Chancellor’s adviser backs scale-ups over struggling small firms

Tech champions could win while traditional businesses lose out

The Chancellor’s reappointed entrepreneurship adviser, Alex Depledge, says growth will come from making businesses radically more productive, not simply from more government spending and announcements. With scale-ups representing just 0.6% of SMEs but generating approximately 55% of SME turnover, her argument is powerful—but risks leaving Britain’s smallest firms outside the Budget spotlight.

GROWTH DOESN’T COME FROM GOVERNMENT SPENDING AND POLICY

The chancellor’s entrepreneurship adviser has warned him that the next phase of UK growth will depend on business productivity, not government announcements. For small and micro firms, this could be the next big challenge.

Alexandra Depledge, who was reappointed by the Chancellor, is arguing that we won’t get the growth we need in the UK through government spending or policy announcements alone. She says the UK must unleash private‑sector productivity, especially among high‑growth firms.

The Chancellor is working on his first budget for 28th Oct so this warning is timely but reading between the lines it might mean a lean time for small and micro businesses in need of support.

If Alexandra Depledge is saying growth doesn’t happen because government spends more or announces more, and the Chancellor takes it to heart it could mean

• fewer small business grant schemes and blanket small businesses programmes

• tighter fiscal support

• and more targeted interventions

Of course, until we hear from the Chancellor on 28th Oct this is all pure speculation and we really should learn not to speculate. However, perhaps the call to action is to get as prepared as possible for whatever comes next. For micro‑businesses, this could mean less possibility of government grants and more emphasis on self‑driven productivity and innovation.

It could also mean that Government policy will prioritise businesses that are scaling rather than the average small businesses. The Chancellor’s adviser says that 0.6% of UK scaling businesses generate just over half of small business turnover and that if you “grow the number of firms capable of scaling globally, the rest of the economy grows around them.”

If policy attention gets tilted toward those high‑growth firms and micro‑businesses get overlooked, opportunities to grow the next generation of scaling business will be missed. If the support that is available is channelled into innovation, tech, and export‑capable companies, small firms in traditional sectors such as retail, hospitality and personal services could find themselves even less of a focus for policy makers.

AI Adoption

The Government also wants small businesses to adopt AI and Alexandra Depledge says AI is a shift “on the scale of the railways” and whoever builds the infrastructure and skills first “sets the terms for everyone else.”

That gives the impression that AI adoption will be a policy priority and support may come in the form of digital skills, infrastructure, or incentives. It sounds like small businesses will be expected to modernise operations, and for micro‑businesses, this means AI is no longer optional.

Traditional small‑businesses may get less attention

Alexandra Depledge has previously said: “We don’t need any more restaurants.” She argues the UK focuses too much on “slow and steady small businesses” and not enough on fast‑growth tech firms. This implies that hospitality, retail, personal services may see less strategic focus, and tech, digital, and scalable sectors may receive more targeted support.

Micro‑businesses in non‑tech sectors may need to rely more on local markets, customer loyalty, and operational efficiency rather than national policy boosts. Nothing new there then.

Talent, capital and scaling

Priorities include retaining and attracting talent, increasing capital available to scaling business owners and improving Series B funding options.

That’s all good for high‑growth firms but for micro‑businesses, it means even less focus on support to survive, and pressure to demonstrate ambition, innovation, or scalability to get access to government‑backed programmes.

That means the onus will be on micro‑businesses to automate admin and adopt AI tools which many are doing as fast as possible, usually to reduce manual processes.

Even small firms will be expected to modernise, digitise and show growth potential, and traditional business models may struggle to attract attention or support.

If the Budget follows Depledge’s advice, expect more funding for scaling business, more follow‑on capital and more targeted investment schemes, but little for the smallest.

Reading the runes

Alexandra Depledge’s warning signals the possibility of a significant shift in how the UK will pursue growth. We won’t know until the 28th of Oct whether the Chancellor will take her advice but if he does, our small and micro businesses, will be able to depend even less on government support. There will be more emphasis on productivity and innovation, AI adoption will become essential and traditional sectors may get less policy attention. All in all, it’s the growth‑oriented firms that will benefit most and the next phase of UK growth will be founder‑driven, not government‑driven. Small businesses will need to adapt fast. Any preparation we can do in advance may well be a survival technique.