Left behind in the enterprise stakes

May 01 2006 by Brian Amble Print This Article

The UK economy could receive a 580 billion shot in the arm if more businesses were started by women, ethnic minorities and people living outside London and the South East, according to the country's largest employers' group.

However according to the Confederation of British Industry (CBI), attempts by the government to broaden the entrepreneurial base in the country are failing as the most active entrepreneurs continue to be white men in London and the Home Counties.

What's more, the CBI says, demographic imbalances are growing not shrinking.

London has more businesses than Wales, Scotland and Northern Ireland combined and will have 100,000 more than them by 2020 as its start-up rates are twice as high.

Meanwhile, the percentage of self-employed who are women has fallen from 27.8 in 2000 to 26.7 today with 2,733,000 men working for themselves compared to 998,000 women. Businesses started by men, on average, achieve three times the turnover of female start-ups over the first three years.

The percentage of ethnic minorities working for themselves has also fallen from 7.4 in 2000 to 7.0 and is forecast to drop to 6.2 per cent by 2020.

But if the UK as a whole - particularly women and ethnic minorities - set up and grew a firm at the same pace as London and the SE, one million new firms would be created.

If each firm achieved the average turnover for a UK business (a highly unlikely 578,000), this would equate to 580 billion of turnover although as the CBI acknowledges, even a small increase in enterprise levels would provide a major economic boost to the country.

Yet with start-up rates in deprived areas well below the UK average (approximately 37 adults per 10,000 compared to 42 per 10,000) and half of white people believing they have the skills, knowledge and experience to start a business compared to less than a fifth of Chinese and a quarter of Bangladeshis, the goal of increasing enterprise seems as far away as ever.

"There is a huge, untapped well of entrepreneurial potential in Britain which would boost the economy and raise the living standards of millions of people if it could be unlocked," said the CBI Director-General, Sir Digby Jones.

"More women, ethnic minorities and people across the entire length and breadth of the UK, including its most far-flung corners, must be helped with the skills, self-belief and support to start and grow a business.

"Yet the trend is going in the wrong direction and the Government must address the problems and causes to better tailor its efforts to solve them.

"Boosting enterprise requires a tax and regulatory regime that supports risk taking. There must be proper support for businesses, and, perhaps most importantly, the Government should invest in the transport infrastructure to ensure no region of the UK is left behind."