What Will Labour Do for Small Businesses?
8 Jul 2024As many expected based on the polls, Labour has been elected to government with a majority. Now that they’re in power, one question on our minds is: What will Labour do for small businesses?
First, let’s list what they’ve stated in their manifesto and then break down each point:
- The scrapping of business rates
- Legislation to tackle late payments
- A crackdown on anti-social behaviour
- The removal of exporting barriers
- New technical colleges to increase the supply of in-demand skills
- Speeding up the planning system
- Building new forms of cleaner, cheaper energy
- Giving small business owners better access to finance
- Guaranteed smaller firms shortlisting for public contracts
Now, let’s take a look at each of these points in more detail.
The Scrapping of Business Rates
Labour wants to encourage small business owners to fill empty high street properties by reforming the current business rate system.
For small businesses looking to move to the high street, Labour’s plans could mean you’ll have an easier and cheaper time moving in. Only time will tell how exactly this policy will play out, depending on small businesses’ eagerness to move back to the high street.
Small businesses are currently still experiencing the impact of the ongoing cost of living crisis, meaning even with reform to the business rate system, SMEs may struggle to return to the high street.
Legislation to Tackle Late Payments
According to Labour’s plan for small businesses, at any given time, small businesses are waiting for £20 billion in overdue payments from larger firms. Delays caused by larger firms can strain the cash flow of smaller companies, making it difficult for them to pay their staff and suppliers.
Working with many small businesses, we have seen what issues late payments can cause. From cashflow problems, to spiralling debt from borrowing to plug the gaps, late payments have a knock-on effect that can be catastrophic. It’s reassuring to see the Labour Government tackle this head on, and if the plans go smoothly, it should ease the cashflow burden on small businesses. If late payments are an issue you deal with, speak to our team today.
A Crackdown on Anti-Social Behaviour
To further encourage more small business owners to move into the high street, Labour plans to crack down on anti-social behaviour which could put customers off going to their local town.
Labour has also stated that they intend to give powers to the local councils to take over empty shops owned by landlords who own properties but have no intention of opening them.
With these powers granted, councils will be able to work with property owners to open shops back up after 12 months of vacancy.
If they can deliver on this policy alongside their business rate reform, Labour hopes to revitalise the high street. How these policies will come to fruition, if they come to fruition, we will have to wait and see.
However, if these policies are implemented as stated in their small business plan, SMEs should feel safer returning to the high streets of smaller towns.
The Removal of Exporting Barriers
Labour has said they will work with the Federation of Small Businesses to create a small business export taskforce. The task force will work on making it easier for small business owners to understand how to export their products and services.
Labour will also look at changing the trade and cooperation agreement with the EU to make it easier to trade in the EU single market. How these proposed changes will be implemented is still yet to be seen, although it seems the Labour government is already keen to repair the trade relationship with Europe following the fallout from Brexit.
New Technical Colleges to Increase the Supply of In-Demand Skills
Labour reports that in October 2023, two-thirds of small businesses were unable to acquire the skills they needed to expand their business.
Labour plans to fix this issue by transforming the UK education system and creating technical excellence colleges whose purpose will be to meet the supply needs of the surrounding area by working with local businesses.
Speeding Up the Planning System
Currently, in the UK, we have quite a complicated planning system. An individual cannot simply buy land and build on it; they must first get planning permission from their local council.
If you’ve been watching the Amazon Prime hit show, Clarkson’s Farm, you’ll be aware of how much red tape there is when it comes to building new infrastructure.
Labour has promised to build more homes faster, hoping this will increase the amount of work available for small-scale builders and tradespeople.
Labour wants to fund this scheme by increasing the surcharge on stamp duty paid by non-UK residents when they buy property in the UK.
But what exactly will be done to planning reform is still unknown, but the overall goal is to make it easier to build houses and to create more jobs in the process.
Build New Forms of Cleaner, Cheaper Energy
Labour wants to relieve the pressure on small businesses caused by rising energy bills by creating greener energy sources in the UK.
The plan is to create this energy through the combination of hydrogen, carbon, and nuclear power. Labour’s plan is to have cheaper energy sources readily available by 2030.
Labour also plans on reducing homeowners’ need for energy by increasing 19 million homes to an EPC standard of C over a decade.
Through this scheme, they hope to create 200,000 jobs for retrofitting firms, builders, electricians, plumbers, carpenters, and architects.
This means a chance for building contractors to take on new work and expand, while other small businesses can benefit from the greener energy. However, the cost of the development isn’t stated or costed, so whether this will be a benefit for SMEs, in particular, is unclear.
Give Small Business Owners Better Access to Finance
There are currently a few schemes small businesses can use to access finance, such as:
- Seed Enterprise Investment Scheme
- Venture Capital Trust
- Enterprise Finance Guarantee
However, Labour wants to move away from these types of schemes and make it easier for SMEs to get funding support from the British Business Bank.
Ultimately, Labour wants to reform the British Business Bank to give tech start-ups better access to financing options to grow their business.
Labour hopes this will help the UK make use of their high-ranking universities and create more new businesses in the UK.
Guaranteed Smaller Firms Shortlisting for Public Contracts
Finally, Labour will require at least one small business to make the shortlist when a contract goes out to tender.
Currently, when a contract goes out to tender, it’s almost always larger businesses that have the time and money to get shortlisted. Labour states that it’s currently difficult for small businesses in the public sector to grow, and hopes to provide a solution to tackle this barrier to entry.
The proposed changes mean that although they still won’t be guaranteed to win contracts, small businesses will finally have the chance of landing significant contracts. All being well, this will allow smaller firms to grow by working on bigger contracts, and also redistributing some of the imbalances across the industry.
Labour also plans on cutting red tape and streamlining the bidding process so they can be more competitive against other firms.
Final Thoughts
So there you have it, a first glimpse at some of the proposed changes being suggested by the Labour government.
On the whole, their manifesto proposes some positive initiatives designed to support business owners such as rejigging business rates, combating late payments and easing access to funding.
Plus, by improving education, healthcare, and housing, Labour is aiming to build a healthier, better-educated workforce. Overall, their policies are all about creating a balanced economy where businesses can thrive alongside broader social and environmental progress. With lots of uncertainty in the economy, Labour certainly has their work cut out, so whether their policies will be beneficial to business owners is still yet to be seen. However, at first glance, their policies seem to lean towards helping small business owners in the UK.
If you’ve come all this way, it’s probably because you’re a small business owner who cares about what happens to their business (yes, there’s an incoming sales pitch).
We specialise in supporting small businesses with their accounts, legal, tax, payroll, and HR. We care about your business just as much as you, and that is why we also offer a catch-up with one of our accountants once a quarter.
This means you can stay on top of everything going on in your business without any nasty surprises. Get in touch with our team today to learn more about how we can help you.
