Micro businesses key to a successful economy

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Anne Marie Morris MP calls on the government to create conditions in which micro businesses can prosper, to provide stability in the economy.

I am delighted to have secured a Westminster Hall debate on Wednesday afternoon in order to raise the important subject of micro businesses. It is my view that micro businesses are a fundamental part of both our national economy and our local communities. It is only by creating the conditions in which they can prosper that I believe a successful and sustainable rebalancing of the economy will be achieved.

Micro businesses consist of both the self-employed and the smallest enterprises in our society. Many of us interact with micro businesses as a regular part of our lives without perhaps realising just how important a role they play in our society. However, 90 per cent of businesses in this country have fewer than five employees and these tiny enterprises make up around 20 per cent of total economic output. There are more than four million micro business in the country and they were responsible for creating more jobs, in relative terms, than companies with more than 100 employees over the last three years.

In my Westminster Hall debate, I will seek to give micro businesses the recognition they deserve. I will also argue that the government has done much to support our micro businesses since May 2010, but that we need to go further and do even more. I will suggest we need to build on the regulation moratorium for micro businesses and the red tape challenge by exempting our smallest enterprises from regulations that prohibit growth. We need to see the spirit adopted by the EU, in relation to measures recently announced on accountancy regulations, extended to many more areas it oversees.

We need to see the taxation system reviewed and assistance provided to micro businesses where it is feasible for it to be offered. We need to see improvements to the quality and accessibility of information available to existing micro businesses and those considering starting their own company.

We also need to review our current understanding of what constitutes a micro business. At the moment, a micro business is defined as one with fewer than 10 employees and a turnover/balance sheet of €2m. This represents far too sizeable a proportion of the total number of businesses in the UK and using this definition has the result of ensuring well-intentioned policy initiatives are not assisting the very smallest enterprises they were designed to help.

I will acknowledge the concept of micro entities recently discussed at EU level, but argue we need to ensure we retain the flexibility to create our own definition that reflects our own economy. I will suggest the recent report published by the APPG for micro businesses (which I co-chair) was correct to suggest we should consider adopting a definition that regards micro businesses as those with fewer than five employees.

Anne Marie Morris has been Conservative MP for Newton Abbot since May 2010.

Member Response: Jane Bennett, Head of Campaigns, Forum of Private Business

"The jobs that will drive economic growth are expected to be created in micro businesses so it is important that we place the political spotlight squarely on them and make sure it stays there. It is time for the Government to stop talking micro and thinking macro and instead focus on the real issues of the smallest businesses."