This is a significant step-forward – a promising start, for our new Government. That Government says that the Equality (Race and Disability) Bill will tackle pay discrimination at work – and will introduce mandatory pay gap reporting for large employers on ethnicity.

But, the Bill alone won’t be enough to change the economic position of BME communities. When it comes to the labour market, it focuses solely on the supply side. It focuses solely on the wage level. Yes, it ups that wage level… it makes more buoyant, more empowered, that labour market. But what about the businesses powering them, employing them? What about the entrepreneurs, whose incomes won’t be changed by this new, state-controlled, wage level?

That Bill, the eventual Act, will only be as effective as the strength of the businesses it’s imposing legislation upon.

That’s where BME startups come in. In 2023, according to Government data, 385,000 of the UK’s SMEs were led by diverse founders. They play a crucial role in driving the Labour Party’s mission-driven, inclusive, growth agenda. They hold the key to the unlocking of the BME economy, the key to the unlocking of true, incentive-led, founder-led, startup-driven, delimited, growth.

We’ve just found this, in a new report published by Startup Discovery School. That report’s shown that, if invested in, diverse startup founders can offer the UK a 1:11 return on investment (ROI).

Moreover, they can generate a huge amount of environmental and social value, too. Those founders have recently been through our Just Transition programme; together, they have generated over 50 green jobs – and more to the point, we have seen a cohort comprising of over 60% female founders, do that, too.

It’s not only us that’s finding this to be the case. In 2017, the Government-backed Baroness McGregor-Smith Review, found that the BME economy could offer the wider UK economy some £24 billion in growth. But, what’s special about our findings, is that they show just what, specifically, diverse-led, startups, offer that wider economy. It’s a lot. And it needs to be noticed.

We said above, that the Bill will only be as effective as the strength of the businesses it’s placing legislation upon.

How then, can the Government ensure that those businesses are as strong as they possibly can be? How can Government work to harness that economy?

Well, there’s one, ready-made, policy solution that it can look to, if it truly wants to see the sorts of startups, we’re turbo-charging – and the Bill its pushing – drive place-based growth worth £500 million in every given local authority, in which it is implemented – and realise that 1:11 ROI.

It can consider closely, how it can continue the positive work facilitated by the UK’s Shared Prosperity Fund (UKSPF). The UK Shared Prosperity Fund aims to improve pride in place, while increasing life chances, investing in communities, and supporting local business, people and skills. The UK government allocated London £144,444,970, for the 2022-25 three-year period.

That UKSPF provided the platform for Startup Discovery School’s Just Transition Programme to be delivered, in Lambeth, Islington, and Camden. With the Mayor of London, Sadiq Khan – and City Hall – we have worked to deliver a job-creating, just transition, for the capital. The £1.2 million, provided, in turn, has seen us support a series of startups, doing exactly that…

We’ve worked with the likes of: SmartyPlants, which is stopping us losing forests six times’ the size of London, in dead plants, with its innovative new plant health monitoring technology; Kestrix, which is accelerating the retrofitting of buildings in Islington, it scanning some 1,900 homes for heat loss, so far; Clip Energy, which combines AI with smart sensors to help businesses reduce their energy (initial findings show a reduction of 1.8 tCO2e per year per business premises); and TryKind, which has stopped some 2,250 ounces of pesticide being used, since its founding. 

However, that programme is due to end in 2026. As things stand, we’re still yet to receive further confirmation on whether this might be continued. Whilst it’s very unlikely that the Fund, in its current form, will be so sustained, what is essential is that we see its positive effects, live on.

We need to ensure that the positive progress made by these startups, is continued, amplified, and learned from. We can’t just pull the plug, on their work. Moreover, it’s crucial that we see others, follow in their stead. Crucially, this isn’t just a concern for those operating in our startup space; our polling shows this to be a wider, political, issue, too: over 60% of the UK’s population, want to see the Government providing interventions, that accelerate the just transition.

Perhaps most significantly – and something not widely discussed, in the space – is that if we were to combine the real wage growth offered by the Bill, for BME employees, with the stimulation of BME startup enterprise, offered by the likes of the UKSPF, then the multiplier effects, not just for BME communities, but for the UK, as a whole, would be material.

The multiplier effect of real wage growth, tends to be around 1.5 to 2 times the amount invested. Meld that with our 1:11 ROI, for BME startups, then the output’s enormous.

The new Government, therefore, must take note of this, as it drives forward the Bill. As it delivers the devolution revolution. As it oversees the creation and implementation of local growth plans, in each region – including London. And as it makes decisions, at this Spending Review. It’s essential that the work of the UKSPF, in supporting the BME startup economy, is either continued, directly, or understood, carried over, and packaged into its plans for the near future. It’s done so much, and has taken these organisations, so far.

If the Government chooses not to extend the UKSPF – or, perhaps more pertinently, chooses to not continue the real-life work that it has facilitated – we risk missing out on that 1:11 return, a £24 billion boost, mission-driven growth, and moreover, we risk totally missing the point of the Race Equality Bill and the offer that it provides the BME startup economy. That’s something, which, in my view, post-summer 2024, this Government can’t afford to do. A chance, that must be taken.

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