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Steve Hare: For small businesses to succeed in Britain, economic policies must incentivise, not pamper

A condensed version of the below article from Sage's CEO, Steve Hare, was featured in the MailOnline on 4th November 2023.

Small and medium-sized businesses are the backbone of our economy and the key to our future growth. 
 
They are responsible for creating two-thirds of the country’s new jobs and are exemplars of ambition, resilience, and innovation. Yet they confront formidable challenges, including rising costs, labour shortages, and heightened international competition.
 
Perhaps, the most telling statistic that underscores the gravity of the situation is this: new data from our business reveals that the average small company holds a mere £4,000 in cash savings. Moreover, a significant burden on these firms is the manual data entry process, with an average cost of £15 to process just a single invoice. It's clear that without significant intervention, we risk the erosion of a critical growth engine.
 
As the chief executive of Sage, I have the unique opportunity to constantly engage with our customers, learning about their aspirations and challenges. These businesses rightfully question how their growth ambitions align with the policy proposals that often lurk beneath the headlines.
 
The digital divide is a growing concern. Countries such as Australia and Spain are already ahead, incentivising tech investments for SMEs, something the UK is yet to embrace. We cannot afford to lag any further. 
 
Introducing a 140 per cent super deduction for software services could act as a tremendous catalyst for the digital economy, potentially adding a gross value of £232billion to our economy.
 
However, our vision has to span beyond fiscal incentives. Currently, four out of five small companies are bogged down with manual data entry. Governments in most OECD countries and throughout the EU have recognised this issue, implementing plans for e-invoicing models across their economies. Notable exceptions include Switzerland, Iceland, and, regrettably, the UK. Adopting a robust e-invoicing model would transform this scenario, facilitating faster transactions and simplifying submissions to HMRC.
 
Yet, there's a glimmer of hope. At recent political party conferences, pledges to reviving growth were unwavering.
 
Shadow Chancellor, Rachel Reeves, astutely acknowledged that 'the lifeblood of a growing economy is business investment' and proclaimed that 'Labour is the party of economic growth.' Similarly, Chancellor Jeremy Hunt envisions a UK that leads in future industries, aspiring to be the world’s next Silicon Valley.
 
Such sentiments strike a chord with our customers; small companies that are both optimistic and growth-driven. To propel their growth trajectories, we need policies and a business environment that rewards and not burdens them.
 
The UK Government aspires to be a forerunner in artificial intelligence (AI). Our research confirms that AI-driven invoice processing can potentially triple productivity by automating mundane tasks. However, for the broader vision of AI to come to fruition, a digital-first economy, abundant with rich datasets, is imperative.
 
As the Autumn Statement 2023 approaches, we need to not only introduce financial reforms but also revamp outmoded systems, like VAT invoicing and reporting. Our aspirations to establish the UK as a trailblazing digital economy rely heavily on these strategic choices.
 
Despite the road ahead filled with obstacles, the potential rewards are great. By genuinely heeding the voices of small businesses and committing to digital transformation, we can place them at the forefront of global digitisation ambitions.

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