ConservativeHome | October 2024
Andrew Barclay, Onward Policy Fellow and co-author of The British Entrepreneur, warns that next week’s expected tax hikes in Rachel Reeves’ first Budget could severely damage entrepreneurship in the UK. Even before Labour took office, entrepreneurship was in decline, with the UK falling behind other nations in creating and growing businesses. Barclay observes that the UK's cultural aversion to risk, combined with high costs, excessive regulation, and limited access to finance, has stifled business growth.
Onward’s report identifies four key barriers to entrepreneurship: high costs, difficulty accessing external finance, a uniquely risk-averse mindset, and excessive bureaucracy. Taxes such as VAT and National Insurance are seen as significant hurdles, while access to finance in Britain lags behind competitors. British entrepreneurs’ fear of failure is 20% higher than the global average, driven by concerns over financial loss and reputational damage. Additionally, the administrative burden in the UK is heavier than in countries like Germany and the US, costing businesses valuable time that could otherwise be spent on growth.
To counter these challenges, Barclay suggests targeted reforms: reducing costs and taxes for new businesses in their first year, replacing the VAT threshold with a tapered system, improving access to finance through community development institutions, and slashing bureaucratic red tape. These measures, he argues, should focus on entrepreneurs keen to expand and the 13 million people “on the brink” of starting their own ventures. If Labour fails to support entrepreneurship, Barclay believes the Conservatives must step in to restore Britain’s entrepreneurial spirit.
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