Small and medium-sized enterprises (SMEs) account for the majority of UK employment and a significant slice of national turnover.
Yet, for years, many have argued that government policy has favoured larger corporations, leaving smaller enterprises to navigate cashflow struggles, red tape, and uneven access to finance.
That narrative is what the government’s new plan, Backing Your Business: Our Plan for Small and Medium-Sized Businesses, is aiming to change. Framed as the most SME-friendly package in decades, it bundles together financial boosts, legislative reform, and local investment.
The ambition is bold. The question is whether delivery will match the ambition.
The Government’s Plan for UK SMEs
Ending the Culture of Late Payment
One of the most hard-hitting sections of the plan tackles a familiar frustration for SMEs, and that’s late invoices. It’s not a minor irritation; the government estimates it costs the economy £11 billion annually and forces dozens of closures each day.
The approach this time is uncompromising:
- A legal maximum of 60-day payment terms, reducing to 45.
- Mandatory interest charges for overdue payments.
- The Small Business Commissioner empowered to fine habitual offenders.
- Spot checks and a fixed 30-day window for invoice verification.
If enforced without exemptions for major corporates, this could mark a cultural shift in how the UK does business.
Cutting Bureaucracy – or Just Rearranging It?
The headline promise: a 25% cut in regulatory admin costs. The measures include simplified reporting rules, reworked hospitality licensing, and an overhaul of planning approvals.
For construction SMEs, extra planning officers and faster small-site development approvals could translate into real gains.
For others, it may feel more like incremental change unless the reductions in admin are clearly felt day-to-day.
Public Contracts and Global Markets
Two big opportunities are on the table:
- SMEs given priority in public procurement, backed by dedicated training and support hubs.
- UK Export Finance expanded from £60bn to £80bn in capacity, with products designed for smaller firms.
The potential here is huge, but awareness is everything. History shows that even well-funded schemes fail if SMEs aren’t actively guided toward them.
High Streets, Security, and Local Revival
The government’s approach to reversing high street decline is multi-layered: business rate freezes for smaller properties, curbs on upward-only rent clauses, direct investment in local regeneration, and reforms to hospitality licensing.
Add to that a boost in policing numbers to combat theft and anti-social behaviour, and you have a package that could improve trading conditions for independent shops and hospitality businesses. The wildcard? How consistently landlords and local councils support and enforce these changes.
Skills, Digital Growth, and Centralised Support
Recognising that SMEs often operate without the spare time or internal resource for major digital upgrades, the plan includes:
- An expanded Made Smarter programme for adopting new tech.
- Increased funding for apprenticeships and training, rising by £1.2bn a year by 2028.
- More leadership and mentoring schemes.
- A centralised Business Growth Service to act as a single point of access for funding, training, and advice.
If this centralised service actually works as intended, it could replace today’s fragmented, confusing landscape of business support with something much more usable.
A Cautious Verdict of the Government’s Plan for UK SMEs
On paper, Backing Your Business is comprehensive and grounded in many of the pain points SME owners raise again and again. The late payment measures alone, if enforced without fear or favour, could be transformative.
But there’s a pattern with government SME policy: launch fanfare, slow rollout, patchy uptake.
Business owners will need to watch closely, engage early, and hold policymakers accountable if these proposals are to shift from glossy PDF to tangible change.
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