What does the recent general election results mean for small businesses and the self-employed?

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Following the recent results of the general election, and Labour gaining the highest majority of seats in Parliament, the party has promised many new policies and approaches. These will apply to NHS funding, global warming and the cost of living crisis, but what do they mean for the self-employed?

Keep reading to find out how these changes could potentially affect you as a business owner.

A crackdown on late payments

Labour plans to crack down on late payments to ensure small businesses and the self-employed are paid on time. In a survey we ran, over a fifth of freelancers and SME owners had experienced an increase in late or non-payments, suggesting that late payments are a prevalent issue for the self-employed. In the meantime, you can read our article about late payments, to learn how you can protect your business against this common pain point.

IPSE, The Association of Independent Professionals and the Self-Employed, has continually campaigned against the late payment crisis among the self-employed.

Andy Chamberlain, IPSE’s Policy Director said: “Being paid late can be crippling for the self-employed. It’s encouraging that the new government has pledged to address this issue but ‘lateness’ is only one part of the problem.

“Payment terms of 90 or 120 days are not uncommon, so even if the client pays ‘on-time’ the freelancer still has to wait for months. 60 days should be the maximum term allowable.”

An increase in funding options for small businesses

Another proposal from the Labour party aimed at small businesses is a plan to open the supply of finance for small businesses who want to grow. This is a positive as it has the potential to give SME’s more opportunity to expand, even if they do not have the capital right now. Along with this, Labour also claim they will reform the British Business Bank, focusing on improving support for SME’s.

A fairer chance of winning public contracts

According to Labour’s plan for small businesses there are £30 billion worth of public contracts, and currently 90% of them are being awarded to big businesses. Labour plans to give small businesses a fairer chance to benefit from public contract bidding. They aim to do this by requiring that one SME makes the shortlist when any suitable contract becomes available. This will give smaller businesses an opportunity to guaranteed work if they win a public bid.

Other policies that have the potential to affect small businesses are:

  • Scrapping business rates and replacing it with a fairer system – aiming to reduce the burden on high streets.
  • Removing the barriers to export for smaller businesses, so it’s easier and less costly to trade internationally.
  • Making Britain a ‘clean energy superpower’, which Labour are claiming will reduce energy bills for small businesses. 
  • Labour has pledged not to increase National Insurance, income tax or VAT.

Labour released ‘Labour’s plan to make work pay’ in 2024 where they state, ‘Labour is the party of the self-employed and recognises their significant contribution to the UK economy, and the next Labour government will support and champion them’. We hope that Labour sticks to these claims so small businesses and the self-employed do have increased support from the government. For further advice on how to navigate being a small business owner, take a look at our help and guidance hub.

All policies have been found on the official Labour party manifesto and the Labour’s plan for small businesses. Both full versions can be found on the Labour website.

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