Small Talk: Who should we thank for falling unemployment? SMEs. So we must do everything we can to help them carry on the good work

 

Who should take the credit for Britain’s jobless rate falling back below 7 per cent? Well, while policymakers argue about the politics of lower unemployment, let’s look at the figures: since 2010, 84 per cent of job growth has come from small and medium-sized enterprises, while almost nine in 10 people moving out of unemployment have either started their own business or been taken on by someone else’s small company.

Given that SMEs account for only two-thirds of employment as a whole, their performance in terms of job creation has been phenomenal. If this Government, or any other, is to succeed in its aim of returning Britain to full employment, it is now obvious what the priority for policy should be: helping smaller businesses to recruit even more people.

A research paper published by the Institute for Public Policy Research (IPPR), the left-wing think tank, looks at exactly that challenge – and concludes that small businesses’ record on job creation is all the more impressive given the greater barriers they face when hiring new employees.

As the IPPR points out, SMEs take more of a risk when hiring new staff, since the additional labour costs incurred represent a larger proportion of their total expenses. The difficulties are even more acute when small businesses recruit from those groups in society where unemployment remains stubbornly high, like those with fewer skills or with health conditions that mean they are more likely to take time off work sick.

The Government has begun to recognise this. The incentives it now offers to small businesses taking on young employees and apprentices are relatively generous. But much more can be done – and there is not necessarily a need for the Treasury to find substantial sums.

The IPPR’s recommendations fall into four categories. First, it wants greater financial support for the costs of becoming an employer – everything from employers’ liability insurance to payroll administration expenses. Second, it suggests reforms to the sick pay rules, so that budgets are focused on firms hiring staff with work-limiting health conditions. Third, it calls for an overhaul of the Work Programme, the Government’s welfare-to-work scheme, so that employers can hire on more flexible terms. Finally, it calls for the launch of occupational benefits schemes that enable SMEs to come together to offer benefits such as sick, maternity and paternity pay that go beyond the statutory levels.

All of these suggestions are sensible, and  shifting the dial only marginally would also have a big impact. One reason for the dramatic fall in unemployment over the past year or so has been the large number of people moving into self-employment. Most of these people will be operating as sole traders with no employees at all. Raising the number even marginally would make a huge difference.

Cost of an Aim listing is 9.5% of funds

The recovery of the Alternative Investment Market has led to a sharp rise in the cost of floating on London’s junior exchange, research shows. The average cost of an IPO on Aim now stands at 9.5 per cent of all funds raised, up from 8.4 per cent a year ago.

The figures, based on research by the accountancy group UHY Hacker Young, reflect the relatively limited number of brokers with the skills and experience to advise on Aim IPOs, with many firms having exited the market during the years following the financial crisis, when deal volumes fell to unprecedented lows.

With the number of IPOs on Aim having risen to 61 last year, up from 43 in 2012, those advisers still available have seen rising demand, and costs have increased accordingly. “Broker fees are being boosted by the rush in new IPOs coming on to Aim, as many companies look to capitalise on renewed investor demand by raising funds,” said Laurence Sacker, a partner at UHY Hacker Young.

The trend looks set to continue in 2014, with IPO numbers having risen further during the first few months of the year. “Businesses are focused on seizing the opportunity to get the right valuation for their companies, and if they need to pay slightly higher professional fees to get the float through soon, it is a cost they are prepared to swallow,” Mr Sacker added.

Crowdfunding to have FCA regulation

Formal regulation of the crowdfunding sector could provide a massive boost for platforms raising equity finance for start-up businesses, a report claims. While there have been warnings that tighter regulation could damage the crowdfunding sector, the research, published by the crowdfunding site Volpit, suggests the new regulation could actually result in billions of pounds flowing into growing businesses.

The Financial Conduct Authority tightened the rules on crowdfunding last month, with platforms offering loans to small businesses brought under the supervision of regulation for the first time and equity-based platforms subjected to more demanding rules. However, Volpit’s research suggests that two in five investors would welcome the opportunity to invest in small businesses if they thought platforms were appropriately policed. One in three said they would invest at least £1,500.

“The FCA’s new policy is a huge deal, but very few everyday investors really understand what this means for them and the wider UK economy,” said Justin Nothling, co-founder of Volpit. “We are expecting massive growth of the angel investor market and a lot more innovative start-ups funded as a result.”

Small Business Person of the Week: Ed Bussey, Founder, Quill

“Quill is now Europe’s leading content marketing company; I launched it four years ago. I had been one of the founding team at Figleaves.com.

“In 2010, Google made a massive change to its algorithm: suddenly, it was able to identify web pages where there was fresh and updated content. Anyone who didn’t have good content on their site found it extremely difficult to get into Google’s search results.

“This was the inspiration for Quill: anyone who wants to sell online nowadays also has to be a publisher – and across so many different platforms – that’s what we do for businesses. We work with 3,000 specialist content creators, ranging from writers to video producers, in 17 countries. They supply the content for clients – who include advertising agencies, well-known brands and some smaller companies, too.

“All of the content goes through at least one pair of human eyes for editing, but there’s also a tremendous amount of editing work that can be done through automated software.

“To build a scalable business, you’ve got to think internationally from the beginning. We wanted a platform where content could be in English, or German, or even Mandarin; exports now account for 25 per cent of sales.

“We’ll have 40 staff by the end of the year. I’m even paying myself a salary.”

@davidprosserind

Sport
footballLIVE City face Stoke, while Warnock returns to Palace dugout
Arts and Entertainment
books
Life and Style
3D printed bump keys can access almost any lock
gadgets + techSoftware needs photo of lock and not much more
News
i100
PROMOTED VIDEO
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
News
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100
News
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Financial Technical Consultant (C++, C#, Finance, MSc, PhD)

£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone