Nick Clegg's speech to the Federation of Small Business Conference

March 20, 2015 10:48 AM
Originally published by UK Liberal Democrats

Speaking at the Federation of Small Business Conference, Liberal Democrat Leader and Deputy Prime Minister Nick Clegg is expected to say:

I want to thank the FSB. Whether it is Small Business Saturday or your work on late payment, young enterprise or driving local growth, your commitment to backing small businesses is second to none.

And, together, working with you, we're turning Britain's economy around.
We've more than halved the deficit since 2010, as a share of national income.

Growth is up. Manufacturing output is increasing. Business confidence is rising and wages are pulling ahead of inflation.

We have more people in work than ever before, with unemployment and youth unemployment, in particular, falling steadily. And, since 2010, over 2 million young people have started apprenticeships.

That success is no accident. It hasn't happened by default.

If you think back to five years ago, Britain's recovery was far from inevitable.

The aftershocks of the 2008 financial collapse were still shuddering through our economy. No one knew where the next shock would come from and where it would lead, and images of riots on the streets of Athens dominated the news.

It may not feel like it now, but we could have been Greece.
In 2010, their deficit was 11% of GDP. Ours was 10%.

As the Greek economy fell off a cliff, ours teetered on the edge.

The British public faced a stark, but simple choice: to sink or swim.

They chose to break with the mistakes of the past and reset Britain's future. They wanted a new way of doing things.

So we stepped up, forming a new kind of Government - a strong, stable Coalition Government that could rescue Britain's economy.

It hasn't all been plain sailing. Nothing this important ever is.

We've had to make some tough decisions in Government to get our finances under control and Britain back on course.

Families up and down the country have had to work hard and make real sacrifices. But, bit-by-bit, we're getting there.

A huge amount of that success is down to you.

There are now 5.2 million businesses in the UK - over 99% of which are small businesses like yours. Together, you employ 12.1 million people and generate £1.2 trillion in turnover.

You are the lifeblood of our economy - the engine that helps drive our growth.

So, when you told us what you needed to help Britain thrive - more competitive taxes; better access to finance, less red-tape and action to tackle the issues that limit your growth - we listened and took action.

We reduced corporation tax to 23% and, from this April, to 20% - the lowest rate it's ever been in the UK and one of the lowest in the G20.

To ease the costs of employment, we introduced the Employer's Allowance - a £2,000 National Insurance tax cut. One million small businesses have already benefitted, with around half a million employers taken out of paying NI contributions altogether.

We're also making it easier for you to pay these taxes: abolishing annual tax returns, simplifying NICs for the self-employed and creating a single digital account for all your tax needs.

We've increased support for everyone who pays business rates, especially small businesses and retailers.

This includes capping rates and doubling Small Business Rate Relief: saving hundreds of thousands of small businesses around £1,500 a year, and we're giving businesses more time to benefit - extending it until the end of March next year.

And, earlier this week, Danny Alexander launched the start of the most in-depth review of national business rates in a generation.

This system was created almost three decades ago. In that time, we've seen the way businesses work transformed. We need this tax to reflect that change, ensuring a modern business rate system that is fair, efficient and doesn't hold your business back.

We're also freezing fuel duty for another year, saving you around £10 every time you fill up your car.

To help those SMEs struggling to get business finance, we've created the British Business Bank - helping thousands of companies secure over £3 billion of finance.

We're extending the Funding for Lending Scheme, working with the Bank of England, to reduce the cost of lending across the system to SMEs.

Our Enterprise Investment and Seed Enterprise Investment Schemes are helping thousands of micro businesses and new start-ups raise millions in investment.

We're turning back the relentless tide of unnecessary red tape that's flowed from Whitehall to your desk for years.

Our Red Tape Challenge has committed to scrap or improve at least 3,000 regulations - saving businesses like yours over £850 million per year.

Our new One-in, Two-out rules mean that for every piece of regulation that costs business £1, Whitehall has to remove £2 of regulatory burden. This has slashed the costs of domestic regulation for businesses by more than £2 billion.

But that's just the start. We introduced a Small and Micro Business Assessment that means that Departments must exempt businesses with fewer than 50 employees from all new regulations - unless their inclusion can be proved to be absolutely essential. But our default position is to exempt small businesses from new regulation.

We're also doing what we can to tackle the number one business issue right now for the FSB and its members - late payment. When you're working hard, doing what you can to keep your business going, it's just not right that one late payment can be all it takes to wreck your business and pull you under.

Since the financial crisis, we've seen that pressure grow and grow for many small businesses, with recent studies estimating that UK companies - the vast majority of them small businesses - are owed around £42 billion in late payments.

To help, Government has put together a tough new package of measures to combat this problem. We're listening to you.

Through the Small Business Bill, we're introducing a requirement for the UK's largest companies to report on their payment practices - subjecting companies' payment performance to full public scrutiny.

We recently announced changes to strengthen the Prompt Payment Code, which will now promote 30-day payments across organisations as standard and maximum terms of 60 days.

In Government, we're working to lead by example with our own payment practices.

And, building on this, we're considering how to give business bodies like the Forum of Private Business further powers to prevent bigger companies pushing small companies around by delaying payment, using unfair payment practices - to ensure these measures are fully effective.

So, step-by-step, we're helping Britain move forward.

But, in the Liberal Democrats, we believe we can do even more for you, your business and our country.

Last week, I set out my party's ambitions for Britain's economic future.

We believe that by building a strong, modern, open economy, Britain can become the powerhouse of Europe. By sticking to our course, we believe we can leapfrog France and Germany to become the biggest economy in Europe within a generation.

It's a big ask, but it's wholly achievable.

We need to do two things: lock down Britain's recovery and continue to rewire our economy for long-term success.

Firstly, just like in 2010, what your businesses need right now is stability.

The very last thing Britain needs is the shock of a lurch to the left or right - away from the sensible, balanced approach that's taking us to where we need to be for jobs and growth.

Yet, as the election draws closer, that's exactly what both Labour and the Conservatives are proposing to do - putting the future of your business and Britain at risk.

Labour has no coherent economic plan.
They talk about the need for deficit reduction, but then say nothing about how they plan to do it.

A Labour majority government would borrow billions more and put our stability and our recovery at risk.

And the Conservatives, despite repeating they will 'stick to the plan', are actually planning to veer away sharply from it.

They propose huge cuts to public spending, far beyond what is necessary, and for nothing more than ideological reasons. That mean they will refuse to borrow for productive investments such as roads, rail and energy - starving Britain of the infrastructure it needs.

Under Tory plans, Government spending on public services and infrastructure like roads, railways and housing will be the lowest we have seen for over half a century.

And when it comes to finishing the job of balancing the books, they have ruled out asking the very wealthy to pay even a penny more to help the ongoing fiscal effort, instead they plan to take billions from the working age poor.

That's around £1,500 each from 8 million low-income families.

It is wilfully unfair and would force many of the poorest families in our country further into poverty.

In the Liberal Democrats, we cannot and will not accept that.

We want to keep broadly to the approach we've taken for the last five years - the stable, centre-ground approach to tax and spending Britain needs to secure its economic recovery and help more people thrive.

So, yes, there is further consolidation to come, around £27 billion in total.

But we will balance the books and, once the deficit is cleared, we will also start to bring down the national debt and invest in the things we, and future generations, need.

Our plan means future governments will need to live within their means and the money we spend on public services will grow roughly in line with the growth of our economy as a whole.

But, in the Liberal Democrats, we'll also allow for one significant exception: government will be able to borrow to make Britain's infrastructure fit for the 21st century.

We've made a strong start in this Coalition Government already - committing over £56 billion of investment in rail, road and local transport by the end of this decade.

But we know more needs to be done to modernise Britain's transport, communications and energy networks and boost our housing supply for the future.

These investments are all essential to help us drive business growth in the years to come.

So, in the last year of the next Parliament, we'll cut £50 billion less than the Conservatives.
That's around half of what we spend on the NHS every year.

And we will borrow £70 billon less than Labour. That's more than we spend on schools and the police put together.

The Tories cuts will make our society less fair. Labour's borrowing will make our economy weaker.

Only the Liberal Democrats have the long-term plan to finish the job and finish it fairly - making our economy stronger and society fairer.

Secondly, we'll also stick to our long-term strategy to harness and encourage the skills and enterprise of British workers and British businesses.

We need every region and community in Britain to succeed, if we're to realise our vision to be Europe's biggest economy in a generation.

So, we'll continue to give local leaders the freedom and control they need to shape their economic future through our City Deals and Local Growth Deals.

We'll build on the success of the Regional Growth Fund - now on track to deliver over half a million jobs and £16 billion of private investment to businesses of all sizes and sectors.

We'll strengthen our Industrial Strategy even further, working with key sectors critical to Britain's ability to trade and grow in the future - our automotive industry, aerospace, low-carbon energy and others.

We'll invest in major transport improvements and infrastructure to create a 'Northern Economic Corridor' - boosting growth, innovation and prosperity across North.

Finally, we'll ensure our tax system stays competitive, making SMEs the priority for any business tax cuts, and we'll continue to focus on building a modern, flexible workforce -maximising the skills and talents of everyone.

Our aim is to double the number of employers with Apprentices in the next Parliament, helping up to 4 million new Apprentices to shine.

We will also exploit every opportunity we have to help your business grow. This includes helping to increase the share SME's win of the public procurement spend.

Every year, the public sector spends around £187 billion on goods and services. In Central Government alone, last year, that figure was £44 billion.

But, back in 2010, only 6.5% of this procurement spending went directly to smaller businesses and the hoops smaller companies had to jump through to try to win a deal were simply endless.

We had departments insisting that every bidder - even for the smallest contracts - complete long and complex forms.

For Government to even consider your bid, you often needed insurance cover, three years of audited accounts and a certain level of turnover.

The Coalition Government was determined to change this. We started with an ambition for a quarter of all central government spending to go to SMEs directly and indirectly.

We then focused on drastically reducing the time, cost and reams and reams of paper work it took for SMEs to apply for these deals.

Slowly, it's working. Last year Government beat its target - spending a record £11.4 billion with SMEs directly and across supply chains. That's over 26% of government spend.

In the Liberal Democrats, we've got an even bigger ambition. In the next Parliament, we plan to push for a third of government deals to go to SMEs.

According to our estimates, that would mean over £15 billion of central government contracts reserved for smaller businesses.

To get us there, we'll see through reforms like the Coalition's recent abolition of lengthy Pre-Qualification Questionnaires for low value contracts.

These forms can run to around 70 pages and take businesses days and days to complete, causing many to fall at the first hurdle.

We'll also implement the changes set out in the Small Business, Enterprise and Employment Bill now completing its passage through Parliament to make government procurement more efficient.

In conclusion, only the Liberal Democrats will ensure Government sticks to the stable, centre ground approach your businesses need.

Only the Liberal Democrats can build the strong, modern open economy Britain needs to become Europe's biggest economy.

We'll keep Britain's recovery on course and we'll invest in your future - giving you the opportunities you need to thrive.

This is our plan for Britain's future - a stronger economy and fairer society.