Programmes Director of TEN writes for CityAM

Programmes Director of The Entrepreneur's Network, Annabel Denham, writes for CityAM: 'UK entrepreneurs are ever-more optimistic – but there’s still work to do.'

WE ALL know entrepreneurs are a positive bunch, afflicted with “optimism bias” – a rare ability to view the glass as half full – which drives them to success. And according to this year’s Hiscox DNA of an Entrepreneur report, business owners across the UK, US and parts of Europe are more optimistic today than they have been for some time.

We’re seeing signs that smaller companies have weathered the storms of recent years and are looking to the future with increasing confidence. Readers of this paper may be particularly pleased to hear that financial service business owners are the most optimistic of all, with a quarter planning to hire senior and junior staff (versus a 14 per cent average) in the near future.

Read the full article here.

The Entrepreneurs Network is a cross-party think tank designed to bring entrepreneurs to the forefront of political discourse and help make Britain the best place in the world to start a business. TEN is based within the Adam Smith Institute and is supported by Octopus Investments, one of the UK’s fastest growing fund management companies specialising in smaller company investing.

Sam Bowman rates an independent Scotland's currency options in the Financial Times

Research Director of the Adam Smith Institute, Sam Bowman, participated in a panel of expert economists who were asked to rate an independent Scotland's currency options for the Financial Times:

Sam Bowman, research director at the Adam Smith Institute Currency union with the UK: 5

In many ways a currency union would be business as usual for Scotland and the least problematic short-term option. However, EU regulations may still require RBS and Lloyds to domicile in the City even under a currency union. In addition, Scottish sovereign debt may trade at artificially low rates thanks to the implicit backing of the BoE, encouraging unsustainable borrowing. Most seriously, without fiscal transfers between Scotland and the rest of the UK, there is a danger that Scotland would not be able to do anything in response to demand-side shocks to the economy, potentially resulting in prolonged and harmful periods of deflation for Scotland. Sterlingisation: 9 Sterlingisation could be Scotland’s best option in the medium to long term, especially if combined with banking reforms allowing banks to issue their own promissory notes, backed by the pound sterling on a fractional basis. With no central bank to act as a lender of last resort, banks would be required to make private provision for such facilities. International evidence from the dollarised Latin American states, notably Panama, Ecuador and El Salvador, suggests that this would improve bank soundness by eliminating moral hazard. Without restrictions on note issuance (and the monopoly protections that encourage excessive issuance), banks would expand and contract their balance sheets in a countercyclical fashion, offsetting changes in velocity with immediate changes in the money supply, reducing the risk of the sort of demand-side recession that took place globally in 2008. This radical option may prove difficult to transition to in the short term, however. A separate currency: 7 The option of an independent Scottish currency has been unfairly maligned. A free-floating currency would indeed be at risk of speculative attack but with the right mandate it could have substantial benefits as well. For example, were the Scottish central bank to target nominal gross domestic product instead of following an inflation target, a Scottish currency would provide a stable macroeconomic environment that adjusted to shocks automatically, keeping nominal spending levels (or aggregate demand) constant (in a similar way to the free banking option, albeit through a different mechanism). By keeping spending constant along a predictable growth level, an independent Scottish currency would lose purchasing power in recessions but would avoid the “musical chairs” problem of sharp drops in nominal GDP leading to unnecessary structural unemployment. A free-floating currency would be at risk of the Dutch disease, however, with Scotland’s substantial resource wealth making its other export sectors relatively uncompetitive.

Joining the euro: 2 Joining the euro carries the same risks as a currency union with the UK but on a greater scale. The eurozone is already far from being an optimal currency area, and it is easy to imagine shocks to the Scottish economy (such as a drop in oil prices) that would be barely felt in the rest of the eurozone and hence would receive no policy response. On top of these potential dangers the ECB has already proven itself to be a badly run institution in practice, strangling the eurozone, stifling recovery and pushing up unemployment with tight money. There is almost nothing positive to be said for this option.

Read the full article here.

'Can Scotland be independent and keep sterling?' - ASI report "Quids In" is quoted in The Guardian

The Adam Smith Institute's report "Quids In: How sterlingization and free banking could help Scotland flourish" is quoted in The Guardian:

With bank runs and bailouts still fresh in people’s memories, Scotland’s sizable financial sector and many other businesses are unlikely to accept such a position.

But the Adam Smith Institute argues that an independent Scotland could flourish by using the pound without permission from the rest of the UK.

The free-market thinktank cites the example of Panama and other Latin American countries that use the dollar as proof that the informal use of another country’s currency “can foster a healthy financial system and economy”.

“Under sterlingisation, Scotland would lack the ability to print money and establish a central bank to act as a lender of last resort. Evidence from dollarised Latin American countries suggests that far from being problematic, this constraint reduces moral hazard within the financial system and forces banks to be prudent, significantly improving the overall quality of the country’s financial institutions. Panama, for example, has the seventh soundest banks in the world,” the institute said in a report last month.

Read the full article here.

Sam Bowman is quoted on the new WEF ranking for the soundness of banks in CityAM

Research Director of the Adam Smith Institute, Sam Bowman, was quoted in CityAM discussing Panama's placement in the new World Economic Forum ratings on the soundness of banks:

The WEF report shows that Panama has the twelfth-soundest banks in the world, way ahead of the UK, which languishes in 89th place. Why is this is relevant to the Scottish independence debate?

Research director of the Adam Smith Institute (ASI), Sam Bowman, explains:

This is good news for Alex Salmond: Panama uses the US dollar without a currency union, and the ‘Panama option’ may be his best bet for an independent Scotland. Today’s results suggest that emulating Panama by ‘Sterlingising’ without a currency union could give an independent Scotland a remarkably robust financial system because Scotland’s banks could not depend on an unlimited central bank lender of last resort.

Alex Salmond has already said Scotland will keep using the pound if there's a yes vote, adding "there is literally nothing anyone can do" about it. For its part, the ASI has offered a helping hand to show how an independent Scotland might arrange its monetary policy in the face of hostility to a formal currency union.

Read the full article here.

Press Release: New World Economic Forum rankings suggest 'Panama model' may be right for Scotland

Commenting on the release of the new World Economic Forum rankings, Research Director of the Adam Smith Institute, Sam Bowman, said:

The World Economics Forum's global rankings of economic development, released today (Wed, 3rd September), have named Panama as having the twelfth soundest banks in the world. Panama also scores well in a host of other financial stability metrics, which is particularly impressive given that Panama is a middle-income country.

This is good news for Alex Salmond: Panama uses the US dollar without a currency union, and the 'Panama option' may be his best bet for an independent Scotland. Today's results suggest that emulating Panama by 'Sterlingising' without a currency union could give an independent Scotland a remarkably robust financial system, because Scotland's banks could not depend on an unlimited central bank lender of last resort.

Notes to editors: The Adam Smith Institute takes no position on the Scottish independence referendum and produces research for public information purposes only.

For further comments or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

Press Release: Sliding towards a police state in response to extremism is just another form of radicalism

Commenting on the Prime Minister’s new anti-terrorism measures, Communications Manager at the Adam Smith Institute, Kate Andrews, said:

The Prime Minister's decision to creep towards a police state in response to extremist threats is just another form of radicalism. While Islamic State militants gain power by creating a culture of fear, Britain plans to make citizens fearful of their own justice system by further empowering police to confiscate passports and detain travelers without clear evidence of wrongdoing.

The Prime Minister’s nuanced comments and eagerness to work across party lines should not be taken as a dedication to Britain’s long-standing civil liberties - especially when Labour leaders promote enthusiastically the return of control orders and increased surveillance.

The coalition should tread lightly as it looks to expand the powers of the State to combat radicalism; for it is often the good intentions of governments that lead to the radical stifling of individual freedoms and the erosion of the presumption of innocence.

Notes to editors:

For further comments or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778207.

The Adam Smith Institute is an independent libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.

TEN's Parliamentary Snapshot is featured in CityAM

TEN's Parliamentary Snapshot survey is featured in CityAM:

Many MPs are unaware of the host of policies in place to support entrepreneurship and are largely split along party lines on how best to support Britain's wealth creators, according to new polling conducted for the think tank The Entrepreneurs Network.

The YouGov poll of 105 MPs found an extraordinary lack of knowledge of already established policies geared to support entrepreneurs. More than 40 per cent had never heard of the Patent Box, one of the government's flagship schemes to make the UK a centre of innovation.

A whopping 66 per cent had never heard of the Angel CoFund, a £100m investment fund established to support small and medium-sized enterprises. The GrowthAccelerator, which was set up to back the UK's answer to Silicon Valley in the form of London's Tech City was only known to half of MPs.

Read the full article here.

In the first survey of its kind, Parliamentary Snapshot- conducted for the think tank The Entrepreneur's Network by YouGov- has uncovered the views of MPs on polices impacting entrepreneurs. 

Read or download the briefing paper here.

The Entrepreneurs Network is a cross-party think tank designed to bring entrepreneurs to the forefront of political discourse and help make Britain the best place in the world to start a business. TEN is based within the Adam Smith Institute and is supported by Octopus Investments, one of the UK’s fastest growing fund management companies specialising in smaller company investing.

Press Release: MPs unaware of schemes and tax cuts that aid entrepreneurs, finds think tank

In the first survey of its kind, Parliamentary Snapshot has uncovered the views of MPs on polices impacting entrepreneurs. The two main findings are:

  • MPs are split across party lines on the sorts of policies they believe would positively impact entrepreneurship in the UK;
  • MPs are unaware of many policies in place to support entrepreneurs.

The survey ( http://www.adamsmith.org/research/reports/parliamentary-snapshot-mps-on-entrepreneurship/ ) – conducted for the think tank The Entrepreneur's Network by YouGov – finds that Conservative MPs are more likely to believe cuts to tax and regulation will improve the state of entrepreneurship in the UK, while Labour MPs are more likely to think policies that involve increases spending will improve entrepreneurship. The only policy where both sides are significantly aligned is in spending more on improving the skills of the domestic workforce (93% of Conservative MP and 89% of Labour MPs believe this would have a positive impact on entrepreneurship in the UK).

The most significant split between the two main parties is over exempting the UK from EU business regulation. While 91% of Conservative MPs think this would have a positive impact on entrepreneurial activity in the UK, just 15% of Labour MPs agree. In fact, 63% of Labour MPs think exempting the UK from EU business regulation would have a negative impact on entrepreneurial activity in the UK.

Top 3 Policy Positions: All MPs

  Policy Positive
1st Spending more on improving the skills of the domestic workforce 92%
2nd Lowering business taxes 73%
3rd Cutting UK business regulation 72%

 

Top 3 Policy Positions: Conservative MPs

  Policy Positive MPs
1st Cutting UK business regulation 98%
2nd Lowering personal taxation 94%
3rd Exempting the UK from EU business regulation 91%
3rd Lowering business taxes 91%

 

Top 3 Policy Positions: Labour MPs

  Policy Positive MPs
1st Spending more on improving the skills of the domestic workforce 93%
2nd Spending more on government support services 76%
3rd Spending more on government grants and loans 75%

 

Top Policy Splits: Labour vs. Conservative MPs

  Policy Positive Con. MPs Positive Lab. MPs Split
1st                  Exempting the UK from EU business regulation 91% 15% 76 pp
2nd Lowering personal taxes 91% 29% 62 pp
3rd                  Cutting UK business regulation 98% 42% 56 pp
4th Lowering business taxes 91% 46% 45 pp
5th Spending more on government support services 40% 76% 36 pp
6th Spending more on government grants and loans 45% 75% 30 pp

 

The Knowledge Gap

The survey also exposed a surprising lack of knowledge among MPs about the policies already in place to support entrepreneurs. Too often, over half of MPs either haven’t heard about established polices or don’t know whether they are effective.

Least Known Policies: All MPs

  Policy Never Heard of it Heard of it but don’t know whether it’s effective or not

 

Total
1st Angel CoFund 66% 8% 74%
2nd GrowthAccelerator 50% 14% 64%
3rd Tech City UK 48% 13% 61%
4th Seed Enterprise Investment Scheme (SEIS) 42% 13% 55%
5th Entrepreneurs’ Relief 42% 12% 54%
6th Patent Box 42% 9% 51%

 

There is a mismatch between the strength of MPs’ opinions about what would benefit entrepreneurship in the UK and their understanding of the current policies in place.

The majority of Conservative MPs believe that tax cuts would be the best way to support entrepreneurship in the UK, with 94% of Conservative MPs in favour of lowering personal taxation and 91% for lowering business taxation. However, many are unaware of the tax incentives already in place for entrepreneurs. For example, 52% of Conservative MPs either had not heard of the Seed Enterprise Investment Scheme (SEIS), or didn’t know enough about it to determine whether it is effective. (The SEIS grants individual investors up to 50% tax relief on investing in smaller companies up to a maximum of £100,000.)

Similarly, the majority of Labour MPs think spending more would be the best way to support entrepreneurship in the UK, with 76% in favour of spending more on government support services, and 75% or government grants and loans. However, many are unaware of government spending already in place. For example, 62% of Labour MPs had not heard of GrowthAccelerator, or didn’t know about it well enough to determine whether it is effective. (GrowthAccelerator is a significant programme of support, offering coaching and expert advice to help businesses attract investment, increase sales and innovate quickly.)

Commenting on the survey, Philip Salter, Director of The Entrepreneur’s Network, said:

It’s encouraging that MPs are increasingly vocal about supporting Britain’s entrepreneurs; however, the fact that they are unfamiliar with the policies already in place is worrying.

As things stand, MPs don’t appear adequately informed to vote on future policy changes impacting entrepreneurs. Also, MPs should be familiar with these schemes so that they are able to pass on details to the many entrepreneurs they meet in their constituencies.

Notes to Editors:

For further comments or to arrange an interview, contact Kate Andrews, Communications Manager, at kate@adamsmith.org / 07584 778207 or Philip Salter, Director of TEN, at philip@tenentrepreneurs.org / 07919 355290.

The Entrepreneurs Network is a cross-party think tank designed to bring entrepreneurs to the forefront of political discourse and help make Britain the best place in the world to start a business.

The Entrepreneurs Network is based within the Adam Smith Institute and is supported by Octopus Investments, one of the UK’s fastest growing fund management companies specialising in smaller company investing.

YouGov polled 105 Members of Parliament, with data weighted to be representative of the House of Commons by party, gender, electoral cohort and geography. Fieldwork took place between the 7th and 19th May 2014.

The Mail on Sunday's feature on TEN's Parliamentary Snapshot survey

The Mail on Sunday ran an exclusive feature on TEN's Parliamentary Snapshot- the first survey of its kind, which uncovers the views of MPs on policies impacting entrepreneurs. From The Mail on Sunday:

Half had not heard of the GrowthAccelerator, a support scheme for fast-growing firms, while the existence of Tech City, the cluster of technology start-ups in East London was unknown to 48 per cent.

The Seed Enterprise Investment Scheme, which offers tax incentives to savers investing in small businesses was unknown to 42 per cent, and the same percentage had neither heard of Entrepreneurs’ Relief, a Capital Gains Tax relief for entrepreneurs selling their businesses, nor Patent Box, which allows companies to apply a lower rate of corporation tax to profits from patented inventions and other innovations.

Philip Salter, director of The Entrepreneurs Network, which is supported by investment firm Octopus and the Adam Smith Institute, said: ‘It’s encouraging that MPs are increasingly vocal about supporting entrepreneurs. However the fact that they are unfamiliar with the policies already in place is worrying. MPs don’t appear adequately informed to vote on future policy changes affecting entrepreneurs.

‘MPs should be familiar with these schemes so they are able to pass on details to the many entrepreneurs they meet in their constituencies.’

Read the full feature here.

In the first survey of its kind, Parliamentary Snapshot- conducted for the think tank The Entrepreneur's Network by YouGov- has uncovered the views of MPs on polices impacting entrepreneurs. 

Read or download the briefing paper here.

The Entrepreneurs Network is a cross-party think tank designed to bring entrepreneurs to the forefront of political discourse and help make Britain the best place in the world to start a business. TEN is based within the Adam Smith Institute and is supported by Octopus Investments, one of the UK’s fastest growing fund management companies specialising in smaller company investing.