Adoption of ‘Manchesterism’ must give SMEs confidence to invest: Kevin Fitzgerald
It’s early days in Andy Burnham’s role as Prime Minister, yet there has already been much said for what his Manchesterism brand of politics might mean for businesses and workers across the UK. The argument that economic growth lies in cities and communities across the UK, and not just in the capital, is hard to argue with.
At Employment Hero, we work every day with ambitious small businesses in those cities trying to hire, grow and deliver on that promise.
The good news is that the regions are ready. When we surveyed businesses in Yorkshire, what we found was a huge sense of pride in the local business community and a drive to support the local ecosystem. Our research found that well over half (64 per cent) say they would recommend Yorkshire and the Humber as the best place to start a business, and 77 per cent of business leaders in the region say they can meet their hiring needs with local talent, well above the national average.
The challenge is turning that ambition into opportunity and creating an environment where small businesses - who employ the majority of the UK workforce - feel confident enough to hire.
When I look at our platform data, which tracks hiring trends across UK SMEs, the picture is more balanced than many people might expect. Contrary to popular perception, employment growth isn’t concentrated in London. In fact, small businesses in the North of England recorded headcount growth of 4.6 per cent over the past quarter to June, compared with 4.0 per cent in the capital. The North outpaced every other region, with the Midlands and the East also posting solid growth of 3.4 per cent and 2.0 per cent respectively.
Where the regional imbalance happens is in wages. Whilst the North posted the strongest employment growth of any region, wage growth is running at around a quarter of London’s. When we spoke to businesses in the North, 70 per cent told us that salaries had been a main driver of cost over the last 12 months and 66 per cent said employer payroll taxes have increased. This is considerably lower in London which suggests businesses in the Capital have been less exposed to rising employment costs, with businesses outside of London feeling the strain most acutely.
Burnham has made some early moves. The 20 per cent reduction in business rates is a genuine relief for hospitality, a sector that has borne the brunt of spiralling employment costs and an ever-growing regulatory burden. Announcements like this are a welcome step forward, but restoring business confidence in regions like Yorkshire will take a concerted effort from the new government to reduce the complexity facing SMEs when it comes to creating jobs.
The same principle applies to AI. As the technology reshapes the way businesses hire, manage people and grow, there is a real risk that the benefits become concentrated in London unless businesses across the UK have equal access to the skills, infrastructure and support they need to adopt it. Our data suggests London is already pulling ahead when it comes to AI skills, making it even more important that the work done by the now disbanded Department for Science, Innovation & Technology to create tech towns in places like Barnsley does not slow down and that the benefits of the UK’s AI strategy are felt around the whole country.
If Manchesterism is to deliver growth driven by the regions, national policy must give SMEs the confidence to invest, hire and embrace new technology. Reducing the complexity and cost of employment, while ensuring businesses across the country can access the skills they need for the AI economy, will empower small businesses to create jobs, raise productivity and drive sustainable growth in the communities they serve.
Kevin Fitzgerald is UK Managing Director, Employment Hero