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Think tank calls for opt-in, light touch employment regime for start-ups in the digital sector

Businesses have been urged to play a bigger role in fostering entrepreneurship in the UK, especially in the technology sector.
 
As part of its Technology Manifesto, launched recently in association with EMC and Google, leading think tank Policy Exchange says that a ‘start-up superstar’ scheme run by the UK’s leading companies would pay at least one graduate recruit a year to try and set up his or her own business rather than come to work. The employer would take an equity stake in the start-up and would guarantee a job for the graduate should the start-up fail within two years. Major public sector bodies such as the Civil Service Fast Stream and the BBC should also be encouraged to participate.
 
The think tank says that the growth of the digital sector is critical to the success of Britain’s long term economic prospects. The internet economy will account for more than 12% of UK GDP by 2016 and Britain already has an online trade surplus of $1billion – more than the US and Germany combined. However, the report argues that regulation too often reflects the pre-digital era. If Britain is to challenge California as the place for digital start-ups, both government and business needs to find ways to develop the talent up and down the country. Instead of castigating people for trying to launch new enterprises, failure should be seen as a positive thing, fostering a culture of innovation that will eventually lead to successful, new wealth creating businesses.
 
The manifesto also says that technology companies should benefit from more flexible and lighter-touch employment rules. Business owners in the digital sector should be able to take on and lay off staff in an easier way. In exchange employees would have stronger rights to break out of contracts to work for competitors or start their own businesses. Research from the United States concluded that, on balance, the enforcement of non-compete clauses impedes entrepreneurship and regional growth. In particular, in regions that did not enforce such clauses, increases in venture capital had stronger positive effects on patents, start-ups and employment.
 
Eddie Copeland, author of the report, said:
 
“Enterprise and innovation is the lifeblood of a market-based economy. The best entrepreneurs in the world are leading businesses that not only earn them a decent living, but also deliver new products and services, generate wealth and jobs, and inspire future generations. For policymakers it is not sufficient simply to assume that the basic building blocks of economic policy designed for previous eras will work for the next generation of digital businesses. We start from a place where rules, regulations, norms and laws designed for an analogue world have accumulated over centuries. As we move forward, bold policy thinking will be a necessary ingredient for radical reshaping of the economy.
 
“To make Britain the most attractive place outside of Silicon Valley for technology entrepreneurs to start and grow a business, we need to encourage our brightest and our best to take risks. Companies should see the benefits – both to their bottom line and the development of their staff – of joining the ‘start-up superstar’ scheme.
 
James Petter, senior vice president and managing director for EMC in the UK & Ireland, sponsor of the report, comments:
 
“The UK has an opportunity to be the home for digital entrepreneurship. Indeed; we made a significant commitment to site the headquarters of Pivotal EMEA here, an investment totalling £100 million over the next ten years. The UK has a great mix of skills, infrastructure, reputation, culture and community, and anything that can be done to foster this will pay dividends far into the future.”
 
“If you look at other nations – including India, Israel, and the city-hubs in Berlin and New York, we are facing up against stiff competition to be the home of digital innovation beyond Silicon Valley. It’s up to UK businesses and policymakers to seize the opportunity for ourselves.”
 
 
Notes to editors

Policy Exchange will be publishing its Technology Manifesto in association with EMC and Google today as part of its Road to 2015 series of events.