Federation of Small Businesses conference 2014
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Matthew Hancock speaks at the Federation of Small Businesses (FSB) annual conference.
It is a pleasure to be here, and I want to start by wishing the FSB a very happy 40th birthday. You are tireless advocates for small business and I know everyone in this room is grateful for the work you do.
The FSB came into being at a difficult time for this country. In 1974 inflation spiked at 18%, and England had a dreadful football team.
I’m happy to report progress. Today inflation is 1.7%.
It’s a pleasure to be here because for me it’s almost coming home. I was born and grew up just down the M56 at Chester. And I grew up in my family’s small business. Those dinner-table conversations about the future of our firm helped shape me as a politician.
So I know from my heart that small business isn’t just a job, but a way of life.
And to all those who’ve put their time, talent and capital into running a small business, my message to you is that this government is backing you to the hilt.
Being small forces you to think big, to take risks and innovate. It’s why you create the vast majority of new jobs each year.
And it’s why you’re at the heart of our long term economic plan to create a more secure and prosperous Britain.
We saw in last week’s Budget that the plan is working. It’s there in the numbers.
1.7 million new private sector jobs and 500,000 new businesses have been created No major developed economy is recovering faster than Britain.
Crucially, a balanced recovery. The latest GDP figures show growth across services, manufacturing and construction, and unemployment down in every region.
But it isn’t just about the numbers. What drives economic recovery is a belief that things will get better. So it’s incredibly encouraging to see the results of the latest FSB survey: 2-thirds of businesses expect to grow in the next year; a quarter plan to export more. And a marked improvement in access to finance.
Even the floods couldn’t dampen the animal spirits of British business.
And you might expect me to stand here and claim all the credit for the recovery on behalf of the government.
But I won’t…
…Because this recovery isn’t made in Whitehall, it was built in the business parks and garage offices, in the white vans and workshops, in the mills and market squares of Great Britain.
It’s thanks to you that we have record numbers of people in work.
Indeed, the lesson of the crash is that government must respect the limits of its power over the economy.
We can’t abolish boom and bust, we can’t deliver sustainable growth simply by flicking a switch in the Treasury; what we can do is to set the framework in which private enterprise can flourish.
And while the recovery is welcome, there is much more to do.
My role as Minister for Skills and Enterprise is not to create the jobs and businesses, but to be on the side of those who do.
How we are helping small businesses today
That’s why last year we launched Small Business: GREAT Ambition - our commitment to make it easier for small firms to grow.
And why we’ve taken action on the issues that you’ve told us matter to you most.
Like a tax regime which supports enterprise, a workforce with the right skills for the job; access to finance, and - through deregulation - getting government out of the way where it hinders instead of helps.
Take access to finance.
We all know money is tight. So where funds are available we’ve been careful to target them at small firms.
British Business Bank schemes are now supporting £600 million of investment each year.
Start-Up Loans have already committed over £80 million and today I’m proud to announce we’ve offered the 15,000th Start-Up loan.
Our £200 million Growth Accelerator Programme has supported over 12,000 small businesses so far, and we aim to support up to more than double that.
Businesses tell us this programme is making a real difference. In its first year, almost 9 in 10 firms that used it thought the Growth Accelerator helped increase their turnover. 97% would recommend it to others.
But while government assistance can give many firms the leg-up they need, tax cuts can reach even more.
It’s why we’ve cut the main rate of corporation tax from 28% to 23%, falling to 20% by 2015 - the joint lowest rate in the G20. Just this week I voted for lower corporation tax again.
It’s why we’ve introduced the new Employment Allowance which, from next month, will save you up to £2,000 on your National Insurance bills - a cashback on jobs.
Letting you keep more of what you earn means more cash available for what really matters to you: running and growing your business, creating jobs.
This summer the Office of Tax Simplification will be reporting back on what more can be done to improve the competitiveness of UK tax administration.
That’s my holiday reading sorted.
Of course, it isn’t just about government doing more. There are some areas where we need to do less.
I’m proud that we’re the first government in modern times actually to reduce red tape. We’ve saved businesses over £1 billion so far by cutting or reforming regulation.
What does that mean in reality?
When we came into office there were rules governing the precise design of ‘No Smoking’ signs, rules requiring a license if you wanted to show a film in school…
There were even age restrictions on the sale of chocolate liqueurs.
…Because we all know the sad sight of a group of teenagers, on a park bench, off their heads on a box of Thorntons.
Too often in recent times process and box-ticking replaced common sense and personal responsibility.
And since every new hire is a risk, we have reformed employment laws and employment tribunals so businesses - especially small businesses - have greater confidence in taking on new staff.
Our tribunal reforms are working. Jobs are up and the number of cases taken to tribunal is down 80%. The only work being hit by our tribunal reform is the workload of employment lawyers.
More to do
But we’re determined to do more.
You told us you wanted action on the cost of energy.
We listened, and in the Budget we announced a £7 billion package of support, including compensation for energy intensive industries with higher electricity costs resulting from green levies.
You told us that business rates should be more responsive to property values, and that you wanted more simplicity for ratepayers.
So we cut £1,000 off rates for retailers, and we’re going to review the whole way business rates are levied.
And as the economy recovers and your books fill up, we know that prompt payment is essential. So we will strengthen the rules on transparency, so everyone knows where they stand.
In the mean time we will keep pressing more companies to sign up to the Institute of Credit Management’s prompt payment code. Over 1,500 signatories are now committed to pay their suppliers on time, including the majority of FTSE100 companies.
Being on the side of small business means being there in a crisis too.
So we worked overnights and over weekends to put together a £10 million Business Support Scheme to help flooded properties, with grants of up to £5,000 to make buildings more resilient in the future and 3 months of automatic business rate relief.
In the Budget we increased funding for flood defences by £140 million.
Tackling these sorts of emergencies means everyone pulling together. And I want to pay tribute to the FSB’s work advising and guiding on issues like handling insurance claims. Helping to make life that little bit easier during an incredibly stressful time.
And of course while last week’s Budget will go down in history as the ‘Savers’ Budget’, saving and investment are 2 sides of the same coin. They’re both about planning for the long term, deferring the reward, taking responsibility for the future.
This government believes that the way to build a stronger economy is to trust people with their own money. And whether you’re saving for your pension pot, or investing in your business, we want to help.
So we froze fuel duty, now 20p lower than planned, and we’re extending the Investment Allowance, increasing it to £500,000 too.
But it isn’t just about investment in capital. The iPhone costs Apple around $180 to manufacture and assemble. It sells for 3 times as much, thanks to the design of that great British success story, Sir Jonny Ive.
In a world where value is added on the drawing board as well as the production line, investment in people is just as important.
So we are expanding apprenticeships and it’s a central mission of my job to drive the education system and employers closer together: making education more rigorous and more responsive to employers needs.
We will continue to do more.
You never stop looking for new trends, new markets, new opportunities. It’s what’s seen you through this recession, and it’s what’s pulling us into recovery. In turn, we will never stop looking for new ways to help you fulfill your ambitions.
Today I’m delighted to announce further progress on clearing away the barriers to growth.
When it comes to business policy, we don’t believe Whitehall has all the answers. Our Entrepreneurs in Residence scheme has brought entrepreneurs into the heart of government for precisely this reason.
So today we are launching our search for 2 new Entrepreneurs in Residence, to take the scheme into a second year.
The first will advise us on how to help small businesses achieve the scale-up and exports we all want to see.
The second will work with us on the exciting new industry of Synthetic Biology, which we believe has huge potential for the life sciences and energy sectors.
But as everyone in this room knows, coming up with ideas is the easy bit. The biggest challenge faced by any entrepreneur is getting them to market.
That’s why we’re determined to create a financial ecosystem which nurtures enterprise, one which bridges the gap between concept and commercial reality.
When it comes to financing great new products we in government want to lead by example.
Technology is poised to change education as radically over the next decade as it has changed everything else over the last. So today I can announce that the Technology Strategy Board is launching a new education technology design competition to give small firms with innovative ideas for EdTech products the chance to turn them into a reality.
Celebrating small business
Which is why I want to highlight 1 fantastic grass-roots initiative which has got the whole country taking notice of what small businesses offer. Last year’s Small Business Saturday - the first ever in the UK - was a huge success, with thousands of businesses taking part across the country and almost £5 billion spent on the day. I’m thrilled that today, we can mark the launch of Small Business Saturday 2014, which will be on 6 December.
With the support of the FSB, the media, and other supporters - I know we can make this year’s event even bigger than the last. Government will certainly be doing its bit to back Small Business Saturday. I urge all of you to get involved.
But celebrating is one thing, hard contracts is another. For some firms the greatest prize we can offer is fair access to the government’s £230 billion public procurement business. The FSB has led the call on this and we are making progress. Today I’m glad to report we’re taking more action.
I can announce that by October we will have legislated to make contract opportunities accessible in one place online, to remove a whole thicket of bureaucracy by abolishing pre-qualification questionnaires (PQQs), and to drive fair payment down the supply chain by requiring prime suppliers as well as procurers to pay within 30 days.
My message to public bodies and small suppliers is get ready, the changes are coming - it’s time for government to be open for small business.
But if we’re going to tackle unnecessary complexity in the way small firms interact with the state, we also need to get our own house in order.
We’re committed to making sure our business support schemes are easier to find and more relevant.
At the start of this year we set up a ‘star chamber’ of some of the wisest and most experienced minds, and me, to bring together and simplify government’s portfolio of business support. By June we will announce our intentions, so that reforms can be completed by March 2015.
We will be working with businesses and the FSB to make sure this new service is user-friendly for you: the customer, and fully integrated locally, connected to business schools and growth hubs across the country.
All of these measures, all of the actions taken in the Budget and in between, each one may be important, but they are but individual stones in something much bigger. Every measure matters, but I believe they are each part of a greater whole. For our aim is not a list of measures. Our aim is that each measure is a stone in the great cathedral to the culture of enterprise that we are building.
Yes, each stone plays its part - but together, stone by stone, we are striving to build something bigger than any one of us. A self-confident nation, enterprising and ambitious. A culture of enterprise which celebrates success without criticising failure, where we can build opportunity for our children and children’s children. Building that culture is no quick task. Yes it is happening but so to is it yet fragile. And I want on behalf of all future entrepreneurs, to enlist your help in that task. Today I pledge myself to do all in my command to support enterprise. I hope you will join me in that task.