All entrepreneurs know the danger of living beyond their means. Do it for too long and the businesses they’ve struggled tirelessly to build can easily come crashing down. In today’s volatile economy, knowing how to balance prudence with ambition is a growing challenge – so spare a thought for Rachel Reeves as she prepares to deliver next week’s Spending Review.
For those with better things to do than follow the ins and outs of Westminster proceduralism, spending reviews are when the government of the day sets out its spending plans – largely for any items that can reasonably be decided in advance (as opposed to expenditure like benefits, which fluctuate with the economy).
We’ve known for some months now that this particular Spending Review will be ‘zero-based’ – meaning that allocations for departments will be reset to zero and all spending decisions will be taken from there, as opposed to making increases or decreases to existing budgets. That probably sounds more radical than it actually is, but nonetheless, in theory, everything is therefore up for grabs.
Where, then, might Britain’s startups hope to see the cash being splashed? Some ankle has been shown, with £15 billion of investment earmarked for transport projects across the Midlands, the North and the West Country. Knowing what we know about how underdeveloped labour markets are outside of London – primarily owing to weak transport connectivity, as opposed to so-called skills shortages – this investment should be applauded, and all the more so if proposed changes to the planning system really do make infrastructure delivery quicker and cheaper.
Meanwhile, Darren Jones, the Chief Secretary to the Treasury – or the Minister responsible for public expenditure in plain English – has repeatedly emphasised the importance of modernising the state and using new technologies to boost public sector productivity. While that could well pay dividends, it won’t come without upfront investment – and many tech founders will spy an opportunity to supply innovative solutions that cost-effectively improve public services.
Of course, given that all government outlays are ultimately financed by the hard work and toil of the private sector, plenty of entrepreneurs may sooner prefer that Reeves tightens the purse strings instead. With the tax burden at its highest rate in decades, if now is not the time to question whether more largesse is affordable, when is? Anecdotally at least, following hikes to Corporation Tax, Capital Gains Tax and Employer National Insurance Contributions, it seems that more of Britain’s wealth creators than ever are questioning the UK as a viable place to start and grow a business.
For reasons I set out in my latest contribution to our Three Big Ideas series (do subscribe if you haven’t already), I don’t think a mass exodus of entrepreneurs is just around the corner. But, if we become complacent, and keep funding spending increases through tax rises rather than broad-based economic growth, our finely balanced fiscal situation will become downright precarious.
Last Call
Entrepreneurs have enough on their plates to deal with without also thinking about influencing policymakers. That’s where we come in. If you’re a founder, please consider filling out our Entrepreneurs Survey so we can tell politicians what Britain’s entrepreneurs really think – with the cold, hard data to prove it. The survey only takes ten minutes to complete and will be open for another few days for final responses. If you’ve already completed it, don’t forget to RSVP to attend the launch reception of the first set of results.
We’re All Ears
On the science and technology side, we have some exciting opportunities coming up for these three groups in particular:
🤖 Those working with AI to solve economic inactivity (e.g. AI-powered solutions for recruitment, job matching or other ways to improve employability, training, and support for people not yet in work);
📚 Those with strong views on what data the government could help unlock to benefit your work and how to make the National Data Library useful for you (see our latest work on this, by the way);
💡 Those who have a positive or negative, successful or unsuccessful experience with Innovate UK.
If one of the above sounds like you, please drop Anastasia a line.