Progress | Centre-left Labour politics

Its not you its SME

Philip Ross says Labour must not lose sight of the electoral importance of small and medium sized businesses

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When out canvassing in 1992, Tony Blair was told by a man cleaning his Sierra that he had always voted Labour in the past, but now he had started his own business he was going to vote Conservative. Blair said afterwards that that was the point at which he realised the election was lost. If Labour wasn’t reaching out to such people then they were doomed to fail.

Now more than ten years on with an increasing army of small businesses and freelance workers, how much have things changed? Has Labour become the party of small business? And how important is the small business vote?

It is estimated that around ten per cent of the population work for themselves and in the future that people won’t just change jobs and careers, but we will all experience a period of self-employment. As many MPs have realised, small business is a key constituent in our community. But this constituency is changing. It includes not just the traditional array of tradesman, small firms making and selling items in our high street and in the industrial estates, but also an army of professional freelance workers working in the knowledge-based economy in areas such as IT, engineering and the creative industries including the media.  The knowledge-based economy in IT and the creative industries are driven by armies of freelance workers. These workers are often engaged on short term contracts for work on projects and to bring in expertise. If this is the employment and work pattern for the 21st century Labour needs to understand the needs and aspirations of these workers.

The Tories think it is all about tax, Labour often confuses freelance workers as temporary workers, the answer is somewhere in between. It is vitally important that a clear distinction can be made between freelance workers and temporary workers for both tax and employment rights. But whether working freelance or running or working in a small firm, small business is important. Our prosperity depends on its success.

MPs themselves certainly consider it to be important. Kerry Pollard, the Labour MP for St Albans who is the chair of the All Party Parliamentary Small Business Group and previously ran a small business himself, believes it is very important. Indeed in the run up to the 2001 general election he was contacted by countless numbers of MPs from all parties, who, realising the importance of the small business vote, asked him if they were a member of the group and if not could they join. As a consequence it is the largest of all the all party parliamentary groups. Indeed in the new parliament following the last election more MPs gave their maiden speeches in a small business debate than in any other.

The traditional view was, of course, that the Conservatives were the party of capital and Labour the party of the workers. In the early 1990s at one of the first Labour party meetings I ever attended the selection process was underway to select a councillor for a safe Labour seat. One of the candidates stood up and spoke and explained that while he was a postman, he also run the local fish and chip shop. He said, ‘people say to me how can you be in the Labour party and also run your own business?’ To a lot of tutting, he said, ‘well I say that my children have got to eat’. It didn’t go down very well and he got zero votes.

Things have changed since a network of Labour party members came together to form the Labour Small Business Forum ( in 2002. It has attracted Labour party members from the Orkney Islands down to the tip of Cornwall and has run its own policy forums on small business issues and holds its own fringe meetings at the Labour conference. Labour now has a claim to be the party of small businesses. Indeed Gordon Brown at the 2003 Labour Conference declared : ‘Let our party be the pro-enterprise as well as the pro-fairness party: Labour, the party of small businesses and the self employed in Britain just as much as we have always been and are the party of employees.’

Indeed measures introduced by Labour have gone a long way to supporting small business. For instance small businesses are now allowed to charge interest on late debts. The VAT system has been simplified for retailers and the new enterprise bill was passed, which among other things makes it easier for people to set up in business, and it does that in part by reducing the penalties which accrue to those who go bankrupt in business through no great fault of their own. There is support of a whole range of services for small firms through BusinessLink and the Small Business Service, which the apparently pro-business Tories plan to scrap.

The challenge for a future Labour government is to recognise that to be in business you don’t have to make things or sell things but that you can just sell your own skills and knowledge as a freelancer. It needs to understand that freelancers and temporary workers are not the same thing and that freelancing is a career decision and not a stop gap between permanent jobs. It needs to recognise that not every small business wants to expand but needs support to survive. Regulation and legislation needs to include measures to mitigate the effect and demands on small business.  Ask  any small businessman what changes they would like the government to make and they would say bring in legislation to force firms (usually larger firms) to pay their debts on time.

If Tony Blair was to encounter the man washing his Sierra today, he might find him quite at home voting for Labour. Never before has small business been so enthusiastically helped by a government. After all, a stable economy is the most important platform for any business and this has been underpinned with good public services that have created the right environment for small business to grow. Indeed the prime minister doesn’t need to go outside the party for advice on small business as there is a wealth of experience and expertise within the ranks of the membership, all committed to helping deliver prosperity for all and a third term in government.

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Philip Ross

is a member of LFIG and the founder of the Labour Small Business Forum which wants to build a network of Labour members in small business and identify those in every constituency. To get involved contact Philip at #philiprosslgc

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