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  • Ian Ritchie : Scottish Business Insider

Bad behaviour slows our start-up rate

IN THE HUGELY SUCCESSFUL 1970s novel ‘Watership Down’ the wild rabbits, in their epic journey searching for new territory, stumble upon Cowslip’s Warren, an apparently prosperous rabbit colony with pampered and fastidious citizens who enjoy plenty of food and protection from predators. The travellers are at first intrigued by these placid creatures, who seem to be living in some comfort, being regularly supplied with food and so on. Slowly, it dawns on them that there is a downside to this arrangement, as members of the tame rabbits occasionally vanish, never to be seen again. They are being farmed.

The wild rabbits move on rapidly in horror, rejecting this Faustian bargain struck by their tamed cousins. Much better to live free and eventually die a natural death, but to set your own destiny.

I was thinking about this the other day when the latest Global Entrepreneurship Monitor (GEM) report for Scotland was published by the Hunter Centre for Entrepreneurship at the University of Strathclyde. This annual survey of attitudes to entrepreneurialism is now published in 43 countries and provides a comparator between rates of new business start-ups across a wide range of competitor nations. The Scottish GEM report has now being published for ten years, which also gives us a decade of comparative statistics to draw from.

So how are we doing? In short, not well.

The report shows that early stage entrepreneurial behaviour in Scotland is way down at the bottom of the league table of UK regions, at second from bottom. Only 20% of Scots actually know somebody that has started a business compared with 30% of Londoners and 43% in comparable nations (small European countries such as Finland, Sweden, Norway and Ireland). And despite decades of efforts from Scottish Enterprise fewer people are trained in Scotland towards starting a business than in our comparator countries.

Business start-up rates are now at the lowest level since these records were first reported in 2000. The number of new businesses started in Scotland fell by 4% last year, compared to a 2% rise in the UK as a whole, and a 9% rise in similar countries.

The proportion of people planning to start a business within the next three years is also at an all-time low, at about two-thirds of the figure for the UK as a whole, and under half of the rate of comparable countries.

There is one bright spot in this GEM report, which is that for the first time they have measured the effect that entrepreneurship education has on subsequent entrepreneurial activity. They have found that although the various school-based entrepreneurial schemes have very little impact, students who have studied entrepreneurial skills in higher education are much more likely to start new businesses.

This information is important and needs to inform decision making by the Government and the Scottish Funding Council (SFC). The SFC gives Universities about £660m this year to support all teaching in Higher Education. The last time I looked, the grant to support the Scottish Institute for Enterprise, which is charged with encouraging entrepreneurship education throughout our HE sector was only £0.5m, less than one tenth of one percent of the teaching grant.

If we are ever going to change our sorry record we must up our game. We need to ensure that a much higher proportion of our students, in all subjects, get exposure to entrepreneurial skills as part of their courses.

Otherwise Scotland will continue, as it is right now, in a version of Cowslip’s Warren.

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