It was a disappointing day for SMEs and scale-ups as Hammond sidelined them in his Autumn Budget. It’s vital that scale-ups remain front and centre despite Philip Hammond barely mentioning them.
The Chancellor mentioned scale-ups just once in his speech despite pointing out how those businesses generate over 50% of the jobs for the entire UK. There was a lot for very small businesses, i.e. the freezing of the VAT threshold or further analysis of business rates, however there was very little to actually explain just how the UK was going to help scale-up businesses scale. Patient Capital Review expectations failed to materialise.
Research has indicated that by closing the scale-up gap there is potential to deliver up to 150,000 new jobs across the UK and as much as £225bn toward UK GDP, both by 2034. Importantly, this growth is across the country and not just confined to London and the big cities.
Enterprise Investment Scheme
The Enterprise Investment Scheme limit was raised to £2million as well as increasing amounts to knowledge-intensive firms.
Access to long-term funding is critical to helping the UK’s high potential young businesses succeed. While many were worried about a cut, a raising of the investment limit for EIS is a big boost for scaling businesses.
However, we need the government not to focus just on the creation of entrepreneurial tech businesses, but on their ability to scale and longevity. It is successful scaleable businesses the UK needs, not volume.
Five Key areas needed to scale-up
There are five key areas that almost every business struggles with as they scale up:
- Access to finance
- Professionalising core business functions and developing leadership capabilities
- Growth through acquisitions
- Hiring and retaining top talent
- Having access to the right external markets to trade
The Chancellor has missed an opportunity to look at these areas as focal points for opportunity. A lot of good work has been done by government already, such as from Scale-Up Minister Margot James, as well as private sector bodies such as the ScaleUp Institute but without a central organising force it’s a little haphazard. More joined-up thinking would be most welcome.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.