What do startups and SMEs want from the new Labour government?

With Labour celebrating a landslide victory in the recent General Election, many voters are hopeful that the party can now quickly get to work on delivering its manifesto promises. No community is more eager to see change than the UK’s five and a half million small businesses.

With small businesses representing a powerful voting pool, political parties were prompted to include SME-focused policies in their manifestos. Labour's plan, described as "fully-funded and fully-costed," pledged to "pull up the shutters for Britain’s entrepreneurs." Its proposals included ensuring access to banking services on high streets, replacing the business rates system, and making the UK the best place to start and scale a business by unlocking the supply of finance.

Startups and SMEs across the UK are hopeful that the new Labour government will deliver on its small business promises.

Bea Montoya, Chief Operating Officer at Simply Business UK, said: “Small businesses have been in a state of limbo throughout the campaigning period, and now is the time for Labour to double down and get to work on promises made in their manifesto.

“As the new government steps in, small business owners face a torrent of challenges. Over a third of small business owners believe this change in leadership will have absolutely no impact on them. This feeling of apathy – though understandable – is uncharacteristic for the sector, which has shown seemingly boundless resilience over the past few years.

“The new government needs to set the tone for their leadership, and small businesses can be a catalyst for change in the wider economy. Our research shows that, if provided the right economic conditions, small businesses would create over one and a half million new jobs. De-prioritising this enterprising community would be a missed opportunity for the government, and we hope that the new leaders can deliver on their proposals.”

Kevin Fitzgerald, UK MD of Employment Hero has said: “Alongside the SME community, I am now looking to the Labour Party for increased support, as outlined in their manifesto. Labour’s commitment to enhancing AI skills development is a welcomed initiative. It’s time to empower our workforce with cutting-edge technological expertise and position the UK at the forefront of innovation. As a business, we pledge to assist the new government in developing the infrastructure needed to make this happen.”

On what SMEs need to see from Labour, James Robson, CEO of FundOnion, said: “They said vote for change. What we need to see from Keir Starmer and Rachel Reeves in the first 100 days is a clear commitment to small businesses – implementing innovative policies that cut the red tape holding back growth, that help with rising costs, and that support easier access to capital.

“We’re also keen for the new government to shake up the British Business Bank by ensuring it increases its partnerships with alternative finance providers and holds regular consultations with UK SMEs and the financial services sector, to get real time findings of the challenges facing businesses and what they really need.

“To reverse the long-term trend of the falling availability of growth finance and access to alternative finance options, businesses need to better understand the finance options available to them, whether that be in growth finance, debt consolidation and refinancing, or other business loans.”

Enterprise Nation’s Founder and CEO, Emma Jones, commented: "We are particularly encouraged by Labour's recognition of the crucial role entrepreneurs, startups and small businesses will play in realising their vision for a more prosperous Britain. Supporting small enterprises means more innovation, more quality jobs, and local economic revitalisation.

"As Labour prepares to take office, we look forward to working closely with the new government to help bring their mission for economic growth to life. We stand ready to offer our expertise and represent the voices of entrepreneurs and small businesses as these important policies are developed and implemented.”

The tech sector

Although 'technology' is not explicitly listed among the Labour Party's five missions, its manifesto references 'technology' and 'innovation' more frequently than any other party's. This indicates that these elements will be central to the government's efforts to enhance public services, boost productivity, and rebuild the UK’s economy.

How does the victory impact the UK’s tech sector?

Dale Peters, Senior Research Director at TechMarketView, commented: “Delivering economic growth and raising productivity will require the new government to create the conditions to support the appropriate application of digital technology and provide an environment where innovation can thrive. Labour plans to create a National Data Library to help deliver data-driven public services and introduce a new industry strategy to support the development of the AI sector and remove planning barriers to new datacentres. It will introduce 10-year funding cycles for key R&D institutions and aims to develop better industry and academic partnerships. All of which will be welcomed by the tech sector.”

Scott Dawson, Head of Sales and Strategic Partnerships at fintech DECTA, said: “It was a divisive election but what matters now is that the new government prioritise common sense policies, including those in favour of the fintech community and its significant potential to better serve UK businesses. This especially goes for small to medium sized enterprises (SMEs), which collectively supports 27 million jobs.

“Despite 14 years of discussions about fostering innovation, regional development, and tech investment, London's status as a supposed global fintech hub ever translated into meaningful government action – hopefully we’ll see a change to this now. Primarily, the government should look to actively promote private sector investment as and when it materialises.”

The tech sector seems to be eyeing the new government cautiously until the Autumn statement. Simon Wax, a Partner in the Tech and Media team at the accountancy firm Buzzacott commented: “All political parties have promised to make the UK a tech powerhouse, yet the last few years have presented tech founders with serious challenges – an uncertain economic environment has hampered M&A activity and an increasingly tough narrative on immigration has made it all but impossible to recruit the best overseas talent.

“Concerns surrounding a possible increase to capital gains tax by the Labour government are worrying, but we believe tech founders will welcome the new Labour government.

“Tech founders will be watching the Autumn statement closely to see if the government live up to its manifesto promises.”

What has Labour promised the tech sector?

Labour has promised the creation of a new Regulatory Innovation Office to help tackle a range of digital problems to build upon the Online Safety Act in areas such as regulation for companies developing AI and ML models as well as banning harmful deepfake content.

It has also committed to putting R&D funding cycles on a 10-year footing and promised to simplify the government procurement processes to support innovation. It has also promised to work with startups and university spinouts to ensure that they have the capital they need to scale. 

The UK holds a strong position in emerging technologies like quantum computing and AI. For Labour to fully capitalise on the tech sector, it is crucial to swiftly advance these cutting-edge fields.

British Safety Council’s Chairman Peter McGettrick said: “New and emerging technologies not only open up new prospects for greater prosperity and efficiencies, they can also help to protect people and prevent risks, but we must make sure we regulate and govern them well. The new Government must remember that wellbeing is broader than just mental health, and we also want to see more support for training which supports people’s health and safety, while we upskill our workforce so they can make the most of new opportunities. Labour set out positive and imaginative policies in their manifesto on work, technology and growth and we stand ready to work with the new Government for the benefit of people’s health, safety and wellbeing across the UK.”