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Election day: best party for small businesses?

As Britain votes in election 2015, most are predicting a hung parliament. Which of the ‘big three’ parties offers the best deal for small businesses?


Labour wants to be seen as siding with smaller business, saying it will “put them at the “heart of government” through the creation of a Small Business Administration. Labour has made several promises in its business manifesto that may prove popular with small businesses:

  • cut and freeze business rates for over 1.5 million smaller business properties
  • strengthened rules on late payment
  • better access to finance for SMEs through a ‘British Investment Bank’
  • ‘Pay to Stay’ terms to remain as a supplier outlawed
  • better vocational education, with all young people studying English and maths to 18
  • support for the construction of HS2


Ed Miliband has promised that small businesses would be “first in line for tax cuts”, which would be prioritised “instead of cutting Corporation Tax again for the largest firms”. However, he did also promise to maintain the rate of Corporation Tax.

One promise that may not sit well with small business voters is the abolition of fees for employment tribunals, which have received praise for cutting the number of spurious claims.

Raising the National Minimum Wage to more than £8 an hour by October 2019 may also get mixed reactions, although tax rebates to businesses who sign up in the first year of a Labour government could soften the blow.

With an eye on Labour’s reputation for inept handling of the economy, Ed Miliband has vowed that a labour government would cut the deficit every year. The shadow chancellor Ed Balls has since said that he would eliminate the current budget deficit by the end of the next parliament in 2020.


Traditionally, the Conservatives cast themselves as the party of business and guardian of the economy. Claims that the Tories have helped create a record-breaking 581,000 businesses in the last year alone are augmented by a specific focus on small businesses, positioning them as the “party of the grafters” in David Cameron’s words. A dedicated small business manifesto intends to blunt criticism that their main focus is on big corporates. Promises include to:

  • keep taxes low and make an early review of controversial business rates, including an extension of the Small Business Rate relief
  • cut red tape, ideally by £10 billion in the next parliament
  • review the “disadvantages faced by the self-employed” including maternity pay and pensions
  • treble the number of start-up loans with a boost for the Funding for Lending Scheme and more money for government-backed Enterprise Capital Funds.
  • invest in infrastructure like fast broadband
  • keep the employment allowance (a reduction in national insurance contributions) until 2020
  • introduce a higher permanent level of annual investment allowance (AIA)


While such promises have been broadly well received, the Conservatives have struggled to overcome perceptions that they are more favourable to larger businesses. And in a recent Financial Times story by Sarah Gordon and Kate Burgess, Tim Ward, chief executive of the Quoted Companies Alliance, said that “The next stage is to concentrate on the ‘M’ in SME, I mean the midsized companies for whom temporary bank finance isn’t the long-term answer.”

In fact, more than 5,000 small business owners signed a letter saying that “A change now would be far too risky and would undo all the good work of the last five years,” which was published by the Daily Telegraph. But the Tory backbenchers campaigning for an exit from the EU could increase worries for UK businesses looking to expand, export and work overseas.

Liberal Democrats

The Liberal Democrats have tried to take the middle ground, claiming that they would be Tories’ heart and Labour’s brain. Given that the party is stressing their potential role as ‘kingmaker’ in a hung parliament, their offerings are more focused around modifying the other parties’ policies. However, their manifesto offers some carrots for businesses:

  • exemption from EU legislation on accounting, legal and administrative procedures
  • prioritise SMEs for business tax cuts
  • Land Value Tax to replace business rates
  • double the numbers of businesses hiring apprentices
  • increase public spending (once the budget has been balanced)
  • double spending on innovation in the economy
  • give young people aged 16 to 21 a discount bus pass to cut the cost of travel to work
  • allow high-skill immigration and conduct annual assessments of skill shortages and impact of migration on services
  • introduce 15 hours a week of free childcare for all two-year-olds, offer 15 free hours to working parents with children over nine months old


Other proposed policies may not be so popular: consulting on allowing employees on zero-hours contracts to request a fixed contract may decrease labour flexibility and discourage hiring for some businesses.

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