What Does the Snap Election Mean for SMEs?
Labour? Conservative? Lib Dem?
How small businesses vote is key for any election and the stakes are particularly high this go around. With just a little over a weeks to go, Theresa May has an opportunity to secure a conservative majority in government. This would allow her to enjoy stronger support from parliament and make Brexit negotiations both smoother and speedier. For the UK small businesses community less uncertainty and possibly better deals with the EU and other trade partners is an obvious positive, but is that enough to win the SME vote?
A recent YouGov survey for the Sunday Times showed the Tory advantage at just nine points, marking the first time in the campaign Mrs May’s party had a single figure lead over Labour. More importantly the poll reveals that an estimated 12% percent remain undecided. What are the battleground areas that might sway this group?
Gig-economy and self-employment are the hottest areas.
Labour has taken a tough stance on the “gig economy”, proposing changing the law so all workers can enjoy full employee rights from “day one” including temporary staff. They will also ban zero-hours contracts and unpaid internships, and raise the living wage to £10 per hour by 2022.
The Tories are planning to double the Immigration Skills Charge to £2,000 per year, increasing costs for small businesses that employ non-EU workers.
Mike Cherry, FSB Policy chairman, says: “The UK’s army of 4.8 million self-employed are the backbone of this country and should be recognised for the value they add both to the economy and their local communities. Small businesses and the self-employed will be vital to a successful post-Brexit economy. Politicians seeking their votes should be on their side instead of hitting them with extra costs.
According to their manifesto, the Tories have pledged to increase the personal allowance for income tax to £12,500, and raise the higher rate threshold to £50,000. They have also ruled out an increase in VAT.
Labour have promised a full review of business rates. It will increase income tax for those earning over £80,000 per year, but rule out increases to National Insurance or VAT. They will also increase corporation tax for large businesses, and bring in a lower small profits rate of corporation tax for SMEs. Labour want to scrap quarterly reporting for businesses with a turnover of under £85,000.
Reactions from the leading business associations CBI summarises “[the Labour manifesto] prioritises state intervention over enterprise” and the ICAEW comments “in theory there are initiatives such as a [state investment bank] that would help stimulate growth and raise productivity, but whether Labour can deliver on this is a big ask. Whilst some measures such as commitments to exempt the smallest businesses from burdensome quarterly tax reporting and reforms to business rates are positive, there is not much overall to help businesses, especially SMEs”.
A recent Guardian Small Business Report wraps up the three key parties’ position on the future UK-Europe relationship as follows:
The Conservatives are vowing to take Britain out of the EU and single market if they win the next election. They want free trade with Europe, planning to replicate all existing EU free-trade agreements with other countries and to pursue new agreements abroad.
By contrast, the Liberal Democrats oppose a “hard Brexit”, wish to remain in the single market, want a referendum on the actual deal struck with the EU, and will unilaterally guarantee the rights of EU nationals living in the UK.
Labour say it will put jobs and the economy first when negotiating a new deal, but that they accepts the Brexit referendum result. They will also guarantee existing rights for all EU nationals living in Britain while pledging to secure reciprocal rights for UK citizens.
Currently the UK is in a good position – the economy is growing, there is investor interest and private business confidence. Brexit remains important, but domestic issues are also important. SMEs are looking for a strong roadmap for overall economic growth, the parties all need to be clear on how they plan to achieve this in order to win the vote of the SMEs that are still undecided.