Lord Young was secretary of state for trade in Mrs Thatcher’s government so he knows a thing or two about the relationship between government and business. He says he wants to encourage more people to start up their own companies. Now, I am all for people working for themselves, something I did for many years before becoming an MP, but one of the lessons I learned from running a small business is that many people who start up on their own live to regret their decision. Only five per cent of businesses survive the first five years; within 10 years very few businesses are still going strong. What that means in human terms is that the people who start businesses usually lose the money they invest and end up suffering financial hardship. Most businesses fail and most people who go into business don’t make it due to poor planning. So when I hear Lord Young encouraging people to go into business, I wonder whether he will make sure that people understand the risks involved.
A good business plan and a good understanding of business are essential, yet many people are seduced by the idea of running their own business. You wouldn’t set up as a doctor without years of training and preparation. Setting up a business should be no different, so I hope that Lord Young will give good advice to prospective business people.
We are also told that Lord Young will be working out what businesses need to help them grow. This means removing regulation, all of which sounds great until you find out what it means. Remember the Tories opposed the minimum wage and the working time directive – measures which actually help business as well as protecting staff. What Lord Young means is that he would remove legislation like the one year rule which protects staff who are employed for more than a year from the insecurity of the sack. No doubt he will also ‘help’ businesses by cutting the minimum wage – the government has already done just this for farm workers by abolishing the Agricultural Wages Board, removing vital protecting for low-paid workers. My grandad owned a confectioners and he taught me that if you can’t afford to pay decent wages, you shouldn’t be in business – wisdom from a previous generation that is very relevant today. Competition on the basis of low wages is not a long-term recipe for success. There will always be countries where people will work for less; success in this country has to be based on high skills and high wages.
I said that the reality will be rather different to the government’s stated aim of helping small business. Billionaire retailer Sir Philip Green questioned the need for a five-day target for settling bills with smaller suppliers, introduced under Labour. So even if Lord Young is serious about helping small business, he is up against the interests of big business in his own government who see small business as just a part of the supply chain which is there to be exploited.
Lord Young said, ‘it is in the government’s interest to see prosperous small firms. They are 60 per cent of the employment in the private sector, half the GDP.’
He is right to say this, but the loss of 490,000 public sector jobs will have a profound effect on those small firms. Forty per cent of the workforce in Sefton works in the private sector and 40 per cent are self-employed. This is significant as small businesses in Sefton depend on public sector staff for their livelihoods. The public sector workers are the customers of the builders, the shopkeepers and the taxi drivers in my constituency. PricewaterhouseCoopers estimates that a further 500,000 people will lose their jobs in the private sector as a result of the public sector cuts. Many of these people will be small business owners or their staff.
I hope that Lord Young does help small business. However, he will need to resist cuts in public sector employment, measures which prefer big business at the expense of small business and so called cuts in red tape that actually undermine small business. He will also need to promote a far greater understanding of how to succeed in business among those who would like to run their own business.
It is great to have a Labour MP talking about small business in such a knowledgeable way, and Bill Esterson is spot on to draw our attention to this very clever move by the coalition. Speaking as a Labour activist who is also a sole trader– and who did a lot of work on developing Labour’s small firms policy in the mid-1990s, when profit (let alone small business) was a dirty word – I fear that the Tories’ (and LDems’) belated rediscovery of the importance of small firms could win them a lot of support. We know that the cuts will eventually wreak damage right across business and industry. But for the moment, many companies will applaud the government for trying to steer more public contracts towards small firms rather than large ones. And even more people will be pleased that the coalition appears finally to be getting the message and turning its attention to growth at the grassroots. The sharp challenge for Labour now is how to develop our own credible policies to help small firms. The work done in opposition helped cement our 1997 victory and meant we did a lot to help small business in our first term. But that got lost in an unhealthy fascination at the top of the party with large companies – or, more accurately, the very rich. In some ways Labour is back where it was in the 1990s: we have to find ways of demonstrating actively to voters that we understand how money is made, not just how it can be spent. Showing that we care about, and understand, the needs of small firms would be a powerful start. The first step must be to listen – and to be seen to do so. For example, a Labour Commission on Small Business could travel round the country, taking evidence from small firms themselves, chambers of commerce, business advisers and others as the cuts bite. This would help inform policy that was relevant to today’s problems. And the highly visible process itself – being seen to support small firms and to be developing policy with, rather than for, them – would help build the Party’s credibility more widely. Small firms deserve Labour’s support as the disempowered backbone of our economy. As the coalition has realised, they also represent a big political opportunity for any party. A failure to grasp this opportunity will make Labour’s climb back up the hill to government that much harder.
yeah but no but…. this big herrnowncement about the post Office by the Tories ,that was Peter Mandelson’s idea I seem to remember ! no? yes?
can you tell me how much you manage rich people to avoid in your consultancy company Ben and how much it could have spent to avoid the cuts?