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Building an economy which works for people who work for themselves

Ed Miliband MP, Leader of the Labour Party, in a speech to the Federation of Small Businesses conference in Manchester, said:

It is great to be here in Manchester with the Federation of Small Businesses.

I want to congratulate the FSB for the amazing work you do across our country helping small businesses grow, thrive and succeed.

I want to thank you for working with Chuka Umunna, our Shadow Business Secretary, to do so much to promote Small Business Saturday.

And I want to say a special thank you to John Allan, your National Chairman.

For more than 15 years, John has been a champion for small businesses everywhere and I am sure we all want to acknowledge the incredible work that he has done to promote small business.

Friends, our country is still emerging, slowly and tentatively, from the impact of the financial crisis.

There has been a return to growth.

But while we all welcome the change, we also know that millions of hardworking people all over Britain today, still aren’t better off.

Britain is living through the worst cost-of-living crisis in any of our memories.

The economy isn’t working for them.

And it runs deep into people’s lives.

Leaving them asking:

Who is going to benefit from the growth we are starting to see: ordinary families or just the wealthiest at the top?

What future will there be for young people who can no longer assume they will do better than their parents?

What kind of businesses are going to succeed in the years ahead: businesses of all sorts and sizes, or just a few of the very biggest and most powerful?

In other words, the cost-of-living crisis makes people wonder what kind of country are we going to recover to be?

These questions mark out the fundamental choice in Britain today.

They are about how we succeed as a country: with a race to the top, for high wages and high skills, or a race to the bottom.

A race to the top is how we succeed in tackling the cost-of-living crisis and paying the deficit down.

A race to the top will create both prosperity and fairness in our country. And we can only succeed in that race to the top if your business succeeds.

And that is what I want to talk about today.

Britain’s economy is changing.

You know that better than anyone.

The number of people working for themselves has increased by over one million since the beginning of this century.

Small businesses are now the bedrock of our economy.

And they will be even more so in the future.

Many of the new inventions our country needs are going to come from you.

The new products are going to come from you.

The new jobs are going to come from you.

You are Britain’s best hope.

So to earn and grow our way to a better standard of living, Britain doesn’t just need a small number of large businesses to succeed, it needs a large number of small businesses to prosper.

We can only succeed in winning that race to the top, when we have dynamic open markets where your businesses can make bigger profits and become bigger businesses.

And we need to make big changes in our economy to make that happen.

A few days ago, I had the privilege of meeting members of the FSB’s Next Generation programme.

The programme that you are launching here at this conference today.

Like Alyssa Smith, who makes beautiful jewellery; Kate Hayes, who creates innovative digital marketing; and Hannah Bell, who offers affordable legal services to those who need them.

Dynamic young business women.

They told me of experiences of the sort that your members have every day.

The experience of what John Cridland of the CBI calls the “forgotten army” of Britain’s economy.

Anyone who wants to understand what needs to change in our country just needs listen to those stories.

Businesses starting out with a great idea, hard work and talent.

Often in a shed in the garden or up in a spare bedroom at home.

And succeeding against the odds:

With ingenuity.

Incredible effort.

And the power of word of mouth from satisfied customers.

These are businesses wanting to grow.

To take new people on.

To get premises for the first time, perhaps a workshop or shop on the High Street.

To learn new skills to expand their market and export.

It is so obvious to anyone listening to Alyssa, Hannah, or Kate that they are the future of our country.

They are how we will succeed.

But as you continue to listen to them, you also realise how many things have to change.

Because despite all their optimism, all their hard work, they each told me that there are so many obstacles in their way.

They’re still priced out of premises, with business rates often higher than rents.

There’s still no access to finance from the banks, even for businesses with a good track record.

They still can’t find the employees with the skills they need.

And there’s still a desperate shortage of opportunities for them to learn new skills for running their business.

When you hear all this, it is no wonder that for all that ingenuity and determination that they show only a quarter of small and medium sized companies in Britain have been able to recently launch a new product.

Compared to a third of French businesses of the same size.

And more than half of German ones.

That’s why so many British small businesses feel the system is rigged against them.

And you know what?

They’re right.

That’s why Britain is falling behind in the race to the top.

Our economy is changing.

But government has not kept up.

I know the Labour Party must change if we are to create the conditions to help you get the success you deserve.

The Labour Party has always stood up for working people.

But if we are going to do that in the future, I know the party I lead must recognise that millions of working people are working for themselves.

And we do recognise it.

I want to tell you today what means for a Labour government:

It means putting the needs of small businesses front and centre of our government’s priorities.

It means opening up competition and removing the obstacles placed in your way by powerful vested interests.

And it means working together, so we can provide the support that all of our small and medium sized businesses need.

So let me start by saying how government should be giving small business the priority you deserve.

Putting you in the fast lane.

We know so many of the costs of running a small business have got larger and larger in recent years.

Stifling enterprise.

The next Labour government is determined to tackle this problem.

Giving every sort of business a chance to succeed.

The current government plans to cut taxes further for large firms in 2015.

Competitive tax rates are an important part of ensuring long-term business success.

And that won’t change under a Labour government.

But in times as tough as this, in my view precious resources should be used to help the small businesses who need it most.

Especially given the way that business rates have gone up and up in the last few years.

Pricing small businesses off the High Street.

Or stopping them getting that new workshop they need.

That’s why we’ve said the next Labour government would cut business rates immediately after the next election and then freeze them in 2016.

An average saving of over £400 for 1.5 million business properties right across the country.

Five times more than will be helped in 2015 by the government’s proposals.
And action on business rates is only a start.

We need to guarantee that small businesses are always at the heart of government decision making.

That’s why a Labour government will follow the advice of the FSB and place a US-style Small Business Administration at the heart of government.

Making sure on the major public decisions that affect you, like public sector procurement, you have a voice and a seat at the table.

And that is why, too, we want to go further.

So often, small businesses find that they don’t get the treatment they deserve from either government or other, larger businesses.

Earlier I mentioned Kate Hayes, who does digital marketing.

She told me what so many other small businesses have told me about the persistent problem of late payment.

And it is so hard for small businesses to enforce the rights they have.

So I am pleased to announce today that the next Labour government will give business organisations like the FSB greater powers to act on behalf of your members to make that happen.

The automatic right to take legal cases on your behalf.

Taking on the bigger businesses which delay payment for too long.

And taking on government too like when the HMRC pays tax rebates far too slowly.

We are determined that small businesses never feel that your interests are being overlooked again.

But we need to make bigger changes too.

We talk about a dynamic market economy.

But too often markets are not working for small businesses or consumers.

Shoring up the old economy and keeping new competitors out.

That’s why we have to tackle vested interests in every area.

It starts with our banks.

Britain has one of the least competitive, most concentrated banking systems in the whole world.

That’s one of the key reasons that lending to British small businesses continues to be so low.

For all of this government’s efforts, that lending has fallen by £1.3 billion in the last quarter alone.

And, as you know, even when the banks do lend, there are often high charges and poor customer service.

Everyone in this room here today knows the truth:

Too often businesses still feel that they serve our banks rather than banks serving them.

The next Labour government will change that.

If the big banks can’t demonstrate real culture change by the time of the next election they will see their high street and casino arms broken up.

We will also introduce real competition, with at least two new substantial and competitive banks on the High Street.

Not just four banks controlling 85 per cent of small business lending because that is too much power concentrated in too few hands.

And we will introduce a new British Investment Bank, specifically to support small businesses.

And that will be supported by a network of regional banks in every part of the country.

Lending only in their regions.

Near here in Manchester, the Mayor of Salford is already taking a lead, helping to set up the Bank of Salford, working with local firms, unions and credit unions.

We will build on this experience.

I want you to know that as a small business there is a regional bank you can go to that will understand your business, listen to your plans and be on your side.

No longer banks that like to say no, but banks that help you to prosper and grow.

And we’re not going to stop with reforming the banking system.

We’re going to change the rules of the game.

To make sure that small businesses are treated properly as consumers of goods and services, as well as producers.

The FSB’s recent work on this issue has been compelling.

And nowhere is this more clear than in the energy market.

Annual energy bills for small businesses have gone up by an average of £10,000 since this government came to power.

The Big Six energy companies have made huge profits at the expense not just of hard-working families but hard-working business people too.

They have done it because the market just isn’t working.

And now it is official.

Yesterday the energy regulator confirmed that view.

So what needs to be done?

We need to reform the broken market and Labour has clear proposals for that.

And while we reform that broken market, there can be no justification for further price rises.

Because we now have official confirmation that these will be price rises taking advantage of a market that is rigged.

The energy secretary dismisses a price freeze as a quick fix.

In fact, it is essential as we reform a broken market.

Neither families nor businesses will understand how the government could give a green light to further price rises while the market remains broken.

The refusal to act is giving the big six a right to rip off.

That’s why we have said we would freeze prices if we win the election.
The government used to say this was impossible and unworkable.

That the energy companies would collapse.

Well, we’ve seen this week that now even the energy companies don’t agree with that.

When the Chief Executive of SSE says “I agree with Ed”, we know the world has changed in the last six months.

But it hasn’t yet changed enough.

It is not enough for one company to freeze bills until 2016.

And then to exclude small businesses from the deal.

As SSE have done.

We have to freeze bills for families and firms across Britain.

And that is what we will do if we win the election:

Right up until 2017.

Saving small businesses on average over £5,500.

And we will take further action too, specifically to help small businesses with their energy costs.

Much of the focus of anger at the energy companies has been because of the effect on families.

But so many small firms have told me that they have been getting a raw deal.

Often finding themselves:

Unable to compare tariffs, being put on a more expensive tariff without their consent, facing back-billing for multiple years, not having any help when they get into debt.

The next Labour government will act.

So today I can announce that we will legislate to give small businesses equal protection with households in the energy market.

This will mean an end by law to practices of rolling over contracts and multiple years of back billing.

A requirement on energy companies to take into account small businesses’ ability to pay any debt.

And for the first time, a new regulator will have a clear remit to protect the interests of small businesses.

That’s how we will stand up for businesses like yours and win a race to the top as a country.

And we also need to ensure problems caused by the lack of competition that have blighted energy don’t emerge in other markets in the future.

And here too I want your voice at the centre of decision making.

We’ve already asked Which? and the CAB to help the new Competition and Markets Authority set their agenda for reform and investigation every year.

But small businesses are at the sharp end of knowing where markets aren’t working and are stifling their efforts.

So today I am proud to announce the FSB will also have a seat at the table working with the Competition and Markets Authority.

Because no-one knows better than you how important open competition is to your future and our future.

Small businesses succeed when they are given the priority they need.

When there is open competition.

And when you are able to work together with others - and with government - to prosper.

My granddad used to run a small shop in London, after the War.

My granddad died before I was born.

But my dad always used to tell me what hard and often lonely work it was for him.

And I know that is still true today.

So I know how important proper support is for you.

And I thank the FSB for the lead they take in helping with mentoring new businesses.

But there is one particular area which has been highlighted by so many small businesses where government can make a critical difference.

As you grow as small businesses, you also take on staff.

Need different skills.

And the young entrepreneurs I met told me again how difficult it was to find the skilled workforce they need.

Nothing can be more daunting than finding the time and the money to train someone else when you’re already working all the hours that God sends.

That is why the next Labour government is committed to turning that around by making sure we properly train young people in this country.

And we have a clear plan to make that happen.

A gold standard technical baccalaureate, with real skills and real opportunities.
Maths and English until 18.

A real chance for business to shape the curriculum.

Giving firms more control over the money spent on training.

And giving work experience the priority it deserves to be in school to inspire the next generation of entrepreneurs.

We will work with you to build the vocational skills at school and the training system you need to prosper.

And help Britain win the race to the top.

Britain has been going through incredibly hard times in the last few years.

Your businesses have been living with a cost-of-living crisis the like of which none of us can remember.

It leaves your customers lacking confidence.

Your companies unable to plan for the future.

You have been working within an economy that too often doesn’t work for you.

With governments that haven’t done enough to stand by your side.

With markets that are not fair.

Labour is determined to change that.

When Labour promises to give you a seat at the table when big decisions are made it means you and your business will not be forgotten again.

When Labour promises a revolution in vocational education and training it means your business will have the skills it needs to expand.

When Labour promises to take on vested interests, it means your business won’t be overcharged for gas and electricity.

When Labour promises to break up the big banks, it means a small business like yours will be able to get the loans it needs to become a bigger business.

Business rates that come down.

Energy bills under control.

Banks that lend.

Competition open to you.

Skills for the next generation.

That’s what I mean by an economy that works for you.

That’s what I mean by a future that works for Britain.

I hope we can build it together.

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