Recommendations

We want decision makers to be informed and empowered to support SMEs in their area. Some policymakers will already have a clear plan. For others, here are our recommendations of where to start.

Our recommendations for local decision-makers

1. Know your local business landscape

As this site and the accompanying report show, the UK’s small and medium business landscape is nothing if not varied. To avoid a one-size-fits-all approach, use this data to build a detailed picture of your local SME landscape. We’d also urge you to share your data more widely – analysis done by others could throw up invaluable insights for policymaking.

2. Create a local, data-based strategy

Now that you’re armed with data, agree with other local decision-makers what needs to change. Do you need to focus on micro-businesses, or medium-sized enterprises? Is your most pressing challenge increasing business births, or raising productivity? Ensure that interventions are not duplicating existing schemes.

3. Respond to your sector mix

Different sectors have their own strengths and challenges, so be sure to know your sector mix and tailor your support to their needs. Your local area might have a wealth of small restaurants, or a growing scene of healthcare businesses. Build your links with sector trade associations to agree the conditions that these groups need to thrive.

4. Involve local businesses in policy decisions

Find creative ways to engage with the businesses themselves, and give them a seat at the table. Doing so will make sure that interventions are giving priority to local challenges, not mirroring a one-size-fits-all national scheme. This applies to wider local issues, too, not just ones about small business – see businesses as a key audience or player in policy decisions around anything from housing to education.

5. Focus on digital skills, not just infrastructure

The lack of correlation between digital infrastructure and productivity shows that infrastructure isn’t helpful without also building digital skills. Thirty-eight per cent of small businesses still lack digital skills – this must be a focus. Make sure local workshops are available in your area, and signpost small businesses to national digital skills initiatives like the Digital Business Academy, or private schemes like Google Digital Garage.

6. Make accessing business support as simple as possible

SMEs are often both time- and cash-poor. Empower them to access schemes, consultations and funding by making these schemes easy to find and comply with. Draw on the evidence of what works and consider experimenting with new ideas. Remember that inexpensive interventions can add huge value – like holding networking events or signposting businesses to regional or national support schemes. Create and distribute a regular update to constituents on new resources, grants and incubators that are available in your area for SMEs – whether public or privately funded.

7. Boost your number of SME suppliers

Procurement is a powerful way to support small businesses. Improve the openness and simplicity of the tendering process to ensure that local SMEs can compete for contracts, and/or find ways to make small businesses aware of local procurement opportunities.

Our recommendations for national policymakers

1. Know that the productivity puzzle must be solved at a local level

While productivity continues to be at the top of the agenda, this data shows that each local authority faces very different challenges when trying to raise productivity.

2. Devolve capacity, not just powers

We must continue to empower local authorities through the devolution agenda, and must make sure to transfer capacity – whether financial or resource-based – as well as powers. For example – local authorities have not made use of their business rates support discretion due to revenue pressures. Push for a deal on business rate retention that incentivises its use to help SMEs improve growth and productivity.

3. Hold local authorities and devolved areas to account

Lobby for the use of devolved powers to create a competitive local business environment that can drive job creation, productivity gains, and rising wages. There is concern that after any further devolution of rates, electoral pressures on council tax may push local authorities to increase business rates – this needs to be considered.

4. Simplify business taxes

It is not just a case of keeping business taxation low and competitive, but of reducing the admin burden on small businesses caused by complying with tax systems. Reducing the compliance burden of VAT MOSS, for example, and tackling growth barriers like the threshold effect of VAT, would help reduce the economic cost of taxation.

5. Support the development of basic digital skills

Alongside local policymakers, national government can also support action to tackle this key obstacle to small business productivity. Push for immediate efforts to help the 38 per cent of SMEs who lack basic digital skills, and see a proven productivity pay-off.

6. Create better access to data

To tackle the productivity puzzle, better access to data on local SMEs is urgently needed. This data is hard to find, subject to a high degree of lag, and doesn’t necessarily correspond with other datasets. Work towards better availability and harmonisation of data held by multiple departments (e.g. HMRC, BEIS, ONS) so that policymakers, businesses, and researchers can better understand their local business environment.

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