- IFB Chairman Ross Warburton urges Government to make family
business a key strategic partner to boost growth
- Family firms generate a quarter of UK GDP - £1.1 trillion in
revenues annually
- 9.2m jobs provided by family businesses - two in five private
sector jobs
- 60 per cent of family firms grew by five per cent or more last
year
Government could boost economic growth by making family business
a key strategic partner, helping family firms to secure and grow
jobs across the country. That is the challenge set out by
Chairman of the Institute for Family Business (IFB), Ross Warburton
at a major international conference for family business in
London.
Ross Warburton issued a stark warning to the Chancellor on the
risks of not supporting the sector, which provides two in five
private sector jobs in the UK, generates revenues of £1.1 trillion
a year and £81.7 billion in tax receipts to the UK
Exchequer.
Family firms have a record of success during the recession: a
recent Credit Suisse report reveals that 60 per cent of family
businesses actually grew by five per cent or more in the last
twelve months - one in ten have grown by over 15 per cent. Over the
same period revenues in European listed businesses have fallen by
one per cent.
Ross Warburton called the family business model an example of
responsible capitalism in an age of economic uncertainty. In
a speech to delegates at the Family Business Network's
23rd International Summit, held in London, said that the
benefits of family businesses go beyond the balance sheet, and
point to the deep rooted culture and values of family firms with
genuine long-term vision and commitments to their communities
Last year, the IFB called on the Government to boost the family
business sector by:
- Removing discrimination in the tax system that penalises family
firms
- Cutting red tape and bureaucracy around employment
legislation
- Working with family firms to plan for the future and secure
jobs
While ministers have responded to the IFB's calls and made
progress on cutting red tape through the Enterprise Bill, they have
failed to align the tax treatment of debt and equity business
investment, thereby maintaining the incentive to firms to invest by
taking on debt rather than using their own revenues - a prudent
investment model favoured by family firms.
Government has also failed to reform the Enterprise Investment
Scheme (EIS) that penalises entrepreneurial family firms by
preventing owners obtaining tax relief when investing in family
business start-ups. Restrictions in the EIS mean that family
members investing in a new family business only receive half the
return on that investment compared with a non-family run start-up
that qualified for EIS relief. Over a third of IFB members
said they would invest more in family start-ups if the law were
changed.
Ross Warburton, Chairman of the IFB said:
"My message to Government is this. We have an opportunity
connect a successful business sector with a successful business
environment - to roll out the red carpet and make Britain a dynamic
global hub for family business. Make family business your key
strategic partner in attracting inward investment to the UK and
driving exports through our relationships with the flourishing
family business sector in key markets around the world.
"We face a very challenging global environment. We
continue to be buffeted by global economic headwinds. People
feel uncertain about the prospects for them and their families and
insecure about their jobs. National economies seem to lurch from
crisis to crisis and pockets of unrest flare up.
"In the face of this, Governments and policy makers appear to be
struggling to find the elusive elixir of growth. Yet at the
same time wherever you look, despite the challenges, family firms
continue to thrive and grow and are in many cases outperforming
other businesses - a testament to the strength and resilience of
the family business model.
"As recent research by Credit Suisse shows, in the last 12
months 60 per cent of family businesses report revenue growth of
five per cent or more. One in ten report revenue growth in
excess of 15 per cent. In contrast, over the same period
revenues in European listed businesses have fallen by one per
cent. The evidence also shows that family businesses have a
track record of delivering superior returns relative to the cost of
capital than the broader corporate sector - patient capital pays
off.
"As a sector we want to play our part in finding
solutions. In the UK, we are looking to build a dialogue and
work constructively with Government on the growth agenda.
Given the right conditions we can work more effectively together to
deliver the growth, jobs and investment that will benefit our
national economy and local communities.
"And just think about what we could achieve together. In
the UK, family businesses already provide two in five private
sector jobs, a quarter of GDP and over £80 billion in tax
receipts.
"But it goes beyond the balance sheet. In an age where the
shock of the economic meltdown has raised questions in many
quarters about corporate practice and the role of private
enterprise in society, the deep rooted culture of family firms has
much to offer the broader business community - built on a bedrock
of strong and enduring values, a vision for and commitment to the
long-term and a genuine part of and contributor to local
communities. In summary, an example of what responsible
capitalism can look like."
Ends
Notes to Editors
- The Institute for Family Business is an independent,
not-for-profit, politically neutral, membership association
which supports the UK family business sector.
- Ross Warburton was speaking on Thursday 4th October
at the 23rd annual Family Business Network Global Summit
in London
- Family firms account fortwo thirds of private sector
enterprisesin the UK economy - almost 3 million businesses; 40% of
total private sector employment, providing jobs to 9.2million
people;£81.7bn per annum of UK tax receipts.