What the Queen’s speech means for SMEs
With the dust surrounding the General Election finally settling, attention has turned to analysis of the first fully-Conservative parliamentary timetable since 1996. The government has consistently identified SMEs as being crucial to the long-term health of the economy, so it was encouraging to see several measures announced that have implications for smaller companies.
Increased deregulation
Top of many CEO’s wishlists is continued reduction in red tape. As well as trying to boost employment (see below), there was some indication that the Enterprise Bill put forward by Sajid Javid – which aims to cut red tape for businesses by £10 billion over the next 5 years – may enter the Commons for debate.
The Bill proposals aim to support entrepreneurs and job creation. A central measure is the introduction of a new Business Conciliation Service, designed to handle business-to-business issues, especially late payments, without having to involve the courts. Unfortunately, this meant there was nothing specific about tightening late payment legislation to aid SMEs. However, any reduction of administrative burden will have a direct positive effect on profit margins.
An EU referendum
Following the Conservative manifesto, the Queen’s speech confirmed plans for an EU referendum to take place by the end of 2017 at the latest. The full impact of any such vote remains a debate of concern for SMEs, particularly if the British public were to vote to leave the EU.
The government has committed to trying to renegotiate a new relationship with other EU members, in the hope of improving trade between states. The concern surrounding the referendum has caused uncertainty in the markets which is having a knock-on effect for other financial institutions – SMEs will want a speedy resolution to the situation so that they can better plan for the future.
Efforts to boost employment
Plans to reduce the cap on benefit payments from £26,000 to £23,000 are intended to push household incomes for benefits claimants below the UK median salary, providing greater incentive to seek employment. Whilst SMEs may find this increases the pool of applicants for jobs, concerns have been raised about the need to create jobs to move into, and avoid increasing poverty.
A bill to counteract youth unemployment will enact an ‘earn or learn’ program. The specifics have yet to be unveiled, but are expected to demand young people attend college/university, or take up an apprenticeship to boost their skills and employability. Whether this equates to incentives for SMEs offering apprenticeships has not yet been announced.
Increased regional devolution
Accompanying the new HS2 rail connection are promises to continue the move towards regional devolution, giving metro mayors increased powers to encourage economic growth in their areas of influence. This may manifest as other rail network upgrades intended to better connect the nation outside London.
Improved accessibility is expected to greatly help SMEs in the North to extend their reach and connect with new markets.
Obviously the coming months and years will see more detail added to these plans, but at the moment there is plenty to please SMEs, particularly if the referendum could be brought forward to 2016 as speculated, minimising financial uncertainty. The only major factor missing from the Queen’s Speech was any mention of the previously promised Business Rates Review – hopefully this will be resolved soon.
