Small Business Plan – What Does it Mean for EO Businesses

The launch of the Small Business Plan offers a slew of support for Britain’s SMEs. With the vast majority of EO businesses falling into this category, what does the plan have to say about employee ownership?

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The Department for Business and Trade has this month launched its highly anticipated Small Business Plan.

The publication provides an important recognition of the UK’s 5.5 million SME businesses. Often referred to as the ‘backbone of Britain’, SMEs account for 60% of the UK workforce and, combined, boast £2.8 trillion in turnover. 

SMEs are also the biggest proportion of the employee owned sector, with 92% of all the UK’s 2,470+ EO businesses (EOBs) falling under this umbrella.

Gary Parlett, co-founder of eoa member Answer Digital – who became the UK’s 500th business to become EO in 2020 – is an advisor at the government’s Small Business Growth Forum. The Forum’s focus for 2025 has been on the Small Business Plan. 

Despite the growing number of employee owned SMEs and Gary’s input into the plan, we find it lacking form an EO perspective.

“The Plan has been the culmination of many months of engagement with business and, having participated, it is very clear to me that the Government recognises the importance of SMEs and is intent on delivering meaningful support for start-ups and to help small businesses scale and grow,” he said. 

“The Plan covers many aspects that have potential benefits to any SME but lacks any substantive focus upon EO business other than a commitment to an inquiry and call for evidence.”

Let’s take a deeper dive into the plan and what, if anything, EOBs need to know.

What Does the Plan Contain?

The plan sets out wide ranging commitments to supporting SMEs across the UK. This includes legislating the end of late payments and unlocking access to finance, to cutting red tape and establishing regional Growth Hubs. 

Additionally, the plan acknowledges the government’s objective to grow the co-operative and mutuals sector (an umbrella term which includes employee ownership). 

As part of this, Government is launching a call in autumn for evidence on how to support businesses within this sector to grow.    

This should help offer a significant opportunity to identify inhibitors to the sector’s continued growth and the value it brings to the economy.

The plan also highlights the launch of new streamlined digital Business Growth Service which aims to provide easier access to advice and support. 

We’ve previously called for a similar service within our EO Manifesto. Here, we identified it as an easy opportunity for Government to signpost to resources and information about employee ownership. This would support Labour’s target of doubling the size of the cooperative and mutuals sector. 

The eoa View

In the past, we’ve welcomed the government’s Growth and Skills Levy announcement which aimed to make accessing support for skills and apprenticeships more flexible. However, this has effectively been renounced in the Small Business Plan.

The plan’s claim to do more to support and promote entrepreneurial and leadership skills is welcome as it aligns with a recommendation in our Manifesto. 

This includes enabling access to a broader range of skills under which ‘EO skills’ – such as those relevant to employee government (e.g. being an employee trustee) – are equally relevant as those already outlined by Government.

We're already seeing this direct financial and development support on a regional scale. East Devon District Council recently launched a funding pilot to support the creation of new EOBs, driving growth and wealth locally. This potentially opens the door for board-based regional support for EO, catalysing significant sector growth across the UK. 

“Overall, the strategy feels overly familiar and lacks clarity of vision,” said James de le Vingne, Chief Executive of the eoa.

“The strategy references long-term ambition but currently lacks a clear acknowledgement of one of the most pressing challenges: UK businesses are increasingly opting to sell to foreign investors. 

“Aside from employee ownership and the existing Capital Gains Tax (CGT) relief, there appears to be no concrete plan to provide credible alternatives, support mechanisms, or incentives to retain ownership and value in the UK economy. This omission leaves a major gap in the strategy’s effectiveness.

“This is not about producing a handful of new millionaires; it’s about building a resilient economy made up of millions of financially secure households.

“While it’s right to highlight that employers struggle to access skills, finance, and markets, the strategy should also recognise that many businesses are looking for a motivated and engaged workforce to support real, sustained growth. 

“That comes from fair reward and genuine employee involvement, not just productivity schemes and training programmes.”