‘Here’s a Labour plan for business that can win over family firms’

If you wandered down your local high street and popped into the shops this weekend, there is a very strong chance that you visited a family business. While family firms sometimes go under the radar, family businesses represent nine in ten private sector companies and are the engine room for growth in the British economy.

In total, the sector contributes £225bn in tax per year and employs around 14 million people. That means whoever is in No 10 – and No 11 for that matter – after the next general election will need to take notice of family businesses and make sure their specific needs are looked after.

Labour politicians have spoken repeatedly about long-term growth and responsible business. These are things that family businesses embody, and the two groups appear to have shared goals, not least the sector’s focus on long-term planning and its commitment to the communities in which they operate.

In Family Business UK’s (FBUK) very first ‘family business manifesto‘, we have identified three areas in which more needs to be done by policymakers to unleash the potential of family firms.

People are at the heart of family firms – so skills are key

First, people. For family firms, people are at the heart of everything they do. And with an eye to the long term, they are looking to train up the next generation for fulfilling careers of the future.  

In a bid to drive skills and apprenticeships, FBUK has called for a future skills fund, which is similar to Labour’s growth and skills levy. Both policy recommendations recognise that the current apprenticeship levy system is wasteful and doesn’t deliver real investment in skills where needed, meaning that there is a general lack of uptake from the business world.

FBUK would also like to see more from all political parties on encouraging upskilling and career-long learning. With people staying in the workforce for longer, and the pace of technological and environmental change, we need to support more people to retrain and get the skills they need to continue to work. 

Any industrial strategy must deliver for the whole business community

The second area in the family business manifesto is growth. To support long-term thinking and investment, family businesses need to see a long-term industrial strategy from the government.

Labour first published its own industrial strategy for the UK in 2022. Shadow Business Secretary Jonathan Reynolds has since declared: “The Labour Party’s central mission is to deliver growth that makes all parts of our country better off. Growth that every family and business will benefit from.”

While we agree with the sentiment, we must ensure that any industrial strategy delivers for the whole business community and doesn’t create winners in certain sectors or business types. That must include a standalone growth and support strategy for mid-sized companies, who are all too often overlooked and fall between the gaps in policymaking.

We must support family firms to transition between generations

Third, is ownership. Continuing to build on a legacy and ensure a smooth transition from one generation to the next underpins everything in a family business. Wanting to pass on a healthier, stronger business is the core driver for many.

To be able to do this, family business owners and their successors should not be unfairly penalised and, frankly, disincentivised. In reality, that means business property relief, a relief in the inheritance tax regime, must be maintained in full. Without this measure in place, we would see thousands of family businesses having to shut up shop, creating an incredibly negative impact on their employees and the local economies they operate in.

If we are going to build the industries of the future in Britain, a goal Shadow Chancellor Rachel Reeves has continually expressed, then we need to make the future more certain for family firms. Backing these initiatives is essential if a future Labour government is serious about meeting its ambition to build a resilient and growing economy, which will provide exciting opportunities for the next generation.