Keir Starmer has pledged to create 100,000 start-ups across the country through direct government support in the first term of a Labour administration as analysis shows that the business “birthrate” has fallen significantly since 2016.
Commenting on analysis released by the party today, which showed that the rate of business start-ups has fallen across every region in England and is down 11% since 2016, Starmer declared that his party “backs business”.
“The drop in business birthrates is in no way symptomatic of a drop in ideas, drive, creativity, or commitment from British entrepreneurs,” the Labour leader said today.
“But under this Conservative government, the next generation of business founders are being let down. Business growth is the engine of our economy and it is only by backing aspiring founders that we can create jobs and rebuild a secure economy.”
The research from the opposition party highlighted that the government’s flagship ‘start-up loans’ scheme has only supported the creation of around 9,500 companies per year, and that the largest beneficiary of the funding has been London.
Labour pointed out that nearly £1 in every £4 of funding under the programme has gone to London, while the North East has seen just £1 in every £20, and called on the government for better targeting outside the capital and the South East.
The party has pledged to boost the existing policy, funding 20,000 new businesses a year with an additional £1bn across the next five years, with a required minimum amount of funding to be lent in each region of the country.
The research from Labour and comments from Starmer today follow a call from the party leader earlier this year for the government to increase support available for start-ups by increasing funding for the Start Up Loans Company.
In a speech on his vision for the economy, delivered via livestream in February, Starmer outlined his plan to “begin a new chapter in the history of our country”. He also called on the Prime Minister to create a new ‘Covid recovery bond’.
Labour said that its plan for business would create double the number of businesses the current start-up loans scheme is delivering by ensuring better links with other programmes and earmarking funding for particular regions and nations.
It also said that its proposals would promote other models such as co-operatives and employee-led business, and that it would support people with low-incomes or with no savings to start a business through the ‘new entrepreneurs allowance’.
“To rebuild our economy, we need to harness the dynamism and creativity of our nation’s entrepreneurs,” Ed Miliband said, emphasising the need for funding allocated on merit rather than “favours or promises of former business contacts”.
The policy pledge from the Labour Party comes amid the ongoing row over lobbying, sparked by former Conservative Prime Minister David Cameron’s involvement with Greensill Capital. Labour has called for an independent inquiry into the scandal.
Eurostat data shows that new business enterprises in the UK employed an average of 2.35 people between 2015 and 2018. Labour has argued that creating 45,000 new businesses could result in over 100,000 new jobs across the country.
“These business founders and small businesses across the country should be at the heart of our economic recovery, yet too many are being held back because of the unfair distribution of funding to help them start up and scale up,” Miliband said.
The Shadow Business Secretary added: “There are hardworking and innovative business founders being left out in the cold by the Conservatives. With Labour, they will get the backing they need to succeed.”
The policy announcement follows the launch of a commission by Labour, bringing together experts representing business, trade unionism, the cooperative and other sectors, to rebuild Britain’s high streets and revitalise town centres on Monday.
HM Treasury and the Department for Business, Energy and Industrial Strategy have been contacted for comment by LabourList.
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