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– Focus on removing barriers for start-ups to improve competition in markets
A future Labour government will boost competition for businesses by tackling ‘blue tape’ – business bureaucracy created by other firms – as well as seeking to reduce the quantity and improve the quality of government regulation on business, Shadow Business Secretary Chuka Umunna MP will say today.
This builds on Labour’s approach of improving competition in broken markets – including in energy and banking – to support consumers and small firms. Last month Ed Miliband announced that consumer groups will be given a greater role under a future Labour government in identifying and fixing broken markets. Under Labour’s plans, consumer groups including Which? and Citizens’ Advice will be asked to work with regulators to draw up an Annual Competition Audit of Britain’s economy. This will help set the agenda for regulators and government in the year ahead.
The latest annual Global Entrepreneurship Monitor report published last month found that ‘total entrepreneurship activity’, measuring the proportion of adults engaged in setting up or running a new business in the UK has fallen and is currently below the United States, Ireland, Portugal and the Netherlands. In the World Bank’s most recent Doing Business report, the UK has fallen from 18th to 28th in the rankings of countries for ease of starting a business.
To increase entrepreneurship – in addition to removing unnecessary bureaucratic requirements which arise from government – Mr Umunna will say that increasing competition, by reducing barriers to entry to new markets for start-ups, will be a key objective of the new Small Business Administration (SBA) which the next Labour government will establish. Not only will the SBA be charged with tackling Government ‘red tape’ on firms, but it will also work to reduce business ‘blue tape’ in order to create a more competitive market place.
Examples of ‘blue tape’ include the scandal of late payment of suppliers by other firms, whereby businesses are effectively bankrolling other firms which refuse to pay on time; delay on the installation of broadband and other essential services; and energy companies routinely rolling firms onto more expensive tariffs without their consent.
To cut such ‘blue tape’, amongst other things the SBA will seek to expose those who pay late and take action against late payers, including through reporting requirements. It will ask Ofcom to investigate whether BT and other providers can deliver broadband more quickly and banning energy companies rolling small business customers onto more expensive tariffs and limiting back-billing to one year instead of six.
Alongside this, the SBA will support business-led solutions and business best practice in tackling burdens on start-ups and other firms, including through new technology, and will lead a cross-government drive to improve interactions between departments, public bodies and businesses.
To cut Government ‘red tape’, Labour will retain the Regulatory Policy Committee, the Better Regulation Executive and the Primary Authority Scheme set up under the last Labour government.
Chuka Umunna MP, Labour’s Shadow Business Secretary, commenting, said:
“To grow our way out of the cost-of-living crisis we need more high-skilled, better paid jobs and more people starting their own business. A key part of this is creating a more entrepreneurial economy, where the practical barriers facing budding business owners and insurgents breaking into new markets are swept aside.
“We will be unremitting in tackling practical barriers to business success wherever they exist and wherever they arise. The next Labour government, working through our new Small Business Administration, will make boosting competition by reducing barriers to entry to new markets for firms – large and small – a key priority reflected across government.
“As well as a better approach to regulation – so that it is drawn up with the small business and entrepreneur in mind – this means tackling ‘blue tape’ too, by reducing the hurdles which come from other businesses and empowering best practice where firms make life easier for each other.
“We will make it simpler and more straightforward for businesses to start up, enter new markets and operate successfully, ensuring that no one is held back.”