Where next for Labour?

Philip Ross, founder of the Labour Small Business Forum, a network of Labour party members who work for themselves, says the party must not lose sight of SMEs' electoral importance.

When out canvassing in 1992, Tony Blair was told by a man cleaning his car that he had always voted Labour, but now he had started his own business he was going to vote Conservative. Blair said afterwards it was at this point he realised the election was lost.

Now more than 10 years on with an increasing army of small businesses and freelance workers, how much have things changed? Has Labour become the party of small business? And how important is the small business vote?

It is estimated that around 10% of the population work for themselves and in the future people won't just change jobs and careers, but we will all experience a period of self-employment.

As many MPs have realised, small business is a key constituent in our community, but this constituency is changing. It includes not just the traditional array of tradesman, small firms making and selling items in our high street and in the industrial estates, but also an army of professional freelance workers working in the knowledge-based economy.

In particular, armies of freelance workers drive IT and the creative industries. These workers are often engaged on short-term contracts for work on projects. If this is the employment and work pattern for the twenty-first century then the government must understand the needs and aspirations of these workers.

The Tories think it is all about tax; Labour often confuses freelance workers as temporary workers, but in reality the solution is somewhere in between. A clear distinction between freelance workers and temporary workers is essential for both tax and employment rights.

But whether you are a working freelance or are running or working in a small firm, the contribution of small businesses is important. Our prosperity depends on its success.

Kerry Pollard, the Labour MP for St Albans who is the chair of the All Party Parliamentary Small Business Group and previously a small business owner believes this is very important.

In the run up to the 2001 general election he was contacted by countless MPs from all parties, who, realising the importance of the small business vote, asked him if they were a member of the group and if not could they join.

As a consequence, it has become largest of all the all-party parliamentary organisations. Indeed, in the parliament following the last election more MPs gave their maiden speeches in a small business debate than in any other.

The historical view is, of course, that the Conservatives are the party of capital and Labour the party of the workers. In the early 1990s at one of the first Labour party meetings I ever attended the process was underway to select a councillor for a safe Labour seat. One of the candidates explained that while he was a postman, he also ran the local fish and chip shop.

He said: "People say to me how can you be in the Labour party and also run your own business?" After a lot of tutting, he went on, "well I say that my children have got to eat". It went down like a lead balloon and he received zero votes.

Things have changed since a network of Labour party members came together to form the Labour Small Business Forum in 2002.

It has attracted Labour party members from the Orkney Islands down to the tip of Cornwall and has run its own policy forums on small business issues and holds its own fringe meetings at the Labour conference. Labour now has a shot at being the party of small businesses.

At the 2003 Labour conference, Gordon Brown was confident enough to declare: "Let our party be the pro-enterprise as well as the pro-fairness party: Labour, the party of small businesses and the self-employed in Britain just as much as we have always been the party of employees."

Indeed, measures introduced by Labour have gone a long way to supporting small business.

For instance small businesses are now allowed to charge interest on late debts. The VAT system has been simplified for retailers and the new Enterprise Bill has passed, which makes it easier for people to set up in business by reducing the penalties which accrue to those who go bankrupt through no fault of their own.

There is support portfolio covering a whole range of services for small firms through BusinessLink and the Small Business Service, which, incidentally, the Tories plan to scrap.

The challenge for Labour is to recognise that to be in business you don't have to make or sell things - but that you can also sell your own skills and knowledge as a freelancer.

But it must be clear that freelancers and temporary workers are not the same thing and that freelancing is a career decision and not a stopgap between permanent jobs. It should recognise that not every small business wants to expand but many need support to survive.

Ask any small businessman what changes they would like the government to make and they would say bring in legislation to force firms - usually larger firms - to pay their debts on time.

If Tony Blair was to encounter the man washing his car today, he might find him quite at home voting Labour. After all, a stable economy is the most important platform for any business to grow.