I’m hugely enjoying meeting the finalists for The Spectator’s Economic Innovator of the Year Awards. This year’s bumper entry was strong on paths to decarbonisation — as you’d expect for the new era of climate action — and on ventures rocket-boosted by the pandemic, whether designed to take pressure off the NHS or in the ‘edutech’ field of online learning. By contrast, ‘fintech’ and consumer apps were less prominent than in earlier years, reflecting changed priorities. And come to think of it, common to all the entrants I’ve talked to so far is that not one has said: ‘We couldn’t have done it without the help we’ve had from government.’
I’m prompted to this observation by two news items on adjacent pages of Tuesday’s Financial Times. The first reveals that the Treasury (on the recommendation of the Department for Work and Pensions, from whose budget it comes) is planning to scrap the New Enterprise Allowance, which has provided £1,000-plus start-up grants, plus mentoring, for some 250,000 benefit recipients since it was launched by David Cameron in 2011. In its early phase, against a background of recession, it was fuelling the creation of 2,000 new businesses a month.
Why stop it now? Perhaps Downing Street would rather see today’s unemployed retraining as HGV drivers than trying to start new businesses. Whatever the thinking, the scrapping sits oddly with the other story, which is that the Treasury has ended up holding equity stakes in 158 small companies (with potentially hundreds more in the pipeline), ranging from a vegan foodmaker to a mobile beauty service and a luxury handbag rental venture, as a result of the conversion of loans under a £1.1 billion Future Fund that was one of Rishi Sunak’s pandemic business-support wheezes.
What all this seems to tell us is that government is never properly joined up and that its ‘enterprise initiatives’ inevitably tend to be short-lived headline-grabbers which generate somewhat random outcomes. So the most talented entrepreneurs just get on with what they do best, gratefully accepting a grant here or there but not otherwise looking to the state for help or advice. That’s as it should be in a flourishing free-market economy — and yet there’s still a strong case for start-up schemes, state- or charity-led, that offer the down-on-their-luck a chance to try a new direction, even if many fail. The Prince’s Trust, which has helped 86,000 young people launch their own businesses, is a worthy model. I hope the Chancellor finds a unicorn in his unexpected venture-capital portfolio — and I hope he uses the proceeds to save at least an iteration of the New Enterprise Allowance.
Crackpot currency switch
If you’re reading this in El Salvador, you’re probably taking a break from street protests against President Nayib Bukele’s adoption of bitcoin as legal tender, enacted last week. This small, heavily indebted Central American republic abandoned its own currency, the colón, 20 years ago in favour of using the US dollar — and has enjoyed relative financial stability ever since. The populist right-wing president’s insistence on shifting to the unregulated, ultra-volatile virtual currency favoured by gamblers and money-launderers will supposedly bring savings of $400 million a year in commissions on the remittances from expatriate workers on which his economy depends. But it creates a high-risk monetary experiment that excludes citizens who lack internet access and which the World Bank has declined to support.
In other states where weak financial governance makes crypto alternatives look interesting, from Nigeria to Ukraine, the outcome for El Salvador will be closely monitored. But anyone who thinks this sounds like a glimpse of a better future should read a Guardian essay by Sophie Elmhirst, headlined: ‘The disastrous voyage of Satoshi, the world’s first cryptocurrency cruise ship.’ A bunch of ‘seasteaders’ (libertarians whose dream is to live on lawless, untaxed floating utopias) bought a former P&O vessel, renamed it Satoshiafter the mythical founder of bitcoin, failed to plan for any of the rules and practicalities of maritime operation, failed to sell any cabins, and were forced to abandon the scheme as ‘an unbelievably expensive mistake born of a desire to invent an entirely new way of living’. President Bukele’s crackpot currency switch is in much the same spirit; I just hope his country’s poor don’t suffer as a result.
Down the depot
Sunday morning finds me in Builder Depot’s flagship New Southgate emporium, just off the North Circular, with a chum who needs a couple of khazis for a doer-upper flat. The store is as big as a cathedral, the clientele a mix of post-lockdown home-improvers and hard-pressed tradesmen here to avoid the queues on weekdays, when I’m told their white vans snake around the block. The merchandise is moving at pace — even at 8.30 a.m. — in a super-efficient operation that’s part of a five-outlet, 15,000-product family-owned business with annual turnover of more than £100 million.
It’s a vivid glimpse of one corner of the construction sector that provides a living for three million people in the UK but is currently suffering a plague of supply shortages and startling price hikes. This branch alone claims to hold more than a million metres of building timber stock — which represents a golden hoard in a global market currently afflicted by forest fires and voracious pine beetles as well as shipping glitches that have driven the price of ‘Canadian lumber standard’ studwork lengths (I think that’s four-by-two in common parlance) up 50 per cent in a year; likewise plywood and floorboards.
Hence a push to keep other costs down that includes Sunday depot trips to save time on site. We’re in and out with our porcelain purchase in ten minutes and in the car park I observe an elderly Chinese customer, more trader than builder by the look of him, carefully loading his vehicle with as much four-by-two as he can squeeze in. I wonder if he’s planning to ship it to China.
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