Closing the gender gap in entrepreneurship is good for women and good for the economy.
The gender gap in entrepreneurship has received less attention as a public policy matter than other areas of inequality. But the Organisation for Economic Cooperation and Development’s latest report on the issue shows there are fewer women entrepreneurs then men in OECD countries.
For Britain, tackling our own gender gap is critical. Research suggests that £42bn would be added to the UK economy if we had the same level of female entrepreneurship as in the United States. If women started businesses at the same rate as men there could be an additional 150,000 extra start-ups each year. Women-led businesses have often started out as community enterprises or niche businesses which go on to become national or global brands. In the US, women own 30 per cent of all small businesses as against just 19 per cent in the UK. In London just 10 per cent of small- and medium-sized businesses are run by women – the lowest rate out of all UK regions.
The better track record in the US is no accident. Two policy interventions in particular are worthy of mention.
First is a network of state-backed women’s business centres. Since it was established in 1979, the US Small Business Administration’s Office of Women’s Business Ownership has fostered the participation of women entrepreneurs in the economy, especially those who have been historically underserved. On a visit to Boston in January, I visited a women’s business centre to understand the programmes they have on offer and how they run. Courses are run in English and Spanish to cater for the fastest-growing segment of entrepreneurs, Hispanic women. In contrast, some of the excellent infrastructure we had in the UK, through RDA-backed programmes and business links, are slowly diminishing.
Second, the US government has decided that five per cent of federal contracting dollars must be awarded to women-owned small businesses. Federal contracts may also be set aside for women-owned small businesses in industries where women are under-represented. Companies bidding for government contracts are now seeking women-led enterprises to be their suppliers. It is not about greater spending, but about incentives to change a culture.
This contrasts with the coalition’s record. In February the government’s paper on ‘buying and managing government goods’ stated that its goal of 25 per cent of central government spending to go to SMEs, but there was no goal for supporting female-led SMEs. While women at the top of large businesses has been the focus of much attention of late, we need to make concerted efforts to close the gender gap in entrepreneurship. If the government does not act, Labour in power must.
Seema Malhotra is MP for Feltham and Heston
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