Are medium-sized companies getting enough support?

In her first keynote speech as director general of the Confederation of British Industry (CBI), Caroline Fairbairn is set to address the issue of MSB’s (medium sized businesses) and their potential impact on the UK economy.

The CBI’s new report, ‘Life In The Fast Lane’, claims that had the scale-up rate of 11% for 2010 to 2013 matched the higher 2005 to 2008 rate of 15%, the impact would have been worth an extra £26.6 billion to the economy.

The report looked at how the UK focuses on start-up firms that are driven by single ideas and one individual, but not on how those ideas are grown and expanded.

It suggests that the big firms that represent the other end of the spectrum are also well-known, but what is needed is an understanding of how the process in between works – from increasing profit and staff numbers to international expansion

As well as being beneficial for the wider economy, scaling up can provide a smaller company with the impetus of growth, helping to avoid the sort of stagnation and even regression that can leave a business in need of corporate recovery.

The theme of the CBI report was also echoed by the recent Scale-Up Report on UK Economic Growth, which analysed 50 scale-up programmes in 20 countries, with the emphasis on tech businesses.

The study found that the UK started more businesses per capita than other country, including the US, but failed to scale them up into larger concerns. This left the UK with proportionally fewer large companies.

The CBI would like to see a range of measures instituted, including tax incentives to reward entrepreneurship and investment in medium-sized businesses. They suggest the Tier 2 (general) visa cap could be raised to give ambitious companies more access to vital skilled workers.

The CBI also called for standardisation of the European VAT threshold at €100,000 and a shortening of the timeframe for payment of the research and development tax credit.

By Phil Smith

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