Ed Miliband’s speech to the Federation of Small Businesses

I’d like to start by apologising for the changes to your timetable today.

I have come to you straight from the House of Commons where the Prime Minister made a statement about last night’s UN resolution on Libya and set out how the UK would play a part in implementing that resolution.

This is an approach that the Labour Party fully supports as part of an international effort to protect the Libyan people from the actions of the Libyan regime.

Given the commitment of UK forces, I thought it was right that I was in Parliament to respond.

I hope you will therefore understand the reason for the delay in arriving here this afternoon.

Turning to the business of your conference.

I want to offer my thanks to the Federation of Small Businesses – and your chairman, John Walker – for inviting me here today.

The Federation continues to make a huge contribution both to the national debate about the future of our economy but also day by day in its support and services to businesses.

And I particularly want to thank a company called Sentry Doors, in my constituency that I have been able to spend some time with, so I better understand how the small business environment looks from the inside.

It’s a great privilege to be given the opportunity to speak with so many of Britain’s leading small businesses, which make up such a diverse and vibrant part of our economy.

I come here today above for a dialogue with you.

We lost the election ten months ago and part of my job is to learn the right lessons and plan for the future.

What I want to do today is this:

First, explain how I understand the role of small business in creating the country I believe in.

Second, say something about my party and the journey I believe we need to go on to win the confidence of small business.

Third, highlight some particular issues that I have learned from you are important and chart how I hope we can move forward on them.

My beliefs

Let me start by saying something about why I am in politics because as someone who aspires to be the Prime Minister of the country, you deserve to know how small business fits into my vision for Britain.

My politics -and who I am-are defined very much by my background. The child of two refugees fleeing from the Nazis, people who saw the difference that governments could make.

People who out of the darkness of the second world war constructed a home for me and my brother.

My parents were not in business, although my father’s father was.

First in Belgium, including during the depression of the 1930s, and then in a small shop in London after the war.

I never met my grandfather because he died before I was born

But I do remember my Dad telling me what hard times he went through-and yet how devoted he was to his business.

Like most parents, my Mum and Dad taught me right from wrong, they taught me to work hard, but they taught me something else: that you had a responsibility to leave the world a fairer, more just place than you found it.

That is why I am in politics.

And what I know is that we cannot create that more just society, without creating the wealth that is necessary for it.

You are incredibly important wealth creators for our country and I salute what you do.

If we are to pay our way in the world and succeed as a country, all the evidence I have seen says our future success will come from small, fast growing enterprises.

But what I know also, from the time I have spent talking to small businesses, is that what you do is not simply about the creation of wealth, important though that is.

It is about something more.

It is about, in a different way, what my politics is about: ensuring that as many people as possible can have life which has meaning and fulfilment.

As I said at the outset, recently I spent some time with a firm call Sentry Doors in my constituency.

Run by Gordon Yates.

Gordon set it up in 1989 in a garage with just a couple of thousand pounds. He has grown it to employ about 60 people.

There is a huge amount of loyalty – flowing both ways – between the employees and those running Sentry Doors.

I’ll tell you as the local MP, I know Sentry Doors is part of the fabric of the local community.

And what you know is that the five million small businesses of this country are all part of the fabric of our communities.

Now Gordon told me that these days he would be able to get by renting out his building as a warehouse.

That might be an option with lower risks and with less heartache.

But he doesn’t want to because he feels an obligation and responsibility to the company, to the people who work for him and to what they do.

For him, and for millions of you, running a small businesses is not just about making a living, it’s a labour of love.

And when I think about the young people in my constituency just down the road from Gordon, I care about the meaning and fulfilment they can have in their lives

Whether we can pass on greater opportunities to them than their parents had.

What I call the British promise

And I want them to see the possibility of setting up a small business as central to that, a route to social mobility and a better life.

So that is something about me and why I believe so much in what you do.

Now let me say something about my party.

In the 1990s New Labour took the very important step of reaching out to business.

It was essential to showing we understood the modern world and cared as much about a good economy as fairness.

We spent a lot of time reaching out to big business then.

For me in the months and years ahead, I want to see an equal effort by my party, as we begin our policy review, to understand the needs of small business.

When we have been at our best as a party, in my view, it has been when we have stood up for those who are up against vested interests, private and public, that prevent them fulfilling their ambitions for their own lives.

Fundamentally, I hope we can be a party that has something to offer small business, because our values speak to your concerns.

Talking to small businesses round the country, I’ve heard the issues people are facing:

From the banks suddenly calling in the overdraft.

To big firms who delay payments to you by 60, 90, even 100 days.

To the government inspectors who didn’t seem to listen.

You tell me that too often small businesses have missed out because of a system which is stacked against your interests.

Let me say immediately, I know many politicians have come to this Conference and said they will do better on all of the issues I have mentioned.

Then failed to act.

I am not going to make you promises we can’t deliver.

What I do want to say is I will listen and then act where I can.

And as part of the listening process, we are establishing today our small business taskforce, led by Nigel Doughty with the FSB’s own Stephen Alambritis.

I have asked the taskforce to spend the next few months consulting with businesses from across the country on what gets in the way of you achieving.

It will report back to me and John Denham, Labour’s shadow business secretary, as part of Labour’s policy review.

Thirdly, then, let me say something about the wider context we currently face.

We need to get the macroeconomy right.

I won’t rehearse the arguments between us and the government, except to say, we do care about getting the deficit down and would have halved it over four years.

But I am worried about the Government’s decision to go too far and too fast.

The risks to growth are only too clear.

And we have seen only too often that it is small business that are affected first, and worst, when growth slows.

The squeeze on families’, on your customers’, living standards is a real problem for our society today.

And the impact of the VAT rise on fuel is only the most visible aspect of that.

For businesses the cost of loans – where they are available – are a serious issue.

Causing cashflow problems in far too many cases.

In the months ahead we need to address these problems.

But if we are to succeed we need to aim at more than simply getting back to business as usual before the crisis hit.

I think that starts with our finance sector and the way the banks work.

When even the Governor of the Bank of England says that banks are exploiting their customers, there clearly is a problem.

I’m concerned that the Govenremnt’s new lending targets won’t make much difference to how banks work with small businesses .

It’s precisely because of the difficulty of implementing lending targets that we proposed an independent small business adjudicator.

I still hope the Government takes up that idea.

But I also think these problems go back further and deeper than just the global financial crisis.

Britain’s banking sector has become too disconnected from the communities it serves.

We have a chance to address that with the Independent Banking Commission and as we consider how to dispose of the stakes we own in banks.

Here I think Britain can learn lessons from abroad.

The Small Business Investment Company programme in the United States has used government-backed guarantees to expand access to finance.

It has provided critical, early-stage financing to some phenomenal business success stories, such as Apple, Intel, and FedEx.

And in Germany, the KFW state bank has a strategic objective of investing in small- and medium-sized companies.

As part of our policy review, I want us to look seriously at whether we can make public-private models of financing work here in Britain, building on the

Enterprise Finance Guarantee – something the FSB rightly fought for.

Second, there are real issues in public procurement.

How government spends money is a key determining factor in the kind of economy we have.

Government should be leading by example.

But I know procurement can be so bureaucratic and complex that it effectively locks out small businesses from bidding for publicly-funded contracts.

John Denham, Labour’s shadow business secretary, recently met FSB members here in Liverpool.

One of the stories that stood out was of a family-owned small chain of nurseries effectively being excluded from tendering for local contracts to run nurseries by the high costs of certification.

And I know that story is probably reflected in hundreds of stories round this room.

I also know that there is a lot of concern about the impact deep spending cuts will have on procurement budgets, particularly in local government.

There is a danger they will choose to consolidate their purchasing from larger suppliers rather than supporting local small businesses.

So we will certainly focus on holding the Government to account over the next few years on the shared goal that small businesses should get an increased share of government contracts.

Let me say one other thing about the way government works with you.

We were right to introduce prompt payment terms of five days for businesses that contract with government departments.

But these are normally large firms.

I believe we should go further and require those firms to meet prompt payment terms of five days to the thousands of businesses with whom they sub-contract to deliver for government.

We must end the situation where government procurement works for big businesses but doesn’t do enough for small businesses.

I want to ensure that in every contract, government gives the same deal to small businesses as we give to large businesses.

And third, there is the issue of how government interacts with you – on tax, and on regulation.

I started by talking about my belief in social justice and wealth creation.

I know that sometimes the two appear to be in tension, particularly when it comes to the regulation of small business.

From the living wage to the end of the default retirement age, we can all see the benefits to society.

But of course you can see better than us the hit to the narrow margins under which you operate.

I’m not going to pretend that we can wish these tensions away, but I do want to say that I understand the need for balance.

I also understand that there is too much bad, and poorly implemented, regulation out there.

That is why the big issue at stake is about the very process of how government makes and implements legislation.

That is why I want us to do the thorough work with you through our taskforce on how we can make a difference.

And we recognise too the importance of a favourable, and simple, tax environment for small business.

That’s why we introduced HMRC’s time to pay scheme in Government.

A common sense, practical approach, to helping businesses manage tax bills.

Let me end with this thought:

I am fundamentally an optimist about our country and what it can achieve.

I see big challenges around us:

How we ensure that all families and not just a few, benefit from prosperity.

How we fulfil the promise to the next generation in Britain.

And how we protect the things people value in our communities.

Small businesses are central to all of these challenges.

That is why I hope we can have a successful dialogue between my party and you so that together we can meet our common goals for a prosperous and fair country.

I look forward to making this happen in the months and years ahead.