Why do we need SME4Labour?
99.9% of private sector businesses are SMEs, employing an estimated 15.7 million people, which is well over half the private sector workforce. It accounts for nearly half of private sector turnover at £1.8 trillion (2016). SMEs are not only the source of a lot of people’s livelihoods but also the dominant driver for growth and creativity in our economy. Every national business success – Amstrad, Virgin, Innocent, Ella’s Kitchen – began life as a small business; as a glint of ambition in their founder’s eye.
Yet start-ups face a huge amount of challenges. For instance, 7 out of 10 don’t make it through their third year, due to lack of working capital, business planning and entrepreneurial skills. This is an area where an active government can use its convening power to give support to ensure that startups can fulfil their potential.
An issue Tom Watson addressed very effectively was how we support microbusinesses – those that consist of less than 10 people. More than 8 million people work in more than 5 million such companies in this country – an existence that can be a source of great innovation and creativity, but can also be a very insecure experience as you fight to make a big enough impact to pay the rent or try to save for a mortgage.
There is a lot we can do to support micro-businesses like this to make their task a little easier, such as cutting red tape to ensure that larger organisations (often the clients of micro-businesses) pay their bills on reasonable timescales. They are a vital element of our economy and as Tom said, a vital section of what should be Labour’s support base. Highlighting that as a fact is but the first step – constructive engagement must come next.
We were good on small businesses in government and also, despite the media stereotyping, in opposition. Chuka Umunna as Shadow Business Secretary set up Small Business Saturday, which encourages people to buy ‘small’ one Saturday in December. Chuka’s bi-partisan initiative was a huge success, with £460m spent in small businesses last December.
It is an effort we need to continue and build on in this Parliament under Jeremy Corbyn’s leadership. To that end, we have set up SME for Labour: a group of Labour supporters from every part of the party to offer support, advice and policy suggestions to the Shadow Business team.
With a goal of a more sustainable economy at the forefront of our minds, we will look to cover a range of areas, including:
- How to make Micro-business a recognised Labour priority: for example by appointing a Shadow Minister for micro-business, and ensuring Labour councils have a dedicated leader for this group.
- How to catalyse start up growth: potentially by looking at progressive measures around investment relief; using unused council property as start up hubs; reducing red tape and providing greater practical support in managing processes; and using governments convening power to enable greater access to sectoral business mentors and advisers.
- Expanding the reach of small businesses: the world marketplace wants British expertise, of all sizes. However, at the moment, access to other markets tends to be the purview of the bigger organisations. Government can do more to open up and create access opportunities to new and bigger markets for our SMEs.
- A partnership economy: as big companies have been making significant deals with educational institutions, so SMEs could benefit as well. How could an active government help SMEs connect with those organisations to ensure they have access to the best in class skills that can help them grow?
In all of these areas, the Labour values of partnership, of internationalism and of the concept of a common endeavour are very much of benefit to business AND to working people of all backgrounds who want make the most of their talents and potential.
That, for me, is what Labour is all about – bringing each of us a life of success, by building a successful society, together. That’s what SME for Labour is about. It’s why I will continue to give my all to Labour under the leadership of Jeremy Corbyn.
Sonny Leong is the chair of Chinese for Labour and co-founder of SME4Labour