Small and Medium-sized Enterprises: Government Policy

Baroness Gould of Potternewton Excerpts

Thursday 17th June 2010 Lords Chamber

[Baroness Gould of Potternewton]

My Lords, like other noble Lords, I thank my noble friend Lord Sugar for initiating the debate. I also thank the many organisations that have sent me information. How pleased I am that the noble Baroness, Lady Wilcox, a successful businesswoman herself, is replying to this debate. It is the role of women entrepreneurs and women business owners on which I wish to concentrate my remarks. I want to try in some way to get a guarantee and an assurance that none of the Government’s new proposals will in any way deter women from entering the business world.

There are different categories of women in business, be it self-employed women, women employee-owners or women entrepreneurs. While each category may have different specific requirements they all require differing degrees of initial funding, refunding and support mechanisms. Encouragingly, the support mechanisms we have in place at the moment have meant that all those categories have steadily grown. However, there still appears to be a perception of women as a disadvantaged group outside the mainstream. That generalisation needs to be broken; it perpetuates a feeling of exclusion for some who have yet to reach a level of awareness to see that anything is possible.

The COGS 2009 report, Challenges and Opportunities for Growth and Sustainability: A Focus on Women Entrepreneurs, provides significant evidence which clearly makes the case for a more holistic approach and dispels a number of myths about women’s business. Women invest as much in their businesses at start-up as do men. Women experience similar rates of job and turnover growth to men from when they started. Women’s turnover growth and job-creation expectations are similar to men’s. Women are prepared to work the long hours in order to make their businesses succeed, and they are more likely to appreciate the business support they get from public and private sources and to feel that they are creating intangible value through their companies, as well as tangible value such as market share and company value. Yet all the women who participate in enterprise offer a wealth of untapped talent and economic opportunity, and are crucial to the service and retail industries.

What, then, is the motivation for women joining the business-owning community? According to the Labour Force Survey of 2007, despite general similarities between the reasons given by men and women there are significant differences. Those need to be taken into account. The most notable difference was that women were five times more likely than men to raise family commitments, the freedom to choose their own hours, to work at home and flexibly; conversely, men were almost twice as likely to say that one of their reasons was “to make money”. That was again evidenced by the COGS 2009 survey, which further identified that 62 per cent of women felt a desire to make a difference either socially, environmentally or in job creation, compared to 37.6 per cent of men.

Women-only businesses already contribute significantly to the economy, with an annual turnover of £130 billion, so without question women’s entrepreneurship is an important driver for economic growth, competitiveness and job creation. Stimulating entrepreneurship is an important challenge for the whole UK. More women-led enterprises are needed to increase the stock of businesses and so contribute to economic growth and innovation.

There has, over the past few years, been significant government investment in a variety of initiatives aimed at supporting women on their entrepreneurial journey. Those have ranged from the strategic framework for women’s enterprise to the establishment of the women’s employment task force and the enterprise strategy. Those initiatives were accompanied by funds, some specifically for ethnic minority women; as an aside, it is interesting that women from ethnic minority groups are more likely to be growth-oriented than men in the same groupings. We should take note of that. There is also the Aspire fund, which was launched in 2008 with the aim of co-investing and investing in women-led enterprises through Business Link.

Business Link has substantially increased its reach to female customers and has made a noticeable difference to the number of women in the SME sector. Overall, it is estimated that women-owned businesses accounted for around one-third of Business Link customers in the past four years. This morning I had breakfast with a woman who is now running her own successful business. I said that I would be discussing Business Link, and she said that she could not have started or continued her business without the support that she got from it.

The coalition agreement raises questions: will the Minister clarify what is going to happen to Business Link if the RDAs are abolished? How will the popularity of RDAs be determined, and will their role in developing SMEs play any part in that decision? It is estimated that women account for 40 per cent of customers using government-sponsored business support services. Which services are going to be maintained?

There is a concern that local enterprise partnerships will have a detrimental effect on the expansion of businesses rather than having a regional structure that means that businesses can stretch across the regions in a simple and easy way. Will there be a continuation of any government funding specifically to assist women starters? The outcomes of these decisions are crucial for women who have not been able to raise funding from their own or from external finances such as the banks, as they are four times more likely to access a source of government grants than men.

Of course, there are different ways of funding, both for setting up a business and for its development, but initial support for business start-ups is critical and for many women it will be the first time that they have sought funding, so they will require support and advice. Again, it is Business Link that has provided much of that support and advice. It will be crucial in maintaining women who are starting businesses. Many women have a lack of self-belief, concerns about finance and confusion about red tape. Those are commonly cited reasons for women not launching their own enterprise, so advice, training and networking are essential elements in taking that leap of faith.

Some years ago I did an Industry and Parliament Trust small business fellowship, looking particularly at the development of women ownership. I spent a day at Barclays Bank sitting in on a training session for women who were considering or wanting to develop or start a new enterprise. What was fascinating was that it was almost possible to identify those who would succeed—it was not those who had just had a bright idea and expected others to help them with it but those who had taken advice, done their research, looked for a gap in the market, had a strategy and a properly worked business plan and developed financial skills. The support mechanism to ensure that they have the capacity to look at all the things that contribute to starting a small business is essential.

The advice has to be clearly understood. There are specific issues faced by women in accessing finance in general and risk capital in particular. Again, this is provided by Business Link. I accept, though, that that support, in the form of financial or personal development initiatives, has to be based on whether the businesses are viable, sustainable and scalable.

According to the British Association of Women Entrepreneurs—I am sure it is right—the majority of women entrepreneurs focus not on the fact that they are women but on the fact that they are business owners, and they are not looking for preferential treatment. However, they want mechanisms in place to encourage and guide those who want to make that dramatic change in their lives and become their own boss. I would like to hear an assurance from the Minister that all the initiatives will in no way be cut, so that there will be no way in which women will be deterred from starting their own businesses.