UK General Election 2024: Where do the Parties Stand on Supporting SMEs?

The SME sector, often hailed as the backbone of the British economy, is seeking clear commitments and tangible support from prospective governments.

All parties recognise how important appealing to SME businesses is. The manifesto of the current Con-servative Government proposes abolishing self-employed National Insurance plus reducing employee National Insurance contributions by 2p. Similar cuts had already been announced in the 2024 Spring Budget and in the 2023 Autumn Statement. Given tax is always a key concern, they promise to keep the VAT threshold under review – businesses have to register for VAT if their taxable turnover is more than £90,000. The Conservatives also intend to retain tax incentives that help small businesses to grow, namely the Enterprise Investment Scheme, Seed Enterprise Investment Scheme, Venture Capital Trusts, Business Asset Disposal Relief, Agricultural Property Relief and Business Relief. They also have no plans to increase to Capital Gains Tax. And, there are promises by the Conservatives to improve enforcement of the Prompt Payment Code and therefore help reduce the strain on cash-flow experi-enced by many SMEs. 

Labour’s manifesto outlines their plans for economic growth whilst recognising the unique challenges faced by SMEs including the self-employed. It has no plans to increase income tax, national insurance or VAT. They will cap corporation tax at the current level of 25%. And, like the Conservatives, they have pledged to address late payments to small businesses. They promise to “stamp out” late payments to small businesses by requiring big firms to report on their payment practices as part of the audit pro-cess. 

The Liberal Democrats’ manifesto pledges their commitment to addressing late payment practices. The party also says that it will create a fairer tax system and will cut income tax by raiding the tax-free per-sonal allowance. They will review the current Government’s off-payroll working IR35 reforms. 

The Green Party’s plans for SMEs include investing £12.4 billion in skills and training for workers with a focus on the green economy. They will invest £2 billion a year in grant funding to enable local authori-ties help business decarbonise. 

As the election campaign picks up speed, industry bodies like the Federation of Small Businesses (FSB) are closely monitoring the parties' positions and advocating for the interests of their members. In a recent statement, the FSB praised the increased attention being paid to SME issues but cautioned against empty promises.

The British Chamber of Commerce (BCC) has also put together it’s own five-point plan for immediate action by the new Government as part of its “Future of the Economy” manifesto. Shevaun Haviland, Director General at the BCC, said, “A General Election is an important time for our country, our econo-my and our businesses. The companies we represent are the drivers of economic growth and the em-ployers of millions of people. They need to know that politicians have got their back.”

As the general election nears, both the Conservative party and the Labour party are appealing to those in business, and SMEs in particular, to vote for them. Whilst most of the Conservatives’ commitments appear to be repetitions of announcements from the Spring Budget, the Labour party has included their “roadmap for business taxation”, going back to the October 2023 Labour Party Conference, in their manifesto.

Ultimately, the success of any party's SME agenda will hinge on their ability to translate manifesto pledges into tangible, well-implemented policies that address the real-world challenges faced by small and medium-sized enterprises across the UK.

Therefore, for the nation's SMEs, the 2024 general election represents a crucial opportunity to have their voices heard and their needs prioritized by the next government. As the campaign unfolds, these businesses will be watching closely, seeking the party that can truly deliver on its promises and pave the way for a thriving, sustainable SME ecosystem – the lifeblood of the British economy.

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