Why the UK needs an Enterprise Skills & Support Act & Agency to enforce it?
Posted by tonyrobbo on Mon, 19/03/2012 – 15:20
Just in time, I hope, I’ve set out below why we need small business legislation to make micro and small business policy and regulations work. This policy proposal calls for an Enterprise Skills and Support Act and a new independent agency, like the US Small Business Administration, to implement and enforce this legislation.
It’s a long document but I’ve found most policy papers are. I did have a shortened 3 point plan version which simply said:
1. ‘Give all the top jobs in the City, Big Business and Government to women’ – it’s their turn and they always find out what’s going on.
2. ‘There is no justification for £billions of government money to help mature businesses. They should know better and they should be able to train their own staff. So, only support start-ups and businesses within their first 3 years of trading’ – it’s where all the new jobs and innovation come from.
3. Raise £billions from Government and Big Business by fining all those that use the term ‘SME’ -£5000 and ‘Smee’ – £50,000.’ ‘SME’ is either spin or meaningless as it is 99.9% of all UK business and does not equate to what the public think of as small or micro businesses. See my government e-petition.
Here are my six steps to get Enterprise Rocking:
1.Make me Chancellor – I’m qualified?!
Although I’m not great with numbers, which is probably why I’ve not made much money in the twenty-five years of running my own businesses I do know how many noughts there are in a £billion and in a £million. This helps me to figure out that government announcements of £1.4 million support to start ups and small/micro businesses through 10,000 volunteer mentors isn’t as much support as bigger businesses get from the £1.4 billion Regional Growth Fund.
£20 billion through the National Loan Guarantee favours bigger businesses and bigger loans than micro-enterprises need or want. Normal bank lending rules apply and your own website quotes that on a £5 million loan an ‘SME’ could save £50,000!!!
I admit I get a bit confused with how to sell hedges, futures, swaps and toxic derivatives to ‘Muppets’. But against that I have read City Girl and City Boy and I figure that if all these ex Ministers that weren’t previously involved in the City, can get top positions in Goldman Sachs, JP Morgan et al then it can’t be that difficult. In addition, I just love gambling, fine wine, champagne, luxury travel and posh nosh – and I don’t dribble much, yet.
2. PM – here are the numbers I’ve taken into account in my Enterprise Skills and Support Act proposal (just so you know I’ve done my homework):
* If you give start-ups the right support, in context of the potential enterprise, including test trading, then over 80% will still be trading in 3 years’ time and 6% will become substantial employing businesses.
* There is no evidence to show government funding spent on picking winners either at start up or later as ‘high growth’ works. It is better to find a way of helping all 400k – 500k start-ups each year to succeed and the ‘winners’ will emerge. Only help those that can’t afford to help themselves. Use loans and discount vouchers not grants.
* Giving all start-ups the best chance of surviving and thriving makes good sense as most new jobs and most innovation comes from new businesses.
* Microbusinesses (0-9 employees) already provide a fifth of UK turnover and a third of all private sector jobs and this is increasing year on year.
* One in seven of the adult workforce is running their own business. For many people self -employment is the only viable option for earning a living. Self-employment, starting and running your own micro- business is still not a career with its own skills and knowledge that is supported in all schools, colleges, universities and government funded adult skills providers.
* The bail out of banks at its peak was costing £850 bn and still has cost the taxpayers more (£124bn) than the annual budget of the Health Service. Taxpayers’ bought £45 bn shares In RBS and £20 bn shares in LloydsTSB but are losing money on these purchases. Many of us, including micro business owners, have been mis-sold £7bn of largely useless ‘payment protection’ on loans plus there has been mis-selling of products for long term care, and investments. To my knowledge despite all these £billions the banks have only been fined £38 million for not treating their customers fairly. We need to get more dosh from the banks to invest in enterprise.
* Some may think that government might have a few levers to persuade Banks to lend to start ups and microbusiness owners but they will not. They treat us like any potential individual customer and credit checks will usually lead to them not making micro loans to micro business owners. As Lord Sugar, Sir Richard Branson and my co-founder of the Enterprise Rockers, the fab Tina Boden, would say it doesn’t take much money to start your own business. We need an Enterprise Bank providing micro loans of £2000 to £50,000 to start ups and emerging businesses. Prince’s Trust and others have shown that over 90% of the loans will be repaid,
* There are many examples of Britain’s biggest businesses including many in the Financial Sector, using PWC and the other biggies to avoid tax due, including offshore arrangements. Cumulatively, there are £billions being lost through ‘legal’ avoidance and settlements with HMRC. Whilst this is going on micro businesses get clobbered. Just the time involved in an HMRC investigation can kill the business. Clearly government need more resource allocated to getting more tax from exemplar tax avoiders such as Barclays, Vodafone and Goldman Sachs.
* Large contractors such as Capita and A4e win government employment, self-employment, skills, welfare and other contracts not based on what they have achieved for the end customer/user but because of their project management capability and capacity to hit ‘targets’/’outcomes’. Despite the fact that Capita and A4e then contract to small providers, government claim either EU procurement rules or that that they do not have the capacity and capability to manage such contracts mean they cannot contract directly with the small providers who understand the customers/users better.
* Seven years ago the Government passed Late Payment of Commercial Debts Act. Despite this legislation a small business supplying a large company will have to wait more than 80 days for payment – it pushes them to the wall.
* The Department of Business, Innovation and Skills (BIS) currently has a budget of £16 bn but I estimate that less than 5% of this spend directly benefits the 4.5 million (96% of all UK business) micro-businesses, including all start-ups.
3. Halve the government support to business and refocus this support on new enterprise
Where there’s a political will there’s a way. We must make the UK a hot bed of enterprise and give everyone the best possible chance of earning their living through starting and running their own business. Most new jobs, new skills and innovation come from new small and micro enterprises. This way will significantly improve UK employment, strengthen all our communities and yet still achieve global competitiveness.
It requires policymakers to invest more in enterprise than bigger businesses but it can be done. It is possible to immediately disband the Department of Business, Innovation and Skills, without any redundancies, and re-allocate £8 billion to Health and Welfare of BIS £16 billion budget.
Most of the 4.5 million of us (96% of all UK biz) starting and running our own micro businesses get no practical help from government at all but we do more for local communities and charities than BigBiz managers. Many of us would be pleased to see half the money currently used for bigger business skills and support going to bolster the UK’s crumbling health and welfare services.
£8 billion for the first year, and reducing year on year after that, will ensure the existing BIS staff can be employed in a new independent agency for enterprise which will implement a new Enterprise Skills and Support Act.
4. An Enterprise Skills and Support Act
There really is no point in starting again if when the next cabinet reshuffle or change in government comes they decide to start again. In the US the Small Business Act and the Small Business Administration (SBA) has survived since 1953. Such consistency leads to real impact and its importance is such that the leader of the SBA has often had, and currently has, a seat in the Cabinet.
After our expensive English debacles with the Small Business Service, Business Links, NTOs, SSCs, Apprenticeship Service and Train to Gain and after reading the Small Business Acts of the US , Europe and Malta I’m convinced that the UK can do something much better. We can be much more future-proof, more practical, more effective and well, more enterprising. We should have an Enterprise Skills and Support Act and an independent agency to administer this Act.
A UK Enterprise Skills and Support Act would be far broader in scope than the U.S. Small Business Act. An Enterprise Act would protect, support and help the development of all prospective and existing enterprise owners.
As well as improving for small and micro enterprises lending, red tape, public sector procurement opportunities and business support services the Act will ensure that pre-start and new enterprise owners gain the skills and know-how and have access to quality support in their critical first few years of trading.
The Act, by its skills and support provision, as a right, will raise the status and importance of working for yourself and starting your own business. Starting your own business will become an equal opportunity career of choice.
We will make the UK a hotbed of enterprise, significantly reduce unemployment, strengthen local communities, encourage innovation and skill up the UK to achieve global competitiveness.
The Act would prevent senior government positions that can effect start-ups and micro businesses being held by persons that have not started and successfully run their own enterprise.
Furthermore, the longer term goal of this Act is for total business self-sufficiency so that local, regional and national government funding and support interventions become unnecessary.
5. Form a new, independent agency solely to administer a UK Enterprise Skills and Support Act
The new Agency to implement the Act would use the existing BIS staff divided into two divisions.
One division will work on Large and Medium, Private and Public Sector, organisation compliance with the terms of the act.
We know that Start Ups and Micro Enterprise owners cannot afford to complain about late payments from their bigger company customers, bad treatment from Utility Companies or Government agencies and so forth. They dare not do anything that would give them a less than positive reputation.
It requires an enforcement organisation with the teeth to monitor, fine and prosecute organisations that habitually breach the Late Payment Act, Consumer protection, Procurement legislation and discriminate against start up and small business owners because of their occupation. This same enforcement organisation whilst monitoring these large organisations can also help other government agencies – for example HMRC to get more tax from Big Business.
The other division will ensure that there is no need for Government to contract with large organisations such as Capita and A4e for government funded enterprise skills and support programmes. Hundreds of BIS staff can be dedicated to monitoring and getting best performance from contracts with existing small and micro businesses to supporting and train self employed, micro and small businesses.
These two divisions will improve the motivation of civil servants too. It must be terribly demotivating for civil servants asked to manage government funded skills and support so that big business can do what they would probably have done anyway without the government intervention. Business lending schemes, business growth initiatives, employment incentives, Sector Skills Councils, Train to Gain, Apprenticeship s and the Regional Growth Fund have all suffered from this.
They will be able to contract out more to high quality skills and support providers that are existing small and micro businesses themselves. See below regarding ‘Going with the Grain’. Ever since learning credits fraud government have steered away from using vouchers to discount or fund support or training for start ups.
Yet this is the best, most efficient way of providing quality help from existing enterprise support providers. As has been suggested, by @cheapaccounting, start ups could have a voucher entitling them to £300 support from a registered, micro firm of accountants.
6. ‘Enterprise led’ and ‘Go with the grain’ – use only what is trusted, credible and practical.
This bit is easy. You only allow real, current small and micro enterprise owners to do the important stuff. The important jobs , including the leader of the independent agency, would be current small or micro enterprise owners willing to take, up to a maximum of three years, out of their enterprises.
The Enterprise Act would be written by enterprise owners who represent the views of all the major national small business membership organisations and networks. No moaners are allowed into the room. It should be truly representative of our enterprise society in gender, ethnicity, age, region, business type and length of time in business.
Publicly funded enterprise skills and support programmes will only be delivered by existing small and micro enterprises and their employees.
This means that getting serious about enterprise skills and support does not require any new organisations, buildings and products.
It means private sector solutions for private sector problems. It means only people that are trusted by prospective and existing enterprise owners get the opportunity to support them. So, Accountancy and Book Keeping micro firms would be used to provide any government part or fully funded financial advice and services to start ups and micro enterprise owners.
If the new agency decides it needs physical premises in towns around the UK to centre its start up support for all in then it would use existing National Enterprise Network members and their equivalents in Wales, Scotland and Northern Ireland.
Going with the grain also means doing what we know works. As the wonderful Jamie Dunn (@JDEntrepreneur) and other entrepreneurs, such as Sir Richard Branson, last week make clear the best enterprise learning is by doing.
So, if government is to promote enterprise learning it must do it by facilitating real practical enterprise creation in community centres, schools, colleges and universities. Government should leave the simulated stuff and Dragon’s Den type pitches and other enterprise award schemes to be sponsored by Big Business as part of their PR and CSR strategies. They’re good but not as important as real skills starting real enterprises.
That’s it PM. Have I got George’s job and how quickly can we get the Enterprise Skills and Support Act through parliament?
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