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Politicians have forgotten how to court small businesses

Politicians have forgotten how to court small businesses

IPSE's Joshua Toovey argues that our political parties have lost their way when it comes to the UK's smallest businesses.

Josh Toovey Headshot
Josh Toovey
08 May 2025
3 minutes
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Almost a year ago to the day, Rachel Reeves was firmly positioning her party as the ‘most pro-growth, pro-business’ that this country will ever see.

Going back a little further, Margaret Thatcher continually repeated her line that the UK is a ‘nation of shopkeepers’ and David Cameron even launched a Small Business Manifesto in an attempt to appear sympathetic to our smallest businesses.

Alas, our now Chancellor’s actions to hike Employer’s National Insurance and seemingly forget about the numerous problems plaguing businesses has led to most voters now viewing her attempt to re-position Labour as merely pre-election guff.

Even the very sentiment that both Reeves and Thatcher were trying to convey has vanished from almost all of the rhetoric that we hear from our politicians. 

Businesses a mere afterthought. And the self-employed are often wrongly grouped by policy wonks and party officials as ‘insecure’ workers that would prefer the security and safety net of employment.

So what’s happened? Why are our political parties neglecting such a vital part of our economy?

Why have our parties lost their way?

It doesn’t take too much analysis of the policy issues that seem to be keeping our parties busy to understand why. 

A quick tune-in to Prime Ministers Questions (though I wouldn’t recommend it for the sake of your sanity) reveals that many of our politicians are preoccupied with ‘culture war’ issues, whilst others are understandably more focused on global events.

Although some MPs quite rightly speak up about the state of our high streets, the self-employed are often overlooked. The parties themselves are also guilty of ignoring the considerable contribution of the sector, instead favouring a quick win at the expense of a political rival.

The local election results must act as a wakeup call

It’s fair to say that it was a very bad night for both the Conservatives and Labour at last week’s local elections. It may not change things in Westminster, but it does show the current level of frustration with the major parties – not least among the 4.3 million self-employed. 

Business owners are now voting with their feet in response to some of the devasting policies that were introduced at the Autumn Budget. But with the recently deposed Conservatives being responsible for their own share of costly tax hikes on the self-employed, the rise of the Reform party as a political force can be seen as a sign of voters’ desire for change.

It remains to be seen if their support will translate into a significant number of parliamentary seats, but our traditional major parties will need to stage a strong reaction if they are to recover.

Is this government any better?

We should give them credit where it’s due. They’re pushing for bold action on late payments that could have a noticeable impact on perennial late payers, and hopefully reduce the scale of the late payment crisis facing freelancers.

However, Reeves’ Autumn Budget is having a devasting impact on hiring and the availability of work. We’ve heard of clients putting projects on hold due to the increased cost of Employer’s NI, and although self-employed engagements are not subject to these costs, overall budgets have now been significantly tightened and the market certainly appears to be slowing.

Similarly, the frozen income tax thresholds, a continuation of the policy from the previous Conservative government, is only resulting in more taxpayers paying higher rates and squeezing many of our business owners that pay themselves a salary. 

The ever diminishing benefit of drawing dividends as a company director is also reducing the attractiveness of taking the plunge and beginning a business in the first place.

And given the focus that the Treasury is placing on economic growth, unleashing the potential of the UK’s smallest businesses seems an obvious area to support with targeted policy ideas.

What can be done?

What we truly need is a coordinated and well thought out strategy for business. 

Dare I say, we could even have some cross-party consensus. Forget Punch and Judy politics. Forget empty platitudes. Let’s have some serious discussions about how to embrace sole traders and single-person companies and help drive entrepreneurial endeavour once again.

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