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“Whatever their other arguments, there’s a clear consensus among economists that long-term growth depends on innovation,” says the Minister for Business and Enterprise, MARK PRISK MP, “but we need to harness that to grow differently.”
Just how differently, he argues, depends on the vigour of the UK’s community of 10,000-15,000 midsized enterprises. “It’s a really important cohort of private and often family-owned businesses which hasn’t traditionally appeared on the conventional Whitehall radar.”
The Government is determined to change that, he says, by removing unnecessary barriers stifling innovation and by mobilising networks to help mid-sized businesses to grow. He outlines a number of key intitiatives to facilitate the commercialisation of original ideas in the sector:
The availability of both equity and working capital is a prime concern, says Prisk. To help bridge the gap, the £2.5bn Business Growth Fund has been launched with the British Bankers Association. It encourages banking investments of £2m to £10m in firms with £10m-£100m turnover, in exchange for a share of the business ranging from 10% to 50%.
From April 2013, companies can apply a10% rate of corporation tax to all profits attributable to qualifying patents, whether paid separately as royalties or embedded in the sale price of products. This reduced rate aims to encourage companies to locate the high-value jobs associated with the development, manufacture and exploitation of patents in the UK and maintain the UK’s position as a world leader in patented technologies.
Large businesses are being encouraged to strengthen their relationship with midsized enterprises in their supply chain. A £125m fund has been earmarked for an Advanced Manufacturing Supply Chain initiative aimed at improving the size, quality and global competitiveness of that sector.
Administered by Birmingham City Council and the government’s Technology Strategy Board, the scheme enables supply chain companies to use the fund for capital expenditure, skills and training and R&D projects. There’s a minimum project threshold value of £2m, so it’s expected many funding bids will be made jointly by “clusters” of several companies.
It’s a £200m-plus network of “world-leading centres to transform the UK’s capability for innovation” in seven areas most likely to drive economic growth: high value manufacturing, cell therapy, offshore renewable energy, satellite applications, connected digital economy, future cities and transport systems. The first, in high value manufacturing, opened last October, and all are expected to be fully operational in 2013.
“To grow beyond private and family ownership,” says Mark, “it’s vital for mid-sized companies to recruit the brightest and best managers with the potential to carry these enterprises to the next stage. We found that the UK’s mid-sized firms very often rank below the Germans and the Americans in their management capability.” So the business school community is being urged to look at programmes specifically aimed at mid-sized businesses rather than focusing on the needs of the classic multinationals. “Working closely with companies and with representative organisations like the Institute for Family Business and the M Institute think-tank, we’re determined to help change the perception of the true potential of mid-size businesses.”
“Something like 43% of all graduates have degrees in science, technology, engineering or maths, but only 5% of them go on into industry,” says the Minister. “Rebalancing our economy towards manufacturing means completely changing the popular perception of old smoke-stacked factories to attract more graduates into these businesses.”
On the back of last year’s ‘See Inside Manufacturing’ initiative, which aimed to tackle just that, this year’s programme, led by industry champions in each sector, culminates with a “mind-changing” exhibition of the future of modern manufacturing at the Science Museum.
“When I look at some of the remarkable design and engineering capabilities I’m seeing in business, I’m really excited about our potential.”
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