Posts Tagged ‘limited liability’

Getting tough on late payment to SMEs will help build the business wing of Labour’s one nation movement

12/04/2013, 12:15:33 PM

by Dan McCurry

There was an interesting article in last week’s Economist about a speech made by Chuka Umunna to the Federation of Small Businesses, which began with the sleepy audience unengaged, but went on to inspire them to shout, “Hear hear!”

I suspect this was following the announcement that Labour would crack down on big companies that deliberately hold out payments to small companies for months on end.

The article compared Labour’s wooing of small business with the “prawn cocktail offensive” of the early Blair years, when Labour wooed the bankers. However, the crucial difference is that we no longer need to persuade the markets of our commitment to capitalism. This speech was about something altogether different.

Sole traders and small businesses don’t see themselves as in need of the state. Nor has the state previously had much of a role to support them. The Tories believe that the best policy is to actively get out of the way, and they often make passionate speeches boasting of their intention to do absolutely nothing. Chuka disagrees, and he’s right. Small business is absolutely in need of the state, but they mostly don’t realise it, because they don’t know what the state can do for them.

The injustice here is about enterprising people who work hard to build their business, but find themselves continually the victim of the unscrupulous and unchecked greed of powerful companies and individuals. They endure a continual battle to get paid, not because there is no law to protect them, there is plenty of law, but there is inconsistency in the application of the law.

If a man walks into Sainsbury’s and steals a chicken he will be prosecuted. However, if that same man hires a printer to provide a box of leaflets, and doesn’t pay, the police would refuse to prosecute, arguing that it is a civil matter.

This is true even if the purchaser dishonestly intended to avoid payment before placing the order. The printer would have to file a small claim at the county court. There would be no criminal punishment and no mark of bad character against the cheating customer.

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