By Luke Davis
Following this year’s EU referendum, Theresa May’s government was faced with the tall order of delivering an Autumn Statement that appeased any concerns and uncertainty in response to the magnitude of June’s Brexit vote. In his first and ultimately last Autumn Statement as Chancellor, Philip Hammond was tasked with reassuring the enterprise community aftera dip in business confidence in the immediate aftermath of Brexit, as reported by a Lloyds Bank survey. Fortunately for entrepreneurs and investors alike, Hammond declared that “Britain is open for business […] and will remain the destination to do business”, which was reinforced by a raft of policies and investment commitments that would prioritise productivity for our nation’s SMEs.
Continuing on the path paved by his predecessor George Osborne, Hammond confirmed the Government’s pledge to the ‘devolution revolution’ and empowering local councils around the country. To ensure that businesses in enterprise hubs nationwide refrain from being overshadowed by their counterparts in the capital, the Government has vouched to deliver £1.8 billion to Local Enterprise Partnerships (LEPs). In a possible bid to fuel the Northern Powerhouse initiative, as coined by the previous Cabinet, the North of England will benefit from the lion’s share of the LEP funding with £556 million on the horizon. London and the South East will receive the second largest investment of £492 million; followed by £392 million for the Midlands’ LEPs; £191 million for the South of England; and £151 million to accelerate SME growth in the East of England. Set to roll out in the coming months, the distribution of LEP funding – which we recently highlighted on the latest iteration of IW Capital’s SME Heatmap – indicates a concerted effort to place entrepreneurship high on the Government’s agenda as a driver of economic progression as we begin our transition to a post-Brexit Britain.
The Treasury’s commitment to asserting small businesses at the helm of our national economy was echoed further by £400 million worth of investments committed to venture capital funds through the British Business Bank, with the objective of encouraging British start-ups to scale. In the hope of reducing the volume of large company takeovers, this substantial contribution towards nurturing the UK’s SMEs emphasises their role as a force for jobs creation – accounting for 60%of British private sector employment – and as a source of economic output,generating over £1.8 trillion in revenue last year.
Although encouraging new entrepreneurs to take their first steps as business owners through start-up investment is vital, the influence that our SMEs’ wellbeing has on the economy is reflected in the Autumn Statement’s investment-led policies. Our nation boasts an impressive list of SME case studies that have progressed from promising start-up to thriving scale-up as direct result of private investment coupled with a unique business proposition. This formula has paved the way for exciting young companies such asWeSwap, an innovative peer-to-peer money exchange founded in 2012. As the largest investor into WeSwap, IW Capital has seen firsthand the support that private investment can offer a disruptive new company in its transition from start-up to a frontrunner in the field of fintech; since beginning its support for WeSwap in 2014, IW Capital has witnessed the platform’s user base grow from just 200 to more than 200,000 today.
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The rise of companies such as WeSwap is testament to the entrepreneurial talent in this country and the integral role that private investment plays in giving them the platform to fulfill their potential. Moving into 2017, we should continue to place greater emphasis on the scale-ups that are disrupting the incumbents of their chosen sector, especially in the transitional Brexit period. Former Skype COO Michael Jackson voiced similar sentiments earlier this year, reinforcing that disruptive businesses have the ability to see change as an opportunity, with the likes of Skype and Google emerging amidst the dotcom crash. Although the Autumn Statement saw the Government pledge £2 billion of investment for research and development (R&D) into science and technology each year by 2020-2021, this is just the tip of the iceberg. Further private investment will serve as an integral conduit for innovative new companies in need of the finance to scale their operations in the immediate future.
For the year ahead, we hope to see even greater focus directed to our disruptive scale-ups as a continued source of employment, revenue, and innovation, from both the Government and the private investment industry. In doing so, we can instil greater confidence in scale-up Britain and enable entrepreneurs to accomplish their business ambitions, in turn boost the nation’s economy as it transitions out of the EU.