General Election 2024: The small business debate
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Posted: Wed 19th Jun 2024
As the UK prepares for the 2024 General Election, the role of small and medium-sized enterprises (SMEs) in propelling economic growth has taken centre stage.
The General Election small business debate, delivered by Enterprise Nation in partnership with the Institute of Chartered Accountants in England and Wales (ICAEW), and the Federation of Small Businesses (FSB), saw senior politicians from the Conservative, Liberal Democrat, and Labour parties outlining their contrasting visions for supporting small businesses.
Co-chaired by Enterprise Nation founder and CEO, Emma Jones CBE, and FSB's UK policy chair, Tina McKenzie MBE, the panellists were:
Kevin Hollinrake, small business minister, representing the Conservative Party
Jonathan Reynolds, shadow business and trade secretary, representing the Labour Party
Sarah Olney, Treasury and business and industrial strategy spokesperson, representing the Liberal Democrats
Watch a video of the full debate:
Read a summary of the main points discussed:
On supporting SMEs
Kevin Hollinrake emphasised the importance of competitive markets, deregulation and reducing regulatory burdens to support private enterprise and economic growth. Hollinrake advocated for ensuring adequate local authority resources and funding to support their work assisting SMEs through business advisors and grant information.
Sarah Olney suggested that the Liberal Democrats aim to revitalise SMEs as drivers of innovation and economic growth through, among other measures, replacing business rates and the apprenticeship levy.
Jonathan Reynolds focused on Labour's mission to provide stability and certainty for businesses through commitments to infrastructure spending and a coordinated industrial strategy framework.
Reynolds added that Labour will focus on giving SMEs a fair chance on procurement, through guaranteeing SME representation on government procurement shortlists to boost opportunities for local small firms. Reynolds suggested that structural barriers needed to be addressed, such as limiting access to finance for marginalised groups through institutions like the British Business Bank.
On tax
Kevin Hollinrake highlighted that the UK has maintained one of the most generous business investment tax relief policies in the OECD, allowing full deduction of capital expenditure from taxable profits. This policy encourages domestic reinvestment and attracts foreign direct investment by providing favourable tax treatment compared to other countries.
Hollinrake warned against raising capital gains tax, arguing it would harm the UK's international investment attractiveness.
Sarah Olney proposed replacing the business rates system with a commercial landlord levy, taxing the annual rental value of land instead of business revenues or profits based on property values. This shift could lower operating expenses for businesses by transferring the tax burden to property owners, reducing barriers for new start-ups and SMEs facing high occupancy costs.
When specifically asked by Enterprise Nation founder Emma Jones about business taxes like National Insurance, corporation tax and capital gains tax, Jonathan Reynolds said Labour has been clear that any additional revenue raised in their manifesto would be hypothecated for specific purposes, not just general funding.
Reynolds emphasised that where revenue needs to be raised, it will be done through targeted measures rather than broad-based tax increases on businesses or individuals.
On access to finance
Kevin Hollinrake highlighted the potential of Open Banking to allow small businesses to view all their finances in one place and compare loan and credit card rates across multiple providers.
By fostering greater transparency, this could significantly increase market competition. Additionally, Hollinrake emphasised the role of regional mutual banks in addressing the UK's financial system void. These localised banks could offer relationship-based support tailored to individual SME needs, providing more personalised assistance than large national banks.
Sarah Olney underscored the need to address structural barriers through policy changes, as these imbalances disproportionately impact women and minorities seeking financing. Olney advocated for collaborative solutions between government, banks, and regulators to remove unnecessary personal guarantees that hinder SME access to finance.
Jonathan Reynolds suggested that Labour aim to address financing barriers through institutions like the British Business Bank, which funds areas neglected by traditional banks. However, he pointed out the data indicating that funding still disproportionately benefits certain groups over others, necessitating continued efforts to ensure equitable access.
On late payment
Kevin Hollinrake highlighted existing legislation that requires large companies to publish their payment practices to enhance transparency and accountability. A new prompt payment code aims to standardise payment timelines across public and private sectors, addressing perennial issues in procurement cultures that disadvantage SMEs.
Jonathan Reynolds suggested enhancing transparency by publishing supplier payment timeframes in audit committee reports for large companies. This initiative seeks to expose and counteract the power imbalances that often leave SMEs financially vulnerable.
On apprenticeships
Kevin Hollinrake endorsed specialised shorter courses to meet specific skills needs directly and efficiently but cautioned against too much state intervention curtailing employer flexibility.
Sarah Olney advocated for replacing the apprenticeship levy system with a skills and training levy, with more flexibility for business to access relevant training. Olney argued that the current system is seen as an additional tax by many businesses, even those who spend time and money on training.
Jonathan Reynolds highlighted widespread dissatisfaction among employers with the current levy model, asserting that it often fails to meet skills needs in a cost-effective manner.
On planning
Kevin Hollinrake stressed the importance of locally accountable decision-making in planning approvals, balancing local development priorities with environmental protection.
This contrasted Jonathan Reynolds' sentiments, as he called for more political will to overcome NIMBYism and expedite the planning processes. Reynolds asserted that this is essential for tackling the UK's infrastructure and housing shortfalls.
On the VAT threshold
Sarah Olney proposed a review of the VAT threshold level and its calculation mechanism to ensure it encourages continuous business growth rather than acting as a barrier.
Jonathan Reynolds ruled out increasing the £90,000 threshold but advocated smoothing the "cliff edge" change in obligations to avoid disincentivising growth just above the limit. He acknowledged, however, that implementing this effectively would be complex.
General Election 2024
In conclusion, the General Election small business debate underscored the critical role small businesses play in driving economic growth and innovation in the UK. With senior politicians from the Conservative, Liberal Democrat, and Labour parties presenting divergent approaches, the debate illuminated key policy differences in areas such as tax, access to finance, late payments, apprenticeships, and planning.
Each party outlined their commitment to creating a more favourable business environment for SMEs, albeit through distinct methodologies. As the election approaches, these discussions will be pivotal in shaping voter perspectives on how best to support small businesses and ensure its continued contribution to the national economy.
Enterprise Nation's General Election 2024 coverage
Tracking what the political parties are saying about support for small businesses
Read Enterprise Nation's small business manifesto for the next government
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