George Freeman is a co-founder of the 2020 Group, co-chair of the Innovation Economy, Commission and MP for Mid-Norfolk.
Today, the Government launches the Growth Voucher, a free-market Conservative response to Labour’s failed approach to small business. (Good news for all our PPCs: it’s an idea I suggested as a PPC to our Manifesto team in 2008. I believe we can and should make more of the expertise of our PPCs in policy making.)
As the Prime Minister set out at Davos last week, the only way countries will thrive in the age of increased global competition is by fostering a pro-business regulatory environment. Not one tangled up in oceans of red tape, but delivering a smart, lean state that backs entrepreneurs to create jobs and invest in skills.
There is a good case for helping entrepreneurs to create business, jobs and wealth. They are taking enormous personal risks to secure a major public good, and I believe that the State has a duty to help by getting out of their way, deregulating the tax and red tape landscape, and making available good advice and support for start-up founders who may be doing it for the first time, in how to start a business and access capital or export support.
As I’ve set out on ConservativeHome previously, I think in due course we should go further and create a ‘New Deal for New Businesses’: No NI, No VAT, NO big company red tape for any growing business until they’ve reached a threshold turnover. Having worked on 10 start-ups over a 15 year career in Venture Capital I was always struck by how distracting compliance with Government schemes can be: all the entrepreneurs I worked with spent much of their first year pre-occupied by fear of non-compliance with Government on NI, VAT, Corp Tax, Accounts, Employment law and Health + Safety.
And if we’re not careful, well-intentioned Business Support can also get in the way. In the private sector I watched how New Labour squandered billions on a programme of business support through the RDAs. All too often councils + quangoes set up ‘business support’ programmes which saw ill-equipped business mates of the councillors and quangocrats trouser hugely lucrative contracts to give very often low quality advice to new businesses. Never in the field of New Labour were so many billions mis-spent on so few by so many.
In 2008, with Doug Richard, from the BBC’s Dragons’ Den, I wrote a report for the Shadow Cabinet on how we could change Labour’s shockingly wasteful business support jamboree which exposed Labour’s ineptitude with public money:
- 3,000 business support schemes run by over 2,000 public bodies and their contractors at a cost of at least £2.5 billion;
- Total public expenditure spent on supporting small business at £10- £12 billion;
- A third of the money spent on regional schemes lost in administrative costs; and
- Less than one half of one percent (0.5 per cent) of small businesses using the Government for advice and finding themselves satisfied with the advice provided.
As with so many of Labour’s grand plans to boost Britain through the steroids of taxpayer’s cash, business support consisted of lots of spin and perilously little substance. Armies of laptop-equipped business support advisers smiley, fluent, veterans of prawn-cocktail offensives yet all too often with no private sector success behind them descended upon areas doling out advice about as useful as an umbrella in a hurricane.
I suggested a simple Conservative alternative which would slash the cost and improve the outcome: just give the SMEs a Voucher for Business Support, requiring them to put in a little so they have some “skin in the game”, and let them choose the best provider for them.
Instead of Labour Ministers micro-managing 1000 little schemes and issuing daily press releases to congratulate themselves whilst businesses received little real help, sit back and watch the market drive the cowboys out of business and reward successful providers, and watch good businesses thrive and bad ones wither.
As a UK Trade Envoy, I know how vital proper business support is to achieve our goal of trading our way back to full fiscal health, supporting businesses up and down the country to sell their products to the emerging markets that need them.
Ever-ready to haemorrhage public money, Labour poured cash into schemes that only served to line the pockets of the advisors and did nothing for the entrepreneurs. Never again.
The Growth Voucher scheme announced lanched today by the Prime Minister to the Federation of Small Business instead trusts businesses to seek out the support they need, potentially helping unlock a new cycle of export opportunities and business growth.
As tomorrow’s GDP figures are likely to show, the Government’s long-term economic plan is working to ensure the hard-won goal of economic security, vital for business and for us all. Our entrepreneurs are the wealth and job creating heroes of UKplc. Let’s get behind them, not in their way.