New research from Labour reveals small businesses across the East Midlands are missing out on over £1.7b each year due to late payments from big companies.
At an event today with the Federation of Small Business, Labour leader, Jeremy Corbyn will make three pledges to small business:
• Tough action on late payment
• No quarterly reporting
• Regional investment banks to improve access to finance
In the East Midlands over 170,000 of the region’s SMEs found themselves owed money in late payments. The knock on effects of this meant that over 50,000 were forced to pay their own suppliers later and over 20,000 found themselves struggling to pay their staff due to late payments.
Toby Perkins, MP for Chesterfield and former small business owner, said:
“Many small businesses in the East Midlands are struggling to keep afloat from one month to the next as late payments from big companies are keeping them on a financial knife edge.
“Here in the East Midlands we have over 370,000 small businesses and we should be doing everything we can to support them.
“As a former small business owner I understand the struggles facing our small businesses when having to deal with late payments. Supporting those striving to make a living through self-employment is vital for not only my constituency in Chesterfield but right across the East Midlands.
“A Labour Government would declare war on late payment to small businesses to boost growth and make sure we have an economy that works for everyone.”
Speaking at an event organised by FSB, Jeremy Corbyn 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.”
As part of Labour’s pledge to small business, any company bidding for a public sector contract must ensure it pays its own suppliers within 30 days. No ifs, no buts. Labour would also look at introducing a system of binding arbitration with fines for persistent late payers within the private sector.
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.