By Stephen Attree, Managing Director of MLP Law
At the start of 2014, small and medium sized enterprises accounted for 60% of the estimated 5.2 million businesses operating in the UK. With the general election fast approaching party manifestos cannot fail to offer some significant pledges to help these all important businesses.
Here is what small and medium sized companies should be looking out for in new party manifestos:
For the UK economy to thrive so must small and medium sized enterprises, after all, they are said to be one of the most integral and influential parts of the UK’s financial system. With the UK general election taking place in May it’s important for SMEs and entrepreneurs to think about what they want to see from new party manifestos. Although it’s difficult to know exactly what these documents will say, we can make some predications as to what they might include.
Although the UK’s economic recovery is gathering pace it is still very fragile. Businesses, in particular SMEs, start-ups and entrepreneurs, need ongoing, consistent support to grow and significantly contribute to the UK economy. So what should a business friendly manifesto include?
A business friendly manifesto should address a number of key issues in order to boost enterprise:
1. Providing added support and investment for all SMEs.
2. Encourage exports and innovation.
3. Provide access to funding by increasing the British Business Bank’s sphere of activity. Pledges around ‘alternative finance’ should also be considered.
4. Reduce regulations and keep them in constant review via the one-in-one-out system.
5. Reduce the cost of employment, particularly employer’s national insurance.
6. Create and maintain a tax efficient environment for business and wealth generation.
7. Support the private sector. Small and medium sized firms accounted for 99.3 per cent of all private sector business in the UK at the end of 2014.
8. Acknowledge that the UK economy must move to hi-tech, high quality, green economy.
9. Nurture and protect knowledge, create new industries and new jobs.
New manifestos will also have to illustrate an understanding of what can be done for small and medium businesses on varying scales.
International stability in financial and monetary markets is key. Keeping deficit and debt under control is extremely important when it comes to the interest rates we are charged within global markets. Long term investment in the production of our own energy sources is also important. Investment in large green and low carbon schemes for energy efficiency is something that needs some attention.
Nationally and regionally, manifestos should focus on nurturing private sector dynamism and entrepreneurship. When it comes to production and manufacturing, steps should be taken to broaden our industrial base.
A large proportion of the private sector is made up from small and medium sized enterprises so parties will undoubtedly address this fact in their manifestoes. They should be including greater transparency and ability for SMEs to tender for public sector work locally. Support for local renewable energy schemes should also be given considerable thought, ensuring that the local communities benefit from the savings.
When it comes to the businesses themselves manifestos ought to be looking to maintain and expand tax incentives for share ownership by employees. Pledges for low business rates and business taxes to be maintained should also be made.
Investment and in-work training should feature in new party manifestos. Attention should be paid to maintaining and expanding access to apprenticeships as well as employer and apprentice benefits. Employer bonuses for the retention of apprentices should be considerable thought.
In addition, manifestos should look to support alternative lending for general investment and growth. For example, crowd funding or pensions led funding. Expanding loan guarantees and enterprise guarantee schemes should be made readily available as well as access to competitive rates of borrowing.
Pledges to maintain schemes in aid of the individual should be made too. For example, the Entrepreneur’s Relief scheme rewards success and allows people to keep more of what they earn. In addition to this, increasing the inheritance tax threshold (IHT) will also let people keep and pass on more of what they have earned.
Regulation that affects SMEs is another important factor that should be addressed in party manifestos and they are likely to deal with managing risks such as banking. Parties should stay clear of riskier investment back operations and focus on accelerating ring fencing or retail banking operations. Reducing unnecessary regulation is something that is also likely to feature for small and medium sized businesses; current rules and policies regarding SMEs are currently far too great.
It’s impossible to know exactly what new party manifestos will focus on when it comes to SMEs. However, by acknowledging what issues affect small and medium sized companies and understanding the implications of current legislation, these businesses can ensure they know what to look out for when the general election comes around later this year.