By Stephen Attree, managing partner at MLP Law
As the Conservatives prepare for another five years in power, David Cameron has spent the week announcing his cabinet reshuffle. Perhaps the most important announcements where SMEs are concerned is the replacement of Vince Cable by Sajid Javid as the new business secretary and the appointment of Anna Soubry as the new minister of state for small businesses. To ensure Britain's SMEs continue to grow, I will take a look at a number of recommendations that Sajid Javid could consider.
At the start of 2014, SMEs employed over 15.2 million people, with their combined turnover amounting to £1.6 trillion. And with these small firms making up 99.3 percent of the total number of private sector businesses in the UK, it is fair to say that they have a substantial influence on the economic growth of the country. Indeed, Cameron has referred to small businesses as the 'lifeblood of UK economy' on a number of occasions.
History has shown that the Conservatives have traditionally been good when it comes to small business policies and are known to champion SMEs. In his new position, Sajid will need to make sure this continues, as well as prioritising a number of other things, to ensure our SMEs continue to thrive and support the economy in the same way they have done in recent years.
A major point on the Conservative agenda, and the topic on everyone's lips following the election, is the proposed EU referendum. The prime minister is keen to push forward with the question of whether Britain should maintain its place in the European Union, and the uncertainty around this and what it would mean for our economy is likely to become a major issue in the next year or two.
Undeniably, as the world shrinks due to mobile technology, the economic woes of the world will lead to protectionism within and amongst the blocks of trading nations. Europe is our single largest trading block - and being in a trading block is incredibly important to Britain’s business and economic interests. Sajid is likely to play an important role in these negotiations and must be mindful of how the referendum will impact on SMEs and their ability to trade.
Funding and support
For a business to be able to thrive and continue growing, investment and funding is extremely important. An important area that the new government should focus on is providing added support and investment options for SMEs. General investment and growth could be encouraged by supporting better access to alternative lending solutions. Crowd funding or pensions led funding and great examples of lesser known funding which can be hugely beneficial. SMEs should also be able to access competitive rates of borrowing more easily and schemes such as loan and enterprise guarantees should be expanded.
Looking back at last year, small and medium businesses were given growth vouchers so that they could access strategic advice to help guide them in the running of their company. This would be a beneficial policy to implement again this year, and should definitely be a consideration.
Further to the point on the financial position of SMEs, Sajid should look to support the generation of wealth and create a tax efficient environment for businesses. This may take the form of lower business rates and taxes, or by offering incentives for employee share ownership. Again, this will work towards supporting the growth of small businesses by reducing the amount of tax that they have to pay, so that they can invest this money in areas that will aid them to expand — perhaps by employing more staff or reaching out to new opportunities.
Recognising the value of apprenticeships
Taking on additional employees can be expensive for employers, so the government should pay more attention to increasing access to apprenticeships. Positions that offer in-work training and investment in skills generate more opportunities for young people to enter the workforce and can be further incentivised by offering bonuses to employers who retain these positions.
The Government has indeed proposed plans to increase apprenticeship opportunities, with the promise of an extra three million positions over the next five years, 13,000 of which will come as part of a deal with leading employers such as Morrisons and The National Grid. Success here will be ensuring that these schemes are introduced properly and are both beneficial to the business and the apprentice. Making it simple for employers to take on apprenticeships will increase their willingness to get involved with the schemes.
Removing red tape
Reducing unnecessary regulations for small and medium businesses is also key. It can be extremely difficult for anyone running an SME to keep up to date with the various changes made to business regulations and this needs to be addressed. There are far too many rules and policies targeted at SMEs at present and these should be kept in constant review via the one-in-one-out system. This system has proved to be successful so far and so it is advisable for Sajid to back this scheme going forward.
With the Conservative Government now firmly in power, the next five years will see a variety of changes, and hopefully the needs of small and medium businesses will be recognised. At this point, all we can do is wait to see how Sajid proposes to support the success of our enterprises. One thing that is clear is that small and medium sized businesses are a great asset to the UK and they need to be given every chance to thrive.