Vince Cable: Britain is still a world-class destination for enterprise
The business secretary gives us his insight into the current business playing field
The business secretary Vince Cable tells Growing Business why recent government trade missions are vital in boosting the UK economy and how he intends to stimulate small business growth
1. What have your delegations to China, Russia, India achieved? What is their significance for entrepreneurial businesses?
The prime minister has made it clear that he regards emerging markets as important for the UK’s future growth and has urged a big step change in our approach to foreign and diplomatic relations in massively upgrading the importance of trade.
He has put this into practice by taking the biggest ever trade and government missions to India and China, two of the fastest growing countries in the world, earlier this year. I was privileged to be on both. This was followed by my own trade visit to Russia and India.
These missions have opened doors, with opportunities for British ministers and businessmen to meet their counterparts abroad and discuss important issues. The challenge now is to encourage more firms to follow in their footsteps.
Our trade missions have resulted in hugely significant business deals for UK companies, but they also demonstrate the value of exporting to firms that may not have thought to do so before.
By showcasing the quality of our exports we also hope also to encourage overseas companies to invest in the UK. I believe this is one of the best countries in the world for inward investment. We are also cutting corporation tax to 24% – the lowest in the G7. We are creating the most competitive corporate tax regime in the G20 and scrapping needless red tape and excessive regulation.
2. What is the current situation with the entrepreneurs’ visa?
We want to attract the best entrepreneurs, and the Entrepreneur Visa will encourage a change in the UK’s ability to attract world-class talent. It will send a powerful signal that Britain is still a world-class destination for enterprise.
The precise design of the new route is still being worked on, but we are developing a system that will be far more attractive to overseas entrepreneurs. It will be more flexible and success will be rewarded.
3. What is the status of the Growth Review? What barriers to growth for SMEs have been identified and how do you intend to remove them?
The growth review is an intensive programme of work that is still taking place across government. I am absolutely committed to creating the right conditions for growth which is why we want to make sure that businesses have their say on the barriers that are standing in their way.
At the Budget, we will publish the outcome of the first phase of the review with an action plan on how we are going to remove these barriers to growth.
4. How will local enterprise partnerships actually work?
We haven’t given local enterprise partnerships guidance on how they should work; it is up to the individual partnerships to decide on this. The local growth white paper, which we published in October, states the constitution and legal status of each partnership will be a matter for the partners, informed by the activities they wish to pursue.
5. Are we moving towards a more level playing field for small businesses and big firms? What would you like to see in order to make this happen?
Small businesses are vital to the UK economy and the government is committed to creating the right long term environment to help many more people start and grow their enterprise.
We want to support small business owners as their company grows, to make sure they have the access to finance they need and have as many opportunities to expand as possible. We launched a finance green paper in July and responding to feedback from business we have announced concrete help for small businesses.
We will extend the highly successful Enterprise Finance Guarantee for four more years, and we will continue the Enterprise Capital Fund programme. This will enable high-growth start-ups to access important venture capital investment.
Plus we have already confirmed that we are cutting the main rate of corporation tax from 28%to 24%over four years, and reducing the small firms’ rate to 20% – instead of increasing it to 22% as previously planned.
The government has a strong role to play in boosting enterprise and critical to that is giving small businesses access to government contracts instead of leaving that as the preserve of big business. We have set a goal to have a quarter of government procurement directed to small and medium sized businesses. We will work with all government agencies to remove qualifying barriers that prevent small businesses accessing these contracts.
At this start of this year we also announced a new framework for business advice and guidance, focused on access to experienced business people who have the expertise to help. This will include Business Coaching for Growth, a new service that will provide strategic advice to fast-track businesses at key stages and will also put these firms in touch with external sources of knowledge and investment, and a national mentoring network – bringing together existing networks of mentors from businesses of all sizes in the voluntary and private sectors.
All these measures will help even out the playing field and enable our small businesses to prosper, grow and drive our economy forward.
6. How can we stop the brain drain of our best entrepreneurs leaving the UK to set up in Silicon Valley or elsewhere? Is this myth or reality?
We want the UK to be a dynamic, vibrant place for entrepreneurs to start and grow robust and innovative businesses. We have some of the best universities in the world and produce some of the best research and new business ideas. Having the right skills and expertise to enable this is essential to rebuilding our economy.
The government has announced a new network of Technology Innovation Centres to help ensure that new ideas and the right people can come together to enable this vision. I believe that entrepreneurs can find everything they need to fulfil their ambitions in the UK.
7. What more needs to happen to stimulate growth in the SME sector? Are you seeing much progress with banks’ willingness to lend? Are banks somewhat caught in the middle between trying to remain relatively cautious and lending enough to smaller, riskier enterprises?
Small and medium sized enterprises are vital to ensuring growth, and particularly for growth in employment, which means I want to ensure they have the right conditions to do this. This means cutting the red tape that takes up their time and money, so that they can concentrate on developing and growing their business.
One vital component is finance, and we are making progress in ensuring that small businesses have the finance they need to start and grow. Banks have committed £1.5bn to a new business growth fund, to invest in businesses across the UK that need growth capital. While not wanting to replicate the conditions that prevailed before the credit crunch, we want to ensure banks don’t become too risk averse and in particular don’t stop lending to smaller businesses. Complementing that we want to improve competition in the banking sector, and ensure that there a wide range of bank and non-bank options for businesses looking for investment.
8. What are you exploring on behalf of small businesses for next year’s budget?
We recently set out a new package of measures to provide small firms with the right advice, guidance and mentoring to grow. We want to place more focus on improving small business performance and growth, with a greater emphasis on further and better private sector provision..
Already, we have introduced a package of reform to reduce rates of corporation tax. We have also introduced a regional National Insurance holiday worth up to £50,000 for new businesses and extended the Entrepreneurs’ Relief from Capital Gains Tax from the first £2mto the first £5mof gains made over a lifetime. We have increased the point at which employers start to pay National Insurance Contributions, benefiting employers by over £3bn a year from 2011 – 12.
The Growth Review, announced last November, will be looking at what relevant parts of government are doing in a particular area to provide the conditions for private sector success and addressing the barriers faced by businesses of all sizes. We have been working with the business representative bodies to develop a series of action plans; the outputs of which will be feeding into Budget 2011.
9. There’s been mention of reducing or relaxing EU regulations to encourage more angel investment. What, specifically, is required, when will it happen, and what effect do you see it having?
The government has been exploring the landscape of both domestic and EU legislation as part of our wider work on making the UK a more investor-friendly environment. The regulatory regime currently in place rightly exists to protect investors, but we will consider with the appropriate European bodies and agencies whether there is the potential to adjust these regulations to take account of the unique requirements of business angels.
10. What are your ambitions for your current role? If you could achieve only one thing as Business Secretary, what would it be?
There is not one single ambition I have for my role, but I do have some priorities. I want to promote growth, particularly in manufacturing and exporting, and a long term approach to investment and takeovers in companies.
I am also focussed on boosting apprenticeships and freeing up bank credit for business.