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1 July 2024

What Does A Labour Government Mean For Small Businesses?

On Friday, June 5th, the UK awoke to a seismic shift in its political landscape. A Labour landslide victory ended 14 years of Conservative rule, introducing a new era under Keir Starmer’s leadership. As small business owners across the nation consider what this new government means for them, there are clear signals from Labour’s policies suggesting significant support is on the horizon. Although we can’t predict every move, here’s an overview of how Labour aims to champion small businesses in their first term.

Labour’s plan for economic growth has been developed for all UK businesses. But small firms, entrepreneurs, and the self- employed face unique challenges. That is why, in partnership, Labour has developed a plan for small businesses – the lifeblood of communities and high streets across the country.

Labour Party Manifesto 2024

Opening Up International Markets

One of Labour’s key strategies involves enhancing guidance and removing barriers to exporting for small businesses. By committing to “pull up the shutters,” Labour plans to unlock greater opportunities for SMEs, aiming to boost small business exports. This will be achieved through the publication of a comprehensive trade strategy and the delivery of clear, actionable advice to help new businesses navigate the complexities of exporting. This initiative could provide SMEs with the tools they need to thrive in global markets, potentially leading to increased growth and profitability.

Addressing Late Payments

Late payments are a persistent issue that plagues small businesses and the self-employed, often causing severe cash flow problems. Labour has vowed to tackle this issue head-on. By enforcing stricter reporting requirements on large companies’ payment practices, the new government aims to expose and stamp out late payments. The significance of this policy cannot be understated; according to the Federation of Small Businesses, over half of small businesses surveyed in 2022 experienced late payments in the previous three months. Timely payments could prevent up to 50,000 business closures annually, highlighting the transformative potential of this initiative.

Reforming Procurement Rules

Gaining access to government contracts has historically been challenging for small businesses. Labour intends to reform procurement rules to level the playing field, ensuring that SMEs have a fair shot at securing public contracts. One proposed measure is to require that at least one small business be shortlisted for smaller public contracts. This could open up a new avenue of revenue for many SMEs, fostering increased competition and innovation within the sector.

Revamping the British Business Bank

Access to capital remains a critical hurdle for many small businesses, and Labour plans to reform the British Business Bank to make it easier for SMEs to obtain the financing they need. By guaranteeing access to banking services on the high street and accelerating the rollout of banking hubs, Labour aims to ensure that small businesses can safely deposit cash and access necessary financial services. According to Tina McKenzie, Policy Chair of the Federation of Small Businesses, strengthening the British Business Bank’s mandate to support regional growth would significantly benefit small businesses nationwide.

Overhauling the Business Rates System

Business rates have long been criticised as a burden on small businesses, particularly those on the high street. Keir Starmer has labelled business rates as “a real drag on businesses” and has committed to replacing the current system. Although details on the replacement system remain scarce, the promise to level the playing field between high street shops and online giants is a welcome development for many SMEs struggling with high overhead costs.

Establishing Great British Energy

Energy costs are a significant concern for small businesses, and Labour’s plan to create Great British Energy aims to address this issue. By establishing a publicly owned company for renewables, Labour hopes to reduce energy bills for small businesses across the nation. Keir Starmer emphasized the importance of controllable costs for small business owners, suggesting that this initiative could provide much-needed financial relief and stability in an often-volatile market.

While the full impact of Labour’s policies on small businesses will unfold over time, the initial signals are promising. From improving access to international markets and capital to addressing late payments and reforming business rates, the Labour government seems poised to create a more supportive environment for SMEs. As these policies begin to take shape, small business owners can remain cautiously optimistic about the future under Keir Starmer’s leadership.

If you need guidance or advice on adapting your SME during this time, please do not hesitate to contact the Grosvenor House team – not only do we offer a range of virtual office services and meeting room facilities, but our team are exceptionally well versed in assisting small businesses across the UK with our resources for start-ups and growing businesses. Fill out the form below to get in touch!