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Three Decades of Enterprise Culture
Three Decades of Enterprise
Culture
Entrepreneurship, Economic
Regeneration and Public Policy

By

Francis J. Greene,
Kevin F. Mole
and

David J. Storey
*
Selection and editorial matter © Francis J. Greene,
Kevin F. Mole and David j. Storey 2008
Softcover reprint of the hardcover 1st edition 2008
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency, 90
Tottenham Court Road, London W1T 4LP.
Any person who does any unauthorised act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The authors have asserted their rights to be identified as
the authors of this work in accordance with the Copyright,
Designs and Patents Act 1988.
First published in 2008 by
PALGRAVE MACMILLAN
Houndmills, Basingstoke, Hampshire RG21 6XS and
175 Fifth Avenue, New York, N.Y. 10010
Companies and representatives throughout the world
PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
Macmillan division of St. Martin's Press, LLC and of Palgrave Macmillan Ltd.
Macmillan® is a registered trademark in the United States, United Kingdom
and other countries. Palgrave is a registered trademark in the European
Union and other countries.

ISBN 978-1-349-52036-7 ISBN 978-0-230-28801-0 (eBook)

DOI 10.1007/978-0-230-28801-0

This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources. Logging, pulping and manufacturing
processes are expected to conform to the environmental regulations of
the country of origin.
A catalogue record for this book is available from the British Library.
A catalog record for this book is available from the Library of Congress.
10 9 8 7 6 5 4 3 2 1
17 16 15 14 13 12 11 10 09 08
Contents

List of Tables vi
List of Figures ix

Acknowledgements X

Part I Entrepreneurship, Economic Regeneration

and Public Policy: The Context

1. A Study of Three Decades and Three Regions 3

2. Regional Differences in England and the Case
ofTeesside 15
3. Enterprise Policy in the UK 51

Part II An Introduction to the Empirical

Evidence on New Businesses

4. Individual Entrepreneurial Determinants 85

5. The Strategic Orientation of New Businesses 106
6. Business Advice and the New Business 121
7. Finance for New Businesses 146
8. The Impact of Teesside New Businesses
in the 1970s, 1980s and 1990s 168
9. The Impact of New Businesses:
Three Regions in the 1990s 205
10. An Audit of the Three Decades and Three Regions 233

References 249
Index 269

v
List of Tables

2.1 Factors commonly associated with entrepreneurship 18

2.2a Human capital variables for 1981 22
2.2b Human capital variables for 1991 23
2.2c Human capital variables for 2001 24
2.3a Entrepreneurial activity in 1981 28
2.3b Entrepreneurial activity in 1991 29
2.3c Entrepreneurial activity in 2001 30
2.4a Access to finance and regional income in 1981 33
2.4b Access to finance and regional income in 1991 33
2.4c Access to finance and regional income in 2001 34
2.5 Cumulative regional rankings 34
2.6 Distance travelled to work, census 2001 39
2.7 Education qualifications in the three counties 41
2.8 Employees in employment Teesside 49
3.1 Cost of subsidies, 1979/80 to 1989/90 in £m
(current prices) 62
3.2 Support for smaller enterprises in 2003/04 72
3.3 Breakdown of Small Business Service
expenditure (2005/06) 73
4.1 Synopsis of prior general profiles of entrepreneurs 90
4.2 Profile of entrepreneurs across the three decades 92
4.3 Profile of entrepreneurs across the three counties 94
4.4 Sectoral choices in the three decades and
in the three counties 95
4.5 Multinomial comparison between the three
decades and the three regions (omitted sector:
professional services) 98
5.1 Factors underlying competitive advantage 110
5.2 The two most important factors for competition 110
5.3 Rotated component matrix sources
of competitive advantage 111
5.4 Univariate profile of 'skill' component 112
5.5 Univariate profile of 'cost' component 113
5.6 Univariate profile of 'quality' component 114
5.7 Factor regressions for skills, cost and quality 116
5.8 Strategic orientation and performance outcomes 118

vi
 List of Tables vii

6.1 The information collected on use of advisory services 125

6.2 Use of pre start business support, 1970s-1990s 126
6.3 Agencies providing pre start advice in the
1980s and 1990s 128
6.4 Logistic regression of usage, 1970s-1990s 129
6.5 Logistic regression of helpfulness, 1970s-1990s 130
6.6 Use of post start business support over time: Teesside 131
6.7 Agencies providing post start advice
in the 1980s and 1990s 132
6.8 Logistic regression of usage of post start-up
public support, 1980s-1990s 132
6.9 Logistic regression of helpfulness of post start-up
public support, 1980s-1990s 134
6.10 Satisfaction scores from pre start business support (%) 136
6.11 Logistic regressions of usage and helpfulness
of pre start-up support across the three regions 137
6.12 Logistic regressions of usage and helpfulness
of post start-up support across the three regions 138
6.13 Satisfaction scores from post start business support 139
6.14 Summary of univariate tests between sources
of pre start-up support and performance 141
6.15 Summary of univariate tests between sources
of post start-up support and performance 142
7.1 Finance sources used at start-up and their importance 155
7.2 Finance sources used post start-up and their importance 156
7.3 Probit marginal effects for rejection (1 = rejected,
0 =otherwise) in the 1990s 158
7.4 Probit marginal effects for discouraged borrowers
(1 =discouraged, 0 =otherwise) in the 1990s 159
7.5 Differences between rejected and discouraged
borrowers in the use of bank finance 160
7.6 Finance sources used at start-up and their importance 161
7.7 Finance sources used post start-up and their importance 163
7.8 Annualised and relative employment growth
outcomes for public finance support 165
8.1 Synopsis of meta-analytic studies 173
8.2 Review of international evidence 178
8.3 Summary of recent empirical studies on performance 181
8.4 Summary performance measures for the three decades 184
8.5 Marginal effect probit estimations for performance
measures, 1970s-1990s 186
viii List of Tables

8.6 Marginal effects for the turnover growth ordered probit 188
8.7 Marginal effects for the employment growth
ordered probit 190
8.8 Tobit regressions for employment growth, 1970s-1990s 192
8.9 Job generation capabilities across the three decades 196
8.10 Synopsis of employment growth performance 198
9.1 Exits 2002-2004 206
9.2 Summary of Chi-square and t-tests of association
with survival in 2004 207
9.3 Job generation capabilities by region 208
9.4 Statistical tests of employment growth trajectories
of the three counties 210
9.5 Correlation matrix for employment and turnover 211
9.6 Summary of the statistically significant relationships
between annualised employment and turnover growth 212
9.7 Heckman selection models 215
9.8 Probit models for exit (marginal effects) 217
9.9 Annualised, relative and absolute employment growth:
regression of all years and tobit of growers 221
9.10 Annualised and relative turnover growth: regression
of all years and tobit of growers 225
9.11 Summary of review and results 232
10.1 Synopsis of performance factors 236
10.2 An audit of the three decades and three regions 238
List of Figures

1.1 Interview process 8

1.2 VAT registrations per 10,000 population, 1980-2005 10
2.1 The eight SSRs (1960-1994) and the nine GORs
(1994 onwards) 20
2.2 Regional unemployment in the North East,
South East, West Midlands and Great Britain,
1923-1980 (Source: Mitchell, 1998) 35
2.3 Map of former English and Welsh counties
(post 1974) 37
2.4 Map of English and Welsh counties and unitary
authorities (post 1998) 38
2.5 Employment structure of the three counties, 2003 40
2.6 GVA rates for the three areas, 1995-2000 (UK= 100) 42
2.7 Three counties GDP per head (UK =100), 1977-1995 43
2.8 Unemployment in the three counties, 1980-2005 48
2.9 Population change in three counties, 1981-2003 49
3.1 Expenditure on regional industrial assistance,
1960-2002 57
3.2 Enterprise support providers and initiatives, 1980 59
3.3 Cost of unemployment payments as a percentage
of GDP, 1979-2004 61
3.4 Enterprise support providers and initiatives,
1980-1982/83 65
3.5 Enterprise support providers and initiatives,
1980-1988/89 65
3.6 Enterprise support providers and initiatives,
1980-1995/96 69
3.7 Enterprise support providers and initiatives,
1980-2006 77
8.1 Job generation by enterprises (absolute numbers) 197
9.1 Employment growth in Teesside, Shropshire
and Buckinghamshire 209

ix
Acknowledgements

There are a number of organisations and individuals that contributed to

the development of this book. One of the most obvious of these is the
Leverhulme Trust whose grant allowed the fieldwork for the research.
We are particularly grateful for this support. We would also like to
thank Paul Reynolds who was insistent that we included new businesses
from outside of Teesside, so as to make additional and valid compari-
sons.
A great deal of thanks must also go to the individual entrepreneurs on
whose interviews this research is based. Equally valuable were the re-
search team involved in conducting the interviews. People of particular
importance here were John Anderson, Bridget Reah and Kevin Amess.
Much of the secondary research for this book was collected at the fol-
lowing libraries: the Bodelian Library, the British Library, Middlesbrough
Central Reference Library, Teesside University Library, and Durham
University Library. We are grateful for the support provided by each of
these organisations.
Particular thanks must also go to Swinburne University in Melbourne
Australia who provided Francis Greene space and time to allow the bulk
of the book to be written. Finally, we are also extremely grateful to
Macmillan and Jacky Kippenberger who saw the potential of a book
that looked at the historical and spatial dimensions of entrepreneur-
ship. As usual, any omissions or errors are down to us.

X
Part I
Entrepreneurship, Economic
Regeneration and Public Policy:
The Context
1
A Study of Three Decades
and Three Regions

Introduction

The demand for entrepreneurs has perhaps never been greater. Entre-
preneurs are seen as almost having a magical effect on economies -
alchemists, whose innovatory capacity allows for water to be turned into
wine, lead into gold. Equally, they appear omnipotent: able to create mar-
kets, shape markets, and, ultimately, destroy markets. En route, they pro-
vide jobs, offer new products and services, and induce productivity
gains.
Little wonder that since the 1970s there have been successive attempts
to increase the supply of entrepreneurs in all developed economies. The
basic thinking is that economies need greater numbers of people to set
up their own businesses. The more that do, the better the economic
outcomes for a whole set of social and economic problems ranging from
international competitiveness to improving the lacklustre performance
of particular regions.
This book weighs up the value of new businesses. It asks basic ques-
tions such as what sort of people set up their own business, how do they
do business, what sorts of funding they make use of, and what is the
economic contribution of such businesses. To achieve this, the book
makes use of interviews with over 900 entrepreneurs.
What, however, is distinct and unique about the book is that it charts
the contribution of new businesses, primarily in an entrepreneurially
moribund region. The thinking here is that if new businesses are so
special, surely they will make an invaluable contribution in the worst
area that can be found? One such area is Teesside, a deep pocket of eco-
nomic deprivation located within the least entrepreneurial region of
England. Teesside has had the lowest rate of new business start-ups in

3
4 Three Decades of Enterprise Culture

the United Kingdom since Value Added Taxation (sales tax) records
began.
Using Teesside as a case study also has further advantages. First, our
interviews with entrepreneurs cover three decades. The first iteration
occurred in 1981 when interviews were held with 157 Teesside entrepre-
neurs who set up their businesses in the 1970s. A further 214 interviews
were held in 1991 to examine 1980s entrepreneurs. In the last iteration,
conducted in 2001, a further 320 interviews were held with entrepre-
neurs who set up in the 1990s. This book, then, affords a rare picture of
the characteristics, behaviours and value of new businesses over three
decades.
A second value in examining Teesside entrepreneurs is that it provides a
case study of successive intervention experiments across the three decades.
In the early 1970s, Teesside was seen as an economically vibrant area, full
of potential, and able to lead the future development of the economy.
Nothing then was done to support the creation of new businesses. By the
1980s, this potential was lost, replaced by endemic structural unemploy-
ment. Huge resources were devoted to initiatives to increase the entrepre-
neurial capacity and propensity of the area. The problems of the 1980s
continued into the 1990s. So, although the nature of interventions changed,
the purpose of enhancing economic and social welfare through the cre-
ation of an 'enterprise culture' remained a central policy objective.
Examining new Teesside businesses across the three decades allows
for an historical evaluation of the success of particular interventions.
This is important because there is a distinct tendency to recycle par-
ticular interventions even when they were not successful when they
were tried previously. For instance, many of the present policies designed
to support new businesses are basic facsimiles of policies developed in
the 1980s, tweaked to focus on modern problems such as social exclu-
sion rather than what once was called poverty and unemployment. This
book gives a sense of the nature and range of interventions and the al-
most funny (if it were not so expensive) flip-flop pattern of interven-
tions to correct perceived problems.
The final value of focusing on Teesside is that, as the weakest per-
forming entrepreneurship area (lowest rate of new business start-ups),
the book is able to compare it with an area approximating to the middle
in the business start-up league (Shropshire) and an area with one of the
highest rates of business start-up (Buckinghamshire). For the 1990s, be-
sides the interviews with Teesside entrepreneurs, another 150 interviews
were held with Shropshire entrepreneurs. Equally, 150 interviews were
held with Buckinghamshire entrepreneurs.
 A Study of Three Decades and Three Regions 5

The advantage of examining an area with high rates of entrepreneur-

ship with that of more modest entrepreneurial means and one with
hardly any means at all, is that it reflects that each nation has spatially
differing rates of new business start-ups. By comparing and contrasting
a 'rich' area (Buckinghamshire) with a middling area (Shropshire) and a
poor area (Teesside), the book reflects not only on what 'works' but also
considers what the barriers are for new businesses in more unfavoured
regions.
In the rest of this introduction, the focus is on tracing the outline of
the book. It begins by sketching out issues of definition and how the
empirical research for this book was conducted. The chapter then moves
on to introducing the three regions more fully. Finally, the chapter syn-
thesizes the nine other chapters.

Issues of definition

One of the root problems with analysing entrepreneurs is that there is

no one single definition that suits. Instead, there is a vast range of dif-
fering ways of describing such individuals. For instance, it used to be
largely thought that entrepreneurs were special people, pre-programmed
with distinctive traits that compelled them to become entrepreneurs.
This is still the common sense view and more or less the view of the
European Commission (2004) who point to entrepreneurs having a par-
ticular 'mindset'. Repeated attempts, however, to find any traits that
can be readily associated with entrepreneurs have proved fruitless
(Gartner, 1988). If not traits, entrepreneurs have been seen as having a
distinctive set of behaviours. Typical here is to suggest that entrepre-
neurs are innovative. What innovation means does, of course, vary.
One example is some form of Schumpeterian entrepreneur who is able
to create, shape and break markets. The reality is rather less exciting. As
is shown in this book, most new businesses start in very traditional sec-
tors, providing much the same goods and services in much the same
way as many other businesses. In that sense then, perhaps, a distinction
may be drawn between those that start a new business and those who
might be called Schumpeterian innovators. The reality is that the former
dominate the latter.
So, for the more mundane amongst us, the alternative is simply a set
of behaviours that lead to the creation of new businesses. This is often
what is meant when entrepreneurs and entrepreneurship are mentioned
in the same sentence. Hence, Reynolds et al. (1999) tend to equate it
with the set of activities and behaviours needed to create a new business.
6 Three Decades of Enterprise Culture

Others, meanwhile, talk of the need to look at discovery, evaluation and

exploitation of business opportunities. Yet more disagreements, how-
ever, might result if the context of the entrepreneur or entrepreneurship
is moved into other areas such as corporate entrepreneurship (intrapre-
neurship) or social entrepreneurship. Finally, there is the issue of the
unit of analysis: is it right that attention should focus on the individual
entrepreneur or should it be wider and focus on the enterprising nature
of a society?
This book shares with MacDonald and Coffield (1991) - the classic
book on Teesside entrepreneurs - a sense that such discussions of the
meaning of entrepreneur, entrepreneurship and enterprise tend rapidly
to dissolve. They say, and we agree:

We are not dealing with a tightly defined, agreed and unitary con-
cept, but with a farrago of hurrah words such as 'creativity', 'initia-
tive', and 'leadership'. Too many of the definitions tend to be circular
or consist of managerial tautologies, tricked out with the rhetoric of
progressive education. (p. 29)

To address this, we have a clear focus on particular economic activ-

ities. Its principal focus is on new or de novo businesses. This means we
do not care much about in what order people create a business. Similarly,
the book is unconcerned with the 'might' or 'could be' (nascent) entre-
preneurs. It also excludes corporate entrepreneurship or social entrepre-
neurship. Finally, what entrepreneurs want to get out of their business
(e.g. community harmony, make money, or be their own boss) is some-
thing not covered in this book. Our focus is therefore on the character-
istics of new businesses, the factors that influence its performance and
their impact on wider society.

The three-decade studies

Even if this book prefers a more economic to a psychological treatment

of those that actually create and sustain a new business, there still re-
main particular issues. For instance, separating out the new from those
that are actually de novo is tricky.
The first general difficulty is the absence of any complete census of
new business activity in the United Kingdom. This is because new ven-
tures are too new, too small or the available datasets are either biased
or unreliable (Birley et al. 1995). To counter this, the study had for each
of the three decades (1970s, 1980s and 1990s) made use of publicly
 A Study of Three Decades and Three Regions 7

available British Telecom county telephone lists. With these county

telephone books - or 'White books' (as opposed to the Yellow pages) as
they are called in the United Kingdom- the research followed an identi-
cal methodology.
For example, in the most recent iteration of the research, the 2000
'White telephone books' for Teesside, Shropshire and Buckinghamshire
were selected (see Figure 1.1 - Stage I). These directories were then
manually cross-referenced with earlier 1995 directories for each of the
three counties (Stage I). If a business appeared in the 2000 directory
but not in the 1995 directory, it was seen as a 'potential' new business.
The entrepreneurs of these 'new' businesses were then telephoned to
establish that they met our specified criteria for a de novo business:
that they were new businesses, independent of outside control (not
subsidiaries or part of larger enterprises), indigenous to the local area,
non-retail, still in operation, and were not a charity or other not-for-
profit organization. From this process, the total population of wholly
new businesses was identified (Stage II). Subsequently, every third
business was re-telephoned (Stage III) to arrange face-to-face inter-
views with the entrepreneurs given that very many new businesses
were likely also to be small (indeed, more than a third of the entrepre-
neurs had no employees). Interviews were held at the normal place of
work of the entrepreneur and took about an hour to complete. The
entrepreneurs followed a structured interview format which was sub-
jected to a pre-test in order to check for biased, misleading or con-
fusing questions. Prior to this being administered, the businesses were
again checked to make sure that the ventures were actually de novo
(Stage III).
There were, of course, differences between the 1970s, 1980s and
1990s. In the 1970s, for example, the interviews were not principally
focused around the attributes of the entrepreneur. This was rectified in
the 1980s and 1990s iterations with attention given to attributes that
had been found to be associated with either entrepreneurship (e.g. prior
sectoral experience) or attributes describing alternative entrepreneur-
ship paths (e.g. those running concurrent businesses). Equally, the
1970s interviews were rather poor at investigating how entrepreneurs
do business. Indeed, a more rounded investigation of business strategy
issues only really appeared for the 1990s interviews. In essence, then, to
try to ensure temporal reliability and robustness, the three decade com-
parisons largely make use of what was available from the 1970s inter-
views, supplemented, where appropriate, with comparisons between
the 1980s and the 1990s.
 Stage 1: Identification of Stage II: Telephone Stage Ill: Telephone Stage IV:
relevant telephone BT Interviews with 'potential' interviews to arrange Identification of
directories new ventures interviews Surviving
Businesses

-
I I -. ..
I
-.I
I I
I I I 2004 1
1995 2000
I I I I
I I I I
.. . . ..
Stage 1: Cross checking Stage II: Screening out Stage Ill: 622 new Stage IV: Postal
2000 BT directories with non new ventures based ventures questionnaires and
1995 directories to on set criteria interviewed in telephone
identify new ventures 2001 interviews

Figure 1.1 Interview Process.

 A Study of Three Decades and Three Regions 9

There is also one other evident difference between the interviews col-
lected between the three decades. For the 1970s and the 1980s, no in-
formation was collected on whether the businesses subsequently
survived after they were interviewed. This issue was remedied for the
1990s study which sought to identify survivors amongst the three coun-
ties (Figure 1.1, Stage IV).
Overall, therefore, the aim of each iteration of the study has been to
make sure that there is a core set of issues that run through the 1970s,
1980s and 1990s. Likewise, the 1990s study was informed by a greater
awareness of business strategy and the need to control for survival
issues.

The three region studies

The study conducted for Teesside new businesses in the 1990s was rep-
licated with the same selection procedures for identifying de novo busi-
nesses, the same interview format, and the same follow up survival
studies for the other two areas. The cardinal difference, however, was
that the regional study sought to compare and contrast the low per-
formance of Teesside with that of two other areas (counties) of England.
The basis of this contrast was some clear and identifiable measure of
enterprise performance between the three regions. One obvious measure
was the number of new value added taxation (VAT) registered busi-
nesses in a given year. As a proxy for 'entrepreneurship', this suggested
that the most enterprising county in 1998 (when we first conceived of a
regional comparison) was Buckinghamshire (excluding London). The
county which had middling VAT registrations of the English counties
(excludes London) was Shropshire. This is not a unique event. In 1994,
Buckinghamshire had the highest rate of VAT registrations per 10,000 of
the population of any English county. This was also true in 2005. Equally,
Teesside continued to have, along with other North East counties, the
lowest rates of new VAT registrations per 10,000 of the population.
The rigidity of these differences is further evident when Figure 1.2 is
examined. This shows the historical rates of VAT registration per 10,000
of the population over the period between 1980 and 2005. It clearly
shows that the VAT registration rates follow a similar pattern for each of
the three regions. In the 1980s, for example, there was a rapid increase
in the number of registrations. This fell away in the late 1980s/early
1990s for each of the three counties as the recession of this period in-
tensified. Since then, rates have remained fairly stable. The second evi-
dent feature of Figure 1.2 is that these movements are in parallel. The
10 Three Decades of Enterprise Culture

1-+-TEESSIDE ---SHROPSHIRE - -BUCKINGHAMSHIRE I

90

80
<:
0
:; 70
:;
a.
0
a. 60
0
0
0
0 50
~<:
0 40
~
Ui 30
c.
2!
!;( 20
>
10

Figure 1.2 VAT registrations per 10,000 population, 1980-2005.

differences were fairly modest in the early 1980s but rose dramatically
in the late 1980s.
There are also second order differences between the three regions.
Put bluntly, Teesside is relatively geographically isolated on the North
East coast of England and its main urban areas (Middlesbrough,
Hartlepool, Stockton on Tees) are some distance from other Northern
urban areas such as Newcastle and Leeds.
By contrast, Shropshire is the largest land-locked county in England.
It is also one of the most rural counties of England, nestled as it is
between Wales to the West, Staffordshire to the East and Cheshire to
the North. Nonetheless, it is still reasonably close to the large conurba-
tion of Birmingham and the West Midlands. Buckinghamshire, mean-
while, whilst still seeking to retain the air of a rural 'home' county, is
just North West of the Greater London conurbation and within easy
access of London itself. In Chapter 2, further detailed consideration is
given to charting the changing fortunes of Teesside and comparing and
contrasting it with the two other regions.

The nature of the problem

Chapter 2 also provides a useful backdrop for understanding the

potential contribution that new businesses can make as a route out of
 A Study of Three Decades and Three Regions 11

particular economic and social predicaments. The specific contribution

of Chapter 2 is to create an entrepreneurial index. Where this index dif-
fers from other indices is that it uses historical information derived
from the contemporaneous population censuses of 1981, 1991 and 2001
and appropriate supplementary material. Such data are subsequently
regionally disaggregated to expose how the regional economies have
fared over a thirty-year period. Ultimately, the contribution of the index
is its ability to show how little regional entrepreneurship has changed
in the face of profound economic change.

An experimental region

Besides the advantage of concentrating on de novo businesses, the se-

cond aim of this book is to look at how such businesses fare under dif-
fering policy contexts. The background for this is detailed more fully in
Chapter 3. What this chapter shows is that in the 1970s there was ef-
fectively no public policy towards new businesses or small businesses in
the United Kingdom. This was a position the UK shared with virtually
all other developed nations. Indeed, the only major country with a long
history of state involvement in supporting small businesses is the United
States which began formally and publicly to support smaller businesses
in the 1950s with the creation of the Small Business Administration.
Chapter 3 contrasts the "policy off" 1970s with the desperate policy
flounderings of the Thatcher administration in the 1980s to increase
the number of new businesses in the UK economy and create an 'enter-
prise culture'. The chapter argues that the increase in the rate of new
business creation was not so much brought about by the urge to create
do-it-yourself capitalism but because of the structural problems in the
UK economy - reflected in close to unprecedented rates of unemploy-
ment. The chapter then highlights how the situation changed in the
1990s and has continued to subsequently evolve.
What is novel about Chapter 3 is that, other than detailing the flip-
flop nature of specific interventions, it itemises, from available informa-
tion, the nature of enterprise policy in Teesside over the three decades.
This is important because it shows that Teesside in the 1980s was almost
a laboratory for successive interventions that sought to establish an 'en-
terprise culture'.
Conceptually, it has proved difficult to ground a distinctive meaning
out of the phrase 'enterprise culture'. Like enterprise, entrepreneur and
entrepreneurship, enterprise culture has shown itself to be extremely
malleable to differing agendas. Unsurprisingly, it might be taken to
12 Three Decades of Enterprise Culture

mean starting a business, developing a growing business, having a set of

skills and behaviours or that there is some entrepreneurial 'animal spirit'
(Keynes, 1936) in the air, pervading institutions and communities.
What is clearer empirically from Chapter 3 is that a range of soft
(e.g. training and mentoring) and hard support (e.g. grants, loans)
mushroomed in the 1980s and was sustained in the 1990s. This might
suggest the development of an infrastructure to support a burgeoning
enterprise culture. The more cynical might suggest, following on from
MacDonald and Coffield (1991) - that it only represents the develop-
ment of an 'enterprise industry' of policy and support providers.

Examining the new businesses

In Chapters 4 through to 9, the emphasis is on looking at various aspects

of the new businesses. The first of these empirical chapters (Chapter 4)
considers the sorts of people who set up a business across the three dec-
ades and across the three regions. It begins by providing an analysis of
prior studies that focus upon the types of people who set up in business.
What is advantageous about this is that, surprisingly, there are very few
actual studies that are about general entrepreneurship. Most of the ac-
tual research in this area either focuses upon particular groups such as
the young or seeks to identify the macro-economic influences bearing
down on the entrepreneurial choice.
Based upon this literature, Chapter 4 moves on to compare and con-
trast evident differences across the three regions and three decades.
Where also the chapter differs is that it does not seek to see how entre-
preneurial attributes impact on business performance. This is left to
Chapters 8 and 9. What Chapter 4 does is to test if entrepreneurial
attributes influence sectoral choices. This is of interest because a suc-
cessful business or a successful economy is likely to be influenced by its
sectoral composition. For instance, it is interesting to speculate on how
many of the richest computer business leaders would have been as suc-
cessful if they had chosen an alternative sector.
The issue of entrepreneurial choice is also important in Chapter 5
which looks at how entrepreneurs approach business. Because of the
limited business strategy factors available from the 1970s and 1980s,
Chapter 5 concentrates upon data for the 1990s. It uses the three regions
to first identify particular strategic orientations held by the entrepre-
neur and, second, what determines such profiles. The value of this
approach is to examine the relevant choices available to entrepreneurs,
particularly in terms of the high, medium and low enterprise areas.
 A Study of Three Decades and Three Regions 13

Chapter 6 continues the examination of the environment by investi-

gating the use and quality of business support both prior to start-up and
post start. The comparison is made across the three decades and between
the three regions. In so doing, it raises issues about the value of such sup-
port, in terms of improvements over time and the impact of such support
on new business performance.
Finance issues form the focus of Chapter 7. The background here is
the suggestion that because new businesses have no track record, it is
likely- for some of the time, for some sorts of finance and for some sorts
of people - that new businesses will be unfairly treated by financiers.
This chapter discusses the likely sources of this viewpoint but also con-
trasts it with other theoretical evidence which suggests that such fi-
nance gaps are modest. Empirically, Chapter 7 examines the three
decades in terms of the finance preferences of the entrepreneurs, the
relative importance of equity finance and the types of people who are
discouraged or rejected for funding. The chapter also empirically exam-
ines finance differences between the three regions.
Overall, what clearly emerges is that even if finance and advice gaps
were present in the 1970s, they were reduced or eliminated by the 1990s.
This is a surprising finding since the expectation might have been that
such 'gaps' were crucial elements in explaining why some regions had
lower rates of new business formation. Instead, although finance and
advice support has improved, a region like Teesside remains firmly
rooted to the bottom of the 'enterprise league' (Chapter 2).
The value of new businesses both across the three decades (Chapter 8)
and between the three regions (Chapter 9) forms the final part of the
empirical evidence. To support these two chapters, Chapter 8 begins by
looking at the thorny issue of performance and how it has been man-
aged in previous studies. What emerges is that there still remains some
conceptual confusion around the notion of performance. Nonetheless,
Chapter 8 goes on to provide an original account of 54 multivariate
studies that have looked at survival and employment growth as meas-
ures of performance. The central question that this chapter seeks to
investigate is whether there are business performance differences be-
tween the three decades once a host of entrepreneurial attributes,
business characteristics, finance, business support and strategy factors
are considered.
Chapter 9 presents the growth and survival data on new businesses in
the 1990s. It then links this to data on the capabilities of the entrepre-
neur, their finance arrangements, their business strategy, business sup-
port and business characteristics. It concludes that these factors have a
14 Three Decades of Enterprise Culture

very modest ability to predict the 'success' of a business. Instead, chance

plays a major role.
Chapter 10 is the final chapter. Its main function is to review the em-
pirical and theoretical evidence presented in this book. In so doing, its
focus is on the value of actual interventions to support new businesses.
One view of entrepreneurship is that what really matters for a society is
to ensure that the correct incentives are in place for 'productive' entre-
preneurship (Baumol, 1990). The Baumol perspective is that the entre-
preneur is always with us - there is no shortage of such individuals.
Their apparent absence in some contexts is because they have found
better - from their viewpoint - ways of spending their time. If society
wishes to change this it has to change 'the rules of the game' to make
legitimate entrepreneurship more attractive. What is almost certainly a
waste of time is to seek attitudinal change since that is not the root cause
of the problem. Instead, society should align its incentives (i.e. taxation
and regulatory frameworks) to support legitimate and socially beneficial
entrepreneurs.
A theoretical alternative to this is that new business entry is shaped
by the nature of prior beliefs held by people (Jovanovic, 1982). If these
are strong, then more are likely to enter. One role for interventions, then,
is to have entrepreneurship policies that promote the entrepreneurial
capacity and propensity of individuals (Lundstrom and Stevenson, 2005).
Jovanovic (1982) also theorises that entrepreneurs only really gain a sense
of their entrepreneurial ability once they are in business.
Such contrasting views raise important policy issues such as what
role, if any, should policy makers play in supporting new businesses.
Are they really that well placed to provide managerial solutions to new
businesses or, if they have a role at all, are they not better off providing
governance structures that signal to entrepreneurs the nature of avail-
able incentives?
Chapter 10 broadly concludes that whilst Teesside has been a labora-
tory for enterprise culture experiments for thirty years, it has not
resulted in any clear acceleration of entrepreneurial activity. This can-
not be blamed upon an inability to limit or close finance and advice
gaps. These gaps have been either addressed or mitigated. Equally, there
appear limits to entrepreneurship policy making: those business that
are a 'success' are often just lucky.
2
Regional Differences in England
and the Case of Teesside

Introduction

In any economy there are likely to be widespread differences between

particular regions. In Europe, one of the countries with the greatest
evident differences is the United Kingdom. Indeed, it has one of the
highest variations of GDP per capita in the European Union (HM
Treasury, 2001). Inner London had a purchasing power parity of 315.3
in 2002 (EU25 = 100), making it the most prosperous economic area in
the EU. At the other end of the scale is Cornwall, a county in the ex-
treme South West of England. This had a purchasing power parity of
72.6 which means that, on average, people in Cornwall had only one-
quarter the purchasing power of people who lived in inner London
(Source: EU, 2005).
The aim of this chapter is to detail the wide variability of economic
performance in England. This is done in two ways. In the first part, an
index of the nine English regions of the UK is presented. This index is
largely descriptive in that it seeks to rank the nine English regions
against one another in terms of 15 factors that are commonly thought
to be associated with entrepreneurship. What is novel about this index
is that it charts changes in the regional economic performance over
three decades using census data for 1981, 1991 and 2001. Hence,
although the index is unable to offer a causal explanation for entrepre-
neurial behaviour in the English regions (see: Reynolds et a!., 1994;
Roberts, 2004), it is important because it demonstrates that little has
changed in the economic condition of the English regions over the last
three decades.
In the second part of the chapter, the aim is to compare Teesside with
Buckinghamshire and Shropshire. This is important because Teesside

15
16 Three Decades of Enterprise Culture

lags behind Shropshire and Shropshire lags behind Buckinghamshire

in terms of economic performance. These differences now seem per-
manent even if, during the early 1970s, Teesside was, arguably, at the
forefront of economic development in the UK.

Entrepreneurship in the English regions

There is nothing new about indexing the performance of particular

areas against each other (Dunning et al., 1998), but there is consider-
able debate about what should be included in any such index (Kitson
et al., 2004). Available indices, which either list the achievements of
one nation compared to another (IMD, 2004; World Economic Forum,
2004) or one region against others (e.g. European Commission, 2000;
Deas and Giordano, 2002; Porter, 2003; Parkinson et al., 2004), essen-
tially weigh what should be considered against what data is available.
This chapter is no different.
In Table 2.1, 15 factors that are often commonly associated with levels
of regional entrepreneurship are identified (Storey, 1982). These are
divided into four areas: features of the individual (human capital
attributes); entrepreneurial activity; access to finance; and regional
wealth. Table 2.1 also shows the suggested associations between indi-
vidual factors and levels of entrepreneurship.
Before turning to the four themes, discussing the research evidence
or presenting components of the index, we have to be clear that these
factors were also shaped by pragmatic considerations of data avail-
ability. Ideally, what would have been appropriate is longitudinal data
that tracked regional performance over the last 30 years. Unfortunately,
detailed time-series data is largely unavailable for two main reasons.
First, it is often difficult to compare one region with another over
time. For example, in the 1960s, England was divided into eight
Standard Statistical Regions (SSRs) with the left-hand side of Figure 2.1
showing, for example, that London was part of the South East (region
8) whilst the 'Northern' region (no. 1) included major cities on the
Eastern coast such as Newcastle and Middlesbrough and rural counties
such as Cumbria on the Western coast. This regional division into SSRs
remained after the local government reorganisation of 1974 which saw
the six major metropolitan cities of England (Leeds and Sheffield
(Yorkshire), Liverpool and Manchester (North West), Birmingham
(West Midlands) and London) given their own local government. By
1994, it was decided to further reorganise the regional administrative
boundaries into nine Government Office Regions (GORs). As the right
 Regional Differences in England 17

1=Northern 1=London
2=North West 2=South East
3=Yorkshire 3=South West
4=West 4=West Midlands
Midlands 5=North West
5=East 6=North East
Midlands ?=Yorkshire
6=East Anglia B=East Midlands
?=South West 9=East of England

Figure 2.1 The eight SSRs (1960-1994) and the nine GORs (1994 onwards).

hand of Figure 2.1 shows, this principally meant that London was rec-
ognised as a region in its own right, that the country of Cumbria moved
from the Northern SSR to the North West GOR and the East Anglia SSR
expanded to include counties such as Essex and Hertfordshire.
The second difficulty with much of the available regional data is that
it remains patchy. Typical of this are sources such as the Labour Force
Survey (LFS). Although the LFS goes back to 1975, it has seen major
changes in how and what data is collected. Initially, it was collected on
a biannual basis (1975-1983), then on an annual basis (1984-1991) and
subsequently on a quarterly basis. Equally, there have been many
changes to what data is collected. For instance, unemployment in the
UK stood at lVz million in July 1981 but less than two years later, in
January 1983 it stood, supposedly, at more than 3 million individuals.
What this neglects, however, is that the unemployment figures were
revised more than 30 times by the Conservative government of the
period (Coles, 1995).
Central to the construction of the present historical index of English
regional entrepreneurship is the use of census information for 1981,
1991 and 2001. Using these censuses has a number of advantages. The
most obvious is that, as a census, it is more likely to give a fuller picture
of socio-economic conditions than surveys such as the LFS. Also im-
portant was that the 1981 data, which arguably looks back to condi-
tions in the 1970s, is available for GOR regions. This is also true for the
1991 and 2001 censuses. Equally, factors such as unemployment are
perhaps less prone to political interference since individuals self-report
their own economic status and ethnicity. A final reason for choosing to
look at regional entrepreneurship in 1981, 1991 and 2001 is that it
Table 2.1 Factors commonly associated with entrepreneurship

Factors Index Expected sign Research evidence

Human capital
Ethnicity 'Yo of ethnic minorities in the + Le (1999)
population
Age & gender 'Yo of 'prime age' males in the + Cooper eta!. (1994), Burke eta!. (2000),
population (Henley, 2004), Greene (2002)
Unemployment o/o of unemployment in the ? '+'Robson and Shah (1989), Evans and Leighton
working population (1989), Blanchflower and Oswald (1990),
Bogenhold and Staber (1991)
'-' Blanchflower (2000) '?' Parker and Robson,
(2004)
Education 0
;b with degrees in the population ? '+' Rees and Shah (1986), Evans and Leighton
(1989), Borjas (1992) '-'Evans (1989), de Wit
(1993), Kidd (1993)
Labour market o/o in managerial occupations in + Storey (1982), Bates (1995), Gimeno eta!. (1997),
experience the working population Robinson and Sexton (1994)
Entrepreneurial activity
Self-employment 'Yo self-employed in the working +
population
Business birth rate of VAT registrations/10,000 + Love (1996), Disney eta!. (2003),
population Scarpetta et a!. (2002)
Business death rate of VAT deregistrations/10,000 +
population
Business stock stock of VAT businesses/10,000 +
population
Industrial structure % employed in large businesses Audretsch and Fritsch (1994)
% employed in manufacturing
Access to capital
House ownership % owner occupiers/total housing + Evans and Leighton (1989), Evans and Jovanovic
stock (1989), Holtz-Eakin eta!. (1994a, b), Bernhardt
House prices Price of average house + (1994), Laferrere and McEntee (1995), Lindh and
Ohlsson (1996), Black eta!. (1996), Cowling and
Mitchell (1997), Blanchflower and Oswald
(1998)
Regional wealth
Personal Income Personal disposable income per + Reynolds eta!. (1994), Audretsch and Fritsch
head (1994) Robson (1996), Hart and McGuinness
GOP per capita GOP per head + (2003), Porter (2003), Roberts (2004)
20 Three Decades of Enterprise Culture

coincides more or less with timing of the data collection for our empir-
ical research on Teesside.
There are, though, drawbacks with such an approach. The most ob-
vious of these is that the index is essentially three snapshots in time
which has the potential to miss radical changes in economic condi-
tions over the decade. Indeed, successive censuses make use of new
categorizations to include economic developments. For example, be-
tween the 1981 and 2001 censuses there was a radical shift in the struc-
ture of house ownership in England. Particularly in the 1980s and
1990s, successive Conservative governments encouraged home owner-
ship through schemes such as the 'right to buy' which allowed social
housing occupants to buy their house. Equally, there has been a gen-
eral increase in the numbers of individuals obtaining tertiary level
qualifications and the ethnic characteristics of the English population
have been redefined over the last 30 years to account for social changes
(e.g. 'Indian' in 1981 and 'Indian' or 'Asian Whites' by 2001).
For this reason, the index reports unweighted averages for each of the
factors. For each of the nine GOR regions both their raw score and their
rank compared to the other regions are reported. Regions with high
scores for each individual factor will be positively associated with high
levels of entrepreneurship. For example, an area with the highest relative
level for a particular factor scores nine whilst the lowest scores one.
A third consideration with using census information is that it fails to
give a rounded picture of regional economic conditions. We, therefore,
supplemented census information by making use of other publicly
available data on house prices and business data (VAT data). Again, this
has to be treated with some caution. For instance, the house price data
is organised in terms of the 'old' regional SSRs which is another reason
why we use an unweighted average of factors to compare regional entre-
preneurial factors.
The aim of this index, though, is to merely describe changes in re-
gional entrepreneurship over the last 30 years. We do not claim that a
region with high scores overall - or for a particular factor - represents a
causal explanation for their relative entrepreneurial prowess. Instead,
what we are seeking to do with the index is simply capture intra-re-
gional changes over time. We are interested in how regions have fared
over the 30-year period and what changes have occurred in their rela-
tive rankings over this period. In the next part, therefore, we look at
each of the four sets of indicators in turn before providing an overall
index of their relative entrepreneurial strength.
 Regional Differences in England Z1

Human capital
Ideally, the aim here is to capture the extent of entrepreneurial ability
that an individual possesses. This remains a perhaps unattainable
measure since there is no obvious or direct measure of entrepreneurial
ability. Instead, what Table 2.1 showed is there are a number of poten-
tial proxies for entrepreneurial ability. Le's (1999) review of self-
employment studies showed that ethnicity was generally positively
associated with high rates of entrepreneurship. For example, in the UK,
those from Pakistani backgrounds are the most likely to be in self-
employment. It is also commonly held that prime age and gender are
reasonable proxies for entrepreneurship since males are more likely to
be self-employed than females. Equally, 'prime' age males (34-44 years
old) are more likely than other age groups to be self-employed (Greene,
2002).
The impact of education would seem to have a more ambiguous im-
pact on new business formation. Lucas (1978) argued that individuals
with increased education were more likely to consider entrepreneurship
because they had the greater capacity to cope with the demands of run-
ning a new business. On the other hand, increased educational attain-
ment, like increased managerial experience, increases the attractiveness
of individuals to wage employers and may, thereby, decrease the likeli-
hood of business start-up. This is reflected in Table 2.1. Similar argu-
ments can be made about the influence of prior labour market experience
with, on balance, the evidence suggesting that older individuals are
more likely to start-up a business.
Also ambiguous is the impact of unemployment. Knight (1921)
suggests that in the absence of wage employment individuals may
seek out self-employment opportunities rather than settle for un-
employment. Evidence for this 'push' hypothesis is, however, mixed
(see Table 2.1).
What Tables 2.2a, 2.2b and 2.2c show are the five human capital
factors for 1981, 1991 and 2001, respectively. These tables are organ-
ised in terms of GORs. The tables are ordered from the region with the
lowest average ranking (where 1 is the lowest) to the region with the
highest average ranking (where 9 is the highest). Table 2.2a shows that
for 1981 Southern regions predominate, with the South East at the
top, followed by the East of England and London. At the bottom are
the three Northern regions: the North East, the North West and
Yorkshire & Humberside, respectively. Regions such as London and
 Table 2.2a Human capital variables for 1981

Ethnicity Prime age Unemployed Education Occupation

Average
% Rank % Rank % Rank % Rank % Rank score

South East 6.28 3 6.00 5 5.77 1 1.67 9 13.71 1 3.80

East of England 5.78 4 6.27 4 6.36 2 1.42 7 12.62 3 4.00
N West Midlands 6.65 2 6.35 2 10.70 7 1.14 2 9.84 8 4.20
N
London 18.20 1 5.99 6 7.78 5 1.54 8 11.77 2 4.40
South West 4.01 8 6.37 1 7.34 3 1.39 6 11.50 4 4.40
East Midlands 5.10 5 5.96 7 7.75 4 1.21 10.08 5.20
4 6
North East 1.88 9 6.32 3 12.72 9 1.13 1 8.28 9 6.20
North West 4.15 6 5.87 8 10.71 8 1.25 6.40
5 9.86 5
Yorkshire & 4.09 7 5.82 9 9.49 6 1.21 3 9.88 7 6.40
Humberside
 Table 2.2b Human capital variables for 1991

Ethnicity Prime age Unemployed Education Occupation

Average
% Rank % Rank % Rank % Rank % Rank score

South East 4.47 7 7.21 1 8.66 3 8.91 2 31.13 1 2.80

N East of England 4.59 6 7.19 2 7.36 1 7.11 3 28.27 3 3.00
w
London 23.99 1 6.75 9 9.34 4 11.81 1 30.63 2 3.40
East Midlands 5.83 3 7.13 3 12.50 8 5.73 6 25.40 5 5.00
South West 2.38 8 6.84 7 7.79 2 6.87 4 27.82 4 5.00
Yorkshire & 5.27 4 6.93 5 11.01 5 5.53 7 24.27 8 5.80
Humberside
West Midlands 10.01 2 6.88 6 12.04 7 5.45 8 24.82 7 6.00
North West 5.18 5 6.83 8 11.44 6 5.82 5 25.09 6 6.00
North East 1.93 9 6.95 4 15.02 9 4.67 9 21.92 9 8.00
 Table 2.2c Human capital variables for 2001
--
Ethnicity Prime age Unemployed Education Occupation
Average
% Rank % Rank % Rank % Rank % Rank score

London 28.85 1 7.86 1 4.87 4 30.99 1 32.44 1 1.60

South East 4.90 6 7.56 2 3.81 3 21.75 2 29.55 2 3.00
N
~ East of England 4.88 7 7.45 3 3.31 1 18.14 4 27.08 3 3.60
South West 2.30 9 7.08 9 3.76 2 18.84 3 24.87 4 5.40
East Midlands 6.51 4 7.38 4 6.45 8 16.63 6 24.33 5 5.40
North West 5.56 5 7.24 7 5.69 6 17.17 5 24.18 6 5.80
West Midlands 11.26 2 7.14 8 5.68 5 16.19 8 24.04 7 6.00
Yorkshire & 6.52 3 7.24 6 5.73 7 16.38 7 22.94 8 6.20
Humberside
North East 2.39 8 7.37 5 7.39 9 14.97 9 21.11 9 8.00
 Regional Differences in England 25

the South East owe their low average ranking to the high proportion
of ethnic minorities, degree educated individuals and managers and
professionals within their respective regions. London, for example,
had the highest percentage of ethnic minorities of all the regions in
1981 (18.2 per cent) whilst the South East scored best in terms of man-
agerial experience (13.7 per cent), education (1.67 per cent) and its
relatively low rates of unemployment (5.8 per cent) (unlike the other
four factors a high unemployment level attracts a high score). The
same cannot be said of the North East. If the relative ranking for
'prime age' is discounted, the average score for this region would move
from an already poor 6.20 to 7.00. Enhancing this, perhaps, is the fact
that the North East had an unemployment rate, according to the 1981
census, of double that of the South East and nearly SO per cent fewer
individuals from a managerial or professional background.
Similar rankings are evident when we consider census data for 1991
(Table 2.2b). The South East, the East of England and London remain
the top three regions. Below them, the East Midlands switch from 6th
in 1981 to 4th in 1991 whilst Yorkshire & Humberside move from joint
8th (with the North West) in 1981 to 6th in 1991. The North East is
rooted at the bottom with an average ranking of 8.00 which is nearly
three times higher than that of the South East. What is also noticeable
about Table 2.2b is that although there has been a general increase in
individuals reporting being unemployed, highly educated or in man-
agerial and professional occupations, the disparities evident in 1981
between the North East and South East persist.
By the 2001 census (Table 2.3c), it is possible to discern particular
features of the human capital attributes of the English regions over
time. London, for example, has remained the most ethnically diverse
region of England. What is also apparent is that it contains the highest
percentage of 'prime' age males. This is in sharp contrast to 1991 when
it had the lowest percentage of such males. This seems to indicate that
there has been a population shift amongst 'active' workers towards the
capital principally from the West Midlands (ranked 2nd in 1981) and
from the South West (ranked 1st in 1981). However, the South West has
become a favoured location for retired people over the last 20 years.
The only human capital factor that London, with an average ranking
of 1.6, does badly on is unemployment. This reflects that certain areas
of London (e.g. Tower Hamlets, Hackney and Islington) are amongst the
top 10 most deprived areas of England (ODPM, 2004).
Table 2.2c also shows there has been some alteration in the relative
average rankings of the English regions: London goes ahead of the
26 Three Decades of Enterprise Culture

South East and the East of England whilst Yorkshire and Humberside,
previously 6th in 1991, swaps places in 2001 with the North West. The
North East remains firmly rooted to the bottom with an average rank-
ing more than four times higher than that of London.

Entrepreneurial activity

This part looks at six further factors that indicate levels of entrepre-
neurial activity. Three of these variables are derived from sales tax data
(Value Added Tax data) collected by the UK government. The three
measures of VAT data are registrations (births), deregistrations (deaths)
and stocks. It is well understood that some uncertainty persists about
the use of such data, largely because registrations and deregistrations do
not always equate to business birth and death (Partington and Mayell,
1998). For example, businesses may be 'born' many years before they
register. Equally, deregistration does not necessarily mean the closure of
a business due to a buyer being already registered for VAT. VAT data is
also likely to miss many businesses since it excludes certain exempt
goods and services, zero rated businesses, group registrations, or div-
isional registrations as well as those operating in the 'hidden' economy
(Dale and Kerr, 1995).
Another major problem is that there is some dispute about whether
a business stock or a labour market denominator should be used.
Essentially, this is a measurement issue. Dividing the number of
new businesses by total number or stock of businesses is one way in
which it is possible to compare rates of new business formation in
different sized geographical areas. Hence, if 100 new businesses are
created per year and the existing business stock is 1,000, the annual
rate is obviously 10°/iJ. The alternative measure is to normalise the
number of new businesses by the population or by the number of
working age individuals in the area. This is called the labour market
approach. Table 2.1 uses a labour market denominator since, as
Garofoli (1994) emphasises, it is primarily people, not businesses,
who create new businesses and so people are the appropriate
denominator.
We further supplement this VAT data by using census information
on self-employment for each of the three decades. Besides being a more
likely indicator of overall entrepreneurial activity, the census informa-
tion is also likely to be a useful proxy because businesses only have to
register once they reach a certain threshold of VAT sales. This is likely
to miss individuals and businesses below that threshold.
 Regional Differences in England 27

The final two factors that we consider are measures of industrial

structure: the percentage of manufacturing businesses as a proportion
of total businesses; and the dominance of large businesses in the re-
gion. These two factors are proxies of likely entrepreneurial activity
because, in terms of the prevalence of large businesses, it has long
been held (Storey, 1982) that regions dominated by large businesses
are unlikely to be fertile seed beds for individuals to set up their own
business (The data for this factor is derived from government sources
which present a slight problem in that prior to 2001, a large business
is defined as 500 employees, but for 2001, it is considered to be large if
it has 250 employees.).
The rationale for including some measure of sector (the percentage
of manufacturing businesses) is because of evidence that business
formation rates differ between services and manufacturing (Keeble
et al., 1992; and Bryson et al., 1997). Similarly, it is also recognised
that there has been considerable industrial restructuring not only of
the English or UK economy but worldwide. Ideally, therefore, we
would have liked to provide more finely granulated data on sectoral
distribution but, unfortunately, such information is largely unavail-
able for 1981.
Tables 2.3a, 2.3b and 2.3c detail the relative rankings of each of the
nine English regions. What is perhaps a little surprising is that the
South West, although ranked relatively modestly in terms of human
capital factors (6th (1981), 5th (1991) and 4th (2001)), has the lowest
average ranking in 1981 for the entrepreneurial activity factors. About
one in eight of the active population in 1981 was self-employed, whilst
in terms of VAT data the region had high stock levels and a high rate of
business birth and death. The relevant tables here treat high rates of
business death as a positive outcome. The reason for this is that although
such outcomes are potentially ruinous for individuals (Whyley, 1998),
there is increasing evidence that high rates of 'churn' (high rates of
births and deaths) have a favourable impact upon the productivity of
businesses either because they shift resources to more efficient busi-
nesses or threaten incumbent businesses with failure if they do not
improve their efficiency or innovatory capacity (e.g. Disney et al.,
2003).
Table 2.3a also shows that below the South West region is the proces-
sion of the usual suspects: London, the East of England and the South
East whilst, at the other end, are the North West and North East. The aver-
age rankings for these two regions are 7.17 and 7.83, respectively. The
North East, for example, performs particularly poorly: its self-employment
Table 2.3a Entrepreneurial activity in 1981

Self- Large
employment Births Deaths Stock Manufacturing businesses
Average
% Rank Rank Rank Rank % Rank % Rank rank

South West 12.93 1 39.45 2 30.95 2 380 1 38.81 3 20.4 1 1.67

London 9.61 4 48.09 1 40.17 1 350 2 32.96 1 25.5 3 2.00
East of 10.12 3 39.43 3 29.88 4 328 3 45.17 4 23.4 2 3.17
England
South East 10.45 2 39.16 4 29.96 3 310 5 37.27 2 25.5 3 3.33
East Midlands 8.77 5 34.61 6 27.14 7 312 4 55.27 8 32.5 7 6.17
Yorkshire & 8.00 7 32.44 8 26.80 8 285 7 49.10 6 25.9 5 6.83
Humberside
West 7.91 8 36.12 5 28.14 5 297 6 62.13 9 33.7 8 6.83
Midlands
North West 8.23 6 33.01 7 27.89 6 278 8 53.15 7 33.8 9 7.17
North East 5.45 9 24.54 9 18.96 9 192 9 47.20 5 31 6 7.83
Table 2.3b Entrepreneurial activity in 1991

Self- Large
employment Births Deaths Stock Manufacturing businesses
Average
% Rank Rank Rank Rank % Rank % Rank rank

London 11.83 4 53.12 1 54.11 1 369 1 10.57 1 26.6 3 1.83

South East 13.10 2 44.32 2 45.89 2 342 3 14.72 2 26.6 3 2.33
South West 15.20 1 37.61 4 42.07 3 359 2 16.51 3 26.8 5 3.00
East of England 12.68 3 38.96 3 41.66 4 334 4 17.89 5 25.9 2 3.50
East Midlands 11.26 5 34.05 5 34.01 5 293 5 24.21 8 25.3 1 4.83
West Midlands 10.44 8 32.31 7 32.99 6 281 6 24.96 9 26.9 6 7.00
North West 10.48 6 33.19 6 32.83 7 257 8 20.29 7 30.7 8 7.00
Yorkshire & 10.48 6 30.98 8 31.10 8 264 7 19.35 6 29.7 7 7.00
Humberside
North East 7.61 9 21.60 9 21.92 9 184 9 17.69 4 39.1 9 8.17
Table 2.3c Entrepreneurial activity in 2001

Self- Large
employment Births Deaths Stock Manufacturing businesses
Average
o;~, Rank Rank Rank Rank % Rank % Rank rank

South East 13.68 2 33.80 2 29.15 2 350 2 12.13 2 41.6 3 2.17

South West 14.94 1 29.00 4 26.04 4 337 3 13.95 3 35.2 1 2.67
London 13.28 4 46.54 1 42.89 1 397 1 7.63 1 57.0 9 2.83
East of England 13.35 3 30.58 3 27.85 3 333 4 14.47 4 44.4 5 3.67
East Midlands 11.50 5 26.71 5 23.29 6 289 5 19.91 8 43.2 4 5.50
North West 11.12 7 24.17 7 22.48 7 251 8 16.89 5 40.6 2 6.00
West Midlands 11.22 6 26.47 6 23.48 5 283 6 20.80 9 45.8 7 6.50
Yorkshire & 11.11 8 23.34 8 22.16 8 256 7 17.35 7 45.7 6 7.33
Humberside
North East 8.59 9 16.28 9 16.06 9 177 9 16.99 6 46.0 8 8.33
 Regional Differences in England 31

rate is less than half that of the South West in 1981. It fares little better
in terms of its birth rate, death rate (about 40 per cent below the South
West) and its business stock is around SO per cent of the South West.
Some changes are evident for both 1991 (Table 2.3b) and 2001
(Table 2.3c). First, in Table 2.3b, London and the South East go above
the South West in terms of average rankings. This situation persists for
2001 (Table 2.3c) as the South East remains above that of the South
West in the average rankings (London, also, would be above the South
West except that the shift from measuring the percentage employment
share of large businesses as 2SO to measuring it as SOO employees means
that London looked as if it had a far greater percentage of its employees
in larger businesses in 2001).
There is also some movement at the bottom end of the average rank-
ings. The North West for example is ranked 8th in 1981 but climbs up
to 7th in 1991 and on to 6th in 2001. Yorkshire & Humberside, mean-
while, slides from 6th in 1981 down to 8th in 1991, a position it still
occupies in 2001. What is abundantly clear from each of the three tables
is the relative position of the North East. It is rooted to the bottom of
the average rankings for each of the three decades.
In terms of individual factors, the three tables also point to other
interesting features. For example, rates of self-employment increase
across all of the regions. Similarly, for regions such as London and the
South East business birth and death rates are n-shaped, indicating
heightened levels of business churn, particularly for 1991. Overall,
though, London ends up over the 1981-2001 period with a business
stock some SO points higher.
This cannot, though, be said of the North East. Here rates of business
birth and death actually fall in 1991 compared with 1981. Business
birth and death rates for the North East fall further in 2001 (Table 2.3c).
Overall, therefore, the business birth rate for the North East slips from
2S in 1981 to 16 in 2001. It is little wonder, therefore, that the business
stock falls from 192 to 177 over the same period. This represents a per-
centage drop in the business stock of about 8 per cent in a period (1999-
2003) where the total number of all UK enterprises held steady at around
3.8 million. Much the same can be said of Yorkshire & Humberside.
Here birth rates fall from 32 to 23 and the business stock decreases from
286 to 2S6 (about 9 per cent) over the same period.
32 Three Decades of Enterprise Culture

Access to finance and regional income

It is frequently argued (see: Chapter 7) that lack of access to finance

plays a central role in constraining the take-up of the entrepreneurship
option. For this reason we now review two factors that may influence
regional access to finance issues. The first of these is the percentage of
home owners. Home ownership might be thought important to entre-
preneurs because they can use it as collateral against any finance they
may receive from an outside financier. Home ownership data are derived
from the three censuses and relates to the GORs. The second factor used
is average house prices from the Nationwide Building Society. Again,
the presumption here is that those with more expensive houses are more
able to access greater pools of finance. These data are organised in terms
of the old SSRs and- since London was not a SSR - London is treated as
being the same as the South East. This is likely to underestimate the
house prices in London.
Besides the potential wealth of people, there is always their income. To
assess this, two factors are presented. One of these is GDP per head (1981)
or GVA per head (1991 and 2001). Although these two measures are
slightly different (GVA measures the contribution to the economy of
each individual producer, industry or sector whilst GDP is derived from
GVA by adding taxes and subtracting subsidies on products), practically
and in terms of intra-regional ranking, these differences are not likely to
be significant. Whilst some measure of GDP is often included in other
studies (see Table 2.1) a second measure of regional wealth (personal dis-
posable income (PDI for 1981) or gross household disposable income
(GHDI for 1991 and 2001)) was included. This is because, as the House of
Commons ODPM Select Committee (2003) also suggests, such measures
take better account of regional price differences and demographic fac-
tors (e.g. there are more retired people in the South West region). Again,
the way these two measures are calculated differ and we also have the
added problem that PDI data in 1981 relates to the SSRs. Hence, London
is treated as being the same as the South East.
Tables 2.4a, 2.4b and 2.4c all show a similar picture to earlier tables:
London and the South East dominate the rankings for each of the three
time periods followed by more southern areas of England such as the
South West, the East of England and the East Midlands. In each of the
three tables, whilst there is an overall increase in house ownership,
house prices, personal income, and GDP per head, there also seems to
be a widening gulf between levels of regional demand (income). Take,
 Regional Differences in England 33

Table 2.4a Access to finance and regional income in 1981

Average Average
Owner- house personal GDPper
occupiers prices income head
--------------------Average
o/o Rank Rank Rank Rank rank

South East 64.60 1 29,379 1 3,474 4,271 1.00

London 48.60 8 29,379 2 3,474 1 4,271 3.00
East of England 60.77 3 24,204 3 3,019 5 3,541 4 3.75
South West 63.76 2 24,168 4 3,114 3 3,420 7 4.00
East Midlands 59.84 4 20,692 7 3,100 4 3,555 3 4.50
North West 59.56 5 20,112 8 2,953 6 3,460 5 6.00
Yorkshire & 56.26 7 23,885 5 2,873 8 3,381 8 7.00
Humberside
West Midlands 57.56 6 21,959 6 2,815 9 3,329 9 7.50
North East 45.30 9 18,546 9 2,907 7 3,438 6 7.75

Table 2.4b Access to finance and regional income in 1991

Average Average
Owner- house personal GDPper
occupiers prices income head
--------------------Average
o/o Rank Rank Rank Rank rank

South East 73.76 1 72,741 1 7,387 2 9,850 2 1.50

London 57.19 9 72,741 2 8,254 1 11,631 1 3.25
South West 72.80 2 59,805 3 6,827 4 8,310 5 3.50
East of England 70.96 3 58,523 4 6,360 5 9,805 3 3.75
East Midlands 70.62 4 51,853 8 7,242 3 8,499 4 4.75
North West 68.11 5 55,513 6 6,292 7 8,135 7 6.25
West Midlands 67.65 6 52,371 7 6,298 6 8,228 6 6.25
Yorkshire & 65.90 7 57,384 5 6,150 8 8,094 8 7.00
Humberside
North East 58.95 8 47,979 9 5,843 9 7,568 9 8.75

again, the North East. In terms of house price differentials, prices were
some 40 per cent lower than that of the South East in 1981 but the level
of disparity reached 60 per cent in 2001. Similarly, personal income in
the North East was some 20 per cent lower in 1981 but 30 per cent lower
than London in 2001. Finally, GDP per head in the North East was some
20 per cent lower than London in 1981. This differential increased to 40
per cent by 2001.
34 Three Decades of Enterprise Culture

Table 2.4c Access to finance and regional income in 2001

Average Average
Owner- house personal GDPper
occupiers prices income head
Average
% Rank Rank Rank Rank rank

South East 73.96 1 139,140 1 13,460 2 17,518 2 1.50

London 56.52 9 139,140 2 14,484 1 19,265 3.25
South West 73.06 2 99,606 3 11,947 4 13,216 5 3.50
East Midlands 72.18 4 93,289 4 12,813 3 13,431 4 3.75
East of England 72.71 3 74,805 6 10,919 5 15,994 3 4.25
North West 69.26 6 82,978 5 10,879 6 13,060 7 6.00
West Midlands 69.56 5 65,241 8 10,862 7 13,171 6 6.50
Yorkshire & 67.61 7 71,469 7 10,791 8 12,596 8 7.50
Humberside
North East 63.62 8 56,983 9 10,112 9 11,132 9 8.75

Regional differences in England 1981-2001

The picture that emerges from the individual tables is confirmed

when we consider the cumulative average rankings for each of the
English regions for each of the three census years. As Table 2.5 shows the
South East of England and London have the lowest average scores. Below
them there is some slight movement as the South West slips from 3rd
to 4th between 1981-1991 and the West Midlands slips underneath
the North West. Two other features are evident. The relative ranking in
1991 is identical to that in 2001. Second, at the bottom of this index,
there is the constant presence of Yorkshire and Humberside and the
North East.

Table 2.5 Cumulative regional rankings

1981 1991 2001

South East (1) 2.87 South East (1) 2.27 South East (1) 2.27
London (2) 3.07 London (2) 2.73 London (2) 2.53
South West (3) 3.20 East of England (3) 3.40 East of England (3) 3.80
East of England (4) 3.60 South West (4) 3.80 South West (4) 3.80
East Midlands (5) 5.33 East Midlands (5) 4.87 East Midlands (5) 5.00
West Midlands (6) 6.13 North West (6) 6.47 North West (6) 5.93
North West (7) 6.60 West Midlands (7) 6.47 West Midlands (7) 6.33
Yorkshire & 6.73 Yorkshire & 6.60 Yorkshire & 7.00
Humberside (8) Humberside (8) Humberside (8)
North East (9) 7.27 North East (9) 8.27 North East (9) 8.33
 Regional Differences in England 35

This perhaps is not a surprise. Foreman-Peck (1985) argued that the

beginnings of the economic decline of the Northern periphery of
England have their roots in the inter-war period when new business for-
mation rates in the North of England were much lower than that of
London and the South East. He suggests that the chief reason for this
was the lack of regional demand in the Northern regions brought about
by lower employment levels and lower levels of overall regional wealth
and income.
Little seemingly has changed since the inter-war period. Figure 2.2
demonstrates this by showing the rates of regional unemployment for
the North East, the South East, the West Midlands and Great Britain,
1923-1980. What this chart clearly shows is that in 1923 the three
regions were all around the British average of 10 per cent unemploy-
ment rate. Over the inter-war period unemployment rose markedly in
all three regions but in the mid 1930s, fewer than 15 per cent of workers
in the South East were unemployed. In the North East this rate stood at
a figure approaching 30 per cent. Unsurprisingly, there was little
regional unemployment differences during the Second World War but
subsequent to this and, despite the 'golden' years of economic prosper-
ity of the 1950s and 1960s in England, Figure 2.2 clearly demonstrates
that unemployment in the North East has always been greater than that
of Great Britain, that of the West Midlands but, most markedly, when
compared to the South East of England.
1- - South East ·West Midlands - - ·North East Great Britain I
30
/,

25

20

10

o~~~~~~~~~~~~~~~~~~~~~~~~~~~~
,OJ~r>:> ,OJf1.,~ ,.._OJrV ,o:,cf> ,OJr>:J' ,OJO:JO:J ,OJr>:>~ ,OJ4- ,OJO:JOJ ....~ro ,OJt><OJ ,OJro" ..._OJ<o~ ,o.;<o<o ..._OJ4- ,OJ<oOJ ..._OJ'O' ...._OJV:J'? . ._OJco<o ,OJ~ . ._OJcoOJ . .~'
. ,O:J"'n:, ,~0 ..._OJ'\"\ ......~OJ

Figure 2.2 Regional unemployment in the North East, South East, West Midlands
and Great Britain, 1923-1980.
Source: Mitchell, 1998.
36 Three Decades of Enterprise Culture

Summary
In this first part of the chapter, the aim was to explore the economic posi-
tion of English regions. We presented an index comprising 15 different
factors commonly associated with entrepreneurship. We then showed
changes in those factors across three decades. The evidence points to
widespread regional differences between the South East regions of
England and the peripheral Northern regions. These differences have
remained remarkably consistent over the three decades with regions such
as the North East scoring relatively poorly in terms of human capital,
entrepreneurial activity, access to finance and regional income.
Although the bulk of the evidence relates to the three decades, further
evidence suggests that these regional differences have existed perhaps as
far back as the 1920s. Such empirical promptings give little succour to
those who believe that somehow or other regional convergence is likely
to occur as businesses realise that land and labour are cheaper in poorer
areas of England. Of course, our results are largely descriptive and tell us
little in the way of factors that are likely to explain why such sharp re-
gional differences persist over such a long period of time. Roberts' (2004)
evidence, however, tends to confirm such findings for the English
regions. Looking at the period 1977-1993, he finds little evidence of
economic convergence at the regional level. Instead, his evidence has it
that those already with the most are the ones most likely to continue to
get the most.

The Case of Teesside

In this second part of the chapter, the recent economic changes in

Teesside are reviewed by comparing this North East area with that of
Buckinghamshire in the South East and Shropshire in the West
Midlands of England. At the simplest level, this comparison reflects
clear subregional differences between the poor North, the middling
Midlands and the prosperous South. In describing these differences the
desire is both to remind seasoned observers and casual tourists of where
these places are but also to help structure our subsequent discussions
in later chapters of the changes in the entrepreneurial profile of
Teesside.
The main aim of this latter half of the chapter, however, is not simply
to trace the circumstances of Teesside. It is a misconception that Teesside
has always been a poorly performing area. What we shall see is that
Teesside, up until the last thirty years or so, was 'in the North but not of
the North' (Benyon et al., 1994).
 Regional Differences in England 37

• Greater London

• Metropolitan counties

Unitary authorities

D Counties with two tier

local government

Figure 2.3 Map of former English and Welsh counties (post 1974).
Source: ONS, 2005.

The three English counties

Teesside is located in the South East corner of the North East of England.
To the North is the broadly rural county of Durham. Beyond this is the
metropolitan conurbation of Tyne and Wear (the cities of Newcastle and
Sunderland) and Northumberland. To the South and East is North
Yorkshire (see Figure 2.3). Teesside has underg< ne two major administra-
38 Three Decades of Enterprise Culture

k-_; :_ ;-,:-::~ Unitary authorities introduced in 1995

Unitary authorities introduced in 1996

Unitary authorities introduced in 1997

D Darlington
H Hartlepool
• Unitary authorities introduced in M Middlesbrough
RC Redcar and Cleveland
ST Stockton~on-Tees
• Greater London

Metropolitan counties

De Derby
KH City of Kingston upon Hull
Lr Leicester
NEL North East Lincolnshire
Nt Nottingham
Peterborough
Rutland
Stoke-on-Trent

Bd
BG
Ca
Cy
Mon
MT
N
NPT
ACT
T
VG

Bo Bournemouth
BH Brighton and Hove
L Luton
MK Milton Keynes
PI Poole
Po Portsmouth
So Southampton
Sw Swindon

1The county of Berkshire continues to exist but has no council

Figure 2.4 Map of English and Welsh counties and unitary Authorities (post
1998).
Source: ONS, 2005.

tive reorganisations in the last 30 years. First, after 1974, four of its five
areas (Hartlepool, Stockton-on-Tees, Middlesbrough and what is now
Redcar & Cleveland) were brought together to form the county of
Cleveland, with Darlington remaining as part of County Durham. This
structure is shown in Figure 2.3. The second reorganisation occurred
in 1996 when four unitary councils were created (Middlesbrough,
 Regional Differences in England 39

Hartlepool, Stockton-on-Tees and Redcar & Cleveland). To the west of

these councils was Darlington which was deemed another unitary
council area. The Darlington area was brought into the area to form
Teesside. The reformed structure is shown in Figure 2.4.
The county of Buckinghamshire, ringed by the counties of Berkshire,
Oxfordshire, Northamptonshire, Bedfordshire, Hertfordshire as well as
Greater London (see Figure 2.3), is firmly located in the South East
'Home' counties. Like Teesside, it too saw its boundaries redefined after
1974 with the former Buckinghamshire towns of Slough and Eton
becoming part of the neighbouring county of Berkshire whilst the
county gained the 'new town' of Milton Keynes in 1967. Following the
administrative reorganisation of the 1990s, Milton Keynes was granted
unitary council status (see Figure 2.4).
Shropshire, like Buckinghamshire, has also no direct access to the
sea. Located in the West Midlands, it was, subsequent to the 1974 local
government reorganisation, surrounded by the Welsh counties of
Powys and Clwyd to the West and North West, Cheshire to the North,
Staffordshire to the East and Hereford & Worcester to the South
(Figure 2.3). Like Buckinghamshire, Shropshire also gained a new town
with the creation of Telford in 1968 and this new town was also given
unitary authority status following the administrative reorganisation in
the 1990s (Figure 2.4).
In terms of the population of these three areas, the populations of
Shropshire (including Telford & Wrekin) and Buckinghamshire are
roughly the same with populations of 447,000 and 478,000, respect-
ively. Teesside is somewhat larger at 652,800 (source: ONS, 2003). What
this masks, however, is the population density of these areas. Of all the
areas, Teesside had the highest population density of 828 people per sq.
km which was far greater than that of both Buckinghamshire (306) and

Table 2.6 Distance travelled to work, census 2001

Teesside Shropshire Buckinghamshire

<20km 79.75 67.52 60.83

20km+ 9.08 16.76 22.08
Working from home 7.18 11.37 11.65
Other 3.99 4.35 5.44
Total 100 100 100

Source: ONS, 2005.

40 Three Decades of Enterprise Culture

Shropshire (89). This indicates that there are different degrees of rural-
ity evident in these areas: Tees side is definitely urban, Buckinghamshire
semi-rural and Shropshire distinctly rural by UK standards.
Further information from the 2001 census (Table 2.6) also indicates
that these three areas differ in terms of travel-to-work patterns. For
example, more than one-fifth of Buckinghamshire workers travel more
than 20 km to work. This may be explained by its close proximity to
London. Some 17 per cent of Shropshire workers also commute similar
distances, presumably either because the relatively large size of the
county or because it is close to the Birmingham (West Midlands) conur-
bation. Only 9 per cent of Teesside (Tees Valley) workers travel sizeable
distances indicating its relative geographic isolation from the nearest
alternative conurbations (Newcastle and Leeds). It is also noticeable
from Table 2.6 that relatively few Teesside workers work from home.
A possible explanation for these travel-to-work patterns is the types
of work undertaken in the three areas. Figure 2.5 shows that
Buckinghamshire is markedly different from the either the West
Midlands or North East areas in that a quarter of all its workers (includ-
ing the self-employed) are employed in finance, IT and other business
activities. The county is also strong in terms of distribution, hotels
and restaurants rather than construction or manufacturing. Shropshire,

g Teessidelilll Shropshire ~ Buckinghamshire

90

80

70

60

50

40

30

20

10

Manufacturing Construction Services Distribution, Transport & Finance, IT, Public admin, Other services
hotels & communications other business education &
restaurants activities health

Sector

Figure 2.5 Employment structure of the three counties, 2003.

Source: Nomis, 2005.
 Regional Differences in England 41

however, has a comparatively greater percentage of its workforce in

manufacturing but is relatively weak in terms of business services. What
is particularly pronounced in Figure 2.5 is the marked reliance of both
Shropshire and Teesside on the public sector in terms of administration,
health or education jobs.
Similar data confirms that there are also apparent differences in the
human capital attributes of the workforce of the three counties. Over
half (51 per cent) of Buckinghamshire workers were in 1-3 SOC (2000)
occupations (managers, professionals and associate professionals/tech-
nicians). By comparison, 40 per cent of Shropshire workers were in simi-
lar occupations. This figure dropped further for Teesside (34 per cent).
Where Teesside did score highly is in the lower SOC (2000) occupation
groups. In terms of groups 8 and 9 (machine operative and elementary
occupations), it had the same percentage as Shropshire (24 per cent) but
this was nearly double that of Buckinghamshire (13 per cent).
Table 2.7 continues this theme. It shows that people in Bucking-
hamshire were more highly educated, less likely to have no qualifica-
tions but more likely to be self-employed. On the other hand, Teesside
had nearly 20 per cent of its working age population with no qualifica-
tions and a self-employment rate of about one-third of that of
Buckinghamshire. Between these two extremes sits Shropshire.
What Table 2.7 begins to indicate, echoing the earlier part of this
chapter, is the deep divisions in the economic outcomes for individuals
who live in these three counties. A measure of this is shown in Figure 2.6.
This shows the GVA per head for each of the areas (UK= 100). Unfortu-
nately, official UK statistics have since 1995 further reordered the con-
stituent areas into NUTS 3 areas. For this reason Figure 2.6 shows GVA
rates for the following six areas: 1) South Teesside (Middlesbrough and
Redcar & Cleveland); 2) Hartlepool & Stockton-on Tees; 3) Darlington; 4)
Shropshire, 5) Telford & Wrekin; and 6) Buckinghamshire.
Figure 2.6 shows that GVA in Buckinghamshire over the period
1995-2002 was distinctly above the UK average (=100) by around 20 per
cent. It also shows that there are similarities in the fortunes of both

Table 2.7 Education qualifications in the three counties

Tees Valley Shropshire Buckinghamshire

NVQ4 and above 17.82 22.80 34.80

No Qualifications 18.07 15.08 10.20
Self employed 4.52 9.19 12.00

Source: Nom is, 2005.

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[79] Letters and Journals, iii. 315.

[80] Report by Thomas Tucker upon the revenue of Excise and

Customs in Scotland, 1656, in the Scottish Burgh Society’s
Miscellany.

[81] Act of Classes for purging the Judicatories and other Places
of Public Trust. Act. Parl. Scot. VI. ii. 143.

[82] Letters and Journals, iii. 225.

[83] Orme’s Life of Owen, p. 128; Whitelocke, July 1650.

[84] Letter to the Council of State, 25th September 1650.

[85] Letters and Journals, iii. 291.

[86] Calendar of State Papers, Domestic, 1659-1660, p. 35; Act.

Parl. Scot. VI. ii. 587.

[87] Letters and Journals, iii. 249, 288, 357, 360, 387.

[88] Kirkton’s True and Secret History of the Church of Scotland

(edited from the original MS. by Charles Kirkpatrick Sharpe,
1817), pp. 64, 65. In Law’s Memorialls (edited from the MS. by
Mr. Sharpe in 1818) there is a passage which, if it is to be relied
on, shows that during this period the course of religion had
been advanced by the policy of preventing the clergy interfering
so constantly in politics. “It is not to be forgotten,” Law says,
“that, from the year 1652 to the year 1660, there was great
good done by the preaching of the gospell in the West of
Scotland, more than was observed to have been for twenty or
thirty yeirs before; a great many being brought in to Christ
Jesus by a saving work of conversion, which was occasioned
through ministers preaching nothing all that tyme but the
gospell, and had left off to preach up parliaments, armies,
leagues, resolutions, and remonstrances, which was much in
use before, from the year 1638 till that time 52, which
occasioned a great number of hypocrytes in the Church, who,
out of hope of preferment, honour, riches, and worldly credit,
took on the form of godliness, but wanted the power of it.”

[89] History of the Union, section ii. p. 10, first edition,

published in 1709. Defoe’s History of the Union was reprinted in
1712 and 1786, and again in 1787 “with an introduction, in
which the consequences and probability of a like union with
Ireland are considered.”

[90] January 1658, Carlyle’s Cromwell, Speech XVII.

[91] A Discourse upon the Union of England and Scotland,

addressed to King Charles ii., March 19th, in the year 1664.

[92] Account of his own Life, part ii. p. 50.

[93] Act for the encouraging and increasing of Shipping and

Navigation, 12 Car. II. cap. 18.

[94] Memoirs of the Affairs of Scotland, p. 25.

[95] 15 Car. II. cap. 7.

[96] 14 Car. II. cap. 11.

[97] Scots Acts, 1661, cap. 44; 1663, cap. 13.

[98] 19 and 20 Car. II. cap. 5, Act for settling Freedom and
Intercourse of Trade between England and Scotland.

[99] The grievances of Scotland in relation to their trade with

England, sent up to the Council, 3 Feb. 1668. See also a paper
given in by the Scots Commissioners for adjusting the
differences of trade between the two kingdoms, Jan. 21, 1667
(1668), printed in Defoe, App. No. xiii., and in the “Report on
the events and circumstances which produced the union of the
kingdoms of England and Scotland” (App. No. xxxi.). This
report, which was prepared for the private use of the
Government, at the request of the Duke of Portland, in 1799,
when the Union with Ireland was being discussed, contains
most of the papers which passed between the Commissioners
on Trade in 1668. The Calendar of State Papers, Domestic,
1667-1668, published in 1893, throws some light on these
transactions. It appears that the coal merchants of Newcastle
and the North of England had a grievance in the inequality of
the export duties levied on coal in the two countries. English
coal paid eight shillings, and Scottish coal only twenty pence.
The result was said to be that the customs from coal had fallen
in that part of the country, from £20,000 a year to £4000, and
that English merchants were suffering from the importation into
Scotland, in exchange for coal, of foreign goods which the Scots
used to obtain from England. (Memorial of 24th Feb. 1668.
Calendar, p. 247.)

[100] Burnet, i. 513. Lord Dartmouth, in a note on this passage,

states that William the Third told Lord Jersey that it was a
standing maxim in the Stuart family, “Whatever advances they
pretended to make towards it,” never to allow a union. Their
reason, he said, was that it could not take place without
admitting Scotsmen to both Houses of Parliament, who must
depend for a living on the Crown. He further asserts that King
William said he hoped it would never take place during his
reign, for “he had not the good fortune to know what would
satisfy a Scotsman.”

[101] Defoe, p. 21; Mackenzie’s Memoirs, p. 197.

[102] “A modern account of Scotland, being an exact

description of the country, and a true character of the people
and their manners. Written from thence by an English
gentleman.” Printed in the year 1670 (Harleian Miscellany, vi.
135). “Scotland characterized: In a letter written to a young
gentleman, to dissuade him from an intended journey thither”
(Harleian Miscellany, vii. 377). “The False Brother, or A New
Map of Scotland, drawn by an English Pencil, London, 1651.”

[103] Leven and Melville Papers (Bannatyne Club), 7th March

1689.

[104] Lords Journals, 21st March 1690.

[105] Act concerning Patronages, 19th July 1690.

[106] Address of the Scottish Bishops to James ii., 3rd Nov.

1688.

[107] It would appear from a memorandum among the

Rawlinson MSS. in the Bodleian Library that several English
bishops, some of the Scottish peers, and some members of the
Scottish Whig party, had held a private conference and agreed
that the Jacobite clergy should be unmolested. The English
bishops represented the case of the Scottish Episcopal clergy to
William about the same time. But it was doubtless felt that any
attempt to pass an Act of Toleration through the Scottish
Parliament would fail. (Rawlinson MSS. c. 985.)

[108] A Memorial for his Highness the Prince of Orange, by two

persons of quality. London, 1689.
[109] A Vindication of the Government in Scotland during the
reign of King Charles ii., by Sir George Mackenzie, late Lord
Advocate there. London, 1691.

[110] Evelyn’s Diary, 7th March 1690.

[111] Presbyterian Inquisition: as it was lately practised against

the Professors of the College of Edinburgh, August and
September 1690. London, 1691.

[112] An Historical Relation of the late Presbyterian General

Assembly, London, 1691; An Account of the late Establishment
of Presbyterian Government by the Parliament of Scotland,
London, 1693.

[113] The Fundamental Charter of Presbytery, examined and

disproved, London, 1695.

[114] An Account of the Present Persecution of the Church in

Scotland, in several Letters, London, 1690; The Case of the
Present Afflicted Clergy in Scotland, By a Lover of the Church
and his Country, London, 1690.

[115] Case of the Afflicted Clergy, Second Collection of Papers,

p. 60.

[116] The Scotch Presbyterian Eloquence; or The Foolishness of

their Teaching discovered, London, 1692; An Answer to the
Scotch Presbyterian Eloquence, 1693; Some remarks upon a
late pamphlet entitled “Answer to the Scotch Presbyterian
Eloquence,” London, 1694. A second edition of The Scotch
Presbyterian Eloquence was published in 1694, a third in 1719,
and there have been other editions since.

[117] The Assembly, or Scotch Reformation; a Comedy. Done

from the original manuscript, written in the year 1690, by
Archibald Pitcairn, M.D. Edinburgh, 1817.
[118] Act for a Company Trading to Africa and the Indies, 26th
June 1695.

[119] Marchmont to Seafield, 7th October 1699, Marchmont

Papers, iii. 178.

[120] To Pringle, 23rd December 1699, Marchmont Papers, iii.

199.

[121] John, first Viscount Lonsdale.

[122] 11th January 1700, Vernon Letters, ii. 404.

[123] Vernon Letters, ii. 408.

[124] Lords Journals, 12th February 1700.

[125] Commons Journals, 5th March 1700.

[126] Somerville, p. 151; Chalmers’ Caledonia, i. 868.

[127] Carstares State Papers, p. 579.

[128] See the Duke of Queensberry’s letter to Mr. Carstares of

9th September, and other letters among the Carstares Papers
during the summer and autumn of 1700.

[129] Private Instructions to the Duke of Queensberry, Hampton

Court, 25th April 1700; Add. MSS., British Museum, 24, 064, f.
18. The Estates met in May, but were adjourned until October.

[130] A Sermon preached before his Grace James Duke of

Queensberry, His Majesty’s High Commissioner, and the
Honourable Estates of Parliament, in the Parliament House, the
1st December 1700. Edinburgh, 1701.
 Transcriber’s Note:
Missing periods, closing quotation marks and closing parentheses
have been supplied where obviously required. All other original
errors and inconsistencies have been retained, except as follows
(the first line is the original text, the second the passage as
currently stands):

Page 30:
and at least Chatelherault
and at last Chatelherault
Page 188:
Castille, 81
Castile, 81
Page 190:
Gurdon, Sir Andrew de, at the Parliament
Gurdon, Sir Adam de, at the Parliament
Page 190:
Johnstone, Sir Archibald, of Warriston, 99, 121.
Johnston, Sir Archibald, of Warriston, 99, 121.
Page 191:
Macintosh, Sir James, 88.
Mackintosh, Sir James, 88.
Page 192:
summoned to meet in April 1604;
summoned to meet in April 1604, 63;
Page 192:
meets at Perth in July 1604;
meets at Perth in July 1604, 65;
Footnote 7:
vocabulo dicta The Debeateable Ground.”
vocabulo dicta The Debateable Ground.”
 *** END OF THE PROJECT GUTENBERG EBOOK THE EARLY
HISTORY OF THE SCOTTISH UNION QUESTION ***

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