The Budget – A challenge for the chancellor

The Budget Challenge balancing business growth with plight of unemployed. Those most under-employed are young people, graduates and women. What the chancellor to both support the unemployed and social enterprise and small businesses?
Firstly, small business underpin economic revival ne answer is to better support the employed set up social enterprise & small business. Small businesses are part of the social fabric of any place: whereas international companies tend to base their business strategies on global considerations and relocate with little consideration for the impact on the local community.
Size is as important in business as ownership. Many innovative younger people do not differentiate between public and private at the small business level, some are sole traders, others public interest companies or partnerships – many want to succeed in business but also are interested in adding public- values. Cafes are social venues etc. For them small businesses, local community organisation and social enterprises have a lot in common. They employ local people and are locally connected – however they also lack the capital to start up and finance to manage cash flow problems.
In Manchester, small businesses are anxious, they face rising costs, VAT increases, significant reductions in trade and little access to finance. Large clients are cutting back and customers are readjusting their spending and staying in to watch the football and videos. Public institutions and companies are returning to being insular and insulating themselves from the daily stress of cash-flow problems. Small enterprises are coping with the same problems age larger companies but with fewer people and much less credit and resources. SMEs carry the responsibility of local revival but are subject to unfair financial and tax practices.

The Chancellor could support social enterprise and SMEs by
• Increasing the VAT turnover starting point to £150K
• Freeze or reduce NI payments for staff
• Provide national funding for smaller social innovation projects.
• Develop models of finance for investment in all small enterprises.
• Invest in Digital Access as a utility
• Financial support for infrastructure bodies that stimulate innovation, market access and supplier chain networks and knowledge exchange.
Secondly, women are losing their public sector jobs faster than men, many innovative social ventures tend to be run by women and investment in women’s businesses has been shown to generate greater return than other investment. So how can the chancellor support women entrepreneurs. One way is to invest in childcare provision for women social entrepreneurs and Sure Starts.
Thirdly, governments have unreasonable expectations of how fast small business can grow, it is not just ‘start-ups’ that need support, it is after 2 years that most small businesses struggle. Creating the conditions for growth is about creating the space for social enterprise and small business to grow and experiment. Government could
• Extend VAT and NI holidays to beyond the start-up phase
• BIS could support SMEs on the ground with roving mentors to tackle cash-flow etc and relay problems to the banks.
• And the Small Business Federation to work with Business Schools to problem solving support from MBAs.
• Incentivise HE work placements and interns
Lastly, Social enterprise also demands a different form of innovation from financial institutions, new packages based on social impact, public value and a mixed portfolio of social return – not a continuation of risk-averse banking.

Innovation blocked in organisations where the rule-bound rule.

Matthew Taylor’s blog is usually timely and philosophical. This week he gave a speech to NCVO and noted that so many small voluntary groups fail because one people is disruptive and takes up all the time and others drift off. I have observed this happening so often not least in political meetings, Matthew also suggested that it is the who people who are obsessed with rules and process tend to end up with more influence and power than those focussed on making change happen in the world.
Ten years ago I observed that women were not being promoted as that they were much less obsessed with rules and processes and wanted to make things happen, yet, this energy rather than be valued, was career limiting, In many public organisations this insularity has disappeared, but this is not so in higher education or in central government, where an obsession with process and procedures persists and is the basis of promotion.

Reaching out and talking to the public, customers and partner is the basis of better services and more imaginative services and a more open and democratic society. Those who cling on to conventions and processes at the expense of more open and flexible practice are usually also clinging on to power.

If your interested in the evidence of how the rule-bound rule read ‘
Faith in Systems or in people? Change strategies in the public sector I J Leadership (2006) or Making Modernisation Work: New Narratives, Change Strategies & People Management in the J of Public Sector Management 2002 15:1 by S Maddock.