There are now more
small businesses in Britain than ever before. The government, and particularly
the Chancellor of the Exchequer, are keen to be seen to be "the party
of business"; Gordon Brown has specifically stated that he wants to
encourage a more entrepreneurial environment. Recruiters and career
advisers are continually saying that the future of work will be for
people to have "portfolio careers" and that the job for life is dead.
Instead, more and more people will be working for themselves, on short-term
contracts: implicit in that is that Britain will become a nation of
small-business men and women.
Labour has taken
many measures to ensure that business has flourished. Many business
leaders feel that they are now the true party of business; Terence Conran,
David Arculus and Russell Chambers have all come out in support of them
and of their increasingly europhile agenda. In office, Labour has taken
steps to increase business's ability to compete. By lowering corporation
tax and by allowing the Bank Of England to set interest rates, the government
has given businesses a stable environment in which to function. New
small businesses are surviving the critical first two years in ever-increasing
There are, however,
concerns, primarily amongst businesses which wish to trade in Europe.
Manufacturing industry has undoubtedly suffered in a world in which
the pound has been too high against the euro. Businesses, particularly
in the Midlands and North have folded, and, although unemployment has
fallen below one million for the first time in several decades, resentment
in these quarters has been strong.
Resentment to government
policy has also blossomed amongst the very smallest industries, by whom
the Chancellor has been accused of positively discouraging entrepreneurship.
IT contractors in particular are aggrieved. Gordon Brown has put in
place a piece of tax legislation which goes almost unnoticed amongst
the salaried majority, but which has caused uproar amongst the independent
contracting sector. IR35, brought in to ensure that contractors (who
are, in the government's view, effectively employees) pay employee's
National Insurance contributions. The regulation has been the cause
of bitter battles between independent workers (who view themselves as
entrepreneurs) and the government (who view them as tax dodgers.)
Amongst this sector
of the population Labour cannot expect much support, and it may in fact
be an area in which the Conservative party may make some inroads, having
promised to scrap IR35. The Liberal Democrats have promised the same,
although neither party has stated what the replacement will be. A threatened
"brain drain" by contractors has not, however, happened, and Labour
appear to be willing to ride out the storm. The government has, however,
recently hinted that the unpopular measure may be reviewed.
So what other measures
are the major parties putting forward to encourage further business
development? Labour will attempt to ensure that the "boom and bust"
cycle is kept under control, although how much they are actually able
to influence this in the face of a growing US recession is open to question.
Labour's manifesto also highlights the fact that investment per worker
is markedly lower than in other G8 economies, and steps will be taken
to ensure that businesses are encouraged, through tax breaks, into spending
more on training.
As is well known,
the Tories are pledged to maintain the pound. They have also promised
tax cuts, perhaps in response to CBI Director General Digby Jones's
comments, that "the UK's reputation as a low-tax economy in which overseas
investors want to invest is under serious threat". Customs And Excises,
as well as the Inland Revenue, will also undergo a review. VAT regulations
are to be simplified, with businesses allowed a six-weeks grace period
to pay outstanding returns. The Conservatives have also stated that
they will work to increase the effectiveness of the World Trade Organisation,
which should benefit larger companies. They will also seek to renegotiate
the Common Agricultural Policy, which may breathe some life into the
struggling rural sector.
The Liberal Democrats
have elected to help the cause of business by improving its efficiency.
They have plans to scrap unnecessary business regulations and are also
going to bring in a Business Tax Allowance, which will work in a similar
way to a personal tax allowance and allow a small business £1500 tax
free income. Larger companies will make up the shortfall; in addition,
the LibDems strongly advocate an ethical business approach and would
put legislation in place to enhance shareholders' rights.
As business becomes
more and more free of tax regulation and seemingly petty rules, it will
undoubtedly become more successful. People are more likely to become
individual traders over the next few years, returning, perhaps, to almost
"cottage industry" status, not seen on a large scale since pre-industrial
revolution days. Along with this, however, must go the rights of individual
workers within business -- and in their mad scramble to ensure that
they are business-friendly, the three main parties are in risk of forgetting
that. They do so at their peril.
© Oliver Moor