Business Advice spoke to Labour MP and shadow small business minister, Bill Esterson, to find out his thoughts on the late payment crisis, and what lessons the UK could learn from across the Atlantic.
Commenting on the government’s approach to protecting small firms from unethical supply chains, Esterson’s concern was that existing policy – the proposed introduction of a small business commissioner and the Prompt Payment Code (PPC) – did not go far enough in protecting small business interests.
The small business commissioner in particular, he added, represented a response to just one single issue faced by the owners of small companies, and reflected the government’s “piecemeal and reactive approach” to policy.
The shadow small business minister has previously aired doubts of the capabilities of a designated commissioner in addressing late payment complaints, warning that it would be unlikely to hold any substantial power.
To deliver a competent, consistent level of support for Britain’s small business economy, Esterson pointed to the success of the Small Business Association (SBA) in the US.
The SBA is the national agency that works to support the interests of entrepreneurs, providing government-backed loans and managing the public procurement process.
Esterson said that the body acted as an effective agent in ensuring that economic growth in the country is driven by small businesses.
“Through the SBA, the US takes a strategic approach. The SBA comments on all regulation and performs a role of inspecting all legislation affecting small business.
“It also forms the largest network in the world of former entrepreneurs, giving back to that community through online and face-to-face training and support. It is a $900m dollar organisation at zero cost to the taxpayer,” he said.
Esterson suggested that “the most striking part” of the SBA’s role was ensuring a consistently high level of public procurement expenditure through small businesses. Some 23 per cent of direct government spending goes to small firms in the US – just short of the target that the Cabinet Office has set the UK for 2020.
“The system in the US drives an ethical approach to the economy – it demands that big businesses provide access to skill development for workers, ensure prompt supplier payments and have positive environmental policies,” the shadow small business minister added.
Labour’s shadow business secretary, Clive Lewis, recently said that the party’s commitment to staying in the single market represented an opportunity for the party to be seen as the party of business – a title that the Conservative Party usually proclaims.
Esterson agreed that the nation’s business prospects best lay with the Labour Party, but was keen to emphasise the notion of “responsible business” within the party’s agenda.
“Labour needs to be seen as the party that supports responsible businesses, encouraging big firms who want to act properly and do the right things.
“This means partnering with smaller suppliers, looking after the environment, not undercutting staff wages – most big businesses want to do these things. Those that don’t experience the consequences,” he said, pointing to the high profile cases of Sports Direct and BHS.
“An agenda of responsibility has to come from the very top. Government is the only player that can level the playing field.”
If you agree, or disagree, with the shadow small business minister, then let us know via email@example.com.
Margot James reaffirms government commitments to combat late payments.
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