By Daniel Hunter
Helping thousands more new businesses get off the ground by expanding the Government’s Start-Up loan scheme and opening up further the £230 billion worth of public sector contracts to the smallest businesses will help boost growth and transform the economy according to the Prime Minister’s enterprise adviser, Lord Young.
In his second report to the Prime Minister, Growing your Business: A report on Growing Micro Businesses, Lord Young highlights the increasing importance that micro businesses — those which have less than 10 employees — have on the success of the economy.
Making up 95% of all businesses, he identifies steps the Government can take to help them develop their confidence and capability to grow, helping the UK to get ahead in the global race.
He recommends removing the age cap — currently set at 30 years old — for the Government’s Start-Up loan scheme, so that all entrepreneurs that would otherwise struggle to secure the necessary finance and support can benefit.
The Start-Up loan scheme helps get business ideas off the ground with a loan of typically around £4,500 and mentoring support. It has exceeded expectations by 50% in its first year, with 3,768 loans worth around £16m now issued since its launch in the autumn. Many of these new businesses are now taking on their own employees.
Further recommendations in Lord Young’s report include:
- Legislating to abolish pre qualification questionnaires (PQQ) on contracts under €200k across the public sector, and setting “single market” principles which suppliers can expect when doing business with the public sector. These principles would simplify and standardise the bidding, payment and advertising of contracts, and would remove the complexity, cost and inconsistency when trying to sell to more than one local authority or public sector body. This would help SMEs further access the £230 billion per year that is spent on goods and services across the whole public sector.
- A £30m Growth Voucher programme to encourage more small firms to get specialist help on: expanding their workforce; marketing a business; financial management and growing online. Businesses that use external advice at key stages in their development grow faster than those that do not - but too few are taking this up.
- A greater role for business schools in the local economy with the establishment of a new national “Supporting Small Business Charter” and accompanying award scheme to incentivise business schools to help SMEs grow. This will include advising small firms and increasing the flow of highly qualified students and graduates into SMEs. Business schools could also become a key part of the referral process and provision of Start-Up Loans and Growth Vouchers.
- Enabling the private sector to provide advice to SMEs on the Government’s website GOV.UK and releasing the online SME advice that the Government holds after the closure of the Business Link website to third party providers for them to rebuild and improve.
- Better marketing of Government schemes to support new and developing businesses by ensuring they are properly resourced and targeted at the small firms that need them most.
The Government will now take these recommendations forward.
Lord Young said: "We have one of the best environments in the world for the creation of new firms. What this report endeavours to do is to help and encourage all those new firms to now take on their first employees and grow.
"Growing our smallest businesses would transform our economy — they are the vital 95%. If just half of the UK’s micro businesses took on an additional member of staff, unemployment would be reduced to almost zero. We need to raise the aspirations and confidence of these businesses and give them the tools to grow."
Prime Minister David Cameron said: "It is very much true that Lord Young brings solutions to the table — his excellent report highlights the steps we can take to fire up business growth, helping to boost our competitiveness and ensuring the UK can get ahead in the fierce global race we are in. I thank him very much for his report."
Business Minister Michael Fallon said: "We are supporting ambitious small firms to grow, create jobs and achieve their goals. Whether that’s by providing access to mentoring and advice, cutting red tape or through successful schemes like Start-Up Loans. But we are determined to go further and faster: Lord Young’s important report sets out a series of practical steps that can make a real difference to entrepreneurs across the country."
James Caan, Chairman of Start-Up Loans and serial entrepreneur said: "I very much welcome the recommendations from Lord Young’s report to make Start-Up Loans available for everyone in this country. His vision to get Britain’s economy back on track through supporting SMEs and start-ups is something I passionately believe in and wholeheartedly support. The success of Start-Up Loans to date - an initiative that Lord Young has championed in Government - demonstrates the country’s need for such ambitious thinking."
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