How SMEs And Startups Are Impacted By UK Political Manifestos

With the General Election scheduled for July 4th, a substantial number of UK SMEs are expressing worries about potential changes in government policy. Employment Hero’s survey found that 36% of these businesses are uneasy about the election’s outcome.
 

Business Concerns And Requests

 
Many SMEs are uneasy about potential new policies that could disturb their current operations. The survey shows that 42% are concerned about disruptions to their business models, while 40% are apprehensive about encountering more operating costs. Also, 26% of respondents are cautious of an increase in regulations that could complicate their daily operations.
 

What Are The Top Parties Proposing On Their Manifestos?

 
From a business, and SME development perspective, this is essentially what the main parties’ manifestos cover…
 

Conservatives’ Approach to Small Business

 
The Conservatives are focusing on tax reductions for the self-employed by planning to remove the main rate of self-employed National Insurance. They also want to keep corporation tax steady and are considering tweaking the VAT registration point.

Their plans include more efficient management of late payments and a significant investment in infrastructure like internet, roads, and rail, which should help small businesses expand. They’re also offering more free childcare hours to help working parents manage both family and business needs easier.
 

Labour’s Vision For Small Businesses

 
Labour promises to keep taxes steady for workers and to modernise tax collection to close loopholes. They’re interested in improving the skill levels of the workforce by revamping training systems and colleges to better meet business needs.

Labour also wants to make sure that workers have secure contracts and fair wages, which they believe will increase productivity and stability within small companies. They’re also looking at ways to make funding more accessible and to support local businesses with better public contract opportunities.
 

Green Party’s Eco-Friendly Small Business Policies

 
The Green Party plans to raise the minimum wage and adjust National Insurance to alleviate financial pressures on small businesses. They advocate for strong employment rights across all sectors and propose to align investment income taxes with regular income taxes to fund extensive training programmes in green technologies. They also want to help small businesses reduce their environmental impact through grants aimed at energy efficiency.
 

Liberal Democrats’ Plans For Small Businesses

 
The Liberal Democrats want to bring tax relief by increasing the personal allowance and want to improve how tax rules are put to action as a way to prevent avoidance. They want to help small business growth by increasing investment in research and development and simplifying how businesses trade internationally. And then, they also suggest a new training levy to widen the range of training options available to small businesses.
 

Reform UK’s Small Business Strategy

 
Reform UK intends to ease the tax burden on workers and small businesses by raising the personal income tax allowance and lowering VAT on energy. They propose eliminating business rates for small businesses on the high street and creating zones where new and growing businesses can enjoy tax breaks.

Also, they want to simplify the extensive tax code and impose a tax on large online businesses to level the playing field for small businesses.
 

Employment Hero: What SMEs Expect From A New Government

 
In response to the worries SMEs have, Employment Hero has compiled a manifesto with SMEs’ desires from a future government. In a nutshell, they covered:

Advanced tech adoption: Keeping up with global competitors is essential.

Remote work facilitation: Businesses report that remote work can improve employee productivity.

AI training programmes: Preparing the workforce for technological shifts is crucial.

Streamlined regulations: Minimising administrative loads to enable smoother operations.

Workplace burnout measures: Creating policies to help employees balance work and life.

Improved financing avenues: Improving the accessibility of funds to drive growth and stability.
 
Kevin Fitzgerald, UK MD of Employment Hero, commented, “SMEs represent 99% of all businesses, contribute 50% of global GDP, and provide over 60% of all job opportunities, their concerns are significant for any Government aiming to secure support. Despite this, there have been no substantial pledges to ensure the growth and stability of the SME community.

“As we approach the next election, it’s essential that any aspiring Government understands and addresses the unique challenges faced by SMEs. These businesses aren’t just economic entities; they are the lifeblood of our communities and a significant driver of innovation and employment.”
 

What Else Are Experts Saying?

 
After asking experts outside of Employment Hero what the UK policitcal manifestos mean for startups and small businesses in the UK, this is what they said…
 
Andrew Martin, CEO and Founder of SMEB, commented on the Labour party manifesto, which included a pledge to support new technology, including Open Banking and Open Finance and ensure a pro-innovation regulatory framework:

“One of the biggest hurdles to the widespread adoption of Open Finance in the UK is that nobody knows about it. We need a new approach that educates consumers and businesses on its benefits.

“As well as educating the market, we need to expand the functionality to include all bank activity, rather than limiting it to data sharing. Finally, we need industry champions to drive the project and raise the awareness it needs to be a success.”
 
Mark Boost, CEO, Civo, said:

“It’s great to see Labour’s commitment to giving SMEs here in the UK greater access to government contracts. For too long, competition for these services has not been on a level playing field, with standards less rigidly applied to Big Tech businesses. We saw this with data sovereignty requirements for cloud services, only for AWS to win the contract.

“Unmooring the public sector from Silicon Valley can only be a benefit. The UK has one of the strongest tech sectors in the world, an industry that continues to grow despite recent economic challenges.

“Why not capitalise on the talent we have over here, instead of awarding huge contracts to large US tech confirms that have no stake in the direction of the nation.”
 
Volodymyr Levykin, CEO and Founder, Skyrora, on the Labour Manifesto:

“A thriving space sector is key to fostering economic growth and job creation for decades to come. Support and funding for UK companies in the form of both public and private investment will help cement the country as a leader in the space sector.

“Not only will this help to provide sovereign access to space, but bolster and future proof our national security and defence capabilities, which will only be furthered by greater support for defence investment for UK businesses.”
 
Mark Lubbock, Partner, EIP said:

“The Labour Manifesto includes an interesting proposal to create a National Data Library and to support AI development by creating a Regulatory Innovation Office to deal with new technologies. It is unclear what the role of a National Data Library would be –would it be a repository of “national data” which would be challenging given the volume of data generated daily and it’s unclear what how data might be regarded as “national” – or might it be a precursor to the creation of new intellectual property rights focussed on the protection of data, something which the existing array does to some extent but often imprecisely.

“The proposal to create a Regulatory Innovation Office sounds like the EU’s proposals to set up the European AI Office which is intended to implement the EU AI Act, which implies that a Labour Government would depart from the existing Government’s approach to AI regulation and adopt a more top down model such as that favoured by the EU. These proposals would appear to be at a very early stage and the complexity of these issues suggests that it may be a while before we see concrete proposals but we will await them with interest.”

James Napier, Founder and CEO, notch said:

“Labour’s manifesto lacks clear support for startups, focussing instead on large sectors like steel and infrastructure. Their £7.3bn investment boost is already fully allocated, with £2.5bn going to the UK steel industry, which offers limited economic benefits.

“Redirecting this investment towards innovation-led startups could drive significant employment and economic growth. Startups require access to capital, yet Labour’s manifesto doesn’t adequately address this crucial need, missing an opportunity to support scalable employment and innovation.

“The Conservative manifesto continues existing policies, such as abolishing National Insurance for the self-employed, but doesn’t significantly support economic growth or job creation. Their promise to back entrepreneurs lacks concrete measures to match the risks that entrepreneurs take.

“Liquidity is key for startups, and it would be better to see policies allowing new businesses to reinvest profits without immediate corporation tax, which could support growth. While the Conservative focus on decarbonising the grid is commendable, there’s little on supporting individual businesses in their Net Zero transition.

“Ultimately, both major party manifestos recognise the importance of economic growth and innovation but fall short in providing actionable support for startups and small businesses.”