A parliament that knows about business and what makes it tick: this is surely what we need. Business background, experience and knowledge is now all the more vital as the main parties are pledged to the largest expansion of government spending since the 1970s.
Billions upon billions have been pledged for giant infrastructure projects, economic transformation and regional renewal. Who best to assess what projects will constitute a worthwhile investment, will bring value for money and are practical to implement?
It would be reassuring if these qualities were to have a greater presence at Westminster on 13 December. But how likely is this?
Never before has there been greater scrutiny of the backgrounds of MPs to ensure greater diversity and representation. A long-standing complaint has been that Westminster is dominated by lawyers, lecturers, local government personnel, teachers and media folk. Lobbies and pressure groups call ever more loudly for better representation in the UK legislature for women; for more black and minority ethnic voices; community activists, more gays, transgender people, the disadvantaged and disabled.
Yet the voice of small business is arguably the most under-represented and overlooked in parliament: people who have started or run a business and have first-hand experience of what – and what doesn’t – work to create and sustain jobs, create growth, encourage investment and revive a community.
Small firms are the beating heart of our economy. Last year there were 5.7 million private sector businesses in the UK – some 2.2 million more than in 2000, an increase of 63 per cent over the whole period.
Small firms contribute 48 per cent of private sector employment and add £1.2 trillion in turnover. They continue to make up 99.3 per cent of all businesses and generate over £1 trillion turnover.
Here in Scotland there are an estimated 354,125 small and medium-sized enterprises (SMEs) providing an estimated 1.2 million jobs. According to the Scottish Government website, SMEs account for 99 per cent of all private sector businesses, 55 per cent of private sector employment and 41.5 per cent of private sector turnover.
So there is no lack of talent or experience that could enlighten and educate the green benches of the Commons. And yet according to a Smith Institute paper on the 2015 intake of MPs by Paul Hunter, its head of research, 14 per cent were lawyers, 10 per cent from the media, five per cent were teachers, four per cent lecturers, eight per cent from the world of PR – a total of 41 per cent. The occupations of an additional 25 per cent were described as “politics”, making for a non-business background of two-thirds.
By contrast, the numbers of those drawn from any form of business background – corporate and consultancy as well as SMEs – was 22 per cent. And within this section those drawn from the SME sector is likely to have constituted the smallest.
The reasons are varied. Starting or running a small business requires an aptitude, outlook, skill-set and an obsessive dedication to a wide range of immediate practical problems at hand. It requires constant attention and adaptation. It leaves little time for academic debate, constitutional theory or party point-scoring. Success in business is never guaranteed. Financial survival is often the greatest achievement.
All this would seem to make the owner-manager of a small firm unsuited to be an MP. Yet a sympathetic understanding of business problems, the complexities of the tax system, the flood of new regulations, employment law and competition policy, planning disputes, changes in business rates, would be a great asset. In all of these areas what works and what doesn’t can kill or suppress the entrepreneurial spirit and undermine those lofty commitments to higher productivity and economic growth.
Here business is critically reliant on bodies such as the Federation of Small Business, Chambers of Commerce and specific industry and retail lobbies to provide vigilance and expertise. But all too often, such voices can find themselves chasing legislative proposals from parliamentary activists that can deeply harm businesses if allowed to slip through unchallenged.
Take, for example, the proposed amendments laid by Andy Wightman, a Green Party MSP, ahead of the Stage 2 vote later this month on the Non-Domestic Rates Bill. According to the Scottish Retail Consortium, it would, if passed, “exponentially increase bills for many ratepayers in Scotland. Every organisation with medium-sized and larger premises – including shops, hotels, schools, hospitals, public buildings, offices, and industrial sites – could see huge rises in rates bills”.
The SRC has calculated that a taxpayer-funded environmental body based in Stirling could see its annual rates bill rise from roughly £117,000 to £208,000; that a jeweller could see the rates bill for its Princes Street store in Edinburgh rise from about £229,000 now to £1.27 million, and a department store on Glasgow’s Sauchiehall Street could see its bill leap from about £129,000 now to £279,000.
Retail accounts for 22 per cent of business rates and the SRC has long argued for rates reform. The SRC’s David Lonsdale said: “Dreaming up new wheezes to tax businesses back to the Stone Age is completely wrong-headed. Hopefully MSPs will firmly reject such nonsense, and instead focus on delivering a rates system that not only better flexes with economic conditions but which tackles the onerous burden whereby the business rate poundage has escalated to a two-decade high.”
Meanwhile the Federation of Small Businesses has set out recommendations for the next government, including business rates reform, support with the “jobs tax”, and an end to the late payment crisis. One in seven people work for themselves, the FSB notes, “yet the self-employed have always found themselves at the back of the queue when it comes to policy-making. With the number of people in self-employment now equalling the number of people employed in the public sector, it’s clear that this situation can no longer be justified.”
A sympathetic acknowledgement of this programme and commitment to action would be of more value to the economy than the daily bombardment of spend-and-borrow billions from the serried ranks of those who have never run a business in their lives.