‘With government borrowing rising, here’s how Reeves can ignite growth’

The Labour Government faces a £5bn fiscal deficit for the autumn budget – a significant reduction from the £22bn inherited from the Conservatives, but still demanding of decisive action. Meanwhile, new figures this week show borrowing costs are rising.

In time, Labour’s defence, energy and infrastructure investments may well help spur the growth our economy so desperately craves, but the Chancellor will need to take more immediate action to unleash growth in local communities across Britain.

Following her Mansion House speech, Chancellor Rachel Reeves has a unique opportunity to leverage the upcoming Small Business Strategy, recognising the over five million British small-and-medium businesses (SMBs) as the true engine of our economy, ready to drive prosperity. Growth from the bottom up and middle out if you will, rather than a reliance on wealth trickling down.

The frustration is palpable

Our new report, ‘Levelling the Playing Field’ – a powerful collaboration between Renaissance and Progressive Britain – is a direct plea from the heart of British enterprise. Insights from over 100 local businesses, investors, and experts across England and Wales reveal an unequivocal message: British-owned businesses are desperate to grow, innovate, and rebuild our communities, but need unwavering support, certainty, and vital liquidity to do so.

The frustration we heard was palpable. Beyond the difficult but necessary decisions on employer national insurance, business owners spoke of a bewildering maze of government support, or worse, a British Business Bank offering ‘higher interest rates than high street banks.’ Procurement processes felt ‘rigged against smaller firms,’ and the fury over being ‘ripped off by energy suppliers’ with no fair recourse was a common, heartbreaking refrain. As the owner of an independent music venue in Huddersfield passionately asked, “How can British businesses have confidence when we are being ripped off by energy suppliers?”

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A finance consultant in the North-East laid bare the stark reality: “Whether in the start-up or scale-up phase, smaller businesses face significant obstacles in securing affordable and quick short-term finance, typically ranging from £25k to £500k.” And from Port Talbot, a managing director lamented the disappearance of the “friendly local bank manager” – a vital lifeline for small firms seeking guidance and loans. These are systemic failures that Labour must and will address.

Yet, amidst these challenges, we discovered an immense wellspring of optimism and profound local pride. Participants spoke with passion about their regions’ unique strengths: “Tamworth is the centre of the UK’s ‘Logistics golden triangle’,” one proudly declared. In Port Talbot, the “proud manufacturing tradition is good for recruitment. One firm closes but another opens” – a testament to resilience. And in York, the call was clear: “Policymakers should articulate more clearly that Yorkshire is the ‘engine room of the UK’s food security’.” These are not just local boasts; they are blueprints for national prosperity.

Time to think BIG

So, how can Labour seize these incredible opportunities and truly ignite growth? Our report provides a clear roadmap, giving a powerful voice to these businesses. Our central recommendation is a bold call to action: the Government must ‘Think BIG’ and establish a Business, Innovation and Growth Unit.

This ‘BIG’ national hub would be a game-changer, coordinating seamless support for SMBs across the UK. It would provide the strategic leadership needed on procurement, finance, and industrial support, ensuring that smaller businesses are not just an afterthought, but are central to Labour’s growth narrative.

Imagine: BIG would co-create dynamic regional innovation clusters, starting with a North-East Innovation Corridor leveraging £350m of local R&D and investment, then applying these transformative lessons nationwide. It would fundamentally reform procurement to give smaller firms a genuinely fairer shot and dramatically improve access to finance – working together with the Treasury on vital tax incentives and developing easy-to-access debt and equity finance.

Crucially, BIG would simplify the very act of running a business in the UK. It would create a unified, intuitive portal for all interactions with Companies House, HMRC, and ICO, ending administrative headaches. It would establish a new system to help SMBs secure appropriate remedies for maltreatment by larger firms, ensuring justice. And it would powerfully support the Chancellor in her work to foster a truly pro-growth, pro-enterprise culture across all regulators.

The appetite for empowering small-and-medium businesses to deliver growth is not just evident; it’s a defining characteristic of our Labour Government and the wider Labour movement. As Small Business Minister Gareth Thomas MP eloquently states in the report’s foreword, “It is heartening to see MPs, Mayors, and activists within the Labour movement working closely with business communities” on proposals that “align closely with policies of this government.”

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This is a testament to the collaborative spirit already at play, with Metro Mayors Kim McGuinness, Richard Parker, and David Skaith, and MPs Alan Campbell, Sarah Edwards, Stephen Kinnock, Emma Foody, and Luke Charters having engaged directly with their local businesses to help shape these vital recommendations.

The synergy between smaller businesses and Labour’s growth mission is undeniable, promising a prosperous future. With foundations laid and vision clear, millions of businesses are ready to be unleashed. It is now up to our Labour government to seize this moment. The Chancellor can ignite this spark by thinking ‘BIG’, transforming the fiscal challenge into an unparalleled opportunity to build a stronger, fairer economy with local British businesses.

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