Don’t Let Chance For Real Growth Slip Away At Spending Review, Say Small Firms

FSB calls for the Chancellor to back the UK’s small businesses ahead of the Spending Review.

The Government must “make every taxpayer pound count” in the Spending Review, the Federation of Small Businesses (FSB) has warned.

Chancellor Rachel Reeves is facing tough choices next Wednesday, with public finances tight and small business confidence in the doldrums.

But with employment costs rising under rushed Make Work Pay plans, late payments piling up and mounting pressures from net zero, this is the moment for ministers in every government department to focus their firepower on small business growth and use limited funds wisely.

FSB is calling for the Spending Review to include:

• A Statutory Sick Pay (SSP) small employer rebate to make it easier for small businesses to take on those with health conditions – which would have a positive knock-on effect on the economy by tackling economic inactivity – especially with 75 per cent of small employers concerned about being able to afford the extra cost associated with the expansion of SSP. An SSP rebate is essential if the government is to have a chance of achieving its 80 per cent employment target.
• Expanding the availability of free energy audits and capital investment grants for small firms, with up to £100,000 in funding for energy-saving measures such as solar panels, insulation, heat pumps or energy efficient lighting, heating or refrigeration. This is currently being successfully piloted through the Business Energy Advice Service in the West Midlands and should now be rolled out to more regions.
• Banning companies that pay their small suppliers late from winning government grants through the Industrial Strategy, unless they pay at least 95 per cent of invoices within 60 days and keep the average payment time to 55 days or less, as required by government procurement rules. Taxpayer funds under the Industrial Strategy must be subject to the same strict standards, or risk weakening the UK’s supplier base and eroding confidence in the strategy itself.
• Targeting spending and finance where it can have the biggest bang for buck – extending the Start-up Loan scheme to help more new entrepreneurs launch, and making the Growth Guarantee scheme permanent, with 70 per cent of loans to firms outside of the south east of England.

The Spending Review covers the next three years, and each and every government department must publish its own direct SME procurement target and report it to the Cabinet Office, with a named minister made accountable for each department.

This includes major winners in the review – and the Ministry of Defence must deliver on the Chancellor’s pledge with FSB to fix the broken system of SME defence procurement.

Tina McKenzie, Policy Chair of the Federation of Small Businesses, said:
“There’s no use glossing over the reality – every pound in this Spending Review has to work twice as hard. With public finances under strain and business confidence low, the smartest move the Chancellor can make is to back the UK’s small businesses because that’s how you get real growth in every local community.

“If public money is spread too thin or misallocated to expensive schemes it will disappear without a trace, which is why targeting investment and supporting the UK’s everyday entrepreneurs is so important, so that they can generate wealth, growth, and jobs.

“The right choices now – making sick pay changes affordable, stopping taxpayer funds being diverted to late payers, reducing energy bills for small firms, and putting real muscle behind schemes that help both new firms grow and existing ones launch – will set the stage for the growth we desperately need.

“The small business community wants the government to show it really gets the need for growth and takes the opportunity next week to grasp it.”