The recent King’s Speech focused on economic growth and the devolution of powers, strongly emphasising regional development and the empowerment of local mayors. However, there were concerns about the lack of specific measures to support small businesses and the self-employed. While the broader economic strategies may benefit these groups indirectly, many feel that the Government’s proposals fail to address their unique challenges.
Concerns for SMEs and employment law changes
The Federation of Small Businesses (FSB) has voiced concerns about the proposed changes’ impact on small and medium-sized enterprises (SMEs). One major area of worry is the Government’s plan to increase the national minimum wage, which could significantly raise small businesses’ operating costs.
Additionally, the introduction of an employment rights package promises to enhance workers’ rights, including first-day entitlements to sick pay, paternal leave, and protection from unfair dismissal. While these measures aim to support workers, there are fears that they could increase the financial burden on SMEs, particularly with the banning of zero-hour contracts and changes to probationary periods.
The Government’s commitment to implementing these employment law changes within the first 100 days of being elected raises further concerns about the potential for rushed legislation. Typically, new Government changes undergo a three-month consultation period, allowing stakeholders to provide input and for potential issues to be addressed. However, the expedited timeline for these reforms could mean less opportunity for businesses to adapt and prepare for the new regulations.
Call for broader business environment improvements
A recent survey highlighted that 81% of UK SMEs and large businesses believe an industrial strategy is crucial for economic growth. Furthermore, 73% of business leaders suggested that policy initiatives should focus on improving the broader business environment rather than catering to specific sectors. Despite this, only 53% of respondents felt that past Governments had effectively considered business needs when designing economic policies.
The Government’s plans for regional investment and empowering local mayors are seen as positive steps towards nationwide growth. However, the absence of targeted measures for small businesses in the King’s Speech has raised questions about the Government’s priorities. The FSB and other business advocacy groups are urging for more comprehensive support for small businesses, particularly in areas such as tackling late payments and reducing regulatory burdens.
The proposed Employment Rights Bill, touted as the most significant upgrade to workers’ rights in a generation, aims to create a new partnership between businesses, trade unions, and working people. While age equalisation in the workforce would benefit younger workers, it could further strain small business finances.
While the King’s Speech laid out ambitious plans for economic growth and regional empowerment, the lack of focused support for small businesses has been a point of contention. As the Government moves forward with its agenda, it will be crucial to balance workers’ needs with the realities SMEs face.
The forthcoming legislation will reveal more details, and businesses across the UK will be watching closely to see how these changes will impact their operations and growth prospects.
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