Inside the Lib Dems' swivel to small business

7 min read3 hr

With many asking what the Liberal Democrats will do next, Sophie Church explores the party’s pivot to small business

Nearly a year after the general election returned 72 Liberal Democrat MPs to Westminster, the party is still elated. But with many questioning whether the Lib Dems have yet made their mark, has the party got a strategy beyond sewage and social care?

For answers, the Lib Dems have looked to their election postmortem, which found them struggling to attract donations and appeal to business. Now, with deputy leader Daisy Cooper at the helm, the Liberal Democrats are launching their own prawn cocktail offensive.

“We’ve always regarded ourselves as the party of small business. But now it’s very much about making that case to others that we are the party of small business,” Cooper, Treasury spokesperson for the party, tells The House.

One of the things we found donors really like is the election success story

“We are very clear-eyed. The major focus for us is becoming the party of small business, and positioning ourselves as such. In the way that each of our MPs said they want to be a local champion, they will also, as part of that, be high street champions.”

Supporting small business is a particular passion for the deputy leader, who many see as a future head of the party.

“I was instrumental in actually changing our party policy at the time [around business rates] by making a speech at our conference and putting a motion through,” she says. “That was even before I was elected in 2019.”

The plan is now afoot. Cooper has been holding meetings with industry bodies, small businesses, big banks and membership organisations such as the Confederation of British Industry (CBI). She formally briefed all MPs of the plan to pitch to small business earlier this month.

Before Christmas, the party went on a “really big drive” for the UK’s annual ‘Small Business Saturday’ campaign. This saw Lib Dem MPs touring their constituencies, using surveys to ask about the challenges small businesses face.

The party is hosting roundtables with business leaders to discuss sector-specific topics that will feed into policy. Science, technology and innovation spokespeople Victoria Collins and Lord Clement-Jones have just led a session on artificial intelligence (AI), attended by large corporates and donors.

Behind closed doors, the party has also employed a business engagement officer at the Lib Dem headquarters, responsible for liaising with business networks up and down the country.
This outreach is yielding results. Business membership of the Liberal Democrat Business Network (LDBN), founded in 2014 to bring together figures from industry, academia and politics, has increased by 30 per cent since the start of this year.

“I’m good friends with a lot of people who are leading businesses in the UK. For example, Rupert Soames, chair of the CBI, is a good friend,” says Lib Dem MP for Inverness, Skye and West Ross-shire Angus MacDonald, a successful businessman who donated to the Lib Dems and Conservatives before being elected. “I am personally blowing the trumpet and getting good feedback from these people.”

Daisy Cooper (Credit: ZUMA Press, Inc. / Alamy Stock Photo)

With reports of Boris Johnson’s sweary anti-business comments still ringing in the ears of business, the Lib Dems have been gaining more Tory ground. Recent LBDN events have included talks by David Gauke, a member of David Cameron’s and Theresa May’s governments, and Tim Leunig, a former economic adviser to Rishi Sunak and Sajid Javid. “We are very much moving into that moderate space,” remarks Callum Robertson, a member of the party’s Federal Board.

“We’re definitely seeing people who may have voted Conservatives before showing interest in our work and our thinking,” adds Cooper.

She says since the Budget there are “a number of people who may have voted for Labour, who were also interested in what we’re saying as well”.

We want to grow the whole economy, not just fan the flames of the City of London

“Since Labour has come into power, the Budget has really clobbered small business, both with the National Insurance contribution hike, but also with the changes to the business rate system.”

The Lib Dems have been dining out on Labour’s Employment Rights Bill landing like a “dog’s breakfast” among business, she adds.

“Our two representatives on the [Treasury Committee, Steve Darling and Sarah Gibson] have held a number of business breakfasts in their own constituencies,” she says. “They will continue to bang the drum to get that balance between making sure that workers are protected, but also that small businesses can function effectively and contribute to the economy.”

The party is operating an open-door policy to hear MPs’ ideas for how to support small business, which the Lib Dems believe the main parties are ignoring. Offering 30-day payment terms and lifting the VAT threshold from £90,000 to £250,000 have been suggested. The party also continues to push for the UK to join the customs union and to review business rates.

“We want to grow the whole economy, not just fan the flames of the City of London,” says another Liberal Democrat MP. “Labour, the Tories and Reform are trying to compete for a small space, which is only 30 to 40 per cent of the electorate.”

While the party sees supporting small businesses as both a seat-keeping and seat-winning strategy, it is also producing financial dividends.

In September, the Lib Dems’ annual conference saw the party draw in more than £1m from business attendees. With more than 850 corporate and charity organisations paying to attend, an increase of 225 from the year previously, the party generated the highest revenue in ticket sales and sponsorship for a decade, according to the Financial Times.

Exhibition stands at last year’s party conference rose by 57 per cent from autumn 2022, with commercial fringe slots growing from 45 to 70. The party’s business day last autumn attracted more than 150 businesses, an increase of more than 40 from the year previously. The party has sold 1,000 tickets to its spring conference so far.

The party has also nearly doubled its fundraising target for January and February thanks to an uptick in new supporters. “One of the things we found donors really like is the election success story,” says Robertson.

Boosting the party’s coffers is welcome. But the Lib Dems also need to be seen as a “credible” political force, Robertson says. With only two of its MPs having previously been in government, the party is now hoping to elect Liberal Democrats into mayoral posts in the spring.

“It sounds really bizarre as a solution to a business problem,” he explains. “But we need people with governing experience, and the best way of doing that would be having some directly elected mayors. So we are going gung-ho for a couple of them in May, and subsequently after that as well.”

Having elected Lib Dem mayors would also bridge the gap between politics and the business world. Former mayor of the West Midlands Andy Street, for instance, is a “good model of doing the job well and attracting investment”, says Robertson.

The party is now hopeful of electing mayors in counties like Hertfordshire and Surrey. They are confident that Mike Ross, who has led Hull city council since 2022, will win the mayoralty in Hull and East Riding. An insurance chief executive has also expressed interest in running for the mayoralty in Essex.

The local elections in May will be the first test of whether supporting small business is the electoral elixir the Lib Dems seek. With Labour, the Conservatives and now Reform UK squabbling between themselves, the Lib Dems’ quiet charm offensive on the high streets of Britain could prove a sound return on investment.

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