The Labour government came to power in Britain last year with one massive advantage: they were not the Conservatives.
After 14 years in office, the Tory party had left the country in a demoralised funk with a housing crisis, weak investment, poor productivity, skills shortages and the tax burden near a 70-year high. Surely things could only get better under Labour, which entered office with a thumping majority and a wave of electoral goodwill.
Apparently not. Britain’s startup community initially cheered the incoming government’s promise of growth, growth, growth. Labour’s excellent pre-election Startup Scaleup report, promising to make Britain the best place in the world to start and grow a business, also raised expectations.
But disillusion has quickly spread. According to a survey released by The Entrepreneurs Network last week, just 4% of founders thought the government understood their needs as entrepreneurs. Only 19% were optimistic about the prospects for the economy over the next 12 months.
The reasons are obvious. Hiking taxes on jobs, via the sneaky national insurance contribution increase on employers, is a big damper on hiring. Imposing tougher employment laws and immigration controls, making it harder to fire employees within the first two years and to recruit foreign workers, also rankles.
Asked if they had a message for the government, one entrepreneur replied: “Don’t make it costlier or riskier to hire new people.” Who (apart from Labour) would have thought it?
There is also the additional concern that Sir Keir Starmer is about as good at scoring goals as a benched Arsenal striker. The prime minister has also conceded a hat-trick of embarrassing own goals: over winter fuel payments; an investigation into the child grooming scandal; and proposed welfare reforms.
His latest climbdown in the face of a mounting revolt by Labour MPs raises big questions about the government’s ability to deliver desperately needed public service and finance reforms. As the FT’s political commentator Robert Shrimsley wrote: “Once you are forced to bend the knee to your backbenchers, you rarely stand tall again.”
This macro-mess is a pity because at the micro level the government appears to be doing several positive things for startups.
Matt Clifford, the co-founder of Entrepreneurs First, has been helping develop a sensible national AI action plan that has been fully endorsed by the government. The former Darktrace chief executive Poppy Gustafsson has injected some much-needed business experience into Whitehall as minister for investment.
And last week Alex Depledge, founder of Resi, was appointed as the government’s first ever entrepreneurship adviser. “This is a chance to rewrite the playbook on how we support entrepreneurs, and I’m here to make sure we take full advantage of it,” she said. Details to follow.
Whatever boost they can deliver would certainly be welcome. And it’s great that organisations like The Entrepreneurs Network and Startup Coalition are lobbying on the community’s behalf. But entrepreneurs might be better advised to focus on the things they can control rather than shouting about things they can’t.
On that score, there were some far more upbeat findings in the TEN survey. Some 67% of founders thought that Britain was an easy place to start a business. Some 69% were optimistic about their own businesses over the next year with many more founders than not expecting to increase headcount, R&D spending and exports.
And, as the Sifted’s latest B2B SaaS Rising 100 Report makes clear, the opportunities to build AI-enabled startups faster and cheaper than ever before are striking.
Entrepreneurs and their allies should certainly keep pressing the government for policy change, and it would surely help if the political winds were at their backs rather than in their faces.
But raging against the government may be rather like complaining about the weather: fun but futile. Britain’s startups may have to hunker down and wait for the storm to pass.
Read the orginal article: https://sifted.eu/articles/uk-startups-labour-policy-complain/
