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13 Jul 2005 : Column 277WH—continued
Women and Enterprise
10.59 am
Mary Creagh (Wakefield) (Lab): I am delighted to have the opportunity to debate this subject with the Minister, and I look forward to sharing thoughts and ideas with hon. Members and hearing their comments and suggestions.
I start by stating the obvious. There is a clear inequality between the number of men and women who want to start a business in the UK. I want to discuss what that gap means for us as a nation and what the Government can do, and are doing, to challenge and tackle those inequalities. I shall also discuss the reason for the gap. It is evident that that a number of structural and cultural challenges face women who want to start their own business. Again, I shall set out what I think can be done to help them overcome those barriers and conclude by considering the implications of demographic trends on public policy towards women entrepreneurs.
On the differences in start-up rates between men and women entrepreneurs, I take most of my figures from the 2004 Global Entrepreneurship Monitor UK report, produced by Rebecca Harding of the London Business School. Her report states that UK women are half as likely as men to start their own businesses. Around 7 per cent. of women own their own businesses compared with 16 per cent. of men. That inequality is a serious social, economic and demographic issue that needs to be tackled across a wide variety of public policy areas, not just in the Department of Trade and Industry. If half the population is not fulfilling its entrepreneurial potential it affects us regionally, nationally and as UK plc.
A number of Government initiatives are taking place across the country to address that gender gap. The Government's 2003 report "A Strategic Framework for Women's Enterprise" noted:
"At a cultural level there is a failure to recognise and value the contribution and potential contribution of women-owned businesses to the UK economy."
The Government have taken the important step of acknowledging that there is a problem. The regional development agencies have been working across the country to close the gap. Most now have a regional women's enterprise strategy and many have action plans that set out what they are trying to do for women and who is responsible for delivering to them. Many have a women's enterprise co-ordinator.
I welcome those developments, but we must go further to tackle the enterprise gender gap. We must also set targets from a baseline so that we know when we have achieved what we have set out to achieve. I have not been able to find anything that says what we want to achieve, so I am anxious to hear about that from the Minister. There have been large increases in the numbers of women starting businesses where the regional development agencies have made significant efforts to attract women into entrepreneurship, and I pay tribute to their efforts.
Yorkshire Forward, Wakefield's regional enterprise agency, has researched patterns of small business ownership and found them to be the same as they are in the rest of the country. In south Yorkshire, which was hardest hit by the closure of the coal mines, there is a
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specific strand of the European Union objective 1 structural fund that exists solely to promote women's enterprise. I welcome that focus on women and applaud the work going on to help those women boost their local economy, create jobs and provide for themselves and their families.
Ms Angela C. Smith (Sheffield, Hillsborough) (Lab): My hon. Friend refers to the work in south Yorkshire. We have the Sheffield community enterprise development unit, more commonly known locally as SCEDU. It is funded by the Learning and Skills Council and objective 1 funding. Its programme "Making a difference" offers a combined programme of business start-up and management training schedules as they relate to social enterprise for women. It is little known that SCEDU is located in Burngreave, which is among the 10 per cent. most deprived wards nationally. It contains within its approximate area seven of the most deprived neighbourhoods of the top 1 per cent. most deprived neighbourhoods—
David Taylor (in the Chair): Order. Interventions should be brief.
Ms Smith : Thank you, Mr. Taylor, for reminding me of that.
What has my hon. Friend learned from such projects about promoting women's enterprise effectively?
Mary Creagh : I am delighted to hear about the excellent work of SCEDU. My hon. Friend raises an important issue relating to social enterprise and what we can do to help women in our most excluded communities. Those women often have all sorts of extra barriers, such as child care responsibilities, very low incomes and no capital for start-up. We need to unleash that potential. We now have 4 million businesses and must bridge the inequality gap. We have to start doing that by tackling all parts of society, which means people in the most deprived areas, too. I certainly welcome and applaud the work that has been done in her constituency.
I spoke to my enterprise agency, West Yorkshire enterprise agency, yesterday. It has started a women's network that brings together women from Wakefield, Kirklees and Calderdale—towns on the contiguous boundaries. It has 777 business women on its mailing list, of whom 172 are from Wakefield. They have set up a monthly networking club to promote their businesses to each other. There is often an information gap among businesses, whether owned by men or women, and people do not know about the products and services that exist in their local area. The West Yorkshire enterprise agency produces a directory of women-owned businesses in the area, which should help to close that gap.
One of the interesting things that the enterprise agency has done is to research the women who have shown an interest but have not started a business. It held a session in Wakefield last year called "What's Holding You Back?", in which it asked women who had attended one of its pre-start-up courses, but who had not gone on to start a business, a series of questions to elicit from them what was holding them back. The research showed
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that time, finances, current employment, criticism from others, motivation, juggling home and work responsibilities, attitude to risk, fear of failure and lack of support all played a part in those women's decisions not to proceed. Pam Shephard, the enterprise agency's marketing manager, made the good point that women are more likely than men to be open about the obstacles that they face and to be more realistic about their chances of overcoming them. Starting a business is not for everybody. Obviously, people who do not have the requisite skills and abilities should not start one, but we must strike an important balance and ensure adequate encouragement and support to harness potential.
We are fortunate in Wakefield to have some notable women entrepreneurs who are blazing a trail and sharing their experiences with other women. Margaret Wood is the managing director of ICW (UK) Ltd., an engineering company based at Horbury Junction. It specialises in the design and manufacture of glazed units for industrial applications. In 2002, Margaret came second in the national finals for the British female inventor and innovator of the year award for a revolutionary window design that enables windows to be opened and shut simply by pushing on them. Margaret is also the chairperson of Wakefield First, which is Wakefield's development agency, and chairperson of the Mid Yorkshire chamber of commerce local area council at Wakefield. She is a fantastic role model for young women who are thinking of starting up their own enterprises.
Linda Lennon is another inspirational Wakefield business woman. She started her business, Black and White Consumables, from her front room when her first child was born seven years ago. Her office supplies company now turns over nearly £1 million a year from its headquarters in the St. John's area of Wakefield. Linda went from being a telesales operator to winning the Yorkshire woman of achievement award for business last year. The business is still expanding, and Linda plans to take on a further 15 telesales staff as well as adding warehousing facilities to allow faster delivery. That is an amazing achievement for someone who started out with a baby in the bedroom, selling from her ironing board and a telephone in her front room.
Ms Barbara Keeley (Worsley) (Lab): There are some interesting role models in the north-west as well. Meena Pathak started work in hotel management in Mumbai and then moved into product development. She is now one half of Patak's, which is famous for its Indian food factory—now the largest Indian food factory in the world—based on the site of an old pit in Leigh, in Wigan borough.
Closer to home, Sue Woodward, the managing director of ITV, lives in my constituency. She recently won a well deserved award in the business category of the winning women awards. She is a rare example of a very senior woman in a media company and she also makes a contribution regionally. She worked on the Commonwealth games, and the citation for her award made it clear that she was an excellent manager of people.
I hope that my hon. Friend agrees that Sue Woodward and Meena Pathak are great examples for enterprising young women to follow. With help and direction from the north-west women's steering group,
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which was started by the regional development agency, we want to create a culture that encourages more women to start and grow their own businesses.
Mary Creagh : I thank my hon. Friend for raising the important issue of ethnic minority women, who can face many barriers to starting their own business. She gave a good example of how women are often accidental entrepreneurs. I am pleased to hear about what is happening in the north-west because the northern way—the economic development plan for the north—is about bridging the gap between the north and the south, particularly in the north-west, the north-east and Yorkshire and the Humber, which lag behind for small business creation generally. We need to ensure that the three relevant enterprise agencies and RDAs work together so that those women are visible as champions and can be emulated in their districts.
Behind the success stories, there are a host of barriers that those women have overcome. We need to address three main structural barriers to encourage more women entrepreneurs. The first, and most important, is one that counts for every entrepreneur—finance. Particular structural barriers prevent women from getting finance for their business. The Global Entrepreneurship Monitor UK report states that men tend to invest more in start-up capital in their businesses than women do and that women are significantly less able than men to access bank finance. Why is that? The report also says that the fear of debt is cited by both sexes as an impediment to start-up, but is more significant for women than for men.
In our economy, people who start businesses tend to be in employment while doing so. Women are more likely than men are to be in low-paid or part-time employment and mixing employment with child care, so they are likely to be on a lower income. They may be at home caring for children, as in the case of Linda Lennon, and have no income of their own. Obviously a bank manager will be significantly less likely to lend to women who have no income or are on a smaller income. That also means that women are limited to starting businesses with a low capital outlay. That is a further impediment that we need to consider. Such businesses can only be financed organically, through their cash flow.
In my experience, women are less confident about the financial side of their business. They lack the language of finance, and that inhibits selling their business to banks as a low risk. There may also be barriers to informal venture capital for women. They may feel shy or inhibited about asking for help from family and friends. They may be worried about the effect on their personal relationships if they take a loan and cannot pay the person back.
The second important impediment is culture. Schools and careers services do not push girls to think of themselves as entrepreneurs. Women do not have a Richard Branson-style role model to emulate. As we heard, many women are accidental entrepreneurs who start in one career and move to something else when, for example, when their partner dies suddenly and they take over his business, when their husband leaves them and they have to work for the first time, or when they have a child and find that they enjoy the flexibility of looking after their children and being economically active at home.
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I welcome the Chancellor of the Exchequer's commitment to make enterprise week in schools a national event. We need more entrepreneurship education throughout the school curriculum and young people to have greater financial understanding if they are to understand the basic principles of profit, loss, cash flow and borrowing.
A third significant barrier is age. Women are used to retiring earlier than men, even though they tend to live longer. They often retire on meagre pensions without the lump sums that men receive after a lifetime of working. Age brings a double exclusion. Banks are less likely to lend to older people, as they are perceived to be a higher risk. In the population as a whole, two men start a business for every woman who does so, but at age 55, five men start a business for every woman who does so. That figure masks a haemorrhaging of older women's skills and talents. If our birth rate continues to fall and life expectancy continues to rise, that group of potential third-age entrepreneurs is set to grow. It will represent a huge, untapped national resource. As our work force shrinks and ages, entrepreneurship could go some way towards alleviating poverty for women in old age.
It is clear that some people chose to be entrepreneurs and that others have entrepreneurship thrust on them. That is the case for women as well as for men. If we are serious about addressing the gender business gap, we must do several things. First, we must provide better access to finance for women. Secondly, we must ensure that efforts to establish an enterprise culture take particular account of the needs and aspirations of girls and women. Thirdly, we must ensure that the talents of older women are not neglected and that a specific plan is proposed to ensure a long, happy and prosperous old age.
Business failure is the other side of business success, but inspirational women entrepreneurs can act as catalysts for others The Government and this country have a huge prize at hand if we can unleash the talent, technological skill and dynamism of girls, women and older women.
11.15 am
The Parliamentary Under-Secretary of State for Trade and Industry (Barry Gardiner) : First, I congratulate my hon. Friend the Member for Wakefield (Mary Creagh) on the enterprise that she showed in arriving at the Chamber this morning. Her office told me that after she could not get on to the tube she took to her cycle, and that after she took to her cycle she had a puncture, and that it was only after she hailed a taxi—I do not know what she did with the bike—that she managed to arrive, breathlessly, in the Chamber in time for her speech. Therefore, she engaged in a considerable amount of entrepreneurial activity to ensure that the debate could go ahead. I also particularly congratulate her on the way in which she presented her argument, and on highlighting such important topics.
I wish to apologise on behalf of my hon. Friend the Minister for Women and Equality; she would have been present to respond to the debate, were she not speaking today at a women's committee of the European Parliament in Brussels. I trust that that is a sufficiently good reason for her absence.
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The Government are keenly aware of the importance of the issue of women and enterprise. We believe that there is an economic imperative for developing women's enterprise, and there is a great deal of evidence that women make a significant contribution to their local and national economy; I shall return to that.
A useful starting point to show how the Government have supported women entrepreneurs is the strategic framework for women's enterprise. Substantial progress has been made since the publication of the document launching that in May 2003. The strategic framework was developed to provide a collaborative and long-term approach to the development of women's enterprise in the UK. Its long-term vision is to create an environment and culture that encourages more women to start and then grow businesses, and it aims to ensure that every woman who desires to start or grow a business has access to appropriate help and support. The framework highlights four key areas for action: improving business support services; access to finance, as has been mentioned; caring and child care; and the management of the transition from benefits to self-employment.
My hon. Friend the Member for Wakefield asked about the Government's targets and the dates by which they should be met. The quantative targets set by the framework are to be met by 2006 and they are as follows: that women will account for 40 per cent. of customers using Government-sponsored business support services; that women-owned businesses will account for 20 per cent. of the UK total; and that the number of women from ethnic minority communities receiving business support assistance will be proportionate to their representation in the relevant local and regional population. I hope that that also goes some way towards addressing the remarks of my hon. Friend the Member for Worsley (Ms Keeley).
Ministers have been active in developing the strategy. My right hon. Friend the Member for Redditch (Jacqui Smith), in her former capacity as Minister for Industry and the Regions and Deputy Minister for Women and Equality, gave valuable support to promoting the development of women's enterprise. My hon. Friend the Minister for Women and Equality has provided continuity by addressing the second Prowess summit entitled "Building on Success". That was aimed at regional development agencies, with the specific goal of reaffirming RDA commitment to building regional impetus with regard to supporting female entrepreneurship. She also launched the Prowess report entitled "The Regional State of Women's Enterprise in England". One of the report's conclusions was that
"women's enterprise promotion is increasingly being viewed in the regions as a vital untapped enterprise resource, rather than as a means of addressing social exclusion".
That goes to the heart of some of the remarks made by my hon. Friend the Member for Wakefield. We have to realise the folly of not tapping the full resources available to us as an economy. If we are able to tap into the untapped resource of female business skills and acumen, it can only bring great advantage to our economy.
I welcome the conclusion of that report as it is the essence of the position that we have reached. Women are increasingly seen as an entrepreneurial resource: an untapped source of great potential and creativity. Their future potential is even greater, and the Government
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acknowledge that, which is why we are doing more to promote the cause. The Government have pursued their goals for women entrepreneurs through the Small Business Service. Essentially, that approach has been to influence key partners in the regions—principally the RDAs—and to lead that implementation throughout Government. It was interesting to hear the examples my hon. Friend gave concerning west Yorkshire and the work of the enterprise agency there to involve women in enterprise.
We have also tried to maintain pressure on the Business Link network, via the RDAs and related agencies, to encourage the active promotion of services to women and to increase capacity and awareness of women's enterprise issues. We have sought to engage with key private stakeholders to promote and actively engage in the development of women's enterprise, such as the British Bankers Association, British Chambers of Commerce and the Association of Chartered Certified Accountants. We have also supported targeted women's initiatives and networks and worked in collaboration with organisations such as Prowess, the UK's advocacy group for women's enterprise development, on a contract basis, and with a range of other women's enterprise organisations.
RDA's have been encouraged to take a lead in implementing the framework objectives by forming inclusive, strategic partnerships and women's enterprise action plans at a regional level. All nine RDAs are actively developing women's enterprise, and the East Midlands RDA, as well as the northern RDAs, has made the matter a considerable priority. The level of engagement of RDAs has improved markedly during the past six months, as my hon. Friend would acknowledge. External stakeholders acknowledge that the environment of support for women's enterprise development has taken quite a boost during that period.
Mary Creagh : The Minister mentions the East Midlands RDA. How can the Government encourage the other RDAs, which have perhaps not been as enthusiastic about embracing the women's enterprise agenda? What plans does he have to encourage them to ensure that women entrepreneurs who want to start a business anywhere in the country receive the same quality of Government service?
Barry Gardiner : That is a critical point. Wherever women are in this country, we have to ensure that they have equal opportunities and that equal support is made available to them in setting out on the path to enterprise. My hon. Friend the Minister for Women and Equality is pursuing that matter with each of the RDAs, and through my departmental responsibilities and engagement with the Small Business Service we are working through that organisation to the Business Link network to ensure that such provision is in place.
We can provide the quality of support that my hon. Friend seeks in key ways, but because of the devolved nature of the RDAs—and the Business Link service of the RDAs—it has to be done through them after pressure from central Government. It is very much a cascading-down process that ensures that we do not take away the capacity of each RDA to examine the function of its Business Link service and put in place what it sees as appropriate measures for its locality. As
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my hon. Friend knows, there are clear differences in need in different parts of the country. It is absolutely right that the RDAs can respond flexibly to those needs, but they must always ensure, critically, that the service standard is maintained. We need to see the feedback to ensure that the service is of a standard that is acceptable to the people who use it.
The significance of the development of women's enterprise was reinforced in October last year, when my right hon. Friends the Chancellor and the former Secretary of State for Trade and Industry announced the establishment of a women's enterprise panel to advise on the content of a new action plan to help to achieve the target of 20 per cent. female business ownership by 2006 that was cited in the framework. The panel was also asked to explore options for the establishment of a national women's business council.
The panel submitted its recommended action plan to the Chancellor and the Secretary of State for Trade and Industry on 8 March. The Chancellor acknowledged and welcomed the action plan in his Budget speech. Regional development agencies have been invited to pilot the establishment of a regional women's enterprise unit in one or more regions. The women's enterprise panel has put that recommendation forward as part of its action plan. The panel is due to make recommendations to the Chancellor by the end of July on the establishment of a women's business council. The Government will then decide whether to take that forward.
Mary Creagh : The US has much higher levels of women's entrepreneurship. One of the key things that it has is women's networking and women's business organisations on a huge scale. Does the Minister envisage something like that coming out of the women's enterprise panel, and does he think that it will benefit the development of networking among business women in this country?
Barry Gardiner : Clearly, networking is an essential part of setting up one's own business. It means being able to tap into the experience and resources of others who have paved the way. I am talking about role models, who, like those mentioned by my hon. Friends the Members for Sheffield, Hillsborough (Ms Smith) and for Worsley, set out a path and can then share that best practice with others who come behind. Those role models must be accessible to all. They can be extraordinarily powerful.
The Government recently staged an online event, which highlighted such role models across the UK, to ensure that networking is not restricted by locality but can occur across the net.
Mr. Andrew Love (Edmonton) (Lab/Co-op): What action is the Department taking with small business organisations, such as the Forum of Private Business and the Federation of Small Businesses, to try to set up women's networks and make them effective throughout the country?
Barry Gardiner : That is part of the response from the women's enterprise panel that we are looking to. My
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hon. Friend raises the wider question of the Small Business Service as a whole. I hope that he will have heard the remarks that I made about business links and the other means of encouraging small businesses, such as access to finance, which I know he pursues vigorously as the chair of the all-party group on small business. These are critical ways, as my hon. Friend the Member for Wakefield has said, in which the Government, working through the Small Business Service, can support women's enterprise.
I return to what I have called the economic argument for women and enterprise. The case for doing all that we can to boost women's enterprise in the UK is quite clear. It is not simply a matter of equality of opportunity; it is an economic imperative if we are to capitalise on the potential that women have to offer to our regional and national economies. The Small Business Service and its partners and stakeholders are working on capturing and articulating the economic argument for women's enterprise so that coherent, economy-based arguments can be put to those with whom we need to engage further in improving the environment for women's enterprise, particularly through the RDAs and other regional players.
A Department of Trade and Industry publication, "Promoting female entrepreneurship", has been received well by the women's enterprise community. It addresses some of the key points that my hon. Friend raised, such as:
These are ways in which we are seeking to do all that we can to support women's enterprise.
On the access-to-finance issue that my hon. Friend rightly raised, the SBS is currently co-ordinating the development of an action plan for access to finance for women entrepreneurs.
11.30 am
Sitting suspended.
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