Micro-business and start-ups: time to get angry?
So much that passes for micro-business and start-up policy is horribly vanilla. For example, Lord Young’s interventions in which micro-business is declared a ‘jolly good thing’ and the Government is urged to chuck a few million quid their way or tweak the odd regulatory barrier.
Alternatively, micro-business and start-ups are projected as the main beneficiary of the hackneyed calls for the loosening of workplace and employment regulation. A demand that wilfully ignores the fact that the vast majority of micro-businesses and start-ups have no employees and are unlikely ever to have any.
It’s an approach that even shapes the outlook of the Federation of Small Businesses which has a series of campaign goals focused largely on access to finance and deregulation.
Where, one wonders, in all this is the anger. Micro-business seems unaware of the disjuncture between their growing importance to the economy and the fact that policy influence is wielded by a very different class of firm altogether.
There are now almost five million mini-firms in the UK accounting for over 30% of private sector employment and 20% of turnover. This means micro-business, on some measures, is now a more significant part of the UK economy than the conventional SME sector. In terms of total employees, the micro sector is not far behind the largest firms. As I’ve pointed out elsewhere, this is a quiet revolution that has happened over the last four decades but maybe it was time it became a lot noisier.
Given this context, the tiddlers might want to start asking some awkward questions. Why, for example, is it the largest firms that get to sit around the table with ministers on a very regular basis actively shaping tax, trade and regulatory policy? Why, when news programmes want commentary on the state of business, do they almost invariably go to the multinationals’ trade union, the CBI or, worse, an economist working for a big bank.
Instead of feeding the sector policy scraps and laughably small funds, how about a wholesale review of business regulation and law to seek out which bits of our system benefit the big over the small? My hunch is that a forensic look at areas like patent law, planning regulation, transport frameworks, tax arrangements and public procurement practice would reveal a system deeply biased towards (and fully exploited by) the largest firms. I could be wrong but I’d be very surprised.
The truth is no-one of any importance cares about a mini-firm. The little get no help from friends in high places that give them a special market advantage. They simply have to produce stuff or services that people want to buy and want to keep on buying over the long run. It is here, down at the small end, that you find the free market working best.
Ironically, this is precisely where their power could lie. Unlike the big, micro-businesses don’t need to get involved in the unseemly cat-fight for special favours and subsidies that characterises so much of the big business policy discourse. They simply need to call for a level playing field; for the removal of just those special favours and subsidies that keep the big big.
In short, if organised and angry, micro-business could be the true champions of a genuinely free market.