business focus 17


Time to recognise Thames Valley’s fertile middle ground


Despite their fundamental importance to the economy, mid-sized firms are under-valued and overlooked, according to accountancy and advisory firm BDO LLP


Economic research by BDO has found that despite accounting for less than 1% of all firms, mid-market companies generate more than £1 trillion in revenue every year. This amounts to nearly a third (31.3%) of all private sector turnover, and one in four private sector jobs (6.2 million) across the UK.


But, according to BDO, the mid-market is caught in a ‘policy and profile’ black hole: too large to benefit from policies tailored to small business, but too small to win the attention that the largest corporates and FTSE firms command from the media and policy makers.


Simon Brooker, partner and head of BDO in Reading, says: “In the Thames Valley alone there are 1,900 mid-sized companies that contribute a remarkable amount to GDP and jobs.


“They have proved resilient during some of the toughest times the global economy has known, but rarely do we see their growth or economic contribution being celebrated. Without a shadow of a doubt the mid-market is under-valued and overlooked.”


BDO has published its own Mid-Market Manifesto – a set of policies that could unlock the potential of the mid-market, encouraging growth and globalisation.


The practical policy recommendations in BDO’s manifesto address a range of areas from procurement, tax and exporting to manufacturing and technology. They could add more than £1.3 billion to mid-sized companies’ revenues and create thousands of jobs across the UK.


Brooker continues: “Our policy recommendations are rooted in reality. We work with these businesses every day. We know that their challenges are different to those encountered by smaller companies or larger corporates.”


One of BDO’s policy recommendations is a temporary reduction in employers’ national insurance for manufacturing companies. According to analysis, more than 13,000 new jobs could be created in the Thames Valley and across the South East during the course of the


THE BUSINESS MAGAZINE – THAMES VALLEY – MARCH 2015


next parliament if the “jobs tax” was temporarily reduced for manufacturers.


The relief would be structured so that in the first year of employment 100% NI relief is offered to manufacturers taking on new workers, with this reducing by 20% each year until the relief reaches zero or the scheme ends.


'We have a unique opportunity to make the case for the unsung heroes and recognise the potential of our fertile middle ground to ensure we drive value for Thames Valley plc'


Simon Brooker says: “Manufacturing is a vital sector for the Thames Valley, and it is the medium-sized businesses that provide us with the biggest untapped potential in both domestic and international markets.


“The chancellor has already shown a willingness to use targeted national insurance reliefs as a way of stimulating employment. The apprenticeship move in the Autumn Statement was a step in the right direction, but it doesn’t go far enough.


“In addition, the cost to the exchequer for this temporary NI reduction – when offset by the increased income tax and employees national insurance - would result in a net exchequer benefit. This policy could single-handedly benefit manufacturing GDP, job creation and the treasury’s coffers.”


Mid-market companies account for £1 in every £4 of goods exported. BDO believes that encouraging these firms to sell more overseas is essential to making progress towards the government’s target of doubling exports to £1 trillion by 2020.


“Expanding and exporting abroad is one of the unique challenges faced by medium-sized businesses. New exporters often find that regulatory and legal barriers make it harder for them to grow into new markets,” says Brooker.


“We looked into many policy options to support businesses growing


www.businessmag.co.uk


Simon Brooker, partner and head of BDO in Reading


internationally, including introducing a VAT zero-rating of supplies to exporters and reducing the tax barriers for companies opening a new branch overseas.”


The Government can also support the mid-market through its own procurement policy. Within the current open framework, the Government should consider contracts on the basis of providing the best value to the UK economy rather than looking at the cheapest price. This could result in boosting mid-market contribution to UK GDP by £285 million.


Brooker concludes: “The Government has done a good job at promoting the general needs of businesses but more can be done to help mid-sized firms specifically. As we fast approach the general election and political parties consider what they can do to drive economic growth, the time is now to champion this section of our economy.


“We have a unique opportunity to make the case for the unsung heroes and recognise the potential of our fertile middle ground to ensure we drive value for Thames Valley plc.”


Details: Simon Brooker 0118-9254488 simon.brooker@bdo.co.uk


For more information about BDO’s Mid-Market Manifesto visit: www.midmarketmanifesto.com


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