CALLS by the Federation of Small Businesses (FSB) for a new position in the Scottish Government to represent small business drew familiar assurances last week that politicians already have the best interests of entrepreneurs at heart.
No doubt that is true – as it is of health, education or justice – but a specific champion at the heart of government for this crucial segment would pay dividends for all departments. The responses to the FSB’s call echoed the tone heard in the run-up to the UK general election earlier this year when Entrepreneurial Spark suggested a minister for entrepreneurs. Everyone is keen to look supportive – but we still didn’t get a minister.
The main argument against seems to be that there is a minister already representing business as a whole. However, this is to dramatically underestimate the specific importance of small business, and start-ups in particular.
It is a cliché that small businesses are the lifeblood of the economy, but true nevertheless. Even in good times large corporations are as likely to cut staff as they are to hire more, so start-ups and expanding small enterprises create almost all the additional jobs as an economy grows. Those jobs are the means by which wealth generated by business feeds back to the population at large, who in turn spend it as consumers in a virtuous cycle.
The need for those jobs was starkly illustrated last week by figures showing a rise in Scotland’s unemployed of 18,000 over the summer. To find jobs for those 18,000, and the other 150,000 or so jobseekers, we can either pay out “incentives” for foreign corporations to set up factories and call centres on our shores, or we can help ordinary people set up their own enterprises.
This highlights the difference in viewpoints between large and small business and why, as fiscal autonomy increases, Scotland needs a minister to argue the case for entrepreneurship. Corporates themselves, contrary to popular belief, generally see the need for a healthy business birth rate to keep the economy vibrant, but inevitably their interests are not always aligned with those of smaller firms.
It’s crucial that entrepreneurs be encouraged to set up and build exciting high-growth companies that generate desirable jobs and ongoing returns for the exchequer.
So just as business relies on public sector areas such as education, health and justice to create an environment in which it can thrive, so these departments benefit from entrepreneurs who at once keep themselves and others happily employed while often providing important services and ingenious solutions to other sectors.
Whether he or she be called a small business minister or secretary of state for entrepreneurs, it is hard to see how the role could be anything but positive. Such an appointment would also send a signal that helps break down the biggest barrier to people entering business – the all too widely held belief that they can’t. «
• Jim Duffy is chief executive of Entrepreneurial Spark