I've been posting my views on the Financial Times web site in reply to Gordon Brown's statement on the subject of entrepreneurship and innovation and how vital this is to the future of the UK. Here's what I had to say on the subject starting with my first posting on 14 November 2005:

First Poting On The Call For Entrepreneurs

"Everyday I get 400 or so visitors to my website all searching for small business ideas. Of those who arrive, the majority is looking for government grant or small business finance. I point them towards Business Link, the DTI, and Local Enterprise Agencies, but they come back to my web site because they meet blank walls.

How on earth can Gordon Brown expect entrepreneurs to take their ideas and build businesses that create wealth for this country when many aspiring entrepreneurs cannot even navigate the first hurdle to starting a small business?I watch with envy at the American system for helping small businesses with grants, loans and Small Business Innovations Research funding.

The Small Business Administration (SBA) that's responsible for providing grant / loan funding operates within a legal framework and is empowered to champion all small businesses; every type of small businesses including those owned by ethnic minorities. The SBA is set targets and is evaluated on performance. Compared to the SBA and associated State structured funding agencies our system falls way short.

Not only that, entrepreneurs in the UK are confused about where to go for funding and whether they’ll even qualify.

Every week I receive announcements of yet another small US companies being granted Small Business Innovations Research (SBIR) funding that allows them to research and develop innovative technological and other products with the USA government as possible stakeholder.

When I read about our research grant scheme that is suppose to be equivalent to the USA's SBIR scheme I smile because I know there's no comparison.

Our scheme falls way short!

When I read about young Londoner's not wanting to start a business of their own, but would rather work in paid jobs because they are adverse to stress, I'm saddened because at the same time, young people in the USA are winning prizes for showing entrepreneurial flair and starting businesses.

If the Chancellor or Prime Minister in waiting truly believes that entrepreneurs are the key to Britain’s future my advice to him is "don't tinker with tax incentives, instead create an environment that supports, encourages and mentors budding entrepreneurs to build thriving businesses".

Here's my second posting two days later:

"Following my previous post on 14 November 2005, here's a classic example that illustrates why the Chancellor should concentrate on substance rather than tinkering with incentives like tax to encourage entrepreneurialism.

In his article on November 9, 2005 Jonathan Guthrie wrote an article with the headline: "Why Tax Credits Are For Business, Not Mad Scientists."

The salient point on which the article was based was the performance shortfalls of HM Revenue and Customs, and ignorance and inertia among companies on the R&D tax Credit scheme.

Apparently George, the Treasury Official who oversees tax credits for companies undertaking cutting-edge research and development spends his working hours in hope of receiving calls from companies that are interested in applying for R&D tax credits.

Ironically, Gordon Brown regularly trumpets the R&D tax credit scheme but the scheme has fallen short of its full potential largely due to administrative snarl-ups at HM Revenue and Customs and ignorance and inertia among companies that are eligible for the scheme.

There is suspicion by companies of the Revenue handing out money instead of its normal role of collecting money but the main concern for companies over the R&D tax credit is that of uncertain administration and the long waiting period (up to two years in some instances) claimants face in receiving their cash.

This is the reality of the R&D tax credit scheme!

In the context of encouraging entrepreneurialism among Britain’s innovative companies the R&D tax credit scheme should be restructured to encourage SMEs (Small and medium size enterprises), on similar lines as the USA’s SBIR scheme.

The scheme should also accommodate larger companies, but should be biased towards helping innovative SMEs, particularly technology type companies.

Clearly, if Gordon Brown wants to infuse in Britain a bias towards taking risks then he should recognize that fundamental changes are needed in all areas of government provision and that changes MUST involve business experts (SMEs and large companies) and not be left solely to the public sector."

And following the good news on 24 November 2005 that Gordon Brown will leave innovations funding to business instead of the public sector, here's my letter to the FT Editor"

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"Sir

A week in politics is a long time but following Gordon Brown’s recent statement that the future of the UK is dependent on entrepreneurs, who are the wealth creators, and the recent announcement to allow businesses to shape the Innovations budget, I can barely catch my breath.

Instead of tinkering with tax incentives to wow entrepreneurs, Gordon Brown it seems has been looking at what has been happening in the USA.

Instead of the R&D tax credit scheme being administered by HM Revenue with all its conflicts, uncertainties and poor performance there is now the prospect that entrepreneurs will be the rightful champions of innovation.

I watch with envy at the American system for helping small businesses with grants, loans and Small Business Innovations Research funding. While there’s no such thing as a perfect system, my hope is that we can finally create an environment where entrepreneurs with innovative ideas, especially those that are technology driven, will be encouraged to seek funding for their projects.

Everyday I point visitors who are seeking funding for their innovative ideas to Business Link, the DTI, and Local Enterprise Agencies, but they come back to my web site because they run into blank walls.

How on earth can Gordon Brown expect entrepreneurs to take their ideas and build businesses that create wealth for this country when many aspiring entrepreneurs cannot even navigate this first hurdle?

At last, there’s the real prospect that some of these companies could finally receive funding that could see them grow into global brands.

The challenges to our economy and way of life whether from of climate change energy shortages, caring for an ageing population, technology change cannot solely rest on the City of London, it must surely rest on people of vision who can transform ideas and, with financial support, create real wealth.

David Davis
Small Business Resource Ltd
www.2-small-business.com
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Finally, what about you, followng the announcement that funding for innovations should be administered by businesses, what is your view?

If you want to contribute to the debate go to the
FT's small business forum