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11 April 2022

The UK economy can thrive by supporting women

£250bn would be added to the UK economy if women started and scaled up businesses at the same rate as men

By Andrew Harrison

In the past two years, with the economy disrupted by a pandemic and lockdowns, many people have had to find new ways to make ends meet. One less-told side of that story is that Companies House data shows 140,000 businesses were started by women in 2021, compared to 56,000 in 2019. The NatWest SME (small and medium-sized enterprise) Taskforce devoted its most recent event to discussing how women entrepreneurs can be better supported and financed to build on this.

NatWest’s A Springboard to Recovery report highlighted that increasing female entrepreneurship and the productivity of women-led businesses is one of the biggest opportunities for growing UK gross value added (GVA). More than doubling the number of women-led businesses and increasing their productivity by about 40 per cent would drive around £50bn in GVA, adding around 50,000 new female entrepreneurs and 260,000 more women-led businesses in the UK economy by 2030.

There have been a series of efforts to support more women entrepreneurs and to remove the barriers to them. In 2019, Alison Rose, chief executive of NatWest Group, was asked by the Treasury to look into why women face more barriers in entrepreneurship. In response to her report, the government announced an ambition to increase the number of women entrepreneurs by 50 per cent to 600,000 by 2030.

“The headline from the initial report many of you will remember was that if women were to open and scale businesses at the same rate as their male counterparts, it would add £250bn to the UK economy,” said Julie Baker, head of enterprise, climate engagement and partnerships at NatWest.

Baker set out some of the work she has been doing with strategic partners from both the private and public sector to support entrepreneurs, especially those from “harder-to-reach” communities and minority communities. “Two years into the pandemic, female entrepreneurship has proven to be exceptionally resilient. And in fact, I think we were all surprised when we saw the number of female-founded firms that were created last year,” she said.
“We know that a lot of females were impacted by furlough,” Baker continued, with around 58 per cent of all those furloughed being women. Many worked in lower-paid jobs and in sectors that were badly affected by the lockdowns, such as retail, health and beauty. “They all sat at home thinking ‘what can I do with all this time’ and they set up a business,” she said.

However, one of the persistent issues for women-led businesses is how to scale up, and it is not yet clear whether these new businesses will carry on as “side hustles” or scale up. Baker said NatWest is launching a Gender Index, which will keep a live count on women-founded companies, and that it will be updated on a regular basis.
One of the main barriers to women is still access to finance. Data shows women-led businesses got less money on average from, for example, the Start-up Loan and Bounce Back Loans schemes, and women often do not ask for the amount of capital they need, Baker explained. This disparity in funding is an issue “across the board” she said.

“Women tend to be more conservative than men, even though they tend to outperform men,” added Demi Ariyo from lending platform Lendoe. “We’ve seen that across the board in our portfolio, particularly with repayments as well.”

The Investing in Women Code launched with 20 members in 2019 and commits financial institutions that sign up to share their data on lending to women and report annually. This means they are committed to focusing on making their processes simple for women to access finance. The Investing in Women Code now has 134 signatories, including mainstream banks and venture capital, such as the UK Business Angels Association. Members are also making more funding available to women entrepreneurs. NatWest Group’s Rose launched a £2bn SME fund at the bank and other banks are now following suit. Alongside this are best practices in place to support entrepreneurs, such as event programmes, mentoring, and access to markets and networks.
Childcare is another key issue for women entrepreneurs, with many women taking on even more caring responsibilities during the pandemic. Women entrepreneurs took on an average of six to ten hours more caring responsibilities than their male counterparts, and 62 per cent are less likely to recover financially as a result of that inequality, Baker said.

The UK Business Angels Assoication is working with NatWest and other partners on a women angel investment campaign, with a focus on regional events supporting mentoring and work with stakeholders. The organisation’s executive chair, Jenny Tooth, said they are currently mapping out the picture of women angel investors and running a “women backing women” campaign to encourage women investors to invest in companies led by women.

In a challenging economic environment, investing in women entrepreneurs and women-led businesses can deliver huge economic and social benefits. The challenge is to remove those long barriers that keep women from starting up or expanding and ensuring that the impact of economic uncertainties in 2022 does not halt or reverse the progress we are making as a business community.

You can read the latest Rose Review Progress report here: natwestgroup.com/news/2022/02/nwg-rose-review-reports-third-year-of-progress.html

Andrew Harrison is head of business banking at NatWest Group