SMEs urge action on skills and tax incentives as Government reforms receive mixed response

Small and medium-sized businesses across the UK are broadly supportive of recent government initiatives but remain concerned about critical barriers to growth, particularly around skills shortages, taxation and regulatory burden, according to new research from specialist lender Shawbrook.

More than a third (34%) of UK SME leaders say the government should expand training initiatives to address ongoing skills gaps, while 28% believe attracting skilled workers from overseas should be a greater priority. The findings reflect a growing unease among businesses struggling to recruit and retain the talent needed to support growth.

While these challenges persist, SME leaders also welcomed some of the recent measures introduced by the Government. Nearly half (49%) expressed support for the recently announced reforms to the apprenticeship levy, while 54% welcomed the decision to freeze corporation tax. Half of respondents also backed planning reforms designed to reduce regulatory complexity.

The research reveals further appetite for tax relief, with 36% of SME leaders calling for tax breaks to encourage reinvestment, and 34% seeking greater incentives for research and development activity. Meanwhile, nearly a third (31%) identified excessive bureaucracy and regulatory red tape as a pressing obstacle to business growth.

Neil Rudge, chief banking officer, commercial at Shawbrook, said: “Our latest research highlights the key concerns facing SMEs in navigating the current economic landscape. There is a clear appetite for tax and skills development initiatives, and it’s encouraging to see that some government measures—such as the freeze on corporation tax and apprenticeship levy reforms—are being positively received.

“With red tape at the top of business concerns, the Chancellor’s commitment and ambitious plans are likely to spark optimism among business leaders who have been waiting for decisive action to drive growth across the country. While the ‘proof will be in the pudding,’ the urgency behind the Chancellor’s plans will be particularly encouraging for high-growth businesses, who will be pleased to hear the government’s desire to make the UK ‘the best place for entrepreneurs.’ SMEs remain the backbone of the UK economy, and it is vital that policies continue to support their ability to invest, innovate, and grow.”