All this swap and change is bad for SMEs

SMEs face uncertainty.

Last week I sat for an hour or so with a couple of entrepreneurs. They have both founded more than one business and are both heavily involved in helping to promote the UK’s start-up and small business economy, one through Start-up Britain and the other through Young Brits and the G20 Young Entrepreneurs’ Alliance. As often happens when you talk to entrepreneurs, the discussion turned to the relationship between government and business and the role government plays in promoting a better environment for those running a business. Both were clear that the UK has a long and noble tradition of an economy built on small business, with several references during the conversation to Napoleon’s description of a "nation of shopkeepers".

The consensus, as it often is, was that government’s role is to create the conditions for start-ups and existing businesses to grow and thrive and then get out of the way and let them get on with it. "We need an end to this constant political need to announce new initiatives," said Alex Mitchell, co-founder of Young Brits. In short, both wanted a bit less government. In fairness, the stated ambition of most politicians for the last 20 years (and maybe longer) has been reducing red tape. This chimes well with entrepreneurs, but all the talking has hardly resulted in less regulation. The current government has made a lot of its commitment to red-tape reduction. It has appointed two "entrepreneurs in residence" at BIS, launched a Red Tape Challenge and promised that all new legislation will be introduced on a "one-in, one-out" basis.

It was interesting last week to see a number of legislative announcements within a few days of each other, all purporting to make life easier for those running businesses. At least two of them will impose new reporting requirements on some or all listed companies. What’s given with one hand in terms of easing the burden on businesses seems bound to be whipped away with the other.

The Enterprise and Regulatory Reform Act is intended to make life easier for those running small businesses and in large part it has been welcomed as achieving that by those it aims to help. But as is often the case, simplification is complicated and the new rules and regulations surrounding areas such as settlement agreements will require entrepreneurs to put in time and effort to understand them. In the long-term there may be benefits for those running SMEs, but in the short term the time pressures may increase. The entrepreneurs last week were clear the best red tape reduction policy of all would be for the government to just stop doing things. A moratorium on any new policy announcements would be the best initiative.

Less welcome in some quarters (judging by reactions to our story on it) was the announcement of changes to the Companies Act requiring listed companies to divulge information in their annual reports on subjects such as diversity (giving the breakdown of the number of men and women on their board, in senior management positions and across the company as a whole), the company’s greenhouse gas emissions and human rights, as well as a new strategic report that focuses on the business model, strategy and risks to replace the existing business report. Even those who welcomed some of these changes (partly out of desire to see this narrative part of company reports be more useful) reacted negatively to the tight timetable imposed, with the changes due to come into force from 1 October, 2013.

Elsewhere, the EU was also trumpeting simplification while adding in a degree of complexity for some companies. The abolition of mandatory quarterly reporting was welcomed by most, but the requirement for country-by-country reporting in certain sectors was less welcomed by those affected, although it will please those keen to see greater transparency in reporting. The new accounting framework also reduces reporting requirements on small and micro businesses, although the category of micro business is a new addition to the regulations.

These are just some of the recent changes announced and all from last week. The net result of all this change is uncertainty. One thing that those at the sharp end, running businesses, talk about is the need for greater certainty. The confidence to invest in their businesses, which is ultimately what will be behind any sustained economic recovery, depends on it. Perhaps it is time for the politicians to leave business to just get on running and growing their businesses.

This piece first appeared on economia.

Photograph: Getty Images

Richard Cree is the Editor of Economia.

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Northern Ireland election results: a shift beneath the status quo

The power of the largest parties has been maintained, while newer parties running on nicher subjects with no connection to Northern Ireland’s traditional religious divide are rapidly rising.

After a long day of counting and tinkering with the region’s complex PR vote transfer sytem, Northern Irish election results are slowly starting to trickle in. Overall, the status quo of the largest parties has been maintained with Sinn Fein and the Democratic Unionist Party returning as the largest nationalist and unionist party respectively. However, beyond the immediate scope of the biggest parties, interesting changes are taking place. The two smaller nationalist and unionist parties appear to be losing support, while newer parties running on nicher subjects with no connection to Northern Ireland’s traditional religious divide are rapidly rising.

The most significant win of the night so far has been Gerry Carroll from People Before Profit who topped polls in the Republican heartland of West Belfast. Traditionally a Sinn Fein safe constituency and a former seat of party leader Gerry Adams, Carroll has won hearts at a local level after years of community work and anti-austerity activism. A second People Before Profit candidate Eamon McCann also holds a strong chance of winning a seat in Foyle. The hard-left party’s passionate defence of public services and anti-austerity politics have held sway with working class families in the Republican constituencies which both feature high unemployment levels and which are increasingly finding Republicanism’s focus on the constitutional question limiting in strained economic times.

The Green party is another smaller party which is slowly edging further into the mainstream. As one of the only pro-choice parties at Stormont which advocates for abortion to be legalised on a level with Great Britain’s 1967 Abortion Act, the party has found itself thrust into the spotlight in recent months following the prosecution of a number of women on abortion related offences.

The mixed-religion, cross-community Alliance party has experienced mixed results. Although it looks set to increase its result overall, one of the best known faces of the party, party leader David Ford, faces the real possibility of losing his seat in South Antrim following a poor performance as Justice Minister. Naomi Long, who sensationally beat First Minister Peter Robinson to take his East Belfast seat at the 2011 Westminster election before losing it again to a pan-unionist candidate, has been elected as Stormont MLA for the same constituency. Following her competent performance as MP and efforts to reach out to both Protestant and Catholic voters, she has been seen by many as a rising star in the party and could now represent a more appealing leader to Ford.

As these smaller parties slowly gain a foothold in Northern Ireland’s long-established and stagnant political landscape, it appears to be the smaller two nationalist and unionist parties which are losing out to them. The moderate nationalist party the SDLP risks losing previously safe seats such as well-known former minister Alex Attwood’s West Belfast seat. The party’s traditional, conservative values such as upholding the abortion ban and failing to embrace the campaign for same-sex marriage has alienated younger voters who instead may be drawn to Alliance, the Greens or People Before Profit. Local commentators have speculate that the party may fail to get enough support to qualify for a minister at the executive table.

The UUP are in a similar position on the unionist side of the spectrum. While popular with older voters, they lack the charismatic force of the DUP and progressive policies of the newer parties. Over the course of the last parliament, the party has aired the possibility of forming an official opposition rather than propping up the mandatory power-sharing coalition set out by the peace process. A few months ago, legislation will finally past to allow such an opposition to form. The UUP would not commit to saying whether they are planning on being the first party to take up that position. However, lacklustre election results may increase the appeal. As the SDLP suffers similar circumstances, they might well also see themselves attracted to the role and form a Stormont’s first official opposition together as a way of regaining relevance and esteem in a system where smaller parties are increasingly jostling for space.