With somewhere more than four million small businesses in the UK, the SME vote is a vital one for any party serious about getting the keys to number 10. Adam Tavener goes through who is promising what, and more importantly what will really make a difference.
There is no doubt that access to growth finance has been a key theme of the coalition engagement with the SME community. This has, of course, culminated in the Small Business, Enterprise and Employment Act, and it's radical reshaping of the relationship between banks, businesses and alternative funders. It is unlikely that whoever takes over at BIS and The Treasury will be able to replicate such an elegant, simple and cost effective piece of legislation, and the outgoing ministers and their teams should be congratulated for this. Critically, however, the new incumbent must see this through to delivery, and the danger is that it will get lost in a whirl of new initiatives, only to resurface much later in a highly watered down form.
Since this was a Tory/Lib Dem initiative one has to suppose that both parties will want to see it pushed through to delivery. Less certainty surrounds an incoming Labour Secretary of State. As noted earlier, a new broom may well have less inclination to deliver on initiatives instigated by their predecessor, so we have to conclude that, in this respect, there is more certainty from a Tory or Tory led administration.
Labours proposals around the British Business Bank (BBB) are interesting, primarily because it is already delivering good things. Their plan to significantly expand its role and importance in the heart of the economy sounds intriguing but risky. Presently its effectiveness can, in part at least, be put down to the fact that it is small, with a firm focus on delivering a limited number of initiatives, and culturally acts like a business in its own right. If this is scalable then an expanded BBB would indeed be a good thing. The risk is, however, that it becomes just another department and loses its cutting edge.
It is only a personal opinion, but I do believe that the chronic uncertainty and national instability from a tie up between Labour and the SNP would be unequivocally bad for the SME community. The inevitable tension between the nationalist agenda and a government trying to run the nation as a whole would inevitably force all sorts of illogical compromise in order to get even the simplest of things done. It is likely that the emphasis would shift from a pleasingly pragmatic and realistic one that we currently have, to an ideological focus whose goal is popular support rather than sensible legislation. The same could be said of a tie up between the Conservatives and UKIP, although I believe that to be a far less likely scenario.
In the end the business community, small, medium or large is a pretty resilient thing, but if a government wants this group to be the powerhouse of the economy it must understand the nature of business itself. For me the focus would be;
- continued low interest rates
- continue and expand the work done around access to growth finance
- roll back pointless regulation
- continue and build on initiatives to encourage innovation
Adam Tavener is chairman of Clifton Asset Management, the innovators behind the Pension-led funding brand. Tavener and Clifton were the catalyst for the creation of the Alternative Business Funding (ABF) collaboration and non-bank funding portal.