The Shorthand – is the red tape bonfire all that it seems?

Welcome to this week's edition of The Shorthand, your weekly digest of the top news stories that affect small businesses in the UK! Here, we break down the stories you may have missed during the week, detailing what they’re all about and, more importantly, why you should care.

And all that in under 5 minutes.

Go on, put the kettle on and we’ll have you caught up with the most pressing business news stories of the week by the time you’ve finished a cup of tea.

1. Red tape to be cut, but who really benefits?

What’s happening here?

The UK government has announced that it is extending exemptions from many regulations that currently apply to small businesses, to now include thousands more medium-sized businesses. Currently, businesses with fewer than 50 employees are considered as ‘small businesses’, with those employing 50-249 staff labelled as ‘medium-sized’.

As of this week, businesses with fewer than 500 employees will benefit from the same exemptions from regulation and paperwork that small businesses previously did. The government has said that this will mean that 40,000 businesses will be “released from reporting requirements and other regulations”.

One such reporting exemption that will now be extended to companies with fewer than 500 employees is the ability to save time by sending abridged accounts to Companies House.

Why should you care?

The news that thousands of businesses will be made exempt from time-consuming regulations and paperwork will be seen as good news amongst many in the business community.

However, many medium-sized firms under 250 employees already benefit from a number of exemptions. In this view, the government’s claim that 40,000 businesses will be freed from red tape is somewhat misleading. The greatest beneficiaries will be the roughly 4,000 larger firms of between 250 and 500 employees.

There is also concern that exempting larger businesses from regulations will have a detrimental effect on hiring ability. Helena Young, from Startups, commented:

Where bureaucracy goes, key rights for the employee may shortly follow…it would have devastating consequences for the business’ ability to attract and keep talent.

There are also questions to be answered around whether or not these changes could lead to further confusion amongst SMEs about their remaining regulatory obligations. The Institute of Chartered Accountants in England and Wales (ICAEW) have responded to the announcement with a degree of concern, calling the cutting of ‘red tape’ a “generational shift in the UK reporting landscape”. Their director of audit and corporate reporting, commented:

We have a number of questions and concerns about the announcement. This includes clarification of any impact on the thresholds that currently determine the reporting and audit obligations of small and medium-sized companies, and the timing of any changes.

2. Time’s up for the Small Business Minister

What’s happening here?

On Tuesday this week, the government’s Department for Business, Energy and Industrial Strategy quietly removed the role of ‘minister for small business’ from their website, after having existed for over 10 years.

Dean Russell MP has been appointed Minister for Enterprise and Markets, a non-cabinet level junior ministerial role. Within his wide-ranging brief, small business will be just one of 16 different areas of responsibility, along with issues such as postal affairs and intellectual property.

This marks the first time since the Tories came to power in 2010 that small businesses have not had a dedicated minister. Indeed, back in 2015-16, the post was upgraded for a time to a full cabinet-level position, with the then-incumbent minister, Anna Soubry, attending weekly Downing Street meetings.

Why should you care?

The UK’s 5.5 million small businesses are currently facing a triple threat of rising inflation, a rising cost of borrowing and rising operating and energy costs. At this time, the apparent elimination of the small business minister position was described by one ‘senior business leader’ quoted in The Times as a “kick in the teeth” for small firms.

That same anonymous source also highlighted the downgrade of representation in government for small businesses, saying:

The post has gone from attending cabinet and having the ear of the prime minister, to being miles away from anything.

While the new Minister for Enterprise and Markets will be a non-cabinet voice for small businesses, the loss of a dedicated ministerial position could be seen as a signal to some small firms that they are not considered a priority by the Truss government.

3. SMEs selling on Amazon have created 250,000 jobs in the UK

What’s happening here?

Global e-commerce giant Amazon has published its UK SME Impact Report, which details the extent of Amazon’s reach into the UK’s small and medium-sized business ecosystem. The report highlights Amazon’s claim that SMEs selling on their site have created 250,000 jobs in the UK.

Elsewhere, the report details how UK businesses sold more than 950 million products on Amazon last year, up from 750 million the year before, marking a more than 26% increase in business in just 12 months. Furthermore, there are now over 85,000 UK SMEs selling on the platform.

Why should you care?

All the metrics in Amazon’s report suggest that small businesses that sell through Amazon are seeing greater returns and increased business year on year, with over 15,000 UK SMEs surpassing £100,000 in sales on Amazon last year for the first time.

There are some concerns, however, that the scale of Amazon’s footprint in the UK e-commerce space means that non-Amazon affiliated independent retailers are losing out.

According to the report, 50,000 sellers in the UK used Amazon’s shipping and inventory management service, Fulfilment by Amazon (FBA), in the last year, and grew their sales by an average of 25%. Back in July this year, it was reported that Amazon was being investigated by the Competition and Markets Authority (CMA) over whether they hold a dominant market position and give an unfair advantage to small businesses that pay extra for the FBA paid-for service.

As small businesses become more dependent on Amazon to compete in the e-commerce space, they become more susceptible to service price hikes and having the cost of tax increase passed onto them by the parent platform.