With a general election confirmed for next month, and lots of pressure from both inside and outside government, it’s crucial that the next Prime Minister doesn’t forget about the backbone of the UK economy, SMBs.
With Boris Johnson taking the reins as Prime Minister only a few months ago, Brexit delayed for a second time and an upcoming general election, there is no doubt that our politics right now is rather turbulent. Add the UK’s economic status into the mix which had recent worries about a possible dip into a recession, and whoever is Prime Minister on December 13th already has a lot to deal with. However, while Brexit will undoubtedly grab the headlines and political attention, the next Prime Minister cannot forget about the needs of SMBs - and particularly those on the high street.
To start off, it’s important that our next Prime Minister acknowledges the notable contribution that SMBs bring to the UK economy. 16.3m people around the country are employed by SMBs - that’s 99.9% of the private sector economy. Likewise, over half of the private sector’s turnover last year came from SMBs, who collectively made £2 trillion. These figures clearly highlight how integral SMBs are to both our economy and wider society.
It’s true to say that in times of economic instability, SMBs are often worst hit. Given the struggling state of the high street, it’s more important than ever that SMBs can benefit from reduced business rates, and the financial support this would bring to them. When we asked our customers what could be done by the government to help them at this crucial time, they said reducing business rates was the number one thing that would make a difference to them. And it isn’t just SMBs who think this. A number of large British retailers, including Iceland, Harrods and Marks & Spencer, have all demanded that the government issue tax cuts to help save the high street. Andy Street, former managing director at John Lewis, said in June that the current system is “detrimental” to SMBs.
Meanwhile, SMBs also need business rate policies to be communicated clearly with them. The current system is complicated, and made worse by the fact that the UK does not have one single system for dealing with business rates. Instead, it varies between England, Scotland, Wales and Northern Ireland, adding to the confusion. The next Prime Minister could demonstrate that they are taking SMBs seriously by making this process easier and simpler.
In a similar manner, the next Prime Minister needs to acknowledge that small legislative changes can directly affect SMBs. For most SMBs, they are focused on selling, and few have the luxury of time to investigate small changes to employment and trade laws. Therefore, ensuring that there is a system in place that notifies SMBs to any of these changes - before they get caught out - is essential. SMBs should not have to try and navigate the minefield of legal information in an attempt to find the answers they need.
A recent example of this can be seen in the case of Strong Customer Authentication (SCA). The Financial Conduct Authority’s recent announcement of an 18-month delay to the introduction of SCA came about after confusion over whether retailers were prepared for it. Crucially, retailers industry-wide, including SMBs, needed a longer lead time, giving them time to tackle any issues or changes that SCA could bring about.
Along with any legislative changes, the next Prime Minister must be clear about Brexit and the implications it has for SMBs. Last year, a worrying study by the University of St Andrews found that SMBs could be the worst hit by Brexit. Dr Ross Brown, who led the research, said: “There appears to be a deep-seated uncertainty permeating UK small businesses about the ramifications of Brexit.” Mike Cherry, National Chairman of the Federation of Small Businesses, also pointed out that delays to Brexit negotiations have already negatively impacted SMBs. “They are the ones dealing with the realities of this mess – planning decisions cancelled, investment stalled and growth going backwards,” he said.
The government has to support SMBs navigating through this turbulent period of time, ensuring that any disruption can be managed as well as possible. This can be achieved through the next Prime Minister and their government maintaining clear and regular communication with small business owners.
The next PM needs to understand the significant role that SMBs play in the UK, and not just acknowledge the pressures facing them. This requires looking at small businesses not just through an economic lens, but also recognising their wider socio-economic contribution to British society. The 5.6 million SMBs in the UK bring a lot to society. They provide spaces for people to socialise, influence local services, and ultimately help shape communities. Likewise, they are critical to the UK’s economic success. Therefore, the government must work out ways to make the lives of SMB owners and employees easier, enabling them to thrive - even during times of uncertainty.
Steven Stewart is director of SMB Solutions at Valitor