Written evidence from Enterprise UK
This paper sets out Enterprise UK's response
to the Call for Evidence from the Business, Innovation and Skills
Committee on the New Local Enterprise Partnerships.
ABOUT US
Enterprise UK is the national campaign to create
a more entrepreneurial UK. Enterprise UK was established in 2004
by the UK's four main business organisations; the British Chambers
of Commerce, the Confederation of British Industry, the Federation
of Small Businesses and the Institute of Directors. The Director
Generals of these organisations sit on Enterprise UK's board,
with entrepreneur and Chairman, Peter Jones.
Enterprise UK works with young people, aspiring entrepreneurs
and existing entrepreneurs to develop attitudes and skills for
entrepreneurship. Our Make Your Mark programme, providing inspiring
enterprise education, is run in one in five secondary schools
and one in three further education colleges in the UK. In 2008,
Enterprise UK established Global Entrepreneurship Week, in which
over 100 countries run events for aspiring and existing entrepreneurs
during the same week in November. In 2009, more than 500,000 people
in the UK and 7.5 million people globally, took part in events.
Since 2005, Enterprise UK has run the Enterprising Britain
Competition, on behalf of the Department for Business, Innovation
and Skills, that discovers and showcases examples of local partnerships
developing a culture of entrepreneurship in their area.
SUMMARY
1. Our response to the Business, Innovation
and Skills Committee is based on our expertise in developing a
culture of entrepreneurship nationally and internationally, as
well as working with local authorities, private and third sector
organisation to improve local conditions for entrepreneurship.
2. Enterprise UK welcomes the move to devolve
responsibilities for the support and promotion of enterprise to
Local Enterprise Partnerships, and the opportunity to respond
to these proposals.
3. The promotion and support of entrepreneurship
in the UK is of fundamental importance to our local and national
economies. Already, there are excellent examples of local authorities
partnering with a range of organisations in their area to develop
a holistic approach to support, with evidence of considerable
success.
4. More systemic transfer of responsibilities
to Local Enterprise Partnerships represents a significant opportunity
to address the UK's comparatively low rate of entrepreneurship
and is one that should not be missed. From the outset, sufficient
emphasis should be placed on the importance of this aspect of
Local Enterprise Partnerships' strategy and operation, as well
as ensuring that they have the capacity and knowledge to succeed.
Moving forward, we believe that mechanisms should be developed
to help Local Enterprise Partnerships share best practice, innovate
and celebrate achievements.
THE NEW
LOCAL ENTERPRISE
PARTNERSHIPS
Enterprise in the UK
5. Entrepreneurship has long been recognised
as an important driver of economic growth. Small entrepreneurial
firms are more innovative than large firms and account for significantly
more job creation.1 At a local level, entrepreneurship is shown
to have a significant impact creating jobs and wealth, and helping
communities operate in the global economy.2 Increasing entrepreneurship
rates and prospects has therefore become a priority for national
and local governments around the world.
6. Strategies to boost entrepreneurship have
moved beyond simply focusing on increasing raw numbers of start-ups,
to incorporate a broader understanding of an entrepreneurial eco-system
or culture. It is now recognized that as well as providing infrastructural
support to businesses, such as improving access to finance and
business support, and reducing the imposition of regulation, entrepreneurship
rates are to a great extent determined by the attitudes and skills
of individuals. Education across all levels, as well as individual
and societal attitudes towards entrepreneurship, therefore, have
a significant impact on levels of entrepreneurial activity.3
Local Enterprise Partnerships
7. Over the past decade, levels of entrepreneurship
in the UK have remained consistently behind those of our major
economic rivals.4 Whilst some areas have established a strong
entrepreneurial culture, other areas are falling well behind.
Entrepreneurship rates in London, for example, are up to twice
as high as those in other parts of the country.5 The need to spread
economic growth and prosperity across the UK demands that this
be addressed.
8. For some years, Enterprise UK has argued
that supporting entrepreneurship should be led at a local level.
Whilst businesses may scale or even start with a national or international
focus, the key components of a new business—such as finance,
skills and infrastructure—are all local. The Government's
move to establish Local Enterprise Partnerships across the UK
is therefore strongly supported by Enterprise UK and will be welcomed
by the entrepreneurial community.
9. The creation of Local Enterprise Partnerships
will provide a major opportunity to shape the support and promotion
of entrepreneurship in the UK. In this document we suggest key
commitments that Local Enterprise Partnerships could make, how
they could function and how they can develop to help create an
entrepreneurial culture in the UK. We also pose further issues
for consideration of the future development of Local Enterprise
Partnerships.
The focus and composition of Local Enterprise
Partnerships
10. Local Enterprise Partnerships should
have an explicit and prioritised role of promoting and supporting
entrepreneurship in their areas. In order to do this they need
to have sufficient existing knowledge of strategies to support
entrepreneurship at a local level, capacity to develop support
and a structure that can easily listen to and respond to entrepreneurs'
needs.
11. Entrepreneurship in the 21st century
can take many forms. The internet in particular has given rise
to a whole new wave of home-based businesses. For many entrepreneurs
these days, achieving social aims are just as important as financial
ones. All of these new businesses contribute to the economic and
social wealth of an area. Indeed, home-based businesses account
for 36% of UK enterprises, and around one in ten home businesses
have achieved an annual turnover of more than £250,000 and
creation of more than 10 jobs.6 But there are also particular
additional barriers that these businesses may face—including
isolation from the mainstream business community, difficulties
in accessing finance and achieving growth.
12. There are also additional barriers that
certain demographic groups face in starting a business, that cause
them to be underrepresented in entrepreneurship. Younger people
and women, in particular, have extremely positive attitudes towards
entrepreneurship, but are less likely to turn their ideas into
a new business. For these reasons, Local Enterprise Partnerships
should aim to establish sufficient diversity in their composition.
13. We recommend that Local Enterprise Partnerships
include entrepreneurs at different stages in their journey (including
those just starting out and more established local business leaders)
and from different backgrounds. In some areas, there are also
existing forums for the promotion of entrepreneurship that Local
Enterprise Partnerships should endeavour to work closely with.
The functions of Local Enterprise Partnerships
Create a more joined-up approach to enterprise support
14. An individual's "enterprise journey"
has many stages and in some form will extend across primary, secondary
and tertiary education, working life and beyond. In our 2007 report
Mind the Gap, Enterprise UK identified that a complex support
landscape for entrepreneurship in the UK made it difficult for
individuals to access the support that they needed. One of the
key issues, therefore, that should be addressed in creating a
local entrepreneurial culture is the connection of different aspects
of enterprise promotion and support along different stages of
an individual's enterprise journey. This is particularly true
of the enterprise journey for young people, where enterprise education
and support can vary considerably between institutions.
15. There is also a tremendous wealth of
resources, such as research facilities, desk space and training,
that could be used to support entrepreneurs but are currently
not being utilised for supporting entrepreneurs. Libraries, universities,
colleges, JobCentres and community centres all have a role to
play in serving as spaces where entrepreneurs and potential entrepreneurs
can meet to exchange ideas, source business advice, and interact
with the range of business networks, enterprise agencies and Chambers
that exist to support local businesses. Given the austerity that
the economic climate demands, there is a real opportunity here
to create more cost effective utilisation of resources.
16. Local Enterprise Partnerships should
look to identify what enterprise provision is happening across
their local area and how each of these can be better aligned and
supported—for example, the involvement of entrepreneurs
in schools and college education, advice on entrepreneurship within
careers advice and employment services such as Job Centre Plus,
as well as more traditional forms of business support. Local Enterprise
Partnerships should also ensure that existing public spaces in
our communities serve to both promote and support enterprise and
work to pool resources between them. This provides a cost-effective
and scaleable method for engaging and developing entrepreneurial
networks to build a more thriving and visible enterprise culture
in the UK.
Provide networking opportunities for entrepreneurs
17. An entrepreneurial society is a well-connected
society: individuals who know entrepreneurs are more likely to
become entrepreneurs themselves, and entrepreneurs who have more
social connections are more likely to be successful.7 To achieve
the ambition of the UK being the best place in the world to start
a business, we need the right infrastructure that encourages people
to share ideas and connect with other entrepreneurs who will help
make their business successful. Often, there are better established
opportunities for existing businesses to do this, but networks
predominantly for entrepreneurs are equally as important. Local
Enterprise Partnerships should be aware and supportive of networks
where new and existing entrepreneurs can meet together informally.
Establish local entrepreneurial role models
18. Evidence shows that positive entrepreneurial
role models are a key requisite of an entrepreneurial culture8.
Where there are visible and identifiable examples of individuals
turning their business idea into reality in their local area,
it improves perceptions of the area as a good place to do business
and inspires others to emulate their behaviour. It is essential,
therefore, that people are also exposed to a diverse range of
local entrepreneurs who are making a reality of their business
ideas. Local Enterprise Partnerships should assist local schools,
colleges and universities in accessing a range of entrepreneurial
role models that can help inspire their students. Local Enterprise
Partnerships should encourage the local public celebration of
successful entrepreneurial role models.
Provide access to start-up finance
19. Entrepreneurs' networks of local contacts
are extremely important in providing start-up capital. However,
even modest amounts of start-up funding can be difficult for some
individuals to obtain—particularly young people and those
from disadvantaged backgrounds. Here, Local Enterprise Partnerships
could have a really important and innovative role in providing
and highlighting sources of accessible microfinance within communities.
The Government should investigate whether the Regional Growth
Fund could support a locally deployed, nationally led, scheme
for Local Enterprise Partnerships to be able to award or loan
small amounts of capital.
Share and celebrate best practice
20. As well as being formed with the capacity
to help new businesses, Local Enterprise Partnerships can be helped
by sharing best practice with each other. Lots of places are already
taking effective steps to build an entrepreneurial culture at
a local level and so more opportunities to enable ideas and good
practice to be shared would be extremely beneficial. Similarly,
Local Enterprise Partnerships should have sufficient capacity
to develop even more innovative ways to support and promote entrepreneurship
in the future.
Further issues for the Business, Innovation and
Skills Committee to consider
21. In its inquiry, we suggest that the
Committee explore and highlight these outstanding issues relating
to the operation of Local Enterprise Partnerships, including:
— What measures of success will there be
for Local Enterprise Partnerships and how will quality be ensured?
— What formal relationships will Local
Enterprise Partnerships have with publicly-funded business support
and local enterprise agencies?
— What links will Local Enterprise Partnerships
have with schools, colleges and universities?
— How might Local Enterprise Partnerships
best be used to stimulate entrepreneurship in areas of strategic
importance, such as the low carbon sector?
— How might Local Enterprise Partnerships
assist entrepreneurs in connecting outside of their local area,
both nationally and internationally?
— How will knowledge and understanding
of best practice be developed, shared and celebrated across Local
Enterprise Partnerships?
REFERENCES1 Z
J Acs and D B Audretsch (1990) Innovation and Small Firms,
MIT Press, Cambridge, MA; Kauffman Foundation (2009) Where
will the jobs come from?
2 Henderson, J (2002)
"Building the Rural Economy with High-Growth Entrepreneurs",
Federal Reserve Bank of Kansas City Economic Review 87
(3): 45-70.
3 A recent Global Entrepreneurship Monitor study
on enterprise education in 38 different countries found that it
doubles the likelihood of engaging in early-stage entrepreneurial
activity in Western European countries, including the UK—Alicia
Coduras Martínez, Jonathan Levie, et al (2010),
A Global Perspective on Entrepreneurship Education and Training,
Global Entrepreneurship Monitor Special Report; Research on the
importance of psychology in determining entrepreneurial activity
suggests that perceived credibility, perceived desirability and
propensity to act explain well over half the variance in intentions
towards entrepreneurship—Krueger, N F, and Brazeal, D V
(1994) "Entrepreneurial potential and potential entrepreneurs",
Entrepreneurship: Theory and Practice, Spring, pp 91-104.
4 GEM (2010) Global Entrepreneurship Monitor
2009 UK Report.
5 See ONS (2009) Business
Demography 2008.
6 Mason, C, S Carter and S Tagg (2008) Invisible
Businesses: the characteristics of home-based businesses in the
United Kingdom. Working Paper, Hunter Centre for Entrepreneurship,
University of Strathclyde, Glasgow.
7 Enterprise UK (2009) Transforming Behaviours;
Audretsch, D B and M Keilbach (2004) "Does Entrepreneurship
Capital Matter?", Entrepreneurship Theory and Practice,
Vol 28, Issue 5, p 419-429.
8 Dubini, P (1989) "The influence of motivations
and environment on business start-ups: Some hints for public policies".
Journal of Business Venturing 4 (11): 11-26.
13 August 2010
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