Where the parties stand on small business: a handy guide

With election fever reaching its pitch in the UK, the political parties have been releasing their manifestos and outlining their plans for how they’d run the country. But admist all the bluster and promises, just what do the manifestos for each party say about small business, and which ones will be tackling the issues important to you?

Fear not - we’ve cut the claptrap, and gathered the points that matter to the UK’s small businesses into a handy guide.

Labour

-          Pledge to raise the national minimum wage to £8 by October 2019

-          Pledge not to raise national insurance contributions

-          All parts of the country to benefit from affordable high speed broadband by the end of the Parliament

-          Labour will create a Small Business Administration, which will ensure procurement contracts are accessible and regulations are designed with small firms in mind.

-          Pledge to cut and then freeze business rates for over 1.5 million smaller business properties.

-          Establish a British Investment Bank with the mission to help businesses grow and to create wealth and jobs. It will have the resources to improve access to finance for small and medium-sized businesses, and will support a network of regional banks.

-          Banning zero-hour contracts – if you work more than 12 hours a week you will be entitled to a permanent contract.

-          Make Work Pay contracts, which will give tax rebates to businesses that sign up to paying the Living Wage in the first year of government.

-          Abolishing tribunal fee system to ensure workers have greater access

Summary

Pledges not to raise national insurance contributions, the cutting and freezing of small business rates, and tax rebates for businesses that sign up to paying the Living Wage are all incentives that will lessen the burden on small businesses. Improved high speed broadband will ensure our tech businesses stay competitive, and help all kinds of businesses achieve their digital potential.

However, raising the minimum wage and banning zero-hour contracts might discourage some smaller businesses from hiring, and abolishing the tribunal fee system also might make some businesses worry that they could fall foul of a disgruntled employee. On the plus side, measures like this ensure that the workforce is more able to live a secure life, making people happier and more productive.

The establishing of a Small Business Administration, and a British Investment Bank targeted at helping businesses gain access to finance, will ensure that business regulations bear SMEs in mind and will help them grow, rather than see them bogged down in red tape.

Conservatives

-          No increases in VAT or National Insurance contributions

-          Major investment in many of the UK’s travel routes, from motorways such as the M5 to electrification of the Great Western Main Line, allowing businesses to have easier access to the rest of the UK

-          Commitment to building High Speed 2, the railway that will link London with the north

-          Investment in the ‘Northern Powerhouse’ tech hub

-          A pilot in Cambridgeshire, Greater Manchester and Cheshire East to allow local councils to retain 100 per cent of growth in business rates, so they reap the benefit of decisions that boost growth locally.

-          Superfast broadband in all areas to be available to 95% of the UK by the end of 2017, and subsidising the cost of installation in the hardest to reach areas

-          National Insurance contributions for employers to be axed for apprentices under 25

-          Continuing with the employment allowance, which  frees businesses from the first £2,000 of employers’ NICs

-          Increasing the business rates retail discount to £1,500.

-          Trebling the Start Up Loans programme so that 75,000 entrepreneurs get the chance to borrow money to set up their own business.

-          Raising minimum wage to £6.70 this autumn.

-          Referendum on the EU

Summary

One key thing that stood out in this manifesto was the emphasis on improving connectivity around the UK, helping with trade and expansion – particularly bridging the north-south divide with investment in the Northern Powerhouse and the building of High Speed Two. Commitments to improving connectivity are also highlighted.

There are things that would help lessen the burden on small businesses, such as no increases on VAT and National Insurance, abolishing National Insurance for apprentices under 25, and keeping income from business rates to the local councils so the areas benefit. Giving more people access to Start Up Loans would be sure to help boost the amount of people going it alone, and making sure they do it with all the possible support and advice.

A referendum on the EU could have implications for expansion out of the UK for small businesses and their ability to trade globally, potentially putting off businesses from expanding and reaching their full potential.

Liberal Democrats

-          Pledge to support to medium-sized businesses through a one-stop-shop for accessing government support, a dedicated unit in HMRC and the development of management skills.

-          Establishing a new community banking sector to support small and medium-sized enterprises and social enterprises.

-          Reforming business tax to ensure it stays competitive

-          Reform and improve the Regulatory Policy Committee to reduce regulatory uncertainty and remove unnecessary business regulation.

-          Remain in the EU

-          Complete the rollout of high-speed broadband, to reach almost every household (99.9%) in the UK as well as small businesses in both rural and urban areas.

-          Build on the success of Tech City, Tech North and the Cambridge tech cluster with a network across the UK acting as incubators for technology companies.

-          Support fast-growing businesses that could create a million jobs over 20 years

Summary

Creating a one-stop-shop for accessing government support, plus a dedicated unit in HRMC, would be sure to help businesses cut through the red tape. Reducing business regulations further would also simplify the process of starting up, and the new community banking sector would provide improved access to finance for small businesses.

There’s emphasis on connectivity and accessing the various tech clusters of the UK, and creating more incubators, as well as targeting the businesses that would create high numbers of jobs to reach their potential (although it would be nice if how they would do this was specified). And committing to remain in the EU means that small businesses could still take advantage of the trading benefits, allowing them to expand.

UKIP

-          Leave the EU, repealing regulations on businesses

-          Have more control over VAT, enabling a lower rate

-          Restrict access to EURES, the EU-wide jobs portal, and allow British businesses to choose to employ British citizens first

-          Amend the Working Time Directive

-          20% discount on business rates for about 1.5 million SMEs

-          A scheme where small businesses can provide evidence of repeated late payments by larger companies, which can then be investigated by HMRC

-          Pilot scheme to improve access to trade credit insurance to small businesses

-          Pushing every local authority to offer at least 30 minutes free parking in town centres, high streets & shopping parades, to boost local business

Summary

The focus of the UKIP manifesto is largely on their desire to leave the EU, and restrict the amount of people entering the country. What this means in terms for small business is a lessening in business regulations and more control over VAT; but it also means renegotiating trade, restrictions on who businesses can employ (as candidates from outside the UK will have less access to EURES, and British workers will be prioritised), and abolishing directives such as the Working Time Directive, which ensures that every worker is entitled to holiday time and weeks that don’t exceed 48 hours.

The most interesting pledge is the establishing of a scheme cracking down on late payments by larger businesses to small businesses, which would improve cashflow. A 20% discount on business rates would also be welcome, as would the focus on getting people back into town centres.

The Green Party

-          Increase min wage to £10 an hour by 2020, and make it a living wage

-          Phase in 35 hour week

-          End zero hour contracts

-          Introduce a maximum pay ratio of 10:1 between the best paid and the worst paid in every organisation

-          Introduce employee-elected directors in medium to larger companies, to ensure workers have a bigger say in the running of their company

-          Reduce employment tribunal fees

-          Introduce a cooperative development fund managed by community banks to finance new and expand existing cooperatives, and also introduce a more comprehensive network of cooperative development bodies that provide training and legal support.

-          Grant employees the legal right in some circumstances to buy out their companies and turn them into Workers’ Cooperatives

-          Reduce employers’ National Insurance to 8% in the long run

-          Maintain corporation tax for small firms at 20%

-          Increase access to finance for small firms with the creation of  a network of community banks

-          Encourage diversity amongst entrepreneurs

-          Give telecommunications operators an obligation to provide affordable high-speed broadband to every small business

-          VAT exemptions for microbusinesses

Summary

Measures focussed on establishing a good quality of life for employees of business, such as increasing the minimum wage significantly, ending zero hour contracts and phasing in a 35 hour week, will ensure employees aren’t exploited and create a happier workforce. However, small businesses might struggle to implement shorter hours and higher wages.

Something not mentioned by any other manifestos is the emphasis on cooperatives as a small business model, with a cooperative development fund to help create these – this could result in more people working together to create businesses, and increases the diversity of the UK’s small business landscape whilst simultaneously give back to the community. Community-level cooperatives are the opposite of large corporations. There is also a big emphasis on stamping out inequality and improving democracy within businesses, with measures that will see employees have more say in how businesses are run and capping top wages – something that could have implications as businesses expand.

VAT exemptions, low corporation tax, commitments to improve access to broadband and reducing National Insurance are all measures that would see the burden lessen for small businesses

SNP

-          Reductions in employers’ National Insurance contributions

-          Increase in the Employment Allowance from £2,000 per business year to £6,000 per business year – 95% of the support will go to smaller firms

-          Increase minimum wage to £8.70 by 2020

-          Improve infrastructure through the whole of the UK, especially between England and Scotland, to promote expansion

-          £100 million investment in jobs in the creative sector

Summary

A big focus of the SNP manifesto was on ensuring that business investment doesn’t stop in the south, with plans for better infrastructure between London and Scotland, enabling a variety of businesses to expand and trade.

The increase in the Employment Allowance would be very welcome, and while a minimum wage increase might put some pressure on small businesses it would also ensure a more sustainable workforce where no workers are exploited.

A £100 million investment in creative sector jobs would encourage new businesses in this area.

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