Commission identifies ten policy recommendations to improve environment for private companies and help Britain fulfil its business potential
London, 6th June 2024 – The Private Business Commission has launched its first report in collaboration with The Entrepreneurs Network, examining the environment for private businesses in the UK and identifying ten key policy recommendations for the incoming government.
The report responds to growing concerns around the UK’s ability to scale ‘breakthrough businesses’ to their full potential. This crucial cohort – defined as companies with more than 100 employees and the potential to become structurally important in their region or industry – make up the majority of the UK’s 43,000 mid-sized firms. The sector contributed more than a quarter of all tax income last year and employs about 27 million people in the UK.
Despite the critical importance of these businesses, they are frequently overlooked in policy making decisions and face an increasingly challenging environment, with respondents to the Commission’s Call For Evidence citing obstacles such as lack of access to funding and a tax system that encourages entrepreneurs to exit early. Britain’s inability to scale mid-sized companies means the number of the world’s largest companies based in the UK has fallen from 20 per cent to just 4 per cent in the last two decades.
The Commission is chaired by Steve Rigby, Co-CEO of Rigby Group, Europe’s largest private technology company and investor, and one of the UK’s top ten family businesses, alongside eleven expert Commissioners from the worlds of business, finance, and politics. Submissions were received from individuals and representatives from key stakeholder bodies. They examined four areas of focus: access to funding, tax incentives, functioning of capital markets, and employee incentives.
Ahead of the general election, the Commission has identified ten key policy recommendations:
- Establishing greater engagement between the government and large private businesses to better support the “middle” of the business sector: companies that are neither startups and scaleups nor publicly listed
- Continuing to implement Mansion House Reforms to leverage capital from institutional investors into British firms with growth potential
- Abolishing the Stamp Duty Reserve Tax, which biases investment away from British companies
- Bolstering the independence of the British Business Bank so that this institution is not tied to the party of government and can operate based on its own mandate of growth
- Ensuring the Spinout Review is fully implemented to capitalise on the wealth of knowledge stemming from British universities and make these companies more investable propositions
- Improving the administration of R&D tax relief so that companies can gain access to the crucial funding they need to grow
- Modernising SEIS and EIS tax incentives to ensure they deliver what scaling businesses require while not encouraging an early sale
- Introducing lotteries and fast track schemes to expedite grant funding for innovation
- Updating employee incentive schemes to ensure they are in line with inflation and have the potential to serve high growth medium enterprises, rather than just small businesses.
- Reconsider the implementation of Basel 3.1 to not hurt SME lending, and redesign these reforms in consultation with banks that lend to SMEs.
Steve Rigby, Chair of the Private Business Commission and Co-CEO of Rigby Group, said: “The government isn’t responsible for accelerating or sustaining the growth of private businesses in Britain, but it is responsible for providing a safe harbour for our ships to sail from. With a general election fast approaching, now is the time for policy makers to consider new ways of encouraging and incentivising small and mid-sized businesses to scale up to a size where they can pay taxes and create employment opportunities on a large scale. The UK’s inherent entrepreneurial spirit is our biggest asset – we must now capitalise on it.”
Philip Salter, Founder of The Entrepreneurs Network, said: “Whoever steps into Downing Street must have growing the economy at the top of their to-do list. To turn words into actions, we need to empower the many British businesses that are on the verge of greatness to take their business to the next growth stage. It’s time to unlock capital so our most ambitious entrepreneurs aren’t forced to leave the UK or sell prematurely. We must ensure that the UK’s stock exchanges are firing on all cylinders, and we need the right schemes in place to make sure employees can be incentivised to remain at fast-growing companies for longer.”
For the full report, visit: https://www.tenentrepreneurs.org/private-business-commission
