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What's the Point of Creating New Businesses if We're Setting Them Up to Fail?

21/01/2015 17:47 GMT | Updated 23/03/2015 09:59 GMT

The average British voter tends to be a bit of a worrywart - and with good reason.

From bureaucratic immigration loopholes and a desperately overworked National Health Service to an ever-deteriorating cost of living crisis, we've got plenty to stress about.

Yet for whatever reason, it seems like those aren't the issues that keep David Cameron up at night. He's far more interested in startups.

This week, the PM made a gaggle of new campaign promises that revolve almost entirely on job creation. It makes sense for Mr Cameron to steer the conversation in this direction, as he's admittedly got a bit of clout here. Since he moved into Downing Street in 2010, we've seen about 1,000 new jobs materialise each and every day - and one of the biggest supposed culprits of said job creation has been the government's shiny startup fund.

Since its inception, the coalition-backed Start Up Loan Scheme has allocated £130m to 25,000 entrepreneurs keen to launch their own businesses. Now, these loans are small - and there are actually much better ways to kick-start a new business. But the government's scheme has been unique in that it's geared almost exclusively at ventures that are unable to secure funding from a high street bank. There's a reason some of these businesses can't get a loan, and so the scheme poses a slight risk to the taxpayer. Yet each loan pushes economic activity, which inevitably helps to promote job creation.

With that in mind, David Cameron has vowed to treble the number of start-up loans the government is dishing out to Britain's aspiring entrepreneurs. In turn, we've been told that a Conservative government in 2015 will transform Britain into the new "jobs factory of Europe". Who wouldn't love that?

There's just one little problem: if that same government doesn't make some serious changes to the level of support small businesses are currently afforded, in five years we may have about 75,000 failed startups on our hands.

Over the past few years, the coalition's level of support for small businesses has been severely lacking in a couple of major departments.

Example: one of Mr Cameron's big campaign promises in 2010 was to slash the amount of red tape small businesses have got to navigate in order to stay afloat. Yet whilst ministers have successfully cut away around £1.2bn worth of regulation, they've simultaneously added an extra £4.3bn.

Meanwhile, the UK government is still resting on its laurels over permanent reform to the country's archaic business rate structure. Under the current system, companies with the same turnover can pay wildly different sums based on the size and location of their premises. Small business owners have been arguing for years that domestic trade continues to be stifled by the highest rates in Europe. And whilst Chancellor George Osborne has made clear that a fairer system is somewhere out there on the horizon, new business owners are still struggling to navigate a broken system.

If David Cameron wants to claim the economy has improved under his watch, that's fine. Despite the odd setback and a poverty divide that has yet to be addressed, a lot of us are better off than we were two or three years ago. But he should know better than to try and sway voters with promises to bolster the country's small business scene when he has yet to deliver on the campaign promises he was pushing five years ago.

No one is going to argue against funding more startups. Innovation is a huge economic driver. But unless the government is willing to go the extra mile and make it easier for those new businesses to operate and thrive, we're merely setting up an entire generation to fail.

I'm no campaign manager, but that doesn't sound like a winning platform to me.