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Small business are split between Labour and the Tories

by LLB political Reporter
26th Jun 24 11:00 am

1st Formations sent its survey in early June to tens of thousands of small businesses across its customer base.

Of the 800 that responded, the majority worked in the following industries: tech, e-commerce, finance, education, construction, hospitality, property, and retail.

Of 800 respondents to a new 1st Formations survey, 51% said they thought that the Tories are better for business (over Labour).

“Given that the Conservatives have historically been seen as the party of business, it’s actually quite surprising that they only got 51%,” says Graeme Donnelly, CEO and founder of 1st Formations, the largest company formation agent in the UK. “The fact that Labour is up to 49% shows how far that party has come since the Jeremy Corbyn era.”

Small business in the UK is often understated or overlooked by politicians, despite there being 5.5 million companies[3] of that size (with 0 to 49 employees). In fact, the latest figures from The Federation of Small Businesses[4] show that small business accounts for nearly three-fifths of the employment, and over a third of national turnover in the UK private sector; in other words: 13.1 million people and estimated turnover of £1.6tn.

Graeme continued by adding: “The resounding statement that SME owners feel SMEs are treated less favourably than big businesses by the UK government, should act as a wake up call to both Labour and The Conservatives. The lack of willingness by the government to lower business rates or VAT rates, coupled with Brexit’s disproportionate effect on SMEs ability to recruit talent to function effectively, is likely to be stifling economic growth that the UK desperately needs.”

To better understand the political priorities and needs of small businesses across the UK, the 1st Formations 2024 Election Survey asked owners a wide-ranging series of questions, such as: Do you think the UK government puts the interests of big business over SMEs? To this, 66% of the 800 respondents said ‘yes’, while 10% said ‘no’. The remainder said ‘unsure’.

The survey also asked owners: Has your business experienced a positive or negative impact from Brexit? 42% of respondents said ‘negative’, versus 9% saying ‘positive’. The remainder said ‘neither’.

Meanwhile, when asked: Are you experiencing a labour or skills shortage in your sector? 62% said ‘no’ while 38% said ‘yes’. Those who responded ‘yes’ were subsequently posed the following question: Is your business suffering from a lack of skilled workers from the EU? 58% said ‘yes’ and 42% said ‘no’.

Dr Sultan Salem, an economist at the University of Birmingham exclusively emphasised the importance of SMEs for the UK economy, “While all businesses are important contributors to the UK economy, it is important that we start focusing [more] on entrepreneurs and SMEs, who are traditionally more adaptable to new technologies and innovations, and [therefore more to likely to drive] substantial [growth] to the UK economy.”

“With the above in mind, Labour would seem a better choice for sustainable, long-term economic growth. Their proposed targeted support for small and medium businesses, including access to finance and local economic development. Their policies often include grants, subsidies, and support programmes designed to help small businesses thrive”, says Salem, who adds that analysis maintains a neutral, data-led stance and does not endorse any political party.

While the Conservatives’ long-established policy of tax cuts, deregulation, and free markets have helped the establishment of big businesses (including SMEs), the benefits created by these policies are not evenly enjoyed by all businesses, especially entrepreneurs, says Salem.

“Given the myriad of issues facing small businesses, re-electing Conservatives will only likely mean a continuation, or slight expansion, of existing policies, i.e. a continued focus on tax cuts and deregulation. While they may benefit some of the larger internationalised sectors, such as those that favour lower regulation, overall the benefits will likely be unevenly distributed. If the Conservatives’ policies have not worked well for the past few years, it’s hard to see how a continuation of these would make the difference,” concluded Salem.

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