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Toby Perkins’ speech to mark Entrepeneur’s Week

On Monday 18 November, Toby Perkins, MP for Chesterfield and Shadow Small Business Minister, delivered a speech to mark the start of international Entrepeneur’s Week.

The keynote address was delivered to an audience of entrepreneurs, social entrepreneurs and thought leaders in the entrepreneurship space.  The event was put together by UnLtd – a leading supporter of social entrepreneurs –  RBS and the newly established Think Tank the Centre for Entrepreneurs.

You can read Toby’s full speech below:

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I am delighted to be here this afternoon and to have the opportunity to start the 2013 Entrepreneurs Week with so many people who’ve been there and done it themselves.

37027Since its creation in 2008, Entrepreneur’s Week has grown as rapidly as any gazelle business.  In the last five years, more than 10 million people from 102 countries have participated in entrepreneurial-related activities during the Week.  Last year alone 88 countries hosted Global Entrepreneurship Week and generated over 32,000 activities.  The importance of the Week in demonstrating to people all around that world that, whatever their background, they too can follow their entrepreneurial dreams should never be underestimated.

So I really am grateful to UnLtd for inviting me here today.  We all know the great work they do to provide innovative support to social enterprises, as a nation and economy we all value the businesses and individuals they support – those whose ventures are firmly rooted in delivering positive social change.

As someone who has set up two and a half businesses, I can assure you that the added value and contribution of entrepreneurs is right at the heart of Labour’s vision of a One Nation economy.  In September 2011 we established “Next Generation” or “NG” – Labour’s first Entrepreneurs’ Network which aims to support and showcase the best of British innovation, new business ideas and inspirational business leaders.

The network brings together high profile speakers and experts in supporting business and entrepreneurialism within an informal environment to meet other entrepreneurs and Labour’s Business team, and exchange new ideas and contacts. It is another chance for entrepreneurs to shape Labour’s thinking around an enterprise economy and enable the ideas from the community of entrepreneurs to be embedded at the heart of our policies.

Speakers at these events have included Samir Desai – Co-founder and CEO of Funding Circle; Sue Woodward OBE the Creative Director for both Manchester’s Commonwealth Games and Liverpool’s Capital of Culture; and from my own patch of North Derbyshire, Derek Mapp, a serial entrepreneur and founder of the Tom Cobleigh pub chain.

This kind of work fits perfectly with the vision set out by Ed Miliband in his very first conference speech as Labour Leader in 2010 when he first outlined his determination “to make Labour the party of enterprise and small business”.

And the need for government to promote a challenging small business led economy has never been more urgent:

  • There are nearly 5 million small businesses in the UK
  • Small businesses account for 99 per cent of all enterprises in the UK, 58.8 per cent of private sector employment and 48.8 per cent of private sector turnover
  • Small businesses employ an estimated 13.8 million people and have an estimated combined annual turnover of £1,500 billion

So encouraging and supporting new generations of ambitious small businesses will be a key part of One Nation Labour’s economic stratergy.  If we are to address the cost of living crisis, reduce our stubbornly high levels of unemployment and deliver a sustainable recovery we need the best environment for our small businesses to survive and thrive.

It is good that the issue of social mobility is back on the political agenda.  Labour believes entrepreneurs and social enterprise have a key role to play in fighting for social mobility by challenging conventional wisdom and breaking open new markets.

Our Shadow Business Secretary, Chuka Umunna, has highlighted how previous attempts to improve social mobility have focussed far too much on the professions – getting more kids from deprived backgrounds into law and medicine has been seen as the way to radically improve their life chances.

These avenues remain important but for many young people – and I speak as someone who left school at 17 myself – the academic route won’t be right for them.

An entrepreneurial career, is an equally realistic path for social progress and this option must be normalised in schools.  We are exploring the idea of having a designated space for a business governor on the board of every school to help achieve this and I am pleased that it is a Labour Council, Waltham Forest, who are already rolling out such a scheme with the help of their local FSB.

As I alluded to a moment ago, I haven’t always been a politician, and before 2010 I could even have been described as a human being.  One of the reasons I was so delighted to be appointed as Ed’s Shadow Small Business Minister is because I have lived many of the problems I am now tasked with finding solutions for.

After leaving what I have already alluded to as a less than auspicious academic career, I took on a telesales job and continued to work in the private sector for my entire career up to 2010.  I eventually set up the third of my own small businesses in the Sportswear business, supplying and importing bespoke Rugby kit to Clubs, universities and schools and through an internet business, Club Rugby.

Alongside this work I was also involved in a social enterprise of my own.  Based in the area of Chesterfield I previously represented as a Borough Councillor, the Families First Children’s Nursery was a cooperative formed with investment from the last Labour Government.  Serving an area with significant deprivation, the nursery has overseen a dramatic improvement in Early Years Education.  And, in one of the proudest moments of my political career to date, I presented a certificate to the nursery in 2011 when it was the first nursery in the area to be named as “outstanding” by Ofsted.

Our nursery fulfilled three fundamental features of social enterprise success, namely it satisfied a need in the community; it had a strong social purpose and it had a sound business plan and was profitable.

Without any of these facets a social enterprise will struggle, and without the latter one, a sound business plan and a profit stream, there is every chance that a social enterprise will actually do more harm than good.

Whenever I speak to budding entrepreneurs who want to set up their own social enterprise I emphasise this point – they must have a clear plan to deliver a profit, which they can then use for social good.

From these experiences I have no doubt that social enterprises work and have an enormously valuable contribution to make to our national life.

So social enterprises and new businesses are a part of a landscape that is undergoing a cultural shift in the eyes of consumers and the public at large where it matters not just how much you make but how you made it.

From concerns about tax evasion, to how firms treat their staff, from business’s relationship with their suppliers to paying on time, and from the carbon footprint to company charities, customers expectations of the ethical capital a business has is an ever increasing factor in our purchasing and investment decisions.

Social enterprises can also have a huge influence on the behaviour of more traditional businesses … particularly when they can so clearly demonstrate that their model works.

In the past 12 months:

  • 38 per cent of social enterprises saw an increase in their turnover compared with 29 per cent of small businesses
  • More than half of social enterprises developed a new product or service, compared with 43% of SMEs.
  • And two-thirds of social enterprises currently project that their turnover will increase in the next two to three years, almost double the number of small businesses.

So the social enterprise sector is performing.  There are currently 70,000 social enterprises in the UK with this figure growing every year.  They contribute £18.5bn to the economy and employ almost one million people.  Crucially these jobs often come in the most deprived areas with over a third of all social enterprises working in the poorest of places.

This underlines that ethical capital is the not the enemy of the bottom line but can enhance it.

Obama’s first Treasury Secretary, Tim Geithner, has spoken publically about how capitalism “will be different” in the century after the 2008 crash.  Perhaps in the burgeoning social enterprise we are seeing the direction of this change, with ethical capital an integrated part of many more business models.

In the 21st century delivering long term productivity is not just a case of utilizing machines, cash, or skill.  In a world of switched-on consumers able to access a previously unimaginable amount of information online, there is an increasing demand on a firm to utilize all these resources without damaging the natural world, abusing the powerless, or taking from the future.

The reverse is also true.  Without ethical capital, industries face the problem that Lord Turner – former director of the CBI no less – has called “social uselessness.” A company socially useless to people, communities, and society will face more disruptive competition from insurgent social enterprises, a keener eye from regulators, and a growing suspicion from customers.

So we applaud your success and stand by you during your further mission to grow further and change the British economy for the better.

To achieve this we need to work in partnership to create a proper system of support and advice.  Almost exactly two years ago the coalition government scrapped Business Links – which despite its faults was a known, branded business support service which people could access for help.

We were promised a huge increase in mentoring to replace this, but this has proved as nebulous a concept as its critics suspected.

I recently discussed these issues with a large group of entrepreneurs and FSB members in Leicester.  They made it clear that to access support they need a clear, branded signpost, and that they believe government has a role to play in creating this.

This is unfortunately exactly what the government are failing to deliver.  Their support model is only reaching those already in the know and plugged into the system. This is shown by the fact that just 17% of those contacting the new MentorsMe site did so in order to find a mentor, while 67% wanted to become a mentor.  It is also demonstrated by where they chose to hold the first meeting of mentors … not Middlesbrough, Manchester or Milton Keynes but just down the road at the BIS offices in Westminster!

Mentors have a vital role to play but they are not a panacea to the problems of business support.  A wide and easily accessible programme is required.

Additionally, we have set up a regional Labour Cllrs Business Network in every area of England to allow local authorities to share ideas, resources and best practice around small business policy … Labour councils have also played a leading role in promoting the first ever Small Business Saturday on 7th December … our skills taskforce are looking at how we can deliver the skills businesses need … and we are examining exactly how Local Enterprise Partnerships can be beefed up to guarantee that they deliver regional growth for the areas that need it most.

I have already spoken about the need to normalise enterprise as a career path for our young people, particularly through the idea of business school governors. This has a skills dimension, a cultural dimension and is about highlighting all of the positive aspects of good business practice as much as we condemn bad practice.

This is underlined by Labour’s work on sales skills. Sales is a key business skill. An old adage of business is that until someone sells something nothing else happens. Yet despite a widespread acknowledgement of the importance of sales, it is as aspect of British business success which has had a Corinthian approach to its development.

Less than 1% of apprenticeships are offered in sales and the profession is often derided in popular culture. Academically our study of the art of sales is virtuall non-existent at graduate level and it has been written out of the Business Studies A level curriculum.

However, sales offers huge potential for people at all levels of acadmic ability and employs over two million people in the UK.

So we have studied best practice and identified many of the shortcoming during our policy development work which has taken in the role of sales skills at every level of the academic and business world.

The next Labour government will be willing to challenge vested interests and intervene to ensure broken markets become fair as well as genuinely free.

You can see this in our approach to the energy sector where consumers and businesses have, frankly, had a raw deal with spiralling energy costs.  Labour will freeze energy prices for twenty months to give time to address the fundamental problems in the energy sector, especially its uncompetiveness, and we will emerge with a fairer market.

Likewise, in the public house sector Labour has consistently campaigned alongside third sector organisations like CAMRA, Unions like the GMB and business representatives like the FSB and Forum of Private Business, to call for a fairer and more balanced relationship between “PubCos” – the large branded pub chains which own the vast majority of British boozers – and their licencees.

At the same time, we also want to reward companies and social enterprise that do the right thing.  For our example our “make work pay” contracts with business would allow those who pay the living wage to claim a one-year tax break in return.

And our job guarantee will offer support to employers who employ the long term employed.  Not ‘work for nothing’ schemes that deliver impoverished staff but a genuine programme that rebuilds the link between work and reward and recognises your role in helping people turn their lives around.

There is much evidence that employing staff who are turning up for work but returning home to poverty is bad for business and we are clear that we don’t see a future in the 21st Century for a low wage low skills Britain.

An independent study of those business which are already paying the London Living Wage found that:

  • 80% of these employers believe that the Living Wage had enhanced the quality of the work of their staff
  • Absenteeism had fallen by approximately 25% amongst these businesses
  • Two thirds of these employers reported a significant impact on recruitment and retention within their organisation.
  • 70% of employers felt that the Living Wage had increased consumer awareness of their organisation’s commitment to be an ethical employer.

This is all part of a general election offer which will remain resolutely pro-business whilst rewarding those who play by the rules and supporting firms to adopt high-value and high-productivity business models

  • Only Labour will cut business rates – Under David Cameron businesses have been hit by business rate rises of £1,500 on average and they are now facing a further hike of £400 in April 2014.  A Labour government would not bring forward the government’s planned 1% Corporation Tax cut for 80,000 large firms and use all of the money to cut the business rate bills of 1.5 million small firms.
  • Only Labour will freeze energy bills – Energy is one of the highest costs small businesses must pay.  Labour’s pledge to freeze energy prices until 2017 would save the average small business £1,800.
  • Only Labour will fix our broken banking system – Small businesses consistently rank limited access to finance as their biggest barrier to growth.  With 89% of all UK small businesses locked into the five big banks for banking facilities, all using the same lending criteria only radical reform will break this cycle.  Only Labour is committed to tackling this by creating a generation of new local business banks with a responsibility to boost lending in their area.

As I go around the country listening to business groups and developing entrepreneurs in every corner of the land, the message that comes back form you is ever clearer.

You know that markets are only free when they are fair, and everyone in them big and small plays by the same rules and has access to the same resources.

You know that an untapped entrepreneurial spirit burns inside in so many people across this great country – from the school kid who thinks maths isn’t for them but builds up a playground empire on the back of smart trading of football stickers, to the amateur baker who has always wondered if they really are as good as their family tells them, and if they really could run their bakery.

You know that a business only thrives when it is tune with its community as well as its shareholders.

So the forward offer from a future One Nation Labour government is forming:

  • Lower costs – a cut in business rates for 1.5 million small businesses and frozen energy prices saving each small business an average of £1,800 a year
  • Access to Finance – a commitment to create a generation of local banks in tune with the support businesses in their community need
  • A primary childcare guarantee – schools open from 8am to 6pm so every parent has the space they need to work or manage a new business
  • Business Support – a clear and well signposted point for businesses and entrepreneurs to access the help and advice they need
  • A focus on the skills your business needs at every stage of the educational system
  • Real incentives – for those who do the right things, such as taking on apprentices and paying the living wage

We are fighting to fulfil the promise of Britain, a promise you are already making a reality.  Thank you for all you do friends, and enjoy your week!

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Welcome

I am Toby Perkins, Labour's Member of Parliament for Chesterfield. If you would like to get in touch with me, my office is open and can be reached by phone on 01246 386 286. I also hold regular surgeries so that constituents can meet me and I can take up their concerns. If you would like to make an appointment then please do contact my office. Thank you for visiting.

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Tel: 01246 386286
Email: toby.perkins.mp@parliament.uk
Post: 113 Saltergate, Chesterfield, S40 1NF

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