Oral evidence: Entrepreneurship and business, HC 728
Oral evidence, 27 October 2026.
Witnesses
Philip Salter, Professor Mark Hart, Professor Monder Ram and Jordan Dargue.
Chair
Welcome to today’s session of the Business, Innovation, Science and Trade Committee as we open our inquiry into entrepreneurship in our country. We open it on the day that the Global Entrepreneurship Monitor for this year is published. Mark Hart, you are one of the lead authors of this internationally acclaimed study. Do you want to tell us what it said and give us the good and bad news for the UK?
Professor Hart
This is the 27th year we have been publishing this report, so it is very timely that we released it this morning as you start the inquiry. In terms of the headlines, the central message is that ambition is alive and well in the UK. We are in a more entrepreneurial society than we have ever been since we started the project back in 1999.
Chair
That is actually quite a big assertion: the UK is the most entrepreneurial it has been since the study started in 1999.
Professor Hart
Since 1999, absolutely. We measure that in terms of the number of people who are thinking of setting up a business in the next two or three years, the number of people who are in the first three months of doing so, the number of people who have been running a business for at least two and a half years, and established business owners as well. Our survey is not just about people who are in the process of start-up. It is an adult population survey. We are trying to measure the level of entrepreneurial activity in the whole population of the UK. We are now talking about 46% of the adult population who are involved in some of those categories that I have been talking about. This is a tremendous step change.
Chair
How big a step change is it since the study started in 1999?
Professor Hart
We are talking about just over 16% of the adult population involved in nascent entrepreneurship and new business entrepreneurship, so the first two and a half years. That has risen from just about 8% 25 years ago.
Chair
So the level of entrepreneurship has basically doubled in 25 years?
Professor Hart
Absolutely, yes. We also see that that has been driven by two groups, which is really pertinent to the subject of some of the questions that we have seen in advance, and that is young people, so 18 to 24-year-olds, and females. Female entrepreneurship has been surging, certainly in the period since 2011. The step changes occurred at the great financial crisis and have step changed since the covid crisis. We can see reactions to those events in the UK economy and society. That is really important.
Chair
The survey is not all good news.
Professor Hart
It is not all good news. We can see that, yes, the headline rate of entrepreneurial activity is fine. Ambition is alive and well among many groups, but we have a problem of retaining people. They are starting up, but getting them to survive and, more importantly, grow their business is really problematic. We see that in terms of the exits. We do a panel study where we follow some of these nascents over two years, particularly ethnic minority individuals and women. We see that very few of them get to the second or third year. They drop out. Women drop out at twice the rate of men.
Chair
Is that failure rate going up?
Professor Hart
It is going up. We have an exit rate in the data as well. You have a bumper edition of over 100-odd bits and pieces of evidence that you can plough through in the report. Yes, the exit data is actually rising as well, so it is swings and roundabouts. We are more entrepreneurial, but we have a problem in an entrepreneurial ecosystem that sustains that level of entrepreneurial interest.
Chair
It is only about 2% of businesses that get to that million threshold.
Professor Hart
This is another statistic, and this is not from the GEM survey. This is the ONS, HMRC, PAYE and VAT data, where I look at how many businesses get to £1 million turnover in three years. I do that because I work on the Goldman Sachs 10,000 small businesses programme and all I hear is, “Getting to the first million, getting to the first million”. I went to the HMRC data and said, “How many actually do?” It is 2% of every cohort of start-ups for the last decade and a half, of those that survived, and half of them do not. The median of the rest is £84,000, so go figure in terms of a VAT threshold.
Chair
Yes, quite.
Professor Hart
That is an interesting discussion point.
Chair
You have set the stage for us very nicely there.
Alison Griffiths
Going back to that, how does the UK compare internationally? When it comes to people deciding to start a business, is the UK more ambitious and entrepreneurial in the number of businesses we start?
Professor Hart
I always describe it as somewhere between the US and mainland Europe. In other words, we are more entrepreneurial, in the statistics I have shared, than France and Germany, which are our two closest comparators we use, but less so than the US, though I have to say that this year the US is showing a downturn in entrepreneurial activity. That is very clear. One negative point is that we do not compare well to France and Germany with the support for entrepreneurs, especially for young people. That is a fundamental problem that we need to be thinking about. Our student population are left to their own devices. It is all to do with individual institutions, whereas in France you have the Pépite system, with 32 hubs for student entrepreneurs. In Germany, you have the exist grant system, where you have monthly stipends for people who want to start up a business and also transfer research out of universities. We are so far behind those two comparator nations. We are better than France and Germany at getting the start-up rates there. We are doing less well—and that is being polite—in terms of being able to support those as they get into business.
Alison Griffiths
Going back to the point you were making in answer to the Chair’s original question about how many businesses survive, are we better or worse, beyond that three-year threshold, than the US, France and Germany?
Professor Hart
It is pretty much the same. When we look at firm-level data, as opposed to individual population data, so the surveys, the survival rate is pretty much the same as in France and Germany. The exit rates are slightly higher, but there is no statistical significant difference between them, so they are much the same. The challenges we see in the UK are also there in France and Germany.
Alison Griffiths
What is the lesson that we should be taking? Are you suggesting—and feel free to challenge back—that, even though the support that France and Germany give their young people does not manifest itself in France and Germany in greater levels of entrepreneurship, if you took our population, who are more naturally entrepreneurial, and gave them more support, we might do better? If so, what is that support we should be giving?
Professor Hart
I would not push back against that at all. We are light years behind what they have been doing in France and Germany—Germany since 1998 and France since 2014—where you have national and regional programmes that are geared towards young people, yes, in a university setting, and the entrepreneurial activity that we observe in GEM in the UK is more than just those out of university. It is really important that we look closely at the evaluation of those schemes. We can see that they help survival improve. That is what the evaluation of this evidence is telling me from Germany. A point I have made is that we have to recognise that these young people need support. It is not all about this lost generation narrative. It needs to be reset a little. At the same time that you have this million or just under a million in the latest data, we can see that, in fact, you have other individuals who are the most entrepreneurial that they have ever been. Go figure. What is that all about? We need to understand that a little more.
Alison Griffiths
What is the No. 1 thing you want to make sure we translate here?
Professor Hart
It is not about reattaching people to the workforce or training. It is about actually supporting them on their entrepreneurial journey. We need to do that with policy intervention. It is clear.
Chair
That is a good framing.
Dan Aldridge
Mark, the UK sits 37th on the national entrepreneurship context index, below the US, France, Germany and the OECD average. Which of the framework conditions is holding the UK back most and which countries have improved those conditions over the same period?
Professor Hart
Entrepreneurship education at secondary and tertiary education is holding us back. We need to raise awareness of the financial initiatives that we have here. We have a plethora of funds available for small business and entrepreneurial activity, but it is awareness. This is what I come across all the time. It is understanding where to go. We need to lean into that and address that. That is one issue. I spend a lot of time in Paris working on other programmes, such as the Goldman Sachs programme. Bpifrance is very active in that space in terms of supporting not just young entrepreneurs but the entrepreneurial stock as a whole. It is about the infrastructure, the education and awareness of the finance, not its existence. It is about the leveraging of what is there already in the UK, which is really important.
Dan Aldridge
My constituency is a coastal town: Weston-super-Mare. We have some very low-funded organisations providing that sort of support. It is not good enough at all. Do you see disparities between cities and towns? Are you able to extrapolate that from your findings?
Professor Hart
It is a UK report, but I think we have a Scottish, Northern Ireland and Welsh report. We need to look, and I can share after this session the details of that. Yes, there is huge regional disparity and local disparity. We really need to think about making sure that people can access that wherever they live and work.
Dan Aldridge
Pulling that out would be really great.
Mr Reynolds
Phil, I had the pleasure of attending the launch of your Job Creators 2026 report a few weeks ago. From that report, the number that really jumps out is that 54 of the 100 fastest-growing companies in the country have at least one foreign-born founder, and they are valued at £15 billion. From those numbers it sounds like it is quite a good place for people who want to come to the UK to start businesses, but the range of uncertainty for founders to commit to the UK is a problem. Could you tell us about that?
Philip Salter
It is the other side of the coin of what Mark talks about. When it comes to talent, you can either have home-grown talent or bring it in from outside. We are lucky enough to attract a lot of talent from all over the world. That equates to over half of the fastest-growing companies. Those are the most valued companies, and that is why we have such a huge figure as £15 billion. We could attract a lot more. The reason we can get a lot of those people is that they come through our universities, and, traditionally, we have been able to keep people on after they have studied in the UK. They have gone on maybe to work in another field, become an expert and then start a business, and one of these really high-growth businesses. All businesses matter, but, for the purpose of the Job Creators report, we focus on really high-growth businesses. There is so much uncertainty at the moment around the visa system. People in the country do not know how long they are going to stay and the Home Office needs to get back to a very large consultation that took place on that. Also, we do not really have an entrepreneur visa that is working properly. We have a visa that attracts only a few thousand. We can open that up to attract more people by giving the endorsing bodies more collateral to make decisions. We could also extend the high-potential individual visa. That currently is a fast-track visa for people who have gone to certain universities around the world. We could include business schools in that, which is not in the metric that they decided. That would include business schools such as INSEAD. World-famous business schools could come in. There is also the cost of visas, especially for start-ups and small businesses. That is in the thousands for individuals and in the thousands for companies. When you talk about dependants as well, it becomes completely uncompetitive compared to mainland Europe. There are a lot of positives inasmuch as we are still a country that can attract these people, but we are missing a massive trick by not letting more people come in.
Mr Reynolds
What is our opportunity cost then? What potentially are we losing out on as a result of that uncertainty and unfriendliness, as you would probably put it, from the Home Office and some of those procedures?
Philip Salter
It is not people coming over and starting businesses as a solo entrepreneur. They are mixing their talent with the domestic workforce as well, so they are often starting it with entrepreneurs in the UK. They are highly mobile and the reality is that they are very susceptible to tax rates, incentive schemes to exit your business and things like that. All of whatever is announced tomorrow in the Budget will feed into how attractive we are. Visas are one part of it, but I would extend that out to other areas, such as culture. One reason that people like to come to the UK is that it has the rule of law and is culturally a very good place to live and build a family. To build a family, you need to know how long you are going to have to stay in the country before you can get citizenship. Ultimately, why would you build a business in a country that is not even willing to say, “You are allowed to live here. You are allowed to have children here and be here for generations”?
Chair
Professor Ram, you have spent a lot of time looking at the barriers that minority communities face in particular. Based on the data that has been published this morning and some of your own work, give us a sense about the key barriers and maybe the opportunity cost that the country is running as a result.
Professor Ram
There is a link between the comment about uncertainty and talent in diverse communities. That applies to communities in the UK. At the moment, ethnic minority businesses contribute £25 billion to the economy. That contribution could rise to £100 billion if they grew at the same rate of their white counterparts to do that.
Chair
We have a £75 billion opportunity cost here.
Professor Ram
Yes. It is a huge opportunity that we are losing sight of because we do not recognise the talent fully in our own diverse communities. We need to have much better data on minority entrepreneurs. We have been trying to persuade Government to do this for many years. There is a real benefit to be had by simply getting a better grip on the evidence base and integrating it into various policy domains. That is very important. The issue about access to finance has been well rehearsed in the Government’s small business strategy. It applies with particular force to ethnic minority communities. There has been a long-standing issue about access to finance in ethnic minority firms. We did the first major study in the UK in the year 2000 and many of the issues that we identified there still pertain, particularly in relation to the core issue of discouragement. Discouragement means that good business propositions are being wasted because people from diverse communities believe they will not be treated fairly, despite the fact that they have a decent proposition.
Chair
These are quite durable barriers.
Professor Ram
They are absolutely barriers that can be addressed. They go with the grain of the policy pronouncement about growth in every postcode, opportunity, and integration and inclusion. It is one of those areas that have an economic and social pay-off at the same time. Mark talked very persuasively about the role of young entrepreneurs and the NEETs agenda, and how entrepreneurship is a way of addressing NEETs. I can tell you that, for decades, minority entrepreneurs have been addressing the NEETs issue all by themselves, because they disproportionately recruit from their own community. They disproportionately recruit people who do not have qualifications and provide a real pathway for economic development and social mobility through the prism of enterprise. There is a great opportunity to be had. This is with the grain of devolution as well. If we get to know and understand our local communities really well, we could work with the talent that is already there and enhance and leverage that.
Chair
We have problems with data, confidence and access to finance. I think that you and I have also spoken about barriers to government procurement in the past.
Professor Ram
Procurement has been a really important public policy lever for all sorts of different policy issues. We have been talking about the importance of using the public sector procurement levers and, importantly, the corporate sector in supporting and leveraging business talent in diverse communities. The Government’s intervention on social value and youth enterprise recently is very much aligned to that. We have been involved in initiatives that have helped minority entrepreneurs get into the supply chains of large corporate sectors. There is an organisation called Minority Supplier Development UK, which we set up in 2004. It is a corporate sector organisation that is providing real contractual opportunities and pathways to growth. We can do that in the public sector. There is a real critical mass of entrepreneurial talent in diverse communities who are not in the right networks, do not know the right people and do not know the informal networks that have an outsize importance in who gets contracts. This, again, is something that is very doable and we can address.
Sarah Edwards
Jordan, we are quite interested, moving on from the challenges that are faced by ethnic minorities, in also, specifically, women in the business arena. Today, the Global Entrepreneurship Monitor released a report with some good news, which is always nice, where we have a record high of nearly 15% in 2025 of women who were in their early-stage entrepreneurship journey. The investing in women code was set up after looking into some of the challenges for women, and access to funding was cited as a barrier. We are aware that closing that gap between men and women could add £250 billion to the economy, which is absolutely enormous. From your experience, what more do you think the Government need to do to get the most out of that potential that, at the moment, we are losing?
Jordan Dargue
That figure that you have just quoted there has actually gone up to £313 billion now. That is how much could be added to the UK economy if women were supported in the same way that our male counterparts are with access to direct finance. We have seen some positive movement in terms of a 65% increase in equity investment into women, but we still remain at that 2% of overall funding into female-led businesses. We are starting to see progress, but we are mistaking activity for progress, and we need to be very careful of that. If we start to look at activity as being progress, we do not see those outcomes and we certainly will not see that increased economic value that we have the opportunity to gain. We are seeing more female founders enter the world of entrepreneurialism. Professor Mark Hart highlighted there that we are seeing women drop off at that two to three-year gap. The reason that that is happening is that women are not getting access to capital at that very early stage. My ask today is that we start to look at products that are available for female founders who are entering the entrepreneurial ecosystem that look at more than a debt focus. We have start-up loans. We have angel investors now—we will come on to angel investing next—but we need to see more products and gateways. We are still seeing unconscious bias in the funding ecosystem, which is why we need more women to be participating and making those investment decisions. We must have a greater focus on how we support women to angel invest as well. Thirteen per cent of the UK angel investors are women, which is good, but 11% of them are in the south-east. That means that there is a very small percentage of women angel investors in the rest of the regions. We have recently launched a campaign where we are asking for the Government to fund and support female founders with a pound for pound co-investment fund. We are saying that we will work to increase women angel investors across the UK. For every pound that a women angel investor invests, we are asking for a pound of investment from central Government. We believe that that is the only way that we are going to move the dial from that 2% mark. If we do not move that, we have lost a lot of economic value.
Chair
That is a really important point. Some of the announcements that we have heard from John Healey over the weekend suggest some quite chunky adds to the balance sheets of the National Wealth Fund and the British Business Bank. We do not yet know how that money is actually going to get diffused into funds. Presumably, this is a big opportunity to capitalise some of the initiatives that you have just mentioned.
Jordan Dargue
It absolutely is. One of our concerns is that we can see money coming through the National Wealth Fund and the British Business Bank, but that money has been deployed into growth-stage and scale-stage businesses. Venture capitalists are investing at a greater level up the ecosystem chain, which means we have a real big deficit in this early-stage investment ecosystem, which comes back to Professor Mark Hart’s report. We are losing female founders in what we are calling the valley of death. They may get their first cheque or their first piece of investment, but, because they are not being supported in helping the businesses go at pace with funding and finance, we are losing them in the second and third years of evolution, at that very important stage where they need more capital. The only thing that will fix that is having some of those dedicated funds, which will filter down into what we believe can be a very good private and public mechanism that will ultimately change the outcome for female founders, and we will make a huge amount of progress across all areas.
Sarah Edwards
The only thing I wanted to pick up on was that you said that there need to be more or different products. Is that specifically because the types of businesses they are running are different?
Jordan Dargue
Yes, absolutely.
Sarah Edwards
Therefore, can you give an example of what it is that they need that is different from a male-founded entrepreneurial business?
Jordan Dargue
We know that women make 80% of consumer decisions in the average household. We are seeing brilliant women starting fantastic businesses that are consumer-led. They are retail sector and industry-led businesses, for example, but we are not seeing dedicated funding streams for those types of businesses. We see innovation funding. We see tech-based funding. We see hard tech. We see life science and clean tech funding. We need to see different products that are going to support more female-led businesses in those areas where we are not seeing dedicated funding streams. We are typically seeing debt for those types of businesses. Unfortunately, female-led businesses are not often in a position to take on debt at that early stage. Yes, as they grow and scale, absolutely, but we need to see more angel investment. That is what we need.
Sarah Edwards
It is equity.
Jordan Dargue
Yes, equity angel investment. We will see that happen more so from women if women can see that the public sector is also supporting in those key areas.
Chair
That is super helpful. We now have the big question. We are going to use this as a jumping-off point for anything else you want to put on our policy recommendation list.
Antonia Bance
It is the Budget tomorrow. What would you like to see in it? What one measure could encourage more people to start a business?
Professor Hart
For me, it is all about youth enterprise. We have to get serious. It is not just, as I said earlier, about reattaching young people to the world of work or to training. It is actually thinking about their entrepreneurial journeys as well, for male and female, ethnic and non-ethnic groups. It is about having a serious look at a youth enterprise type of funding arrangement, a grant, or something like that. We need to be quite serious about that. To date, it is all about, as I say, “Let’s get them into a job. Let’s get them into training”. We need to recognise the reality, as Monder has pointed out as well, of what young people are actually doing. In the report we look at solo entrepreneurs. There is a huge amount of high ambition there. We just need to pump-prime those young people. I want to see something really tangible tomorrow. I always like to go on the eve of Budget night and have a dream, but we really need to lean into our young people, who are the future of our entrepreneurial capability in the UK.
Antonia Bance
I think that that is more likely, if it comes at all, to come in the Milburn recommendations than the Budget. Is that something you have been putting to Alan Milburn?
Professor Hart
I have tried to have a conversation with the Milburn review, but, as you can probably gather, to date I am quite frustrated by that, because it is all about this lost generation of NEETs. Can we just stop using the phrase NEET? There is another E that we are not actually talking about: entrepreneurship. We have ignored that completely and the evidence is staring us in the face.
Alison Griffiths
This is a follow-up to build on Antonia’s question. You mentioned earlier that we need policy interventions. I want to press you to be specific about what the policy interventions are that you think will help entrepreneurs that you may wish to see in the Budget tomorrow.
Professor Hart
I look at our counterparts. Money is being devoted, through policy and through universities, to young people to give them monthly stipends to run their business and translate research in their universities into businesses. There are examples out there of how we do this. I have submitted a note that gives you a page of my response to Antonia’s question on the Budget.
Chair
Yes, we have that. Give us a sense about the money involved. What kinds of sums are we talking about?
Professor Hart
We are talking about €2,000 or €1,000 monthly and access to €30,000, for example, on the exist programme in Germany. That is €30,000 in terms of capital, equipment and stuff like that, but a monthly stipend of €1,000 or €2,000.
Chair
How long is that for?
Professor Hart
It is a year or two years, to get them established. The start-up loans in the British Business Bank are wonderful. Its original intention was for young people. That is really brilliant. Connecting it to our universities and to our education system is really important. There are wonderful programmes across the university sector, but they are not co-ordinated. That is the problem.
Dan Aldridge
Jordan, I wanted to come back on something you said about the unconscious bias around this. It goes to ethnic minority businesses as well as women-led businesses. In my constituency—and I think it is probably disproportionate to cities—so much entrepreneurship is women and ethnic minorities who, for whatever reason, build businesses there. The beauty industry in and of itself has £28.3 billion of value to the UK, but it is consistently not seen as a priority area. How problematic is that bias in the UK? Are you both seeing that? I do not think we really recognise it enough.
Jordan Dargue
It is very problematic, unfortunately. From an investment perspective, because there are more men in the ecosystem who are working in venture capital institutions and private equity, they are making the decisions on what gets backed. If we think about the women-led businesses, so femtech and healthtech, for example, and beauty and retail, as you have just mentioned there, unfortunately, the men aren’t understanding those businesses, so it is not often seen as something that should be a priority to back and invest in. That is why we need to see more women operating in those organisations and being a part of those investment committees. We are not saying, “Make it all women”. We are saying, “Grow the table and make it very diverse”, so that you have lots of different skills, opinions and knowledge around sectors and industries. That is one way that we will start to see women being backed.
Chair
Let me return to Ms Bance because, Professor Ram, we would love to get your views on the Budget as well.
Antonia Bance
I wanted to stay with Professor Hart for a moment on the idea of a youth enterprise grant or a monthly stipend. A thousand euros would be three times the value of the universal credit basic allowance every month for a young person under 25. Is that really what you are suggesting? What activity requirements would you put alongside that? How do people qualify for that sort of allowance?
Professor Hart
At the moment we see businesses coming out of our university sector and young people, which are already there. We have to do the sums on this. I do not have the Treasury spreadsheet; I agree with that. We need to go away and do the sums to find out how much it would cost. Look at the evidence from elsewhere. See what it would actually take to do this. You are probably thinking about 32,000 individuals in Germany who have had the benefit of this, so it is not universal. There is an entry fee, if you like, in terms of what it is they are proposing to do and actually develop. It is not available to every 20 or 21-year-old who is coming to the end of their degree. In France, for example, there are about 40,000 of these students with national enterprise status. That is the sort of scale we are talking about, but the growth ambition there is the key entry fee. For me, it is all about not chasing the headline numbers of start-ups, but finding out where the growth ambition is. I am coming back to the female point, and the GEM data has shown this. When you control for the types of businesses that women set up, women are just as ambitious as men. Take the sector difference away from that, and that should be evidence enough to the equity, the angels and—dare I say—the VC, to say, “We can back women because they are some of the most ambitious entrepreneurs in our society”. Look at Buy Women Built. I work with some of the most ambitious female-led businesses in the Goldman Sachs 10,000 small businesses programme. The potential is there. The financial sector needs to pay attention.
Chair
Professor Ram, what are your asks for the Budget?
Professor Ram
Before the Budget, can I come on to something that Dan Aldridge mentioned about the kinds of businesses he was seeing in his communities? This hits upon a really neglected topic. There is a big concern at the moment about reviving our high streets. Especially in an area you know well, Chair, in Birmingham, which is a great example, women and minority communities gravitate towards those high streets and set up businesses. There is one stellar example, which I want to draw your attention to: Soho Road. That is an area you will know very well. People are talking in other parts of the country and the city about the death of the high street. There is no recession in that high street. It is one of the busiest, most entrepreneurial high streets you will see. There is a waiting list of international entrepreneurs wanting to locate there. We would call that FDI in another policy discourse, but we do not here. Why? That street provides jobs and provides different communities with a pathway to economic development. It integrates different communities and has a huge number of growth firms, which are not recognised as such. I do not think that the business support system is agile enough to integrate the policy thinking, the economic thinking and the social policy domain. It provides answers. There was a piece of research done by anthropologists a few years ago. They knocked on every door in a surrounding street and every business on that street. They found out that there had been businesses there for three or four decades. They spoke three or four different languages for business purposes. They contributed disproportionately to the tax base. They employed a huge number of non-family workers, again from NEET communities. Why are we not seeing that as a resource? We see these shopping malls as a resource and try to attract them. This is the talent that goes unrecognised in our own communities. To address Antonia’s point about what I would like to see in the Budget, I would start off with that: recognising the talent there. We now have a system in the UK that is reasonably well developed in the Business Growth Network and the Business Growth Service. Do we know what priority they are attaching to going out and finding the female businesses or ethnic minority businesses in their patch? Is there any warrant for them to work with those businesses? Do we know how many of them they are supporting? Do we know how many of them they are facilitating to grow? We have a mechanism there, but I am not sure how well we are utilising it. That is one thing. The second thing is that someone needs to own this agenda. Someone needs to drive this particular agenda. If we were to look at international best practice, let us say in Canada, for example, there is a discernible body there, integrated within Government, whose job it is to drive black empowerment in that particular case. We do not have anything similar. I am not advocating a policy of separation. It is actually integration on steroids to make sure that it is integrated in every policy domain. We need to see what works.
Chair
It sounds like quite a bold plan for growth in every postcode, as we now call it. Jordan, what are your top asks for the Budget tomorrow?
Jordan Dargue
We need to stabilise the tax-efficient investment scheme. We do need to stabilise that. It would be very useful to look at enhanced tax-efficient investment schemes for women backing women. We know that there is going to be a transfer of wealth to women over the next five to 10 years, with baby-boomers transferring and women being able to take hold of quite a lot of the household wealth. We need to think about some tax-efficient investment schemes that are going to help women to back more women. As I have mentioned earlier, it would be very good to see some of the Budget aligned to how we support more women in their early-stage investment journey. If we do that, we will absolutely see them being able to take on more capital and progress their businesses, coming back to the economic value.
Chair
That is nice and specific. Thank you.
Philip Salter
I am going to say three things, but I will say them quickly. On Mark’s point, we put out a report called Starting Out and Starting Up. This was all about tackling the NEET challenge. Currently, if you employ someone you get a grant of £3,000. If you start your own business—there will have to be metrics for this—and you get to a certain point, we think that you should also be able to qualify for that grant, because you could then go on to employ people. There are other ideas. We used to have the new entrepreneurs allowance. We had the enterprise allowance before that as well. There was a lot of mentoring involved there. Now is the time to bring something back, given where we are with 1 million youth unemployed. The hard policy announcement I would like to see in the Budget is around R&D tax credits. I mention that one specifically because there is not a trade body to represent them, but they are in an absolute mess. A lot of entrepreneurs who are doing very innovative things are choosing not to apply for them because they are being hounded by HMRC with demands from previous years to give back money. This happened for a good reason. They were not being properly managed and there was a lot of fraud that took place within them, but within that context we now have lots of legitimate founders and a lot of innovation that is not being undertaken. That is with the backdrop of work from economists such as Van Reenen and others that show how effective they are. In the past, I think when we doubled how generous they were, we also doubled the level of innovation. Patent quality went up 60% as well. There is a lot of really strong evidence that they work, but they need now to be properly targeted. There are ways of doing that in Canada. I will leave that as a tantalising thing to look into. The final one is something that connects a lot of what has been said today and is a more ambitious idea than potentially some of the things we may hear tomorrow. It is about connecting up Government and data. We put out a report called The Master Key. This is the idea of having one identifier across businesses. Currently, as a business owner—I am a small business owner myself—I have to keep telling Government what I am, what I am doing and who I am. That is annoying. A big part of that is that there are millions of hours to be saved. We could quote that number. On the more positive side, imagine a place where Government would know exactly who I was. If I was growing fast enough and I was a female founder in Doncaster, they could target me and say, “The data is showing how amazing your business is doing. For that reason, we are going to push you towards something”, maybe one of the schemes that Mark is running, or someone else. It is the underlying basis of a lot of interventions and the state capacity to act and deliver on the things we all want. It is slightly boring, but, if we get the plumbing right, the engine can really get going on the economy.
Chair
Thank you so much. The clock is slightly against us, so I am afraid we are going to have to conclude it there, but that gives us an excellent checklist against which to judge the Chancellor when he rises to his feet tomorrow afternoon. That concludes this panel.