Small businesses and inclusive growth
Produced by FSB South Yorkshire, East Yorkshire and Humber
Supporting Local Enterprise, Driving Growth, and Strengthening Our Economy
The Federation of Small Businesses (FSB) is the UK’s leading business organisation representing the self-employed, micro, small, and medium-sized enterprises (SMEs). At the FSB we have just celebrated our 50th anniversary, and we remain committed to ensuring that the voice of small businesses are heard at all levels of government—local, regional, and national.
With Hull and East Yorkshire (HEY) preparing for the next mayoral election, this manifesto outlines what small businesses need to thrive in our unique and diverse region. We call on all candidates to recognise the critical role small businesses play in driving economic prosperity, sustaining local communities, and shaping a resilient and inclusive future.
HEY: A Distinctive Economy
Our region is home to a diverse business landscape spanning urban, rural, and coastal areas. Hull’s port infrastructure is a gateway for international trade, the East Yorkshire countryside supports vital agricultural and food production industries, and our coastline contributes to tourism and hospitality. The region also has a growing creative, and digital sector, alongside a manufacturing and engineering base that underpins national supply chains.
Despite this, HEY faces some of the highest levels of economic disadvantage in the country. Retail and hospitality businesses continue to struggle with footfall and rising costs, coastal and rural enterprises face unique connectivity challenges, and many micro-businesses still struggle to access finance, skills, and public sector contracts.
Hull and East Yorkshire’s businesses continue to face economic pressures from inflation, rising energy costs, and the aftershocks of COVID-19. The cost-of-doing-business crisis is forcing many small businesses to make difficult decisions.
To ensure our small businesses not only have the opportunity to grow but also the support to sustain long-term, the next mayor must focus on the following key priorities:
A Mayoral Manifesto
1. Improving Procurement, Supply-Chain and Late Payments
Public sector procurement is an essential lever through which to support small business growth and innovation, therefore enhancing the productivity and the wider competitiveness of the HEY economy.
Research shows that every £1 spent by a local authority with local Small and Medium Enterprises generates an additional 63p of benefit for their local economy, compared to just 40p generated by large local firms.
Every year, late payment costs small firms billions of pounds and leads to many business failures. Small businesses are owed around £36 billion by large organisations at any one time1 – that figure has risen year on year. The problem is getting worse.
Undisputed and valid invoices should be paid by public bodies, and their contractors, in HEY within 30 days.
1 https://www.fsb.org.uk/resource-report/credit-where-credit-s-due.html
A Mayoral Manifesto for Hull and East Yorkshire FSB has been highlighting the impact of:
i) supply-chain bullying - suppliers are forced by larger firms to cut their prices,
ii) retrospective discounting - larger firms forcing a discount of an already agreed price, and:
iii) paying-to-stay - smaller companies pay larger firms to remain a supplier.
(We are aware of cases of extreme late payment by some local authorities and via major contractors of local authorities and/or their private sector partners).
Recommendations:
A new Mayor should:
• Introduce procurement targets— and ensure a greater share of public contracts go to local Small businesses to keep wealth within the region, this should include assessment of the current requirements of frameworks and tenders to ensure they are realistic for small businesses.
• Work with business organisations, procurement teams and larger contractors to eliminate late payments in Hull and East Yorkshire.
• Provide and encourage business support schemes which advise small firms about public sector procurement and the steps needed to win contracts.
2. Strengthening Our Coastal and Rural Economy
HEY’s economy is uniquely shaped by its coastal and rural geography, creating opportunities and challenges. Rural enterprises are the backbone of their communities, they create employment opportunities, drive innovation, and contribute to economic growth, all while strengthening the social fabric of rural life.
The rural economy is a complex and diverse ecosystem. However, despite the diversity, poise and ambition of rural enterprises, the productivity rate in rural areas is in decline, and they face challenges that are disproportionate to urban based businesses.
According to FSB’s report, "The Growth Belt: Supporting Rural Small Businesses,"2 key issues include:
- Digital Connectivity: Almost a third (32%) of rural small businesses report issues with broadband reliability, and only 58% state that their broadband speed meets current and future business needs.
- Skills Shortages: Rural small firms identify finding appropriately skilled staff as one of the greatest barriers to their future growth aspirations.
- Rising Operational Costs: A quarter (25%) of rural small businesses highlighted fuel costs as a barrier to growth, compared to 17% of urban firms.
- Ambition: 49% of urban small businesses reported they planned to grow compared to only 43% of rural small businesses with the same ambition.
By investing in infrastructure, enhancing digital connectivity, and supporting skills development, an environment can be created where rural and coastal businesses not only survive but can thrive, ensuring the continued prosperity of the entire region.
FSB members from Rural areas report that much of their concern lies with key infrastructure. Businesses feel that public transport, roads and digital connectivity services do not meet their current expectations based on the level of business taxation paid.
Rural businesses make a fully functioning eco-system of entrepreneurs; covering digital, creative, professional services and small manufacturers which enhance our rural towns and hamlets. They should be deemed as integral. Rural business includes, but also stretches beyond, farming communities and traditional views of ‘rural business’.
2 https://www.fsb.org.uk/resource-report/the-growth-belt.html
Recommendations:
A new Mayor should:
• Improve digital and physical connectivity—expand access to full-fibre broadband and reliable 4G/5G networks, especially in rural and coastal areas.
• Ensure rural transport schemes cover a wider catchment area, merge funds to deliver on crossborder transport improvement plans.
• Make communication improvements on business support for rural businesses, including visible dedicated rural business specialists.
3. Revitalising High Streets & Town Centres
Retail and hospitality businesses are the heart of our communities but are under immense pressure from rising costs, reduced footfall, and changing consumer habits. Our high streets and town centres need to be accessible, with enhanced parking incentives, improved public transport and connections to retail areas.
High streets are more than just commercial spaces; they are destinations in their own right, with the potential to attract tourism and enrich local economies. They can also identify opportunities to carve out their specialities – whether it be a certain type of retail, or an offer to commuters during the week; or providing shops and experiences for family days out or be attracting tourists.
The unique identity of each high street is its greatest asset, and supporting their distinctiveness is crucial for their long-term survival. Many small business owners say that a diverse offering of independent businesses is vital for their sustainability.3
Recommendations:
A new Mayor should:
• Appoint a High Street Lead responsible for championing high street businesses. This role would liaise with local businesses, BIDs, landlords, Humberside Police and councils to support growth, tackle challenges such as commercial vacancies, and retail theft.
• Establish a fund for pop-ups, markets, and temporary-use initiatives, providing new businesses with affordable entry points into high street and rural markets.
• Work with local authorities to provide free parking on at least two Saturdays per month to encourage footfall in town centres, supporting retail and hospitality.
3 https://www.fsb.org.uk/resources-page/new-report-sets-out-future-vision-to-support-and-transform-our-high-streets.html
4. Supporting the Self-Employed & Start-ups
Whilst self-employment can be incredibly rewarding, without the right support, even the most driven entrepreneurs will struggle. FSB was created 50 years ago to remove barriers for the self-employed. Poor policy choices can lead to barriers to entrepreneurship and affect individuals at different stages of the enterprise journey.
One of the biggest challenges is Universal Credit (UC). UC can offer valuable financial stability for those starting out. However, it unfairly penalises self-employed workers through the Minimum Income Floor (MIF), which assumes they earn a fixed amount each month, whether they do or not.
Staying competitive in today’s fast-moving, tech-driven world means constantly updating skills, but affording training and the time for it remains a challenge. Health is another concern for entrepreneurs. 64 per cent of sole traders worry about not getting paid if they fall ill4
4 https://www.fsb.org.uk/resources-page/entrepreneurs-start-ups-and-business-growth.html
We need inclusive policies and approaches to entrepreneurship to ensure that everyone, regardless of their background, has a fair chance to start and expand their businesses, helping to reduce inequality. For instance, there are high entrepreneurial intentions amongst people from an ethnic minority background, yet they often lack the support to reach their potential. Business owners from the LGBT+ community also need better resources to encourage them to go at it alone, and women and disabled entrepreneurs are underrepresented.
Recommendations:
A new Mayor should:
• Support with lobbying to extend financial protections for new business owners by lobbying for an extension of the Universal Credit Start-up Period from 12 to 24 months, ensuring self-employed individuals have more time to establish their businesses before being impacted by the Minimum Income Floor.
• Introduce a HEY wide ‘Help to Start’ programme – providing business mentoring, peer support, and guidance on tax compliance, maternity allowance, and childcare options for self-employed individuals.
• Champion ‘Skills for Self-Employment’ in local skills strategies, ensuring self-employed workers are included in Skills England’s remit and have access to tailored training and growth support –introducing a regional self-employment skills fund to support sole traders and micro businesses access accredited training relevant to their industry.
5. A Fair Green Transition
HEY has a strong foundation in net zero initiatives, with institutions like the University of Hull, Aura Innovation, Oh Yes Net Zero, and the local councils driving forward sustainability efforts. However, there is no overarching coordination of these efforts, leading to fragmented support and missed opportunities for small businesses to fully engage in the green transition.
For Hull & East Yorkshire to stay ahead of the curve in net zero innovation, the next Mayor must take a strategic, inclusive, and long-term approach to net zero support for businesses.
Sustainability should be inclusive, with supply-chain considerations so that local small businesses can meet green procurement standards, and benefit from the regions large scale net zero investments and industries.
Business support schemes have often swayed towards those creating jobs, or businesses who will save the most carbon – due to limited funds. However, a fresh approach is required if HEY is to meet its net zero ambitions and support more businesses to become resource and energy efficient.
Recommendations:
A new Mayor should:
• Establish a Hull & East Yorkshire Net Zero Business Hub, providing one-stop access to information, funding (long-term!), and expert advice for small businesses looking to decarbonise and adopt greener practices. Ensure the hub acts as a coordinator between existing initiatives so that businesses can access joined-up, consistent support.
• Develop a Regional Green Business Strategy, that ensures net zero programmes are coordinated, inclusive, and long-term.
• Provide a long-term ‘help to green’ scheme for small businesses, with a dedicated auditing, advice, training and grants for net zero adoption. Including considerations for retail, hospitality and rural based businesses.
6. Education and Skills
The skills gap remains a major challenge for small businesses in HEY. Meeting the skills needs of small businesses is a key part of having a productive and growing economy, and devolution in HEY will allow the Region to establish a way forward for post-16 education – although the results will not be delivered quickly. Alongside this, small businesses continue to express that a lack of work ready skills in new starters, fresh from education, is still a major challenge of recruitment. Very few students have any meaningful experience of work, paid or otherwise; their first day in work often being the first time in a workplace situation.
Businesses continue to be faced with the challenge of where to find new talent. The application process for apprenticeships, and other public and private sector skills provision, remains highly complex for small firms to navigate.
Recommendations:
A new Mayor should:
• Expand access to work experience – consider an initiative which link small businesses with local schools, colleges, and universities.
• Increase the capacity of support currently offered to small businesses which can help them to better understand their current and future skills needs. One part-time dedicated skills adviser is simply not enough.
• Development of a hub approach to skills and new talent recruitment including: apprenticeships, skills bootcamps, graduate talent, and training and development options. This should consider both publicly funded and private provision (providing breadth of choice for businesses depending on their needs).
7. Business Support and Access to Finance
For as long as business support has been publicly funded, HEY and the wider Humber area businesses have not accessed their share of finance initiatives, finance investment programmes and innovation programmes, including Yorkshire and National wide schemes.
The HEY area benefits from several ‘tech’ and digital hubs, with so much on the doorstep, and yet face swathes of small businesses who need to adopt digital solutions and are still far from being ‘future ready’.
The area has a thriving creative sector that is gaining momentum. Various groups and initiatives are driving activity across the region, (but could benefit from greater co-ordination), and the sector has benefited from the successful HEY Creative programme—though its impact could be limited due to a set end date.
Recommendations:
A new Mayor should:
• Explore what support is needed for small business to be investment ready and to address the inequality in the success rates of getting alternative funding, including the take up rates for investment finance and accessing innovation support in the area.
• Encourage greater community collaboration by connecting digital entrepreneurs with the local microbusinesses and sole traders who want to adopt digital solutions.
• Champion the creative sector and support cultural and creative industries with grant access and workspace initiatives to help businesses scale.
About FSB
As experts in business, FSB offers members a wide range of vital business services, including advice, financial expertise, support and a powerful voice in Government. Its aim is to help smaller businesses achieve their ambitions. More information is available at www.fsb.org.uk
To discuss the contents of this manifesto, please contact Paula Gouldthorpe, FSB Development Manager for South Yorkshire, East Yorkshire and the Humber Paula.gouldthorpe@fsb.org.uk
If you require this document in an alternative format please email accessability@fsb.org.uk