Richard Parsons of True: give creative entrepreneurs a fighting chance

It’s official. We’ve narrowly missed falling into recession, with latest GDP figures revealing the UK economy grew by 0.1% in the fourth quarter. It appears the economy performed a little more strongly in the latter half of last year than previously estimated, with the ONS saying data shows that telecommunications, construction and manufacturing all fared better than initially thought in the latest quarter.

Yet these figures only tell half the story. Chancellor Jeremy Hunt will no doubt be sleeping a little more soundly over the coming weeks, but the same can’t be said for small businesses and entrepreneurs. Indeed, analysts are painting a more dismal picture, saying the impact of higher interest rates have yet to be felt, making a recession more likely as the year goes on.

Entrepreneurs – who contribute so significantly to the UK economy – are once again in danger of being stifled, overlooked and undervalued, with little motivation to start, let alone grow a business. Tax incentives from the recent budget were meagre to say the least, while a higher rate of corporation tax kicks in from this month.

Add this to the near evisceration of CGT and dismal levels of entrepreneur’s relief (now known as business asset disposal relief), where you’ll pay 10% on all gains on qualifying assets up to the lifetime allowance of £1 million (reduced in 2020 from £10 million), and these are the real figures to take note of.

With the current government hitting small businesses where it hurts the most, it’s little wonder that Labour is hot on its heels when it comes to the idea of growth. In adland, growth often means the shift from startup to scale-up but with so little in terms of small business incentives, establishing a pattern of solid growth from the ground up is difficult and demotivating.

Britain should be a growth hotspot for entrepreneurs – for starters it has world-class universities and a flourishing tech and creative scene. But here’s the thing. What every entrepreneur wants is long-term, dedicated and constructive support.

All too often, government support is a knee-jerk reaction with no long-term vision. Witness the recent deal for HSBC to buy Silicon Valley Bank’s UK operations, which might soften the threat to British startups and VCs concerned they would go bust if their deposits vanished. While a decent rescue move, it also reveals the extent to which the current government has no concrete plans other than a Hail-Mary move at the last minute.

There remains a real need to protect and support entrepreneurial efforts and as the market is showing, a concrete plan would help to stabilise an already twitchy lack of confidence.

Britain could be unleashing its entrepreneurs with better tax incentives to encourage them to take the leap towards success without the heavy weight of corporate and capital gains increases. To be competitive in global terms, Britain urgently needs business tax reform to be competitive and stimulate investment growth. Instead of these anti-business restrictions we need to be making it clear to entrepreneurs in creative industries that Britain is an attractive place to start and grow an agency. But the current fiscal outlines are making this an unappetising proposition.

While Hunt may be talking about growth, stability and public services, his actions all point to belt tightening, giving entrepreneurs very little – if any – fighting chance to turn things around.

It’s no wonder that the Chancellor has been asked to at least indicate a path to lower taxes but let’s not hold our breath. Right now, the costs are high via the war in Ukraine and the ongoing costs of the pandemic, but without any future hope of relief, the UK will stagnate and entrepreneurs will be more likely to take their business elsewhere.

Richard Parsons is a co-founder of B2B agency True.