Labour has today challenged the Conservatives to be more
ambitious in tackling the scourge of late payments to small
business which costs the UK economy £2.5 billion each year.
Since 2014, the government have published eight reviews and
consultations to tackle late payments. Analysis from Labour
suggests in that time up to 400,000 small firms have gone under
waiting on government action.
While the Chancellor promised action on government procurement to
tackle late payments in the Autumn Statement, Labour
has called for the government to match their ambition and
legislate to end the practice once and for all.
Labour’s plans would see tough new legislation brought in to
ensure that all large companies, not just government
contractors, will have to report on their payment practices and
demonstrate they are prompt payers. Labour has committed to
bringing the legislation in urgently and taking the action needed
to ensure small firms get paid on time.
Commenting ahead of Small Business Saturday on the 2
December, ,
Labour’s Shadow Business and Trade Secretary, said:
“While I welcome any steps to stop late payments sadly small
businesses have heard these promises from government before.
Small and medium sized businesses whose cashflow is hit while
they chase invoices cannot wait another day. Our small businesses
have waited long enough to get paid on time.
“Labour is on the side of small business that’s why we will
reform business rates to level the playing field and go further,
faster in cracking down on late payments making sure the law is
on the side of small businesses. Small businesses are crucial to
our economic success and our communities that’s why Labour will
give them the backing they need.”
Tina McKenzie, Policy and Advocacy Chair
of the Federation of Small Businesses, said:
“We welcome today's important renewed commitment from Labour to
tackle late payments. Feeding off a land of lost
invoices is an intolerably chronic problem that is costing small
firms billions, primarily from larger businesses using them for
free credit by delaying invoices for
sometimes three or four months. This
undermines productivity, and takes up huge amounts of small
business owners’ time and effort chasing unpaid invoices for past
work, sometimes putting their businesses’ survival on the
line. Sorting this out would add £2.5 billion
to the economy and save 50,000 small businesses a year from going
to the wall.
“FSB therefore welcomes Labour's pledge to
empower audit committees of large corporates to oversee
their payment practices, and to include this in the
companies’ annual reports. We believe this will
make the difference, but if cultural change does not flow then
stronger legislative action may be required before the mid-point
of the next Parliament.”
Ends
Notes:
FSB research estimates 50,000 businesses a year fail due to late
payments. If 50,000 firms failed every year since the Government
started consulting on late payments that would mean 450,000 firms
have gone under.
Stop late payments, save 50,000
small businesses | FSB, The Federation of Small Businesses
List of consultations and announcements since
2014:
