The government must retain vital finance schemes to encourage talent and innovation in the UK, says Duncan Cheatle, CEO of Rise To, in the second of our pre-election blogs
Whatever happens come May 7, we need to ensure that the next government delivers real, on-going support for the true wealth creators in this country – those behind the fast-growing businesses that disproportionately contribute to job creation and to the public purse through the range of taxes they generate.
Of course, micro businesses are a growing and vital part of the enterprise community. But the reality is that it is the highly-ambitious firms that deliver growth and we now have to build on the vibrancy already witnessed over recent years to deliver future sustainability and scale.
The entrepreneurs at the helm of these businesses take enormous personal risk and any future government should be prepared to support and reward the significant responsibilities that these people take on to deliver success: a success that we all share in.
Recently, I wrote an open letter (in the Sunday Times) to the main party leaders seeking a pledge from their political parties that they will specifically retain and improve two very important incentives: Enterprise Investment Scheme and Entrepreneurs’ Relief. It was strongly supported from across the enterprise community. In my view these two tax incentives make a considerable contribution to helping growth businesses at the start of their life and create an incentive for entrepreneurs to roll over financial gains to grow their business further.
By making it easier to raise equity finance and rewarding founders when they finally sell their business, these schemes have encouraged many businesses to grow sustainably over recent years. They have retained crucial talent in Britain and kept innovation, jobs and much needed tax here in the UK.
In his latest Budget, George Osborne agreed to the removal of the restriction to spend at least 70 per cent of SEIS money before raising further funds under EIS. This is positive, as to date, a new business may have had to turn down investment in its initial funding round before seeking further funds down the line. This shows steps in the right direction to improving the practicalities of these measures.
Getting more cash in the hands of ambitious growing businesses is vital if we are going to see them scale. We need more schemes like Help to Grow, which is promising to help fast-growth firms to secure financial support through the British Business Bank in order to make the leap from small to medium-size.
Further deregulation and easing of red-tape on firms will also help, as well as a focus on building a talent pool of people that can join these growing firms. We are still facing a skills shortage in this country so the more that can be done to tackle that, particularly in technology and digital, the better.
Each party has now set out its promises in its party manifestos but this is the most uncertain election in decades and inconsistency does not encourage ambitious growth. Changes which worsen the environment for growing firms will send a clear message that the UK is not supportive of entrepreneurs wishing to scale their business.
Whatever we see after May 7, it must send a message that Britain is open for business.