General Election 2024: Read Enterprise Nation's small business manifesto for the next UK government

The 2024 General Election stands as a pivotal moment for the future of Britain's small business community. Small businesses are the driving force behind job creation, innovation, and growth in every corner of the United Kingdom.

As we look ahead to the next chapter of our nation's story, it is imperative that any incoming government places small enterprises front and centre of their agenda. A thriving small business sector is not just an economic imperative, but a catalyst for a more prosperous, resilient, and inclusive society.

Enterprise Nation's manifesto centres around key policy priorities, closely aligned with the pressing concerns of our 120,000+ members. These priorities include:

• Access to markets: We advocate for measures enabling small businesses to access both domestic and international markets efficiently. A thriving export market, and a seamless process for small firms to sell into the public sector, are essential for the growth and prosperity of small businesses in the UK.

• Access to technology: We emphasise the importance of technology adoption in small businesses to enhance productivity, innovation and competitiveness.

• Access to finance: To foster small business growth, we propose policies that facilitate access to capital, with added emphasis on supporting female founders to raise funds.

• Access to people: Supporting small businesses in attracting and retaining talent is a cornerstone of our policy objectives.

• Access to space: Access to affordable work and trading space is a critical factor in the success of small businesses and we advocate for policies to enable this.

Enterprise Nation’s full manifesto can be found here and a summary is below.

Access to markets

Trial an Export Tax Credit or Export Vouchers to incentivise exporting among small businesses

The government signalled its commitment to backing UK exports, and in Enterprise Nation's report, Access all areas: Markets, entrepreneurs highlighted that a principal reason they don't export is due to concerns on expenses and the risks of venturing into the world of international trade.

To help incentivise SMEs to export, the next government should consider tax incentives, in the form of an Export Tax Credit or 'Export Voucher'. This would allow businesses to claim a credit on any money it spends in pursuit of exporting activities. This proposal isn't without precedent, having already received the backing of a number of policy experts, and with similar initiatives even being introduced in other countries.2

Exactly how the Export Tax Credit should work would need to be consulted on, but modelling it on Research and Development Tax Credits would be a sensible place to start. Businesses are familiar with how this works, and it has proven a successful intervention to date.

To limit costs of the Export Tax Credit, the next government may wish to restrict eligibility to companies that haven't previously exported, or those that haven't exported for a certain number of years. This would ensure that the support it offers is truly 'additional' in terms of achieving what should be its intended aim, building familiarity and experience of exporting within companies.

The Export Tax Credit could also be limited only to SMEs, which would naturally lower the cost to the Treasury.

A 2017 study from Annette Broocks and Johannes van Biesebroeck found that export promotion is generally more effective at helping small firms with no previous experience of exporting -- with evidence showing that export promotion leads to a 10.7% increase in propensity to export for small firms on average, compared with a 3.5% increase in propensity for large firms.

An alternative form of support could be to trial Export Vouchers, to subsidise the costs of firms that are looking to export for the first time. Voucher-style schemes are a common intervention, and also have recent precedent with regards to helping businesses that trade.

In 2021, for example, the government launched the £20m SME Brexit Support Fund, from which businesses could apply for grants of up to £2,000 to help them adapt to new customs and tax rules when trading with the EU.

Precisely how an Export Voucher would function would again need to be consulted on, but it could provide a subsidy for firms getting advice on exporting, market research, translation services and so forth.

As with the proposed Export Tax Credit scheme, the effectiveness and value-for-money of such an initiative would need to be carefully evaluated, but its aim would be the same -- reducing the financial risk firms can incur when starting their export journey, in return for higher growth in the long run.

In addition, the next government should consider re-introducing programmes such as Tradeshow Access Programme, piloted until April 2023, which supported UK businesses to attend or exhibit at overseas trade shows. Enterprise Nation's members cited this programme as an area of best practice that they would like to see re-introduced.

Build on the work of the Procurement Act with a Small Business Procurement Code to help ensure small businesses have fair and equal access to government contracts when selling to government directly, and via strategic suppliers

The SME procurement agenda has developed over recent years, and the Procurement Act coming into effect on 28 October will take this further to help achieve the government's ambition of spending £1 in every £3 with SMEs.

The next government should build on these efforts and take an ambitious approach to help ensure small businesses are best-equipped to compete and win government contracts.

Create a national training programme to empower SMEs to make the most out of the Procurement Act: launch a nationwide programme to equip SMEs with the skills and knowledge to navigate the public procurement process. Training could include, among other areas, cyber security essentials, required insurance levels, and sustainable business practices.

Streamline the matching of SMEs with tier one suppliers through a centralised platform:  the next government should support the development of a single, managed platform where strategic suppliers can upload contract opportunities specifically for SMEs. Doing so would help simplify the SME's process for identifying relevant opportunities.

To help deliver this, the next government should consider partnering with experienced organisations like Tussell to help ensure effective onboarding and mentorship for SMEs within larger supply chains. Doing so would foster collaboration and help SMEs become reliable suppliers.

Furthermore, the next government could work with small business membership organisations to promote procurement opportunities to their members. This could be done through email newsletters, social media, and other communication channels.

Enterprise Nation stands ready to work with the next government on this agenda and develop comprehensive proposals on how SMEs could get fit to supply.

Access to technology

Work with Enterprise Nation to deliver and champion a digital one-stop shop for business support

Small businesses are overwhelmed by the fragmented and numerous business support options. They need a one-stop shop to access critical resources easily. This inefficiency wastes time and money for both businesses and the government.

To help solidify the UK's position as a global leader in small business support, the next government should work with Enterprise Nation to champion and promote its position as a national digital one-stop shop.

Enterprise Nation has spent over six years investing in and building a one-stop-shop platform. As a small business, we understand the unique challenges faced by entrepreneurs. Enterprise Nation already invested over £6 million in its platform development -- a significant head start for the next government. Enacting this call would yield the following benefits for the next government, among others:

Minimal investment: through leveraging Enterprise Nation's existing platform and expertise, minimising government costs.

Data and reporting: gaining real-time valuable insights to inform and optimise future spending decisions on SME support programmes. This would help address concerns raised by the National Audit Office report of business support in 2020, which said that "most schemes in our review lacked measurable objectives from the outset or evaluations of their impact to know if they are providing the most value or if they should be discontinued. Without such analysis, the Department cannot know if its business support is providing value for money."

Universal support offer: through providing a free, self-serve platform of essential business resources on legal compliance, marketing, finance, and more.

Prioritise the nationwide adoption of e-invoicing to boost UK's digital economy

The UK is falling behind other nations in digitising its economy, risking missed growth and investment opportunities. Unlike many OECD countries, the UK lacks fiscal incentives to drive tech adoption and policies to support a connected digital economy through e-invoicing.

This impedes SMEs from keeping pace with global competitors in digitisation and productivity, posing significant obstacles to higher economic growth.

Running an SME can be complex and time-consuming, with manual tasks and excess admin like chasing payments and filing taxes. eInvoicing can create a faster, more efficient invoicing and payment process, improving relationships with suppliers and customers.

e-invoicing presents a low-cost, accessible solution to improve productivity, reduce late payments, boost growth, and strengthen competitiveness.

An e-invoice is an electronic invoice issued, sent, and received digitally in a structured data format, allowing for automatic and electronic processing. Leading economies like Japan, Singapore, Australia, and the EU are mandating or actively encouraging eInvoicing adoption as part of tax reporting measures and digital transformation initiatives.

These economies have witnessed a steady increase in digital tool usage, driving all sectors to digitise and adopt modern financial software for accounting and payments management.

Among 43 OECD and remaining EU countries, only 3, including the UK, have not publicly announced plans to actively support e-invoicing adoption to some extent.

The evidence outlines the prize on offer through eInvoicing adoption. According to Sage, on average, SMEs get paid seven days faster through e-invoicing, helping tackle late payments. 82% of SMEs still use manual processes, spending 10-36 days per month on invoicing5.

In addition, economic modelling from Sage shows that if SMEs unlock technology's full benefits, an extra £232 billion per annum could be added to the UK economy.

The next government should consider a phased rollout of mandatory e-invoicing for B2B transactions in the UK. This could successfully encourage technology adoption while allowing businesses time to prepare. Phasing could occur based on:

• Business size

• Business structure

• Number of invoices per month

• Targets set by the government, e.g., by 2026, XX% of businesses must use financial software to process invoices.

To complement e-invoicing, the next government could introduce a separate incentive scheme for SMEs to invest in e-invoicing software, similar to the Australian Small Business Technology Investment Boost. This would allow SMEs to claim a 140% deduction (worth 10% of the purchase cost) against their corporation tax bill for qualifying productivity software purchases.

Access to finance

Commit to the continuation of the Shared Prosperity Fund

The Shared Prosperity Fund (UKSPF) is a government initiative designed to help level up the economy by investing in local places and businesses across England. The programme is due to end on 31st March 2025. The key benefits it offers small businesses include, among others:

Funding: UKSPF offers financial resources to support various aspects of small business growth. This could include funding for marketing campaigns, skills development programmes, or investment in new equipment.

Local focus: the UKSPF allocates resources based on a funding formula, ensuring a share goes to areas where small businesses might need a particular boost.

Skills development: UKSPF supports initiatives that help small businesses address skills gaps in their workforce, making them more competitive and productive.

Enterprise Nation encourages the next government to review proposals being developed by the Department for Levelling Up Communities and Housing (DLUCH) to extend the SPF for a further 12 months.

Doing so would offer small businesses continuity in support, and offer a new administration the time necessary to build a future funding plan, based on the evidence of what has and has not worked in relation to the SPF.

Build on recent progress to stamp out late payments by mandating 30-day terms to larger firms procuring from smaller ones

Enterprise Nation's research found nearly half (47%) of small firms are either often or sometimes paid late, placing an enormous strain on their cash flow, stunting growth and impacting their ability to operate and pay suppliers. That is why ensuring businesses get paid on time for what they do is crucial, and ultimately, reducing the time spent by small businesses chasing payments will free up more time for them to focus on the activities they need to grow.

The government's review on the impact of late payments on small businesses found that payment times for some SMEs reduced from 81 days in 2010 to 36 days in 2020/21, but 40% of invoices are still not being paid according to the agreed terms which means SMEs struggle or do not survive.

The government's announced new measures at the 2023 Autumn Statement marked a positive step in the right direction. Positive steps announced included the stringent payment time requirements for firms bidding on large government contracts.

But, these measures only apply to firms bidding for government contracts over £5m, and small businesses will want to see the net widened to ensure the scourge of late payments are properly tackled. Cashflow is the lifeblood of a small business, so ensuring payments are made on time makes a real difference.

In addition to the announced measures to tackle late payments, the next government should consider recent measures from the European Commission to combat late payments in commercial transactions.

The European Commission are proposing to introduce a single maximum payment term of 30 days for all commercial transactions, including B2B and transactions between public authorities and businesses. This term will be the same across the EU. This follows recent measures from the Dutch Government to mandate 30-day terms to larger firms procuring from smaller ones.

Such proposals have been made possible by the proliferation of e-payment services in recent years. For example, ECOMMPAY's Open Banking solutions connect to over 48 partner banks in the UK, with Barclays, HSBC, Lloyds, and Monzo customers able to utilise this real-time payment solution. Sofort is an overlay banking system covering 99.9% of German banks, enabling real-time transaction conformation, security for its users and zero chargebacks.

Access to people

Continue the delivery of existing mentoring business support programmes

Small businesses have experienced challenging times in recent years. But, green shoots of optimism are starting to appear. To provide small businesses with a much-needed sense of continuity and stability, Enterprise Nation urges the next government to adopt a cautious approach on enacting wholesale changes to support programmes that have been effective for small businesses.

A key example of a support programme small businesses would like to see be continued is the current Help to Grow: Management Course. Enterprise Nation has been honoured to be part of the consortium delivering the mentoring element of the programme. Since August 2022 the consortium has:

• Recruited 7,000+ mentors

• Trained 3,000+ mentors

• Recorded 18,000 mentoring hours

• Achieved average ratings of 4.9/5 for quality of mentoring experience

To help bolster the programme, Enterprise Nation would like to see the next government enact the following steps:

Continue the mentoring programme:  a future government should consider continuing this initiative beyond March 2025. This could involve replicating the existing model or potentially expanding it to reach more businesses.

Deploy the programme's volunteer mentors:  Enterprise Nation would welcome collaborating with the next government in deploying the existing pool of 7,000+ trained mentors to support businesses outside of the specific Help to Grow programme framework. This could involve a matching platform, utilising Enterprise Nation's platform to connect business owners with available mentors, and the creation of incentives for mentors, to help incentivise the continued participation of volunteer mentors, potentially through recognition or further training opportunities.

Reform the Apprenticeship Levy to enable businesses to transfer a higher portion of their Levy funds directly to the small businesses they partner with

According to the Chartered Institute of Personnel and Development (CIPD), the number of apprentices starting in small businesses decreased since the introduction of the Apprenticeship Levy in 2017, with 123,800 apprenticeship starts in SMEs in England in 2020/21, compared to 241,000 in 2016/17, a fall of 49%.

Furthermore, business investment in training per employee in the UK has declined by 19% since 2011, from £2,191 to £1,778, with UK investment per employee at around half that of the EU average. 

The CIPD's research found that employers are training and investing less in their workforces than they were 20 years ago. This has occurred despite the number of skills shortage vacancies more than doubling in England, from 193,800 in 2017 to 460,100 in 2022. 

One way to help reform the Apprenticeship Levy to deliver on its originally-intended policy aims, would be to enable businesses to transfer a higher portion of their Levy funds directly to the small businesses they partner with.

Taking this course would give businesses significant flexibility and strategic control over their training investments. They would be able to prioritise partnerships with smaller players in their supply chains, targeting specific skills gaps or sparking innovation through collaboration.

This would free up the larger company's resources to focus on its core competencies, similar to an investment bank supporting a financial planning apprenticeship at a local accounting firm. Both gain from the specialised training while concentrating on their unique strengths.

Furthermore, building stronger skills throughout the supply chain would help create a more resilient and reliable network, benefiting all participants.

For smaller businesses receiving the higher portion of Levy funds, the benefits would be numerous. For example, it would increase their access to talent, as the increased access to Levy funds would allow smaller businesses to offer competitive salaries and benefits, attracting high-quality candidates they might not otherwise afford.

In addition, Levy funds can cover a large portion of apprenticeship costs, freeing up resources for other business investments, while sharing the cost with a larger partner mitigates the financial risk associated with investing in unproven talent or new training programmes.

Furthermore, for smaller firms, partnering with larger companies exposes them to a wider pool of potential apprentices, increasing their chances of finding the right fit for their needs.

Increasing the transferability of the Apprenticeship Levy offers a valuable tool for stimulating economic growth through enhanced skills development within small businesses. By enabling larger Levy-paying companies to share funds with smaller partners, the policy aims to address critical skills gaps within specific sectors and foster innovation through collaborative training initiatives.

This direct financial support empowers small businesses to access skilled talent, reduce training costs, and upskill their workforce, leading to improved productivity, competitiveness, and ultimately, broader economic benefits.

Access to space

Scrap and replace the business rates system with a tax on the underlying land values, not productive investment

Enterprise Nation's report, Access all areas: Space, argued that the current business rates system is not fit for purpose. While cutting business rates can offer short-term relief, evidence suggests this is effectively a tax cut for landlords, as rents rise to offset any cuts.

Therefore, a more efficient system would see the business rates system replaced with a tax on the underlying land values, not productive investment.

For example, the proposed Commercial Landowner Levy would cut business taxes in the vast majority (92%) of local authorities -- particularly outside the South East -- helping to rebalance Britain's divided economy.

In addition, rates should also shift from being paid by tenants to being paid by landlords, be set annually, rather than operating through a five or three-year revaluation cycle, while the business rates' relief which landlords can claim for empty premises should be eliminated: "This will strengthen the hand of tenants in negotiations with landlords and will reduce the chance of high street premises remaining empty. It will also yield its own financial benefits, given that this relief costs the taxpayer around £1bn per year at present."

How government works with small businesses

Create bespoke small business bodies

A future government should consider bespoke small business bodies to maximise its engagement. For example, these may take the form of:

Reinstating the Small to Medium-sized Enterprise Action Group -- A bi-monthly meeting of the Small Business Minister and representative groups to discuss specific business topics.

Create small business regional boards: Regional boards to provide a forum for small businesses to engage with government at the regional level.

Small business missions: Offering small business owners an opportunity to meet with;

• Prime ministers's business advisers

• Cabinet Office teams working on SME Procurement

• DEFRA teams looking at sourcing more from SMEs

• DfE teams looking at enterprise in the curriculum

Small business secondments: Providing civil servants with opportunities to work in small businesses/small business membership bodies to help deepen their understanding of small businesses.

Small Business Insights Unit: This unit could be responsible for sourcing data from the private sector, including Enterprise Nation's platform data, cloud accounting software providers and banks who can offer a live view on small business sentiment and confidence levels.

These structures could provide a more direct way for small businesses to engage with government and have their voices heard.

Enterprise Nation's General Election 2024 coverage

Tracking what the political parties are saying about support for small businesses

Watch a video of 'General Election 2024: The small business debate'