Jeremy Corbyn said on Tuesday (April 11) that a Labour government would “declare war” on the late payment of invoices, describing the issue as a £26bn “national scandal”.
The Labour leader said companies who are persistently late in paying their bills will be fined and accused big businesses of being the “worst culprits”.
In a speech to the Federation of Small Businesses (FSB), he said late payments are responsible for the closure 50,000 small companies every year and promised to name and shame large companies who engage in the practise.
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.”
Corbyn accused a number of blue-chip firms, including Capita, E.ON, BT Group, Marks & Spencer, Vodafone and National Grid, of regularly not paying their invoices on time.
After the speech a number of the firms refuted his accusations.
A Labour government would tackle the problem by requiring any company that bids for a public sector contract to demonstrate that it pays suppliers within 30 days, Corbyn told the FSB.
He said that Labour would also consider introducing “a system of binding arbitration” so that companies that repeatedly pay late would be fined.
“We will support those striving to make a living through self-employment and in small businesses,” he noted.
“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.”
Corbyn also pledged to keep tax rates for small businesses as they are and said that “any tax rises will fall on the broadest shoulders”, as well as mentioning Labour’s plan for a national investment bank and national lifelong learning service.
Unite assistant general secretary Steve Turner said, “Large companies should not be keeping smaller suppliers waiting inordinate amounts of time to receive payment.
“It’s an issue that often cripples firms who would often be healthy and productive businesses otherwise. The knock on effects on jobs and the wider economy can be disastrous.
“This kind of behaviour, along with firms forcing people into bogus self-employment in order to dodge employment legislation and the payment of taxes, is making the UK increasingly unequal.”
Turner added, “We need a government that tackles unfairness head on and invests in an equitable and sustainable economy, rather than one that presides over predatory business practises that make money by riding roughshod over everyone else.”