We should support Britain’s small businesses to create jobs

Last week’s ONS statistics delivered some welcome news for Britain’s economy, with the unemployment rate registering its first fall since last spring, dropping by 35,000 to 2.65 million.

While this was music to many ears, the amount of people in the UK that are currently out of work remains alarmingly high, with long-term joblessness at its worst level for 16 years.

Young people are among those facing the toughest time in the job market. Youth unemployment alone remains above the one million mark, and as the government acknowledges, there is a risk of creating a lost generation unless this problem is tackled head on.

As far as I am concerned, the answer is staring us in the face. The UK has over 4.5m small businesses that form the backbone of the British economy. This is a group that could have a disproportionately large impact on Britain’s employment rate if they were encouraged and incentivised to take on new employees.

We recently polled 500 small businesses for our report – One Giant Leap:The Vital First Step To Becoming An Employer – and found that the vast majority (91 per cent) of sole traders would not consider taking on an employee in the next 12 months. Moreover, more than a quarter of respondents attributed this to the administrative burden of bureaucracy and paperwork (that weighs particularly heavily on small enterprises).

In Britain, we have a huge pool of bright, young, ambitious graduates, eager to work and start their careers, as well as skilled and enthusiastic trades-people who are on the lookout for jobs. Their unemployment equals lost potential. So, we must ask the question – why are small businesses so reluctant to taking the leap and recruit new talent?

We spoke to small business owners up and down the country who gave us valuable insight into their reluctance to hire.

Take Zoe Jackson, founder and managing director of performing arts company Living the Dream, who employs most of her staff on a freelance, project-by-project basis. She said: “I would love to be in a position to make some of these roles full-time but I am concerned about the ‘extras’ involved; maternity leave, redundancy payments and pension schemes, as well as the administrative complications of PAYE.”

Zoe’s response was typical of many small business owners. However, what is striking is that more than half of those we polled admitted that hiring another member of staff would help them to grow their business. So what can we doto help them take that step?

There is a perception among small firms that taking on staff is an unwanted administrative burden. Therefore, if we are to reduce the number of Britons unemployed, we need to break down the barriers that are preventing companies from expanding their workforce.

Sole traders that are concerned about the bureaucracy of employment could benefit from a number of simple measures, not least engaging with mentors to gain valuable advice and guidance on their business.

In addition, getting a better handle on financial management would give greater assurance to small business owners that they can financially afford to hire an additional employee. Finance is a crucial area in which many business owners feel a lack of confidence and some 65 per cent of small firms still rely on manual processes to manage their finances. With this in mind, there is no doubt that many small businesses could harness tools and software that greatly simplify administrative tasks such as payroll and VAT.

It’s vital that Britain’s small businesses create jobs as they expand, be it through new recruits, flexible staff or even apprentices. So let’s get behind them and offer support and encouragement so they can take the giant leap and go for growth.

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• pfbulmer

  Of course we should support small business and there are so many ways to do this which are not being done .This article states the obvious and even implies as if this is a new idea ! Wow  lets help small businesses !’, it is so obvious that it is not being done by the government ,this crisis did not happen over night the UK business community has being asking for help for small businesses for months and months and nothing is happening but no one is lobbying on their behalf and the they do not have 250,000 in spare cash to speak to the Prime Minister whose time is of course as we have heard very valuable !

  Small business will not take on new workers even if they are paid to do so , because they do not have the time to fill in the forms for them or even look after them in this current climate , they are too busy surviving , trying to get orders , trying keep customers happy, trying to get paid ,trying  manage cash flow and nervous bankers and funders , trying to export without short-term ECGD short-term guarantees, without trade finance and discounting facilities ,  trying cope with complicated bureaucracy from the government and the EU, in a shrinking market and in unhelpful economic climate .

  Solve these  problems for small business and the whole UK economy will expand and small business with them !

  There may be a debate on whether the government is doing a good job governing the country and representing the people of this country but as far as helping small business are concerned , there is no debate the government has done an appalling job !

• Skaramouche

  Is there a reason why comments are being pre-moderated on this blog?

• Skaramouche

  Well, lets try again as it seems the Censor has gone home:

  There are two main reasons why there will be no grwoth in employment via small businesses, and both rest firmly at the feet of the previous Labour government and it’s Tory-lite pro-corporatist mentality when last in power:
  1) The current Labour front bench vetoed the EU’s entirely sensible control of EU migration under the A8 agreement, thereby swamping us with Eastern European “trademen” who promptly decimated our indigenous trades, the majority of who were small businesses, typically builders, plumbers etc, who were employing either one or two people or subcontracting the same on a regular basis. These businesses went in short order from being able to offer employment to other Brits, to being left unable to to – in many cases – even pay tax, let alone  the other niceties that legitemate businesses contributelike employment and growth.

  2) The previous Labour government (and the current Labour “opposition”) failed to re-regulate the banking and financial sectors in the 13 years they had in power, which led directly to our economy being infected by the same criminal activity as the US sectors and their subsequent collapse.

  These things are done, and the stage is set. Expecting any miracles on the employment front from small businesses that have been first decimated financially and then almost destroyed by the lack of steady demand since the collapse is just wishful thinking.

  In order to countract the effect of the disastrous past 5 – 6 years, and to grow employment, three things would have to happen:
  1) Have government subsidise the employment of *indigenous* workers. The simplest way to do this would be to enable a *British Born* JSA claimant to work without the stigma of being a “benefit cheat” and thereby subsidise their own activity and the re-growth of small comapnies.

  2) Introduce the same Work Permitsthat exsist quite fairly and legally elsewhere in the EU that limit people (including EU citizens) right to live and work “on the black” in another EU country. You may for instance work  self employed in France if you become registered to work- which entails you registering your valid qualifications and being issued with either an Auto Entrepenuer number – without which you will be arrested and thrown out of France. This may seem draconian to some, but has the effect of jobs going to indigenous workers within the system rather than cheap migrant labour, the upshot of which is less benefits being paid, greater hope for our own young peple and long term unemployed and a persuasive argument for those from other states to be entrepnureal in their own EU states rather than act as cheap labour in others.

  3) The introduction of import tarrifs on goods produced in countries where the governments are not freely elected democracies. This would at a stroke make those who think that capitalism = offshoring proper jobs to quasi-slave labourers should be an easy route to their own personal wealth. Our entrepenuers will always create wealth, but should not do it at the expense of anybody, be they workers in developed democracies or the pitiful elsewhere.

• shanoakes

   I think this is where we differ: the pie can’t get any bigger because the pie is the planet.  It’s finite.  Resources such as oil are becoming scarce, expensive and fought over

• shanoakes

  I think a lot of people now are trying to use their purchasing power to support ethical (green) companies and boycott unethical ones