Young Entrepreneurs

Wednesday 18th April 2012 Westminster Hall

11:00

[Justin Tomlinson (North Swindon) (Con)]

I called for this debate on encouraging young entrepreneurs in order to focus our support for business on the next potential generation of wealth creators. During my time as an MP, I have focused much effort on supporting businesses. That is based on my experience of owning my own company and the regular business and retail forums that I organise in Swindon. I myself was a real wheeler-dealer when I was at school—if someone needed football stickers, comics or school lockers, I was their man. I want that type of young entrepreneurial flair to be promoted and supported.

I note that in the debates on business and enterprise, we often do not focus on encouraging young people to consider, as a career path, setting up their own business. When I go round talking to young people in schools and colleges, I find that they are incentivised by incredibly popular television programmes such as “The Apprentice” and “Dragons’ Den”. When I ask them to put their hands up if they would be interested in setting up their own business, the hands shoot up. In many ways, that is the perfect time for people to start their own business. Once people are a bit older and have children and a mortgage, they have a lot to lose. For a young person with a good idea, often the worst that can happen is that they will blow their savings.

When hands are thrust up into the air enthusiastically to show that those young people are keen to follow in the footsteps of those they have seen on “The Apprentice” and “Dragons’ Den”, I ask a follow-up question: “How many of you will take this up as a career?” Immediately, the hands go down, there is a deafening silence and tumbleweed rolls across the room. I ask why that is the case and it transpires that they simply do not know how to turn those ideas and that enthusiasm into setting up a business. It is crucial that we change that, because just over 1 million 16 to 24-year-olds are unemployed and 25% of graduates cannot find work. Many of the graduates who do find work do not necessarily use their degrees; they do not necessarily work in the areas in which they gained their qualifications. In addition, we as a nation are seeking to rebalance the economy.

Those are clear reasons why we should be supporting young entrepreneurs. I am delighted that the Government are right behind that. The decision to create 40,000 business mentors is key. I will come on to that. We have also had the exciting announcement of the £10 million pilot of an enterprise loan scheme that will give young people access to finance in a similar way to the student loan concept.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining the debate. I remember well starting my own company some 32 years ago. I do not claim to be a wheeler-dealer like the hon. Gentleman; nevertheless, we managed to succeed. Does he agree that although it is important to encourage young entrepreneurs, we need to get to grips with the issues of financing young entrepreneurs and the bureaucracy and form-filling that they have to go through, which puts many young people off?

[Justin Tomlinson]

I thank the hon. Gentleman for his intervention and for being someone who took the plunge and set up his own business. I will say that when I was at school, not all my businesses went according to plan. A thriving comic business was thwarted when my friend William’s yoghurt pot exploded in his bag, destroying our entire back collection of comics, so we do not always succeed. The hon. Gentleman is right, and I want to focus later on some of the ways in which we can help people.

With regard to schools and colleges, I want as many schools as possible to encourage entrepreneurial opportunities. That can be done in a variety of ways. For example, there are a number of courses that schools could offer students. Those courses include the ifs School of Finance certificate and diploma in financial studies and the finance baccalaureate being piloted at King Edward VI college in Stourbridge, backed by the Royal Bank of Scotland. They are examples of where young people can do courses to encourage entrepreneurial flair. In some schools, that could be an appropriate way to encourage it.

We should also get schools to embrace the opportunities given to them by the fantastic young enterprise scheme. That gave me my first proper taste of running a business while I was at school. I understand that 250,000 students a year have the chance to try their hand at making money. I want to encourage every school possible to take that up and give their young people that brilliant opportunity. We should give students the chance to do that and we should also support them by getting lots of mentors who are connected to the school to support the young enterprise scheme. For example, a simple letter could be sent to all the parents saying, “Are any of you business people? Can you come and help with the young enterprise scheme?”

[Anne Marie Morris (Newton Abbot) (Con)]

I entirely endorse what my hon. Friend is saying about the need for support and for mentoring. Is he aware of the work that NACUE, the National Association of College and University Entrepreneurs, is doing? With regard to the point that he is making about schools, does he agree that similar support needs to be provided as people exit schools? This issue should not be considered only when young people are leaving universities and colleges. The concepts of mentoring, advice and business incubators should be considered at school, not just at university.

[Justin Tomlinson]

I thank my hon. Friend for that very helpful intervention. I will refer to that organisation later, but she is spot-on, because what I will talk about in relation to universities can be replicated to boost the young enterprise scheme.

I have seen a number of young enterprise schemes in action—partly when I was a student myself, but also while visiting schools and colleges since becoming an MP. I have only one slight issue with some of the schemes that I see. They are set up so that young people raise money from their friends. They sell goods to their friends—they know what their friends want to buy—and they sell them in their friends’ environment. That means that they can cash in a favour, as it were. They can say, “Look, I’ll go to the cinema with you on Friday if you’ll buy my T-shirt off me today.” That is great, but I want young people to have more real-life experience, so I have struck up a deal in my constituency with the Blunsdon indoor market. That is a challenging market environment in which price is key and the customers are very savvy about haggling.

New college, in the South Swindon constituency, which many of my local students attend, is involved. The young people will take their young enterprise business and have three days of trading—a Wednesday, Saturday and Sunday. They have to comply with strict rules. If they have not set up their pitch by 9 in the morning, they lose that day’s trading. They get only a table, so they have to dress that table up, but of course if they get too carried away with that, they will have no money left and will not make a profit. They have to do research to see which products are already being sold, where the gap in the market is and what they can do. They have to stand on their own two feet—and trade on their feet all day long. They have to be able to do mental arithmetic, because the customers will haggle. This is something in which the local media are particularly interested. I am delighted to say that the market will then identify the businesses that do well and say to them, “You can come back in the summer holidays at a discounted rate.”

That scheme could be the first door opening to young people starting their own businesses. The owner of the Superdry clothing company started on a market stall and is now turning over £165 million a day. The Mary Portas high street review said that every town centre should have market stall days, although there are not enough market stall traders. I have now asked Swindon borough council to identify which retail premises in the town centre it cannot lease out at the moment in order to look at giving short-term leases to allow young entrepreneurs just to dabble. Those types of short-term contract can always be found in office blocks. People pay a little more rent, so they would do it only short term, but it enables them to test the water. We need to see the same in retail. I hope that the concept involving New college and Blunsdon market will be a success and provide a model for others to follow.

Turning to universities, I did a business and marketing degree. There were 350 of us and, to the best of my knowledge, I am the only one of those 350 who went on to set up their own business, which ultimately employed people, which is what this country needs. That is in part because 29 of the 30-odd modules that I did focused my mind on how to be good on the corporate ladder. My work placement year was spent in the corporate environment. Entrepreneurial risk taking and flair was in a way educated out of me.

On that point, my old university was Oxford Brookes and I am delighted to say that having met some Virgin Media pioneers—I will say more about them later—they showed me some of their peer-to-peer mentors and I stumbled across Rebecca Hunter, the vice-president of the Oxford Brookes society for entrepreneurs. This scheme has been set up at a number of universities across the country by NACUE, the organisation highlighted by my hon. Friend the Member for Newton Abbot (Anne Marie Morris). It is a fantastic scheme. I spoke to Rebecca last night and asked her how it works. She told me that there are 3,000 people on the mailing list at Oxford Brookes university and 600 people attended the events last year. It is about business mentors coming in and giving people practical advice. The best part is that a number of the students involved in the society are already operating their own businesses. Some are doing so to pay for their university costs and some are setting themselves up for their lives post university. That is absolutely fantastic, and I would urge as many universities as possible to make time available for these things and to encourage people to do them. When it comes to the work-placement years, we should look at how students can run their own businesses, rather than simply be a marketing assistant in a sandpaper department, as I was.

I have been absolutely overwhelmed by the number of fantastic outside organisations that are doing their bit to support young entrepreneurs. I do not have time to mention them all, so I will pick just a few. Perhaps surprisingly, the first is the Scouts. My fiancée, Jo, and I had the pleasure of being invited to act, in effect, as “Dragons’ Den” business mentors and advisers to the Stratton St Margaret first scout group. The entrepreneurs badge is new, but 10,000 children have already taken it, and I am delighted that my hon. Friend the Member for South Swindon (Mr Buckland), who I share an office with, will be encouraging his son, George, to take it as soon as he joins the Scouts.

I learned two things from my experience. First, the kids absolutely loved doing the badge. They spent the first three weeks raising money. In a similar way to people on the young enterprise scheme, they came up with their business concepts. There were two teams, which Jo and I had to judge. They were both very creative. Indeed, as soon as we arrived, the first team said, “You look thirsty. Can we make you a cup of tea?” Spotting a way to influence our decision, the second team then said, “You look hungry. Here’s a cake.” That worked, and we were impressed.

We had to choose which team was likely to be the most successful, and that team was then given a £50 boost. The teams’ ideas were brilliant. We were able to advise them. For example, one team had secured a pitch in front of the big screen in the town centre. The team was really excited, but I asked what would happen if it rained, because the pitch was not properly covered. That was the sort of advice the teams needed before they started.

I also met people from Virgin Media Pioneers, a brilliant scheme that allows young people to upload videos asking questions and seeking advice from other young people taking their first tentative steps into business. The scheme is a wonderful resource. I took time to look at some of the videos and at some of the questions people were asking. Underneath, there were reams of comments and helpful suggestions. The person who asked the original question would come back and say, “Thank you. That’s what I’m going to try.” I am delighted that such things are there, because young people get technology.

On Monday, I met Miles Jacobson, the main guy at Sports Interactive. For those who are not computer geeks, like myself, I should explain that Sports Interactive creates Football Manager, which sells more than 1 million copies a year. We had a good, productive meeting, at which we talked about how easy it is in theory to get young people to start technology businesses creating apps and computer games. Miles Jacobson believes that, for as little as £10,000, people can have all the licences and equipment they need to get going. We are looking to embrace high-tech industries, and the one thing young people certainly understand are the mobile phones we all carry around and get confused by. I therefore encourage the Government to look at that issue.

In summary, I want to highlight my three key requests. I have met so many young people who are keen to be entrepreneurs, and they just need that extra bit of help. I welcome the provision of access to finance, but the single most important thing we can do is provide mentors and advice. Where there are opportunities such as those offered by the young enterprise scheme and the Scouts, they should be built on. These things are not simply fun exercises that can be put away and forgotten in the back of people’s minds. People who take part in such schemes should be told, “You’ve done really well. This is your No. 1 choice as a career path. You should think about it.”

I want the Government to do everything they can to accelerate the delivery of the business mentor programme, to encourage the organisations that take part in it, such as Virgin Media Pioneers, and to give young people the opportunity to access the programme. I also want Ministers to do all they can to encourage schools, colleges and universities to promote the opportunities offered by entrepreneurial schemes, which give young people real life experience.

Finally, I make a direct plea to the Minister. I want him annually to celebrate and highlight the best young entrepreneurs from across the country and to support the organisations that help them achieve what they do. In that way, we—the key decision makers in Parliament—will understand these issues, demand support for those involved and push entrepreneurism as hard as we can as a real career path for young people.

11:14

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I congratulate my hon. Friend the Member for North Swindon (Justin Tomlinson). I was not quite as successful as he was in my wheeler-dealer days. At one point, I did corner the market in Curly Wurlys, but I should perhaps cast a veil over that. It was only a couple of years ago—actually, I am teasing.

What is exciting when we engage with young people is that we immediately see their sense of inspiration when they realise they can make money by understanding the people around them, by thinking laterally and by solving problems. Those are really important skills, whether or not they go on to become the next Sir Richard Branson. I really like the market idea that my hon. Friend highlighted. I would like to have a closer look at it with him, because I think it sounds like an exciting initiative that we will want to talk to market traders and others about. The Scouts initiative is great. I was aware that the Scouts were doing that. We should not assume that it is only college and university students who do these things; often, it is the youngest students who recognise that the moment they become their own boss is important.

Before I come to the question of young enterprise, however, let me go to what for me is the heart of the broader debate. Enterprise and entrepreneurship are vital to the economy, but they also have an important social message. “It doesn’t matter what your background is or where you went to school. If you have ability, ambition and the will to work, you can be your own boss and make your own fortune,” is a really powerful message, especially for the next generation. I applaud my hon. Friend’s work because in addition to what the Government are doing, all of us as Members of Parliament have a useful role to play in encouraging young people to see the range of opportunities before them. Even if people go into a salaried career for the first 20 years of their working life, many of them will still have those opportunities in the back of their mind. If they are shown what paths there are when they are young, their chances of progressing down them will be much greater. The number of start-ups in the UK is an encouraging sign: between 2003 and 2010, the number of business start-ups was static, but last year it jumped. I look at those numbers and see an encouraging shift in people’s ambition and aspiration to start their own business.

Alongside conventional economic reforms, we have tried to ensure that people have, as my hon. Friend said, the tools to turn their dream into a reality. We started by reforming all the business information the Government provide, putting it in a usable form and making sure it is where people want it, when they want it. We are looking to develop it in an app-based form, which is especially important for young people. We then looked to establish the principle of mentoring and money through the new enterprise allowance, mirroring what the Prince’s Trust has done in the past. That is important, because it will help unemployed people to become self-employed, creating up to 40,000 new businesses.

The broader question is how to get the advice right. I am absolutely committed to the principle of good business mentoring. That is why we have replaced the 1,600 state- paid business advisers with real business people: we have not even got to the end of the first year of the Mentor Me programme and 15,000 such people are already in place and helping many others to start businesses. We want to increase their number to 26,000 this year and, yes, we aim to get to 40,000, but I want make sure we get the quality right. I have that target in my mind, but I want to make sure that I do not race for 40,000 and get the quality wrong. That is an important issue. Mentoring is absolutely fundamental.

I want to focus on helping young people in particular. I will come to the enterprise loan for young people, but I cannot talk about start-ups and enterprise without briefly mentioning the importance of being able to access finance. That will never be easy following the 2008 crisis, but we have tried to think about it in the round. We are trying to improve debt finance and ease lending, which is what the enterprise finance guarantee and the national loan guarantee scheme are about, but we also need to think about the use of the tax system, and that is what the enterprise investment scheme is about. A key measure is the development of business angels, which to my mind are the logical next step for business mentors. If we nurture the community of mentors, we are more likely to generate more business angels, so alongside the mentoring programme, we are also putting in place the co-investment fund to expand the number of business angels, so that we get an underlying network to help people to start up.

What can we do and what are we doing to help young people to turn a bright idea into a real venture? Enterprise education has real benefits. My hon. Friend mentioned the young enterprise scheme; the evidence that it and other such programmes have produced shows that in almost every case when people engage in enterprise education, the proportion who actually start up a business doubles. However, there is an added benefit: even those who do not immediately go on to start up often demonstrate a greater appreciation of those skills and are better able to fulfil their career potential, so that they may go on to become successful in a salaried career. In other words, such education helps people to reassess what they are capable of and gives them the confidence to think in the round.

We have tried to foster enterprise education across the education system. Hon. Members have all said, “Let’s not just think about universities. Let’s think about schools, colleges and universities.” That is absolutely right, and that is why we are doing work in each of those areas. We want to enable most students, wherever they are in the education system, to learn about the opportunities and practicalities while they are still in learning. In schools we have established Enterprise Village, an online resource that has been up and running for the past few months, which aims to help teachers and students to start a business in the school. The Norwegians are good at that, and have established a principle of running a business in every school. We want to foster and encourage the same here. The importance of role models at local level was rightly mentioned, and alongside the Enterprise Village programme we have established Inspiring the Future, an army of 2,500 business champions or local entrepreneurs who fulfil an ambassadorial role in a formal sense, but, more important, provide inspiration. Those two elements are very important.

We have also thought about those who are struggling on the edge of the school system, and we were delighted to support the Premier League Enterprise Academy, a good programme that uses the draw of premier league clubs to get young people engaged in the process of entrepreneurship. We should not ignore a fact that I discovered by accident a few years ago, which is that many entrepreneurs struggled at school far more than the average student. Routinely, if I were to ask a group of entrepreneurs whether they had dyslexia or significant problems at school, about 40% would put up their hand. Whether that is because entrepreneurs are wired differently, or because the struggle at school made them entrepreneurial, I do not know. I do know that we need to think about that side of people’s learning alongside the conventional academic route.

My hon. Friend the Member for North Swindon took us on a wonderful trek through his educational and entrepreneurial career, and he rightly highlighted his university experience. I am a few years older than he is, and when I was at university the clubs, societies and networks were not oriented towards business—and I was doing a vocational degree. I felt strongly that we needed significantly to expand opportunity during learning, regardless of the subject students were taking—so not going down the exclusive business school route, but saying, “I don’t care whether you are studying land management or classics: you have the opportunity to be part of an entrepreneurial network on campus.” While my party was in opposition, I came across the nascent National Association of College and University Entrepreneurs, which in government we have been able to turn into a formal charitable group. This year we will put more than £1 million into NACUE, to make sure that the number of entrepreneurial clubs goes up from 40 or 50 to 90 during this Parliament. That is important, because they are not just clubs: they are the focal point for setting up competitions and other entrepreneurial opportunities, and for bringing in the other things that universities can do, such as establishing incubators, which has rightly been highlighted. I have seen that for myself at the university of Hertfordshire, where a youngster in his first term started a photography business. He has a space there and is studying, learning and earning. That is a wonderful combination, and, my golly, he is a mature and capable young man.

We want to make sure that alongside such programmes we build other networks, because where entrepreneurship really flourishes is where people group together and then bring in people with the business finance. It may involve academics, who have an invention that they are not sure how to commercialise. That fusion—whether in silicon valley or, indeed, Boston—lets people really make things happen. That is why we have actively been supporting such programmes as StartUp Britain, involving people who are dynamic, engaged, and of the relevant age group. They see universities as a place in which to put their business, although they may be well past the university stage. What I think of as a sort of entrepreneurial ecosystem is bringing finance, invention and the entrepreneur together. That is where we find the best opportunity.

We also wanted with NACUE to think not just about our friends at universities, but about the many people at further education colleges. We should not ignore the fact that if we help young people to gain a trade or craft that is crucial to the economy and to their ability to earn, we need also to ensure they know how to be self-employed in those trades and crafts. That is why, partly at the behest of Doug Richard, who bent my ear on the subject, we have also given NACUE the task of rolling out entrepreneur clubs to about 160 campuses by the end of this Parliament, so that we will be dealing with schools, universities and colleges.

My hon. Friend mentioned finance, which is important. It is especially challenging for young people. When I was a mentor for the Prince’s Trust, I learned that the combination that we often see in the context of micro-loans—money and a little grey hair—is the mix that helps a business to succeed, especially over a two or three-year period. We wanted to get the infrastructure ready on college campuses and so on, and then think about the finance side, and that is why we announced in the Budget a £10 million programme, to which my hon. Friend alluded, to provide enterprise loans to 18 to 24-year-olds. In a sense that mirrors what is available in the market for other entrepreneurs, but it is an exciting concept because it will provide the means to take a nice idea that needs to be tested in the market through to a business plan, and then on to becoming a real business. I can tell the House that we will start the pilot next month, and this morning I had a meeting with many of the private sector partners who want to participate. I am particularly grateful to Lord Young, who has been leading on the matter and advising the Prime Minister and the Government. He has brought real enthusiasm and energy to the work.

On a broader point, my hon. Friend mentioned the need to engage lots of people, and I have always taken the view that the Government’s job is not to try to run all this. If we did try, we would do it badly. We want to create the environment in which a thousand flowers can indeed bloom in the entrepreneurial community. That is the nature of entrepreneurs. Some will fail, and some will not. Some will bloom and go to great heights, and others will nearly disappear but come back next year. That is fine. That is why, to celebrate entrepreneurship, we have taken the concept we inherited of the global entrepreneurship week—it started in this country and now encompasses more than 120 countries—and set the ambition of having an entrepreneurial week every week. I have got together all the different entrepreneurial partners in Young Enterprise and beyond to produce something that is more focused and that builds on the things that Young Enterprise, the Prince’s Trust and many others already do. That is what StartUp Britain is doing, in part, through the year-long calendar it has just launched, which shows people the fantastic array of events taking place in this country. We are the most entrepreneurial country in Europe, but I want us to be the most entrepreneurial country in the world. We have to make sure that we help young people in that process.

I am excited by the ideas that my hon. Friend suggested. In a way they reflect the broader activity that is going on in many of our constituencies. Entrepreneurship is a positive message for young people. Our job is to enable all students, whatever stage they are at in their school or university career, to get access to the right information, advice and networks, so that they can take their bright idea and turn it into a successful business for the future.

11:29

Sitting suspended.