Why British entrepreneurs hold the key to the cost-of-living crisis
Ahead of the upcoming Budget, entrepreneur Tom Inskip explains why rewarding risk-taking is the only way to build a thriving, future-proof British economy.
For better or worse, most people in my life would call me a ferocious optimist. Someone once joked, “when Skippy sees a shit on the road, he’s immediately looking around the corner for a pony”. So when Brent Hoberman stood up at the City AM Awards in May and criticised the “narrative of decline” gripping Britain, it struck a chord with plenty of founders like me who were already trying, in our own small way, to prove otherwise.
Fast forward to September and there’s a back-to-school feeling in the air. Perhaps not optimism yet, but let’s call it expectation at least.
A month from now, John Healey delivers his first Budget, and we’ve already had a taste of how the government plans to tackle the ongoing cost-of-living crisis. VAT comes off electricity this Thursday, worth about £45 a year to a typical household. I’ll take it.
But speeches alone don’t change the national mood, and budgets don’t necessarily drive systemic change. That’s not a dig at the Chancellor. Governments can shuffle levies and adjust taxes but they can’t redesign how an industry makes money.
And that’s where the opportunity lies to address many of the big costs hitting household finances.
A revolution for bills
Energy, mobile, broadband, home and car insurance, breakdown cover: together, these are a £180bn industry in the UK. Different markets, but too often the same familiar dynamic. Bring in new customers with a teaser deal. Let the price creep up. Rely on inertia to keep them there. And when your customers get in touch because they’re confused or want to make sure they’re on the best deal, drive them crazy with your call hold music.
The thing is, these complicated tariffs, plans and policies should really be treated and sold as simple commodities.
OK. Rant over. And to be fair to the incumbents, nobody designed this system out of malice. When your margin comes from how much people use, and your growth comes from poaching from rivals, complexity and sign-me-up-promotions can make commercial sense.
The problem is that it’s costing British consumers millions of hours of tedious admin, dealing with call centers, chat bots and comparison sites. And you can hardly expect an incumbent to dismantle the model that works for them.
That’s why I firmly believe systemic problems get solved by new entrants taking risks. Nobody waited for the high street banks to make banking bearable; Monzo and Revolut just built something better. It takes a company with nothing to protect to ask the obvious question: what if we had a blank sheet of paper?
Before founding Alfred, I asked myself a simple question too: how would household services work if we designed them with the customer’s interests at heart? What if nearly all the time wasted on haggling, comparing, switching (or, if you’re like most of us, forgetting to do any of these) could simply disappear?
Our answer is a membership model. People pay a flat yearly membership and get access to household services at wholesale prices, with no hidden profit margin, no teaser deals and no loyalty penalties.
New solutions
We’re not the only ones asking questions like this and coming up with different solutions – and we shouldn’t be.
Because this is where British enterprise is at its best. Not just in grand national strategies, but in founders who look at a market everyone has accepted as broken and decide to rebuild it.
That’s what Brent Hoberman’s Enterprise Britain is calling for. Companies built here, solving real problems, by founders who chose to stay in London rather than up sticks to San Francisco. Britain has never been short of ideas. But I believe we sometimes struggle to give new companies room to take on whole markets and change them.
So here’s my ask of the Chancellor: if you want a cost-of-living policy that will make a long-term difference, make it easier for new entrants to compete. Reward people for taking the financial risk of starting a company, make it easier for them to hire and raise capital, and give challengers a fair shot at taking on the incumbents.
As Brent has argued, Britain needs a tax system that rewards risk-taking rather than making entrepreneurship feel like an increasingly bonkers choice.
The Budget can take the edge off this winter. But when spring comes round and the VAT cut on electricity bills runs out, lasting change won’t come from Westminster alone. It will come from optimistic builders willing to challenge the way things have always been done.
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