We’re all stuck in our own bubbles. Try as we might, we’re naturally drawn to people who share our views, backgrounds or interests. So when the Budget landed this week, I realised that I sit roundly in two bubbles that saw it very differently: the entrepreneurship ecosystem bubble and the economics bubble.
First, the entrepreneurial ecosystem bubble. Viewed through this lens (to mix my metaphors), the Chancellor – advised by the incisive and indomitable Alex Depledge, the Treasury’s first Entrepreneurship Adviser – absolutely delivered. Depledge’s Entrepreneurship in the UK prospectus closely reflects many of the priorities of high-growth founders. As I wrote in our snap response: “The doubling of Enterprise Management Incentive allowances and the expansion of the Enterprise Investment Scheme stand out as a clear response from the Government to calls from entrepreneurs.”
We were also pleased to see some movement on the Stamp Duty Reserve Tax. As our Research Director Eamonn Ives explains: “[It] is an international outlier and a relic of a bygone age. It depresses share prices, increases the cost of capital and adds friction to our beleaguered markets.” In the next Budget, as argued in Backing Breakthrough Businesses, the Government should just scrap the whole tax.
Arguably the most underappreciated announcement was around procurement. Public procurement makes up around 15% of UK GDP, which makes it one of the largest single levers the state controls. It should be driving innovation – but it isn’t.
Announcements to expand Advance Market Commitments, the creation of an Innovation Marketplace to fast-track innovative solutions, and the appointment of Procurement Innovation Champions across all departments, all sound encouraging. It’s about time a government started thinking creatively about how to harness procurement’s power.
But we – including many reading this – really need to come together to understand why public procurement is so bureaucratic and how to unpick it. We aren’t the only country to suffer from this, though many countries do procurement better. Fundamentally, it can’t just be about layering the above on top of the current system; we need a genuine reset.
Finally, the Call for Evidence on Tax Support for Entrepreneurs, which launched alongside the Budget, is a welcome way to keep the conversation and momentum going. As well as looking at current schemes, you’ll have the chance to contribute ideas on things like how the government can strengthen the investment pipeline, why exited founders do or do not reinvest, and whether Business Asset Disposal Relief (BADR) is effective. I expect we’ll be integrating some of these questions into our Entrepreneurs Survey, so do let us know if you’re keen to partner on this work.
Now to the second bubble: the economics bubble. As a think tank, we’re grounded in and by economics, and it’s fair to say that most economists weren’t overly enamoured with the Chancellor’s Budget.
The Economist was eloquently blunt (paywall): “The tax-and-spend party has taxed and spent,” and “The state has never been so expensively funded, yet seemed so tired.” Paul Johnson, formerly of the IFS, spoke for many in the profession (paywall). I would summarise him and others as criticising big tax rises without reform, debt still rising, a barely better-than-even chance of meeting the fiscal target, repeated U-turns on tax and welfare, and an overall sense of a government lacking strategy and direction.
I won’t try to thread the needle here. It’s possible for a Budget to contain strong micro-level reforms that help entrepreneurs while still falling short on the foundational reforms that underpin growth. As we argued in Building Blocks:
“While remedying small issues can be important, there’s a danger that too much attention in policymaking is afforded to them, while more fundamental problems go unchecked. We contend that even marginal policy improvements in any of these bigger areas – from simplifying our country’s planning rules, to rationalising the tax code, to modernising the visa system – will do more to ensure we are genuinely offering the best possible platform from which to unleash the full potential of entrepreneurship and innovation in Britain.”
Finally, these lenses ignore others. As Enterprise Nation reveals in the reaction from some of the more than 150,000 small business owners they support, there are concerns about rising costs, squeezed margins, frozen thresholds, tax pressures, wage pressures and a lack of growth measures. Similarly, in his weekly must-read newsletter (sign up here), Beauhurst’s Henry Whorwood states:
“[I]f you’re starting a business that doesn’t fit the equity and grant funding model, you’re left out in the cold. Indeed, you are clobbered with onerous employee rights, minimum wage increases, and record employer NI contributions. Instead of ever more fine-grained interventions, we need to make it easier and cheaper to create jobs in every sector.”
I managed to avoid the tired framing of this being “the good, the bad and the ugly” Budget. Nor did I call it “a tale of two Budgets.” But there’s a reason these idioms are as hackneyed as they are.
It’s up to you to decide which bubble you’re in, and which lens matters most.
Rights Call
I’ll keep this brief. It’s good to see the government scrap the plan to give workers the right to claim unfair dismissal from their first day in a job. Reducing the qualifying period from the current two years to six months is a compromise employers can live with. But while this was the worst part of the draft bill, there’s a lot more they’ll need to unpick. Drop me a message if you’d like to be involved.
Cometh the Hour
I’m delighted to share that Dr Mann Virdee has joined us as a Senior Researcher. Before joining The Entrepreneurs Network, Mann led the Council on Geostrategy’s work exploring how the United Kingdom can build a more competitive and resilient science and technology base. He previously worked at RAND Europe, the UK Parliament, and the Parliamentary Network on the World Bank and IMF.
Mann’s research has covered areas such as AI, energy, infrastructure, quantum computing, R&D, 5G, space, the life sciences, civil service reform and Foreign Direct Investment. Drop him an email here, follow him on X here, and connect with him on LinkedIn here.