General election 2024: What SMEs need to know

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    Ian Hawkins

    Page written by Ian Hawkins. Last reviewed on July 3, 2024. Next review due April 6, 2025.

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      Major change is predicted, so make sure your business is ready for upheaval.

      The business environment has been buffeted by change in the last few years: Covid and remote working, digital transformation and supply chain issues, Brexit, cost of living and volatile interest rates… Businesses that have survived through the last five years are businesses that can accommodate radical change.

      Often change comes with little or no warnings. The impending election, however, may be one change that has been flagged clearly in advance. With so many poll predictions of a landslide for Labour, a win for the incumbent Conservatives would be the least-predicted change of all. 

      With a majority Labour government predicted with 99 percent probability by Electoral Calculus at the time of writing, this is the most likely outcome of the general election. 

      What will a Labour government mean for your business?

      Tax burdens and breaks

      Incoming governments will always mean a mixed bag of pros and cons for SMEs but there are reasons to be optimistic. 

      SMEs which suffer from slow or late payers could be about to get new legislation which will help them fight against unpaid invoices. 

      Labour has also said they will replace business rates with a fairer system which will rebalance the advantage of online businesses. 

      And after accusations of cronyism during Covid, Labour has promised SMEs will have a fairer chance of winning lucrative public contracts with shortlisting guaranteed for smaller firms. 

      The big question is around Brexit: Labour says that they will “remove the barriers to export”, but without a seat at the table with the EU which sets the rules, it’s unclear how this will be achieved. Expect to see a big effort to renegotiate terms with our nearest trading partners. 

      Cost of employing staff 

      Employment legislation may be one of the big downsides for SMEs as employing staff could become more expensive. Labour has published a Green Paper on employment rights and said that they will be introducing legislation on “making work pay” within their first 100 days of government. Here’s what the Green Paper has outlined: 

      • New staff rights: Employees will have protection against unfair dismissal from their very first day on the job, not after two years. Employers will have to provide more for things such as maternity leave, sick pay and bereavement, plus employees will be entitled to statutory sick pay and parental leave from day one.
      • Fairness and transparency: Employers can still let staff go for performance, conduct, or downsizing, but they’ll need to be more upfront about the rules during the probation period.
      • Conflict resolution: Employees will have six months to make a claim, instead of three. 
      • Minimum wage increase: It’s likely that there will be an increase in the minimum wage. This may have long-term impact on inflation but in the short term, your wage bill may go up. 
      • Work-Life Balance: Employers will be expected to have a policy about contacting staff outside work hours. 
      • Zero hours contracts: After 12 weeks, employees will have the right to a contract that reflects the hours they actually work.

      Labour plans to introduce a new enforcement body to make sure everyone’s rights are respected, including minimum wage and protection from discrimination.

      What will happen to RLS?

      The government has already wound down the old RLS (recovery loan scheme) which proved to be one of the most effective and successful ways of helping businesses recover from the Covid pandemic. The intention is to replace the RLS with the Growth Guarantee Scheme from 1 July. 

      Hopefully, the GGS – or something much like it – will survive into a Labour government. Labour have long promised that they will deliver “better access to finance” specifically for SMEs. Government-backed loans have been so effective at providing this, with the government able to target industries and sectors most in need of help, at Swoop we think restrictive changes to the existing scheme are unlikely.  

      Conclusion

      Labour will be very cautious about what they say before the election if they think it will lose them votes. We should expect major changes to happen in the early days of government, however, as the incoming team puts their stamp on things (and gets any potentially unpopular legislation in early). 

      Broadly, SMEs which employ a large number of people will have to be ready for a hefty wage bill. Businesses which have run into problems with late payments will have more power in negotiations. And there may be more opportunities for SMEs with public contracts and exports – though how this will be achieved is still open to question.

      If you want to find out how this affects your business get in touch today or read more in the article written by our CEO, Andrea Reynolds

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      Written by

      Ian Hawkins

      Ian Hawkins is Head of Content at Swoop. As a freelance business journalist and filmmaker he has reported from Europe, Central and North America and Africa. His films and writing have appeared on BBC World, Reuters and CBS, and he has spoken at conferences on both sides of the Atlantic on subjects including data, cyber security, and entrepreneurialism.

      Swoop promise

      At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

      Find out more about Swoop’s editorial principles by reading our editorial policy.

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