Britain’s small and medium-sized businesses have given the King’s Speech a decidedly lukewarm reception, with industry leaders accusing ministers of squandering a “critical opportunity” to ease the mounting cost pressures threatening to choke off growth across the economy.
While the legislative programme offered some genuine wins, most notably a long-awaited crackdown on late payments and a meaningful overhaul of City regulation, there was a conspicuous silence on the three issues that dominate the in-tray of every SME owner in the country: business rates, soaring energy bills and the rising cost of employing staff.
Coming as the deepening conflict in the Middle East drives up energy and shipping costs, the omissions felt particularly raw to firms already navigating what the CBI’s chief executive, Rain Newton-Smith, described as “strong global headwinds”.
A missed moment on rates and energy
Shevaun Haviland, director-general of the British Chambers of Commerce, did not mince her words. “With the Middle East conflict ratcheting up cost pressures, this was a critical opportunity to deliver meaningful change and give companies the certainty they urgently need,” she said. “Businesses will be disappointed to see no clear progress on reforming business rates, which remain a major cost burden for firms across the UK.”
Haviland was equally pointed on what she called the speech’s failure to grapple with supply-chain resilience, urging ministers to accelerate work on infrastructure, planning reform and the chronic backlog of grid connections that has become a binding constraint on industrial investment. Businesses, she said, wanted “a relentless focus on reducing costs, boosting investment and improving competitiveness”.
Newton-Smith struck a similar note. Firms, she argued, “want to go for growth, but they need strong leadership from government to reform an unfair business rates system, lower business energy bills and find appropriate landing zones on the Employment Rights Act”.
The British Retail Consortium went further, warning that ministers risked allowing an “inflationary storm” to take hold. Helen Dickinson, its chief executive, said: “Government cannot raise living standards without reducing the costs of doing business. Every moment of indecision will deepen the damage done to the British economy and extend the pain felt by households everywhere.”
Late payments: a long-overdue win for SMEs
For all the grumbling, one measure was greeted with something close to euphoria in the SME community. The Small Business Protections (Late Payments) Bill will impose maximum payment terms of 60 days, mandate interest on overdue invoices and arm the Small Business Commissioner with powers to investigate serial offenders and issue fines.
The economic case is stark. Late payments drain an estimated £11 billion from the UK economy every year and, according to government figures, contribute to the closure of 38 businesses every day.
Tina McKenzie, policy chair at the Federation of Small Businesses, called the bill “an historic moment for small firms”, adding: “Late payment destroys thousands of viable small firms a year. For too long, large businesses have used small suppliers as a free overdraft.”
Emma Jones, the Small Business Commissioner, described the package as “excellent news for UK businesses”. Steve Thomas, insolvency partner at Excello Law, said the measures could finally arrest the “domino effect” of large companies pushing smaller suppliers towards insolvency, though he argued the 60-day deadline should ultimately be tightened to 28.
The City cheers a regulatory reset
In the Square Mile, the mood was markedly brighter. The Enhancing Financial Services Bill promises a significant pruning of the post-crisis regulatory thicket, including an overhaul of the Financial Ombudsman Service, the absorption of the Payment Systems Regulator into the Financial Conduct Authority, and a streamlining of the Senior Managers and Certification Regime.
Miles Celic, chief executive of TheCityUK, said the package “signals a clear commitment to strengthening the UK’s position as a leading international financial centre”. Hannah Gurga, director-general of the Association of British Insurers, hailed it as “a significant step towards strengthening the UK’s competitiveness and long-term economic stability”.
Chris Hayward, policy chairman at the City of London Corporation, struck a note of cautious optimism. “Delivery will be key,” he said. “We must now maintain momentum and ensure reforms translate into tangible improvements in how regulation operates in practice.”
The accompanying Competition Reform Bill, which aims to speed up merger investigations and bake a growth duty into regulators’ decision-making, was similarly well received. Michael Moore, chief executive of UK Private Capital, said quicker, more focused investigations would provide “increased clarity” for private capital firms weighing UK investments.
Hospitality braced for a holiday tax
If the City had cause to smile, the hospitality sector did not. Proposals for local tourist levies have alarmed an industry already grappling with the highest employment and energy costs in its recent history.
Allen Simpson, chief executive of UK Hospitality, was blunt: a holiday tax, he said, would be “wildly unpopular, as well as economically destructive. A holiday tax will increase the cost of a staycation for Brits, it will hit lower income families hardest, it will lose the Treasury money and it will cost 33,000 jobs.”
Matthew Price, chief executive of Awaze, the holiday rentals group behind cottages.com and Hoseasons, warned that any levy on overnight stays “risks placing further pressure on consumers with already tight budgets, and by extension the communities and businesses that rely on holidaymakers for their living”. If a levy is unavoidable, he urged, it must be applied through “a standardised national framework that minimises the impact on guests, owners and the wider visitor economy in Britain”.
Steel, Europe and a leasehold flashpoint
Elsewhere, the Steel Industry (Nationalisation) Bill gives ministers the powers to take British Steel into full public ownership, subject to a public interest test. The CBI cautiously described nationalisation as “an expensive option of last resort”, while conceding that preserving sovereign steelmaking capability mattered for economic security.
The European Partnership Bill, which would fast-track future UK-EU agreements, was warmly welcomed by exporters and retailers. The BRC called it a “golden opportunity” to cut red tape for food businesses, manufacturers and suppliers trading across the Channel, though it pressed for clear guidance on the sanitary and phytosanitary arrangements that will follow.
The Commonhold and Leasehold Reform Bill, which will ban leasehold for new flats in England and Wales and cap ground rents at £250 a year, drew predictable battle lines. Matthew Pennycook, the housing minister, said the legislation “marks the beginning of the end for the leasehold system that has tainted the dream of home ownership for so many”. The Residential Freehold Association countered that the proposals were “a wholly unjustified interference with existing property rights” that risked damaging investor confidence in the housing market.
Regulatory sandboxes for the innovators
Finally, the Regulating for Growth Bill empowers regulators to establish “sandbox” schemes allowing firms to trial emerging technologies — from defence innovations to AI-controlled ships — under lighter-touch oversight. It was warmly received by investors, with Moore suggesting the powers would help founders and backers “grow, innovate and support jobs” in sectors often dependent on private capital.
The verdict
Across 37 bills, the King’s Speech offered something for almost every business constituency, and, in the eyes of many SMEs, not nearly enough. The late payments crackdown will rightly be celebrated as a structural reform a generation overdue. The City has its long-promised regulatory reset. Exporters have a route to a closer European relationship.
But for the corner-shop retailer staring at a quadrupled rates bill, the manufacturer absorbing yet another energy price spike, or the publican counting the cost of the Employment Rights Act, the speech will feel like a missed opportunity. The political theatre may have moved on; the economic anxiety on Britain’s high streets has not.
Paul Jones
Harvard alumni and former New York Times journalist. Editor of Business Matters for over 15 years, the UKs largest business magazine. I am also head of Capital Business Media’s automotive division working for clients such as Red Bull Racing, Honda, Aston Martin and Infiniti.
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