As an owner-director of an SME staffing business you might be forgiven for an occasional frustrated sigh, as one policy announcement champions the engine houses of the UK economy, while another consults on more regulation, with the third promising to cut red tape.
With the budget fast approaching it’s a good time to focus on what’s already available for SMEs and what they should watch out for in the budget.
In APSCo UK and OutSource’s Budget Representation to HMT we called for a reduction in cumulative regulatory burdens on SMEs such as a further review of the value measurements in public sector public procurement, including KPIs and fee levels, to actively support SMEs. We called for lower NICs on graduate employment, a cohort traditionally relied on by our members. Plus, tax reliefs on AI investment that includes professional advice on implementing it to comply with usability and transparency obligations.
The Burnham Government's economic message is becoming clearer: growth, investment, skills and business scale-up are the priorities as stated by the Chancellor John Healey in his recent Growth Speech. This was followed by a DBIST consultation on modernising corporate reporting
Growth Finance
SMEs can already access funding through the British Business Bank, including the Growth Guarantee Scheme, Start Up Loans and regional investment funds. Find out more.
Employee Share Incentives
Enterprise Management Incentives (EMI) remain one of the Government's principal tax-advantaged employee share schemes. Reforms which went live in April 2026 have expanded eligibility thresholds and increased scheme limits, suggesting continued policy support for employee ownership and growth-company reward structures. Click here for more information.
Skills and Apprenticeships
As Government devolution expands, accessing funds, improving skills and opportunities locally will become ever more important for SMEs. An updated list of Local Skills Improvement Plans was published in July 2026 with links to the designated Employer Representative Bodies for each area.
Funded apprenticeship programmes are available and from 1st October 2026 you may be eligible to receive a hiring payment of up to £2,000 when recruiting new apprentices aged 16 to 24.
Youth Jobs Grants and Youth Guarantees are available to those offering young people work – which could apply to a recruiter’s own workforce or their clients. More information is available at the “Build your Future Workforce” webpages.
Capital Investment Reliefs
Businesses investing in technology, software and business infrastructure should continue to review available capital allowances and full expensing provisions.
More information:
https://www.gov.uk/capital-allowances
Pension Salary Sacrifice
The Government has legislated to allow future restrictions on the National Insurance exemption available through pension salary sacrifice arrangements. Current policy indicates a £2,000 annual exemption threshold could apply from April 2029. For recruiters this could increase employment costs and affect reward strategies. Detailed implementation remains subject to future regulations so the final rules are not settled.
Employment Regulation
As we made clear in our budget representation, employment regulations and the new penalty imposing powers of the Fair Work Agency will be particularly burdensome on SMEs.
Growth Capital and M&A
Government policy is increasingly focused on helping firms scale. Businesses considering expansion, acquisitions or external investment should review the Government’s SME Hub and monitor future funding and investment announcements closely.
What Might Feature in Budget 2026?
APSCo members should watch for announcements in the following areas:
Broadly speaking, Labour's current offer to SMEs is centred on investment, skills, regional growth and helping businesses scale through improved access to finance and innovation support.
The Conservatives continue to focus on lower taxation, deregulation and reducing the cost of doing business, arguing that growth is best achieved through a more flexible and less burdensome business environment.
The Liberal Democrats place greater emphasis on workforce participation, skills development, employee ownership and local economic growth with their Clearing the Way for Growth campaign.
Reform UK's proposition is the most explicitly pro-deregulation, with a strong focus on reducing business taxes and cutting compliance requirements. In Scotland, the SNP continues to advocate a more interventionist economic approach than Westminster with a stronger focus on public investment and regional development.
In Wales, Plaid Cymru has traditionally focused on regional economic development, SME support, local supply chains, skills and devolved economic decision-making.
In Northern Ireland, economic policy debates tend to focus more heavily on inward investment and the region's unique trading position between the UK and EU markets. In APSCo UK’s recent research NI showed strong growth in engineering and IT hiring.
Despite these differences, there is a growing degree of cross-party consensus around several key themes of direct relevance to SMEs.
The debate is increasingly about the route to growth rather than whether growth should be the priority and all parties are looking to invest in business and address skills shortages.
Hiring and skills remains at the heart of the UK’s growth strategy and the biggest opportunities will be through investment led growth. The biggest concerns for recruiter SMEs remain the cost of employment and increasing workforce regulation.