Small business strategy

Status / emerging findings

• SME confidence is at historically low levels comparable to or worse than the Covid-19 pandemic; costs are rising faster than revenues and businesses lack pricing power to pass costs to customers
• Late payment is closing 38 UK businesses daily; £23bn in unpaid invoices outstanding with nearly half of all invoices paid late, reaching 60-90 days in construction
• Hospitality sector lost 84,000 jobs since April 2024 Budget; individual businesses report 5-10% workforce cuts despite 14-29% revenue declines, with many becoming 'structurally unprofitable'
• Government procurement to SMEs stands at 20% against an inherited 33% target, representing a £44bn annual shortfall; Minister refused to commit to a new target
• Retail crime imposes a 10p-per-transaction 'crime tax' on convenience stores; 77% of retail workers experienced abuse annually, with prolific offenders repeatedly re-released
• Non-commodity costs comprise 45% of small business energy bills; 75% of microbusinesses experienced billing issues and third-party intermediary market remains largely unregulated
• Construction sector needs 250,000+ additional workers over 4-5 years but two-thirds of trainees fail to complete training due to college-industry mismatch; 98% of construction firms are SMEs

Why it matters

SMEs employ 60% of UK private sector workers and are central to government's growth targets, but evidence shows they face simultaneous pressures from late payment abuse, rising costs (energy, employment, tax), retail crime, and poor procurement access that threaten business closures and job losses.

Tone arc

Inquiry opened procedurally focused on cost pressures but shifted markedly critical after hospitality witnesses in September revealed 84,000 job losses directly attributable to government Budget changes; final evidence sessions in November on crime and HMRC enforcement revealed systemic enforcement gaps that amplified the narrative of government failing to support small business viability despite stated commitments.

Key witnesses

Blair McDougall MP (Minister for Small Business), Alison Kerrey (Federation of Small Businesses), Alice Jeffries (CBI), James Lowman (Association of Convenience Stores), Allen Simpson (Hospitality sector representative), Jonathan Athow (HMRC), Superintendent Lisa Maslen (Police), Nick Plumb (Power to Change)