I am sure the 10s, if not 100s of 1,000s of those going out of business in the United Kingdom this year, because of Covid and, sotto voce, Brexit, share Starmer’s sentiment.
I am not so sure, as I have blogged previously, that those getting into difficulties, if not going out of business, because of Brexit are as enamoured of Starmer’s lack of concern for the growing socio-economic problems that Brexit is causing.
Starmer and Labour, more generally, continue to display an attitude bordering on callous indifference about the impact of Brexit on our society and economy whilst claiming they want to win over the support of the business community.
For the uninformed, like whoever wrote that Tweet for Starmer, the UK is made up of three nations, Northern Ireland, Scotland and Wales, and nine English regions.
I am assuming, for sake of argument, that Starmer is speaking of 1,200,000 new business start ups across the UK over the lifetime of a Parliament.
To put that into context, the Federation of Small Business has estimated that 200,000 small businesses will cease trading in 2021.
That is 200,000 actual businesses, employing flesh and blood people and paying tax into the UK Treasury whilst producing goods and services rather than 1,200,000 may bes, dreamt up by a Special Adviser.
Politicians are simple folk. They like targets like that set out in the Tweet.
Now for the reality.
You do not need to go out of your way to encourage people to start up a business, they do that perfectly well themselves, wrongly in a lot of cases.
It is arguably unethical, if not immoral to encourage folk, especially young people to set up in business. The attrition rate, the incidence of business failure, is astronomically high. A figure of at least 60% was quoted to me on Twitter a few months ago.
Labour’s New Deal for Young People in 1998 had no self employment option. You might make your way into self employment via the Employment Option, but it was not encouraged. Tony Blair was lobbied by the Prince’s Youth Business Trust, Fairbridge Young Enterprise and others so a Self Employment Option became formally part of the Employment Option.
A NDYP slogan was “There is no fifth option!” so the Self Employment Option became essentially 1A.
The routeway into it and the option itself were designed to deter applicants. Gordon Brown’s ethics won out on that occasion.
Too many new start ups fail and young people, in particular, should not be casually exposed to the consequences of failure, both psychological and material.
About fifteen or so years ago, Birmingham City Council paid a consultant to assess the return on the money they spent on helping businesses in the city. The consultant concluded that they got a bigger bang for their pound working with existing businesses, helping them expand and grow, than in encouraging new business start ups. Crucially, the jobs created by existing businesses were more likely to be sustainable than those generated by new enterprises.
I once heard Sir John Harvey Jones argue at a business event that only middle aged folk should consider starting up a business, ideally once they had paid off their mortgage, seen their children through university, learnt a little of life and similar.
It struck me as sound advice from the original Troubleshooter.
I would like to return to Starmer’s target and discuss the three year marker.
New business start ups tend to go through three phases:
Year One – We do not expect to make a profit.
Year Two – We hope to break even.
Year Three – If we do not make a profit by the end of this year, we are shutting up shop.
Most promoters of new business start up schemes understandably cite the Year One figures when promoting their initiatives.
Starmer’s 1,200,000 business start ups might at the end of their Year Threes turn into 480,000 business surviving into Year Four. However, we should not forget that the full impact of Boris Johnson’s Hard Brexit, that Starmer freely endorsed, has yet to be felt.
Let me make clear, I am not arguing against business support for those thinking of going self employed or setting up small businesses. However, I am counselling against a repeat of a Thatcherite policy of going out of one’s way to encourage start ups, coupled with providing, in too many cases, poor advice about the hardships of going into business for oneself.
The Thatcher era’s Enterprise Allowance Scheme paid successful applicants £40.00 per week for a maximum of 52 consecutive weeks. A formal review of the policy revealed that in East London, for example, folk were setting up window cleaning businesses and using the subsidy to undercut existing self employed window cleaners, putting some of them out of business. Of course, at the end of the 52 weeks the newbies had to up their charges, only to find themselves undercut by the newer window cleaners on EAS and so the cycle went on. The scheme was eventually scrapped.
I recall Esther McVey a few years ago as Minister for Work and Pensions waxing lyrical about a new version of the EAS.
What is it with the current crop of Tories and their nostalgic affection for proven failed schemes like the Work Programme (a thinly disguised take on Employment Zones), Freeports and Enterprise Zones?
Any way, it is not unusual for the self employed to earn less working for themselves than they might working for someone else.
Arguably being employed is less stressful than being the captain of your own enterprise, however humble it may be.
Starmer has Tweeted and spoken about wanting to create high (sic) skilled jobs. How he proposes to do that as businesses are losing contracts; moving operations and jobs abroad; laying off staff in the UK … remains a mystery.
But then as Starmer told The Guardian on the night before he whipped Labour MPs to back Johnson’s Hard, sorry, Slim Brexit deal, he did not expect Brexit to be an issue at the next General Election and he intended to focus in 2021 on the economy and the NHS.
The latest trade figures for 2021 show the UK’s export trade contracting due to Brexit.
The NHS currently has 100,000 unfilled vacancies.
In 2019, 5% of all those employed in the NHS were EU citizens.
In the West Midlands that figure rose to 10%.
Labour policy remains to not seek any major renegotiation of the EU-UK Trade and Cooperation Agreement and certainly not to seek a return to the Single Market which would involve a resumption of Freedom of Movement.
Heaven knows where Starmer’s head is at, but until he accepts the reality of Brexit, Labour will never have a credible economic policy and definitely no chance of successfully wooing at least some of the business community to its side.
Urging folk who have gone out of business to start up new enterprises is down right unfeeling.
If Starmer is in need of suggestions as to how to proceed, ideas forged, in fact, in the business experience of Brexit then he need look no further than the UK Trade and Business Commission.