OH, NO! NOT ANOTHER BUSINESS QUANGO!
Another worthy report into how to boost enterprise, says Scot-Buzz editor Bill Jamieson – and another predictable conclusion: set up another business quango.
Do we really need another one?
How can innovation and entrepreneurship in Scotland be improved? What is our problem, exactly? And what policies should the Scottish government and its agencies pursue?
To find the answers a team from Scotland took part in a Massachusetts Institute of Technology (MIT) Regional Entrepreneurship Acceleration Programme (REAP). It has now produced a 50 page report entitled “Increasing Innovation-Driven Entrepreneurship in Scotland through Collective Enterprise”.
It purports to describe “Scotland’s entrepreneurial ecosystem and what could be done to improve it”. There is an opportunity, it says, “to redefine ourselves as a nation of dynamic and high achieving entrepreneurs” busy “targeting global opportunities” and “pursuing innovation as a key driver of sales growth”.
With such a promising if clunky bureaucratic title and impressive international study credentials, this would surely produce some innovative and entrepreneurial ideas.
Sadly the result is one of the most cliché-infested regurgitations of long familiar problems ever churned out by Scotland’s leading enterprise agency. What spark of original thinking ever informed this exercise is snuffed out by a prose style best described as Dead on Arrival.
A flavour of the challenges presented in this 50-page report can be gained by its recommendations. These are:
- “Improve networking linkages through education in entrepreneurship and management”
- “Improve access to growth finance”
- “Improve skills for growth through provision of internationally excellent education in entrepreneurship and management”
- “Leverage role of universities to improve entrepreneurship”
- “Improve innovation-driven entrepreneurship through positive communications strategy”.
Finally, it proposes an independent “non-profit stakeholder-led organisation” is set up to pursue these aims, or, as the report puts it, “This backbone organisation will work across all stakeholders to ensure ongoing alignment of vision, delivery of mutually re-enforcing actions, continuous communications and an agreed monitoring framework.”
Phew! Can this really promote innovation and entrepreneurship in Scotland? What is our problem, exactly? To find the answers the REAP Scotland team participated in four “multinational residential workshops” alongside teams from Finland, New Zealand, and regions of China, Spain and Mexico.
Sadly it seems to have spent most of the time munching the MIT Buzzword Dictionary. There is more – much more – of all this engaging, networking, stake holding, vision-aligning, network building, incubator monitoring and innovation-driving.
But insightful? Original? Revelatory? Search in vain.
Scotland already has a range of business schools and facilities for campus entrepreneurialism.
Problems of access to growth finance are already well documented following the biggest banking crisis in more than a century. That this crisis was due in part to excessive and indiscriminate supply of finance to business is not examined, nor are remedies suggested.
The need to improve business skills – indeed skills at all levels – is already well documented and skills training is increasingly funded.
A “positive communications strategy” might usefully begin by running a buzzword Geiger-counter over further publications like this and reducing their length by at least half.
As for the establishment of yet another organisation to “work across all stakeholders” and “ensure ongoing alignment of vision”, Scotland is littered with organisations devoted to the promotion of innovation and entrepreneurialism, not least Scottish Enterprise itself and its Highlands and Islands counterpart. Do we seriously need another one? And what would it do, exactly, that would be better than, or different to, existing organisations?
The report from REAP, comprising Donna Chisholm (Highland and Islands Enterprise), Simon Gray (AWS Ocean Energy), Ian Ritchie (Iomart), Professor Jonathan Levie (University of Strathclyde), Jonathan Harris (Editor, Young Company Finance) and Clive Reeves (Scottish Enterprise) is not totally without value. There are some useful figures on Scotland’s business universe and how it compares with the UK overall.
But there is little examination of two findings presented by the report: (1) why do SMEs in Scotland appear to have little ambition and are content to remain ar or around their current size? And (2) why does business R&D in Scotland significantly lag the UK (0.59 per cent of GDP compared with 1.09 per cent)?
These are the issues that need to be explored, together with other approaches rather more ambitious and broad-minded than this focus on government agency infrastructure. What about, for example, a larger exemption from business rates to help small businesses to expand and grow, and a scrapping of Capital Gains Tax on small business investment?
We have big problems in Scotland.
And here’s my intensive eco-system accelerator engagement conclusion: we need bigger solutions than this.
SCOTS SMEs 'MORE CONFIDENT THAN UK'
Scottish small business confidence is now higher than the UK average, the latest Federation of Small Businesses’ (FSB) quarterly report shows.
The FSB’s Voice of Small Business Index, published yesterday shows that while small business confidence is growing across the UK, an average firm in Scotland is currently more bullish than its counterpart in England and Wales.
The analysis also shows that, as spare capacity in small business falls, recruitment intentions are at their highest level since the research began in the first quarter of 2010.
The Scottish Small Business Index, the FSB’s measure of small business confidence, rose substantially to plus 44 points in the second quarter of 2014, up 8 points from quarter one. This represents a substantial improvement from this time last year, when the index stood at just plus 9 points. Half of the small businesses surveyed expect business prospects to improve over the next three months, compared to just 12 per cent who expect them to deteriorate. Across the whole of the UK, the Small Business Index rose from plus 35.7 points to plus 39.7 points over the first quarter 2014, while the share of UK businesses expecting conditions to improve held steady at 47 per cent.
The proportion of Scottish firms reporting that they are running below capacity fell from 52 per cent at the start of the year to 46 per cent this quarter. Looking ahead, only 33 per cent of firms expect to be running below capacity during the next three months. Revenue and profits are looking healthier, too, with 37 per cent of respondents expecting revenues to increase over the next quarter. A balance of 16 per cent reported increased profits during the last quarter and 26 per cent of firms anticipate higher profits in the coming year. Further, 19 per cent of businesses plan to increase capital investment over the next year, compared to 8 per cent at this point in 2013.
Says Andy Willox, the FSB’s Scottish policy convenor, “While it is nice to see Scottish small business confidence climb above the UK average, more significant is the continued rise in small business confidence across the UK. Further, reduced levels of spare capacity means that more businesses are looking to recruit.
“This is good news for unemployed Scots and for the recovery – as is the fact that one in five businesses plan to increase capital investment this year. More businesses placing orders with suppliers means more full order books, more materials to be sourced and more staff to be hired. That is the key to rebuilding our economy.
“No matter how confident we are, though, none of this investment will happen without finance. Although the position has improved since this time last year, it has hardly moved in the last three months. We’ll need to keep a close eye on this trend and ensure things don’t start to slip back. Having worked so hard to build a recovery, we can’t have it stifled by a lending market which lacks our members’ ambition.”
Economy Forecast
08 Jul
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RETAIL LEVY 'PUSHING BUSINESS OUT OF SCOTLAND'
Scotland’s £95 million large retail levy “looks designed to push retail investment elsewhere”, the Scottish Retail Consortium claims in a pre-budget submission to Holyrood.
It argues that the non-domestic rates system “is no longer fit for purpose. It is a disincentive to invest in commercial premises, the tax seems to only ever rise, and retailers pay disproportionally more than other sectors.”
A comprehensive longer term overhaul of the business rates system is required, which would increase retailers’ confidence about investing in property, create more jobs and help revive high streets.
The large retail levy or ‘Tesco tax’ was brought in to assuage small firm concerns that the retail super-stores were sapping business from the high street and putting traditional and family businesses in jeopardy. Others saw it as a pure and simple tax grab by the Holyrood administration.
And there other improvements, the SRC argues, that can be made to support the retail industry. “The small firms’ relief is a welcome acknowledgement of the need to keep down costs, and avoiding the repatriation of control over the poundage rate to local authorities is sensible.”
However, it argues, the £95 million large retail levy was a significant departure from poundage rate parity.
“It has meant that for three years 240 retail outlets are paying 28% more than equivalent stores in Wales or England. The levy has been a conspicuous blot on the Scottish Government’s claims to have the most competitive rates regime in the UK.
“Indeed, the policy appears designed to push retail investment elsewhere in the UK, rather than attract it to Scotland, the very antithesis of the argument that the First Minister has been making recently in seeking to “rebalance the economic centre of gravity across these islands”. We welcome the pledge not to continue with the levy.
The SRC recommends that Scotland’s rate poundage rises no faster than that in England, it comes good on its promise not to renew the £95 million levy and rejuvenate the Business Rates Incentivisation Scheme to ensure that revenues accruing to local government from it are transparently re-invested in aiding town centre regeneration.
Transport is vital to the success of the retail industry. With 23,000 outlets in Scotland, located in every town and village, retailers rely on access to good quality and reliable transport for the daily operation of their businesses – for ease of access for customers, to deliver goods, and to enable employees to reach the workplace.
“We fully support the Scottish Government’s plans to dual the A9 between Perth and Inverness, and the A96 between Inverness and Aberdeen, but would urge a more ambitious timescale for delivery rather than the two decades currently envisaged. Improved connectivity to the North and North East will help unlock the economic potential of these two regions, help get goods swiftly to retail outlets as well as, as is increasingly the case, direct to customers.
