Labour’s pre-election courtship of business has given way to a familiar reality: the unions are in charge.
Unlike Tony Blair, who had the foresight to tell the unions to wait until his second term, Keir Starmer has shown no such political or economic acumen. Instead, his Government has rushed into anti-business policies that threaten to undermine the workforce it claims to protect.
Labour say they want to safeguard workers’ rights and support the vulnerable, but their real goal is empowering the unions. Hiking the minimum wage, raising National Insurance and piling on employer burdens cripple the very businesses that drive employment and growth. This comes at a time when the Office for Budget Responsibility is set to downgrade the growth rate for the 2025 financial year by half – further evidence that Labour’s policies are actively harming the economy.
The upcoming Spring Statement – effectively an emergency Budget – is a critical opportunity for the Chancellor of the Exchequer to address the damage she has inflicted on small and medium-sized enterprises (SME).
The reality behind Labour’s policies
A higher minimum wage might sound like a win, but it has forced wage increases across organisations. Minimum-wage recruits will earn almost as much as experienced colleagues, increasing wages at every level. Industries such as hospitality, retail and beauty are particularly affected. The result? Fewer hires, higher prices and more inflation.
The National Insurance hike couldn’t have come at a worse time. Many industries, such as road haulage, operate on razor-thin margins. Burdening them with additional costs forces cutbacks on hiring, weakening the job market and supply chains.
Labour’s regulatory burden discourages hiring, particularly for those needing extra support. The most vulnerable jobseekers now face even greater barriers to employment.
All hail the cash economy
SMEs thrive on agility. While Labour talk about slashing red tape, they have only increased it for businesses. Their additional bureaucracy strips SMEs of their edge, making them less adaptable in an uncertain economy.
The consequences are clear. The cash economy is roaring back. Young adults seeking their first job are now offered work off the books without contracts, protections or benefits. The result? Fewer official jobs, lower tax revenue and a workforce stripped of protections.
True to their entrepreneurial spirit, businesses are adapting. Instead of running salons, hairdressers are going mobile. Instead of opening high-street cafes, caterers are launching food trucks. Many are shifting to cash payments to avoid punitive costs. Labour’s policies are forcing our entrepreneurs into the shadows.
SMEs: the backbone of our economy
SMEs may not contribute as much in direct tax revenue as multinationals, but their economic and social importance is undeniable. They hire locally, serve communities and define our high streets. Labour’s approach is gutting this crucial sector, leaving our towns with shuttered storefronts and lost jobs.
The Conservative Party must step up. I welcome Kemi Badenoch’s launch of the Policy Renewal Programme, and encourage SMEs to get involved. Business, it’s time to pick your party. Come back to the blue side, engage with policymakers and shape the pro-business agenda Britain needs.
A pro-business alternative
First, SMEs need stability. Confidence comes from predictable policies that allow businesses to plan, invest and innovate without fearing sudden, damaging shifts.
The minimum wage increase must be phased in gradually, and the National Insurance hike should be scrapped. Businesses face enough inflationary pressures without Labour adding to the burden.
Business rates must be lowered for independent high-street businesses. Councils should be encouraged to allow empty stores to be occupied for free by businesses testing a physical presence – a move that would reinvigorate our towns.
Tax breaks should support businesses investing in training, apprenticeships and new technology. This would fuel growth, while ensuring a more skilled workforce.
Stability in leadership is also critical. The Shadow Business team should remain in place for an entire parliament, providing consistency and a reliable point of contact.
Finally, a direct feedback loop between business and government is essential. Since launching last month, Conservatives For Business has begun engaging with SMEs and MPs nationwide. If we want a pro-growth agenda, politicians and businesses must work together to shape it. That’s what we’re facilitating.
Labour’s approach is not just flawed – it’s economically reckless. Their policies are forcing businesses into untenable positions, eroding job opportunities and driving workers into the unregulated cash economy.
The Conservative Party has a chance to rebuild trust, not through grand gestures but through practical, common-sense reforms that allow businesses to thrive. It must commit to reversing Labour’s damage and putting SMEs back at the heart of the UK economy.
It’s not rocket science. It’s just good business.
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