Despite the uncertainty the smaller firms continue to grow. Simon Hanson North East Development Manager for the Federation of Small Businesses looks at the key issues facing them.
It is fair to say 2017 has been an uncertain year for smaller businesses across the North East. We’ve seen yet more political changes that had a profound effect on the wider region including a General Election no one expected (and with hindsight probably wanted), the election of the first elected mayor for the Tees Valley and a North of Tyne devolution deal being agreed.
This has been coupled with the broader uncertainty around what is happening with the Brexit negotiations and how this will impact on the North East and Tees Valley. Whilst a lot of attention has been paid to the Brexit negotiations there have been some big issues that smaller businesses have been grappling with.
The revaluation of business rates was a disaster for many smaller firms. There was the imposition of the so-called staircase tax, chronic delays to relief measures, and a disastrous new appeals platform. Whilst the announcements in the Budget are welcomed the business rates regime is nothing short of a living nightmare for too many smaller businesses.
Late payment is still a huge challenge for too many businesses in the region with payment times increasing. Finding skilled staff remains a constant barrier in meeting the ambitions that smaller businesses have.
So what will smaller businesses focus on in 2018?
Despite all this uncertainty there is some positive. We’ve seen the numbers employed by smaller businesses increase with more looking to take on staff. Alongside this, exports have seen a significant and sustained increase with small firms expecting this trend to continue into 2018. FSB research shows that the right support could double the number of small exporters even further.
Many have not seen the progress they would have liked with the negotiations or any certainty on what the UK position is.
What’s critical now is that businesses are given a firm commitment to a transition period post-Brexit. This interim arrangement must allow businesses that trade with the EU, to operate broadly in the same way as currently is the case, and maintain current terms of access to the EU customs union and single market during a time-limited period.
There are only 15 months left on the Brexit clock and we are edging ever closer to a cliff edge if negotiations fail. It really is make or break time for North East business, who are not feeling confident about investing or expansion while the UK’s future relationship with the EU after March 30 2019 remains unclear.
There’s no doubting that the momentum around devolution in the Tees Valley has gathered pace. Since the election of Ben Houchen as the first directly elected mayor for the Tees Valley we’ve seen exciting announcements that will help cement the status of the region nationally and globally. These announcements are now being backed up by funding including an extra £59m for transport and £123m for the South Tees Development Corporation.
With the North of Tyne devolution deal now agreed we are looking forward to continuing to work with the local authorities to ensure this helps smaller businesses. The North of Tyne deal offers a real opportunity to rekindle the pioneering flame here in the North East to improve our skills base, our local infrastructure and create new jobs throughout the region.
The publication of the Industrial Strategy White Paper marks the first phase of the journey to improve the UK’s productivity, leading to sustained wage growth and an improvement in living standards - but it’s essential we quickly move on to phase two.
To have a sustained and game-changing impact on the economy, the focus needs to be on how to improve productivity across the North East’s 147,000 small businesses and the self-employed. To achieve this a lot more needs to be done to increase productivity by encouraging firms to adopt new-to-firm innovation into the heart of their businesses, as well as a fresh look at how regulation can support small business innovation of all types.
We’ll be working with Government to ensure that small businesses are heard on all these issues and more.
The North East is the best region in the UK to start, grow and develop a business. As a region we will play a leading role in reducing the productivity gap between London and the wider UK. We have some world leading assets to deliver this whether in advanced manufacturing, automotive or in the digital and tech sector.
2018 is the year that we will deliver on this.
Our BQ Bulletin emails will land in your inbox at 7.30am, Monday to Friday, with a mix of the latest local business news, national news, and features to inspire you. Sign up here!
Click here to read our privacy statement