Tim Dier is a Research Fellow at the Centre for Policy Studies.
It’s time for a Small Business Parliamentary Scheme!
Our parliamentarians overwhelmingly lack hands-on business experience. As Kemi Badenoch notes, barely a fifth of Labour’s Cabinet has any private-sector experience, and prior to entering Parliament, 90 per cent of the new Labour MPs at the last election came from a trade union, charity or public-sector background. Changing their party leader won’t change that fact. They cannot sympathise with the uphill struggle many small businesses face meeting payroll in the face of rising costs.
To many of them, business is solely a magic money tree which exists to fund public sector wage rises and the ever-expanding welfare state. There’s scant awareness that when they squeeze businesses, it’s consumers that ultimately pay, through higher prices, lower wages and fewer jobs.
The bureaucratic burden that SMEs face has been steadily increasing for years. The Federation of Small Businesses estimates that tax compliance alone costs the small business community a whopping 242 million hours and nearly £25 billion per year. Add to that the FSB’s £36 billion and 379 million hours per year estimate of the cost to SMEs of complying with regulations, and is it any wonder that Britain has stopped growing?
Even these horrific numbers don’t fully account for the opportunity costs, whether that’s investment in new plant and machinery, expansion, or simply time with family and loved ones. Instead, late nights and Sunday afternoons are spent at the kitchen table compiling reams of backward-looking information for the state that may make sense for a multinational but is of little use for an SME.
But this Labour government, seemingly oblivious to the fact that incentives matter, has gone out of its way to make life even harder for small businesses across the country. Leaving aside National Minimum Wage hikes, Rachel Reeves’s National Insurance hikes, and Ed Miliband’s ruinously expensive energy prices, their flagship Employment Rights Act further piles pressure and sleepless nights on entrepreneurs throughout the land. As Andrew Griffith MP, Shadow Secretary of State for Business and Trade, regularly argues, the lack of small business understanding in Parliament is holding back our entrepreneurs and our nation’s prosperity.
Back in 1989, Conservative MP Sir Neil Thorne identified a different but not unrelated problem in Parliament: fewer and fewer politicians had military backgrounds. His brainchild was to launch the Armed Forces Parliamentary Scheme to give MPs and peers hands-on exposure to military life, with the aim of making parliamentary debates better informed.
As the saying goes, history doesn’t repeat itself, but it often rhymes. Perhaps the time has come for a small business equivalent? Let’s call it the Small Business Parliamentary Scheme. Rather than riding tanks and flying fighter jets, MPs would spend time on the shop floor of small businesses, rolling up their sleeves and seeing how the state makes it difficult for many to make a living.
The bravest MPs could even start and manage a small business of their own. From start to finish. They would have to navigate every login, password, security code, corporation tax submission, VAT registration conundrum and filing, hiring and firing, payroll filing, Companies House submission, registering with the Information Commissioner’s Office, navigating a business rates appeal, and maybe even a vexatious employment tribunal claim thrown in for good measure.
Before you ask, no – just as many small business owners don’t have anyone to turn to, MPs wouldn’t be allowed to delegate the running of their businesses to their parliamentary staff. And to those who argue that MPs don’t have any spare time to do this, that’s rather the point. Neither do people who run small businesses on top of their work and family lives.
I wager that MPs of all persuasions would be genuinely blown away by the burden that small businesses face and probably pleased they’d opted for elected office over starting an enterprise of their own. Their respect for and understanding of those who run small businesses would go through the roof, and our entrepreneurs up and down the country would gain advocates in the heart of Westminster.
In practice, sitting MPs running trading companies could create conflicts of interest, so their entrepreneurial endeavours may need to be in a sandbox or confined to shadowing real small businesses. But even shadowing the assault course our entrepreneurs have to run would be enough to leave a bitter taste in their mouths.
Just as the Armed Forces Parliamentary Scheme has helped its members gain an insight into military life and has informed debate, its small business equivalent would serve to give those who have never been at the coal face the understanding that every additional rule or regulation they add – or delegate to a quango to impose – is grit in the cogs of our economy.
With 5.7 million SMEs employing 16.9 million people, it’s high time our parliamentarians gave our entrepreneurs and small businesses the attention they deserve.
Tim Dier is a Research Fellow at the Centre for Policy Studies.
It’s time for a Small Business Parliamentary Scheme!
Our parliamentarians overwhelmingly lack hands-on business experience. As Kemi Badenoch notes, barely a fifth of Labour’s Cabinet has any private-sector experience, and prior to entering Parliament, 90 per cent of the new Labour MPs at the last election came from a trade union, charity or public-sector background. Changing their party leader won’t change that fact. They cannot sympathise with the uphill struggle many small businesses face meeting payroll in the face of rising costs.
To many of them, business is solely a magic money tree which exists to fund public sector wage rises and the ever-expanding welfare state. There’s scant awareness that when they squeeze businesses, it’s consumers that ultimately pay, through higher prices, lower wages and fewer jobs.
The bureaucratic burden that SMEs face has been steadily increasing for years. The Federation of Small Businesses estimates that tax compliance alone costs the small business community a whopping 242 million hours and nearly £25 billion per year. Add to that the FSB’s £36 billion and 379 million hours per year estimate of the cost to SMEs of complying with regulations, and is it any wonder that Britain has stopped growing?
Even these horrific numbers don’t fully account for the opportunity costs, whether that’s investment in new plant and machinery, expansion, or simply time with family and loved ones. Instead, late nights and Sunday afternoons are spent at the kitchen table compiling reams of backward-looking information for the state that may make sense for a multinational but is of little use for an SME.
But this Labour government, seemingly oblivious to the fact that incentives matter, has gone out of its way to make life even harder for small businesses across the country. Leaving aside National Minimum Wage hikes, Rachel Reeves’s National Insurance hikes, and Ed Miliband’s ruinously expensive energy prices, their flagship Employment Rights Act further piles pressure and sleepless nights on entrepreneurs throughout the land. As Andrew Griffith MP, Shadow Secretary of State for Business and Trade, regularly argues, the lack of small business understanding in Parliament is holding back our entrepreneurs and our nation’s prosperity.
Back in 1989, Conservative MP Sir Neil Thorne identified a different but not unrelated problem in Parliament: fewer and fewer politicians had military backgrounds. His brainchild was to launch the Armed Forces Parliamentary Scheme to give MPs and peers hands-on exposure to military life, with the aim of making parliamentary debates better informed.
As the saying goes, history doesn’t repeat itself, but it often rhymes. Perhaps the time has come for a small business equivalent? Let’s call it the Small Business Parliamentary Scheme. Rather than riding tanks and flying fighter jets, MPs would spend time on the shop floor of small businesses, rolling up their sleeves and seeing how the state makes it difficult for many to make a living.
The bravest MPs could even start and manage a small business of their own. From start to finish. They would have to navigate every login, password, security code, corporation tax submission, VAT registration conundrum and filing, hiring and firing, payroll filing, Companies House submission, registering with the Information Commissioner’s Office, navigating a business rates appeal, and maybe even a vexatious employment tribunal claim thrown in for good measure.
Before you ask, no – just as many small business owners don’t have anyone to turn to, MPs wouldn’t be allowed to delegate the running of their businesses to their parliamentary staff. And to those who argue that MPs don’t have any spare time to do this, that’s rather the point. Neither do people who run small businesses on top of their work and family lives.
I wager that MPs of all persuasions would be genuinely blown away by the burden that small businesses face and probably pleased they’d opted for elected office over starting an enterprise of their own. Their respect for and understanding of those who run small businesses would go through the roof, and our entrepreneurs up and down the country would gain advocates in the heart of Westminster.
In practice, sitting MPs running trading companies could create conflicts of interest, so their entrepreneurial endeavours may need to be in a sandbox or confined to shadowing real small businesses. But even shadowing the assault course our entrepreneurs have to run would be enough to leave a bitter taste in their mouths.
Just as the Armed Forces Parliamentary Scheme has helped its members gain an insight into military life and has informed debate, its small business equivalent would serve to give those who have never been at the coal face the understanding that every additional rule or regulation they add – or delegate to a quango to impose – is grit in the cogs of our economy.
With 5.7 million SMEs employing 16.9 million people, it’s high time our parliamentarians gave our entrepreneurs and small businesses the attention they deserve.