Labour manifesto: ‘What it means for small business and the self-employed’

Overall, the Labour party’s 2024 manifesto is the most business-friendly and business-aware manifesto that has been produced in a long time by any of the parties. There is a coherent theme in there. Labour understands that there is no contradiction in being both pro-business and pro-worker.

They understand that they are two sides of the same coin and that coin, to stretch the metaphor, is prosperity.

Business isn’t just big business. It is small business too. And small business isn’t just the high street but is a key part of it. Also, small businesses cover the self-employed too, many of whom will also be providing goods and services, and quite a lot of services in-fact to big business too. So while the business world is as broad as it is wide, it is all inter connected and sometimes a delicate eco-system that adapts and changes.

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Tax and employment policy moves more slowly in this country. It has a tendency to lag behind the everyday realities that people face. 

The high street versus on-line shopping is one area where this is true. Another is how people work. There are few jobs for life outside of the public sector (and less so there too). There is a mix of permanent work, fixed term contracts, freelancing, contracting as well temping and gig working. 

But most of the current UK employment and tax policy is geared solely around single employment and usually for one company. That doesn’t reflect the reality for millions of workers. Modernisation of this is key to generating wealth – and that is what the business policies in the manifesto are focusing on. 

So what does the manifesto mean for small business?

Replace the unfair system of business rates

As noted, the High Street, having a shop front and paying high street business rates is so 20th century. The tax system and tax policy in this country has a tendency to lag behind the everyday realities that people face. The high street vs on-line shopping is one area where this is true. The obvious candidate for more business rates will be the big on-line retailers, but Labour will need to tread cautiously to ensure it doesn’t step on the toes of small businesses and entrepreneurs.

⁠Improve access to capital removing the barriers faced by women and minorities

This is implicit in the manifesto. Much has been made about the gender pay gap, but work in the Labour movement has been done to highlight that there is also a gender finance gap. That women find it harder to borrow money and obtain finance. To have a prosperous economy it makes sense to liberate these workers.

Grow the co-op economy

Though born in the UK the co-op sector is huge in Europe particularly around the agricultural sector. In this world of gig work and small business the co-op economy needs be more than a retail offer. Expect the co-op to be developed to enabled to allow businesses to work together in sectors and share costs and services. 

One area tipped for development will be union-coops which will link with self-employed workers. Through the co-op economy expect also to see a reform in finance, one idea to watch for will be legislation to allow Mutual Guarantee Societies to operate in the UK as they do in Europe.

Small business procurement

Labour says it wants small business to be included on all government procurement bids. There is a problem of scale and time. Small businesses don’t always have the time (and return on their time) to chase these contracts down as they invariably go to bigger firms. On the cards is firms joining up through co-ops to do this. 

Preston City Council has shown how this can be done successfully, so Labour can build on this experience and use it elsewhere. The other dividend for Preston has been that they have used lots of local firms and kept wealth inside the town.

Reinvigorate the high street with banking hubs

We are at the tail end of a generation who still use High Street banks, while the banks themselves may now see branches as uneconomical as an industry they still have a responsibility to their customers. Expect some regulation urging or compelling banks to co-operate.

Remove export barriers to trading

Sadly Labour won’t be undoing Brexit, but the problems that it has created need to be addressed. While we can’t necessarily tackle the additional red-tape at destination countries we need to help businesses engage from our side. Again it is a key link with driving up prosperity.

Tackle late payments, the scourge of small businesses and the self-employed

Every party looks at this and talks about it, but aside from warm words nothing ever seems to get done. But there is a possibility that this Labour government will look at the Freelancing Isn’t Free Act that is in place in New York that has helped self-employed workers there. Labour doesn’t need to reinvent the wheel it can use and adapt existing schemes that work.

⁠High quality apprenticeships and new technical colleges to create the skilled workers businesses need

In the tech and engineering sectors as an example there is a shortage of skilled workers. A green economy cannot be built without the skilled workers to do. And we have a shortage. Hopefully Britain will be able to set aside its snobby attitude against engineering and tech and become once again the workshop of the world.

Energy prices stability through Great British Energy

Energy showed itself to be a variable that business couldn’t control. The situation where pubs and outlets close down because they can’t afford the heating and energy costs is ridiculous. Hand outs and subsidies are a short term fix, Labour’s plan is to build a long term solution with a new Great British Energy company.

⁠New legislation to improve working life will be passed in the first 100 days after consultations with business, unions and civil society

Some suggest that we have a 1950s welfare and employment system based on jobs for life and an employer, whereas we have 4.2m self-employed, millions also in temporary jobs. There is a need to find a proper balance between tax, employment rights and risk. While this has been, quite rightly, a big topic with the unions, most of the workers affected aren’t unionised. 

So, expect a push to improve workplace rights and growth in trade union membership to uphold them, particularly with the smaller unions that specialise in sectors. Labour inherits a mess of umbrella companies, zero hours contracts and off-payroll working (the revised IR35). On the agenda could be the introduction of the proposed Freelancer Limited Company as a way of cutting the Gordian knot. 

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The principle that some workers are taxed as employees but without employment rights will be key. Expect business to adjust how it engages workers. The problem Labour will have is that it could try to apply a single measure across a broad workforce and in practice may find that it will take more than 100 days to solve the puzzle.

Labour does plan to strengthen rights and protections for self-employed workers, including the right to a written contract, action to tackle late payments, and extending health and safety and blacklisting protections. 

These are specific things that Labour Business has campaigned for. The principle is that there are definite rights at work as well as employment rights. In particular that is the right for a contract and the right to be paid in time. 

To back these rights up will be reform of the trade unions act to allow the self-employed to be better represented, for instance on chasing late payments, dealing with health and safety, bullying and discrimination in the workplace.

If this is Labour’s business plan for the economy, then it is a winner, it is solid, thorough and innovative. That is how businesses succeed.

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