If I were Prime Minister: I'd save small businesses from the negative influence of banks

Our series in the run-up to the General Election – 100 days, 100 contributors, but no politicians – continues with the co-founder of Market Invoice

If I were Prime Minister, I would give more support to our small businesses, helping them scale-up, saving them from the negative influence of banks, and ensuring they stay in the UK to become tomorrow’s world beaters.

The Federation of Small Businesses estimates that small businesses account for 99.3 per cent of all private sector businesses in the UK. In recent years we’ve seen a boom in new start-ups, now we must help these young businesses grow. We need to be home to tomorrow’s Google, Facebook or Amazon.

To help our small businesses become world leaders, I would implement a simple three-point plan:

1. Help UK businesses break free of their bank, and prevent further banking scandals from destroying our small businesses

2. Get more top class international talent into the UK and into our small businesses

3. Reinstate and extend the National Insurance contribution holiday for small businesses in specific sectors.

So, 1.

Access to finance is one of the most common reasons for small business failure, with endless horror stories of businesses’ experiences with our banks – from slow service, to hidden fees, to mis-selling. Too many businesses are being destroyed or held back by our banks. The good news is we are on the brink of a revolution, as the industry begins to move away from traditional banking towards new, disruptive and innovative models of lending.

Peer-to-peer lending has already provided nearly £2bn to UK small businesses and is growing fast. As PM I would want to see this kind of lending become a cornerstone of the UK economy. The great value of this is that it puts our money – whether it be our savings or our pensions – to work, earning a return for individuals and at the same time driving the growth of UK small businesses.

This has the other benefit of removing businesses’ reliance on banks. We’ve heard countless tales of our businesses being let down in scandal after scandal. Taking businesses out of their bank will help them grow much faster. As a nation we’ve become too reliant on big banks – that has to change, not just for our small businesses, but for everyone.

2.

In order to turbo-charge this growth in small businesses, we must also be able to attract the best international talent. The sharpest and smartest minds in the world should be welcomed into the UK – and specifically into our high-growth small businesses. I think we need a far more open national discussion about immigration. Too many political leaders have dodged the issue. Any rational analysis shows that our economy benefits from immigration – this is an argument that needs to be resolved. As PM I would take a strong, pro-immigration line, but would also explain the reasons to the voting public.

3.

As PM, I would also extend the National Insurance contributions (NICs) holiday, which is a perfect way to help small businesses establish themselves. Initially run between September 2010 and 2013, the scheme allowed new businesses in qualifying regions to claim back up to £5000 of the employer NICs due for each of the first 10 employees during the holiday period.

If I were Prime Minister, I would bring back the NICs holiday scheme, but with a wider remit. By making it a nationwide scheme (the last scheme excluded London businesses, which dramatically reduced its impact) and increasing the allowances to the first 15 employees, a significant increase in small businesses will fall under the programme and will find fewer barriers in the way when looking to make those early hires.