Home » What are Labour’s plans for small businesses and what are others saying?

What are Labour’s plans for small businesses and what are others saying?

– What do the plans entail?

The proposals include guaranteeing small businesses access to high street banking services by accelerating the establishment of banking hubs, as well as an overhaul of the business rates system to help high street shops compete with online giants.

Labour also wants to stamp out late payment of invoices to small businesses by forcing large firms to report on their payment practices, and to “revitalise” high streets by cracking down on antisocial behaviour.

The party wants to unlock the supply of finance for businesses looking to grow, to require at least one small business to be shortlisted when smaller public contracts go to tender, and to publish a trade strategy to give businesses advice on exporting.

The establishment of Great British Energy, a publicly owned sustainable power company, would slash energy bills for small business and create thousands of opportunities for tradespeople, Labour says.

– Why the focus on small companies?

Sir Keir Starmer was setting out his party’s plans on a visit to a small business on Saturday, flanked by Dragons’ Den star Deborah Meaden.

At 3 Locks Brewing Company, a canal-side craft brewery in Camden, north London, he said: “We want small businesses to thrive because they are the backbone of our economy.”

They drive economic growth and create jobs for local people, the Labour leader said ahead of the visit, as he accused the Conservatives of holding such firms back.

Sir Keir Starmer with Dragons’ Den star Deborah Meaden at 3 Lock’s Brewery in Camden (Stefan Rousseau/PA)

“Conservative chaos over the past 14 years has inflicted a deep and lasting cost on small business owners through economic instability and sky-rocketing energy bills.

“Through no fault of their own, hard-working small businesses have been held back by a tired Tory party that has failed to provide the stability and certainty business needs to thrive.”

– So what will happen to business rates?

Sir Keir said Labour’s plan involves replacing business rates because they are “a real drag on businesses”.

But it is not clear what Labour would replace business rates with, leading some to call for more clarity.

Sir Keir told broadcasters in Camden: “We want to replace them with a system that works better, because at the moment, there’s not a level playing field between businesses that are online and those that are sort of bricks and mortar.

“It’s been a problem for a long time. The Government hasn’t fixed it and small businesses have all gone through a really hard time in recent years.”

– Are late payments an issue?

Yes. The Federation of Small Businesses (FSB) said more than half of small businesses it surveyed in 2022 had experienced late payments in the previous three months.

It said thousands of small businesses are being held back by a “systemic poor payment culture” and a lack of adequate protection.

If late payments were made on time, 50,000 business closures could be avoided each year, according to previous FSB research.

– How will GB Energy help?

The setting up of GB Energy is a key pledge of Labour’s election campaign. The clean energy firm will be headquartered in Scotland and funded through a windfall tax on big oil and gas firms, with an initial £8.3 billion capitalisation over the course of a parliament.

Sir Keir said the plan is “very popular” with small businesses.

Opinion poll tracker
(PA Graphics)

“What’s come up here comes up with all small businesses – energy is too expensive.

“What you can’t have if you run a small business is sort of costs that you can’t control, so Great British Energy, a publicly owned company for renewables, is very, very popular with small businesses.”

– What has the reaction been?

Meaden told the PA news agency at the brewery: “I think GB Energy is absolutely brilliant, I think it does everything that I care about.

“Businesses don’t like being out of control of costs and energy is one of those costs that simply fluctuates beyond your control.”

Groups representing small firms also welcomed the proposals.

Michelle Ovens, founder of Small Business Britain, said: “It is really exciting to see small businesses take centre stage in the election campaign this weekend. Representing 99% of UK business, small firms bring immeasurable value to the UK economy, society and wider communities, as well as being at the cutting edge of innovation, creativity and disruption.

“The next government must focus on driving ‘good growth’ – which means putting the nation’s 5.5 million small businesses front and centre of powering prosperity for the UK that is sustainable, fair and inclusive. As part of this we are certainly keen to see interventions to empower small firms to start up and scale up, such as improving access to finance and tackling late payments and business rates.”

Tina McKenzie, policy chairwoman at the FSB, said it was “good to see late payment addressed by Labour” and eyes would “turn towards its manifesto launch to see if the party takes a pro-small business approach”.

She said: “Our snap election poll shows that the majority of the UK’s 5.5 million small business votes are up for grabs.

“As the election gets into its final stage, it’s crucial political parties reassure small businesses on tax, on protecting small business apprenticeships, and on having the right legislative environment to support growth.”

Labour first put forward its plan to “breathe new life” into Britain’s high streets in April, drawing approval from trade bodies for its proposed overhaul of the business rates system.

But the Tories claimed Labour would “hammer” small companies.

Business minister Kevin Hollinrake said: “Labour remain committed to imposing Angela Rayner’s French-style union laws that would hammer our vital small businesses.

“Labour’s policies would reduce flexible working and pile new regulations on to small companies, destroying jobs alongside their £2,094 tax raid on hardworking families.

“Rishi Sunak and the Conservatives have a record of taking bold action to support small businesses, including freezing business rates, helping small business owners gain the skills they need, and lifting more small businesses out of paying VAT.”