Women Entrepreneurs

George Freeman Excerpts

Wednesday 18th March 2015 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (George Freeman)]

It is a pleasure to serve under your chairmanship, Mr Robertson in the closing phase of this Parliament. I congratulate the hon. Member for Feltham and Heston (Seema Malhotra) on introducing this debate on Budget day—an important day, when attention will be rightly focused on the Government’s initiatives to support business and entrepreneurship. As a Business Minister, it is a pleasure to be here and to be able to respond to the debate. I pay tribute to the Members who have spoken today. We heard powerfully from the hon. Member for Strangford (Jim Shannon) on some of the good practice in Northern Ireland. I was there recently celebrating and supporting the Northern Ireland life sciences cluster. He made a powerful point about the importance of rebalancing the Northern Ireland economy from public to private sector and the role of women entrepreneurs in that. He also made an important point on mentoring—I would be interested to look at the scheme he mentioned—and also touched on child care.

The hon. Member for Feltham and Heston made a number of points and I will try to deal with them in my speech, as well as to answer some of her specific questions. I pay tribute to the large number of women who have contributed to the driving of the agenda outside this House. A number of pioneering entrepreneurs and women in policy have been mentioned today. It is another area where more needs to be done. I am proud of what this and the previous Government have done, but the Government agree that we need to keep our foot to the pedal and keep at it.

I particularly thank and congratulate those behind the Aspire fund, the taskforce and the Women’s Business Council for their work. The subject is close to my heart, partly because I have a 14-year-old daughter whose career I take a close interest in, and partly because I come from a 15-year career in the entrepreneurial sector in Cambridge and elsewhere around the country starting high-growth technology companies, particularly in the life sciences. In that sector, I am glad to say, there is a proud record of women achieving very highly both in our larger companies—I recently met a delegation from GlaxoSmithKline, and Members will be delighted to know that all five representatives were women—and in the smaller companies. There are huge opportunities for women in life sciences, both at the bench and in driving small businesses.

Women and entrepreneurship is also an area of interest from a policy point of view. Through the 2020 Conservatives group, I have set out a number of measures on how, in driving the rebalanced economy and the long-term economic plan, we have to liberate the entrepreneurial talents of all our citizens, and in particular reach into those areas where we have not properly unleashed them before. It is clear from what Members of all parties have said this morning that there is a lot of latent entrepreneurial talent in our female community. In our inner cities and our black and minority ethnic communities, there are incredible rates of entrepreneurial activity that we have not recognised, properly reached into and supported. Family finance supports a lot of our small businesses in some very business-hostile environments in some of our inner cities.

In the public services—before the shadow Minister leaps to her feet, I do not mean privatisation—we should unleash the spirit of entrepreneurship and the talents of people in the public services to deliver more for less. The economy nationally needs a strong focus on unleashing that spirit of enterprise. That does not always mean for-profit or very acquisitive, venture capital-backed businesses; it means a culture of delivering more for less and innovating. We need that to modernise our public services and to continue to drive the recovery that we are leading. The subject is close to my heart, and on Budget day it is close to the Government’s mission more widely.

The truth is that small businesses are the lifeblood of our economy. Every village, town and city in Britain contains shops, garages, cafes, manufacturing firms, hairdressers and so on. We take those small businesses for granted, but they are backed by enterprising and hard-working people who are taking risks to run those businesses. Responsible society depends on the ties that bind us, and as well as the economic benefits it brings, an entrepreneurial, small business economy does something else: it builds the ties and social capital that link communities.

[Jim Shannon]

The Minister is making a powerful response, saying what he feels he can do. One of the growth industries in my constituency and across the whole of Northern Ireland, particularly among ladies, has been the craft industry, where there are special talents and the ability to create products for sale. The Minister mentioned shops, small businesses and restaurants and so on, but the craft industry could release enormous talent and job opportunities across the whole United Kingdom. What are his thoughts on that?

[George Freeman]

The hon. Gentleman makes an important point. I was about to talk about the importance of small business in driving innovation if we want an innovation economy. Small businesses tend to be quicker to adopt innovation and to drive it. They are a force for insurgency in the economy. In tourism and crafts, we should not forget that small businesses are important in our theatre, media, digital and tourism sectors. A culture of empowering people and unleashing the talents of women in every walk of life is incredibly important if we are to build a diverse and strong economy and a strong and linked society.

That is why I am absolutely delighted that the UK is a truly great place to start a business. This year we have seen data confirming that 760,000 small businesses have been created in this Parliament since 2010. We are backing business every step of the way, making it easier to start, succeed and grow. We will hear about more such measures in the Budget later today, I have no doubt. I am delighted, too—but not complacent for a minute—that in 2013 there were more women-led businesses in the UK than ever before: 990,000 of our SMEs were run by women or a team that was more than 50% female, an increase of 140,000 since 2010. We know that more needs to be done, and we need to build on that positive momentum. I am also delighted that in the UK, women-led small businesses are contributing £82 billion to the gross value added of the UK economy.

Before the debate, I looked at the latest data, which are even more encouraging. The data from the Office for National Statistics for October to December 2014 show that there were 1.45 million self-employed women in the UK, which is 42,000 more than in the previous quarter and 281,000 more than in May to July 2010. Some 672,000 of those self-employed women were working full time and 778,000 were part time.

I pay tribute to the work of the Women’s Business Council and the important policy work that it has done and intends to follow up. It has rightly, as a number of Members have highlighted, pointed out that if we had women starting businesses at the same rate as men, we would have up to 1 million more entrepreneurs. That is a good reminder of the latent potential that we need to continue to drive at.

One or two Members asked about the Government’s commitment and which Minister is responsible for this. I am delighted to say that a number of Ministers are responsible. The Minister for Business and Enterprise leads on enterprise policy for the Government. The Secretary of State for Education is also the Minister for Women and Equalities. The Under-Secretary of State for Women and Equalities at the Department for Education is also an Under-Secretary of State for Business, Innovation and Skills. They are all working to develop joined-up policies with the Government Equalities Office. We take it seriously as part of our commitment to social justice and to the long-term economic plan.

Research by the Enterprise Research Centre has shown the challenges that confront women entrepreneurs, but in many ways they are similar to those facing men.

[Seema Malhotra]

The Minister has acknowledged the important work that the Government Equalities Office has been doing and the different Departments involved, but he has not been so clear on who is actually in charge of the policy area. Having many people involved is good, but who is in charge? Also, he has not mentioned what plans the Government might have for the Women’s Business Council and whether they think its role needs to be strengthened. Should it be looking at more diverse aspects of business? Should it be put on a statutory footing?

[George Freeman]

With eight days of this Parliament left, perhaps I could undertake to write formally to the hon. Lady to confirm the various initiatives that we have running. I assure her that if this Government are returned on 9 May, we will continue to keep our foot to the pedal and drive on this agenda. She would not expect me to commit now to what that might look like, given the uncertainties that we all face.

A number of colleagues mentioned access to finance, which is rightly regarded as a major obstacle preventing women from starting and growing a successful enterprise. It is worth pointing out that access to finance is an issue for all businesses, but although it is in many ways gender neutral, the truth is that women perceive higher financial barriers and the evidence shows that they are more likely to be discouraged, particularly by some forms of borrowing. Sources of finance for male and female-led businesses are similar, but studies show that women-owned businesses start with lower levels of overall capitalisation, use lower ratios of debt finance and are much less likely to use private equity or venture capital.

Encouraging women to start their own business is a key part of our long-term economic plan, which his why we have put in place a range of Government initiatives to support women. Through the GREAT website, we have brought together in one place all the relevant Government advice, guidance and support, but there is more to do. I am delighted that, this week, we in the Office for Life Sciences have redone our business support portal to make navigation easier for those outside the system. The Department for Business, Innovation and Skills has also launched a range of new measures, including a new web page specifically aimed at potential and existing female entrepreneurs.

The Government’s “Business is GREAT Britain” campaign has been highly effective at making small businesses aware of the range of support on offer to help them to grow. Specifically for women, we have committed additional funding to understand in communications terms the particular challenges that female entrepreneurs face, and we are making sure that existing activity is widely promoted among women. We have managed to match up experienced business women with those new to enterprise and invested £1.9 million in the “Get Mentoring” project—a number of colleagues mentioned mentoring. That project has recruited and trained more than 15,000 volunteer business mentors from the small business community, 42% of whom are women, I am delighted to say; that is more than 6,000 mentors trained specifically to support female entrepreneurs. Owing to the success of that project, the Government recently announced an extra £150,000 to host 12 “Meet a Mentor” roadshows throughout the UK for female entrepreneurs.

[Seema Malhotra]

The Minister mentioned the GREAT Business website, which I referred to, and said that it has been successful in raising awareness among small businesses. Has there been any formal evaluation of how successful it has been?

[George Freeman]

The process of evaluating the BIS portals has been taking place only in the past few months. Perhaps I could come back to the hon. Lady with the latest details of that assessment.

[Stella Creasy]

Will the Minister give way?

[George Freeman]

If I can just finish this section of my speech, I will happily give way.

We have invested in the women’s start-up project to provide opportunities for young women studying in the creative industries and the leisure and tourism sectors to start their own businesses. This pilot project, in partnership with Young Enterprise, will see the Government provide funding of up to £50,000 for teams of young women aged 19 to 24 studying at undergraduate level to set up and run their own businesses. We have also provided £2 million for small grants of up to £500 for those wishing to set up new child care businesses—help with child care is of course a major part of support, and I will say more about that in a moment. In the autumn statement, the Chancellor announced that that scheme would be extended until March 2016, with a further £2 million made available for next year.

As a number of colleagues have mentioned, we have provided a £1 million women and broadband challenge fund to help women to move their business online and take advantage of superfast broadband. Sixteen local authorities have been awarded a grant to support actions to encourage women’s enterprise in areas where superfast broadband is being deployed. I want to touch on the particular challenge faced by women entrepreneurs in rural areas such as my own.

[Stella Creasy]

Will the Minister give way?

[George Freeman]

I will just finish my point, then I will give way.

The Government are actively addressing a number of additional barriers for women in rural areas. We have provided £1.6 million to support women’s start-ups in rural areas, including improved access to transport links, virtual assistants for those in the most remote areas, online help, and local business support through mentoring, skills training and networking.

[Stella Creasy]

Before the Minister moves on from discussing Government support to women’s business, I want to press him on the Aspire fund—I hope that he has just received a note on it from his officials. He mentioned a number of different pots of money that are being given out to support women in business in various ways—for example, the broadband challenge. The Aspire fund was set up with £12 million to support high-growth women-owned ventures, but six years on, only £4.7 million has been invested. Will he say more about why that is the case and what the Government are doing to reduce the gap? If that money is there to support women’s business, surely we should ensure that it gets to women in business.

[George Freeman]

With her typical prescience, the hon. Lady anticipates the next paragraph of my speech. We recognise that the sector needs particular support, which is why we are so keen on the Aspire fund, which makes equity investments of between £100,000 and £1 million on a co-investment basis and is designed to help female-led businesses that aim to grow. The fund invested £1.3 million and supported £5.5 million of investment in 2013-14, and it has a total of £12.5 million to invest.

It is worth remembering that the fund was not intended to fund a large number of businesses; it is there as a beacon project to support women-only businesses and catalyse the sector. I am delighted that we have also made additional investment available to businesses led by women, as well as those led by men, through the £100 million business angel co-investment fund. We must not forget that although we are catalysing and driving women-only entrepreneurs, the whole range of business support mechanisms we have put in place—including the seed investment enterprise scheme and the expanded enterprise investment scheme—are all available to women entrepreneurs.

[Stella Creasy]

Will the Minister give way on that point?

[George Freeman]

I just want to finish this point about funding.

Without the right funding, it would be hard for anyone to realise the potential of their ideas. The Aspire fund is one of a much larger range of measures. Women are also benefiting from the full range of start-up loans and the new enterprise allowance. More than 25,000 loans worth more than £160 million have now been made, with 37% going to women. The 25,000th loan was given to a female entrepreneur.

To help more parents to start their own business, from autumn 2015 tax-free child care will be available to nearly 2 million households to help with the cost of child care. That will enable more parents to go to work and, unlike the current scheme—employer-supported child care—it will be available to self-employed parents.

[Stella Creasy]

There is a £7 million gap between the £12 million that has been made available for women’s businesses and the money that has actually been drawn down. I take the Minister’s point, and I am not suggesting that that is the only funding available for women entrepreneurs, but compared with other Government-led schemes, there is a substantial disparity. Why does he think that is? Why has the Aspire fund not been able to lend at the same rate as the other available start-up funds? Will he commit the Government to monitoring across the piece the gender of those to whom they are lending through start-up schemes? The Government have not always monitored that, but they must do so to truly understand what we might have to change about finance for women to ensure that they all get the support that they need.

[George Freeman]

It is important to realise that we do not want the investment funds that take equity stakes simply to shovel the money out of the door irrespective of the quality of the bids. The decisions have to be based on proper investment criteria, and it is not for me or the hon. Lady to second-guess such judgments. I am pleased to see that after an initial period during which the rate of investment was slower, it has picked up. We are actively monitoring and supporting the fund, and our ambition is for it to be spent and invested, but it is important that we send a signal that the money is going into high-quality business propositions.

As we have all acknowledged this morning, there is a challenge in trying to observe the wider cultural point made by my hon. Friend the Member for Cambridge (Dr Huppert). He said that we must promote world-class, aspirational, high start-up businesses that are capable of receiving that sort of venture capital. It is not for us to signal that the money should be pumped out of the door irrespective of the quality of the bids. It is for the fund manager to ensure that they are picking the right investments.

I have tried to be generous in giving way, but time is running out, so I want to complete my remarks. For all the reasons I have outlined, and because we agreed that we must do more, in April 2014, my right hon. Friend the Secretary of State appointed my hon. Friend the Member for Solihull (Lorely Burt) to the role of women in enterprise champion, to promote the support available to women starting a business. In February, she presented her report on how the Government could boost support for female entrepreneurs, and we agree with much of the thinking and analysis it contains. I cannot be expected to commit the Government to agree with every single one of the recommendations, but we are actively looking at them and working on an implementation plan.

I want to pick up on some of the comments. My hon. Friend the Member for Cambridge focused in particular on science and start-up companies. I join him in paying tribute to the people in the high-tech and life sciences sector, which we both know well from Cambridge, and to entrepreneurs such as Julie Deane of the Cambridge Satchel Company. He made a number of interesting points about cultural attitudes and the need to ensure that, in what can sometimes be the quite macho world of finance, the quality of women entrepreneurs and of women in science is properly recognised.

My hon. Friend also talked about the importance of getting schools better connected to businesses. We can all do something about that in our own constituencies. Tomorrow night, the Norfolk Way is launching our first innovation awards for Norfolk, linking up science teachers and students in schools with local businesses in the area. He made an important point about 8% of venture capital funding but 41% of crowdfunding going to women-led businesses. That sends a signal about the power of some of the new financing mechanisms to support women’s businesses. Although the Enterprise Research Centre has shown that there are no specific obstacles to access to finance for women, strong perceptions have a powerful effect, and that is something we need to monitor.

My hon. Friend made a particular point about STEM. Since 2009-10 the number of women starting engineering in manufacturing apprenticeships has increased threefold, which is a real success for the coalition’s apprenticeships policy in that we are getting more and more women in the STEM subjects. More action is necessary, but with the apprenticeship ambassadors STEMNET programme we are making progress. The Your Life “Call to Action”, part of the campaign launched by the Chancellor and the Secretary of State for Environment, Food and Rural Affairs, has brought together employers, educators and the professions to make concrete pledges to increase the number of women in engineering and technology. I am delighted that more than 200,000 organisations have now pledged to create in excess of 2,000 entry-level positions, including apprenticeships, graduate jobs and paid work experience posts, as well as action to support their female work force.

[Dr Huppert]

The hon. Member for Feltham and Heston (Seema Malhotra) talked about mentors and I could not remember a name. I hope that the Minister will join me in congratulating Roma Agrawal, who worked on the Shard and has a website, romatheengineer.com, which promotes females going into engineering.

[George Freeman]

I absolutely join my hon. Friend in paying tribute to another beacon project that is sending out such a powerful signal to girls and women about opportunities available to them. I am delighted, too, that we allocated a further £20 million in the engineering skills fund to help employers to tackle skills shortages in engineering, including to develop women engineers.

Finally, my hon. Friend made a point about enterprise education. I am delighted to confirm that we are working actively with schools, colleges and higher education institutions to encourage and promote entrepreneurial attitudes and skills training, as well as providing mentors and role models and improving access to finance support.

I want to deal with the questions about child care and women on boards. A number of colleagues asked about child care support. The Government have increased the number of funded hours of free child care from 12.5 to 15 hours a week for all three and four-year-olds, saving families an additional £425 a year per child. Since September 2014, we have funded an additional 15 hours a week of free child care for the 40% most disadvantaged two-year-olds, saving families £2,500 a year per child. We have also increased child tax credit well above inflation to £2,780 a year, which is £480 more a year than at the beginning of the Parliament. All families under universal credit will be able to receive 80% support for child care costs, which is up from 70% under the existing working tax credit system. The introduction of tax-free child care could also save a working family up to £2,000 a year per child. In addition, we have committed an extra £50 million to introduce a new early years pupil premium in 2015-16 to support the most disadvantaged three and four-year-olds to access Government-funded early education. That is important if we are to support our entrepreneurs and innovators in all walks of society and to ensure that entrepreneurship is not the preserve of the well-off.

Women on boards is an important subject. A lot of our entrepreneurial companies do well and go on to become substantial, significant companies quoted on the stock market. We are ensuring that, at that point, women continue in leadership roles. Following Lord Davies’s recommendations in the 2011 “Women on boards” report, the Government are committed to achieving the target he set for the end of 2015 of 25% of FTSE 100 boards being women. We also want to increase the number of women on FTSE 250 boards. The graph that I have in my hands shows a line slowly climbing from 2004 to 2011, but then turning sharply upwards, going from 12.5% of women on the boards of FTSE 100 companies to 20.7% at the end of 2014. We are making a real impact and we must continue to do so. I am delighted that now 22.8% of FTSE 100 board members are women and that women now account for 28% of FTSE 100 non-executive directorships and 8.5% of FTSE 100 executive directorships. There is much more to do, but we are making real progress.

[Stella Creasy]

Does the Minister share the view of his colleague, the Minister for Business and Enterprise, that it is unacceptable that boards are only appointing women to non-executive positions and that what we need therefore is a target not only for women on boards, but for women in decision-making positions? Also, will the Minister answer the questions about the Women’s Business Council and about the supply chain? It would be incredibly helpful to hear his response on those issues as well.

[George Freeman]

I do share the ambition and desire of my fellow BIS Minister, my right hon. Friend the Member for West Suffolk (Matthew Hancock), to see a continuing increase in the rate of women being appointed to the boards of our top companies. The hon. Lady is right to highlight that we do not want women only to be in non-executive roles; they must be in executive roles as well. That is why I was saying that we are very much focused on that. We are pleased with the progress, but we need to go further—not, I hasten to add, because of a politically correct desire to hit some quota, but because women are talented and represent more than half of our work force. By not giving women fair representation in the leadership positions of our great companies, we deny those companies their talents. We are being hard-headed and not only concerned with social justice. It is in the interests of the country in every way. I am glad that we agree on that.

In closing, I want to return to the point with which I started. Many of the arguments used in the Chamber today relate to the economic contribution of women in entrepreneurship and start-up businesses and to the need to unleash the talents of women, because that is so important to our economy, but I want to highlight the importance of a small business and entrepreneurial economy to the wider stock of social capital and the ties that bind us. I am absolutely certain that if we are to rebalance our economy in the broadest sense, we need to create one in which small business not only contributes to economic success, but helps to bring communities together. Give me a deal between two small companies any day of the week and I will show people a deal that includes not only an economic deliverable, but a contribution to social capital and to building trust between communities. In many of our small towns, neighbourhoods, villages and inner-city communities, small businesses working together produce and deliver so much more than just economic growth. It is vital that we build women into that network as well.

For those reasons, I am delighted that, while there is not a shred of complacency in the Government, we are making real progress. We now have 1.45 million women enjoying the freedoms and flexibilities of self-employment, which is 42,000 more than in the previous quarter and 281,000 more than in 2010. We also have 900,000 SMEs run by women, more than at any time in our history. I am not complacent, but the Government are making progress.

[Stella Creasy]

Before the Minister closes, I wanted his response to two specific questions about the future of the Women’s Business Council and the supply chain. His own Government adviser on women-led businesses has suggested that the Government should monitor women in the procurement supply chain. Will he commit the Government to that, yes or no?

[George Freeman]

I have taken a lot of interventions and questions, but I will happily get back to the hon. Lady in detail. She made an interesting point about procurement. Through the work of the Cabinet Office, we are driving hard to ensure that we use every procurement power to support innovation throughout the economy. That is an important part of it and I will happily come back to her on it later.

The 900,000 SMEs run by women in our economy, the highest number in history, suggests that we are making real progress. I am not complacent for a moment, but we are on the right track.