Blog: How should government best support entrepreneurial small business

I’ve participated in three government minister visits to Bristol recently.  Last month it was a breakfast seminar run by Business West for a few local businesses to meet Alan Lewis the Conservative Vice Chairman for Business.  Then earlier this month it was a visit by Ed Vaizey (Minister for Communication, Culture and the Creative Industries) at a lunch organised by South West Screen at Aardman’s offices.  Finally, this week it was Deputy Prime Minister Nick Clegg at an event hosted by Bristol Media at The Watershed.

The reason I go to these things is principally to network, but it was fascinating to meet the ministers and debate what role government can play in helping to create an entrepreneurial business culture.  It’s an encouraging sign that people with Alan’s skills and experience are helping to define how government should help business; and I warmed to both Ed and Nick.

One of the points I made was that the various hand-outs and grants have bred a culture of dependence.  It incenses me that anyone can announce at an event that they’d fail as a business without government support.  There are some industries that are so crucial to the national interest that they deserve government support, but surely it’s not the gaming and animation sectors?!

The culture of dependence was brought home to me in 2000 when Sift got involved in an EC funded project to build a community around knowledge management (which still exists at KnowledgeBoard).  I learned a lot, had fun travelling round Europe and we successfully built a vibrant KM community, but in terms of a sensible way of spending tax dollars?!  And the game of extracting money from the EC for projects was profoundly depressing.

I was criticised at the Aardman meeting for advocating that UK business should be left alone; the point I was trying to make was that rather than tinker with the detail, the emphasis should be on facilitating the right environment for the UK as a flexible, easy place to do business.  Surely, the government is better off working these macro-economic levers, rather than trying to (say) offer the biggest grants for gaming companies.

The Budget announcements last month were a good start, with a range of business initiatives including the extension of Entrepreneurs Relief to £10m, enhancements to the EIS and R&D tax credit schemes; followed since then with news of a planned regulation moratorium for micro businesses, together with some push back on some of the latest employment rules.

There’s still more that could be done on the employment law front however.  It shouldn’t be right that at the very hint of the word ‘grievance’, lawyers quickly advise companies to settle.  I’m not asking for the lack of regulation that seems to prevail in the US, but employers and employees should go into conflict situations on a level playing field; which is not the case at the moment.

The three recent meetings were of supposedly ‘creative industries’; the argument being that they are particularly worth of support.  I’m afraid I increasingly fail to see the distinction.  It seems to me there’s just as much creativity going on in retail, automotive, construction and manufacturing; as all industries adapt to today’s fast-moving web-enabled global business environment.  Moreover, in the digital world (where I’ve spent the last 15 years), it’s almost impossible to decide what to support, with things moving so fast.  And by the time government wheels have cranked into action, they’d more than likely be incorrectly aligned.

In response to a question about the very favourable tax treatment afforded to tech businesses in Austin (Texas), Nick made a strong play for the coalition’s localism agenda; which would allow councils to have more control over local taxes and investment (and generally have a more significant role in local life).  I’ve blogged about my belief in the benefits from elected mayors before; I think this could be a powerful catalyst to boost localism’s effect.

The UK (including Bristol) has many of the ingredients for even greater entrepreneurialism, but as a couple of people told Nick, given the challenges we face as a nation, things need to move faster to make any sort of difference.  And of course, at this stage, most of these initiatives are just announcements.