Over the past fortnight I have spoken to a number of people involved in small and medium sized businesses in London and at a recent series of Progress regional small business roundtable meetings with business people and parliamentarians such as Liam Byrne and Seema Malhotra.

The question posed has been: ‘what can the Government do for you?’ – the answers have been varied, but address issues that all of the major political parties will need to consider and take a position on prior to the general election in June 2015. It is therefore more important than ever for business voices to be heard. I want to touch on just three of the most popular policies to be raised.

Getting parents back to work

One issue which has come up time and again, and indeed seems to dominate debate in some forums, is the availability and cost of childcare for those people with children who are looking to return to work. My understanding from listening to the debate is that funding for childcare is inadequate in the vast majority of cases and that an increase in funded childcare hours (from 15 to 25) would help many more parents get back to work.

Obviously providing childcare is expensive for government, but it was felt that the net cost to the economy would be reduced as any person re-entering the workplace would generate income tax and other work-related taxes with an appropriate balancing reduction in the level of benefits that they are receiving.

It will be important for Labour to look at this issue in detail and present a workable, costed solution, which meets the needs of those with childcare issues without placing too great a cost on the state. I think getting our message right on this issue will allow Labour to pick up significant support amongst women voters, families with children and others who have recently dealt with childcare issues.

Accessing public sector contracts

Many local businesses share my frustration about the public sector tender documents they are expected to deal with, which often run to tens of pages and cover a whole range of things often not relevant to the project being tendered for. As just one example, when submitting tender documents I’ve found that my company has to jump through huge hoops with regard to health and safety on construction sites – when in fact the public affairs support we offer is pretty much desk-based.

These types of burdensome requirements often mean that the cost of participating in these tenders rule out any but the biggest companies.

For the public sector to raise its game it needs to employ the brightest and best, and for that to happen it desperately needs to open up its contracts to allow new and local businesses to bid for work, with a realistic chance of winning it. We are seeing massive reform in government with how services are procured, delivered and especially cut. Labour could send a significant message to the market about its pro small business nature by ensuring the same access to public sector work.

Labour could reinforce its commitment to a fair and transparent tendering process by simplifying application procedures and giving far clearer indications of how selection decisions are to be made.

Reducing the tax on jobs

Currently, national insurance is a massive component in the monthly salary run with employees paying 12 per cent (between the upper and lower earnings limit) and employers paying 13.8 per cent. (There are a number of exemptions and rebates, but this gives a general understanding of the situation). It is a proportional tax, but it is not necessarily progressive or indeed particularly redistributive, with the money disappearing into the government’s coffers with little or no indication of how it is spent.

Now if Labour is keen to see an increase in employment, in particularly full-time employment, and also wants to indicate that it is supportive of business and growing the economy, then surely this is the tax that Labour should be looking at to reduce.

Why? Because if national insurance is cut, then employers would have a reduced wage bill. The savings could then be used in a number of different ways.

If it is a successful company generating profit it could be spent on more staff (to grow the company, or reduce the working week of those people currently employed), better staff benefits or even if it goes through to profit it will still be caught by corporation tax or by the company to support good causes through charitable giving.

If a company is only breaking even or indeed losing money, then a reduction of this nature could be the difference for an employer in taking the risk to retain a member of staff or let them go.

My feeling is that if this tax was reduced we would see an increase in employment, as most reasonable employers want to see their staff have a good work life balance, and also are concerned about resilience within their teams – having some additional capacity would enable them to manage more easily maternity, paternity, staff leaving and sick leave issues.

How would this be paid for?

First, some of the cost would be covered by removing the ridiculous £2000 ‘employment allowance’ that the Tories are offering on NI, which although supposed to benefit small business really will have an almost minimal impact on employment and replacing this with a straight cut in national insurance levels.

Second, Labour would keep the current rate of corporation tax relief, reversing any future cut in the rate as has been hinted at by the Conservatives.

Third, increased levels of employment would see an increase in the tax take and a subsequent reduction in welfare payment.

Taking action

So why should Labour consider taking action on these three issues? A simple understanding of economic policy is that it should do two things:

1. Increase the economic wealth of a country by growing its GDP
2. Ensure that the wealth generated in the country is more evenly spread amongst those people who help create it, while making provision for those unable to be economically active.

Labour is generally, and quite rightly, recognised for giving a lot of consideration to the redistribution, or even pre-distribution of wealth, but it is often criticised for its failure to properly communicate its plans to increase GDP and inflate the nation’s wealth.

To improve Labour’s standing with business, particularly small and medium sized businesses, it needs to present clear messages about the action it is planning to take to increase the wealth of the country as well as spread it more evenly. They are not mutually exclusive, but to date the messaging on the wealth creation has almost been apologetic when it needs to be robust. Adopting clear and demonstrable policies on the three issues raised above would be a good start to making Labour’s business case.

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Mark Glover is the chief executive of Bellenden Public Affairs. Bellenden recently worked in partnership with Progress to hold a series of roundtable meetings discussing the issues affecting small businesses

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Photo: Russell Davies