David Rutley is the Member of Parliament for Macclesfield, Damian Green’s PPS, and a member of the Free Enterprise Group.
Thirty years ago, as the Conservatives prepared for our annual party conference, a palpable sense of purpose filled the air. We were building a property-owning democracy of first-time homeowners, first-time shareholders; we were the optimists, the true progressives in British political life. As we approach another conference, there is again cause for progressive, Conservative optimism about the new opportunities we can deliver, particularly the opportunities for promoting enterprise. We continue to need more first-time entrepreneurs, and more can be done to encourage those entrepreneurs to become first-time employers.
When Mrs Thatcher’s governments sold council houses and shares in the privatised utilities, the aim was not merely to shift ownership from the public sector to the private sector, it was to shift ownership to a wider part of the population than had previously enjoyed it. Many of the people who bought their council house, or took part in the utility share subscriptions, had no family history of holding such property. The success of the sales showed that the ambition was there, but something had held people back – be it the tangible issue of cash or the intangible psychological, or perhaps cultural issues that can act as a barrier to realising aspirations.
This Conservative-led Government is working hard to boost enterprise. The Treasury, for example, is introducing an Employment Allowance to cut the National Insurance burden most for the smallest employers; the Department for Business has introduced a “one-in, two-out” rule, whereby every new regulation that imposes a new financial burden on firms must be offset by reductions in red tape that will save double those costs.
Much, then, is being done, “but,” as Business Minister Rt Hon Michael Fallon MP has said, “every year businessmen and women still spend too much time and money complying with government regulations, when they should be developing and growing their businesses. We are impatient for growth and I’m determined to remove this brake on aspiration.”
To keep unemployment falling, we need to continue encouraging more businesses to set up and go on taking the brakes off them becoming employers. There are many among the four million self-employed who have never grown their business activity to a point where they have taken on an employee. It’s not this simple, of course, but if they all took on one employee, that would be enough jobs for zero unemployment.
With help from the Federation of Small Business (FSB), I recently asked small business owners via social media what they believed are the barriers to taking on a first employee and what solutions they had to overcoming them. Respondents suggested a number of barriers which can, as with first-time home- and share-ownership, loosely be grouped as “psychological” and “tangible”.
A couple of respondents specifically used the word ‘fear’: “Fear of getting some minor issue wrong and being taken to the cleaners by the employee;” “Fear I will get sued, fear I have to pay maternity leave when I can hardly afford to stay afloat, fear of all the legislation that is pro-employee and against employers.” There was frequent use of negative terms: “overwhelmed,” “crippling,” “uncertain,” “totally confusing.”
The key sources of fear for these respondents were being sued for breaches of employment law and challenges relating to what were sometimes seen as “confusing” government regulations, with particular reference to HM Revenue & Customs processes. In fact, more than one in four respondents used the specific term “red tape” with others citing “admin”, “regulation” and “legislation” taking it up to half of respondents. About a third cited “money” (increasing to over 40 per cent, if taxes and rates are included). Time is money, and the opportunity cost of the time required for performing an employer’s duties could, it was feared, actually cause a business to shrink, not grow.
Enthusiasm does exist about the prospect of being able to hire an employee. The FSB recently found that small-business confidence is at a record high, and there are clear ambitions to take on staff – if barriers are removed. With confidence increasing, we can go further in taking forward our deregulating agenda, and at the same time provide clearer signposts and navigational aids for small businesses. The will to set up a business is there, the will to employ is there, we now owe it to the tradition of progressive Conservatives to redouble our efforts to ensure the will finds a way.