Last week, a request landed on our ‘virtual desk’, originating from the Department for Business, Energy and Industrial Strategy (BEIS) and linked to a series of economic recovery roundtables that are expected to inform the emergency budget announcement scheduled for the second week in July.
Given the challenging turnaround time, YU, together with our colleagues from the N8 Research Partnership, agreed to pool our respective ideas and produce a joint response. The topics where BEIS were seeking inputs, included: innovation, investment, net zero (carbon), levelling-up and (business) start-ups and scaleups. I was asked to contribute to the the start-up and scaleup theme, and was set the following exam questions:
- What are the most significant barriers to starting and growing a business in the UK, and what can business and Government do to address them?
- What specific actions should we take to ensure the UK creates a strong pipeline of investable start-ups that have the potential to grow into future UK Unicorns?
- Beyond making sure businesses have the access to finance to support growth, what are the most critical factors for successfully growing a business in the UK?
- What more can be done to encourage businesses to invest in their own success?
- How can we boost progress in some of the hubs for fast-growing businesses outside of London? How can we support businesses through venture capital, an area where our performance outstrips that of European neighbours?
A daunting task to complete in a matter of 48 hours. Fortunately, as a membership organisation, YU works with brilliant colleagues at our regional universities who work on a daily basis to support and help individuals start their own companies and existing businesses to grow and expand. Their insights proved valuable in ensuring that the final submission to BEIS was robust and grounded in both research and policy evidence and reflected practical realities on the ground. I am grateful for their counsel and advice. You are can read the full response here. In this blog, I want to reflect on the situation in its broadest sense.
Against the background of COVID-19 and the lockdown, the ONS June 2020 labour market overview reveals that, between February and April, about 600,000 people may have been cut from company payrolls. In addition, 8.4 million people are temporarily away from a job. The number of job vacancies advertised has collapsed by 60 per cent. These numbers have racked up with unimaginable speed. We are in the midst of an ensuing economic crisis caused by the pandemic, and start-ups and scaleups have not escaped the impact. To date, the government has announced a £1.25bn support package for start-ups and scaleups. But how long should this support last? And how long will the period of uncertainty last?
If the economic crisis, driven by the public health crisis, wasn’t enough, the fractious trade relationship between the US and China and ongoing uncertainty about the UK’s future relationship with the European Union dominate headlines and are vexing many businesses in the region. According to the 2019 ScaleUp Annual Review, 64% of scaleups surveyed thought Brexit would have a negative impact on their business. In July 2019, the Office for Budget Responsibility (OBR) warned of the risk of the UK entering into a recession on the back of a ‘no-deal’ Brexit, predicting the scenario of a year-long GVA contraction of 2%, rising unemployment and an increase in annual borrowing of £30 billion. One year on, and the world feels so different. The OBR’s forecast about the risk of the UK entering into a recession is now a reality, albeit for different reasons, but post-Brexit negotiations continue.
The region’s businesses have been through a difficult and uncertain period in recent years, and the lockdown has added significantly to their list of challenges. Yorkshire needs all its businesses to reopen safely and to get the region firing on all cylinders again. The next generation of firms and the potential high-growth companies will play a leading role in the recovery. Government, working with the private and public sectors, and universities and colleges, can create the necessary fertile environment where the volume of resilient business start-ups and scaleups in the region increase in the short- and long-term. That would support economic recovery and would contribute to the levelling-up agenda; so important at a time when there are growing concerns about widening social and spatial inequalities.