New strategy to help small businesses
It’s no secret that many small businesses have struggled in the wake of the pandemic and a cost of living crisis. In July, the Department for Business and Trade (DBT) published a new plan to support small businesses, offering a range of measures to support businesses in every community. These include more help for startups, targeted help for under-represented entrepreneurs and a clamp down on late payments.
What is the new strategy for small businesses?
Small and medium-sized enterprises (SMEs) are an integral part of the UK economy, with 5.5 million firms making up 99.8% of the business population. However, in 2023, just 40% of SMEs reported an increase in turnover – down 6 percentage points from 2022.
The plan cites “a decade of stop start policy, economic shocks and slow productivity growth” among the reasons for the hardships faced by small business owners, and focuses on accelerating SME growth. Furthermore, it estimates that just 1% growth each year could deliver an extra £320 billion to the UK economy by 2030.
The long-term goals of the initiative include reducing late payments, reducing administrative costs of regulation by 25%, improving access to finance and upskilling on digital and AI technology. A new Business Growth Service is proposed too, making it easier for SMEs to find the government advice and support they require.
Where is investment going?
New investment is promised to support:
- A new Fair Payment Code to prevent late payments, which are a major source of financial concern to SMEs and costs the UK an estimated £11 billion each year
- A simpler and more modern tax and customs system
- Expansion of start-up loans
- A £2 billion increase in the capacity of the ENABLE programme for SME lenders
- A £400m Investor Pathways scheme for business owners from under-represented backgrounds
- 13,000 extra police officers to tackle shoplifting and tool theft
- Permanently lower business rate multipliers for high street retail, hospitality and leisure properties with rateable values below £500,000
- Upskilling of workforces and development for leadership and management teams
- A £20 billion increase in UK Export Finance’s capacity
What does the strategy hope to achieve?
The measures laid out in the plan are intended to ease the day-to-day pressures on small businesses, promoting quicker and easier trade. It is also hoped that the strategy will make accessing funding easier for small businesses, increase footfall to high street retailers, empower leadership teams and ultimately deliver a significant boost to the British economy by 2030.
What’s next?
The government is expecting to begin the rollout of its Business Growth Service in 2025. In 2026, it will be working on an FCA roadmap on open finance and begin consulting SMEs and their representatives on late payment legislation. An update is scheduled for an unspecified date in 2027.
Starting and growing a business in 2025 and beyond
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