Ministers should set out a clear roadmap to help SMEs transition to net zero

This week Labour launched a series of net zero small business roundtables, the first of which I hosted with Scottish Labour leader Anas Sarwar and Scottish Labour’s finance spokesperson Daniel Johnson MSP in Glasgow.

Small businesses have spoken of feeling “neglected” with all the talk from governments seeming to be “pitched at larger businesses”. One woman business owner, who was also keen for women-led businesses to be on the radar of policy makers, said: “Businesses want to play their part. The question is what is it that you need to do? Governments need to work with small business owners to help prioritise what steps should be taken.”

The need for this is clear. Recently the FSB launched a new report, ‘Accelerating Progress‘, on how we must empower small businesses on the journey to net zero. The findings are stark: 56% believe the planet is facing a crisis, but only 36% of small businesses have a plan to combat climate change. Many firms do not have the capital or knowledge necessary to make investments in their sustainability. The British Chamber of Commerce found that only 11% of SMEs had started to measure emissions, though the majority want to play their part.

With small businesses making such a significant economic contribution across the UK, they will need to go further and faster. The FSB warns that “they will only be able to do this if they have adequate support from governments across the UK, and their local authorities” and that “mixed and poorly-targeted messaging in an already confusing landscape has undermined both the environmental and economic benefits of some of these changes to small businesses”.

Feedback from our meetings highlights that the barriers faced by small businesses are around cost, time and clarity. Small businesses don’t have large sustainability teams, and are often very time challenged dealing with day-to-day issues. The cost of getting it wrong can be a high price to pay. The demands for transition come as businesses continue to face higher costs from the supply chain crisis, fuel price hikes, staff shortages, the impact of the summer’s pingdemic. And after 18 months of significant disruption, the government’s answer to businesses is to impose a jobs tax.

It cannot be right that just as businesses are getting back on their feet, the government chooses to make life harder, not easier, for businesses. While the government acts as if we have “bounced back” to pre-Covid times, the reality is far from business as usual. Businesses also face high debt levels that they didn’t have pre-Covid. The level of stress is worryingly borne out in latest ONS statistics showing that in each of the last three quarters business deaths have soared to over 100,000 business deaths across the UK.

Small businesses play a critical role in our economy, our communities, and high streets right across the UK. We want our policies to reflect that. Chancellor Rachel Reeves’ recent visit to Stockton to meet with business leaders and shop owners is just one demonstration of the kind of outreach Labour is doing to hear the concerns of local businesses and look at solutions. At party conference we announced that a Labour government would scrap business rates entirely and replace them with a more modern business taxation system that levels the playing field and boosts our high streets. The Budget bottled the full review of business rates that we urgently need and that all major business groups have called for many times.

Small businesses are being asked to transition without clear advice or guidance about the steps they should take and being asked to do so whilst dealing with high levels of debt, the cost of living crisis and ongoing staff shortages. This cannot go on; we need to see long term planning that boosts business confidence. Labour’s climate investment pledge is a big step in that direction, investing an additional £28bn a year to 2030 mobilising businesses and financial institutions behind climate action. It’s also crucial for growing our economy, which we must do if we want to get out of the Conservative high tax, low growth cycle they have trapped us in.

COP26 has shown that there is huge ambition for change from citizens and businesses who want to do the right thing. Now governments must step up to meet the scale of that ambition. It’s time for ministers to heed calls from small businesses for a clear roadmap to help them make key decisions with confidence, and with a clear plan to go with it. The costs of climate change will be greater if the government do not invest now. And it’s through having a long-term plan that will give businesses the certainty they need to invest, and the growth and jobs our economy needs.