James Caan: Give British business a big boost
Serial entrepreneur James Caan talks to Matthew Partridge about AI's effects on the labour market, the dire state of financial education and the future of British business
Matthew Partridge: James Caan – you founded Alexander Mann and co-founded Humana International, two successful recruitment companies. Would you say that today there's a risk that many university graduates heading into entry-level roles today are being replaced by AI?
James Caan: While I feel much depends on what type of degree the student gains and what they want to do, I do think we're heading for a car crash. I talk to a lot of the big corporate employers, such as Goldman Sachs or KPMG, and if you look at the graduate intake this year, it's going to be less than 50% of the previous year's level.
Up until now, the basic entry-level graduate would have done a research-oriented job. But research is now available at the click of a button, removing the need for someone sitting there for hours trawling through documents and information. Even law firms have significantly reduced their intake, with many of these jobs set to be phased out altogether.
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Matthew Partridge: Won't eliminating these entry-level jobs make it harder to find tomorrow's managers and executives?
James Caan: It might, but I think the whole concept of management will change. After all, so much of it is about managing businesses through information, and now access to information, whether financial or operational, is going to be on steroids, both in terms of increased quantity but also accessibility. This, in turn, will drastically reduce the need for managers. What's more, the managers who remain will be much more analytical and data-orientated than today's people-orientated managers.
If you take the three largest recruitment companies in the world, Adecco, Randstad and Manpower, you can see that their share prices have crashed over the last two years. This suggests that the market doesn't believe that the number of jobs they will fill, as well as the fees that they generate, will be anywhere near where they used to be, so my outlook for the job market is very bearish.
Matthew Partridge: So what sort of degrees should students looking to get a job after university do?
James Caan: Unless they want to follow a specific path, such as medicine, I don't think it is possible to generalise. However, I would say that degrees involving learning to work with data, whether through physics, maths or science, are going to be much more valuable. It is also important to realise that education is about more than just getting a degree; it's about capability, confidence and critical thinking. I left school at 16 because I wanted to get on with building something. Later, I went to Harvard because I wanted to sharpen what I had learned through experience. Both experiences were “education”. At the very least, the career departments of universities and schools need to reflect the careers of today with the advice they give students.
Matthew Partridge: You've been vocal about the need for change in the education system through your work with the Foundation for Education Development (FED). What sort of reforms would you like to see?
James Caan: Education is a very sensitive subject for me because I feel passionately that the UK's education system has not kept up with the times, with students that are coming out of schools ill-equipped for the jobs that exist today. The key problem is that the education system dates back to the 1950s idea of GCSEs and A-levels leading on to university, even though the economy has changed dramatically over that period. The problem is made even worse by the fact that many teachers working today were trained 25 years ago, which means key aspects of their skill sets can't meet the needs of today's students.
When I talked to various people about incorporating technologies such as AI or animation into classrooms, they all say “It's a great idea, James, but we don't have the resources within the education system to deliver those courses because the teachers are just not equipped”. What is particularly worrying is that the [Persian] Gulf and China are way ahead of us in terms of using AI and technology to provide advanced education at schools and universities, and their offerings are starting to overtake what's available in our institutions. Even Oxford, Cambridge and the LSE are falling behind, which means that they, and the country, could lose their income from overseas students.
Matthew Partridge: Is the solution to bring more money into education, or change the way in which education is delivered?
James Caan: The discussion has shifted towards skills, apprenticeships and employability, not just academic routes. The decision to refocus public funding away from master's-level apprenticeships is a clear signal of intent: prioritise earlier-stage, broader access to training. We also need to deliver lessons better. Thanks to AI, even when the teacher isn't qualified to deliver a topic, you can now design bespoke courses, using content culled from world-class institutions, which can then be delivered by virtual avatars.
So, for instance, I've always been a big fan of teaching students the basics of personal finance, such as owning a credit card and opening a bank account, right through to the mechanics of setting up a company and issues such as limited liability. Yet when I've raised the issue, the big objection has always been that many of those teaching in schools today don't know that much about those topics either.
The good news, though, is that thanks to the explosion in information, there's so much content available that it should be relatively easy to design a course and program an avatar to deliver a lesson for 30 minutes, with the teacher dealing with any further questions that the pupils might have. While this might seem futuristic, I'm already seeing schools in the Gulf and China using such technology in this way.
Matthew Partridge: You were a presenter on Dragons' Den, a TV programme credited with promoting entrepreneurship. Do you think that we're becoming more entrepreneurial as a society?
James Caan: Dragons' Den did something very powerful. It normalised entrepreneurship. It showed people from all backgrounds that starting a business was not reserved for a particular class, education or network. It made business conversations part of mainstream culture. That visibility matters enormously because you cannot aspire to what you cannot see.
Historically, we have had a cautious culture. We are more comfortable with security than risk. To fail in business still carries a stigma here that it does not in the US or the Middle East. But this is changing. Younger generations are far more comfortable with enterprise, side businesses, and alternative career paths. The cultural shift is happening, but the system has not yet caught up with the ambition.
Matthew Partridge: A big criticism of British entrepreneurship is that those who do set up companies still focus more on selling themselves to larger groups than growing into global champions. Is this true, and if so, what are the reasons for it?
James Caan: There is a lot of truth in that. Access to sufficient capital to achieve scale in the UK is still more limited than in the US. Founders receive acquisition offers earlier than they should, and without the right support, selling can feel like the rational decision. But I also think Britain can change this if it gets serious about confidence and long-term growth. When sentiment improves, companies invest more, and founders hold their nerve. The January business readings show we are not there yet, but the direction matters.
We need patient capital, better advisory systems, and a culture that celebrates building enduring companies, not just quick exits. A great example of the sort of thinking required is Amazon. At present many listed firms think in quarterly cycles because they have to report every three months and therefore the time horizon for investment is very short. However, Amazon held fast to its view that they needed to invest in order to build a world-class platform that would make them and their investors' a lot of money. While this meant that Amazon received a ton of negative press until the platform was built, it quickly became one of the most successful firms in the world, showing the benefits of thinking a bit more longer term.
Matthew Partridge: The government has recently talked about trying to reduce the amount of red tape around business. Do you think that will work?
James Caan: Yes, we definitely need to reduce red tape. I mean, try opening a bank account tomorrow or getting a VAT or PAYE number. One of the companies I set up recently took five months to get a VAT number. It's just ridiculous. And the awful thing is that, with all today's technology, we should be able to do this online. How is it that I go to Barclays and it can take me four months to open an account, but I can open one with a fintech such as Revolut in ten minutes?
Some of the decisions that the government has taken haven't helped. The decision to hike national insurance was particularly ill-thought through; it looks as though the Treasury may end up losing money because of the reduced number of hires. Similarly, the tax hikes on some of the wealthy have resulted in people leaving the country. I don't think that the government understands how to implement policies to boost business and entrepreneurship.
Of course, I'm not against all tax rises, especially if they are used to fund retraining for workers displaced by AI. It might make sense to target the huge technology companies that are causing all the problems. However, by hiking employers' national insurance contributions to 15%, the only thing that you are going to do is to kill all the small companies.
James Caan CBE is the founder and CEO of private-equity firm Hamilton Bradshaw as well as chairman of both Recruitment Entrepreneur and Ingenia Global Partners. Between 2007 and 2012, he was on the panel of Dragons' Den. He has written four books on business.
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