From the outset, the newly elected Conservative Government made its ambition to nurture small businesses clear. In Sajid Javid’s first speech as Business Secretary, he said that “small businesses are Britain’s engine room and the success of our whole economy is built on the hard work and determination of the people who run and work for them”.
Meanwhile in a signal of the Government’s specific commitment to small business, Anna Soubry’s role was re-named Minister for Small Business, Industry and Enterprise – instead of the broader version of Minister for Business and Enterprise.
Since then, the Government has started the ball-rolling on a number of initiatives which could be transformational for small businesses. Through the Enterprise Bill, the Government intends to create a new Small Business Conciliation Service to “help settle disputes between small and large businesses, especially over late payments” without the need for legal action and to appoint a Small Business Commissioner to “help small businesses handle disputes over late payment and other supply chain practices that hit them especially hard”.
These steps have the potential to free small and medium sized enterprises (SMEs) from their chains and stamp out chronic problems which have hampered their growth.
These strong announcements in May and July are wending their way through Parliament as part of the Enterprise Bill. But Royal Assent can’t come soon enough as small business owners and decision-makers are really feeling the pinch. SME leaders are shockingly depressed about the outlook for their business: according to our SME Confidence Tracker, less than half (46%) of SMEs expect their business to grow. Meanwhile one in five small business decision-makers say that the uncertain economic environment in the UK is their primary reason for holding off on future investment.
Against this stark picture it is clear that SMEs need reassurance about their economic future, with the Government and policy makers providing as much ‘forward guidance’ as they can to give certainty to SMEs’ 2016 and 2017 business plans.
An area ripe for action is exports. With only 1 in 10 small businesses exporting according to our Tracker, it’s time for more work in this area. The EU referendum will be pivotal as it is beyond doubt that exporting is easier because of the EU. Time will tell whether that is enough to help sway the vote.
The latest ONS Annual Business Survey figures find that the number of UK companies selling goods and services abroad decreased last year. We need to reverse this trend if the UK is to compete on the global stage. This requires a combined effort of ambition and imagination by both SMEs and the Government.
As they wait for the Enterprise Bill to become reality, small business owners occupy a strange sort of purgatory – the waiting room of a possible metamorphosis. The Government stands on the brink of positive reform, but in the meantime, it must reassure and comfort small business owners, who are overwhelmingly depressed in their outlook and sensing dark clouds on the economic horizon.
The threat (promise)of interest rate rises is likely to act as a drag anchor to any positive policy statements as business leaders tend – in the most part – to be a cautious bunch.