Labour confirmed plans to eradicate late payments to small businesses as part of a package of measures designed to help entrepreneurs.
Among a range of measures announced today, the opposition said they will “stamp out” late payments to small businesses by requiring big firms to report on their payment practices. This would require audit committees to issue a report on late payments.
Late payments have been a major hindrance to small businesses, often contributing to cash flow problems and forcing firms to divert resources to chasing unpaid bills.
According to the Office of the Small Business Commissioner, a third of all payments to small businesses are late. In total
Commenting on the proposals, Tina McKenzie, policy chair at the Federation of Small Businesses (FSB), said: “We are especially pleased to see Labour state that it would pass new laws to help small businesses, including requiring the audit committees of big businesses to report on their company’s payment practices.”
“This is something we have worked closely with the Opposition on, and is a clear commitment that addresses one of the biggest problems facing small businesses,” she continued.
Alongside action on late payments, Labour confirmed plans to give small businesses a “fairer chance” on public contracts, pledging to shortlist at least one SME when smaller contracts go to tender.
It will also replace the business rates system with a new system that will try to level the playing field between the high street and online giants.
The party promised to make the “unlock” the supply of finance for SMEs, many of whom face significant barriers in accessing lending. According to data from UK Finance, the success rate of SME applications for bank loans fell from 80 per cent in 2018 to around 50 per cent in 2023.
Labour leader Keir Starmer said: “Travelling across the country, I meet so many small business owners who work day in, day out, to grow and innovate. Their entrepreneurial courage to take a risk and serve their area is what stitches the fabric of local communities together”.