King’s Speech: no mention of small business, the bedrock of Britain’s economy

The King’s Speech at the state opening of parliament yesterday outlined 40 bills ranging from big-ticket items such as nationalising Britain’s railways to scrapping planning rules, all designed, in Sir Keir Starmer’s words, to “fix the foundations” of the country.  

Accompanying Starmer’s ambitious new reforms was a 105-page briefing document sent to interested parties with further details of Labour’s policy proposals which the new government hopes will bring change, and indeed wealth creation, to every corner of the nation.

Yet there was not a single mention – in either the bills or the briefing papers – of “small business” in any shape or form. Those two words which add up to so much simply didn’t make it into any of the government’s legislation or future plans. 

It’s the most astonishing omission, a glaring gap in Labour’s stated ambition of bringing economic stability and growth to the country. Even the usually apolitical Federation of Small Businesses was flabbergasted and deeply disappointed, to say the least, by the omission. That’s an understatement, particularly as the FSB’s top team, including national chairman, Martin McTague, spent many hours with the then Shadow Chancellor Rachel Reeves and the shadow business secretary, Jonathan Reynolds, and Labour’s team going over the issues and problems faced by the UK’s six million or so SMEs and thousands of the self-employed. 

According to the FSB, while in opposition, Labour’s business team were eager to listen to those issues, and promised that it would deliver a small business plan once in government to help remedy those problems. Now they feel hung out to dry. Used, for want of a better word. Even outlining Starmer’s new Industrial Strategy Council, for example, there was no mention of small businesses nor is there any suggestion representation of a small business “voice”. 

As you might expect, Rachel Reeves’ new economic advisory team includes academics such as John Van Reenen, an innovation expert and former Downing Street policy adviser under Tony Blair’s New Labour government, to head the body but, once again, there has been no mention of a small business voice or voices.

What makes Labour’s omission all the more ominous is that it is these six million or so small businesses – which employ up to 50 people or so – are the bedrock of the UK economy. That’s not a fanciful or sentimental thing to say: SMEs employ more than 60 per cent of all private sector employees and contribute half of the country’s economic turnover. 

More pertinently, it is these young, dynamic companies – from new bio-tech start-ups to housebuilding – that will provide the bulk of all new jobs for the future. 

Which is why small businesses are not to be gaslighted. Yet that is exactly what Starmer has done in his first official outing. It’s a travesty and is a worrying sign that Reeves and Labour’s business team have been so captured by big business – both UK and overseas firms – that they have forgotten about the small widget manufacturer in Swansea or the self-employed bio-tech entrepreneur based in Newcastle. 

So it’s easy to see why the FSB is so disappointed. The FSB’s policy chair, Tina McKenzie, said the fact that small businesses weren’t mentioned once in the speech suggests that Labour “may not keep its promises to drive growth in the real economy”. David Hale, the FSB’s head of public affairs, was equally despondent, suggesting that it’s a dangerous sign that Labour is no longer interested in small business, preferring the company of big businesses whose interests are not always aligned with theirs. 

In fact, they are often at odds. Big business can command great power because they control their supply chains yet the smaller suppliers down the chain often need protection too. 

What, then, would small business liked to have seen in the speech? The FSB has a list of about 50 issues which need to be sorted out but top of the agenda is the lack of promised legislation to tackle late payments and poor payment practices by bigger businesses to their small business suppliers. As McKenzie argues, it’s a real issue for small business owners and will hold back economic growth because it hampers cash flow and stifles new investment. 

Small business owners would also like to have seen a promise from the government to give its “unequivocal commitment” to protect co-investment for apprenticeships. One of Labour’s new proposals is to turn the Apprenticeship Levy – which operated mainly for bigger businesses – into a new Growth and Skills Levy to improve the number of apprenticeships. 

Despite the last government’s attempt to increase apprentices, the number of those taking new apprenticeship schemes has fallen by a third.   

But according to Hale, as well as the pledge of co-investment, small businesses also want to see college curriculums improved. Most small businesses no longer bother putting youngsters through the schemes as they claim so many vocational schemes are no longer fit for purpose. After so many attempts by successive governments to improve apprenticeship training, it’s extraordinary that they all have failed so dismally. Getting the training right is also a no-brainer, a great way for youngsters to work and train without incurring debt and improving skills in the workplace. Which is why it’s all the more bizarre that Starmer hasn’t put skills training at the top of his agenda.    

Small businesses are also worried about the developing employment rights package which is presented in the new Employment Rights Bill. This new legislation is aimed at cracking down on exploitative zero-hour contracts, the rights and wrongs of firing and rehiring and other dubious working practices. 

Big business can more easily afford to pay its labour force more – or find ways of getting around the loopholes. But small, growing businesses don’t always have such an easy time playing the game. They are, quite rightly, worried about the increased costs and risks when they employ people, particularly as small businesses are usually the employers which take greater risks by employing those out of work – the economically inactive as they are now categorised – or who are suffering from some sort of disability. 

Rather than be penalised with stricter, suffocating employment rules, SMEs should be encouraged to employ more people in a more flexible environment. If the government does want to reduce the huge increase in those who are economically inactive, it needs to look more closely at how it formulates its new employment legislation for smaller companies. 

And if Starmer is serious about fixing the country’s foundations – and growing the economy – then he needs to stand back from the kowtowing and adulation he has received from big business. He needs to scrap away the techno and corporate speak and listen, carefully to what matters most to our small businesses – and budding entrepreneurs. They are not only the country’s bedrock but will provide the next generation of wealth. 

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