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Lord Young’s report on micro-businesses contained some fascinating data pointing to radical change in the UK economy:

Lord Young’s report on micro-businesses contained some fascinating data pointing to radical change in the UK economy:

  • in 1971 there were 820,000 small businesses in the UK; by 2000 there were 3.5 million
  • since 2008, over half a million new businesses have been established
  • 95.5% of all businesses are micro-businesses (with less than nine employees) accounting for 32% of private sector employment and 20% of private sector turnover - this makes micro-businesses a far more important part of the economy than SMEs with between 10 and 249 employees
  • most notably the number of microbusinesses has been rising inexorably since 2000 – there are 40% more of them now whereas all other sizes of business have remained static or even fallen.
  • This is a very big shift in the way we work and generate wealth.  My guess is that it is also having a big impact on social and political attitudes. 

    I wonder if anyone, for example, has explored a possible link between the well-evidenced growth in hostility towards the welfare state and the rise of the micro-business. It seems at least possible that if you have much larger numbers of people working as sole traders or leading businesses that they are less likely to have sympathy for welfare claimants exhibiting no entrepreneurial spirit. It’s not so much a ‘get on your bike and find a job’ but a ‘get on the internet and start a business’ attitude that might be growing.

    It could also start having a very big impact on how we understand routes to a fairer economy. Both right and left see the growth of traditional organisations in the private and public sectors as the key to more jobs which ultimately leads to greater wealth shared out more fairly.  The left, of course, tends to favour a bigger role for the public sector in this while the right tends to favour the private sector.

    But if millions of people are establishing their own businesses then the imperatives shift. What is required is not the expansion of the leviathans of the public or private sectors but precisely the opposite. The big players would need to be encouraged to get out of the way to allow more business activity and hence more wealth to flow to the growing ranks of micro-businesses. That might mean looking very hard at all the subsidies, regulations, legal structures and political prejudices that keep those leviathans in place.

    For example, how would we bring about a micro-business revolution in banking, energy generation, transport or construction? It can’t just be through the sort of exhortation and very minor interventions Lord Young recommends.  Surely the oligopolies that exist in key parts of the economy that have yet to see a micro-business revolution need to face a more forceful policy challenge.


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