Today Labour will take another step towards establishing ourselves as the party of small business with a move to support businesses who play by the rules and pay their bills on time.
Small businesses are particularly vulnerable to customers who choose to pay their invoices late. Insolvency specialists have estimated that 1 in 5 business failures are simply down to bills being paid late rather than a failed business model. Many big businesses stand accused of using their suppliers as an unofficial credit line by paying them weeks or even months after the due date.
The latest figures published by BACs reveal how the problem is growing ever more serious. Britain's small businesses now carry a burden of £39.4 billion in overdue payment they are owed; sixty per cent of Britain's small businesses report that late payment is a problem with the average small business waiting for £38,186 in overdue payments; and one in four companies spend over 10 hours a week chasing late payments.
Whilst this has been a topic which has brought cross party attention (Labour's Debbie Abrahams in particular has been a stalwart campaigner) the Government have failed to take significant action. From reneging on a commitment to name and shame large companies who pay late to delaying the implementation of a fairly mild EU directive that offered a little support for action against late payers.
Today in Parliament, MPs have a real opportunity to take a big step in the right direction by supporting Labour's amendment which would ensure that any business paid late would automatically be paid interest by the supplier.
This intends to shift the burden of action away from the victims once and for all. It will remove the incentive for businesses to pay late, because rather than saving interest and improving cash flow late payers will automatically pay interest to their suppliers at 8% above the Bank of England's base rate; and because it is a mandatory requirement to complete this form it will bring the issue of late payments into the light in a way which all previous government measures have failed to do.
This proposal sits alongside Labour's commitment to cut Business rates for small firms, reduce energy prices, improve access to finance and boost Business support for start-ups right across Britain. It is a core part of Labour's plans to support jobs and tackle the cost of living crisis
This exciting plan has won support from across the business community, I hope that today it will unite all those across the political spectrum who recognise that late payment is a business fairness issue but if ministers choose once again to ignore this problem, small businesses can be assured that a future Labour government will take the action they need.Suggest a correction