The Government’s Industrial Strategy demonstrates a firm commitment to improving on the competitiveness of Britain’s economy. The ScaleUp Institute is delighted to see that many of its recommendations, featured in the 2014 ScaleUp Report and 2016 Review, have been woven into the Industrial Strategy.
The Government has fully recognised the economic importance of scaleups, and of creating an environment at both local and national level that is fit for purpose to the needs of our fastest-growing firms.
Most notably among our recommendations being taken forward, there is the commitment to review the use of HMRC data in identifying scaleup businesses; the focus on building local strengths (peer to peer networks etc); and the appointment of the Rt Hon Margot James, Minister for Small Business, as a cross-Government ScaleUp Champion to lead a public and private sector task force. These are all hugely welcome steps.
The section in the Green Paper which outlines how the ScaleUp Institute will be working with the Government is entitled “Supporting businesses to start and grow” (p.61 onwards)
This builds firmly on the work that the ScaleUp Institute has undertaken across the preceding years and the Driving Economic Growth programmes undertaken with LEPs and Growth Hubs in 2016, which were supported by Goldman Sachs Foundation and Innovate UK and led by Professor Daniel Isenberg.
Here are the key paragraphs from the Industrial Strategy Green Paper, outlining the role and engagement of the ScaleUp Institute:
The Patient Capital Review, recently announced by the Prime Minister, will identify the most effective ways to improve the availability of patient capital for growing businesses. It is essential that we explore all options that could improve businesses’ ability to invest for the long term, so in this paper we are also inviting views on how to address the factors constraining quoted companies and fund managers from making longer-term investment decisions. We will work with the British Business Bank and the ScaleUp Institute to understand and address the relative weakness of venture capital funding and entrepreneurship networks outside the South East.
‘Backing institutions which can catalyse private sector equity investment’ (p.65): Surveys show that new businesses may not be aware of what is available in their area or familiar with how to access it. New models of funding such as crowdfunding are also concentrated in London and the South East. Funding networks have also been weaker outside this area, and we will work with the ScaleUp Institute, the British Business Bank, the BGF and other partners to examine how we might improve business networks and so improve access to capital in the rest of the UK’.
‘Improving support for scale-ups and entrepreneurs’ (p.66)
‘To help improve management and leadership skills to boost productivity, the Government proposes to work in partnership with Local Enterprise Partnerships (LEPs), Growth Hubs and the private sector to enable the timely delivery of scale-up plans across the country.
To achieve this we will take the following actions:
- Recognising the particular challenges faced by businesses scaling up rapidly, the Minister for Small Business will take the role of ‘Scale-up Champion’, working to support high-growth scale up companies across the UK.
- Businesses that are growing fast have unique challenges and can benefit from connections between others in analogous positions. The Government will work with the ScaleUp Institute and other partners, including LEPs and Growth Hubs and their network of strategic partners, including universities, business schools, business bodies, associations, and the private sector to build peer-to-peer business networks speci cally for fast-growing firms.
- We will use data that only government has – such as VAT returns – to help identify fast-growing firms at an early stage. This will enable the efficient offer of advice and support to catalyse business growth and support scale up businesses in cooperation with the Behavioural Insights Team and the ScaleUp Institute’.
New commitments: (p.68)
- ‘We will work with the British Business Bank to build understanding of the obstacles to firms accessing capital outside London and the South East, and the supply and demand-side causes of lower rates of equity deals.
- The Minister for Small Business will take on a new role of Scale-Up Champion, overseeing a task force to support high growth scale-up businesses across the UK and to build peer-to-peer business networks to improve productivity, working with Local Enterprise Partnerships, Growth Hubs, the ScaleUp Institute and other partners.
- We will explore how data – such as that held by HMRC and Companies House – can be used to identify scale-up businesses and be made available to enable local public and private sector organisations to better identify, target and evaluate their support to scale-up businesses more effectively.
- We will continue to build on the success of the British Business Bank, and will work with the Business Growth Fund (BGF) and other private partners to raise awareness of equity funding,
This is a tremendous opportunity to turbocharge the UK into being the best possible place to scale and grow a business. The Industrial Strategy is a vital plank for creating the components for a sustainable ScaleUp Nation.
In addition, there are two important reviews whose work aligns closely with the scaleup agenda. The ScaleUp Institute will be working closely with both these reviews.
Aligned to the intent of improving support for scaleups and entrepreneurs, the Government has announced a review into entrepreneurship to be led by its Chief Entrepreneurial Adviser Professor Tim Dafforn.
The review will assess the support currently available to entrepreneurs and consider international best practice, with the aim of identifying any potential gaps in current policy. It will examine the entire entrepreneurial journey, focusing on the motivations and opportunities for those embarking on business ventures, from education to business development and growth. The review will also examine how to ensure best practice across business schools can reach the widest audience.
The ScaleUp Institute will stay closely and positively engaged with the Dafforn review, which is due to complete by June 2017.
Patient Capital Review
The Patient Capital Review was announced by the Prime Minister in November 2016. The review, chaired by Sir Damon Buffini and which will report into HM Treasury, will identify barriers to access to long-term finance for growing firms. The review will:
- consider the availability of long-term finance for growing innovative firms looking to scale up
- identify the long-term root causes affecting the availability of long-term finance for growing innovative firms, including any barriers that investors may face in providing long-term finance
- review international best practices to inform recommendations for the UK market
- consider the role of market practice and market norms in facilitating investment in long-term finance
- assess what changes in government policy, if any, are needed to support the expansion of long-term capital for growing innovative firms
The review will begin work in January 2017. A consultation document will be published in the spring. Its final recommendations will be presented to the Chancellor ahead of the Autumn Budget 2017.
The ScaleUp Institute will stay closely and positively engaged with the Patient Capital Review.
We are very keen to hear your views and we encourage you to engage with us, so that we can feed into these important discussions. What are your views and reactions to the 38 questions that are contained in the Green Paper? What contributions do you wish to see the ScaleUp Institute make towards the Dafforn and Buffini reviews?
The Industrial Strategy for a Modern Age is a public consultation document. We encourage all scaleup leaders and ecosystem players to read the Green Paper and to respond to it. Formal submissions to BEIS should be made no later than 17 April 2017 to: https://beisgovuk.citizenspace.com/strategy/industrial-strategy