Responding to the King’s Speech at today’s State Opening of Parliament, Policy Chair of the Federation of Small Businesses (FSB), Tina McKenzie, said: “Today’s King’s Speech announcements fell short on the central challenge – getting growth back into the economy and ensuring wealth creation in every local community.
“Small businesses and the self-employed expected more on these, with their key issues instead overlooked. The Government’s 105-page briefing document doesn’t mention ‘small business’ once – suggesting Labour may not keep its promises to drive growth in the real economy.
“Apart from ambitious-sounding planning reform, there was no sign of delivery of the small business plan promised by Labour in opposition.
“The lack of promised legislation to tackle late payments and poor payment practices by bigger businesses to their small business suppliers is the most serious omission for our community and will hold back economic growth. This scourge hampers cashflow and stifles investment, and we call on the Government to look again and deliver on the promise it made.
“The move from an Apprenticeship Levy to a Growth and Skills Levy will risk small business apprenticeships unless the Government quickly follows up with its promised unequivocal commitment to protect Government co-investment for apprenticeships at small employers.
“Similarly, the Industrial Strategy Council commitment omits mentioning the need for a small business voice, to prevent it being dominated by large corporate incumbent interests.
“At the same time, small businesses are increasingly worried about the developing employment rights package. More than nine out of ten small employers say they are concerned about the prospect of increased costs and risks when they employ people, and there were no commitments within this to look after small employers who will struggle the most.
“It is small businesses which take on those furthest from work and who must be the solution to labour market participation. Small firms must be given the right platform to recruit those out of work, create new jobs, and expand. There was nothing on this today, which suggests early signs of complacency on the need to back small businesses to resolve economic inactivity.
“The Government has before pledged to consult widely and openly on measures it has announced, and FSB will be working intensely on this over the coming months, and helping our community to deal with the more difficult challenges.
“As we look towards the Autumn, today’s speech piles pressure onto the Chancellor and Business Secretary for the Budget where progress must be made to achieve economic recovery and growth. Small businesses and the self-employed can drive this, but only if the right conditions are there.”
Responding to today’s King’s Speech, Shevaun Haviland, Director General of the British Chambers of Commerce, said: “The commitment to an industrial strategy could put in place a framework to unleash the pent-up ambition of British business to grow the economy. If we use it to make green innovation a key driver of that growth, and link it to a coherent plan around skills, trade, devolution, and AI, then the possibilities could be endless.
“Billions of pounds of private investment have been held back by businesses which have been watching and waiting for long-term certainty in the economy. The Government’s clear intention to speed up the planning system for large scale infrastructure can feed that business confidence, if it can be delivered. Measures to increase business resilience, reform of the apprenticeship levy and legislation to support sustainable aviation fuel could also boost the economy.
“Placing decision-making and funding in the hand of the people closest to their local economies, and the issues they face, while increasing a collaborative approach will also be welcomed. There are still big issues that need to be addressed. Improving our trade relationship with the EU will not be straightforward, and there will need to be detailed consultation with business on the Plan to Make Work Pay. But there is much in today’s speech which shows the voice of business has been heard and that Government is introducing measures that benefit firms and help unlock investment.
“We want to work in partnership with the Government to make this happen and shift the economy out of first gear to get it motoring again.”
Dr Marc Warner, CEO, Faculty AI, said: “Whilst tighter rules around frontier systems is sensible, Labour must guard against regulatory overreach. AI has been safely and successfully used for decades – from predicting travel times, spotting bank fraud, or reading patient scans.
“Embracing these “narrow” applications – AI tools with specific, predetermined goals set by humans – should be the priority. Cracking down here would only stifle growth and hamper innovation – as well as robbing the public of better, faster and cheaper public services.
“Starmer should release the handbrake on narrow AI, whilst implementing sensible rules around advanced, more general systems. This Bill looks to be a good start on that journey.”
Ross Meadows, Partner at Oury Clark Solicitors, said: “The Labour Government’s plan to introduce day one employment rights will have massive implications for employers. The changes are likely to necessitate rigorous hiring practices and comprehensive onboarding to mitigate the risk of immediate legal disputes. Employers will need to invest in robust HR policies and training to ensure compliance and avoid potential litigation. This change will increase operational costs and administrative burdens.
“Smaller businesses are likely to face greater challenges adapting to these requirements, potentially affecting their competitiveness and financial stability. It could lead some employers to engage Professional Employer Organisations (PEOs) and Employers of Record (EORs) rather than employing staff directly. The PEO/EOR would take on all the employment/HR responsibilities and mitigate the risks associated with direct employment, including potential unfair dismissal claims.”
Mike Randall, CEO, Simply Asset Finance, said: “The government has been very clear on its promise to take the brakes off the economy, but it can only succeed in doing so by working hand in hand with SMEs.
“The UK’s wealth generators will have been watching the King’s speech eagerly to see whether the government’s election promises would materialise. The focus on “getting Britain building” through planning reform suggests potential opportunities in construction and infrastructure projects for smaller businesses. Moreover, at a time where there is much disparity with performance across the country, the Devolution Bill could potentially support local growth plans that directly benefit local businesses and communities. But, we will have to wait for September’s fiscal event to see if the promised reforms to the business tax regime come to pass. Then, we will have more confidence if the foundations for further growth are in place.”
Neil Davy, Chief Executive of Family Business UK, said: “We are delighted that the Government has committed to reforming the Apprenticeship Levy through the new Skills England Bill. The key to unlocking the true potential of family businesses, and the economy as a whole, is to create a culture of continuous improvement and investment in the skills of young people. The current system just doesn’t work and, reform was one of our key asks of government in the Family Business UK Manifesto.
“A new system must give family businesses greater flexibility on how they allocate funding to support apprentices, life-long learners and help people looking to re-enter the workforce. Family businesses employ almost 14 million across the UK, so we are well-placed to support and implement these changes.
“We look forward to working with the Government on the new Growth and Skills Levy, ensuring the necessary reforms can help drive growth across the family business sector and the whole economy.”
Bea Montoya, UK COO at Simply Business, said:“The king’s speech offered an opportunity for the new government to deliver help for the UK’s five million small businesses and build on the pre-election signals to “pull up the shutters” for Britain’s entrepreneurs. However, it’s hard to detect much positive news for SMEs within the outlined proposals.
“The future prosperity of the UK economy depends on the success of small business. Our research shows 98% of SMEs felt the last government didn’t do enough to reduce their tax burden – so there is clear evidence of where help is required from the new government in an increasingly challenging business landscape. Hopefully, more recognition for SMEs will emerge along with cast iron commitments to create conditions which will enable small businesses to thrive in the long term.”
