The snap general election caught just about everyone off-guard apart, presumably, from most of those in the cabinet!
However, if you’re an SME then you’re bound to have some concerns and uncertainties about what this all might mean. I’m no politician but I’ll try and summarise some of the key issues and general principles.
One of the problems with snap elections is that many in government just don’t have time to think through what this means in terms of scheduled legislation going through the Houses of Parliament or local authority town halls.
That’s because our democracy prohibits parliament (usually meaning the government of the day) or local government rushing through last-minute laws and measures that could directly influence the election result.
The procedure for stopping legislation being introduced at the last moment is called “Purdah”. Some scheduled legislation has to be abandoned or shelved until after the election is over.
The overall objective is to stop, for example, a government rushing through an emergency income tax cut the week before an election in order to buy votes.
The effects of pre-election purdah
Almost inevitably in the context of an unexpected snap election, there’s a period of confusion as a result of the above.
This sometimes results in unfortunate ministers appearing in front of TV cameras ill-prepared and being asked what this means for legislation “XYZ” or for a specific group in our society – such as SMEs!
Typically, they don’t know in detail because they’re still trying to work out which planned legislation has to be axed and which got through before Purdah commenced. The inter-dependencies are complex and not always easy to quickly sort out.
Their hesitation and sometimes obvious “don’t know” position is often taken as a sign for the worst by our sometimes glass-is-half-empty inclined media. Headlines saying that the government is confused perhaps make better news.
The first two messages are therefore clear:
- don’t read anything negative into some apparent pre-election confusion and contradiction over recent government deferrals or even slight confusion about the effects of the election on current legislation timetables. It’s perfectly normal in these circumstances;
- be healthily sceptical about the very negative interpretation of some of these symptoms. For example, the attached headline implies potential worrying exposures for existing planning permission guidelines though it quotes some very major figures in local government confirming that the election is NOT going to have any significant impact.
It’s perhaps worth keeping in mind the imminent End-Of-Days economic collapse that sections of the media were widely predicting would commence immediately after the Brexit vote!
Post-election result impact on SMEs
Nobody can predict what will happen after the election. At this time, the polls appear to suggest that the government has an unassailable lead and that presumably indicates that the only question is the size of the majority.
Assuming that is the most likely outcome, it’s perhaps fairly safe to predict that broadly speaking, government policy towards SMEs will be more or less consistent.
However, there are some issues to contend with:
- even its most ardent supporters would agree that the government’s 2017 rather chaotic NI U-turn and the business rates revaluation exercises weren’t examples of best-of-breed practice. Fortunately, the suggestion that the relief package for SMEs would be deferred due to the election has now been rescinded;
The election hiatus should encourage the government to learn that SMEs need stability and consultation before rash measures are passed. It seems likely that lesson will be taken;
- on a much more positive note, the election means the planned reduction of dividend tax relief thresholds from £5,000 to £2,000 has been canned. While many SME owners will be cheering, it’s not entirely clear whether this is a permanent or temporary move.
On balance, it might be prudent to assume that we’ll see this again after the election.
As I’ve said in other blogs, while there are of course challenges ahead, such as Brexit, the UK economy seems to be in fairly good shape and the borrowing environment likewise, as can be seen from various sources.
For SMEs in 2017/18, the most likely impact of the election is going to be more of the same. If the current government is returned, it’s difficult to see why they would introduce radical change that would put the economy and SMEs at risk.