How Policymakers Can Actually Help Scaling Businesses (Instead of Just Talking About It)

By: Felix Mitchell, co-CEO and co-Founder of Instant Impact, a provider of AI-powered talent solutions for small and medium sized businesses.

Beyond the headlines, what’s trending on LinkedIn, or the cut and thrust of debate in Westminster, there’s something very concerning happening in the UK.

We are in the middle of an unseen recession for white-collar and tech careers.

Job vacancies have fallen sharply since 2022, fastest in the service economy (down by 24,000), with tech close behind. 2024 was the first year on record that the number of those employed as software developers fell since 2006 and overall, there has been a 70% drop in software job vacancies since 2020.

I know dozens of inspiring leaders who've been unemployed for 6, 9, or even 12 months now. Every recruiter I talk to does too.

Meanwhile, companies are looking at making greater use of AI and hiring offshore not because they necessarily want to, but because growing teams in the UK has become too expensive and too risky.

The tragedy is that we have incredible talent, world-class universities, and a time zone that works for both the US and Europe. We should be the obvious place to build the next generation of global software companies. Yet studies show that a combination of factors mean that European software firms typically take longer to reach €100 million in ARR compared to their US counterparts (15 years vs 10 years), and fewer of these firms go on to reach €1 billion.

Unless we make some serious course corrections around culture, education, regulation, and immigration, we're going to keep watching the best opportunities go elsewhere.

I’ve spent 14 years building Instant Impact, applying technology to make hiring simple, and helping hundred of businesses to innovate, hire top talent, and grow faster. Here are the steps government and other stakeholders can take today to make the UK a country where entrepreneurs from all over the world come to scale their businesses.

Challenge 1: Fix Our Broken Relationship with Risk

The Problem: We hero-worship the wrong people in this country. Most talented graduates still dream of Goldman Sachs not joining the next Monzo or Deliveroo at employee number 50.

The solution:

Champion our success stories properly. Did you know that Kristo Käärmann co- founded Wise (formerly TransferWise) in London and it's now worth over £5 billion? Or that Yorkshire born Greg Jackson grew Octopus Energy into the UK’s largest energy supplier worth over $9bn in 9 years?

These are the stories we should be telling in schools, these are the people who should receive knighthoods, these are the people who Ministers should be engaging with as a matter of course, not a rare exception.

Start in schools. We need a fundamental shift in how we talk about failure and risk- taking. As comedian John Bishop brilliantly put it on the podcast How to Fail: "Confidence is a lack of consequence". In the US, failing at a start-up is a badge of honour, it means you tried something hard. Here, it's still seen as something to be ashamed of. We need to change that narrative from age 11, not age 25.

Make risk-taking aspirational. When the most talented people in the country see entrepreneurship as a backup plan rather than the main event, we've already lost. Government messaging, school curricula, even (maybe especially) university career services need to flip this script.

Challenge 2: Make UK Talent Competitive Again

The Problem: It’s easier than ever for businesses of all shapes and sizes to hire talent abroad and more and more of our clients are doing just that.

Companies like Oyster and Omipresent allow companies to hire talent (almost) anywhere in the world for a nominal fee. A London or Manchester-based company looking to build a lower-cost team can look at Cape Town as easily as Cardiff.

This should terrify policymakers. The relationship between company growth and increased employment can no longer be taken for granted, it has to be earned.

The solution:

Create incentives to hire in UK regions. If the government genuinely wants to grow regional economies across the North, the Midlands, Scotland, Wales, and Northern Ireland, it must support companies to hire in this country rather than offshore. This means spreading existing best practices for supporting scale-ups and spin-outs across the whole country, and ensuring that devolved and regional leaders prioritise scaling businesses, as the Future Governance Forum think tank has proposed.

Fund massive AI retraining programmes. We're in the middle of the biggest shift in how work gets done since the industrial revolution. AI isn't coming, it's here. Every single person in the workforce needs to understand how to work with these tools, not just the tech sector, and they need to understand it right now, not months or years down the line.

Make AI fluency mandatory in education. Not just coding (though that helps), but understanding how to prompt effectively, how to verify AI outputs, how to use these tools to be more productive. The countries that get this right first will have an enormous competitive advantage.

Challenge 3: Remove the Barriers We've Created for Ourselves

The Problem: Recent government policies such as increased National Insurance contributions and employment rights reforms have made it harder and more expensive to hire people in the UK. At the same time, regulatory barriers make it harder than ever to access capital quickly when you need it.

The solution:

Fix the immigration system. The recent rhetoric around immigration policy risks driving talent away. If we want to build world-class companies, we need world-class talent – especially people with go-to-market expertise that can turbocharge sales and marketing, as highlighted by Boardwave and McKinsey & Company. That means sending a strong message that the UK is open to the best global talent to work and build businesses here.

Reform small business lending. Why should I have to give a personal guarantee that survives even if the business goes under just to get an overdraft? There’s no way that the CEO of GSK has to personally guarantee their debt. This isn’t about irresponsible lending, it’s about levelling the playing field for scaling businesses with the big boys.

Stop making employment more expensive and risky. Every time government makes it more expensive or legally risky to hire people in the UK, companies will look elsewhere. It's that simple. The latest employment law changes are well-intentioned but will encourage many businesses to hire in other countries or move existing jobs offshore.

We’re at such an exciting inflection point. New technology, new trade alliances, new risks, and new opportunities are reshaping the world around us. The UK and Europe can and should be at the epicentre of another explosion of wealth creation – with up to €500 billion to €1 trillion in annual value potentially on the table by 2030, as highlighted in Europe’s Moonshot Moment.

A few well-placed interventions from government that genuinely respond to the needs of scaling businesses would go a long way. This means prioritising access to late-stage funding, supporting ‘founder factory ecosystems’, encouraging the procurement and adoption of game changing technology, and strengthening public-private partnerships to de-risk innovation in strategic sectors.

The government is doing many of these things already – but must go further faster, and stop creating barriers that hold scaling businesses back – in order to realise the full growth potential of scaling businesses.