Labour needs to champion small businesses

Written by Total Politics has a free weekly Friday email bulletin. Follow this link to register. on 8 January 2013 in News
The Labour Party should seize the opportunity to be the champion of small business interests, as well as the unemployed, in its job guarantee scheme

When Labour announced plans for a new guaranteed compulsory jobs scheme  - which would guarantee a job to anyone who had been unemployed for more that 24 months - the response from some quarters was as boring and snobbish as it was inevitable. Those horrified at the idea of compulsion usually managed to fit in the phrase “stacking shelves in Tesco” somewhere into their objections.

As if being a shelf stacker (or 'ambient replenisher', which I believe is the technical term currently given) is something to be ashamed of being? As if it isn’t a perfectly good job that thousands of people do every day – many of them union members. It’s something my brother is currently doing in Australia as he starts his new life over there. 

But this snobbery aside, it may well be reasonable to ask if we need to be supplementing the mega-profits of large corporations who could afford to hire staff without support. The details of the Labour scheme are not yet published. We know how it will be funded and we know the basic framework of how it will work. We don’t know what the criteria are around the compulsion and we don’t know who will be taking part.

But it strikes me that this idea – one that I largely support – presents an opportunity for some cross-departmental thinking, and to help Labour appeal to a vital constituency to whom we need to be reaching out.

In 2009, SMEs accounted for 99.9 per cent of all enterprises, 59 per cent of private sector employment and 49 per cent of private sector turnover. Within this larger group there were over 4.5m businesses with no, or fewer than 10 employees. So this is a sizeable interest group, one Labour cannot afford to ignore.

Small businesses are not doing well under the coalition. The rise in VAT was particularly felt by those running small businesses with tight profit margins. The banks' continuing reluctance to loan to small businesses (and the government’s failure to change this) means people running SMEs struggle. The government’s austerity overkill is attacking confidence and reducing consumer spending. For small businesses, this is hitting their bottom line hard.

Equally, the coalition seems set on lumping all business together, with large corporations receiving a six pe rcent cut in their tax rate, reducing it to 21 per cent compared to only a one per cent cut for small businesses, leaving their rate at 20 per cent. The trajectory looks alarming, like a move to a flat rate for all businesses regardless of size or scale. This gives the larger companies, especially those with more predatory instincts, a massive advantage.

So the role of champion of the smaller business is up for grabs and could be fertile territory for a renewed Labour Party. Instead of the New Labour technique of burnishing Labour’s business credentials by making grand gestures towards multinationals, One Nation Labour can be the Labour that protects our high street and is proud of our nation of shopkeepers and entrepreneurs.

So what does this have to do with the jobs guarantee? Well, as we don’t know the details of how it will work yet, perhaps nothing. But wouldn’t it be good if Labour were to ensure that the jobs guarantee worked for small businesses as well as for the unemployed? By only offering subsidies to those businesses who qualify for the smaller corporation tax rate or who only employ 250 or fewer workers.

By aiming this business stimulus at where it could do the most good for participants – both the employers and employees, Labour could become an authentic champion of the needs of small businesses. Helping the unemployed to find work while also helping stimulate the business community where it is most needed is an idea that has its roots in the One Nation communitarianism of Ed Miliband’s Labour Party.

It also allows Labour a positive narrative on welfare that speaks of the value of employment not just to the employee, but of the value of their work to the employer. What could be more Labour than that?

Tags: Business, Emma Burnell, Jobs guarantee scheme, Labour Party, One Nation, SMEs

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