Conservative leadership contest: What the contenders have promised for small businesses

Conservative leadership contest: What the contenders have promised for small businesses
Dan Martin
Dan MartinDan Martin Content & Events

Posted: Mon 1st Aug 2022

Following the resignation of Boris Johnson, the Conservative Party is choosing a new leader and prime minister.

A total of 11 candidates originally put themselves forward.

Successive ballots have taken place to narrow it down to two candidates. They are foreign secretary Liz Truss and former chancellor Rishi Sunak.

The wider Conservative Party membership will now vote with the new leader and prime minister announced at 12.30pm on 5 September.

Commenting at the start of the leadership contest, Emma Jones, founder of Enterprise Nation, said:

"Many of the leadership contenders are pro-enterprise and we will continue to assess the relative plans of each contender for small businesses through until the final count.

"We have always stated that a key role of government when it comes to supporting small firms is to get the infrastructure right - ensure that the trains run, broadband is fast, and remove barriers to growing a business.

"Our concern is that recent political turmoil is putting this in jeopardy as ministers are more focused on winning the race as opposed to ensuring the country functions. We need to rapidly return to a sense of stability so businesses can function in a high performing environment."

See below for what the contenders have pledged so far when it comes to supporting small businesses. We are keeping this post regularly updated.

What do you want from the next prime minister? Please take our quick, two minute survey so we can better represent small businesses' views to the new prime minister.

The final two:

Rishi Sunak

Rishi Sunak at podium

Image credit: HM Treasury

Rishi Sunak, who resigned as chancellor, said he wants to "restore trust, rebuild the economy and reunite the country".

Referencing calls for introducing tax cuts from the likes of his leadership rival Liz Truss, he added:

"Someone has to grip this moment and make the right decisions. Do we confront this moment with honesty seriousness and determination or do we tell ourselves comforting fairy tales that might make us feel better in the moment but will leave our children worse off tomorrow?"

Most of Sunak's rivals knocked out of the leadership race, and Liz Truss who remains, pledged immediate lower taxes. However he stands by the tax rises he announced as chancellor. They included a National Insurance increase to fund the NHS and social care and next year's planned rise in corporation tax from 19% to 25%.

Sunak described his rival's plans for immediate tax cuts as "immoral". He promised to "deliver tax cuts that drive growth" but only "after we've got a grip of inflation".

Speaking in Grantham in Lincolnshire, Sunak said:

"We have to tell the truth about the cost of living and that there is no answer to this problem other than to grip inflation and bring it down. Rising inflation is the enemy that makes everyone poorer and puts at risk your homes and your savings."

"And we have to tell the truth about tax. I will deliver more tax cuts. I've already made real progress as chancellor, but I will not put money back in your pocket knowing that rising inflation will only whip it straight back out."

On 1 August, Rishi Sunak pledged to cut the basic tax rate from 20% to 16% within seven years if he is appointed prime minister. This builds on his announcement as chancellor to reduce income tax by 1pm in April 2024. He described the policy as "radical" but "realistic". Sunak said:

"Firstly I will never get taxes down in a way that just puts inflation up. Secondly I will never make promises I can’t pay for. And thirdly I will always be honest about the challenges we face.

"Because winning this leadership contest without levelling with people about what lies ahead would not only be dishonest, it would be an act of self-sabotage that condemns our party to defeat at the next general election and consigns us to a long period in opposition."

Sunak, who voted leave in the Brexit referendum, has vowed to scrap or reform the EU laws still in place in the UK by the time of the next general election. He promised to make the first recommendations for which rules should be reformed or scrapped within 100 days of becoming prime minister.

On the environment, the former chancellor signed a pledge committing to net zero by 2050.

On boosting the UK's high streets, Sunak pledged to cut the number of boarded up shops by 2025 if he becomes prime minister. He said he would build on proposals in the Levelling Up and Regeneration Bill to make it easier for local authorities to take control of empty commercial properties so they be repurposed. He also promised to increase police powers in public places and double fines for graffiti and dropping litter in town centres.

At a hustings in Darlington on 9 August, Sunak committed to extending the current 50% cut in business rates in England. He said supporting high streets would be "top of my mind" should he win the leadership race.

Liz Truss

Liz Truss

Image credit: © UK Parliament/CC BY 3.0

Launching her campaign, foreign secretary Liz Truss said:

"I want us to be an aspiration nation, where people from all backgrounds and all parts of the United Kingdom have the opportunity of a great education, be able to start their own businesses and realise their dreams.

"Everyone should have the same opportunity to succeed, regardless of their background."

Truss has pledged to "cut taxes from day one". That includes scrapping the recent rise in National Insurance Contributions and not going ahead with planned increase in corporation tax.

Writing in the Telegraph, she said:

"It isn't right to be putting up taxes now. I would reverse the National Insurance increase that came in during April, make sure we keep corporation tax competitive so we can attract business and investment into Britain, and put the Covid debt on a longer-term footing."

Truss has also promised to reform business rates and introduce "low tax, low reguation investment zones" which will create new model zones similar to Saltaire and Bournville. She described them as a "full fat" version of the freeports that Rishi Sunak announced as chancellor.

"We can't carry on allowing Whitehall to pick the winners and losers, like we've seen with the current freeport model," she said.

"By creating these new investment zones we will finally prove to businesses that we're committed to their futures and incentivise them to stimulate the investment that will help deliver for hardworking people."

Truss, who voted remain in the EU referendum but has since embraced Brexit, promised a "red tape bonfire" by the end of 2023 as she reviews all EU laws still retained in Britain.

She has confirmed to push ahead with the Nothern Ireland Protocol Bill, proposed legislation that would allow the UK government to scrap parts of the Brexit deal with the EU.

On the environment, Truss signed a pledge committing to net zero by 2050 but has also pledged to pause green levies on domestic energy bills.

On 1 August, Liz Truss said she would "unleash British food and farming" by removing "onerous EU regulations and red tape". She also pledged to tackle labour shortages in the sector by introducing a short-term expansion to the seasonal worker scheme.

Truss said:

"The pandemic and cost of living crisis have shown it is more vital than ever for us to ensure we have a high-quality and affordable supply of British food.

"I will cut the red tape that is holding them back and hitting them in their pocket."

In an interview with the Sun on Sunday on 20 August, Truss promised a "small business revolution" to stop Britain entering a recession.

She said:

"Those [small businesses] are the future big companies we need to develop — and why shouldn't Britain have the next Google or the next Facebook? Why shouldn’t it be a British company?

"It's about that level of ambition. There is too much talk that there’s going to be a recession. I don’t believe that’s inevitable. We can unleash opportunity here in Britain."

Truss said she will review the IR35 rules, which are designed to stop the “bogus self-employed”. She said:

"The changes that have been made to IR35 are all about trying to treat the self-employed the same as big business.

"But the fact is, if you’re self-employed, you don’t get the same benefits as being in a big company. You don’t get paid holidays, you didn’t get those benefits. So the tax system should reflect that more."

What do you want from the next prime minister?

Please take our quick, two minute survey. With your answers, we can better represent the views of small businesses to the new prime minister.

Out of the Tory leadership race:

Penny Mordaunt

Penny Mordaunt

Penny Mordaunt has a varied background including working as a magician's assistant and appearing on ITV's celebrity diving show, Splash. According to her website, she also ran her own business which she sold.

The international trade minister launched her campaign saying: "Our leadership has to change. It needs to become a little less about the leader and a lot more about the ship."

One of her promises is "an immediate" 50% cut in VAT on fuel.

Writing in the Telegraph, Mordaunt said: "We should not get stuck on superficial questions on tax and spending. Whilst I will cut taxes, I will pioneer sound money, with a key fiscal rule to ensure that debt as a percentage of GDP falls over time and roll out further development corporations that will drive growth in local communities across the country."

She added that she will focus her work on "investment, infrastructure, incentives and innovation".

On the environment, Mordaunt has signed a pledge committing to net zero by 2050.

Kemi Badenoch

Kemi Badenoch

Image credit: © UK Parliament/CC BY 3.0

The former equalities minister and one of the MPs who resign from their jobs last week wrote in the Times: "Without change the Conservative Party, Britain and the western world will continue to drift. Agressive and assertive rivals will outpace us economically and outmanoeuvre us internationally.

"I'm putting myself forward in this leadership election because I want to tell the truth. It's the truth that will set us free."

Badenoch added that she has a plan to lower taxes to "boost growth and productivity" that is "accompanied by tight spending discipline".

At her official campaign launch, she said she was committed to lowering business and personal taxes but will not take part in a “tax bidding war”.

On the environment, Badenoch said at her campaign launch that there are "too many policies, like net zero targets, set up with no thought to the effects on industries in the poorer parts of this country."

She added: "The consequence is simply to displace emissions to other countries – unilateral economic disarmament. That is why we need to change and that is why I’m running to be leader."

However, speaking at a hustings event on 18 July, Badenoch said she would not backtrack on the 2050 net zero pledge and did not intend to change the existing legislation.

Tom Tugendhat

Tom Tugendhat

Image credit: © UK Parliament/CC BY 3.0

Tom Tugendhat has promised to scrap the government's increase in National Insurance to fund the NHS and social care. Speaking to the BBC, he said: "I don't want to see a tax on jobs constraining British growth."

Asked on Sky News' Sophy Ridge On Sunday programme if he would cut corporation tax, he said doing so is "not realistic unless you have a 10-year economic plan".

He added: "You can't simply look at each of these taxes as a one-off, you need to look at it as part of a whole. The reality is this economy needs not only lower taxes for growth, but it also needs sound money, and that is why we need to deliver both."

The chair of the foreign affairs select committee has also pledged to cut fuel duty by 10p a litre and back the Northern Ireland Protocol Bill. "I have fought for my country in combat, I have fought for my country in Parliament, and I will keep fighting for my country", he said on Sky News.

On the environment, comments by Tugendhat suggested he did not support the 2050 net zero target but speaking to reporters, he said: "Of course I agree with the target, but nobody yet has set out a path to achieving it."

Tugendhat has signed a pledge committing to net zero by 2050.

Suella Braverman

Image credit: © UK Parliament/CC BY 3.0

The attorney general, who was the first to declare her intention to stand for Conservative Party leader, has pledged "radical tax cuts" if she becomes prime minister. That includes removing VAT from energy bills and reducing corporation tax.

Speaking at a Conservative event in Westminster, she said: "They say the tax burden is high and that cutting taxes too quickly is not the 'serious' thing to do. But in a cost of living crisis with spiralling costs, we know there is no alternative but radical tax cuts."

Braverman has also pledged to deal with the "multibillion-pound wastage" in the use of taxpayers' money. In an interview with the PA news agency, she said: "I think there are too many people in this country, for example, who are of working age, of good health and who are choosing not to work full time and they are taking benefits.

"Whilst universal credit did a very good amount of work to stamp out that welfare dependency, we still have a stubborn tail of the population that refuses to enter into economy activity.

"I think we have to introduce much more rigour and incentive to get people into work."

Nadhim Zahawi

Nadhim Zahawi

Image credit: © UK Parliament/CC BY 3.0

The former vaccines minister and education secretary, who was appointed chancellor after Rishi Sunak resigned, has an entrepreneurial background. He set up a business selling Teletubbies merchandise and co-founded polling firm YouGov.

Zahawi said "nothing is off the table" when it comes to tax cuts. Speaking at a Conservative event at the Churchill War Rooms in London, he said he had "set the wheels in motion to abolish the planned corporation tax rise". As chancellor, Sunak announced corporation tax will rise from 19% to 25% next year.

Zahawi has also promised to reduce business rates, pause VAT and green levies on energy and cut the basic rate of income tax from 20p to 19p in 2023 and to 18p in 2024.

The chancellor said he will pay for tax reductions by cutting the civil service headcount by 20%.

Jeremy Hunt

Jeremy Hunt

Image credit: © UK Parliament/CC BY 3.0

The former health secretary co-founded educational listing company Hotcourses in 1990. The business was sold in 2017 for £30.1m.

If he becomes prime minister, Hunt said he would drop the planned increase in corporation tax and cut it from 19% to 15% in the government's Budget this autumn.

He has also promised to remove business rates for five years in deprived areas.

"What matters is wealth creation, which means that people don't feel that they need to leave a Bolton or a Bolsover because they can get better jobs in Manchester or London. They can actually stay there," Hunt said.

Rehman Chishti

Rehman Chishti.

Image credit: © UK Parliament/CC BY 3.0

Newly appointed foreign minister Rehmi Chishti is the least well known of the contenders.

Announcing his candidacy on his Facebook page, he said: "For me it's about aspirational conservatism, fresh ideas, fresh team for a fresh start taking our great country forward.

"That means lower taxes, small state big society and then means ensuring that you have fresh ideas and a proven track record of coming to the table with ideas and creativity to help improve people's lives."

Sajid Javid

Sajid Javid

Image credit: © UK Parliament/CC BY 3.0

In his campaign video (see below), which was originally released for the 2019 Conservative Party leadership election, Javid talks about growing up living above the clothes shop that his parents ran in Bristol.

If he wins the leadership contest, Javid, who last week resigned as health secretary, said he will reverse the controversial increase to National Increase and dividends tax that was introduced to fund the NHS and social care during his time as health secretary.

He has also pledged to drop next year's planned increase of corporation tax from 19% to 25% and instead reduce it by 1p each year until it reaches 15%.

Other promises include cutting fuel duty by 10p per litre and bringing forward to 2023 the 1p reduction in the basic rate of income tax planned for 2024.

He told BBC One's Sunday Morning programme that although the tax cuts would cost £39bn a year, they are required to boost UK economic growth and not introducing them was a "much greater risk".

Dan Martin
Dan MartinDan Martin Content & Events
I'm a freelance content creator and event host who helps small businesses and the organisations that support them. I'm also Enterprise Nation's Local Leader for Bristol. I have 20 years of experience as a small business journalist having interviewed hundreds of entrepreneurs from famous names like Sir Richard Branson and Deborah Meaden to the founders behind brand new start-ups. I've worked for a range of leading small business publications and support groups, most recently as head of content at Enterprise Nation where I was responsible for the prolific output of content on the company's blog and social media. I now freelance for Enterprise Nation as the website's news reporter and as the host of the Small Business sessions podcast. I'm based in Bristol where I run and host regular events with the local small business community in my role as Enterprise Nation's Local Leader for Bristol. I also have strong connections with other major business organisations in the south west region. In total, I've hosted over 100 events including conferences with an audience of hundreds for international brands like Xero and Facebook and live web chats from inside 10 Downing Street. With my partner, I co-run Lifestyle District, a lifestyle blog focused on culture, art, theatre and photography.

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