Small business is stronger than ever, according to Lord Young

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It is now four years since the Prime Minister first asked me to report on Small Firms.

Up until then there had been only one report, the Bolton Report in 1971, and its conclusions - that the sector was in terminal decline and doomed to extinction - seem scarcely credible today.

 The three quarters of a million firms of his day are now well over five million, and small firms are leading the way to increase employment, with more than 19 out of 20 employing fewer than 10 people.

 It really has become a small firms’ world. Of course, large firms are important; they still employ about a third of the workforce.

 But, increasingly, technology is enabling them to do more with fewer people. What technology has really done is to make it easier than it has ever been to start working for yourself.

 I also found that the bureaucratic nature of public sector procurement militated against small firms.

 We have taken substantial steps to open up the entire sector by abolishing pre-qualification questionnaires, sometimes up to 40 pages-long, asking for all sorts of irrelevant information. Large companies can deal with these as a matter of course, but small company directors throw up their hands in horror at them.

 We will be making the whole procurement process transparent and open and will shortly announce further steps to enable small firms to compete for public sector contacts on a more equal basis. From what we have seen already in our work for central government, this will result in substantial improvements in innovation and even cost savings.

 The skills you need to work for yourself or in a small firm are rather different from those required by large companies, for large companies are, of necessity, more concerned with teamwork than an entrepreneurial approach.

 That is why we are going to offer all head teachers an enterprise adviser to bring speakers into schools to motivate young people early in their school career and introduce an enterprise passport to broaden their activities through the school years.

 Young people in school today will face a world in which more and more people work for themselves, work in small groups and sometimes for more than one company and change occupations from time to time.

 It is going to be an exciting world but a different one and we must prepare them for it.

 Lord Young is the Prime Minister’s advisor on enterprise.

 

 

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