General election 2024: What it means for SMEs

We’re here to provide an unbiased view so you can make the most informed decision for your business.

This article will discuss a mixture of party's proposals on:

• Inflation

• Taxation

• Regulations

• Employment

Inflation

The Conservative Party plans to halve inflation. This will hopefully lead to more financial security for businesses and growth. If this does happen, here is what to expect.

There will be a shift in consumer behaviour, which could improve consumer confidence and spending power. Consumers will be able to buy more with the same amount of money. This results in a higher demand for goods and services.

For businesses buying raw materials, this will either decrease or stabilise the cost of purchasing materials, resulting in lower production costs. For companies in debt or who may be in the future, lower inflation rates can make debt repayments more costly. That’s because the value of money stays higher over time, meaning it takes longer to repay debts.

However, it’s hard to predict the impact on business operations overall as large inflation drops haven’t happened in a long time. The Conservatives have been under a lot of scrutiny by the other parties for this mission statement.

On the other side of the table, Labour's approach centres on resilient measures such as rebuilding economic security. Their plan to tackle this includes revising the spending of taxpayers' money and reducing government consultancy spending.

This can affect businesses looking for government support while these changes are being made, as we’re unsure of their confirmed budgets for grants and SME support. Therefore, less money will be given out to businesses during this time.

The Liberal Democrats want to support stability with SMEs specifically. They aim to partner with businesses to maximise opportunities, targeting:

• Investment

• Growth

• Employment

Their goal is to provide a stable environment for sustained business growth. The Lib Dems must determine their budget allocation for this initiative to see how many businesses they intend to support.

Tax

Labour proposes scrapping business rates and introducing a new modernised system. This would reduce costs for SMEs with physical premises.

The advantage of this new system would be lower monthly outgoings for businesses and, therefore, lower operational costs. This could ignite the spark for high street shops to create healthy competition while staying afloat. This may ease business cash flow and help with financial stability, which could help with business growth.

The only thing to add is that it needs to be carefully planned to avoid unintended negative consequences such as less money going into the community. Therefore, the benefits for businesses need to be balanced with the need for local and government services.

Similarly, the Liberal and Green parties also support reforms in business rates. The Green Party emphasises the exempt status of childcare providers, which would relieve current industry pressures.

Regulations

Labour shows a proactive approach to improving working conditions. This includes a plan to address issues such as:

• Late payments

• Zero-hour contracts

• One-sided flexibility in employment contracts, like "day one rights."

So, let’s start with late payments. Having more predictability for business owners' cash flow is always a positive. Timely payments can strengthen relationships with suppliers and clients alike.

The zero-hour contracts have received mixed reactions. There has always been an underwritten debate about stability vs. flexibility regarding the work-life balance. This approach definitely leans towards stability. So, what does it mean for business owners?

• An increased cost for the business owner as they must offer guaranteed hours or full-time positions.

• With more secure contracts, you may see reduced turnover. This means lower hiring and training costs and higher employee morale.

• If you’ve got a large workforce, you may need to invest in a more sophisticated scheduling system.

Now, onto one-sided flexibility contracts. As business owners, creating a fairer work system is a great idea. Implementing these changes may take some time and cost, though.

You’ll most likely face legal and administrative costs for changing employment contracts. But in the long run, you’ll see a reduced legal risk associated with unfair dismissal. The only disadvantage would be the reduced flexibility for adjusting work schedules on short notice. This may pose some challenges for hospitality and retail, especially.

Meanwhile, the Party of Wales is supporting a community and investment pledge. Helping industrial innovation in clusters reflects a regional approach to supporting SMEs.

Also, the Green Party seeks to provide grants for small businesses. They want companies to use this money to transition to green practices. This aligns with the growing importance of sustainability in business operations.

Their emphasis on decarbonising transport needs for independent traders underpins environmental changes for SMEs. This includes freelancers and self-employed people currently using a van to convert to electric. If you’ve got a large fleet of vehicles within your business, it will be interesting to see if this scheme will affect you.

Apprenticeships and Employment

Labour plans to transform the apprenticeship scheme into a "Growth and Skills Levy." They want to maintain the 95% co-payment for small and medium employers. This will increase the access to training employers can give their employees, and the funds from the levy may support innovation and R&D activities.

However, businesses may face additional costs and extra compliance requirements such as paperwork and reporting. If this is feasible for your business, it could be a way to get new talent onboard.

Labour also wants to establish a single-worker status. It ensures equal basic rights and protections for all, including pregnant workers. Their agenda includes:

• Raising wages, with an immediate increase in the minimum wage to at least £10 per hour

• Raising the national living wage

What does this mean for your business?

Providing equal rights will hopefully increase worker satisfaction and reduce turnover. But, you or your HR staff will need to manage some policy updates and training costs.

Meanwhile, the Conservative Party's approach focuses on their "Back to Work" plan, which includes their fit note reform. They want a more integrated work and employment support offer to help employers and employees to reduce sickness-related absences. This aims to streamline the process for employees returning to work after an illness. So, if you’re on the look-out for new staff members, it may get easier if the party wins.

However, more people looking for work could lead to lengthier hiring processes and a mismatch between skills and the roles people apply for.

However, suppose you’re in the next growth phase of hiring a large number of employees. You may have to consider your workplace dynamics and culture to prevent any problems with team cohesion and the morale of existing employees.

Other parties also offer diverse perspectives:

• The Liberal Democrats aim to simplify job creation and hiring processes.

• The Green Party focuses on improving employee well-being.

• The Reform Party proposes scrapping specific employment laws to reduce hiring risks. They argue that this will encourage businesses to expand their workforce​.

Trading and the EU

The Labour Party suggests a potential shift towards EU trade. Its policies emphasise worker protection and new regulations. While specific details remain vague, the party wants to promote EU visas.

The policy supports many sectors and indicates a possible willingness to ease certain restrictions​. This could indirectly benefit manufacturing and export businesses, creating a more flexible relationship with the EU.

The Liberal Democrats propose a four-stage roadmap to rebuild the UK's relationship with the EU. This plan introduces a duty of care for the environment and human rights within business operations and supply chains​​. These policies aim to create a stable and ethically responsible trading environment, potentially enhancing the UK's reputation and competitiveness in the global market.

The Scottish National Party (SNP) wants to reinstate free movement with the EU for performers, musicians, and freelancers. This reduces barriers that benefit businesses reliant on cross-border trade and collaboration.

On the other hand, the Conservative Party has introduced a post-Brexit scheme. It seeks to cut tariffs on products entering the UK to reduce import costs​​. The policy aims to make UK businesses more competitive by:

• Lowering the cost of imported raw materials.

• Streamlining trade.

• Reducing business costs.

Each party's approach to EU trade reflects their broader political priorities.

• Labour focuses on regulatory adjustments and worker protections.

• The Liberal Democrats on rebuilding relationships with a strong ethical framework.

• The SNP on reducing mobility barriers.

• The Conservatives on cost reduction.

These strategies highlight the potential for significant changes in the future of trade for businesses.

We hope you have found this article useful and have considered how each party's approach will affect you as a business owner.