A new report from the Adam Smith Institute co-authored by our Executive Director, Duncan Simpson; Director of Research, Maxwell Marlow; and Head of Research, Daniel Pryor, finds that medium-sized businesses (MSBs) and their size-specific challenges are often neglected in public policy debates. MSBs are the “Forgotten Medium”.

• Focus is skewed towards both the smallest and largest companies in the UK, who benefit from support not offered to the “Forgotten Medium.”

• Scaling up MSBs would boost the UK’s growth prospects, in particular in areas of ‘levelling up’ concern. 

• Over 83% of MSBs are outside London and the South East. Their products are overwhelmingly in non-services sectors such as retail, wholesale, and transport.

• The following policy changes can alleviate these problems:

  • Implement a recommendation of the 2019 Augar Review for a lifelong loan entitlement. This would allow for 4 years of post-18 education over the course of a lifetime, allowing individuals (especially in MSBs) to re-skill. 

  • Enterprise Investment Allowance & Venture Capital Trust schemes should be modified to remove the cliff-edges facing MSBs who partake in them. To keep current and potential investors, the number of employees allowed should be raised to 999 from 249, as well as increasing the turnover and balance sheet totals.

  • High Potential Individual visas should have a widened list of elite universities and a lower application fee to attract more high-skilled foreign labour. 

  • The Annual Investment Allowance should be made unlimited from its current level of £1 million. This would improve the growth prospects of MSBs, especially in capital intensive industries.

Richard Harpin, entrepreneur and founder of HomeServe, said of the Adam Smith Institute’s new report:

“Successive governments’ growth policies have overly focused on the biggest corporates or the smallest start-ups.  Yet it’s Britain’s tens of thousands of medium-sized businesses that are the lifeblood of the economy and key to more jobs, productivity, and growth.

“Growing HomeServe from an idea into a FTSE 100 company took 27 years but making the jump from medium to large was by far the biggest challenge. Just when businesses are on the cusp of something great, the policy support plug gets pulled.

“The Adam Smith Institute is spot on: if we want to catch up with the rest of Europe, Britain needs to rethink how it supports this crucial yet neglected segment of the economy.”

-ENDS-

Notes to editors:

• For further comments or to arrange an interview, contact Connor Axiotes, connor@adamsmith.org | 0758 477 8207.