The Coalition Government appears totally unaware of the impact of their drastic financial cuts on small businesses as well as on public services. There is no evidence that the loss of 100,000 public service jobs are being created – and even less evident that new businesses are emerging in the places where the jobs are being lost – in cities, particularly in the North. According to Danny Blanchflower there is actually a collapse of confidence in the private sector – if existing businesses are freezing recruitment – where is the support and incentive for new businesses ?
It is not easy setting up a new business, I know about this as my son set up a wine bar two years ago at the beginning of the recession. Pinchjos a Tapas Bar in South Manchester looks like it is going well – customers return, Matthew the chef is great, people like the food, the place has atmostphere and staff are friendly. Although, small, there is occasional live music, (next Sunday19 December) and they also do Parties. You can book online http://www.pinchjos.co.uk
Underneath all this hard work is a constant cash-flow crisis; fixed costs of rent, rates, insurance, tax, licences, utilities etc are high and food pricing and VAT are going up. Where is the support for SMEs ?
I have spent several days trying to find out how to access the Regional Growth Fund and how new SMEs can claim a reduction in HMRC payments for employees – you cannot access the former directly as an SME and accountants and Business Support Agencies appear unable to provide any information on the latter. Banks are closed as far as new businesses are concerned and the advice you receive from Business Link- you could read on their website. While many in the local authority have been understanding, a woman in HMRC said if ” If you can’t pay your tax on time you shouldn’t be in business“. The same could be said of their own practice. Is it any wonder that people in SMEs become anti-government and public officials ?
What businesses like Pinchjos want, is not just information on what you are supposed to do (regulation and law) but how you do it. People’s capabilities grow when they are given help with how to do things rather than merely information on what they ought to know. There is very little of such support. The world of know-how is provided by those closest to the problems and who have a problem solving approach – rather than merely thinking support is information and form filling. Government and local public services are strong on the latter than very weak on problem solving.
Local, connected SMEs are critical to recovery – and yet there is a huge gap between the government’s interest in economy and the impact of their public expenditure custs and the growth of this sector. All enterprise is based on the capacity and confidence of entrepreneurs who take a risk and start a business. In the current environment they cannot take all the risk because that means they have no capital, little investment and little know-how support. Manchester social entrepreneurs contributed a great deal to the revival of Manchester in the 1980s and 1990s -many sole traders are social entrepreneurs. But even they are losing confidence in places where they customers are anxious about the future and many already struggling to survive.
Local leaders have a role to play in creating the conditions for innovaton in all sector.