Reporter: Allan Roach
Following the lead set by Debbie Abrahams, MP for Oldham East and Saddleworth and Shadow Work and Pensions Secretary, in her Be Fair – Pay on Time campaign, Jeremy Corbyn has announced that a Labour Government would ‘declare war on late payment’ to small businesses as part of its strategy for growth, jobs and an economy that works for all.
Speaking at an event organised by the Federation of Small Businesses (FSB), the Labour leader called 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.
Mr Corbyn has made three pledges to small business from Labour:
- Tough action on late payment
- No quarterly reporting
- Regional investment banks to improve access to finance
Debbie, whose Be Fair – Pay on Time campaign has won various awards* since she launched it in 2011, said: “I’m delighted that Labour is making tackling late payments one of its policies as it’s one of the main problems faced by small and medium businesses across the UK.
“The majority of people in employment work in a small or medium sized business so the tactics of large companies who pay late affects the lives of many millions of working people.
“Be Fair – Pay on Time started right here in Oldham East and Saddleworth after a constituent in Saddleworth told me how a major supermarket was consistently paying him late and it was driving his business to the wall.
“Talking to other people around the constituency it became clear that not only were many other constituents who run small businesses affected by late payments but the issue was huge across the whole UK.
“It’s shocking to think that in Oldham East and Saddleworth alone almost £31m is owed to small and medium businesses for work that has been done. And in the last year local businesses have written off almost £8m as bad debts.
“Over 400 businesses in Oldham East and Saddleworth have said they are struggling to pay staff because of late payments and 66 went under according to figures supplied by Bacs (Bacs Payment Schemes Limited, formerly known as Bankers’ Automated Clearing Services).
“The Tories won’t do anything concrete to tackle late payment because so many of their donors are linked to big businesses. But if we’re to help small businesses, who are the backbone of our economy, we must stop this late payment culture and only Labour is now committed to do this.”
Speaking at the FSB event Jeremy Corbyn said: “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 named 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 said, 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.
He added: “We will support those striving to make a living through self-employment and in small businesses. 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 also promised that taxes would fall on those with the broadest shoulders. He pledged not to increase the corporation tax rate for small businesses and said Labour would scrap quarterly reporting for micro businesses if introduced next year.
Mr Corbyn said: “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.
Mr Corbyn added: “Economic competence is vital for any government that’s why Labour has published our Fiscal Credibility Rules. 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.”