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How to rescue Britain’s economy

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If Britain were a company, it’d be undergoing a “business review”. Exec summary as follows:

“UK Ltd was once hailed for its excellent, beautifully engineered product range. It owned some of the world’s best brands and had a presence in many overseas territories. Service offering was sometimes eccentric, but this pillar of the business community was committed to high commercial values.

“With the retirement of its long-standing managing director, a series of new ‘CEOs’ came in. Keen to make their mark, they took the business public and pushed into new markets, particularly complex financial ‘products’. Profits surged, UK plc took on new people, market expectations soared. With the disposal of its old industrial divisions, credit ratings hit triple-A.

“A focus on the P&L, however, led management to neglect the balance sheet. Huge levels of debt were built up. This new ‘leveraged’ structure was justified by the promise of ceaseless future earnings from the globalised market. The business model was ‘robust’, spokesmen insisted. However, when its debt providers retrenched and customer confidence nosedived, the strategy of the recently rebranded Cool Britannia was exposed.”

“Saving Britain’s Future” is our response to the government’s “Building Britain’s Future” programme. Ours presents practical ideas for reigniting Britain’s spirit of enterprise and giving us a chance of becoming a proper economic power again.

We do not advocate a return to short-termist “wealth-creation” that spawned what FSA chairman Lord Turner calls “socially useless” commercial activity.

In our view, a good business needs predictable, long-term revenues. It needs well-trained, enthusiastic people and manageable levels of debt. It should produce strong products that people buy because they need or want them, not just because they’ve been “sold” into submission by squadrons of outsourced telesales operatives.

How do we get there? Here’s how.

1. Two-year tax holiday for first-time entrepreneursTo help novice entrepreneurs, we propose a package of tax breaks lasting two years. This would be a once-a-lifetime benefit to help genuine first-time entrepreneurs through the difficult start-up period. 2. Abolish Enterprise Investment Scheme exclusionsUnder current rules, EIS covers only equity finance and forbids staff and directors. 3. Business & IP Centres for other UK citiesThe British Library’s Business & IP Centre has been a huge success. Now it’s time for Cardiff, Belfast, Birmingham, Edinburgh, Leeds and Bristol to get their own centres. 4. Create nationwide intensive internship scheme for 15-year-oldsProject Aspirations, chaired by Alba founder John Harris, has provided the perfect model for introducing school children to the world of commerce. Now Project Aspirations must be rolled out across the UK. 5. Reduce tax complexityTolley’s tax guide has doubled in size since 1997. Even the Lord Chief Justice laments the complexity of the tax code. For entrepreneurs there is the cost of compliance and the threat of HMRC investigation. Often the law is obscure even to tax experts – an unacceptable situation. The solution lies in increased consultation and the creation of an Office of Tax Simplification.   6. Enforce the Prompt Payment CodeGovernment departments are required to pay suppliers within ten days. Serious failures of some authorities to adhere to this code are creating cash-flow crises for small firms. The code must be enforced across all state departments. 7. Introduce feedback at Business LinkUsing Business Link is a lottery. Entrepreneurs blindly select independent consultants from a list provided by Business Link. No information on quality is provided. This needs to change. A web-based feedback system would help entrepreneurs to make informed choices about which organisations they seek help from. 8. Public procurement must be entrepreneur friendly.With £175bn up for grabs each year, entrepreneurs need access to public sector contracts. Three simple measures would improve their chances: a return to meet-and-greet sessions with buyers; opening up the Approved Supplier Lists; feedback on unsuccessful tenders. 9. Create a  £1bn investment scheme for small firmsThe government’s two flagship investment schemes for small firms, Regional Venture Capital Funds and Early Growth Funds are now closed. The replacement funds are inadequate. Small firms urgently need a £1bn venture capital fund to stimulate start-up activity. 10. Full time Small Business Secretary at BISLord Davies (previously, Baroness Vadera) should be exclusively stationed in the department for business, and have one job: promoting the interests of small businesses. The post should last the duration of parliament to eliminate the constant ministerial reshufflings which have undermined the influence of the role. Oh, and we demand a full time Enterprise Tsar. Lord Sugar regards this crucial job as part time.

Related links:Saving Britain’s Future – the forum 

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