The UK’s entrepreneurial divide: why is the south more enterprising than the north?

October 20, 2013 by
Filed under: Adam Lent, Enterprise 

There are many good stories to tell about the entrepreneurial spirit that seems to be gripping the UK.  However, the way this spirit is concentrated in the South of the country is not one of them.

On Wednesday the annual edition of the Business Population Estimates for 2012 will be published by the Office for National Statistics. It’s a publication that attracts far less attention than the regular inflation, employment and growth reports but it deserves more for it will almost certainly present a worrying picture of an emerging ‘entrepreneurial divide’ between the north and the south.

The last two editions of the report for 2010 and 2011 show a country where the number of businesses has been rising inexorably since 2000 from 3.5 million  to 4.5 million – a rise of over 30%. Even the most severe financial and economic crisis since the 1930s has not dented the appetite for start-ups.

But this hides the reality of a divided nation. While southern regions boasted 1,126 enterprises per 10,000 people in 2011, northern regions (including Scotland and Northern Ireland) could muster only 773.

More worryingly, the recent acceleration in the establishment of start-ups is happening far faster in the south than the north with a 6% and 2.5% rise respectively in the number of enterprises per 10,000 people between 2010 and 2011. Wales and Northern Ireland actually saw a 5% fall.

The sheer scale of the entrepreneurial divide is shocking. The most entrepreneurial region (London) had 1,231 enterprises per 10,000 people in 2011.  The least entrepreneurial (the North East) had very nearly 50% less at 625.

Why this divide is so stark urgently needs further investigation. As Ben Dellot points out in his blog post today:

where once we were a nation of shopkeepers, now we are seemingly one of consultants, freelancers, entrepreneurs, online marketplace traders.

This is the reality of the new economy that is being created in the UK and those regions that fail to nurture the intense entrepreneurial spirit required to adapt to this challenging world will inevitably be left behind.

Undoubtedly there is a strong element of Catch 22 about all this: regions that have more active labour markets and more enterprises are inevitably more likely to generate further entrepreneurial activity. The regions with more businesses and start-ups do, for example, have higher employment rates and lower unemployment rates (although London, interestingly, bucks this trend).

But to simply accept this as a sad fact of life is to condemn northern regions to their fate in an economy where entrepreneurial oomph increasingly counts. Instead, we desperately need to understand more about the motivations and needs of the new wave of business people and then explore how those motivations can be nurtured and those needs supported in the regions where the entrepreneurial fire merely flickers rather than roars.

 

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Comments

  • emma jones

    Adam

    Congratulations on a thoughtful post and raising an interesting issue. You are right in that more people are likely to start a business if they know someone who has so in the south, there’s a virtuous circle emerging.

    Having lived in Leeds and Manchester, and done a lot of business in the north, I know many entrepreneurial people there too! There is action that can be taken to close the gap:

    * a lively programme of events and startup training, in every town and city

    * the media playing its part to raise the profile of starting a business and shining a spotlight on those who have

    * encouraging big companies to get involved through projects such as PitchUp as this will also get small business in the press

    * opening up work spaces so StartUps can go meet others .. and even if you’re in consideration stage, you can go along too

    * Local Authorities taking a lead to launch StartUp competitions and contests

    * open PopUps to bring small businesses (and support) onto the High Street

    I could go on. This work will be underway but it can take time to move economies that have had a big public sector presence to one where people think first about self-employment, over employment.

    I’m confident it will happen and posts like yours will hopefully serve to accelerate it.

    Emma

  • Dan Martin

    This an issue I bang on about a lot! A major reason for the disparity is that there’s still a huge amount of focus on London and I say that as someone who was born and lived there for 30 years! Event after event and programme after programme focuses on the capital and there’s nowhere near enough done to promote entrepreneurship outside of London. There are very entrepreneurial people all over the UK but most business groups, media etc are tempted by the lure of Tech City and other London-centric programmes. Until that changes, the gap will remain.

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