Please release me. Let me go.
This is not a party matter. The House of Commons Business and Trade Committee concluded early in 2026:
“SMEs are facing late payments, rising energy costs, increasing crime, a complex tax system and barriers to growth that are compounding rather than easing. These pressures are not isolated; together they pose a real risk to business viability, high streets and economic growth.”
So which party is going to be able to sweep up the millions of votes from the SME sector. I suspect that most of those owning, employed by or dependent on small businesses don’t really care so long as they can escape from a high tax, high cost, highly regulated straitjacket and be allowed to be once more the engine of growth.
Small and medium businesses are important: they employ millions.
Small and medium enterprises (with less than250 employees) account for 60% of total employees in the private sector providing 16.9 million jobs. While government ministers are, as you might expect cheerily optimistic about ‘growth’, the ICAEW’s Business Confidence Monitor Business shows confidence dropping back into deep negative territory, falling to -14.6 and its lowest level since Q4 2022.
But they are being crushed by higher costs.
More than half of SMEs say that high costs and inflation are their main concern. Increased employment costs (employer NI, increase in minimum wage, employee rights), higher operating costs (business rates, energy) late payment, crime and increased reporting regulations and planning delays are squeezing profits. Their natural reaction to the profit squeeze is to cut stop hiring, start firing, stop capital expenditure: cut unprofitable lines of business; and increase prices (if possible, in a competitive environment) and, if that doesn’t help, close the business and retire. According to ONS, 83,195 businesses closed in Q1 2026, while only 78,650 were created—resulting in a net loss of about 4,500 companies. So, unemployment rises, and job opportunities decline.
Does government understand small business?
SMEs account for 99.8% of all UK businesses and form the backbone of local economies and high streets. SMEs should be the engine of growth in our economy, driving innovation and greater productivity, finding solutions and creating jobs. Why are they being given such a hard time? Does a Labour government, none of whose cabinet members have ever worked in business, let alone small business instinctively believe that ‘businessmen’, often used pejoratively, are oppressors of workers and tax evaders? I suppose that, if you have only ever been paid a salary funded either by taxpayers or a not-for profit organisation, it may be hard to imagine grafting for trade every day to pay your bills. Perhaps an apprenticeship in running a corner shop might be appropriate for any aspiring politician.
Big companies don’t really care about the UK economy.
It’s no good schmoozing with big business. Often business is treated as one undifferentiated mass. For most politicians business means big business, names that appear in the FTSE 100 index not the local builder or the butcher. Rachel Reeves directly referred to the FTSE 100 when it broke through the 10,000-point milestone, describing the achievement on X as “a vote of confidence in Britain’s economy”. It’s not. Because around 75% to 80% of total revenue across the entire FTSE 100 comes from outside Britain from international markets like North America, Europe, and Asia. Such companies care a lot less about what happens in Britain than SMEs, not only because their revenues are not dependent on what happens here and because they employ relatively few people in the UK (for instance only just over 15% of HSBC’s employees are UK base and 7% of Shell’s) but also because they are able to maximise revenues in fast growing regions and minimise the impact of unfavourable polices and taxation by using complex structures. By contrast SMEs tend to be trapped in their home markets and can’t escape the impact of a stagnant economy and higher costs.
Customers prefer to deal with small businesses.
According to the insurance company AXA’s survey, customer service is considered to be a key area of benefit when using a small business with three quarters of consumers considering that small businesses do this better than big businesses. Providing a ‘real person’ to deal with tops the list of things small businesses do better than their bigger counterparts. Small businesses are also viewed by consumers as nearly three times as likely to provide quality services or products and nearly four times as likely to treat their staff well.
These opinions probably lie behind the concern about the slow death of small local businesses the high street. The closure of familiar local names seemed to signify economic decline to those who were surveyed.
Who gets the SME votes?
According to Britpoll the typical Labour voter in 2026 is a woman aged 25–44 with a university degree, living in London or another major city, working in the public sector, who voted Remain in 2016 and Labour in 2024. That is hardly a description of the millions of small business owners, their employees and customers in a provincial town. But perhaps that is why a Labour government can afford to ignore them. The typical Reform UK voter in 2026 is a man aged forty-five or over, without a university degree, who voted Leave in 2016 and lives in the Midlands or North of England. Today Tories poll almost equally among graduates and non-graduates, having lost their non-graduate dominance to Reform UK and their graduate competitiveness to Labour and the Lib Dems. This educational and social flattening shows that neither Reform nor Conservatives own any educational or social demographic.
The small business vote is worth courting
So, support from SMEs should be a valuable asset to any party that can attract their owners and employees as voters as well as those customers who like dealing with them. The potential is not specific to any region but is nationwide. Interestingly enough a high percentage of small businesses are owned by immigrants, probably a demographic worth courting. According to the Entrepreneurs Network, in the United Kingdom, migrants are roughly three times more likely to start a business than lifelong residents and their businesses often grow faster. That apart there is no specific or social demographic except that those involved with them will tend to be interested in lower taxes, less regulation and more freedom. There is no reliable research on how small business votes. Everyone is up for grabs if the vision is attractive. Reform has clearly done the numbers, spotted the opportunity and is making a comprehensive and radical targeted pitch at SMEs with a whole package of costed proposed changes in tax and regulation. The Conservatives present themselves as the party for enterprise and business and have finally got their act together with a scheduled conference dedicated to small business. The LibDems pay lip service to supporting small business and cutting business rates but in a half-hearted way. The Green party offers a strange combination of climate incentives, grants, high street revival plans and taxing big companies more highly. But the Labour government seems indifferent and only pays lip service to the role of small business. Andy Burnham has said he will be a pro-business leader but there is no sign of the words turning into action.
There are clearly prizes to be won by a party that can convince the millions of those whose livelihood depends on small businesses and the customers who like dealing with them. The FSB says “Small business owners and the self-employed are a shrewd and motivated part of the electorate. They’re used to weighing up competing offers when running their businesses, and it’s clear from our research that when it comes to an election they’re looking for which of the parties has the most compelling pro-small business offer.” It will be interesting to see who wins the prize at the next election.
All about investment funds 