Senior Policy Manager, The Federation of Small Businesses
During a time of economic crisis, we have to ensure small businesses are supported to create jobs by putting tools in place to help them.
“This is an economic emergency. That’s why we have taken extraordinary measures to protect people’s jobs and incomes. And we’re doing more to build on our Plan for Jobs.”
These three sentences capture the crux of the Chancellor’s Spending Review address. It was a short speech, but he managed to use the word ‘jobs’ no less than 14 times. The headline announcement: £3 billion for the Department of Work and Pensions to reinvent the Work Programme.
Helping to protect jobs
On the one hand, he is absolutely right to stress the importance of job retention. Many of the Government’s efforts on this front – not least the extension of the Job Retention Scheme into next year – have been critical to small business wellbeing. Although the sudden withdrawal of the Job Retention Bonus will have hurt said efforts.
On the other hand, we have to recognise the fact that the economy is changing. Protecting jobs is vital, but so too is creating them.
Small employers have long struggled with the hidden costs of hiring – chief among them, employer National Insurance contributions. Expenditure on this levy, which essentially serves as a tax on job creation, can easily spiral into the thousands for every person a firm employs on a modest salary.
We need to encourage people to make a job rather than take one. Let’s not forget that start-ups and the self-employed were fundamental to our recovery from the last recession.
Bringing down the cost of job creation
As we emerge from this crisis, encouraging small firms to create jobs that will be here for the long-term will be fundamental to our future prospects. If we want that to happen, we have to bring down the costs of doing so.
Equally, as one former Conservative leader put it, we need to encourage people to make a job rather than take one.
Let’s not forget that start-ups and the self-employed were fundamental to our recovery from the last recession. Any strategy to protect jobs ultimately has to have business creation at its heart – securing the employers of tomorrow by enabling them to strike-out on their own today.
Helping people to start businesses
In its manifesto, the Government promises to make Britain “the best country in the world to start and grow a business.” And yet, the sentiment was found wanting in the Chancellor’s speech. The word business was used only four times. The words self-employed just once.
Unfortunately, by talking about jobs far more frequently than he talks about business, the Chancellor is putting the cart before the horse.
The impact of COVID-19
We heard an awful lot about government debt in the Chancellor’s address. It should also be noted that many previously thriving small firms have had to borrow heavily to see them through COVID-19 linked disruption.
When repayments start to fall due in the Spring, many small businesses will find job creation even more of a challenge.
At the Spring Budget, and in the months leading up to it, we need to hear the Chancellor speaking far more about small firms and the self-employed – turning words into meaningful action. Jobs, and our economic recovery, depend on it.