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Government support for entrepreneurs - Keynote Speech

The Rt. Hon. John Hutton MP,  Secretary of State for Business, Enterprise & Regulatory Reform
The Entrepreneurs Summit 2008, Marriot Hotel, London,  15 April 2008

Introduction

Good afternoon everyone. And thank you for the opportunity to speak at this event.

Economic context

In today’s global economic climate, it’s easy to think of risk as a four letter word. Talk of credit crunch and a liquidity squeeze has moved beyond stock market bear pits to workplaces and homes across the world.

People are anxious, rightly so, about the future. And so it’s easy to forget that markets fundamentally depend on risk-taking and entrepreneurial behaviour for their long-term health and vitality.

It’s also clear that at a time like this, Governments attach a very high premium to ensuring economic stability. The UK’s continued growth; low inflation and interest rates; and record employment levels mean that we are well placed to come through the current financial market turbulence.

According to a leading industry observer, business liquidity rose in the final quarter of last year. Also business creation levels remain strong. And more companies are surviving longer than a decade ago.

This all represents a solid platform on which we can build for the future. And it is the future not the past on which we need to focus.

It’s people like you - ambitious people - taking risks and making the most of good ideas that create the jobs, wealth and growth that we need and will need in our economy now and in the future.

So it seems to be that the job of Government is simple and straight forward. We have to be on your side. No ifs. No buts.

Working with you to create the right conditions for business success in the future as we have done in the past. Ensuring our interventions and the support we offer are all driven by your needs as entrepreneurs. And of the highest standards possible to assure your success.

Few in Whitehall have experienced the highs and lows of trying to run their own businesses.

You certainly have. You know what it’s like to take a calculated risk and build up a business. You can inspire and help build the confidence of other UK entrepreneurs to do the same in the future.

Thank you

Many of you will know that over the past few months, entrepreneurs – some of whom are here today - have shared their views with Government on UK enterprise. I want to thank everyone, who helped develop our new Enterprise Strategy.

This includes Richard Lambert, of the CBI, and Stuart Rock, of Caspian Publishing, for their support throughout this process. And I want to thank them both personally for this.

Ambition

This strategy will help shape my Department’s priorities in the decade ahead. It sets the ambition for the UK to be the world’s most enterprising economy.

Why is that important? Because the truth is that all of our ambitions for the future are predicated on your success.

We’re already a nation with rising aspirations - ranked third in the G8 for early stage entrepreneurship. Increasing numbers of people in the UK expect to start a business in the next three years. More SMEs, I’m glad to say, are planning to grow.

We have the lowest barriers to entrepreneurship in the OECD. The World Bank ranks us in the global top ten in terms of ease of doing business. And in the last ten years or so, the number of businesses operating in the UK has increased by nearly three quarters of a million.

But the US still has 20% more businesses per head. 40% more US businesses achieve high growth than businesses in the UK.

Closing these and other enterprise gaps is going to be the fundamental task in the years ahead. And essential to that is re-doubling our efforts to support more women entrepreneurs.

Women remain the largest under-represented group in UK enterprise. If they started businesses at the same rate as men, there would be 150,000 extra start-ups each year in this country.

To help them, and others, we’re working to mitigate the impacts of global economic turmoil at home. The Bank of England, as many of you will know, has today injected billions of pounds into the money markets.

And my Department has been doing what you told us would help. Increased access to finance for SMEs. Simplified, but effective support and advice from people with experience of starting their own business through Business Link. I hope that Business Link is getting better for you. The skills and knowledge to make your companies a success. And trying to get to a point where we are doing less regulation.

Finance

The UK has one of the world’s most innovative and flexible finance markets; supported by a stable business banking sector and mature SME lenders.

But while many UK companies report they are yet to see the credit crunch impact their business, they’re already experiencing tougher lending conditions in our credit markets - particularly in the retail, real estate and leisure sectors.

This partly reflects the banks’ assessment of risk. And today, I want to assure you, we’re working with the major Small Firms Loan Guarantee lenders – and other leading UK banks – to ensure SME investment capital remains readily accessible.

They assure us that they’re ready and willing to lend to SMEs.

We’ve already announced an extra £60 million of lending will be available through the Small Firms Loan Guarantee scheme this year and extended eligibility for these loans to SMEs over five-years-old with growth ambitions.

This month, we launched the third round of Enterprise Capital Funds, with around £50 million on offer to invest, and a further £100 million of early stage venture capital for entrepreneurs in two subsequent rounds.

We’re investigating how to improve the provision of mezzanine finance through both of these schemes. And providing an additional amount of money to the Enterprise Capital Fund to help deliver this.

But in reality, the corporate sector itself has become more cautious in its attitude to debt, drawing on deposit bases rather than borrowing.

It’s critical for investment and growth that we tackle these concerns upfront. And in particular ensure every arm of Government that directly deals with business - including the Regional Development Agencies and Business Link - recognise changing economic conditions and adapt to meet the immediate business challenges.

Reassuring, hopefully, and enabling business to take the necessary risks that benefit ultimately all our long-term economic futures.

Prompt Payment

To succeed, every business must strike the right balance between establishing a good working relationship with customers and suppliers and developing payment terms that deliver essential capital when you need it.

Ensuring prompt payment is a crucial part of maintaining this balance. We recognised this in the Enterprise Strategy that we published in March. And we are committed to working with business representative organisations, other Government departments and NGOs and others over the next six months to tackle late payment issues.

Additional, updated information and support on credit management issues and other business challenges is also available through our Business Link service.

And in response to business feedback, we continue to streamline government funded business support schemes to deliver an improved portfolio. That’s easier to access and better targeted to meet your needs.

We’re also building better support networks, so entrepreneurs can learn from the people that have been there, done that and know what it takes to survive and to succeed.

Over the next few months, we’ll be working with the key business representative bodies, including the CBI and others, to analyse what creates a successful mentoring relationship and the difference it can make to a business.

These are just some of the measures Government is trying to deliver to help your businesses deal with the present global uncertainty. But also critical to your own, and this country’s ambitions, are our long-term plans for a stronger enterprise environment.

Women’s Enterprise

If we matched US levels of female entrepreneurship – to come back to that theme for a second, the number of women-owned businesses would double and there would be 900,000 more businesses in the UK.

I think that is a huge untapped economic dividend, that I’m determined we do everything we can to maximise.

Work is now underway to develop the Women’s Investment Fund, announced in this year’s Budget. We’re working with the private sector to secure up to £25 million of investment, and will be inviting investment proposals in the summer.

Next month, I will announce the launch of a national network for women in business, supported by key partners including the Royal Bank of Scotland, BCC, Prowess and Everywoman.

And I want to thank all those organisations for the support they are giving us.

And drawing on the incredibly successful programmes run in the US and Canada for over 20 years, we’re working with RDAs to establish Women’s Business Centres.

These centres will build on the women’s enterprise support already available to create hopefully a centre of expertise on women’s enterprise issues and ensure support that’s female-friendly and targeted to reach women of all backgrounds.

Regulation

We’re also trying to take some important, tough measures to prioritise and simplify essential regulation, and eliminate unnecessary regulatory burdens for business.

In addition to our ambitious programme to cut administrative burdens by 25%, we’re consulting on a new system of regulatory budgets that we want to introduce across Whitehall. If introduced, this system – a world first – will set out the cost and limit of new regulation that can be introduced in a given period.

With 50% of regulation impacting British business agreed at an EU level, I believe introducing such a novel approach in Europe - along with the implementation of common commencement dates - could substantially help businesses cut even more unnecessary costs and plan with further confidence.

In response to work on the proposed Small Business Act, last week I wrote to Commissioner Verheugen urging the EU to focus its attention on improving the regulatory environment for small firms, in particular.

It’s critical, now more than ever, that the EU considers the impacts of new laws on small businesses before they are agreed – identifying at an early stage potential impacts and unintended consequences along the way.

They must look seriously now - like we are in the UK, with our “think small first” initiative - at exempting small businesses with fewer than 20 full time employees from new EU regulation. And where that’s not possible for all sorts of reasons, designing tailor made approaches for small firms with simpler enforcement and effective guidance.

The UK now has a record four and a half million businesses, and many of those are surviving longer in the marketplace. Our economy remains robust, despite shocks in the global financial markets. And Government is committed to your success now and in the future – whatever the global conditions might be.

We want the UK to be the world’s number one place for enterprise.

And we are working to create an environment, where ambition, hard work and passion for a good idea are what count and where no-one’s aspirations should be limited by gender, race, location or a lack of finance. That, I believe fundamentally, is the way to power our country’s success in the decades ahead.

And I stand ready to work with the CBI and other business organisations on this to try and deliver for our people. Thank you.

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