With the first Queen’s Speech of this new government out of the way, now is the time to think about how politicians can help grow the UK out of the current downturn and into a new age of prosperity.

If we’re to create jobs and wealth, let’s make entrepreneurship compulsory in schools. We should make sure young people are taught that starting your own business is just as legitimate a career option as any other. Careers officers should be given the right training and materials to make this understood. We lose too many entrepreneurs who get locked into a traditional career path and have to wait for redundancy ten years later to find their calling.

Stimulus package

Let’s also extend tax breaks to stimulate investment in growing companies. Whether through venture capital trusts, the Enterprise Investment Scheme or other such measures, we must recognise that people with spare money want an incentive for backing exciting new companies. Venture capital on the whole does make money but many institutions (who manage these people’s money) are focused on short-term rates of return. Doubling your money in a few years is great, but so is doubling your money over a longer time and what is even better is investing in companies which interest and excite people and change the world. The demand is out there as many people want to take more control of their own investments, back entrepreneurs and learn from and enjoy the experience.

A taxpayer’s investments or tax breaks focused in this area must be spread across the spectrum of early, mid-stage and publicly listed growth companies. There is no point funding a lot of start-ups if they can’t get more capital later and a healthy public market needs to be part of this value chain.

Complementing this should be an instrument for long-term investors (including the general public) to benefit from the IPOs of new growth companies. Let’s limit the involvement of hedge funds and other short-term investors and lock in existing shareholders to share some risk for the first six months or so of a public company. This gives the share price a chance to grow and was the way NASDAQ flourished in the 1990s.

Yes, minister

If we are to embrace a new culture of business, why not have the government underwrite some risk in venture capital funds? Banks thought property was ‘safe as houses’ and would lend 110 per cent against bricks and mortar to the point where we became a nation of property developing entrepreneurs. There were inherent risks here and and the taxpayer ended up footing the bill. Innovation and intellectual property should be more bankable, so entrepreneurs could leverage the investment in their innovations and loss-making businesses instead of their houses. The first country to do this in the world could steal Silicon Valley’s crown.

The risks in technology are no more than in property; someone will figure this out and start bankrolling them but it will probably take government support to kick-start it. If this sounds pie-in-the-sky, note that it’s how Israel created its impressive technology and venture industry.

For all of this to succeed on a grand scale, we’ll need to incentivise the best managers to join start-ups from large global companies. So let’s allow them to transfer some of their equity or pensions from large companies into small companies and offer them tax breaks for taking this risk. Also, we should reinstate Enterprise Management Investment schemes so that share options in start-ups offer tax advantages for managers who risk their careers with younger companies.

The regional divisions in financial support for SMEs in the UK are mind bogglingly complex. We are a small nation in a global economy and need to corral our resources on a sector basis and make sure we have the best companies in the world regardless of where in the UK they are based, rather than having lots of sub-scale businesses spread across regions. Likewise, let’s ensure all initiatives for SMEs are balanced between the Smalls and the Mediums.

As one of the UK’s largest advertisers, the government’s Central Office of Information could spend more of its budget on highlighting some of the UK’s greatest successful young businesses. Silicon Valley is driven by role models who inspire others to start new companies and we have plenty of successes here, but they don’t get the profile they should from the mainstream media.

In the grand scheme of the UK’s economy, these measures amount to a tiny fraction of the country’s budget. However, the impact of forging a globally focused, vibrant culture of entrepreneurship would be felt across all areas of the country and cement our place in the world as a value-adding nation. After all, we are a country of inventors and entrepreneurs at heart and with the right environment our potential could explode again.

Simon Cook has been a key player in the UK venture capital industry since 1995. He has been involved with a number of Europe’s most successful technology start-ups, including Cambridge Silicon Radio, Virata, nCipher and KVS.

See also: Simon Cook – Exit Strategist