11th February 2026
A report published today (11 February 2026) by the UK Parliament's Business and Trade Committee titled "Small business strategy" (Fifteenth Report of Session 2024-26, HC 1057) shows many of the issues facing small businesses in the UK.
Main Findings
SMEs are under significant pressure
Small and medium-sized firms are facing economic challenges as severe as during the COVID-19 pandemic, with financial strain affecting confidence and growth prospects.
Cashflow and late payments are critical issues
Late payments have become routine and are a major stress on SMEs where many are owed billions in unpaid invoices, which can lead to cash shortages and even closures.
Public procurement is underutilised
Government purchasing could help small businesses more: although billions are spent each year, only a small fraction goes to SMEs.
Tax and regulatory burdens hamper growth
Complex tax systems including VAT and business rates place disproportionate costs on small firms.
Skills and labour costs are a challenge
SMEs struggle with labour costs and navigating the skills and training ecosystem, limiting their ability to hire and grow.
Energy costs and crime hit small businesses hard
High energy bills and crime rates (e.g., retail theft) are eroding profits and adding to operational costs.
High street decline and data gaps
Many town centres are struggling with vacancies, and the absence of reliable data complicates policymaking.
Overall Conclusions
Small businesses remain committed to growth and community, but systemic issues threaten their viability.
Government action to date has helped in some areas (like tackling late payments and cutting administrative burden), but much more ambitious reforms are needed to improve conditions, stimulate growth, and strengthen support for SMEs.
Recommendations
The Committee suggests the Government should:
Improve enforcement of prompt payment to protect small firms.
Increase SME access to government procurement opportunities.
Simplify tax and regulatory frameworks to reduce compliance costs.
Enhance skills training support tailored to SMEs.
Address energy cost pressures and business crime impacts.
Improve data collection to better understand SME needs across sectors.
If you'd like, I can also provide a breakdown of the Government's response (if available) or highlight the key recommendations chapter by chapter.
[b]Read the full report HERE
More details
Chapter-by-Chapter Key Recommendations
1. Starting and Growing a Business
Improve start-up support and reduce early-stage barriers to entry.
Ensure business support schemes are accessible and tailored to micro-businesses and first-time founders.
(General theme; specific text not extracted but captured within report structure.)
2. Sales and Cash Flow
Late payment & procurement
End the late payment crisis: introduce stronger, enforceable measures to prevent persistent late payments and mandate transparency across supply chains.
Ensure businesses pay invoices within reasonable timeframes to free up SME cashflow.
Apply targeted reforms in sectors like construction where long payment terms are routine.
Improve procurement access: set and meet a clear target (at least 30 % of public procurement spend to reach SMEs) with simpler bidding processes and better reporting.
(Detailed recommendations summarised from Committee conclusions.)
3. The Tax System
Reform VAT: review the VAT registration threshold and simplify the system to avoid cliff edges that deter growth.
Replace business rates: move to a fairer system that reflects ability to pay and supports high-street viability.
Simplify administrative tax burdens to reduce costs and compliance time for SMEs.
(Derived from overall conclusions and recommendations.)
4. Labour Costs and the Skills System
Simplify SME access to the national skills and apprenticeships system.
Align training provision with SME workforce needs to improve productivity.
Provide clearer guidance on managing labour costs without stifling recruitment.
(Summarised from Committee recommendations.)
5. Energy Costs
Introduce targeted energy support for SMEs, including protections for smaller users and more market transparency.
Review pricing structures to ensure SMEs are not penalised relative to larger firms.
(From commitments in report recommendations.)
6. Crime and Business Protection
Provide national leadership on business crime, strengthen policing and trading standards.
Improve enforcement powers against retail crime and illegal trading.
Tailor crime prevention funding to small business needs.
(Core Committee policy calls.)
7. High Street Regeneration
Empower local authorities with resources and data transparency to revitalise town centres.
Increase investment in public realm and community ownership of commercial space.
Tackle high vacancy rates through coordinated local-national strategies.
(Part of Committee's broader recommendations.)
8-10. Business Support, Improving Data & Cross-Whitehall Working
Create a coherent national framework for business support to replace fragmented services.
Enhance SME data collection for evidence-based policy (e.g., accurate payment, growth, skills metrics).
Establish mechanisms for improved cross-Whitehall coordination and SME policy consultation.
(From Committee's concluding recommendations.)