Entrepreneurs’ wish list for Wednesday’s Budget
TAX
MADSEN PIRIE
CURBING public spending keeps down borrowing rates, but we need a growth agenda, too, and specifically we need encouragement for the entrepreneurs who will create the new wealth and the new jobs of Britain’s future.
We don’t need a few more token sums available to approved borrowers; we need instead a shift that favours and exalts entrepreneurship. I have backed enterprising friends setting up new companies and have seen the obstacles they face. I watched Regius Cigars achieve success with top quality Nicaraguan cigars against the odds, and want the UK to develop a culture that facilitates and rewards such ventures.
The 50p top tax rate raises no money. Many analysts point out that when the damage it does to the economy is included, it loses revenue. It punishes achievers and reinforces the toxic message that success is somehow antisocial. We should instead be encouraging others to emulate the success of the achievers, and encourage the achievers to invest in those attempting to follow them.
The income tax threshold should be raised to £10,000 and then to £12,000 to take people at or below the minimum wage out of income tax. This makes employment more attractive and benefits less attractive, and increases the pool of those willing to work. Crucially, the chancellor should set up a group tasked to find ways of making self-employment easier, removing in one go many of the burdens faced by start-ups. We want a clear message from the Budget: Britain backs its entrepreneurs.
Madsen Pirie co-founded the Adam Smith Institute.
FUNDING
SARAH HILLEARY
ENTREPRENEURSHIP is already on the rise in Britain, with a record number of new businesses created in 2011. But while we give a loan to someone to study business, we often ignore them when they want to start one. Surely a sensible economic strategy encourages both higher education and enterprise? Neither a degree nor being an investment banker fully prepared me for running a company. I have learned considerably more from the ground up on a shoestring budget. And I know one of the biggest challenges for any start-up is access to appropriate financing. But the amount of money needed to build a new business is often too small to interest lenders.
That’s why I’m proud of the efforts of Virgin Media Pioneers, a community of thousands of young entrepreneurs, in suggesting and championing a fund on comparable terms to student loans. There is speculation the Budget could attempt to address this. If so, it will transform the business prospects of thousands of people. My own business would have been further ahead had such a fund been available.
But for it to be successful there must be support beyond just cash. Having a trusted mentor and a network of like-minded entrepreneurs will be vital in reducing the risk of failure. Any new initiative has to put long-term guidance and encouragement at its heart.
This Budget is a real opportunity to empower young entrepreneurs who can help reverse rising unemployment and return the country’s economy to growth again.
Sarah Hilleary is the founder of b-tempted.
REGULATION
MICHAEL HAYMAN
RED tape wrecks business. That’s the message that the chancellor needs to act on if he wants to deliver a true entrepreneurs’ Budget. The political classes often believe that we need regulation to protect us from ourselves. It strikes me that what seems like common sense in Whitehall can often seem pretty archaic when you emerge into the real world.
By using the Budget to create one of the world’s most deregulated trading environments the chancellor could send a strong message that this government has skin in the game.
Focus on jobs, that’s my advice. I would like to see a combination of national insurance breaks for hiring the unemployed combined with looser regulations on employee contracts.
Trust me, no one in business hires people to fire them. You hire to grow, but the punitive perceptions of employee regulation deters firms from taking the leap to employ.
When you start a business you have enough of a burden in simply trying to survive. Government could acknowledge this by implementing a regulation escalator that starts light and climbs as companies become more sustainable. In turn, every excessive health and safety requirement, every onerous reporting expectation stops businesses from doing what we need them to do, trade.
Nearly two-thirds of new job creation comes from businesses that are less than five years old. These businesses are like toddlers, young and vulnerable. Red tape strangles them and if the chancellor wants an enterprise led recovery he needs to cut it.
Michael Hayman is co-founder of Seven Hills and StartUp Britain.