Grant Shapps says small firms are the key to social mobility

By Daniel Boffey, The Observer,  29-11-2013

Writing in the Observer, Tory party chairman claims 'businesses not benefits' will help close gap between rich and poor

The Tory party chairman, Grant Shapps, has admitted that Britain can no longer tolerate the lack of social mobility, but claims that ultimately it is entrepreneurialism that will help people to "escape the circumstances of their birth".

Whether owning, running or working in one, it is the creation of companies that will provide people with the opportunity to get on in life, not state interference in the markets, he says.

On this newspaper's website, in comments likely to be seized on by those who say the current economic model is not working, Shapps writes: "We may forget it, among the glitz of the Christmas lights, but capitalism can be a profoundly moral force."

As an example of the benefits of commerce, Shapps controversially claims that the business practices of supermarkets have done more to "tackle food poverty in our poorest housing estates than decades of government schemes".

His comments follow warnings from Alan Milburn, the government's social mobility adviser, that the emerging economic recovery is unlikely to halt the trend of the past decade, where the upper echelons of society prosper as the bottom stagnates.

Under Labour, wealth from economic growth was distributed to pensioners and those with children through annual above-inflation welfare increases and the introduction of tax credits.

In 2011-12, the Office for National Statistics found that a rise in the threshold at which people had to pay tax, among other factors, had narrowed the gap between the richest and poorest to its smallest since 1986. However, with benefits and tax credits facing substantial cuts and the national minimum wage falling in real terms in recent years, it is unlikely that future growth will continue to be distributed on the same trajectory.

Shapps, MP for Welwyn Hatfield, believes that ultimately it is commercial activity that needs to be encouraged, not a hand-up through the benefits system. He writes: "Businesses, not benefits, are the true ladder of social mobility."

Shapps adds: "Look at the growing middle class in India. Small businesses are not just a source of jobs and prosperity: they are the driving force of social justice too. A World Bank study has linked the rise of small business ownership among women in India with greater legal and political rights.

"The same progress is being made in parts of eastern Europe, where small firms are repairing the damage left by decades of socialist stagnation." >>>