The Government released the Backing Your Business plan which outlines its strategy to help strengthen small and medium sized businesses (SMEs). The plan comes just five weeks after the release of the Industrial Strategy which set out the 10-year plan to increase investment and economic growth through prioritising ‘growth driving’ sectors (the ‘IS-8’). The Small Business Plan sets out a long-term direction for the government’s support for smaller firms, across all sectors.
SMEs comprise 99.8% of businesses in the UK. The Government said that if SME growth increased by one percentage point a year, it would deliver £320 billion to the economy by 2030. In short, SMEs are vital for a strong economy.
The plan includes five key actions with a combination of new announcements and previously committed funding and policies relevant to SME growth. The five actions are:
Fixing the fundamentals
Unlocking access to finance
Backing the everyday economy
Future proofing business skills
Opening up opportunities
The Prime Minister launched the Plan at a small business hub in Swindon on 31 July. Much of the early press coverage focussed on proposed legislation to crackdown on late payments - the practice of larger companies delaying payments to small businesses - which the Government says costs the economy £11bn per year. There were other key provisions in the plan that businesses may welcome as well, including:
A new Business Growth Service (BGS) to make it easier for businesses to access advice and support
Efforts to reduce the cost of regulation
Expansion of the Start Up Loans and British Business Bank’s lending guarantee scheme
Measures to reduce vacant units on high streets and the costs and time frames for licensing
Observations and Implications
The plan recognises the challenges that businesses have been facing: ‘A decade of stop-start policy, economic shocks and slow productivity growth has left many SMEs stuck and working harder just to stand still.’ It also notes that ‘These issues have resulted in a lack of a coherent, lasting brand of business support at UK level – in stark contrast to the approach of international peers and also the devolved governments in Wales, Scotland and Northern Ireland.'
The new Business Growth Service marks a significant shift in business support. It is set to become a nationally recognised brand, closely integrated with the local Growth Hub network. Many of the plan’s announcements focus on improving SME access to information – covering areas such as digital technologies, skills and apprenticeships, net zero and international trade – and will rely heavily on the new Business Growth Service, its web platform, and local delivery through Growth Hubs.
The plan also includes several notable announcements on access to finance and business support, though details remain limited. Key measures include the creation of an Investor Pathway programme aimed at increasing investor diversity, and a commitment to explore the role of regional cooperative and mutual banks.
Additionally, the Plan introduces a new DBT-led scale-up offer and digital adoption support, as outlined in a report by the Government’s SME Digital Adoption Taskforce, which was published alongside the SME Strategy.
The plan identified three areas as ‘High Street and Growth Incubators’ based on the its view that they hold the greatest potential of growth if productivity increased to the national average. The designated areas are:
While the Government did not provide further details in the plan, it is possible that the Mayoral Combined Authorities (MCAs) will have scope to shape their own interventions.
There are challenges with the messaging around Backing Businesses and reducing barriers, particularly after the recent National Insurance increases. While the emphasis on stability and certainty is welcome, these aims remain partly outside the Government’s control due to ongoing economic uncertainty, global trade tensions and armed conflicts.
Implications for local authorities, MCAs, and Growth Hubs
The Government has affirmed its commitment to Growth Hubs, with multi-year core funding expected to be announced later in 2025. This marks the most significant investment in the Growth Hub network since its launch a decade ago. Under the new Plan, Growth Hubs are expected to serve as local access points for the Business Growth Service, which will expand over time to reflect priorities outlined in the Plan - such as export, skills, digital adoption and the transition to net zero.
The Business Growth Service will explore a gov.uk ‘One Login’ equivalent for businesses. This has strong potential to personalise business support information and advice. Local areas and Growth Hubs will need to consider how this might integrate with existing local content, guidance, and support services to ensure the BGS rollout enhances coherence rather than contributes to fragmentation.
What role might MCAs play in the delivery or tailoring of new national business support provision? For example, in shaping the new DBT scale-up offer or any future initiatives aimed at increasing awareness of international trade opportunities.
Despite some announcements, currently there is no UK-wide core funding for local business support provision. The 2025 Spending Review introduced new funds for MCA areas, but there was no replacement funding for the UK Shared Prosperity Fund in areas that are not on a roadmap to devolution.
Conclusion
The Backing Your Business plan outlines a broad strategy to support SME growth, with welcome measures like tackling late payments and expanding access to finance. However, questions remain around funding and delivery, especially in non-devolved areas.
‘While we welcome many of the provisions in the SME Plan,’ said Simon Hooton, Managing Director of GC Insight, ‘experience tells us that the effectiveness of this Plan will rest not only on its vision, but on its ability to deliver tangible outcomes for businesses across all regions and sectors.’
GC Insight designs and delivers business support programmes that create positive outcomes for businesses and their local areas. We also offer a suite of performance data and tools that help Growth Hubs and national, regional, and local governments build growth and work more effectively and efficiently.
If you would like to talk through your area’s strategy for business support, contact Patrick Robertson, Associate Director, at patrick.robertson@gcinsight.co.uk.
