No sooner had I posted my blog about the government having little idea on how to get growth back into the economy, when “The Path to Strong Sustainable and Balanced Growth” is published by BIS and the Treasury. After reading the paper I can say that my original view is correct. There is nothing new in the paper and it is generalised and lightweight. For instance it speaks of a generalised aspiration to raise productivity whereas I think you have to look at each business area and work out how to raise productivity sector by sector. They are all different. The McKinsey paper does this and that it what gives it more depth.
Concentrating innovation in large clusters is known to make it more effective. Instead of saying how this should be done, the government’s paper speaks of being “innovation friendly”. It is generally recognised that because of demographic and other trends, health and education are areas of huge potential growth. The government paper makes no mention of this.
There is nothing new in the access to finance section. At least the McKinsey paper suggests new sources of money.
I am no friend of consultants, but if they produce some good ideas, why not use them?
“Work out how to raise productivity sector by sector.”
Good old Labour thinking, let`s employ thousands more time and motion people in the interests of productivity, 5 people to stand watching the man dig the hole ! If we throw enough experts and money at overseeing everything it`s bound to get better….Same old, same old !
I had forgotten about time and motion people. I thought it was all done electronically now.
I would think the 2009 statistics on UK Business might shape what needs to be done? Fig 1 shows that large enterprises account for 51% of national turnover and 40.2% of employment whilst small enterprises account for 35.7% of turnover and 48.2% of employment. Academics might care to plot this chart over the years but what is clear right now is that large business turnover has increased whilst employment levels have remained the same suggesting a productivity increase.
Ref: SME Statistics for the UK and Regions 2009
http://stats.berr.gov.uk/ed/sme/Stats_Press_Release_2009.pdf
SME Statistics for the UK and Regions 1994-2009
http://stats.berr.gov.uk/ed/sme/
You are right about productivity going up, but it applies to large and small businesses.
You are right about productivity going up, but it applies to large and businesses. The McKinsey Report tells us that we have closed the producity gap with the rest of the EU by 10% and the largest contributor to that was the manufacturing sector.
Along with Senex, I also had cause to look at the 2009 Annual Business Survey. It is worth noting that, for the purpose of the report, micro businesses were added to SMEs. A micro business is defined as having 1-10 employees, small have 10-49, medium have 50-249, and large with 250 or more.
At the time, there were 4.68 million private sector businesses of which: 3.5m had no employees, 1m were micro businesses, 194,000 were true SMEs. Approx 0.1% of all ps businesses had 250+ employees.
For now, this is really just to point out that true SMEs plus large businesses represent 4.1% of all ps businesses, 22% are micro businesses, leaving roughly three-quarters having zero employees.
PS if you like stats, take a look at http://www.cipd.co.uk/NR/rdonlyres/45894199-81E7-4FDF-9E16-2C7339A4AAAA/0/4926AbsenceSRWEB.pdf
My favourite is Table 26
Thanks for this. I’ll look at it and then let you know.
Tiz: Micro business is a concern. All the last government was concerned with was the tax take from this sector. What is a real concern is how these businesses should scale themselves or be encouraged to do so to enable them to join the small business sector.
Micro businesses rarely have a sales plan because they are opportunistic and plus they cannot pursue sales leads when they are lab rats to someone. They are exploited by all sides to remain just as they are. This means that lending by the banks is frustrated because banks are definitely not venture capitalists at this level.
I must confess that I want to see their numbers greatly reduced by encouraging consolidation into the small business sector. This would open many more doors commercially but their hangers on would be opposed to this as would the government as both are earning a cosy living off of their backs.
Such small businesses would need admin, sales and support staff so this would be a boost to employment generally. The gotcha is that individuals running these micro businesses treat money in just the way government likes it; they spend it.
Money in business is a tool for making more money. But how do you convince or encourage somebody that is a virtual employee that this should be their prime directive?
A pretty fair assessment, and a rarity to see a comprehension of how gvt treats MBs.
The shedload of employment-related laws passed by the last gvt were extraordinarily detrimental to job creation in MBs, especially when coupled with the loss of exemptions in 2002.
I was hopeful that Lord Young’s report would mark a turning point. Sadly, it won’t even put the brakes on.
I always thought micro businesses were often a lifestyle choice. And very welcome it is and made easier by I.T. I am not sure it is a good idea to add on overheads.