Support Small Businesses for the Economy to Flourish

As political parties publish their manifestos there is one thing I am looking for both as a small business owner and as the Policy Chair for the Federation of Small Businesses (FSB) in Wales.

I am looking for economic strategies which recognise and celebrate the critical role small businesses and the self-employed play in building a thriving and diverse Welsh economy.

It is an often-used fact, but one that is worth reiterating, that 99.3% of Welsh businesses are small or medium businesses, accounting for 62.3% of employment and 43.4% of turnover. They are an intrinsic part of the fabric of our economy, creating jobs, spreading prosperity and keeping our communities vibrant.

FSB have published our manifesto – a blueprint setting out how the next UK Government can support small business and the self-employed and help them to thrive.

There are key levers the UK Government can use to drive growth for small businesses. Many of these do not involve additional spending, including committing to a Small Business Act, which would provide legal protections for small firms. These vital protections include measures to clamp down on big businesses with poor payment practices towards their smaller suppliers and improving small businesses’ ability to access finance by closing loopholes in protections for those giving personal guarantees.

Political parties can also show that they understand the vital role small businesses will play in securing our economic recovery and driving innovation by creating the right conditions for growth.

One key measure which would unlock billions in trapped economic firepower would be to reform our VAT system. FSB’s manifesto calls for an increase in the VAT threshold to £100,000 and for the threshold to be uprated in line with inflation. In addition, to address the cliff-edge scenario many small businesses find themselves facing when drawing closer to the VAT threshold, we have called for a smoothing mechanism for businesses growing above the threshold. This would remove a major barrier small businesses and start-ups face when considering expansion.

Putting in place the right measures to help small businesses grow will also support the parties in their ambitions to create routes into work for those who are currently out of work. One key measure required to ensure this works effectively is to put in place better support for those businesses experiencing a steep increase in their staffing costs. This can best be done by automatically increasing the Employment Allowance when increasing the National Living Wage, providing fair wages whilst ensuring smaller firms aren’t disproportionately hit. This approach makes it more viable for firms to maintain and extend jobs and hours and would inject some much-needed energy into the economy.

As business owners in Wales, we are also looking for a commitment that the next UK Government will work constructively with the Welsh Government. Given that Welsh Government is responsible for economic development, effective co-operation is essential to ensure a coherent approach to delivering business support infrastructure in Wales. A first step would be returning decision-making on shared prosperity funds to the Welsh Government.

These asks from the small business community are not only important in terms of future economic prosperity, but they are also electorally vital for political parties as we near the election date. Our snap-poll has found that millions of voters who run their own businesses are still to make a final decision on who they will back on July 4th. The poll revealed that 96% of small business owners intend to vote, but one-in-five have yet to decide which party they will choose, while a further one-in-three have a good idea who they will vote for but could still change their mind. It is clear then that the deal is not yet sealed for small business votes.

Over the next month, political parties have a chance to show their commitment to the millions of hard-working voters who run their own businesses by setting out a compelling pro-small business offer which will allow our economy to flourish.