HM Treasury marked International Women’s Day by publishing the findings of a probe into how the UK’s female entrepreneurs fare in their efforts to secure funding. [1] By any standards, the picture that emerged left a lot to be desired.
Carried out by NatWest deputy CEO Alison Rose, the review found that just one in three of the nation’s entrepreneurs are women: a gender gap of more than one million fewer female leaders in UK enterprise than men. On average, firms run by women are half the size of male-led firms, and far less likely to scale up to a £1 million turnover.
Comparisons with the health of female entrepreneurship in other countries are unflattering: in the UK, just 6% of women run their own businesses, compared to 15% in Canada, almost 11% in the US and more than 9% in Australia and the Netherlands. The Rose Review noted that closing the gender gap could add an additional £250 billion in gross value added to the UK economy: equivalent to around four years of economic growth.
Rose said: “I am passionate about this cause, and was proud to have been asked to lead this Review. Some of the findings are stark – but by shining a spotlight on the issues and outlining the barriers and opportunities, the aim is to support the full potential of every woman who has the entrepreneurial spirit and ambition to start or scale their business. Today is just the beginning.”
With that fresh start in mind, the government published a response to the Review on the same day, [2] throwing its support behind a new Investing in Women code that would compel financial institutions to publish the gender split of their business-funding commitments on an annual basis. HM Treasury will work in partnership with banking trade association UK Finance to formulate and establish the code.
The response also backed a set of further initiatives, such as
i) new investment vehicles designed specially to increase funding to female entrepreneurs;
ii) efforts to encourage UK-based institutional and private investors to dedicate further investment to female entrepreneurs, and
iii) improving access to professional expertise by expanding the Entrepreneur and Expert in Residence programmes.
Do these measures have what it takes to make a positive impact?
The Institute of Leadership & Management's head of research, policy and standards Kate Cooper says: “We at the Institute are proud to be associated with the University of Birmingham’s Centre for Women’s Enterprise, Leadership, Economy & Diversity – known for short as WE-LEAD. [3] One of the most important messages that has emerged from WE-LEAD’s work is that achieving sameness isn’t strictly an indicator of success: people have a whole range of different motivations for wanting to run businesses.”
Cooper notes: “Women should be able to access finance and grow their businesses if that’s what they want to do. But having also been closely connected with the National Centre for Micro Business [4] – which was funded by the EU, with partners in Italy and Sweden – one of the most interesting things The Institute learned was that women are running businesses of that scale very happily and successfully, without growth being an all-consuming driver.
“So, let’s not lose sight of the host of reasons why people become entrepreneurs. And let’s not assume that high numbers of women turning to entrepreneurship is uniformly a good thing – because if conventional career paths have failed to deliver satisfactory earnings or working conditions, it’s often a choice of last resort.”
That said, Cooper points out: “Once we shine a light on structural inequalities and produce statistics that say, ‘Look, this isn’t fair – there’s an injustice here,’ then as with the ethnicity pay gap reporting we explored last week, the findings flag up the need for a conversation to be had – and difficult questions to be asked.”
She adds: “A code is a solid, first step towards achieving greater equality.
For further insights on the themes raised in this blog, check out the Institute’s resources on sustaining growth