WHAT goes round comes round – and round and round. Last Friday brought business figures to Holyrood for the latest annual Business in the Parliament Conference.
The title of the event was “The importance of entrepreneurship and internationalism to promote economic growth.” Familiar? It was the seventh such conference. Or was it the 17th?
For as long as I can recall, official Scotland has agonised over our poor entrepreneurial ambition, our low business formation rate, the reluctance of firms to enter export markets and the inability or unwillingness of schools and universities to prepare leavers for the world of work, never mind enterprise.
The programme set out this well-aired libretto which performers sang to perfection. There was the brisk opening address by Murdo Fraser MSP, convener of the parliament’s enterprise committee; an inspiring, knock-out address by Sir Tom Hunter and a fine recitation of the government’s achievements by First Minister Alex Salmond.
In the workshop sessions young entrepreneurs told inspiring stories, council officials related their good works, business folk grumbled about lack of finance from the banks and the bankers reeled off statistics from another planet. Axes were ground to a fine edge. Some intelligent and thoughtful ideas were put forward. Many more desperate and impractical ideas were also floated. Perhaps people felt better afterwards. I suspect many really didn’t on reflection. However, if there was no such conference, business and enterprise agencies would loudly lament the lack of one.
It is more than 15 years since Crawford Beveridge, when chief executive of Scottish Enterprise, bravely sought to drive up our business formation rate, and ten years or so since Sir Tom, who started out with just £5,000 from his Dad and a bank loan for the same amount, launched the Hunter Centre for Entrepreneurship. His message has lost nothing in passion and persuasion. It was delivered to the parliamentary chamber with all the melting eloquence of a great Puccini aria – Nessun Dorma perhaps, or Tosca’s Vissi d’Arte. All it lacked was a murderous stabbing.
“Scotland is the land of invention… the country that invented the modern world… a nation with a proud tradition of enterprise and entrepreneurialism… We need to re-create this… We cannot go on as we are… We need more entrepreneurs… less red tape…We need to be ambitious… We need to think bigger and better… We need a can-do attitude… Our vocational institutions must flourish… We need world-class teachers for world-class pupils… Carry on doing what we have always done and we will be defeated… We must raise our game… We must be innovative… When we do this we can invent the modern world.”
The big business attendees sighed, the Federation of Small Businesses wiped away a tear and the politicians applauded. Who could possibly fault this message or fail to be moved to immediate action?
But here is a strange and depressing thing. Back in 2003, when similar calls were being eloquently made, Scotland’s business formation rate was running at 36 per 10,000 head of population. Last year, our business formation rate was… 36 per 10,000 head of population. For reference, that trails the UK figure of 46 and even the UK figure excluding London and the south-east (39). There is also a notable gap between Scotland and the UK in research and development spending – just 0.52 per cent of our GDP compared with 1.09 per cent across the UK and 1.16 per cent across the European Union.
As Sir Tom himself admitted: “We have not moved the dial one iota”.
That may be an unfair summation. How much lower might the business formation rate have fallen had all the work of Sir Tom, Scottish Enterprise, business advisory groups, government initiatives and rate relief schemes not been in place? And current examples were cited of great entrepreneurial flair – BrewDog, Alison Grieve of Safetray Products, Patrick McDonald’s Superior Catering, and Jim Duffy’s Entrepreneurial Spark. “Crowd funding” was hailed as an innovative approach to raising finance.
These examples, as Salmond stressed, provide models and exemplars to inspire others to follow. And in exports there have been some notable achievements – Scotland’s food and drink exports have risen by 50 per cent over four years and the government’s goal to raise Scotland’s exports overall by 50 per cent by 2017 starts to look achievable with this example.
But such examples of success also work to highlight the bigger problem: if we have success in these areas, why not others? Since successful businesses can be built from next to nothing, why are there so few? The announcement of an additional £1 million support for the Prince’s Trust Youth Business Scotland Fund for start-up businesses is an admirable gesture. But given the scale of the economic challenge, it is just that – a gesture.
Many factors have worked to dull the entrepreneurial spirit. Chief among them has been the preference across Scotland’s aspiring classes for a career in the professions – law, medicine, financial services, and accountancy – even media. As one contributor to a workshop session bluntly put it, parents tend to respond to an offspring’s ambition to set up in business thus: “No you don’t. Go and get a proper job.”
There is the relentless march of a risk averse, rules-based culture: better to be a regulator than an entrepreneur. There is the dramatic swing within the banks from “risk on” to “risk off”. There has been the unstoppable growth of the public sector. When a council representative praised how Ayrshire’s three business gateway units came together to give to Entrepreneurial Spark, why, one wondered, couldn’t the three councils be merged and an altogether bigger donation provided?
And then there is an education system which once spawned entrepreneurs but which has, on many accounts, declined lamentably. The First Minister praised Scotland’s educational system and our great universities. But if all that is true, why do we have such high university drop-out rates? And why do we hear so much from business and employers of young people unprepared or unskilled for the world of work, and with an embarrassingly high incidence of illiteracy and innumeracy?
The recurring refrain in Sir Tom’s message is the compelling need for adaptation and invention to address the challenge of a low-growth economy. The grim conclusion many might draw is that since invention is the offspring of necessity, the economic challenge is not yet severe enough. Millions prefer to settle for the low-growth, low-risk career. The problem, of course, is that in a highly competitive world this option is not sustainable forever: the relative decline becomes absolute. If we are to avoid Third World status, Sir Tom Hunter’s clarion call for enterprise and invention must now be heeded.