E&Y demands more support for midcaps
MEDIUM-SIZED companies could be major drivers of the UK economy but some are being hampered by the political and regulatory environment, according to a report published today by Ernst & Young.
The report says many midcaps are caught between focus on big business and support for small businesses. Research conducted by YouGov for the report says UK-based midcaps are still set to invest an estimated £109bn in innovation by 2012.
YouGov spoke to 500 businesses last month, and reported 81 per cent expect to see profits and the businesses believe this will in turn help to boost the broader economy by driving growth in their sector and create jobs.
Bob Forsyth, head of strategic growth markets in the UK and Ireland for Ernst and Young, said: “It is clear that UK mid-sized businesses are a hotbed of innovation and enterprise, and a driving force for economic growth.”
The company is backing midcaps’ demand for greater clarity and consistency from government on regulation and taxation to enable this growth.
The report shows around a third of the businesses polled for Growing Britain into Recovery: Putting Midcaps on the Map, believed the tax and regulatory environment would not be supportive in the coming years, and there was a lack of understanding of middle-sized companies.
Martin Jones, owner of a heating maintenance firm and a regional winner of the Ernst & Young entrepreneur of the year award, says: “We’re expected to compete with large caps on the same level but without the resources they have, and yet we’re precluded from some of the advantages given to small businesses. We’re caught between two stools.”
Case Study: Chiltern Railways
THOMAS Ableman, Chiltern Railways’ marketing director, is on the brink of a historic project but feels his company is being hindered by unnecessary regulation. “We are embarking on the largest railway project since before the war that doesn’t require a penny of taxpayers’ money. The new London to Oxford line will mean it takes less than an hour to get from Banbury to London for the first time.”
But he said the regulation of rail franchises, geared towards bigger companies, has hindered his group. He said: “Our sector is a prime example of over-regulation, and we have seen a move to more prescriptive measures which we would like to see reversed. We feel we are close enough to our customers to make decisions and make them quickly but we are not able to do so.”
The company has still been able to be innovative, being the first rail operator to offer mobile tickets.