Speaking at an event held by the Federation of Small Business today, Corbyn named and shamed some of the companies that owe UK SMEs a total of £26bn, including Marks and Spencer, Capita, Vodafone, E.On and BT.
“It kills jobs and holds back economic growth,” he 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 huge cash piles that don’t actually belong to them."
According to the BBC, however, several of the businesses named by the Labour leader have since disputed the figures.
Corbyn suggested that any business that bids for a government contract should be forced to pay its suppliers within 30 days. He also proposed the UK should follow the Australian arrangement which has binding arbitration and fines for persistent late payers. “It needs to be a system with teeth,” he said.
FSB national chairman, Mike Cherry, agreed that small businesses are facing a “late payments crisis” that causes around 50,000 businesses a year to go bust as “a result of unfair and lengthy delays in big business customers paying what they owe".
“Jeremy Corbyn’s proposals today are important, as we build a cross-party consensus for further action. Government’s transparency reforms are vital, but not sufficient. We believe it must set an example, with prompt payment practice disseminated throughout the supply chain of the £230bn public procurement programme.”
Corbyn also said that if Labour were to gain power, they would exempt businesses with a turnover of less than £83,000 from government plans to replace annual tax returns with quarterly ones under HMRC’s Making Tax Digital project. “It’s a burden, a distraction, that will hold entrepreneurs back,” added Corbyn.
The chancellor Philip Hammond deferred its implementation for a year in the Spring Budget, a move that was welcomed by SMEs and the accountancy profession.