For those of you who missed it, Ed Miliband boldly declared last week that Labour would be the ‘party of small business’ should they emerge triumphant from the next general election. In his keynote speech at the Labour party conference in Brighton, Miliband outlined a range of policy proposals purportedly designed with the small business owner in mind – and he took a swipe at the current government’s track record in the process.
Among the announcements was a declaration that Labour would cut business rates to the level of the previous year, before freezing them in 2016. By applying this cut to properties valued at less than £50,000, Labour estimated that ‘hundreds of thousands’ of companies would benefit. Meanwhile, Miliband revealed that Labour would also scrap the Coalition’s proposed cut in corporation tax for larger firms from 21% to 20%, scheduled for 2015. And energy firms were a further target of Miliband’s ire, as he promised a 20-month price freeze, along with a new tougher regulator to give households and businesses a ‘fairer deal’ on their rates.
However, the question remains as to whether the delivery of these promises would genuinely reveal Labour to be the party of small business. Needless to say, our country’s small business owners have their own thoughts as to what such a party would look like.
“MPs should have experience of entrepreneurship,” says Sam Parton, co-founder of OpenPlay
The main flaw for any political party suggesting that it is a ‘party of small business’ is that very few, if any, of its members have ever worked in a small business or taken the risk of starting their own. As such, someone like Ed Miliband cannot begin to understand the pains and emotions that any founder of a small business goes through when starting out. His latest statement about freezing energy prizes or business rates suggests that he fundamentally does not understand economics – the country cannot pay for itself as it has clearly shown. Instead, innovation should be rewarded in all industries and barriers to SME innovation and growth such as red tape should be tackled.
At the moment, most SMEs see political parties as blasting hot air and this boils down to their lack of experience working in SMEs. Any party with at least a couple of members who are entrepreneurs, with credible reputations and opinions, might just be able to justify the label of a party of small business.
“Parties must understand how business models have changed,” says Amanda Boyle, founder of BloomVC.com
Battling for the title of the ‘party for small business’ has become a recurring political theme; however, it’s a battle with much posturing and little progress. Headline grabbing policies are thrown around in the run up to elections, then watered down for implementation. Bright ideas from the current government provide a perfect example: the Funding for Lending Scheme hasn’t helped small businesses, nor has the Business Bank. Ed Miliband’s hopes for frozen business rates and energy bills would be welcomed by small business owners, but they are a fantasy, and hardly the most pressing concerns. I meet countless entrepreneurs who are trying to turn their part-time ventures into businesses, then their fledgling businesses into successful, sustainable enterprises. The odds are stacked against them in our current economic environment.
Therefore, any party for small business must firstly make more money accessible to new businesses and pre-revenue businesses, which are ultimately the future of our economy. Secondly, it is essential that both enterprise and business are built into the education system to give young people an entrepreneurial mindset as well as employable skills. Finally, business models have changed dramatically in the last 20 years and assets are more likely to be intangible, so support, funding and rates must reflect the changing face of British business.