Small Business, Big Heart: Bringing communities together

UK Government should:

• Deepen its understanding of the social impact of smaller businesses in their communities. The extensive work of small businesses in their communities must be a central factor in the development of the small business policy framework, i.e. the formation of policies on issues such as tax, regulation, education, local government and infrastructure. Government must recognise the wider social impact of small businesses – beyond the economic – in tackling key societal issues such as ageing demographics, loneliness, wellbeing and social mobility.
• Ensure there is a small business champion on the Responsible Business Leadership Group. Small businesses are embedded in their communities, trusted by local people and are there for the long term. Government must work to better understand the role that small businesses play, to better inform its place-based approach to the Industrial Strategy, the Inclusive Economy Partnership, the Civil Society Strategy, and Integrated Communities Strategy.
• Explore the potential for ‘Community Zones’ (following the model of Enterprise Zones). For small businesses operating outside urban centres and business hubs, the costs of doing business are often greater due to poor infrastructure, cost of transport and lack of economies of scale. However, these small businesses have a significant social impact and support their communities to be more resilient. Government must recognise the challenges these businesses face and, equally, celebrate the critical role they play.
• Carry out a feasibility study for an online tool to promote understanding of the Social Value Act, working closely with stakeholders. The online tool could be used to educate commissioners and smaller firms about what can constitute social value within the context of the Act (without being overly prescriptive) and help to create a level playing field across public procurement. It should also include a self-audit tool to support smaller businesses to understand their social value maturity within the context of the Social Value Act.

UK Government should for:

Labour market disadvantaged groups

• Introduce a one-year Employer National Insurance Contributions holiday for smaller businesses employing labour market disadvantaged groups. UK unemployment is at record lows, but we are far from ‘real’ full employment. The NI holiday would fulfil the Conservative Party manifesto promise to incentivise small businesses to employ the most labour market disadvantaged in our communities.

Young people

• Reintroduce the principle of compulsory work experience, allowing for flexible models that work for smaller businesses. The end of compulsory work experience in England in 2012 for students at Key Stage 4 was arguably detrimental to the employability of young people and the education to employment transition. Head Teachers and Career Leads must have the freedom to engage with smaller businesses in their community (perhaps via Career and Enterprise Company Enterprise Advisors) to develop appropriate work experience and, more generally, employer touch point models that are tailored to the needs of the local community. If the principle of compulsory work experience cannot be introduced, at the very least statutory guidance to schools and colleges should be revised to include a “right to be offered” a substantive work experience placement at Key Stage 4.
• Support smaller businesses to take on apprentices. Government must make the 20 per cent off-the-job training work for smaller businesses, including those in rural areas and fringe towns.
• Incentivise smaller businesses to deliver work placements by matching the industry placement fund for providers of T-levels with a fund for small employers. Work Placements are an integral part of T-levels but the 45-day work placements are a significant burden for small employers. The UK Government must provide clear financial incentives and guidance to enable small businesses to provide these work placements – especially those in rural, coastal and remote communities.
• Supporting employer engagement. The Department for Education (DfE) should extend eligibility for travel bursary funding to young people under the age of 16 to help them access a wider range of local employers. DfE should publicise the fund and ensure that information about eligibility and the application process is communicated clearly to young people and those supporting them. It should commit to communicating this via schools, colleges and the redesigned National Careers Service website. The Careers and Enterprise Company, which has recently joined the Skills Builder Partnership, should work closely with organisations such as FSB to achieve the ambition of increasing the number of Enterprise Advisors from 2,000 to 4,000. A variety of communication channels must be utilised to reach smaller businesses including through the use of existing civil and community organisations. The merger between SkillsBuilder and the Careers and Enterprise Company will allow for a shared language and outcomes.

Higher Education 

• Promote the Small Business Charter (SBC). To support this ambition, more must be done to promote the Small Business Charter award, which gives recognition to business schools that play an effective role in supporting small businesses, local economies and student entrepreneurship. 
• Build bitesize learning into the design of management and leadership training. Smaller businesses may benefit from more of an escalator approach, whereby their initial financial and time commitment is relatively low. If they see benefits from the training, they are then in a position to be able to ‘ramp up’ and buy the second round or module of training. This should be taken into consideration by policy makers who are designing leadership and management training, following the announcement of an additional £11 million of funding by the Chancellor in the Autumn of 2018.³

Older workers

• Target the mid-life MOT on those most in need. The mid-life MOT has the potential to benefit the self-employed in assessing their skills levels, evaluating their health and wellbeing, and planning ahead for retirement. The mid-life MOT has the ability to link current and proposed policy interventions, such as a £10 million training pilot in Greater Manchester with occupational health support. For the mid-life MOT to help those most in need, the Department of Work and Pensions (DWP) should initially focus on a targeted messaging campaign highlighting the benefits of a MOT to specific sub-groups of the self-employed and workers. Government should commit funds to extend the pilot amongst the self-employed and small firms. There should be a continuation of investment to support face to face or telephone advice support, as an investment in an online resource alone will not act as a sufficient intervention. This will benefit small businesses that do not have access to HR support.

Ethnic minorities

• Introduce a dedicated scheme to help ethnic minority-led businesses to access external finance. Alongside awareness-raising, a dedicated scheme – similar to the now defunct Aspire Fund – would help more ethnic minority-led businesses access the finance they need to grow. A scheme targeted at women from certain ethnic minority groups could make a real difference.
• Create effective mentoring circles for ethnic minority women who have experienced long-term unemployment and who may have English as a second language. This should be rolled out across the JobCentre Plus network, similar to the current initiative for ethnic minority youth jobseeker plus claimants. Role models can play a powerful role in inspiring individuals to seriously think about self-employment.

Ex-offenders

• Provide a one year Employer National Insurance Contributions holiday for small businesses employing an ex-offender. This will not only act as an incentive for smaller firms to recruit more ex-offenders, but will also enable smaller firms to deal with some consequences which may arise from hiring an ex-offender, e.g. an unforeseen absence from work to resolve housing issues. It would also support small business employers to upskill ex-offenders.
• Enhance the New Futures Network scheme. The New Futures Network Scheme should leverage and enhance the good work of charities, to help provide ongoing support to exoffenders in employment.

^{3 HM Treasury, Budget. 2018}

UK Government should:

• As part of the statutory evaluation of the right to request flexible working in 2019/20 deepen its understanding on the ways in which flexible working is secured in smaller businesses.⁴ The review, proposed by the Department for Business, Energy and Industrial Strategy (BEIS) in 2019/20, should seek to better understand the nature of flexible working offered by smaller businesses. In particular, the review must not lead to legislation that creates unintended consequences in relation to the ability of small businesses to offer flexible working through informal means.
• Promote new-to-firm innovation amongst smaller businesses to support flexible working and support the development of digital skills. There should be a particular focus on the adoption of digital technologies, the development of digital skills, and the enhancement of management and leadership capabilities.

The Industrial Strategy Council should:

• Ensure that the measurement of flexible working, as part of the measuring Good Work agenda, contains metrics designed to capture the informal ways in which flexible working is agreed within many smaller businesses. FSB agrees that the measurement of good work is important. We support the Government’s decision to request that the independent Industrial Strategy Council provides further advice on how best this can be achieved, building on the work led by Matthew Taylor.
• Ensure the self-employed are not excluded from the commitment to measure the quality of work. The daily experience and expectations of work for self-employed people often differs from those in employment. The nature of self-employment can increase the risk of loneliness and exacerbate existing mental health conditions, for example due to the fear of ill health or cash flow volatility. Therefore, FSB welcomes the commitment in the Measuring Good Work: The final report of the Measuring Job Quality Working Group to include, in a relevant way, the self-employed in the measurement of good work and the drive to improve the quality of work.⁵

^{4   HM Government, Good Work Plan, December 2018, available at https://assets publishing service gov uk/government/uploads/system/uploads/attachment_data/file/766167/good-work-plan-command-paper pdf} 

^{5     Measuring Good Work: The final report of the Measuring Job Quality Working Group (2018)} 

UK Government should:

• Continue to promote Access to Work. This should include awareness raising and myth-busting. For example, many businesses are not aware that micro and small businesses (less than 50 employees) are exempt from employer contributions to Access to Work. In order to improve Access to Work further, Government should act to ensure that processing and payment times are reduced, making it possible to claim for employer and staff time in both processing the application and providing reasonable adjustments.
• Create a new level 4 within the Disability Confident Scheme. A new level 4 should be created where accreditation depends on achieving actual job outcomes. This would enable small businesses with a proven track record in the recruitment, progression and retention of employees with disabilities to claim recognition at level 4. The current levels 1 to 3 can disadvantage smaller businesses because they rely more on the measurement of processes and procedures.
• Introduce a one-year Employer National Insurance Contributions holiday for smaller businesses employing people with disabilities and with mental health conditions. UK unemployment is at record lows, but we are far from real full employment. A one year NI holiday would fulfil the Conservative Party manifesto promise to incentivise small businesses to employ those furthest from the labour market.
• Support small firms in delivering a phased return to work through Statutory Sick Pay, on a voluntary basis. More broadly SSP should be reformed to incentivise employers to engage in good practice in helping their employee return to the workplace. Government should consider revising existing legislation so that the operation of SSP does not dis-incentivise employers who are doing the right thing by enabling their staff to return to the workplace at a time that suits both parties. The Percentage Threshold Scheme (PTS) should be reinstated, perhaps through a model that links PTS support with small firms who can demonstrably show good practice in helping employees return to the workplace, for example through a phased return to work. This would send a clear message that Government is willing to help small businesses support their staff, and to embed best practice. A significant proportion of employees within small businesses work on a part-time basis (37%). If a phased return to work is to be incorporated into SSP, it must be easily incorporated for those who work part-time and for those who work flexibly. Engaging employers in a return to work plan is essential as they need to be directly involved as only the employer will know what is or isn’t possible in their workplace.
• Explore the potential for tax breaks to incentivise occupational health within small firms. This would encourage smaller businesses to pay for occupational health and may, in turn, ease the burden on an under-pressure NHS. Such an incentive may lead to increased output, efficiency, employment and productivity.

• Provide specific support for smaller businesses to access the occupational health market. The occupational health market is fragmented and very difficult to navigate. Government should further consider how to improve the awareness and knowledge of occupational health and occupational health products by improving advice (perhaps through an advice line), accessibility (perhaps through a portal) and support both at a national and local level.
• Implement better occupational health through supply chain pilots. These pilots should focus on scalable interventions that incentivise larger companies to provide access to occupational health for smaller businesses within their supply chains. Supply chains can play an instrumental role in improving access to occupational health within small firms. A smaller business could benefit from access to the resources, support and training that larger companies may have available to support staff with a disability or mental health related issue.
• Provide dedicated funding for self-employed occupational health pilots. These pilots should focus on scalable interventions to support the self-employed to access occupational health and to provide a cash flow during a period of ill health. The self-employed in particular lack access to occupational health services. Many are left vulnerable when they find out the NHS does not provide help in this regard. The UK Government should support the development of self-organising models (e.g. Bread Funds) where the self-employed are able to come together under the umbrella of a legal structure, i.e. where an organisation is specifically created to enable the self-employed to cooperate to enable them to access help and support in the event of ill-health.⁶

^{(6) RSA, The Self-Organising Self-Employed: Empowering grassroots collaboration in the new Economy, available at https://www.fsb.org.uk/docs/default-source/ fsb-org-uk/self-organising-self-employed---final.pdf?sfvrsn=0.}

UK Government should:

• Promote the benefits of self-employment to service leavers. This can be done through ensuring clear and coherent information about self-employment and its benefits and risks is included in the career guidance offer provided to service leavers by the MoD’s Career Transition Partnership (CTP). Government should also ensure that support is offered on a longer-term basis. This is because many service leavers often shift to self-employment some time after leaving the armed forces.⁷

^{(7) Lyonette, C., Barnes S-A and Owen, D. Self-employment and the Armed Forces Community. 2018.}