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Comments from ACCA
September 2003

The Association of Chartered Certified Accountants (ACCA) is pleased to comment on the above limited consultation exercise. In the following paragraphs we address the assumptions supporting the rationale for establishing the Council.

Although we are generally supportive of the need to establish a Council for Graduate Entrepreneurship, ACCA believes that the "Provisional Rationale" for establishing the Council does not yet provide sufficient evidence that there is a real problem with the number of graduates starting businesses. We note that there is contradictory research in the public domain regarding the assertion that the number of graduates who choose self-employment as a career option is falling short of its potential.

The Higher Education Statistics Agency found that only a fraction of graduates consider and then go on to be involved in self-employment. Global Entrepreneurship Monitor data on the other hand, states that higher levels of educational achievement actually leads to a greater desire to start-up in business vis-à-vis those with lower educational achievements.

Evidence of the number of graduates who consider - and then go on to set up - their own business is not only vital to establish need for a Council, but will also provide a benchmark against which to measure any subsequent success of the Council.

It is increasingly acknowledged that graduates can no longer expect a linear career progression in a large organisation and so must be made aware of the range of graduate opportunities, which range includes self-employment and working in small enterprises. In this context, ACCA agrees that many careers advisers do not promote self-employment as a career option.

We note that there does appear to be a shift in the range of information which is offered to careers advisers away from purely a career working in a large business. The recent launch of 'Prospects into self-employment' magazine, which we commend, has been circulated to University careers centres nationwide. Organisations such as ACCA have recognised this trend. We ourselves have staged an ACCA University Careers Advisers Seminar in May 2003, "Graduates, Accountancy and SMEs � do good things really come in small packages?"

ACCA agrees that many graduates may be unaware of the advantages of running their own business and will be deterred by a lack of knowledge of how to proceed, thus reflecting the national trend.

The business community, in particular finance providers, are often unaware of the advantages of graduates running their own businesses. Testimonials from some of Britain�s most successful young entrepreneurs consistently highlight the problems they faced of being "taken seriously" due to their age and supposed lack of formal work experience. Importantly, these testimonials also state that excellent support and guidance in the form of an accountant and/or mentor is vital for the success of a business and provides assurance to finance providers.

The objectives of any education and promotion programme should therefore be to promote the advantages of graduates setting up in business to students, to those providing finance or advice and to the wider business community.

ACCA agrees that closer links between universities and their local business support community are necessary to ensure that students receive the comprehensive help they require to develop their business ideas. Research consistently demonstrates that accountants are the first choice adviser to many small businesses and are critical in the process of setting up and successfully running a business. ACCA believes that stronger links with accountants and banks should be established, in addition to government business support.

ACCA believes that student debt should be included in the Provisional Rationale as an additional cause for the low number of graduates setting up in business.

Research by Barclays Bank reveals that the average graduate debt in 2003 is set to be £12,500, with the levels of future debt increasing year on year. There is a clear link between student debt and subsequent employment routes, with graduates who have debts being unlikely to consider becoming self-employed: indeed, they may consider applying to large firms who often offer to pay off student debt as part of the employment package.

Over 30 per cent of the Prince's Trust client base are now graduates, which means that the Trust has extended its target market from the under-employed and ex-offenders to graduates. This amounts to evidence that graduates, who typically have significant debt problems, can be considered a new 'excluded' group.

ACCA's own research, "Barriers in accessing finance through formal channels", February 2003, supports the findings that access is a significant problem and has revealed that young people face the greatest obstacles when accessing finance. Faced with such high levels of debt, it seems unlikely that graduates will desire, never mind have the ability, to set up their own business.

ACCA will be happy to comment on proposals which outline the way the Council should work, including the form the Council should take and the operating terms of reference. We should also welcome the opportunity to participate in the workshop to discuss such matters, which is scheduled to take place in October 2003.

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