The British Connection

It was a strange place for a small business meeting -- Lancaster House, a magnificent London palace, whose interior, says a fact sheet, "is a brilliant recreation of the decorative art of France in the reign of Louis XV." But if you closed your eyes, mentally changed the accents, and simply listened to what the embattled entrepreneurs present were saying, you might just as well have been visiting Peoria.

The similarity between the English small businesspeople gathering at Lancaster House and their U.S. counterparts is more than a matter of common language. In both countries -- as well as in the rest of Western Europe -- small businesspeople worry about adequate financing, regulatory burdens, unfair competition from low-wage countries, unemployment, and inflation.

Entrepreneurs in the 10 European Community (EC) countries have spotlighted these problems with the creation of the European Year of Small and Medium-Sized Enterprises, or, EYSME (see INC., April, page 140). The occasion for the Lancaster House meeting was a one-day conference to kick off the first of 10 different national EYSME programs. Each EC country will conduct its own round of studies, discussions, and conferences. A December 1983, wind-up session will take place in Strasbourg, where representatives from the 10 countries will try to agree on a charter for the EC's Small and Medium-Sized Enterprises (SMEs).

On the flight over the Atlantic en route to Lancaster House, I wondered why I had agreed to travel 10,000 miles to address the conference on U.S. small business goals and accomplishments. What was I hoping to discover that would make this meeting worth the time and trouble?

I went because I wanted to find out whether EYSME was likely to bring a policy partnership between U.S. small businesspeople and their European counterparts closer to reality. How much can we and small businesspeople in the EC learn from one another? How much can we really do together? The answer is "quite a bit," and in the end I was glad I had agreed to go.

As a ceremonial opening for the United Kingdom's EYSME, the Lancaster conference was all it should have been. A broad-based committee led by outstanding Conservative small business spokespeople as well as British members of the EC Parliament and representatives to the Economic and Social Committee organized an event that attracted small businesspeople from all over the United Kingdom. Best of all was the candor, even eagerness, with which Sir John Hoskyns, a likely key figure in the upcoming election campaign, blasted Conservative defenders of the status quo in British business and government. His remarks were particularly noteworthy, because he had served for more than three years as head of the Prime Minister's Policy Unit. If an underlying political purpose of the conference was to showcase the Conservative government's concern for small business and entrepreneurship in this general election year, one came away feeling that the government was at least sincere.

There are clearly important Conservative leaders prepared to spearhead a fight inside or outside their own party against those who want EYSME to be merely ceremonial. These people apparently include Prime Minister Margaret Thatcher, who served as the official patron of the Lancaster House conference.

But, you may ask, what did the conferees do besides talk? There is no better way to drown out that question than with the cheerful rustle and clink of money. John MacGregor, undersecretary of state for industry, who served as conference president, used the occasion to announce a joint EC and British new loan program for small and medium-size businesses.

The program's first installment is tiny, about $15 million. Small companies will be able to borrow from about $25,000 to $375,000 for up to half of their capital costs. Interest will be at 11.5% for eight years, and there will be a two-year grace period before repayments must begin. Britain and the EC have sponsored loan programs before. But, unlike the others, these new funds will be available for small businesses throughout the United Kingdom and not just in distressed, high-unemployment areas.

England needs all the help it can get if it is to have a larger, healthier small business sector. Bear in mind that bigness has been chewing into British manufacturing from two directions -- private sector mergers and nationalization under the pre-1979 Labour Party governments.

Last October, two thoughtful Britons, both EYSME vice-presidents, were quoted on this subject in the International Herald Tribune. John Bolton, who, in 1971, served as chairman of the Committee on Inquiry of Small Firms, estimated that England will need 150,000 start-ups every year over the next five years to produce jobs for the country's 3 million unemployed. Sir Charles Villiers, chairman of a British Steel Corp. subsidiary that is trying to replace shut-down steel mill plants with small companies of any kind (see INC., May 1981, page 121), forecast that "We need a million new businesses in the next 10 years. This would bring us to about the same number pro rata as in France, Germany, Japan, and the U.S."

Asked why Britain lacks entrepreneurs, Villiers responded:

It goes against the culture. I feel the British are very good at their basic research and very bad at turning it into applied operations. . . . Our culture breeds the reluctant manager. "You know old boy, I've got to collect a few pennies, but of course what I really want to do is go off and shoot a few pheasants."

During the Lancaster House conference three months later, these comments came to mind as. I listened to Sir John Hoskyns. As Sir John described it, the underlying issue in Britain is "whether a very conservative Conservative Party and a very conservative Civil Service led by a rather radical Prime Minister with one or two fairly radical colleagues can actually do what is necessary to be done over the next five, six, seven years." (When Hoskyns says "radical," he means a readiness to make sharp breaks with previous practices, policies, and leadership.)