Tuesday, 11 April 2017

Labour Is A Party Championing SMEs. Here's Why:

Today Jeremy Corbyn delivered a speech to the Federation of Small Business (FSB) which outlined a series of measures designed to help small and medium sized businesses (SMEs) thrive in areas such as Lincoln. Such a speech is incredibly welcome because Corbyn hasn't really come across as being particularly business friendly over the past few years, to the point where a fellow constituent in Birchwood, my council ward in Lincoln told me bluntly that Corbyn offered "no politics of aspiration" for those who had taken the time and financial risk to set up their business. Hopefully the policies announced today will go some way towards convincing Mr Skeptic that Labour does have a strategy for helping SMEs to flourish whilst also announcing policies to help employees (such as pledging a £10 an hour National Living Wage). Here's my thought's on Corbyn's SME policy platform:
  • Labour wants to "radically reform" the business rates system, easing the business rates burden by £1.5bn and ensuring that its SMEs that benefit the most. Corporations and conglomerates should not be receiving more tax breaks when SMEs are struggling to survive in a competitive market place.
  • Labour's going to scrap the quarterly reporting requirement for SMEs whose turnover (revenue generated from normal business activities- e.g. sale of goods or customer services) is less than £83,000 a year. Labour claims this will allow SMEs to focus on "growing their business" rather than worrying about turnover calculations. Will this mean less work for accountants who may rely on SME business to operate effectively?
  • Labour wants to reform the late payment culture, given that £26bn is already owed to SMEs in late payments according to data provided by BACS Payment Services Ltd. Late payments by big suppliers can lead to shortfalls in available cash which can lead to businesses having to lay off staff, reduce services or put off crucial infrastructure investment- e.g. moving to an office to allow for service expansion. So for any business that's bidding to be a Government contractor (procurement contract) Labour will ensure that the latest that any suppliers or partner businesses can be paid is 30 days. Labour are also fully prepared to "name and shame" those Government contractors who are unwilling to comply with the policy decision and companies who regularly use the payment system like an "interest-free loan". Corbyn mentions corporations such as Marks & Spencers, the BT Group and Capita as being exponents of this system. His information was based on analysing Experian reports where the payment beyond terms were 30-60 days according to Labour, with M&S at 72 days and the National Grid a whopping 119 days beyond terms. The FSB believes that a reform to the payment system generally would stop 50,000 businesses from going under, so I believe in theory, Corbyn's proposal is a sound one if it's going to help release cash quicker for SME owners to use to invest back in their businesses.
  • Labour are committed to establishing a National Investment Bank (NIB), with regional banks across England set up to help SMEs borrow to invest in their businesses in order to facilitate growth. Labour would borrow £500bn to help fund these regional banks.
  • Jeremy Corbyn acknowledges that more investment is needed in upskilling and retraining, recognising that in order for people to survive in a competitive jobs market and increasing technological innovation, they will need to "retrain several times" in order to keep working. That's why Labour are committed to creating a National Education Service that allows learning to take place "from the cradle to the grave" with subsidised courses being available in the evenings in areas such as Accountancy and Finance to help those working during the day to gain extra business skills.
  • Labour argues that the Conservative proposal for punishing small business owners for "dividend withdrawals" when they may also have to pay corporation tax amounts  to "double taxation" and is entirely unfair. Labour's also pledged not to increase the corporation tax for SMEs, meaning that any policy positions which require funding from corporation tax will need to be carefully budgeted for, since increases would only come from corporation tax increases at the top.
  • Labour is currently looking into the feasibility of extending the Employment Allowance in tandem with raising the National Living Wage. The Employment Allowance currently allows businesses and charities (who are not sole traders or whose business is a public body operating more than half of its services in the public sector unless its a charity) to reduce their National Insurance Contribution (Employers (Secondary) Class 1) by up to £3,000 and can be claimed by businesses even if their total NIC is less than £3,000 a year. Care and support workers can also claim the allowance, so any overall increase is going to benefit them too!
  • Labour believes that a "full gender audit" needs to be carried out by SMEs to determine for example, whether opportunities are really being given to women to progress in the companies or whether pay gaps between positions need to be addressed when based on gender.
  • On Brexit, Labour has reiterated the need for the UK to have tariff-free access to the EU post Brexit and hinted that regulatory standard stability was "key" to trading success. This means that the Great Repeal Bill cannot get rid of any EU legislation that makes it more difficult to trade with the EU- e.g. environmental regulations on meat quality that have to be in place before it can be exported to the EU.
  • Labour promises to keep listening to SME business experts when coming up with Labour policies so that they are appropriate and implementable.
Such a policy platform I feel is going to direct help SMEs who operate in my council ward and in the Lincoln constituency as a whole. A regional bank established in the East Midlands will allow business owners struggling to save enough money to help pay for key infrastructure or to get funding from existing financial institutions to access the short-term or long-term loan they need in order to facilitate their plans. Freeing up cash by getting corporations to pay their SME suppliers on time could help pay for the upskilling of employees or the possibility of updating computer equipment. Extending the Employment Allowance would reduce the NIC burden on small businesses and help working class people pay for care and support workers to look after their disabled and elderly relatives. A gender audit of SMEs can help identify where businesses need to develop HR and management practices that facilitate promotion opportunities for women who may have taken a career break to have and/or look after their children. Scrapping the quarterly reporting requirement reduces the pressure on those small businesspeople who cannot afford to take on an accountant to do the reporting for them. Keeping the regulatory climate stable post-Brexit will help agricultural exporters to the EU who need to keep the market open in order to keep their business viable. The Late payment comments may have grabbed the mainstream media headlines today, (with corporate organisations quick to deny the existence of a late payment system despite data being provided in the public domain that points quite empathically to the contrary) but I think Labour's overall approach, as outlined by Jeremy Corbyn today, does offer hope to small business owners who want to see regulatory and financial burdens eased in a realistic manner. It was far from "pie in the sky" thinking and I feel that as long as Labour continues to make the case for fairer business taxation and regulation, their "unreliable" reputation on the economy in the polls may begin to be eroded and for Labour supporters of all different persuasions, that's got to be an exciting prospect.