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SMEs need consistency and communication

Author: ICAEW

Published: 30 Mar 2023

Tech business Data Duopoly is fast growing and innovative. While some regulation feels appropriate, its founder believes a lack of communication and constant change is holding back business investment.

Data Duopoly tracks real time footfall for consumer-facing spaces, using predictive algorithms to forecast footfall and consumer activity so that those spaces can be better designed to fit their purpose. It is currently looking to work with transport providers to help encourage exploration of towns and cities. Its founder and CEO Tanuvi Ethunandan set up the company in 2019 after working as a Senior Auditor for EY; she has gone on to win awards at both West Country Women and Tech South West in 2022. 

As a data-driven business, GDPR has a major impact on how the company operates. From the start, the company made the decision to limit the amount of personal data collected by the Data Duopoly app, to ensure no one can be personally identified. This has worked fine for the company; the objectives of the regulation are clear, says Ethunandan.

“In my view, the regulations seem quite fair and measurable. You do have to pay the ICO charge every year. While I know it’s a tiny amount, it feels like a bit more admin than is required, because I’m not quite sure what you get back for it.”

The other major set of regulations, as a start up, concerns R&D tax credits. Data Duopoly has attracted innovation funding and investment from the European Space Agency. The recent changes to R&D tax credits, which reduced the SME additional deduction from 130% to 86% and the SME tax credit rate from 14.5% to 10%, was not welcome news. 

“As a tech company, we have a lot of development, though I imagine life sciences will be impacted to a much greater degree. I think it’s a real shame, because these are innovative companies, and they’re spending money. I think there is a danger there, that business owners might choose to take profits out of the business in dividends etcetera rather than reinvest it, because the R&D tax credit claim won’t seem worth it.”

Ethunandan is also concerned that the fallout from the Silicon Valley Bank and Credit Suisse will negatively impact the tech sector in the form of ‘corrective’ regulation. “I would hate to see the tech sector used as a scapegoat. It hasn’t happened yet, but my fear is that there will be some blowback on technology businesses because of this.”

Ethunandan believes that more targeted regulation makes the system more complicated. Frequent changes and fiddling to regulations also does more harm than the regulation themselves, she says. “Things such as the NIC contributions increase, they have an impact on businesses. Yes, we’re not going to have to lose staff, but growth plans are reduced. The opportunity cost of regulation is a key issue, and it’s a really difficult thing to measure.”

The intention and objective of regulation is rarely well communicated or understood, says Ethunandan. She has an economics degree and reads various publications to keep up to date with regulatory change, but information about why said regulation is coming in is not easy to find. 

“The government is missing a trick,” she says. As Thaler and Sunstein said about behavioural economics: if you get people on board, they’re going to actually want to support what you’re doing. If the government did more to communicate the purpose of regulation clearly and simply, perhaps through a personalised dashboard that tells you what to expect and why they’re changing the regulation, it would suddenly make businesses more likely to engage and support it.”

While simplification would be a long and painful process, continuity and consistency of regulation would be welcome, says Ethunandan. When things are changing significantly, she explains, it makes businesses really hesitant, as they’re always waiting for the next change. “And while we’re waiting, we’re delaying investment. We're delaying innovation, and that’s slowing down GDP growth.

“Consistency across government is one of the best things they can do for businesses, and communication is a part of that.” 

When it comes to listening to SMEs, Ethunandan feels that the government tends to only hear the loudest voices. “The ones that are very well lobbied are the ones that go down to Westminster. And I don’t necessarily think that’s a true representation.”

Local groups such as Chambers of Commerce can be useful to put your point across, but there are also regional discrepancies when it comes to who gets a say, says Ethunandan. 

“I’m also involved in the Digital Skills Partnership in Cornwall. That’s an intentional thing to try to lobby the government about what digital skills are needed in the sector, which is fantastic. But it’s no guarantee of an invite to Westminster.”

Ethunandan would love to see the government doing more representative surveying of businesses as part of their consultations around new or changing regulations. A market research approach would be welcomed by SMEs, she believes.

“I think most business owners would take the time, if they got an email from Westminster, to take 10 minutes over Zoom or Teams to give their view. Most people I know would be quite appreciative of that.” 


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