General election: what the party manifestos mean for small business

Rising costs and inflation, increased taxes and regulation, and reduced consumer spending have defined the last few years for small business owners. So with the 2024 general election fast approaching, it’s crucial that each of the main political parties present a clear plan to tackle these issues.

This week saw the major parties release their manifestos – outlining their plans if they were to win the election. But what did these manifestos have to say about small business matters? Read on to find out.

• Conservatives’ manifesto
• Labour’s manifesto
• Reform UK’s manifesto
• Liberal Democrats’ manifesto
• Green Party’s manifesto
• SNP’s manifesto

When is the next general election?

The next general election will be on 4 July 2024. In a surprise move, Prime Minister Rishi Sunak announced a snap election on 22 May, giving each party six weeks to campaign before polling day.

What are small business owners saying?

We recently surveyed 1,750 small business owners about their hopes for the next government. When asked which party they felt represents the best interests of small business, this is what they had to say:

• Conservatives – 22 per cent
• Labour – 38 per cent
• Liberal Democrats – 7 per cent
• Green – 6 per cent
• Reform – 11 per cent

However, 81 per cent of those surveyed said they’d consider changing their vote if they placed more importance on the needs of small businesses. With that in mind, we’re breaking down the small business matters included in each party’s manifesto.

What is the Conservatives’ plan for small business?

The Conservative Party is the current governing party – and has been since 2010. But the above results show that not all small business owners are happy with their policies. Now their manifesto has been released, let’s see how they’re hoping to win the small business vote.

Abolishing self-employed National Insurance (plus other tax changes)

The Conservatives plan to cut taxes for the self-employed, claiming they’ll abolish “the main rate of self-employed National Insurance entirely” by the end of the next parliament.

This accompanies plans to further cut tax for workers by reducing employee National Insurance contributions by another 2p, following on from similar cuts announced as part of the latest Spring Budget and Autumn Statement.

The Conservatives’ manifesto also states the party has no plans to raise corporation tax. As well as keeping the VAT registration threshold under review – and exploring options to “smooth the cliff edge” at £90,000.

This may not be enough, however, as 29 per cent of those we surveyed believe it should be raised to £100,000.

These changes could prove popular – with 27 per cent of of small business owners believing that reducing the tax burden should be the incoming government’s main priority.

Tackling late payment

The manifesto continued the party’s previous pledge to tackle late payments. As part of the Cash Flow and Prompt Payment review, the Conservatives want to improve the reporting around late payments, promote digital invoicing, and give more power to the Small Business Commissioner.

Secretary of State for Business and Trade Kemi Badenoch said: “I know that late payments are a massive barrier to growth and I am determined to fix that.

“The measures we’re announcing will take a big step towards making sure SMEs get their payments on time, helping firms to grow and prosper.”

Data from our 2023 SME Insights Report shows the scale of the problem for small business owners with 54 per cent being owed up to £5,000 in late payments.

Investments in infrastructure

The manifesto lays out plans to invest in energy, transport, and digital infrastructure to help businesses grow. Some highlights include:

• plans to deliver high-speed internet to over 80 per cent of the country
• investing £4.7bn in smaller cities across the North and Midlands
• backing city regions with £8.55bn each to spend on local priorities
• improvements to rail travel across the country

This echoes the thoughts of the small business owners we surveyed, with 33 per cent calling for more investment in local infrastructure.

Support with childcare costs

Expanding tax-free childcare is another way the current government aims to support business owners and the self-employed – reducing the cost of childcare so business owners don’t have to choose between growing their business and their family.

The Conservative manifesto reveals that from September 2024, working parents of nine-month to two-year olds will be able to access 15 hours of free weekly childcare (an increase from the 15 hours currently available to those over the age of two).

And from September 2025, this will increase to 30 hours a week, for nine month olds up until school age.

There are also plans to further raise the threshold for losing access to Child Benefit. This will now move to a household income based system, rather than individual earning. The combined household income is set to be capped at £120,000 a year, at which point it will gradually be removed.

Our guide to tax-free childcare breaks down how to apply, eligibility, and how much you could receive as a small business owner or self-employed parent.

Maintaining triple lock pensions

During times of high inflation, there’s always speculation around whether the triple lock pension will continue. The Conservatives have announced the introduction of Triple Lock Plus, which will:

• increase the tax-free state pension allowance by 2.5 per cent – meaning the state pension is always below the tax-free threshold
• increase the state pension to £13,200 by the end of the next parliament

More lenient energy efficiency targets

In a surprise move, Prime Minister Rishi Sunak announced a set of changes to the UK’s net-zero targets – with the plan to deliver net zero by 2050. Highlights from the manifesto include:

• investing in offshore wind to deliver ‘low-cost, home-grown energy’
• ensuring that annual policy costs and levies on energy bills will be lower each year of the next parliament then they were in 2023
• maintaining the energy price cap
• allowing drivers to get a fair petrol price with Pumpwatch’s live prices
• household savings of £900 by giving households the choice of smart energy tariffs

It’s also important to note the Conservatives’ ‘plan for drivers’ which lays out how they’ll improve systems like 20mph zones, emissions charges, and low traffic neighbourhoods. With plans to also scrap the ULEZ expansion in London. They’ve shown they want to be pro-motorist as a party, which could benefit business owners that drive for work.

What is Labour’s plan for small business?

“Making Britain the best place to start and grow a business” is Labour’s ambition. But is this reflected in their manifesto? With the majority of the small business owners we surveyed planning to back Labour, we break down their plans for small business.

No tax changes

Labour have stated they have no plans to increase taxes on working people. They’ve said not to expect increases to National Insurance contributions, as well as basic, higher, or additional rates of income tax, and VAT.

They do, however, plan to cap corporation tax at 25 per cent. This could support small business growth through the ability to deduct capital investments.

Speaking of tax, Labour plans to ‘modernise’ HMRC in order to tackle tax avoidance. This will involve further increasing reporting requirements, as well as investing in new technology to increase their capacity. The overall goal here is to close the tax gap, which will better support the economy.

Addressing the skills shortage

Labour plan to solve the skills shortage by providing more training opportunities. One of their actions is to replace the current Apprenticeship Levy with a Growth and Skills Levy. They hope this will allow small businesses more flexibility in how they train their workforce – as well as access to a more skilled labour pool.

Another way they hope to address the skills shortage is through turning educational colleges into ‘technical excellence colleges’. This will align vocational training with the needs of businesses. In turn, they say this will create new job opportunities within local communities.

Improving workers’ rights

The Labour Manifesto lays out plans to remove zero-hour contracts and ban fire-and-rehire practices. This is alongside introducing a genuine living wage. These changes should raise employee satisfaction and productivity, which could lead to a more stable workforce for small businesses.

Growth and innovation

Labour plans to give more economic powers to regional leaders, as well as establishing local employment systems. For small businesses, this could make it easier to grow in the local market.

They also propose creating more stable R&D tax credits, as well as a new Regulatory Innovation Office, which could provide more funding opportunities for small businesses in the technology and innovation sectors.

And with 43 per cent of small business owners we spoke to believing it should be easier to access funding and grants, this could be a popular move for small businesses.

Supporting startup growth

Labour plan to make it easier for small businesses to access funding and investment. They want to achieve this by giving the British Business Bank a stronger mandate for investing in small businesses outside of London.

And by making changes to the Enterprise Investment Scheme and Seed Enterprise Investment Scheme, they say this will make them more effective at helping early-stage businesses.

Labour also wants to create a ‘Scale-Up Taskforce’ made up of government officials, academics, and industry professionals. They say they’ll focus on improving the policies that are currently acting as barriers to business growth.

‘Stamping out’ late payments

We know that late payments are a consistent issue for small businesses, so it’s no surprise that both Labour and the Conservatives have made solving the issue a priority. Labour plans to “introduce tough new laws to stamp out late payments and make sure more money gets to high street firms.”

To reduce the amount of late payments, Labour say they would make “big businesses report on their company’s payment practices in their annual reports” in an attempt to make larger companies more accountable and make sure that small businesses and the self-employed are paid on time.

This echoes the thoughts of the public, as 39 per cent of the small business owners we surveyed stated that the government should provide more guidance and financial support to those who are struggling with late payments.

Scrapping the business rates system

Labour is planning to replace business rates with a new system which ‘balances the burden and levels the playing field between our high streets and online giants’.

Labour say their plan will fill empty stores, encourage entrepreneurship, and incentivise small business investment, while reducing their tax burden.

Supporting small business exports

Improving the UK’s trade deficit and export performance is another priority for Labour. Since Brexit, small businesses have seen an increase in export fees and disrupted supply chains.

To try and change this, Labour are looking to remove some of the barriers associated with importing and exporting goods from the UK, by working with the EU to make things run more efficiently.

The goal is to expand these markets for British export businesses, while shaping new regulatory frameworks.

Labour say they’ll work with the Federation of Small Business to create a small business export taskforce, identifying practical methods for simplifying the process and providing the appropriate level of guidance for businesses.

Rejuvenating construction

Shortages in materials and skilled workers led to a slowdown in the construction sector in the last year. Labour’s strategy for turning this around is to:

• build 1.5 million new homes, creating opportunities for small builders and tradespeople
• strengthen planning capacity by hiring more than 300 new planners across the public sector
• reduce red tape in the current building planning system

Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said it’s “a good idea to promote regional growth and deliver new homes, but it’s essential that local builders are part of this process. By bringing SMEs on board with new town development this will ensure high quality and diverse housing is delivered, while also creating wider benefits, like vocational skills opportunities.”

Preventing a future energy bill crisis

After small business energy bills rose to unprecedented levels, Labour have explained how they plan to stop it from happening again. This includes:

• investing in clean and renewable energy through their Green Prosperity Plan, providing small businesses with low-cost energy
• supporting British manufacturers so they can compete with their European equivalents
• investing in energy saving measures like loft insulation
• establish Great British Energy, a public entity focused on lowering costs

Making public contracts more accessible

According to Labour, billions of pounds are spent on public sector procurement each year. They estimate that £30 billion could be ring fenced specifically for SMEs.

Labour are looking to introduce a National Procurement Plan which would give small businesses a fairer chance at winning public contracts. At least one SME would be shortlisted for each suitable contract, and they plan to reduce the red tape in the bidding process in order to level the playing field for small business owners.

What are Reform UK’s plans for small business?

Reform UK (formerly the Brexit Party) ranked third in our survey of 1,750 small business owners. Their manifesto includes the following:

• raising the income tax threshold to £20,000 a year (potentially saving the average worker almost £1,500 a year)
• removing VAT from energy bills
• raising the minimum corporation tax profit threshold to £100,000 – as well as reducing the corporation tax rate to 20 per cent (and eventually 15 per cent)
• abolishing existing IR35 rules
• raising the VAT threshold to £120,000
• abolishing business rates for high street small businesses
• creating SME Enterprise Zones for ‘left-behind’ areas, implementing a period of no tax for new or existing businesses that are creating jobs
• banning all ULEZ and low traffic neighbourhoods, and abolishing bans on selling petrol and diesel cars
• implementing an online delivery tax of four per cent for large businesses
• simplify the 21,000 page tax code

What are the Liberal Democrats’ plans for small business?

The Liberal Democrats’ manifesto is titled ‘For A Fair Deal’ – with the economy being one of their major pillars. With only seven per cent of the small business owners we spoke to believing the Lib Dems have their best interests at heart, let’s see how their proposals could affect small business.

Their manifesto states plans to:

• cut income tax by raising the tax-free personal allowance
• support  HMRC in hopes they can better tackle tax avoidance
• review IR35 reforms (also known as off-payroll working) to make sure the self-employed are treated fairly
• invest at least three per cent of GDP in research and development by 2030 – rising to 3.5 percent in 2034 (with a particular focus on small businesses and startups)
• boost trade for small businesses by bringing down trade barriers
• enforce the prompt payment code – requiring companies with more than 250 employees to sign
• replace the apprenticeship levy with a broader training levy
• protect triple lock pensions so they rise in line with with inflation, wages, or by 2.5 per cent (whichever is highest)

In addition to this, the Liberal Democrats plan to establish a new employment status: the dependent contractor, which will sit between employed and self-employed. This will provide entitlement to minimum earnings levels, sick pay, and holiday entitlement. There are also plans to review pension rules for those in the gig economy.

What are the Green Party’s plans for small business?

The Green Party have called on the government to ‘back small businesses to make the most of a fairer, greener economy’. But what details are included in their manifesto?

The Green Party plan to:

• increase the minimum wage to £15 an hour, regardless of age, with the costs to small businesses offset by reducing their National Insurance payments
• implement equal employment rights for all workers, including those in the gig economy, from their first day of employment
• ensuring that businesses which repeatedly break employment, data protection, and tax law will not be allowed to operate
• raise National Insurance to 8 per cent for people earning over £50,270
• repealing anti-union legislation
• invest £12.4bn in skills and training for workers – with a focus on the green economy
• reform capital gains tax to align the rates paid by taxpayers on income and taxable gains
• align tax rates on investment income with National Insurance Contribution on income
• investing £2bn a year into grant funding for local authorities to help businesses decarbonise

What are the SNP’s plans for small business?

So far, the SNP haven’t released an official manifesto. However, their website lists their policies ahead of the general election – yet not too much has been shared specifically about small businesses. But there are some policies that’ll impact SMEs, for example:

• opposing an increase in VAT and National Insurance
• continuing the Small Business Bonus, with 100,000 business properties paying no business rates
• supporting the digital capabilities of creative businesses by investing £1 million into a programme of workshops

What policies would you like to see to help small business owners? Tell us in the comments below.

More useful guides for small business owners

• Best business bank account
• How to do a VAT return
• What can I claim as expenses on a tax return?
• How much is business insurance?