Business start-ups falter

It was no surprise to hear Alistair Darling and Treasury officials praising the contribution to the UK economy made by small business, but officials at the DBERR are becoming increasingly concerned at the decline in number of new business start-ups.

On the face of it, the start-up figures seem rosy. Absolute numbers, measured by new VAT registrations, have been rising year-onyear for a over a decade and the Government has pumped billions, via the RDAs and Business Links, into creating what Gordon Brown refers to as a "culture of enterprise".

Yet the reality is different. The UK is becoming less enterprising by the year, and at an alarming rate, as the Government's own figures are beginning to show.

The enterprise of nations is most accurately measured by the number of businesses per 10,000 (or 100,000) of adult population. It is a yardstick which allows comparisons across the globe. And, on this fundamental measure, the UK in general and the regions in particular are in deep trouble.

Between the start of 2003 and 2007, the rate of start-ups across the UK plunged by almost 10 per cent, from 40 per 10,000 adults to 37.

In the North West the figures were 35 to 32, the North East 24 to 22 and Yorkshire and Humberside 34 to 31.

Those areas where attempts to create an enterprise culture via the public purse have been most vigorous appear to have suffered the worst declines. New start-ups in Merseyside (26 to 23) and South Yorkshire (28 to 25), are down over ten per cent, despite Objective One.

Even those city-regions which appear to be prospering are doing so for reasons other than their own performance. Manchester continues to perform poorly, but Greater Manchester, thanks mainly to Trafford, is holding steady.

Cumbria, meanwhile, is in car crash territory. New business start-ups in the period have plunged almost 20 per cent, from 38 per 10,000 adults to 31.

Quite why this collapse should be happening is unclear, though an increasing legislative burden on small business is one obvious candidate. The figures, controversially, also suggest that the influx of eastern Europeans has not brought the number of entrepreneurially-minded immigrants for which the Government might have wished.

Whatever the reasons, as the economy now lurches towards slowdown it is difficult to see how this disturbing underlying trend can be easily reversed.

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