Small business

By the time you read this, UK voters may be getting ready to cast their votes in the General Election, or may have already heard the victory speeches of the winning party.

Whoever wins, there are big changes on the way for small and medium sized businesses. Some of these changes will be welcomed by hard-working entrepreneurs, others will not.

The last eight years of Labour Government haven't been all bad from an SME viewpoint, despite good reasons for complaint. The biggest plus has been the strength of the UK economy which has provided opportunities for businesses of all sizes. This outweighs the obstacles that control-obsessed politicians and meddlesome officials have erected in the path of enterprise.

Some of those obstacles need to be demolished and various positive steps taken if SMEs are to prosper. The Federation of Small Businesses set out its 'six key principles for a General Election year' well before polling day was announced. These principles, which it wants the new administration to adopt, are freedom from red tape, combating crime, sustained investment in skills to boost productivity, a better business environment, employment policies that are business-friendly as well as family-friendly, and fairer and simpler taxes.

The FSB has said that the new government should take action on these issues 'to ensure that small businesses are at the core of the political agenda'. ACCA has itself published its manifesto for small business, highlighted in the last edition of accounting & business.

All the main parties claim to be business-friendly, but in reality they mostly want to tax and control businesses as much as they want to tax and control individuals.

The Conservative Party is the most pro-business of any party, a point proved by the successes of Thatcherism, but economic mismanagement in the late 1980s and early 1990s damaged their credentials.

The Conservatives stated during this election campaign that they believe employers and employees alike thrive best in a low-tax, low-regulation economy. If returned to power, the Conservatives announced they would provide this framework by 'reducing unnecessary expenditure' and 'introducing deregulation measures'. They would also maintain 'macro-economic stability'.

The Liberal Democrats said in their Manifesto for Business that 'without wealth creation, there is no wealth to spread'. They promised to tame regulation, which they said made it 'difficult for business, especially small business' to create wealth. This promise included a pledge to 'abolish the DTI'.

The Liberal Democrats also stated that they would 'reform business rates with an allowance for small businesses' and 'simplify the tax system to ease the burden on small businesses in particular'. What the document did not mention was one of the party's central pillars: a 50% income tax band for high-earners, which would discourage many entrepreneurs.

What of the Labour Party? In the eyes of many companies, ministers and civil servants in modern governments are infected with a disease that makes them compulsive legislators, and Tony Blair's second administration had a severe dose.

The Chancellor's March Budget contained numerous legislative proposals affecting SMEs which illustrated that point. The proposals appeared under positive headings such as 'building an enterprise culture', 'improving access to finance' or 'developing better regulation'.

But what a government gives with one hand it often takes away with another. So all of the Budget promises must be viewed in the context of the many anti-business measures implemented or proposed in recent years by the UK Treasury and other government departments - such as increased taxes, strict employment laws and new regulations.

Whichever party is in power, electors agree that it has a fine balancing act to perform. On the one hand it has to encourage wealth creation. On the other it has to redistribute some of that wealth and protect employees and society at large from unbridled market forces. Where voters cannot agree, of course, is which party can best achieve that balance.

Michael Imeson is editor of Business Money International and director of publishing agency Financial and Business Publications.