Helping small businesses to build back better

I have been doing some work with a couple of smaller businesses, mostly legal and HR issues. This isn't a sector I am very familiar with having spent most of my career working in the public sector and with large companies. So, it has been interesting and provided new insights.

One owner joked that he didn't expect to be getting help from a former trade union official. It did remind me of an evidence session in Parliament when I was seated between the Federation of Small Businesses (FSB) and the CBI. The guy from the CBI asked, light-heartedly if I would be more comfortable swapping places. I pointed out that the biggest threat to small business is big business, not unions!

One of the firms had to close, and furlough staff during the first lockdown, but they recovered well as a hobby business demand was brisk. We sorted out some of their staffing issues, but they are now struggling with Brexit. I was, of course, familiar with the queues of lorries at Dover. Still, I hadn't fully appreciated the problems involved in just sending orders to EU companies that didn't exist before Brexit. Assurances from UK Government ministers don't match up for a firm exporting around a quarter of their products to the EU. As the owner put it, orders from the USA have always been a bit of a pain, but it was an occasional pain, not a constant backache!

The other firm has suffered pretty severely during the lockdown. It has had some help from the UK and Scottish Government schemes. I had heard that these were not always easy to access, and there were delays. However, I hadn't appreciated just how difficult it could be. Particularly for small businesses who don't have the in-house administrative expertise. I also discovered that ministerial announcements don't necessarily mean that the scheme is even up and running, let alone paying out.

With this experience, I paid a bit more attention to an article by competition lawyer Michelle Meagher in the RSA Journal's latest edition. She argues that as large global companies accumulate more power, competition laws are no longer fit for purpose. She uses the analogy of a combine harvester, in which big business sucks in the land, capital and people and churns up the world as it goes. This is reinforced by limited liability, short term shareholder value maximisation and executive remuneration. All of this has led to a concentration of markets, channelling power to a few companies in each industry. Instead of protecting the public interest, competition law is aligned to the needs of the combine harvesters. She proposes three solutions around dispersing, democratising and dissolving power. It reminded me of the, admittedly more radical, arguments in Andy Cumber's book The Case for Economic Democracy.

Wearing a different hat, I discussed the FSB's manifesto for the Scottish Parliament elections this week. I can remember when I might have struggled to find much that I agreed with in a small business manifesto. However, there are plenty of decent progressive ideas in this paper, which is well worth reading. Not least the call for a bigger share of public procurement. 

The discussion has reinforced my view that Community Wealth Building is a critical economic initiative, and that more can be done to support smaller businesses that keep wealth local. My recent experience has also taught me that the vast number of schemes aimed at helping small business, often confuse and complicate access. In my last Reid Foundation paper, the public service hubs idea could also be developed to provide a one-stop-shop for business support.

Scotland's economy is built mainly on small businesses with more than a million jobs dependent on the sector. Like so many other areas, the pandemic has highlighted long-standing problems and created new ones. If we are to build back better, we have to support small businesses to be part of the solutions.