What does Conservative majority mean for UKs small businesses?

Entrepreneurs have high hopes for the next five years, especially from a party that has repeatedly talked of SMEs being “the lifeblood of the economy”. The Guardian are reporting that businesses will also welcome a clear direction, as John Cridland, director general of the CBI, says: “With the votes counted, businesses will be relieved that the clouds of uncertainty around the possibility of a hung parliament have dispersed.”

Furthermore, most surveys suggested a high level of support for the Tories from business owners. Among them was Duncan Cheatle, founder of networking group, The Supper Club, who said: “The last government had a strong track record in supporting entrepreneurship and I’d expect a Conservative government to be even more so.”

Small business manifesto
The Conservatives set out their stall with their small business manifesto pledging to increase the number of startups to 600,000 a year by 2020. In truth, this isn’t a hugely ambitious promise, over 580,000 new businesses were created in 2014. However the manifesto had a number of pledges and new initiatives and these were not missed by entrepreneurs.

Among those who are impressed by the Tories’ approach is Emma Jones, founder of the small business network Enterprise Nation. “What we’d like to see now is the Tories deliver on their small business manifesto including more investment in superfast broadband for entrepreneurs, a review of benefits for the self-employed and a trebling for the startup loans programme,” said Jones.

Red tape
Business owners will be hopeful that a full-blooded Tory government will slash unnecessary regulations and paperwork, otherwise known as red tape. Business owners complain it is costly, time-consuming and prevents them employing people and investing. Indeed the Conservatives have pledged to reduce such regulations and save businesses £10bn during this parliament.

For senior managers such John Coldicutt, of accountancy software company KashFlow, this needs to be a priority. “With the Conservative party win, it’s vital the government continues its pledge to cut a further £10 billion from business red tape in the next five years,” he says. “One of the promises the Conservatives made during the 2010 election was to leave office having reduced the overall burden of regulation.”

Employers rights
Some employers want greater flexibility in their hiring and firing decisions, as well as a reduced risk of being taken to an employment tribunal. During the last government the Beecroft report suggested a radical shakeup of employment legislation, including a controversial proposal to allow employers to make no-fault dismissals or as it critics called them “firing at will”. This was overruled by the Liberal Democrats but now a Conservative government can look again at such changes. Serial entrepreneur and former cheapflights.co.uk CEO David Soskin, says new employment laws will make the UK more competitive. “On employment legislation, the Liberal Democrats were not helpful and prevented the full implementation of the Beecroft reforms. Now the Conservatives can implement those reforms in full. For digital business, this makes it easier to compete with the Americans,” he says.

The European question must surely be tackled this parliament and the prime minister has promised an in/out referendum on the issue. It’s an issue that divides business owners and change and uncertainty are never welcome. Graham Blakey, a director at life sciences business consult2deliver, is one of those fearing the turmoil of a Brexit.

“The election of a majority Conservative government concerns me given their pledge to hold a referendum on European membership,” he says. “Our company has several European clients and we are worried that changes to the UK’s EU membership will make our access to the European market more challenging. Furthermore, the life science sector in the UK which thrives on being able to recruit scientists with the requisite skills from across the EU will struggle if membership is relinquished.”

Late payment
Late payment remains a big issue for businesses and there are calls for the government to do more. The Conservatives have said they will strengthen the prompt payment code and improve transparency. However, there’s still a feeling among entrepreneurs that the UK’s late payment culture must change. “There’s a culture in British business of late payment – or to put it another way – saying one thing and doing another,” says Martin Campbell, managing director at fintech startup Ormsby Street. “A culture of integrity isn’t something that can be legislated for, but one which our politicians can lead by example.”

The Tories have pledged to invest £100bn in infrastructure during this parliament with high profile projects such as HS2 and the proposed airport expansions set to dominated the headlines. The former, a new rail link connecting London to Birmingham, looks set to go ahead and work should begin during this parliament. However, airport expansion remains a big question and one that will be increasingly hard to duck. In their manifesto the Tories promised to respond to the Airports Commission and increase capacity. However, it is not clear whether this means another runway at Heathrow, a bigger Gatwick or a distributed model using regional airports and high speed rail.

George Osborne no longer has the Lib Dems reining him in. Business owners can expect to see a raft of new changes including increases in personal tax allowances, national insurance holidays, a cut in corporation tax and a freeze on VAT. There will also be a review of business rates but how the government will tackle one of its major cash cows remains to be seen.

The chancellor’s plan is to cut taxes and boost jobs and reduce the UK deficit through growth. Michelle Wright, founder and CEO of social enterprise Cause4, says she believes incentives will help growing businesses. “The easing of the burden of employer national insurance contributions by making new businesses exempt from contributions on the first ten employees for two years, and for scrapping NI for those aged under 21 will also be seen as a positive for emerging new businesses,” she says.

Finally, the country’s economy must grow and so the fate of UK business owners is crucial to the nation’s success. The UK has many small businesses but all too few medium-sized companies and this impacts on jobs, exports, investment and tax revenues.

But businesses have been stifled in recent years by a lack of finance and fast growth entrepreneurs are looking for more support. Richard Prime, CEO and co-founder of recruitment finance company Sonovate, says the government must do a better when it comes to helping businesses gain funding. “The main issue facing small businesses in the UK is still the banks’ inability to lend – their risk averse nature is stifling the growth of the UK’s SMEs.”