Back to all articles

What small businesses want from a future government

Pick up any newspaper or business title and the message is clear. The recovery is on course, the economy is on the up and we're in a lot better shape than we were at the last election! Sadly, read further and it’s all too often UK plc that gets the bulk of attention from the media which in turn gives us a rather distorted view of the UK business environment and the engine room that has played a major role in the UK’s turnaround – small businesses.

None one’s denying the important economic role of UK major players. But as our thoughts turn towards May 7th the Forum is keen to remind politicians not to lose sight of the fact that small firms form the backbone our economy and don’t allow their voices to be drowned out in the crescendo of pre-election calls.

I’ve been impressed by many of our members’ abilities to adapt, innovate and prosper in some of the toughest economic conditions we’ve seen. The employment figures are impressive, and show the number of work is at an all time high, but quite often fail to credit the hardworking UK small firms that have created the lion’s share of the recovery’s private sector jobs.

What makes their achievements even more impressive is how small businesses have achieved so much despite the constant battle against rising costs and red tape.

I’ve had first-hand experience of the challenges of running a small business. We’ve listened and here’s the top business wants for a future government, whoever wins!

1. Real help for small businesses to grow, not for bigger businesses to get bigger

Big businessesand their treatment of their smaller suppliers has definitely been called into question in the past few months. One of the worst economic downturns in living memory has been a challenging time for businesses of all sizes. However, it has also led to many large companies looking to de-risk their operations by applying pressure to the small firms they work with. Recent tactics have ranged from increasing payment terms to introducing schemes to claw back cash from their suppliers.

We feel that all parties should look to address these issues by introducing measures to help small firms to grow and prosper, not help big firms to grow further.

The introduction of a code or regulator to oversee the relationship between suppliers and retailers would also be a positive move. Halfords, Marks and Spencer and Debenhams are just some recent high street names that have looked to introduce longer payment times and other tactics to squeeze their supply chain who unlike the supermarkets remain unregulated, but it’s time to consider tougher measures.

Late payment also remains a key issue for small firms. According to the most recent estimates, chasing late payment costs businesses somewhere in the region of £9.2 billion a year. While recent moves towards greater transparency are welcome, a future government could go further and amend current legislation to faithfully enforce the EU Directive on late payment.

2. Help smaller by cutting the cost of compliance

Despite continued government promises to reduce the amount of time and money spent on keeping up to speed on regulation changes, the average SME employer last year saw their annual compliance bill rise by £713.

Moves to continue to reduce the red tape burden felt by small firms are essential.

One key move we’d like to see is the removal of the Health and Safety Executive’s Fee for Intervention policy, which has been extremely unpopular, damaging the relationship between businesses and the HSE regulators.

Our members also feel that an under resourced HMRC has also unfairly targeted smaller firms. All too often they’ve been seen as easy wins, as opposed to some big businesses that have escaped paying their fair share of tax. Therefore it’s essential that a future government builds on recent moves on corporate tax avoidance by ensuring that HMRC has sufficient resources to support this.

The constant flux of employment law has also proved damaging for small firms, who have often had to adapt to a raft of workplace regulation changes in a very short space of time. Future administrations need to seriously consider the cost and time pressures this places on small businesses, perhaps by only regulating once in any area of employment law per parliament.

3. Reduce the cost of doing business for small firms

Despite inflation falling to record levels this hasn’t translated to falling business costs, particularly when it comes to the key overheads of people, utilities and property.

Business rates continue to be a bugbear for many of our members who with 42% in recent poll citing it as a key problem affecting their ability to grow. Therefore we are keen to see a freeze on business rates in the first year and cap at 2% for the remainder of the Parliament. Also we would like to see moves to make Small Business Rate Relief permanent and automatic, and to carry out an immediate rating assessment with a promise not to subsidise any increase in rates for a business as a consequence.

In addition other welcome moves would include a removal of the VAT element charged on fuel duty contribution on the price at the pumps, and moves to change the Low Pay Commission’s National Minimum Wage recommendations to once every two years.

What’s clear is that, whatever the outcome on 7 May, small businesses will continue to be the engine room of growth in the countries recovery following one of the worst downturns in living memory. The challenge for the new administration, whatever its make up will be to provide the right mix of freedom, intervention and support, that can help build on the recovery and ensure sustainable growth for the UK economy.

The full list of our asks from the next government can be found in our election manifesto. Find out more about how we represent your business or call us on 0845 130 1722.

Join the conversation