Five reasons a Conservative Lib Dem deal is good for small business

As the horse trading between David Cameron and Nick Clegg appears to be entering its final phase, Alex Bellinger asks ‘could a coalition deliver good news for Britain’s small businesses?’

10th May 2010 at 12:35 pm

Following the 6 May election the British people have delivered a very exquisite kind of torture to our politicians in whom many have lost faith.

Conservative Lib Dem small business impact

Muddle and fudge or strong and stable?

But what matters to small businesses now is whether a new government based on consensus and coalition is going to be ‘strong and stable’ or the living embodiment of ‘muddle and fudge’.

Although a Conservative Liberal Democrat coalition is an unlikely pairing, here are five reasons the result of this hung parliament could be good news for UK SMEs.

1. No Tax On Jobs

Labour’s planned 1% National Insurance hike has been widely condemned by businesses large and small as a tax on jobs. The Lib Dems recognise this and say they’ll get rid of the rise in due course. The Tories are committed to scrapping it.

As part of any Con-Lib pact, I’d bet a nail is hammered firmly into the coffin of any NI rise, which should benefit jobs and business in general.

2. Vince Cable & Cuts

The Lib Dem shadow Chancellor has consistently talked sense and proven a sharp mind when it comes to the economic turmoil of the last couple of years.

To have his influence at the heart of a new government would be valuable. I think most small businesses would welcome Vince Cable as Chief Secretary to the Treasury, providing a counter-balance and gravitas to George Osborne as Chancellor. [Edit: Vince Cable become Business Secretary announced on 12 May – good news.]

While everyone recognises painful cuts in public spending and tax rises are on their way to deal with the deficit, there are conflicting views about time-scales.

The Tories want to introduce £6bn of cuts this financial year, the Lib Dems would delay until 2011-12. The IMF (International Monetary Fund) and Mervyn King, governor of the Bank of England, both warn against rapid cuts before sustainable growth is secured.

[Edit: £6 billion cuts remains in the new Con Lib Dem agreement.  But as a commenter below notes and following comments by Mervyn King on 12 May, the economy seems to be growing enough to accommodate these cuts. ]

What’s at stake here? The threat of a double-dip recession which will harm all small businesses.

Although the Greek/Euro economic crisis could dictate events, the markets may find a considered, balanced plan for the economy delivered by a Lib Dem backed Conservative government more appealing, than anything one party might pursue alone.  An economic war cabinet, if you like.

3. Co-opetition

In an increasingly networked business world, the idea of co-opetition and partnership has gained a lot of ground over recent years, particularly in the world of web startups.

More and more businesses recognise strong leadership doesn’t preclude developing mutually beneficial partnerships.

Working with competitors isn’t such a strange idea in business. It shouldn’t be in politics either.

This hung parliament is an opportunity for government to catch up with progressive business.

4. Green Tech

Environmental policy is an area where Tories and Lib Dems are closely aligned. Both talk about a low carbon economy and investment in renewable energy. Together they have an approach which is arguably more progressive than the Labour alternative.

This should be good news for Green Tech businesses – an area of the startup economy which is increasingly important and offers the UK an opportunity to become a global leader.

5. Red Tape Reduction

As some of you will know, I’m sceptical of Ken Clarke’s new broom to sweep away red tape.

However Vince Cable has long espoused the idea of ‘sunset clauses’ i.e. legislation that has a shelf-life and then disappears off the statute book.

I believe this could have the single biggest positive impact on reducing legislation for small businesses.

A Tory commitment, combined with a very practical Lib Dem solution, could finally mean we see some sharp, rather than blunt scissors snipping away at the confusing tangle of red tape.

[Picture credit: Andy Beez licenced from Flickr]


Alex is the founder and editor of SmallBizPod, the UK's first podcast dedicated to small business, start-ups and entrepreneurship. Alex writes about topical small business issues, entrepreneurs and anything else that catches his eye here on the small business blog.

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  1. George says:

    The UK economy is worth £1.5trillion, with £60billion of growth predicted this year. Given this, can you explain how a cut of only £6billion will cause a double dip recession?

  2. Personally I am positive about the change. Certainly it seems that the news this week confirms the dire situation we are in as a Country, and of course the menace of inflation is coming.

    Without a doubt those of us running small firms, and assisting small firms are the most nimble and can react immediately to any change coming.

    Stop watching the TV and start listening to those that buy your products and services.

    It works well for me.

    Richard Smith

  3. Guy says:

    I feel positive about the change also, however, I am skeptical about how the Conservative Lib Dem deal will pan out when it comes to certain issues that both parties are in complete disagreement over. However, I do feel that the UK will do better with Gordon Brown out of the picture and I believe that the new leaders of this coalition government are intelligent and motivated enough to work through issues.

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