King Charles recently made his speech at the State Opening of Parliament, following the Labour Party’s success in the July general election. The King’s Speech is written by the government and is delivered by the Monarch, with the purpose of the speech to outline the government’s priorities for their first year in office. I know that SMEs want the government to reduce their tax burden for businesses, such as increasing the VAT threshold, making funding easier to access and reducing energy costs.

Labour’s manifesto focused on economic growth and this article will look in detail whether the King’s Speech lives up to the expectations of SMEs.

New Employment Rights

  • This bill will look to ban zero-hour contracts, along with ending ‘firing and rehiring’ practices.
  • Employees will be entitled to flexible working from the first day of their employment.
  • Workers will be entitled to parental, sick pay and unfair dismissal from day one of the job.
  • Statutory sick pay will be available to all workers.

These changes don’t surprise me, given during the election campaign, Labour promised to reform employment rights.

Whilst I believe employees should be given protection from bad employers and their underhanded practices, these proposals have the potential to hit the pocket of businesses and reduce labour market flexibility.

SMEs will need to overhaul their HR practices to comply with new employment laws and the broadening of employment rights could result in more employment tribunal claims, making it imperative employers document justification of employment decisions.

Businesses should look to start reviewing their existing HR policies to ensure compliance. If not already implemented, consideration should be given to creating a documentation process for HR procedures such as the hiring and firing of employees, flexible working arrangements and employee benefits.

As an employer, I am concerned these changes increase costs and risk associated with employing staff and I believe the Government should widely consult before implementing any changes.

Great British Energy Bill

  • £8.3 billion will be made available to develop and own assets, along with investing in partnership with the private sector.
  • GB Energy will be a state-owned energy company, set up to protect us from rising energy prices caused by global events.

The King's Speech touched on how, GB Energy will be responsible for accelerating clean energy investment which should create jobs.

Businesses in the energy sector should prepare for new opportunities along with potential regulatory changes. I suspect there will be additional tax incentives introduced, to encourage sustainable practices.

Budget Responsibility Bill

  • The Office of Budget Responsibility (OBR) will be required to independently assess any significant and permanent tax and spending changes made by the government.

Now that OBR forecasts have legal standing, Rachel Reeves and future Chancellors may have less flexibility in tweaking fiscal rules. I believe this lack of flexibility may stagnate economic growth.

My opinion is this has been introduced to convince financial markets that stability is the basis of UK economic policy for the new government and that Kwasi Karteng’s doomed 2022 mini budget won’t be repeated.

For businesses, this should result in a more stable and predictable economic environment.

Planning and Infrastructure Reforms

  • This bill aims to reduce red tape in the construction industry in a bid to accelerate infrastructure and house building.

I believe this is a good idea in principle, but it may be difficult to achieve. There is currently a labour shortage in the construction industry and the government will need to promote apprenticeships, offer more training for those currently in the industry and attract back those who have left the sector for this to be achievable.

Businesses should prepare for the potential for new investment incentives being introduced, along with a change in property taxes such as Stamp Duty Land Tax.

Was The King's Speech A Missed Opportunity?

The King's Speech was Labour’s first opportunity to offer help to the UK’s 5 million SMEs and to take the brakes off the economy. This can only be achieved by working in partnership with the 5 million SMEs in the UK and I believe the announcements fell short of this. Within the outlined proposals, I have been unable to identify any positive news for SMEs.

Inside the 105-page briefing document, there is not one mention of ‘small business’ and there was no reference to the challenges facing SMEs, such as addressing a poor payment culture by big clients towards SME firms. This is despite Labour previously indicating it would address this.

Small employers struggle the most when employing people and I am worried about the developing employment rights package, given there were no commitments from the government to assist SMEs with this.

Small and medium- sized firms must be given the right platform to grow, create new jobs and recruit those who are out of work. SMEs are the solution to ensuring labour market participation, employing three-fifths of the UK workforce and around half of turnover in the UK private sector.

There was no mention of the need to support SMEs and I believe this shows complacency by the government on the importance of these firms to our economy.

The prosperity of the UK economy depends on the success of SMEs and I’m hoping the new government will help create conditions that enable SMEs to thrive, although I’m yet to be convinced.

What Next for Businesses After The King's Speech?

The earliest the Autumn Budget can be is 13th September as any tax changes will need to be reviewed by the OBR. This is when any real changes that will affect your business be introduced.

Navigating legislative changes can be complex. We are here to help you understand the financial and tax implications for your business. Sign up to our weekly news blast so you never miss an update. Being proactive with confirmed regulation changes will become a critical requirement for businesses wanting to stay ahead.

 If you would like any further information, please contact our offices for expert advice and to ensure you’re prepared for the changes ahead.

Author: Jonathon Greenaway

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