Director gathered a group of business leaders to discuss their hopes for UK economic growth

The panel

• Simon Biltcliffe, Managing director, Webmart
• Duncan Cheatle, Founder, The Supper Club
• Jason Choy, Founder, Welcome Gate
• Sally Ernst, President, Entrepreneurs' Organization
• Ben Gladstone, Chief executive, Conosco
• Rosena Robson, Director, Verdant Marketing

What do you think of the government's efforts to promote enterprise so far?
Simon Biltcliffe R&D tax credits were a great idea and we use them a lot. They were rubbish at the start because the people in the tax office didn't understand them. It was a good idea but the execution was rubbish. But they've got better.
Jason Choy Execution is a key theme. There have been lots of good initiatives with poor execution.
Duncan Cheatle As an ex-accountant, one thing they got wrong with R&D tax credits was the number of entrepreneurs told by accountants that they didn't apply to them when they did. That's negligent, if not worse. They should have hit the Institute of Chartered Accountants and said, 'this is an area where you can really add value'.
SB The trouble was that the tax people didn't understand it either.
DC It is still going on. While the tax office has got its act together, most accountancy practices avoid it because they don't understand it. It's an opportunity to earn fees and add value.
JC Enterprise UK has done a brilliant job in fostering an enterprise culture. Not just getting people enthused about entrepreneurship and thinking, 'when I leave school this is an option for me, I don't have to go and join a big company'. It's also encouraging people to reinvest: reinvest by employing staff, reinvest in R&D. It takes away that short-termism.
DC A number of things the government did when they first came in were great: R&D tax credits, EIS (Enterprise Investment Scheme), zero band of tax and the 10 per cent band. From then on they messed it up. They upped national insurance, they upped the small-rate corporation tax, and regulation has gone up. They started out way better than the Tories and ever since then, apart from some initiatives such as Enterprise Insight, it hasn't been good.
Ben Gladstone There are many bodies, too many initiatives, and too many points of contact. What we need is one point of contact for everything.
SB We need an account manager, effectively. Dealing with the government now is easier and the people are more helpful in terms of the way they talk to you. When you want advice, people seem to care about it. 
JC One plus is the speed of start-ups. We're still top seven in the world and one of the best in Europe, in terms of how easy it is to set up a business.
BG We could still do better. We just set up an Australian company and you just pull the templates off the government sites and fill in the forms—it's so much easier.
Sally Ernst I've only been in the UK for four years so I've only recently been exposed to some of the grants available to help people start businesses. Often they can't spend the whole budget because not enough people are applying, particularly in the creative arts. On the whole what they have is good, they just need to make it more visible and more accessible.
Rosena Robson I was involved in grant giving in my last role. The government grants are so complicated that it's hard to apply for anything. Government needs more entrepreneurship and to take more risks. They have to accept that some people who apply for grants will default. At the end of the day they want people to get these things, so they should make it easier.
DC The problem is that often grants attract the wrong businesses. [They're offered] at start-up stage, often encouraging businesses that aren't going to be sustainable. I don't know why they don't run it like the Prince's Trust. If somebody is struggling to get off the ground it works well. They know some people run off with the money at times but [because they use mentoring] their hit rate is much better than government-run schemes.

Do you create schemes, grants and various enterprise bodies, or do you simply take that cash and lower corporation tax?
DC Whack it into cuts in NI and PAYE to encourage those that actually employ people to create new jobs.
SE We need to treat ourselves as a re-emerging country. I think of the things offered in China—only five per cent tax on revenues, but 33.5 per cent on profits, which means they are encouraged to reinvest. If entrepreneurs have a good exit, China encourages you to reinvest it in the country rather than pull it out. I like that emerging model.
BG We could get rid of NI but raise the money through corporation tax, which would put a bonus on creating jobs. It would simplify things, but crucially it would mean you wouldn't be taxing a loss-making, early-stage company through NI, which is crazy. If you shift it to corporation tax, you get longer to pay as well.
SB But the profitable companies would just leave. Why would you stay if you had a huge corporation tax when you're making good money?
BG Well, you'd be paying the same overall in tax, but you're paying it through the corporation tax mechanism. In your early days you pay less tax as you're building the business up. If it's neutral for mature companies then the government still gets the money it needs.
SB If firms aren't making profits you're not going to make a lot from corporation tax. If we lose NI and there's no corporation tax to offset it, it wouldn't work. NI is predictable whereas corporation tax isn't.
JC VAT deferment has been quite good. The EFG (Enterprise Finance Guarantee) is a great initiative; we're waiting on the execution now. Our experience of the EFG is that the banks ignore it. They assume it doesn't exist.
SB It's perhaps not a particularly sexy thing to say, but I think paternity leave and the national minimum wage are fantastic. Probably not for certain companies, but I think as a country and a community, they are a great leap forward.
Director Entrepreneurs have decried both.
SB Yes, but so were holidays [decried]. We're not uncompetitive because we have paid holidays. There is a lot of research to show that if you have appropriate levels of holiday you work more efficiently. I think they've done a lot to change it from a Thatcherism model of "capitalism rules everything" to what I would say is a more mature approach to labour relations.
RR I'd support that. It's really important to have a balance.
DC As a bloke, you're not likely to put your head above the parapet and argue against it, but there are disadvantages in the current maternity arrangements for an SME in that if you have only  a few employees and somebody goes on maternity leave it can make it difficult to plan.
SB Maternity leave has gone too far. It's almost impossible to plan. In an interview you can't ask anybody anything of a material nature otherwise you are in breach of regulations. As a business, I've taken the decision that if I treat people fairly, if I use common sense, it works.
DC Almost every small businessperson is breaking the law when they run a business, either knowingly or not. It's just risk management. You can't cover all the compliance properly.
BG But those laws can come back to bite you at an employment tribunal. We got a gun put to our head by someone we'd treated fairly. He had no grounds to make a claim. But the lawyer said it would cost us £20k to fight. If you can settle for £15k, then you are better off.
DC I'm hearing of more cases where if there are any grounds at all people smack in an unfair dismissal claim. As an employee, you're going to get at least £5k, so why not? That means you can't employ somebody else. It's draining, energy-wise. Anyone who has ever been to a tribunal will say, 'don't do it, just settle'.

Would people like exemptions for small businesses?
BG If it was easier to get rid of people then you would hire them more [readily]. I would like to see more of a US-style hire-and-fire culture for small companies.
SE I have heard of people avoiding hiring women because of the issues associated with maternity leave. Something needs to be done, and it requires government help. If we're worried about women being paid less and not getting the same opportunities then we've got to look at why.
RR Having had a baby last year, I think one of the problems with maternity leave is that you accrue holidays. That can be a big shock to a small employer, when a woman comes back to work and suddenly they've got a lot more holiday. As far as planning goes, I think employers hope to have a mature relationship with employees, but there should be more commitment from employees to say what they intend to do.

Which policies suggested by opposition parties grab you?
BG The Liberal Democrats' tax on cashflow sounds interesting.
In the early stages when you've got negative cashflow you're
not getting taxed. And if you're investing you don't pay any tax. It sounds great.
JC Cashflow is our lifeblood. Just because we're making a paper profit doesn't mean we're in a great cash position.
BG The Tories' idea of not paying NI on your first 10 employees
in your first year doesn't mean much. How many bootstrap businesses have 10 employees in their first year? There are lots of people out there who could start businesses that don't have any capital. Give them a free run to get going, and then once they've got to 10 to 20 people start to tighten things up.
SE I'm not seeing anything from any of them about innovation. Even if you look at the EFG, it's to do more of the same. The business has to show that it can pay it back. Well, innovation doesn't always allow for that, even for an existing firm. I'd like to see something stronger around innovation starting with a definition of an entrepreneur, because they are the people who innovate. In China, if you go abroad and get a master's degree and then come back the government will give you an office for free and your tools to start a business.
BG One way they could provide free office space is to get rid of a lot of quangos and offer those [free] desks to entrepreneurs at a low rate.
DC I think we should just get rid of all of the grant schemes.
BG I don't think government should be in the business of directing investment and controlling the economy that way. It's just not good at it and it's not its job. The Conservatives are also saying we're not going to collect corporation tax for the first two years. Hello? What profits are you making in the first two years? These people haven't run businesses.

MPs tend to be career MPs. Should there be more with a business background?
JC There are more people with finance degrees or backgrounds entering government, which is a good thing. But at the moment it's clear that [many] have never been through what we go through.
DC Mark Prisk (shadow business spokesman) has run his own business and has been in the role for a long time. When we've done dinners with both sides it's been disappointing on the Labour side. The worst was one business minister who clearly didn't have any understanding of what an entrepreneur was.
JC There are too many changes in direction. I think they must be getting really good at change management. There's that constant changing of goal posts. I think a bit more consistency is what we're looking for.
SB At least two of the parties say they are interested in lowering the benchmark for SMEs to procure public sector work. A lot of our business is in the public sector, but it's not easy. From their point of view it's public money. If you give it to an SME that messes it up, they've got the public to answer to. But do the barriers have to be so high? A lot of London councils have signed up to a scheme where you need to be vetted. The vetting process costs £1,000 and you have to be vetted again each time for each council.
DC There is a danger with early-stage businesses that have a social impact and bend the ear of the minister. If somebody likes it, but feels you can't deliver it, they'll give it to a bigger company. And then you're stuffed. If they like it you're almost a victim straight away because if they think it's scalable they'll give it to someone else.
What steps should the government take to improve things?
SB They should provide an integrated platform where you can register once for all public sector work. And then you reuse it. For every tender we have to fill out a tender document. One document from the Welsh Assembly ran to 9,000 pages. So they should eliminate the replication. Get one framework that works. If you only have to do it once you wouldn't mind. 
BG Instead of a Home Information Pack, it would effectively be a "company information pack". A portfolio of what you do, including accreditations and policy documents, validated by a central body, and used by all government departments.

Any changes to taxation you'd like to see?
DC Bring back taper relief. That was the stupidest move at the wrong time, in the middle of a property bubble when all the City boys with their bonuses were investing in property, art and fine wine, instead of investing in business assets. Entrepreneurs aren't interested in avoiding tax. They're not interested in offshore trusts. I thought 10 per cent seemed fair if you bust a gut for a few years. Now a lot are feeling they have been shafted and are actively looking to avoid tax.
BG Dropping corporation tax from 22p to 20p? By the time you're making profits, it's not going to make much difference. It's not going to change behaviour.
DC It was a waste of time to drop VAT for one year. I just can't believe it affected consumer spending. It was an administrative nightmare for some people and a mild irritant for others.

What about the inevitable tax increases?
BG They will just slow everything down. Reducing the tax on employment has to be a priority somehow. We need to encourage people to hire.
SB I think generally the tax will be too high. Fifty per cent just feels wrong. I think people were reasonably happy with 40 per cent. Somehow it's crossed a mental divide.
JC As entrepreneurs we don't spend too much time thinking about tax, but it's the first impression [that counts]. If all the parties want the UK to be the destination of business, that's not the way to do it. The way it was carried out says 'we're not open for business anymore'.
BG A lot of these policies need to be set in the international context. We are competing with the rest of the world.
SE In some research the Entrepreneurs' Organization did with Investec, one in 10 entrepreneurs said they were looking to move offshore, both operations and residency. It's crazy. Something has to change.
SB But generally you've got your roots and you've settled down, so it isn't going to want to make you go [abroad]. It's just a galling fact of life that we're all going to have to pay more taxes. People are resigned to it, but it does send out the wrong message.

What should be the most important consideration for an enterprise-focused government?
RR For us, it's to do with being able to compete, so it's all to do with creative procurement in government and in the public and private sectors.
SE We need a definition for entrepreneurs, to separate their treatment from SMEs and other businesses. It's about the intent to innovate, and that includes corporate entrepreneurship. We need to develop mechanisms to support innovation. We should bite the bullet and look at ourselves as a "re-emerging" economy and start to learn from the emerging economies—see what they are doing right and put some of those policies in place.
SB I want to see the people issues simplified. If you want employment to go up, we want to re-employ people and give them good value-creating jobs, so there's a simple way to treat people fairly and legally without the need for specialist HR resources. And I'd like to see more use of the R&D tax credit ethos of incentivising innovation through tax credits rather than giving grants all the time.
JC The government needs to keep encouraging entrepreneurial UK. Keep on with the national enterprise academies. Keep on ensuring that it's easy to start up a business, so that people aren't daunted by the need to fill in a few forms. Keep the red tape low. There is pension reform coming in place from 2012 that is going to be a major pain. This is where we need to get involved and say what we feel. We want to focus on growth and employment. We don't need to throttle ourselves, getting customers is hard enough as it is.
DC Get rid of all grants. Make them all related to taxes around employment. Everything to encourage employment and growth, not grants to business where absolute sums are going to encourage the wrong behaviours. And I'd like to see exemptions for small businesses on some regulations.
BG Get the government out the way of business. Let us get on with it. Government shouldn't try to influence or command and control the economy. Just make it easy and cheap to employ people. Just simplify. We'll innovate.