Despite their fundamental importance to the economy, mid-sized firms in the South West are under-valued and over-looked, according to accountancy and advisory firm BDO LLP.
New economic research, published today by BDO, reveals that despite accounting for less than 1% of all firms in the South West, mid-market companies create 21% (451,000) of private sector jobs in the region.
The 2,580 South West companies analysed, all of which have a turnover between £10m-£300m, also contribute £65bn in revenue and £20bn GVA every year.
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.
Alongside the new data highlighting the impact of the mid-market, BDO has published its own Mid-Market Manifesto; a set of policies that could unlock the potential of the mid-market, adding over £1.3bn to mid-sized companies’ revenues and creating thousands of jobs.
Graham Randall, partner, BDO in Bristol, said: “Without a shadow of a doubt the South West’s mid-market is under-valued and too often over-looked. Mid-sized firms contribute a remarkable amount to GDP and jobs, and what’s exciting is that with the right support these businesses have the potential to deliver even more for our regional economy.
“The Government has done a good job at promoting the general needs of business but more can be done to help mid-sized firms specifically. As we begin the run-in to a general election, this is a good opportunity to reflect on the needs of this section of our economy, as all political parties consider what they can do to drive economic growth.”
The practical policy recommendations in BDO’s Mid-Market Manifesto address a range of areas from procurement, tax and exporting to retail, manufacturing and education and skills.
Graham Randall added: “Our policy recommendations are rooted in reality and quantify just how beneficial to businesses, job creation and the wider economy they could be. Straightforward changes even to policy around procurement could make a material difference. There is now a unique opportunity to tilt the balance in the direction of growth for the unsung heroes of the economy to ensure we drive value for South West plc.”
Some of BDO’s specific policy recommendations include:
· Temporarily reducing employers’ National Insurance for manufacturing companies.
Make tax simpler and fairer and encourage mid-sized business to export by temporarily cutting National Insurance (NI) for manufacturers. This would boost UK GDP by over £3.5bn (£1bn from the mid-market) and create nearly 90,000 new jobs.
· Awarding government contracts on the basis of the employment and training benefits to the supply chain, not cost alone.
Support British business by changing the way the government awards contracts to ensure the best value to the economy, rather than looking for the cheapest price. This would increase UK GDP by £1bn (£284m from the mid-market) and create over 11,000 jobs.
· Allowing the Regional Growth Fund to lend to smaller businesses.
Make it easier for ambitious mid-market firms to access the Regional Growth Fund to aid expansion. This would grow UK GDP by nearly £200m (nearly £60m from the mid-market) and create over 2,000 jobs.
Britain’s mid-market companies account for just 1% of all UK firms but generate a third of private sector revenue, totalling more than £1 trillion per year, and employ over 6.2 million people (one in four of all private sector jobs).