The small businesses who say Labour’s not working for them — yet

When Rachel Reeves walked into the Treasury in July following Labour’s resounding victory in the general election, she made it clear that her mission as chancellor was to focus on economic growth.
Since then, she has painted a bleak picture of her economic inheritance while Sir Keir Starmer, the prime minister, has warned about tax rises needed to help plug a £22 billion black hole. The gloomy message was blamed last week for a sharp fall in the closely watched GfK measure of consumer confidence.
So, as Reeves prepares to invite international investors to a key summit to attract billions of pounds of investment into Britain before her first budget on October 30, what is on the minds of business leaders?
Aurrigo makes autonomous vehicles at its factory in Coventry where it employs 110 people. It listed on London’s junior market AIM two years ago.
David Keene, 60, chief executive, said he wanted to see a clear strategy from the government about its approach to industry and the economy. “Getting to that quickly would be a really important thing for the government right now because they’ve been brought in on a mandate [for change],” said Keene.
He said the messaging of, “We’ve got this £22 billion black hole, it’s all terrible and the country’s falling to pieces” needed to be replaced with a more positive spin.
“Where’s the plan for the growth?” he said. Once it was clear what the government’s intentions were, it would be easier for companies like his own to plan, he added.
“Our company’s doing really well and we’re beating the world on what we’re doing but the narrative over the top of it, it’s not great from a country point of view.”
DefProc Engineering is based on Liverpool Science Park after being founded in 2013 by Jen Fenner and her husband Patrick, the head of engineering. It employs six people, working on design projects for a wide range of companies. It helped develop Remlok, a remotely operated medicine cabinet for pharmacists.
Jen Fenner, 41, the managing director, has detected caution among her clients. “One of the things we’ve noticed, particularly over the last 12 months, is where people used to come to us with a budget ready for their innovation work, they are now wanting to de-risk everything. It would take maybe two to three months to land an innovation project, now it’s taking maybe six, sometimes 12,” she said.
She said the government had talked about innovative industries being an important driver for economic growth but called for clarity on key areas, such as whether hydrogen was a key part of the green economy.
Fenner also said that changes to the way HMRC was handling tax credits on R&D were delaying decisions because firms were no longer able to self-submit their applications. She added: “Business has been incredibly uncertain for a lot of people and our clients are very much looking to keep control of costs because they’re not sure where the economy is going.”
Based in Coventry, where it employs 400 of its 650 staff, Amtico makes wood-like flooring and is now part of the American family-owned company Mannington Mills.
Jonathan Duck, 63, the chief executive, said his business had been faring better than some rivals because its product tended to be used in expensive projects.
Even so, he said some customers might be delaying orders because of the government’s plans to charge VAT on school fees. “That just puts people off doing house renovations while they try and work out their numbers,” said Duck. “It’s the constant law of unintended consequences.”
For the same reason, Duck urged caution on plans to give workers more employment rights. “You get these arguments that workers have got these rights in Belgium or Ireland, say. Unfortunately, I’m not competing with Belgium and Ireland. I’m competing with China and Vietnam and America.”
Family-owned Robinson Brothers is based in West Bromwich and employs 250 people in its chemical factories, where among other things it makes the smell that is put into the gas pumped into homes.
Adrian Hanrahan, 63, the chief executive, said he wanted the “obstacles” the business had faced in recent years to be removed. He pointed to the rise in energy prices after Russia invaded Ukraine as the reason the firm had to make 30 redundancies last year. The 10 per cent rise in the minimum wage in March to £10.42 hour also hit his costs, as other staff wanted comparative rises.
Hanrahan sees plans to change employment rights as a new obstacle, particularly the suggestion that probation periods may be ended. “It worries me that the ability for us to release people because of their unsuitability for the job, that it’s going to be curtailed.”
And he pleaded for a more positive tone from the government: “Just get on with it and give us some hope.”
The 65-year-old business Rutland Plastics employs 150 people and makes moulds for use in the medical, electronics and engineering industries.
Stuart Johnston, 47, the chief executive, said that there seemed to be mixed messaging from the government. “There’s certainly a feeling that while we’ve got a new government and they’re saying they want to listen to business, the messages they are putting out don’t seem very supportive of business.”
One of his key concerns is recruiting staff so he is scrutinising Labour’s workers’ rights plan. He partly blamed Brexit as two longstanding colleagues from Romania face being forced to leave because their applications for settled status have been rejected. “One of the problems we have is getting people who are good enough. We don’t have access to people who want to work and have the capability.”
Johnston is also watching for confirmation that Labour’s pre-election pledge to keep capital allowances — which allow the costs of investment to be deducted before tax is due — are not reduced. “This is a massive thing for manufacturers,” he said.
Jen Fuller set up her baby sensory products business Etta Loves eight years ago and sells online and through retailers such as John Lewis. She employs four people in Sudbury, Suffolk.
Fuller, 44, wants policies from the government to help the economy grow and boost consumer confidence, which has been battered by concerns about interest rates and the geopolitical tensions in the Middle East. “We’ve had a sense as a business that there’s been such uncertainty since the beginning of the year that it has really been playing out in how people have been spending or not spending. It’s been incredibly hard to forecast and manage all our stocks.”
She felt that trading should improve in the last three months of the year, particularly as interest rates had started to to be cut by the Bank of England. “That should be stimulating greater consumer spending,” she said.
“I want to feel that the economy is moving in the right direction towards enabling growth and therefore my customers to feel more confident, have more money in their pockets and feel more confident spending with my business.”
Gravita is a private-equity backed accountancy firm targeted at small businesses and those listed on London’s junior market, AIM. It has about 400 employees.
Caroline Plumb, 45, the chief executive, said her clients were concerned about potential changes to capital gains tax that could affect how much tax entrepreneurs pay when they sell their businesses. Some entrepreneurs were trying to complete deals before any changes, she added. “My sense of what small businesses are worried about, particularly the owner-managers we talk to, are around capital gains tax and what that means for wealth creators as opposed to those who have wealth,” she said.
Clients were wondering whether the tax incentives to encourage investment would also be introduced for software. They were also discussing the implications of giving workers more rights. “Businesses want to know how do you encourage risk-taking and agility if at the same time you’re having day-one employment rights. How does that create flexibility?” she said, pointing out that start-up businesses often have to be agile in changing their employment needs in order to survive.