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Press release
Friday 22nd March 2013
For immediate use
Chuka Umunna speech to Federation of Small Businesses Annual Conference
-Check Against Delivery-
Chuka Umunna MP, Labour's Shadow Secretary of State for Business, Innovation and Skills, in a speech to the Federation of Small Businesses Annual Conference, said:
This is the first time I have addressed your Annual Conference and it is a real honour to be asked to do so.
You’ve already heard from Vince Cable and Owen Paterson and they, quite
rightly, have underlined how important you are to our economy.
I echo this. And for me, what you do matters personally. My late
father arrived in this country from Nigeria in the mid-1960s with little
money to speak of but a huge sense of possibility.
He started off washing plates and washing cars before he struck out on
his own. Over 15 years, he built a thriving import/export business.
Aside from his family, that business meant everything to him. He worked
night and day to ensure it was a success.
I saw that same determination representing many entrepreneurs and small
businesses during my practice as a lawyer in the eight years before I
was elected. I found my small business clients were hard working,
determined to do the right thing, determined to succeed, and determined
not to let their customers and employees down.
So I have seen up close the risks you take to create jobs, generate
prosperity and extend opportunity. Thank you for what you do. We do
not recognise your contribution enough, and I am determined we change
that.
So I shout about the 83 per-cent of new private sector jobs that were
created during our time in government by small businesses like yours and
I am proud that when we left office this country was rated fourth in
the world for ease of doing business, hopefully making things a little
easier for you. For a Party called ‘Labour’, this matters. Supporting
aspiration, extending opportunity, creating good jobs is at the core of
what we believe; getting more people in jobs was why we were created.
That is why today we want to see more people setting up and working in
businesses.
But, I know the face of business is changing. There are almost five
million small businesses today. They are all different in their own
way.
There are ‘aspirants’ with an ambition to be their own boss but who face barriers in getting there.
There are the ‘traders’ - the market stall holders, shopkeepers, plumbers, craftsmen, ‘white van man’.
There are the “lifestylers’ who want work to fit around other parts of
their lives like caring responsibilities, or want to start making a
business dream a reality by freelancing – some freelance of course
because other employment opportunities aren’t there.
Others self-define as ‘entrepreneurs’, particularly those doing business through emerging sectors and social media.
And then there are the ‘small employers’ who provide substantial employment in their localities.
We must support and encourage this diversity and also recognise that
what you do goes beyond job creation. You challenge the existing
order. You ensure competition in the market place. And create choice
for consumers.
You innovate, producing products people want to buy the world over - you
help make the British Lion roar in an ever more competitive world.
So in the future, we must do even more to help you thrive.
This starts with getting our economy moving again. Demand is weak – not
for every business, but for far too many. We can create a better
environment, but it needs demand too.
You will have all seen the Budget this week. We have been arguing for a
proper National Insurance break for small businesses for two years now,
so I was glad to see the Chancellor announce the new Employment
Allowance. And the £3 billion a year extra capital spending and the
establishment of Lord Heseltine’s Single Local Growth Fund – they were
welcome too.
My complaint, though, is that too many of the measures kick in post
2014, when you tell me you need the support now. And there was precious
little to help the High Street.
That is why we will continue to argue for a temporary VAT cut to get
people placing orders with you again; it is why we will continue to push
the Government to deliver on a much more ambitious infrastructure plan.
A targeted stimulus now to kickstart the economy, get the unemployed
back to work.
The Government’s official forecaster said this week that deficit
reduction has stalled. Despite all the cuts and tax rises the
Government’s borrowing this year will be at the same level as last year,
and next year at the same level as this too. Only getting growth back
will allow us to reduce borrowing.
But we will only build a sustained recovery which raises living
standards if we also ensure there is a much better environment to do
business in.
In Liverpool a few weeks ago I was talking to a businessman who told me
that to register your company, you’d need to reinforce your post box
given all the forms you are sent to fill in. Some young entrepreneurs
in London who are in the process of setting up a web app business told
me this week that it has taken them three weeks just to set up a bank
account. Others, tell me it takes a month to set up a broadband
connection. This is not acceptable and has to change.
That is why we asked a group of business people – our Small Business
Taskforce - to produce a report for business people by business people
to tell us what we need to do to remove the blockages for you. And I
thank the FSB for all the assistance you gave to the Taskforce.
We published their report last week. It is bursting with 100 ideas.
Practical measures from those who know, all aimed at making Britain the
best place to start, run and grow a business.
Top of the list of the problems you’ve said is finance.
We need far more competition and diversity in the small business lending
market if we are to transform the service you receive from them. It
cannot be right that around 90 per-cent of small business lending is
concentrated in the hands of just five High Street lenders. So I
welcome new entrants like Handlesbank and Aldermore.
Next year Nationwide Building Society will enter the market - with its
mutual model you, the small business customer, would co-own that bank
which could help drive a culture change. We need more mutuals in this
small business space for that reason.
But, this alone won’t solve the historic problems which pre-date the
financial crisis. Let’s do what every other G8 economy has done and set
up a state backed investment institution to get credit to small
businesses where others won’t, by establishing a proper British
Investment Bank.
Its funds could be given out through a new network of regional banks
which, last week, Ed Miliband announced we are looking to establish.
Like the German Sparkassen, they would represent a return to local
relationship banking, with managers who know your needs with discretion
to make local lending decisions.
And much more needs to be done to promote non-bank lending too - from
equity to new peer-to-peer models. With this in mind, across Britain
Labour councils are innovating with new ways of supporting small
businesses. So today Labour run Camden Council has announced a joint
endeavour with peer-to-peer finance firm Funding Circle, allowing the
local authority to invest directly in its local small businesses. This
is an exciting opportunity which we want to see expanded - our aim is
for at least ten Labour Councils to sign up with Funding Circle by the
end of this year.
But access to finance is one thing, cash flow is another. Too many
small businesses are effectively bankrolling bigger businesses that
refuse to pay them on time. This is outrageous.
In government we legislated so that late payments can incur interest,
and we established the Prompt Payment Code. But I know how hard it can
be to challenge your own customers.
So, the next Labour government will expose those who pay late and we
will seek to put in place a regime that will automatically trigger
action against late payers, perhaps by preventing them winning public
contracts and through reporting requirements on payment performance in
their company accounts.
You talk to me about skills: the lack of technical and engineering
skills, as well the need for young people to have the right attitude for
work and to be “job ready”.
We agree. So we will put the money into the hands of, you, the
employers. But with control of the money there will be a shared
responsibility – on business and government - to train and retrain the
workforce.
I have already mentioned infrastructure. It is crucial that, in all its
forms, it supports small business and treats you fairly as consumers –
from access to superfast broadband to a fair deal in the energy markets.
On digital infrastructure, we will follow the recommendation of our
Small Business Taskforce and ask Ofcom to investigate how BT and other
providers can deliver broadband within a week as standard. We will
consider the Taskforce’s proposal of an e-commerce Ombudsman as well.
On energy, small businesses consume like residential consumers but you
get nowhere near the same protection. Myself and Shadow Energy
Secretary Caroline Flint want to change that. Under a Labour government
energy companies will be banned from rolling small businesses over onto
more expensive tariffs without their consent. Back-billing will be
limited to one year, not six; and we will require realistic repayment
plans for small businesses that fall behind, not immediate demands for
full repayment.
It would be remiss of me not to say something about regulation.
In every major election politicians of different parties have promised
to cut red tape. But I think you are fed up of politicians making
overblown promises about this, when your practical experience suggests
otherwise if and when we get into office. I want to be upfront with you
on this: the conversation about regulation is too crude in my view
because it’s about the quality not just the quantity of regulation –
both are important.
Also, regulation per se is not always a bad thing – for example, I have
just mentioned ensuring the energy companies serve you better - that
involves better regulating them.
And, as a former employment lawyer, I totally understand the worry
employment law can cause but if we go for a ‘slash and burn’ approach to
your employees rights at work, I fear it will hit consumer confidence.
Employees worried out of their wits about keeping their jobs do not go
out and spend much in your businesses in my experience.
So we will adopt a balanced approach to this issue and reform where
needed which is why I welcomed the Underhill Review into the Employment
Tribunal Rules of Procedure.
With regard to exports, if we are to pay our way in the world, it is no
good us urging more small businesses to export if the support is not
there. There is a huge amount of demand out there in the global
economy, which is set to double through emerging markets. Our
businesses – you – need to have your share of this pie.
A straightforward thing we are looking at doing is establishing a
network of ‘export hubs’ in major overseas cities, as recommended by our
Taskforce, which UK firms could use as an office base and place for
meetings and research.
Finally, I believe that we need to transform the way in which central
government serves small businesses. On finance: there are lots of
disparate schemes and you have to search out details. They should be
brought together under a single portal to improve access and awareness –
a simple thing Government can do which will make it much simpler for
you
And, our new approach to small business, which reflects the changing
nature of small business, is why today I say I believe there is very
strong case for the establishment of a Small Business Agency, along the
lines of the Small Business Administration in the US. I have met senior
SBA officials several times and believe an equivalent agency could be
set up here under the auspices of the Business Department to drive a
small business agenda across the whole of government.
What I have just outlined is not an exhaustive list but I hope it gives
you an idea of our programme for small business in government.
However, until the election, we continue to serve as Her Majesty’s Loyal
Opposition - but I don’t believe we have to wait for government to
actively champion small businesses.
A small but effective thing we can do is establish a UK Small Business
Saturday. In the US, Small Business Saturday takes place on the first
Saturday after Thanksgiving celebrations, one of the busiest shopping
days of the year. It is used to celebrate and showcase small
businesses’ contribution to their local economies and to encourage
people to shop at small independent businesses in their local area – it
boosted spending in small independent businesses by .5 billion last
year. So we are building a movement to make Small Business Saturday a
reality here – it will start on Saturday 7 December this year.
A Small Business Saturday in the UK is something all local authorities
could support and promote. Administrations in Manchester, Birmingham
and London are already supporting our campaign to do this along with
seven business organisations, including the FSB, representing over
370,000 businesses.
So, to conclude: it is tough out there but because I see so much drive,
passion, great customer service and innovation in small businesses all
over the country, I am hugely optimistic about your ability to meet the
challenge.
It is why I want to help.
It is why you will only ever hear me talking you up, not down.
It is why it has been such a great privilege to speak to you today.
Ends
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