By Douglas Grant, Managing Director at Conister Bank
As signs of economic recovery were beginning to appear this year, it’s crucial to empower small and medium-sized enterprises (SMEs) with the support they need to flourish. SMEs are the backbone of our economy, driving innovation, creating jobs, and stimulating local communities. However, under Labour’s leadership so far, the rhetoric has been fiscal fearmongering as SMEs face the challenge of uncertainty that risks hindering rather than boosting their growth.
With the SME lending landscape rapidly evolving, Labour must urgently recalibrate its policies to better support these essential businesses. To foster resilience and sustained growth, we have outlined five key areas where Labour should focus its efforts.
1. Establish long-term government-backed regional financial support
The pandemic highlighted the critical need for accessible and sustained financial support for SMEs. While temporary measures were helpful, they fell short of addressing the long-term needs of businesses. Labour should focus on establishing enduring, UK wide sector-specific financial support that offers stability and predictability, rather than relying on short-term schemes prone to annual revisions. This would enable SMEs to better plan and invest in growth, innovation, and operational resilience.
Maintaining low corporation tax is also essential, as it allows SMEs to retain more of their earnings for reinvestment, fuelling job creation and economic expansion. Additionally, Labour must ensure that local governments, like Birmingham City Council, are adequately supported to prevent financial collapse. Keeping local authorities solvent but not reliant is critical, as they play a key role in providing essential services and infrastructure throughout the UK that SMEs rely on. By committing to these measures, Labour can foster a more supportive environment for SMEs, driving sustainable growth across the economy.
2. Use technology to enhance job performance
With rapid technological advancements, concerns about automation and digitalisation displacing jobs are common. However, technology can also be a significant driver of job creation and productivity enhancement. Labour should focus on leveraging technology to complement and support jobs rather than replace them. This can be achieved by investing in digital skills training programmes, improving digital infrastructure, and promoting technology adoption initiatives tailored to the needs of SMEs. By equipping SMEs with the necessary tools and expertise to effectively harness technology, we can build a workforce that is adaptable, innovative, and resilient, fostering economic growth and stability.
3. Enhance and develop new infrastructure
Infrastructure investment goes beyond building roads and bridges; it’s about creating jobs, boosting local economies, and providing the foundation for SMEs to thrive. For SMEs, reliable infrastructure means better access to markets, customers, and suppliers, which is vital for growth and competitiveness. The Autumn Statement provides an opportunity for the party to highlight clarity, consistency, and reliability in its infrastructure funding commitments, with a focus on timely execution and efficient resource allocation.
Prioritising infrastructure projects that directly benefit SMEs—such as upgrading digital connectivity, improving transport links, and developing business hubs—will enable these businesses to operate more efficiently and expand their reach. Additionally, the government should focus on sustainable infrastructure initiatives that align with the UK’s net-zero goals, fostering innovation in green technologies and creating new opportunities for SMEs in emerging industries. By committing to comprehensive and strategic infrastructure development, Labour can empower SMEs to flourish in well-connected, resilient, and vibrant communities, driving long-term economic growth across the country.
4. Optimising supply chains and ethical trade infrastructure
The pandemic and recent disruptions at key trade routes, like the Panama and Suez Canals, have highlighted the fragility of global supply chains. In an increasingly uncertain geopolitical landscape, it’s important for the Labour government to prioritise supply chain resilience and local business trading. By strengthening local supply chains, SMEs can reduce dependency on unpredictable global markets, lower transportation costs, shorten delivery times, and enhance sustainability efforts. A comprehensive analysis of current supply chains is needed to identify vulnerabilities, bottlenecks, and opportunities for improvement. Using data-driven insights and expert advice, the government can guide SMEs in optimising their supply chains, reducing risks, and increasing efficiency. This includes encouraging best practices in procurement and trade behaviour that adhere to strict ESG criteria, ensuring that SMEs operate sustainably and responsibly. By prioritising local sourcing and environmentally conscious supply chain strategies, Labour can safeguard against future disruptions and position SMEs to thrive in a market that increasingly values sustainability. This approach fosters a robust local economy where SMEs are integrated into resilient, ESG-compliant supply chains, driving economic growth and environmental stewardship.
5. Keep incentivising investment in UK SMEs
Access to capital is essential for SMEs to fuel growth and innovation. To attract investment into UK SMEs, the Labour government should not look to remove incentives for investors, such as tax breaks, investment schemes, and venture capital support. It’s crucial that Labour avoids raising taxes on the wealthy too much, as this could lead to a wealth flight, reducing the capital available for investment in the UK economy. Supporting the venture capital sector through established schemes like the VCT, EIS, and SEIS should be reinforced to create a continuous financial support system for SMEs, while appealing to investors who seek tax-efficient opportunities and attractive returns. By maintaining a balanced tax approach and creating a conducive investment environment, Labour can unlock capital, drive entrepreneurship, and catalyse economic growth across all sectors without deterring potential investors.
The success of SMEs is vital for the prosperity and resilience of the UK economy. Currently, the lack of cohesive and concrete economic planning is creating uncertainty. However, by focusing on the key areas identified and implementing targeted policies, the Labour government can use the Autumn Statement to foster an environment where SMEs can thrive, innovate, and significantly contribute to driving the economy forward.
