Labour pledges to 'put small business at the heart' of a future government

The Labour Party has unveiled a plan for how it will support small businesses in government by bringing together pledges on issues including tackling late payment, revitalising high streets and scrapping business rates.

Launched in Essex by shadow business secretary Jonathan Reynolds at the first of the party's "regional small business roadshows", the small business plan is called "The beating heart of our economy".

In the forward to the plan, Reynolds says:

"My ask of small business leaders across the UK is to work with us as we try to build that firm foundation to succeed.

"Your voice and experience is integral if the next Labour government is to succeed in growing our economy.

"And I really believe that we can succeed together. Labour’s plan for small business is an important milestone in that journey. It is an invite to small business leaders to work with us to make sure a future Labour government is delivering for you."

The measures have previously been announced but the document unveils new details. The pledges include:

Late payment

Among the promises are dealing with the ongoing issue of late payment by introducing "tough new laws to make sure small businesses get paid on time".

The party says it will legislate to require the audit committees of big businesses to report on their company's payment practices which would "be a key step in making late payments a thing of the past".

Business rates and high streets

The party says it will scrap business rates and replace it with a "fairer system". This is a promise it first made in December 2021.

In the new plan Labour says it will introduce:

"...a fully costed and fully funded system of business property taxation that is fit for the 21st century. Our new system will reduce the burden on high streets, rather than making those businesses that are the heart of our communities pay more than their fair share of tax.

"Our new system will support small businesses' ambitions to grow and to move into empty premises, rather than standing in the way of entrepreneurship. And our new system will increase incentives for businesses to invest, rather than discouraging them from doing so."

The party says it is "continuing to develop these plans ahead of a general election".

In others measure to boost UK high streets, Labour pledges to give councils new powers to take over empty shops and reopen them without consent from the property's owners. The premises would be offered to local small businesses for a discounted rent.

There are also plans to tackle anti-social behaviour by introducing town centre police patrols and a mandatory antisocial behaviour police lead for every local neighbourhood.

To keep shop workers safe, there will also be a new specific offence of assault against retail employees, and the party says it "will reverse the Conservatives' decision to downgrade the police response to shoplifting under £200 in value to make it easier to take action against repeat offenders and put a stop to offending impunity".

Exports

On exports it will publish a trade strategy to help small firms sell overseas and "look at practical ways we can remove the barriers to exports for firms of all sizes and improve guidance to make exporting easier".

Labour said it will "make Brexit work" by "improving on the Conservatives' thin deal when the TCA renewal period comes in 2025". It promises:

"Our plans include seeking a sanitary and phytosanitary agreement to make it easier to move food products across the border, reducing business costs and curing food price inflation. We will aim to strengthen mutual recognition of professional standards and qualifications across Europe, to unlock vital trade in services.

"We will also push for an EU visa waiver for UK touring artists, to help free up travel for artists and supporting services in creative sectors."

Related resource: Enterprise Nation's International Trade Hub

Skills

On skills shortages, Labour says it will create Skills England, work with businesses to ensure local people have the skills they want and set up new Technical Excellence Colleges.

On the Apprenticeship Levy paid by larger businesses, Labour says it "is not flexible enough and has huge underspends because businesses cannot use the money on the full breadth of skills they need". The party pledges to turn it into a new "Growth and Skills Levy" which it says would "give businesses greater flexibility". Labour says it will "continue to cover 95% of costs for non-levy payers protecting apprenticeship starts in small businesses".

Under the current Apprenticeship Levy scheme, employers with a wage bill of more than £3m a year are required to pay 0.5% of their payroll each month as a levy. The money can then be spent on apprenticeship training, with businesses able to transfer 25% of their funds to smaller businesses.

Public sector contracts

Labour says it will help more small businesses win public sector contracts. It says there are £30bn worth of public contracts that would be suitable for smaller businesses to deliver but, currently, 90% of them are still being awarded to big businesses.

It says its "National Procurement Plan" would require that at least one small or medium sized businesses makes the shortlist when any smaller, suitable contract goes out to tender.

'Making the UK the best place to start-up and scale-up'

Labour says it "won't achieve our growth mission without the millions of people across the country who take the plunge and start their own business". It criticises the government for "abandoning their Enterprise Strategy and introducing a litany of schemes that failed to deliver on their promises":

"British entrepreneurs need a government that matches their ambition, but time and again, we hear about the stubborn obstacles preventing many businesses from starting up and scaling up, and the opportunity to grow a business is still not shared widely enough."

Labour says it will unlock "the supply of patient capital for technology-intensive, early stage businesses", and reform the British Business Bank "to give it a more ambitious remit, helping it better support SMEs and giving it a stronger mandate to support regional growth".

It also says it will grow the number of university spinout businesses.

Energy

Labour says it has a "mission to make the UK a clean energy superpower" which "will cut bills for small businesses, create commercial opportunities for them and deliver security with a cheaper, zero-carbon electricity system by 2030".

A "Green Prosperity Plan" will invest "in renewable energy, hydrogen, carbon capture and nuclear power to provide small businesses with access to secure low-cost energy", while a "Warm Homes Plan will have enormous benefits for small businesses, creating over 200,000 jobs for retrofitting firms, builders, electricians, plumbers, carpenters and architects."

Commenting on Labour's plan, Daniel Woolf, head of policy and government relations at Enterprise Nation, said:

"Labour's plan will be welcomed by small businesses across the UK. The party's pledge to introduce tougher laws on late payments cannot come soon enough. Nearly half of small businesses experience overdue invoices, placing intense strain on cash flow. 

"While the government's recent Autumn Statement included welcome steps around prompt payment, we need to see far bolder, wider-reaching action on this issue. Small businesses would welcome Labour's consideration of the Dutch government's 30-day mandate between larger and smaller firms.

"The promise to scrap business rates in favour of a fairer alternative is equally positive. As our Access all Areas: Space report argued, the current system serves landlords more than small firms. Temporary cuts simply lead to higher rents. We need replacement with a tax on underlying land values, not productive investment. This would enable small businesses to properly plan and invest for the long term.

"The direction set out in Labour's plan aligns well with our members' priorities. We look forward to working with Labour to help translate these principles into practical policies that support small businesses nationwide."