Queen’s Speech: More questions than answers?


In my last blog I revealed the policy ‘wish list’ of owners and decisions makers of 1,000 small and medium sized businesses. The overall take away was that SMEs want the Government to let them get on with running their businesses, without creating change simply for the sake of change. Last week in the Queen’s Speech, the Government announced its policy intentions for the year ahead with some positive signals for SMEs, though uncertainty still remains on some key issues.

Simplicity and stability are the two key desires of UK businesses, whilst the critical issues of productivity and EU membership are making small business owners across the nation ill at ease.

In the Government’s Enterprise Bill it was announced that “measures will also be introduced to reduce regulation on small businesses so they can create jobs”. The bill will focus on significant deregulation and the cutting of red tape, seeking to save UK PLC £10 billion in the process. The sentiment of this bill is welcome because a lighter burden would simplify the work of SMEs, providing more freedom and independence with less confusion and restrictions. But SMEs require clarity around how such a substantial saving of £10 billion will be made – with intricate details of where and when the red tape will be cut. Many hope the Government will disclose these details in July’s budget in order to provide full transparency and clarity to business owners across the country.

Another important feature of the Enterprise Bill will be the establishment of a Small Business Conciliation Service (SBCS). The service will operate with the sole purpose of settling business-to-business disputes such as late payments issues, preventing the need to go to court. In our recent survey, a fifth of business owners polled said that legislating to tackle late payments was an immediate priority. It is high time that late payments become an anomaly, rather than an ever-present feature of life for SMEs.

The prospect of an in-out referendum on the EU became a reality in last week’s speech as it was announced that “early legislation (will) be introduced to provide for an in-out referendum on membership of the European Union before the end of 2017”.

The issue of the UK’s relationship with the EU will continue to be a thorn in the side of small businesses as this uncertainty has hugely detrimental implications for stability and future prospects. Our research shows that a third of business owners want to see a commitment to remain in the EU from this Government. These businesses do not have the resources to scenario plan for a potential Brexit and assess the potential risks to their business. Unless a decision is made to bring the referendum forward – as many are hoping – for the next two years, SMEs will be in the dark. They will be doing their best to prepare for a worst case scenario, instead of pursuing their most ambitious dreams for the business.

Start-ups and small businesses across the UK need certainty and security in order to flourish and this is the benchmark against which the new Government will be held to account.

Getting on with the job


As the dust settles on the political landscape post 7 May, UK SMEs have laid out their policy wish list for the new Conservative Government. The single biggest immediate priority is a simplified PAYE system – a policy backed by almost a quarter of UK SMEs polled*.

In creating a vision for the next twelve months, when asked what three policies they would like to see from the Government, almost a third of SMEs leant their voice to calls for the UK to stay within the EU. Meanwhile tax was another area of policy where businesses would like to see clarity with a clear outline of how much small businesses will be taxed. Just under a third polled also called for a reduction in business tax rates.

As we saw earlier this week / last week (change where appropriate) growth in the UK economy is very much under the spotlight, with the Bank of England reducing its forecast for 2015. Growth is also a key challenge for business owners with over a quarter indicating a reduction in small business taxes would help them to grow. A quarter of businesses also said having stable interest rates and no surprises in monetary policy would also help these crucial businesses.
So what does this mean for the business environment?

Simplicity and stability – that is what UK businesses are asking for from the new Government. Just under half of businesses agreed that politicians should stop tinkering with SME policy and let them get on with the job at hand.
With worries over growth and productivity threatening the economy as well as uncertainty surrounding the UK’s relationship with the EU, there is the real risk of the UK slipping back into a recession in the next few years. With years of policy changes amidst a deep recession and economic recovery, the SME community does not want any more new policies just for the sake of it.

While lenders such as Bibby Financial Services can provide stability and comfort of mind to businesses by providing a source of financing, equally we are also subject to operating in the same business environment managed by policymakers.
The Government should resist the temptation to make wholesale changes and focus on creating a stable environment for small businesses to flourish as it attempts to tackle the economic challenges the UK faces.

*Bibby Financial Services polled 1,000 UK SME owners and decision makers in the three days leading up to and following the General Election.