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What a Conservative Government Means to Britain's Small Businesses

Last week saw the Tories win the General Election, forming a single party Government, much to their surprise and the chagrin of Labour I'd imagine. As the expression goes, the proof of the pudding is in the eating - so it must be for the Conservatives.

A lot of promises were made during their electoral campaign, with guarantees to slash red tape, tackle late payments, invest in communications and infrastructure, and the enhancement of employer rights among them. But what does all this mean for the UK's SMEs, and should we hold our breath in the hope that they deliver.

Faster Payments

Despite promises in the last election and a number of initiatives from Government, late payment still remains the biggest challenge for SMEs in the UK. Figures from BACS shows that 60 percent of UK SMEs are owed late payments, and ‘the average small business is currently owed £38,186 in overdue bills.’ Further research carried out by the Federation of Small Businesses reveals that one in four small business owners spend three hours or more every week chasing late payments.

As I have mentioned before in this forum, a plan is only as good as its implementation and timing and the lack of progress in this area does little to fill me with hope for any dramatic change in the near future. The challenge here lies in changing the payment culture and that will take time.

More from David Banfield

I guess the really good news for the British SME community is that there is still a robust marketplace open to their financing needs - they don’t have to wait for the ‘new’ Government to come through in order to finance their business.

Red Tape

Anyone running a small business will know only too well how time consuming and unnecessary much of the regulatory paperwork demanded by HMRC and the various associated bodies can be. Not only does it eat into precious time that could be better spent generating business and growing your client base, but it is also a costly exercise.

This is one area we may see Government taking positive and noticeable steps to reconcile. Indeed it has already started making changes, with the Regulatory Policy Committee scrutinising some 1,200 regulatory proposals, saving business in the region of £2.2BN. Should they continue in this manner, we may look forward to a few less documents to sign and forms to fill in the coming years.

Employer Rights

Current employment legislation weighs heavily in favour of the employee, leaving employers with very little room to manoeuvre. As a result employers are apprehensive about taking on staff, and this has hampered the downward trend everyone wants to see on the unemployment register.

Had labour come to power things might have been much worse for employers, as they were hell bent on eradicating zero hour contracts. Indeed even in the past coalition government, the Lib Dems overruled a number of measures put forward by the Beecroft Report, such as ‘no-fault dismissals’.

Expect to see some major changes in favour of employers and a more competitive employment market being put forward by the Tories in the coming months.

Growth

Ultimately, the British economy must grow, and that means the country’s fate is inevitably intertwined with the success of the nation’s business owners. Simply put, the better they do, the better the country does as it has a direct impact on jobs, exports and tax revenues. A big issue in the UK is that we have a lot of small businesses but too few medium-sized companies. Government must do all it can to support our indigenous businesses in making the leap from small to medium.

While advice and mentorship programmes may help, what’s needed most is finance. Businesses need easier access to capital in order to invest in their growth, be it through the expansion of grants, promotion of secondary financing options such as spot factoring, invoice discounting and peer-to-peer lending, or more lenient banking regulations in terms of small business lending.

 

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