Agency.

Importantly, more than three quarters of companies we polled continue to struggle with skills shortages – particularly in IT, engineering and R&D. This perhaps explains why such a strong majority want the government to secure them continued access to the EU’s workforce.

While ministers may not grant them this, there is an opportunity here for government to demonstrate that it isn’t just focused on helping big business. Addressing the skills gap is a key priority: a recent report by the UK’s Science and Technology Committee suggests that the digital skills gap alone costs the economy £63bn.

Growth companies have plenty of suggestions on how to tackle this. Almost seven in 10 companies want better links between business and education bodies. There are pockets of success – just look at businesses such as The Learning Curve Group which works with companies like Optionis for whom it launched an accountancy academy for school-leavers – but more needs to be done.

Read more: Driving down worryingly high youth unemployment is the City’s business

Growth businesses are also keen on apprenticeships to plug the skills gap. The government’s current plan for 3m new apprenticeships by 2020 is certainly ambitious, but the cost for this is shifting to employers. Smaller businesses need more help to fund and administer these complex training schemes.

Brexit will likely present a huge challenge and years of uncertainty for British businesses. Small and mid-sized growth companies are best placed to be nimble and navigate through this, and the successful ones will keep our economy thriving.

However, the government needs to ensure that they have sufficient skilled labour to grow, and are not forgotten in the stampede to placate global corporates who often seem to forget to pay their fair share in taxes.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles