Alarm for policymakers
Scotland plummets in league of scale-up businesses
Scale ups are more likely to employ apprentices
Scotland’s attempts to scale-up businesses has taken a severe knock, according to new research showing it has plunged in the UK growth league.
While the number of high growth companies across the UK has risen 3.7% to a record 36,510, Scotland has seen a dramatic decline, which has seen it fall 21 places to third bottom in the official rankings of 41 local areas and devolved nations. Only Gloucestershire (25 places) fell further.
The Scale-Up Institute, which compiled the latest data, said the research showed the importance of local initiatives engaging with schools and universities. The CBI Regional Scorecard shows that Thames Valley Berkshire and Hertfordshire both rank highly for business interactions with schools, while Bristol in the West of England performs strongly for in-work training.
The 2018 ScaleUp survey found that scale-ups are twice as likely as typical firms to offer apprenticeships. There is also an emerging pattern regarding the availability of regional equity. The British Business Bank has found that London and the South East account for a significant proportion of deal activity, which correlates with London, Oxfordshire and Thames Valley Berkshire’s success in scaleup growth.
Across the UK, the data shows that the economy added 1,300 companies going through a period of rapid growth.
The national number of scale-up companies, who are defined as those which have grown their turnover or employment by more than 20% annually over a three-year period, has increased by more than one-third over the past five years. There are 35% more scale-ups than in 2013, compared to GDP growth over the same period of just 9%.
Scaleups generate more than £1.3trn in combined turnover. This is up 34% on 2016, and compares to a turnover of £1.9trn by all SMEs combined. They employ approximately 3.4m people across all sectors and areas of the UK economy.
The three local areas which have seen the highest scale-up growth relative to their population between 2014-2017 are Oxfordshire; York, North Yorkshire and East Riding; and Thames Valley Berkshire.
The ScaleUp Institute is a private sector-led, not-for-profit organisation focused on collaborating with policy makers, corporates, finance players, educators and government at a local and national level.
Irene Graham, CEO, said: “Scale-ups are the engine drivers of local economies. They are twice as innovative as large firms, employ twice as many apprentices, are twice as likely to be operating in international markets, and, significantly, they create high quality jobs. On average, scale-ups are 42% more productive than their peers.
“Their aspirations remain high. According to our recent Scale-up Survey, eight out of ten expect to scale again in 2019, generating £1.5bn more in turnover and creating an extra 7,000 jobs.”
Irene Graham added: “It is is encouraging that scale-up numbers are increasing across the UK but it is equally important to note that the rate of growth has slowed from its average annualised rate of 9.3% between 2013 and 2016. The increase in scale-up numbers is driven by having more businesses scaling in turnover, whilst the numbers of those scaling by employment or by both factors has seen a slight decline.
“As this constitutes the first full year of data since the EU referendum of 2016 we will watch closely to see how the decision to leave the EU has affected scale-up confidence, their ability to scale and the ecosystem’s ability to evolve to meet the needs of scaling businesses.”
Ms Graham, who is a a visiting professor of entrepreneurship at the University of Strathclyde, said that “large disparities” in scale-up numbers persist at a regional level – the fastest growing regions grow their number of scale-ups almost five times faster than the slowest.”