Speech – Getting on with business: entrepreneurship and social mobility

Chuka Umunna MP, Shadow Business Secretary
Speech at Hub Westminster, which provides facilities and support for start up firms

Thank you for inviting me to speak this evening.

I cannot think of a better group of people to discuss this with than all of you gathered here today: restless people, not satisfied with the world as it is; innovators determined to find new gaps in old markets and to create ideas for new markets.

Our economy and society needs more people like you. More people starting up businesses, building businesses, and – hopefully – succeeding in business.

You are engines of growth for an economy that has stalled but a country which has huge potential.

What I intend to do is to first reflect on entrepreneurship, then consider how it can power social mobility, before setting out our ongoing work to help entrepreneurs to set up and grow businesses. What I do not cover in my remarks, I am more than happy to pick up on in the Q&A afterwards.

Entrepreneurship – what it did for my family

Now, before coming here, some of you may have wondered what on earth is this grandson of a High Court Judge, a private school educated, former City lawyer doing coming here to talk to you about social mobility and entrepreneurship? Well, the legal tradition in my family sits on my mother’s side and I am incredibly proud of it. But it is my late father, a self made man, who makes me so passionate about the transformative power of entrepreneurship.

My father arrived here after a very long journey on a boat from Nigeria in the mid 1960s. When he arrived at Liverpool Docks he had a suitcase and no money. A random stranger leant him the cash to pay for his train fare to London where he was due to take up lodgings with friends.

Once settled in London, he did various jobs. He washed plates in kitchens and he washed limousine cars too. Washing cars was handy because, once he had finished each job, he could sit and study in the warmth and luxury of the limo until its owner arrived to pick it up. He was studying to acquire his business and accountancy qualifications at the time.

Within 15 years he worked his way up from arriving with nothing to running a very successful import and export business doing trade between Europe and West Africa, selling all manner of goods until his death. Sadly, he passed away when I was quite young so I never got to hear the full story from him. But his example continues to inspire me.

My father’s story was particular to him. But in many ways his was an archetypal story common to many immigrant families the length and breadth of Britain. Let us not forget: the Britain of the 1960s – despite the free love, the hippies and the rest – was not the tolerant Britain we live in today. His generation created – through commerce – opportunities that no one else would offer them.

Potential entrepreneurs in my constituency

So my family’s story informs my outlook; so too does my London constituency which takes in Streatham and parts of Balham, Brixton, Clapham and Tulse Hill. There I see a vibrant culture of business that must be supported. But it was something more serious that really got me thinking.

I am Chair of the London Gangs Forum which works to reduce gang activity across London. Gang culture has taken hold of a substantial minority of our young people in London. My borough, Lambeth, is one of the most acutely affected areas.

Gangs have been responsible for numerous killings with innocent bystanders being seriously injured in the cross fire between rival groups. The most shocking incident of late was the shooting of 5 year old Thusha Kamaleswaran in her family’s newsagent in Stockwell last year.

Make no mistake: at the heart of these gangs activities are criminality and very serious violence. Each of them lays claim to certain ‘territories’ in Lambeth – in particular in and around our social housing estates. As a community we send a clear message: what the gangs do is completely unacceptable, we will root it out and ensure the strong arm of the law is brought down to bear on the perpetrators. That is exactly what happened with those found responsible for the shooting of Thusha – members of a notorious local gang, who were jailed for life in March.

But if one studies what Lambeth’s gangs do in more detail, it is both shocking and frustrating. They put a lot of effort into building up their gang’s brand. Most are involved with the sale of drugs; but some have branched out into more legitimate activities around fashion and music. You can find music videos they produce to promote their activities on YouTube. BBC Radio 4’s Today programme did a series of reports on this a couple of weeks ago featuring Lambeth’s gangs.

This brand building is alarming because it helps the gangs to be more notorious and glamorises what they do – it is one of the reasons myself and other Labour parliamentary colleagues, Heidi Alexander and Karen Buck in particular, have argued that stronger powers are needed to ensure the gangs YouTube videos are taken down.

What frustrates me is this: many of these young people are using skills that – if channelled in the right way – could provide them with an alternative route to success. And yet, in Lambeth, too much of this entrepreneurial instinct is being channelled into totally the wrong thing. Just imagine what our young gang members could achieve if their energies were redirected. Their entrepreneurial zeal, used in a legitimate business setting, could provide them with a ladder up, just as it did for my father. Instead, as things stand, many of them will likely end up in jail with blood on their hands unless we change things.

I spent an evening talking to young people in a youth club in my constituency about this speech last week. A large number of the young people attending that particular club are affiliated to and/or are involved in the gangs which operate in my area. We talked about why young people were choosing to do the wrong kind of business through gangs. One young constituent said simply that illegitimate business was “an easier and faster way to make money”, to “get rich quick”.

When I dug behind this rather glib explanation, my young constituents explained that pursuing gang related business was viewed as a strategy for getting out and getting on. Gang members “have goals”, said one young man, “they do bad to do good”. What he meant was that gang members sought to make money first through illegitimate means, with a view to building up enough finance to run a legitimate business later. The other young people present shared his analysis.

I am sure that many in this room have struggled to access finance to start and grow their business, and will have considered peer to peer lending or maybe finding an angel investor for it. Well, among this group in my constituency there was a perception that profits from illegal commerce were the most viable solution for them.

Of course the reasons why young people get involved in gangs are complex and varied. But what is clear is that the entrepreneurial spirit is strong in them,
albeit misdirected. We must make legitimate business a more feasible avenue through which they can realise their dreams even when all else may have failed them.

Reflecting on my father’s experience and the entrepreneurial impulse of our young people, I am convinced that Labour must view entrepreneurship as central to our approach to increasing social mobility.

Social mobility

Social mobility is of course very much in keeping with what Labour is all about. We exist as a movement and as a political party to help more people succeed in life – or, as we put it in our constitution, to secure “the means for each of us to realise our true potential”. Like all the best entrepreneurs, ours is an ambitious mission: putting power, wealth and opportunity in the hands of the many. And, yes, this can sometimes be threatening to the established market players – those who have the power and wealth, and want to hoard it. So be it.

At root it is about helping people to get on in life regardless of where they are from, able to pursue the life they choose and value. It is about making a person’s destiny less dependent on the circumstances of their birth.

Some people view social mobility as a relative concept, meaning that for every person moving up the ladder there must be an equal and opposite reaction of others moving down. But extending opportunity need not be a zero sum game. Removing the ceiling on success that too many experience is to the collective benefit of us all.

And in an interdependent world individual success can strengthen our common bonds, just as strong common bonds can enrich the soil from which individual success grows. Hillary Clinton is fond of quoting the Nigerian proverb which says it takes a whole village to raise a child. I say it takes a similarly strong culture to raise an entrepreneur. Just ask those who have spent time in Silicon Valley about the strong culture there – of hope, possibility and forgiveness, where failure is seen as part of the learning process.

Labour’s record

In government, Labour did a lot to fracture the link between a person’s history and their destiny: from Sure Start and unprecedented investment in early years’ education, to improvements in educational attainment across the board; from the educational maintenance allowance, to the expansion of higher education. These are things we can be proud of.

We narrowed the gap in attainment between pupils from more and less advantaged backgrounds – for example, the percentage of those on free school meals gaining five grade A*-C GCSEs rose faster than for those not on free school meals. And there is some evidence that we had begun to weaken the link between family background and educational attainment: research from the University of Bristol suggests family background had less influence on GCSE results for those taking them in 2006, compared to those taking O-levels in 1986. But, despite this, the link remains strong and it is clear there is a long way to go. However, it seems unlikely that this progress will be sustained if this Government – which has already cut the educational maintenance allowance – also follows through on its plans to return us to a two-tier education system where kids are divided into winners and losers at age 14.

And even where it appears that progress has been made, it takes a long time to quantify. A key indicator for measuring social mobility is earnings. I’m told that the erratic earnings of you entrepreneurs makes it much more tricky to keep track of your earnings than those in employment, meaning you are often excluded from the data. But that’s for another day. Whether a wage earner or an entrepreneur, there is a long time lag until these data are available. For example, the very first kids who benefitted from Sure Start are still only just teenagers today but the benefits they will derive will be long lasting if the US Head Start programme is used as a guide.

Entrepreneurship as a vehicle for social mobility

The All-Party Parliamentary Group on Social Mobility recently set out its excellent “7 key truths about social mobility”. They highlighted the critical importance of early years in developing learning skills and laying the foundations for personal resilience and future emotional wellbeing; the impact of high quality teaching and out-of-school programmes; how these feed through into university admissions, the main determinant of later opportunities; as well as pointing out that while early pathways are often highly predictive, they are not determinative, something that policy makers should not forget.

So I do not want to decry the investment in the early years, or to undermine the focus on educational attainment, access to universities, and access to the professions – the last point particularly brought to public attention through the excellent and persuasive work of Alan Milburn more recently. All this remains incredibly important. They are issues I am passionate about and, in the case of universities, form a major part of my brief as Shadow Secretary of State.

But – as Ed Miliband recently pointed out – social mobility shouldn’t just be about changing the odds of people making it to university, as if only one kind of pathway top success matters. We have to improve opportunities for everyone, including those who don’t make it to university. That means ensuring vocational education is seen as just as much of a gold standard as academic education – and that there are good opportunities to switch between the two.

What I wanted to do today, by highlighting the role of enterprise, is to ensure we place the role of entrepreneurship and business policy at the heart of this debate. Increasing social mobility cannot just be a matter for education, at whatever age. It must be a whole government activity. We must harness the power of business to change lives, releasing the entrepreneurial spirit wherever it resides, to open up new routes through which people can shape their own destinies just as my father did.

Entrepreneurship has a key role to play here because running your own business, research suggests, can sometimes offer a better route for weakening the link between where you come from and where you end up, than being in paid employment.

I have been particularly taken with the work of Ingrid Schoon and Kathryn Duckworth at the Institute of Education in this respect. They compared levels of social mobility between those who are employed and those who are self-employed. Their findings suggest that self-employment offers a more likely route to social mobility than paid employment – so one has a better chance of getting on by going into business.

Labour’s vision for the economy

And entrepreneurial success is at the core of Labour’s vision for the dynamic, future economy we need, and at the core of our vision for the dynamic, fair, opportunity society we want to see.

It is central to the better and more productive capitalism Ed Miliband and I have been arguing for – innovative businesses, focused on long-term value creation not short term profit extraction.

It is a vision rooted in our history. We have always stood for increasing autonomy in life and dignity in work as the world of work has evolved and changed. So what are we doing in this area?

We set up our Small Business Taskforce early last year, now led by Bill Thomas, to advise on what we should be advocating to help people start up and grow businesses. Before coming here I tweeted a link on twitter to the Taskforce’s interim report – produced by the late, great entrepreneur Nigel Doughty – for those who have yet to read it. Its next report will be published later this year.

We set up NG:Next Generation, our vibrant entrepreneurs’ network, towards the end of last year to ensure our party is connected into the entrepreneur community and to provide a vehicle through which entrepreneurs can connect with each other. The network’s next event takes place here this evening just as soon as the Q&A session is done.

Labour’s shadow education team, led by my good friend Stephen Twigg – with whom my team is working closely – is looking at the role schools can play in fostering the next generation of entrepreneurs. It is why, for example, we are supporting the campaign by the CBI and others that speaking, presentation and communications skills should be a priority in all state schools following the excellent example of Paddington Academy, as they are in many private schools.

And I am pleased to say that, before being elected, every member of our shadow business team in the House of Commons had either set up and run their own business, or – like myself – professionally advised many entrepreneurs who have done so. So when our manifesto comes, I can confidently say it will be informed by practical experience, as well as our beliefs and values.

Making entrepreneurship a national state of mind

In closing, I want to quickly say something about the business environment.

These are difficult times for business. Our economy is in a recession of the Government’s own making. The outlook is uncertain. The full impact of the troubles in the Eurozone have yet to feed through. All the while, the Government continues to fail to show the leadership needed at home, it has failed to show the leadership needed abroad, and it has failed to take the action necessary to guide our economy back to growth. In short, they risk creating a lost generation of businesses and business opportunities.

That said, I remain optimistic about our national future in the longer term. Looking around the world at the rise of the emerging economies I know we will have to raise our game to compete but I am determined that we will do it. There are, after all, huge opportunities out there.

In the US there is a national story in which the lone entrepreneur plays the lead role, pursuing the American dream. The evidence for this kind of story today may be weak, given that social mobility in the US is as low as anywhere. We all know that in an unequal society it is simply harder to move up the ladder. But there is no doubting the rhetorical strength of their national story, with its unashamed veneration of individual success.

To succeed in the future we must write the next chapter of our own national story – with aspiration at its heart, entrepreneurship as its state of mind, and community as its end. It must encourage your restlessness and inspire my young constituents. That way, together, we will create a better future for all in Britain.