Small Business Owners Excluded by Reeves

A Party for Some, Frustration for Many

In December, Chancellor Rachel Reeves hosted a high-profile drinks reception at Number 10 Downing Street. The guest list: tech founders and leaders of fast-growing scale-ups. For most UK contractors and small business owners, the event was a reminder of a widening gap. While the government celebrated a select group, over 4 million self-employed individuals and micro-businesses watched from the sidelines.

One business owner summed up the mood: “While the Chancellor threw a party at No.10, business owners are doing the Budget maths and realising they’ve been mugged. Again.”

The Two-Speed Economy

The government’s focus on scale-ups was clear. Founders from companies like Huel, Moneybox, and Quantexa attended the Downing Street celebration. Reeves described her government as “backing our entrepreneurs,” promising modernised tax incentives and billions in investment. Alex Depledge MBE, the Chancellor’s Entrepreneurship Adviser, argued that the new policies would “clear the obstacles that stop scale-ups from reaching their full potential.”

Yet, most UK businesses look nothing like these unicorns. According to the government’s own statistics:

For these millions, the Budget delivered tax hikes and increased employer National Insurance. Changes to Capital Gains Tax added further strain. The rewards for entrepreneurship, many say, have never felt more distant.

Contractors and Micro-Businesses: “Invisible” to Policymakers

Jill Poet, CEO of the Organisation for Responsible Businesses, challenged the government’s narrative:

“This bells and whistles announcement is aimed only at high-growth scale-ups. Someone ought to remind Rachel Reeves and her government what the definition of an entrepreneur is. In simple terms, anyone who takes the risk of setting up their own business where they would be bearing most of the risks and enjoying most of the rewards, if they are any.”

Contractors, freelancers, and solo operators now make up a critical voting bloc. They are the backbone of the UK economy, yet many feel their concerns are consistently ignored.

Fred Hicks, head of policy at IPSE, noted that freezing tax thresholds and increasing dividend tax “loads yet more pressure onto company owners and risks disincentivising entrepreneurship when we need it most.”

The “Scale-Up” Disconnect

While the Chancellor promised that reforms to the Enterprise Management Incentive (EMI) scheme and Enterprise Investment Scheme (EIS) would eventually benefit all, most business owners see little immediate help. Tom Leathes, CEO of Motorway.com, welcomed the EMI changes for large scale-ups, stating, “These reforms fix that. Extending option lifespans to 15 years and doubling the employee cap gives UK scale-ups far more firepower to compete for world-class talent much longer into the journey.”

But for contractors and small business owners—cafe operators, IT specialists, graphic designers, tradespeople—these advanced financial instruments make little difference to daily realities: rising costs, complex tax rules, and uncertain cash flow.

Matthew Knight, Chief Freelance Officer at The Independency Co., put it simply:

“The Chancellor saying she’s backing Britain’s entrepreneurs while simultaneously stripping away the tax provisions that help small businesses survive is contradictory.”

He added, “If the government’s industrial strategy genuinely relies on homegrown entrepreneurs to drive growth, policy needs to match the promise. We need a landscape that reduces risk and helps new and small businesses avoid tax traps and heavier administrative burdens.”

What Next for UK Contractors?

For many, the message from government is clear: high-growth scale-ups can expect support, but the millions running micro-businesses and contracting on their own remain out in the cold. The disconnect is not just symbolic. It has real impacts on livelihoods, innovation, and the overall health of the UK economy.

Key takeaways for contractors:

• Most Budget and policy changes continue to favour larger, fast-scaling firms.

• Tax hikes and administrative burdens are rising for micro-businesses and contractors.

• The self-employed sector, critical for UK economic resilience, is not seeing targeted support.

What Can Contractors Do?

• Stay informed about ongoing changes to tax and employment legislation.

• Engage with representative bodies like IPSE to amplify concerns to policymakers.

• Consider joining local business networks to build collective influence.

• Document the impact of policy changes on your business and share with MPs.

Final Thought

The government may say it backs “entrepreneurs,” but for most UK contractors, the reality is more challenging than ever. As one business owner asked: “Where is our party?”