Labour declares war on late payment to small businesses

Mr Corbyn will make three pledges to small business from Labour: 

• Tough action on late payment
  • No quarterly reporting
  • Regional investment banks to improve access to finance

Speaking at an event organised by the Federation of Small Businesses, the Labour leader will call it “a national scandal” that big companies were withholding more than £26 billion from suppliers, forcing 50,000 of them out of business every year.

Jeremy Corbyn will say: “Cash is king for any business, and big companies are managing their cash by borrowing – interest free - from their suppliers. 

“Some of the biggest names in business are holding cash piles that don’t actually belong to them. It’s a national scandal. And it’s stopping businesses from growing and causing thousands to go bust every year. It kills jobs and holds back economic growth.”

Jeremy Corbyn will name names, citing credit agency reports that showed E.On, Capita, BT Group, Vodafone, National Grid and Marks & Spencer as being among the worst culprits

A Labour government, he will say, would require any company bidding for a public sector contract to pay its own suppliers within 30 days and would look at introducing for the private sector a system of binding arbitration with fines for persistent late payers.

“We will support those striving to make a living through self-employment and in small businesses,” he will say. “Not just because it is the right and fair thing to do, but because millions of jobs and the future of our country depends on it.”

In a wide-ranging speech on the economy, the Labour leader will promise that taxes would fall on those with the broadest shoulders. He will pledge not to increase the corporation tax rate for small businesses and say Labour would scrap quarterly reporting for micro businesses if introduced next year.

He will say: “In last month’s budget, the chancellor bowed to pressure by delaying the implementation of quarterly reporting for small businesses by one year. That’s not good enough. Labour is against small businesses having to report quarterly. It’s a burden, a distraction, that will hold entrepreneurs back.

“Labour will scrap quarterly reporting for small businesses with a turnover of less than £83,000 a year to help you focus on growing your business.”

Corbyn will also hit back at the prime minister’s recent attacks on Labour’s plans for a National Investment Bank supported by regional investment banks. 

He will say: “This year, the Welsh Labour government is creating the Development Bank for Wales Its purpose will be to create and safeguard over 5,500 jobs a year by 2022 by providing more than £1 billion of investment support to Welsh business over that period.

“This has not come out of the blue. Labour in Wales has nearly two decades’ experience of working with the FSB and other business organisations. 

“It has taken on board your feedback about the forerunner to the development bank, Finance Wales. And my business team at Westminster will take a keen interest in the launch of the Development Bank for Wales and the work it does to generate growth and jobs.

“The Prime Minister frequently accuses me of wanting to bankrupt Britain by borrowing money to fund investment. But, as every business person knows, there is a world of difference between borrowing for capital spending and borrowing to fund the payroll and day to day trading or service delivery.

“The risk of bankruptcy comes not when you borrow to invest in projects that will deliver growth but when you give tax breaks to big companies and the wealthy when you don’t have enough money to run public services.”

Ends

Notes to editors:

 ·         The findings are based on data from Bacs Payment Schemes Limited (Bacs), formerly known as Bankers' Automated Clearing Services, the organisation with responsibility for the schemes behind the clearing and settlement of UK automated payment methods Direct Debit and Bacs Direct Credit

·         Current Experian credit reports give the following payment beyond terms figures for the big companies named by Labour: E.On - 78 days, Capita – 82, BT Group – 89, Vodafone – 84, National Grid – 119, Marks & Spencer – 150.  Terms may be more than 30 days and are often 60 days. Marks & Spencer is therefore paying suppliers more than 6 months after delivery of goods or completion of work. This is a random selection of late paying big companies.