If an inquiry on this subject is held in the future, the Committee may refer to evidence already gathered as part of this inquiry.
Monday 3 April 2017
Government's Inquiry Identifies Barriers to Small Business Growth
The government has launched an inquiry investigating the question of how to help UK start-ups and potential high-growth small businesses to become 'scale-ups'.
This inquiry will look at how potential high-growth small businesses throughout the UK can be better identified and encouraged to grow.
The term 'scale-up' refers to a small group of rapidly expanding companies which account for an above-average proportion of the UK's economic growth. They are usually defined as being enterprises with average annualised growth in employees (or in turnover) greater than 20% a year over a three-year period, and with 10 or more employees at the beginning of the observation period.
The UK lags behind other countries in the extent to which our companies scale-up, with research suggesting that many of our companies have stagnant growth despite their best aspirations. The Industrial Strategy Green Paper highlights OECD research which found that while the UK ranks third for start-ups, it ranks only 13th for the number of businesses that scale up successfully.
Research has shown that fewer than 3% of start-ups both survive for a decade and enjoy a single year of high growth. By one estimate, if expanding small businesses were boosted by just 1%, they could generate 238,000 new jobs within 3 years and an extra £38bn for the economy.
The 2014 Coutu report identified several barriers to companies scaling-up, including accessing skilled talent, developing leadership capable of managing rapid growth and financing scale-ups. The Committee's inquiry explores the impact of the Coutu report, the effectiveness of the government's proposed measures and solutions, and how potential scale-ups can be better identified and encouraged to grow to create greater economic activity and employment.
The government's Business, Energy and Industrial Strategy Committee is seeking evidence on the following points:
The Committee is inviting written submissions on these issues by 3 May 2017.
It is reassuring to see that the government is taking note of the importance of start-ups and scale-ups to the UK economy and is looking to find ways to support these businesses.