Jeremy Corbyn has said a Labour government would “declare war” on corporations, such as Marks and Spencer, which he accused of failing to pay suppliers on time, leading to the closure of tens of thousands of small businesses.
Corbyn said big companies, including E.ON, Capita and the BT group, were profiting from the late payments, as he vowed to ease regulations on small businesses, including abolishing quarterly reporting.
“Cash is king for any business, and big companies are managing their cash by borrowing – interest free – from their suppliers,” he told a Federation for Small Business event.
“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.”
The FSB has estimated that prompt payments to suppliers could prevent 50,000 small businesses going under each year.
Labour said Corbyn’s attack on the corporations was based on analysing data from current Experian credit reports, which identified payment beyond terms, normally 30-60 days, by big companies. Marks and Spencer went 72 days beyond terms, Capita 82 days and the National Grid as long as 119 days.
Any company bidding for public-sector contracts with a future Labour government would have to pay its own suppliers within 30 days, Corbyn said on Tuesday, and Labour would consider creating a binding arbitration system, with fines for persistent late-payers.
The Labour leader pledged not to increase the corporation tax rate for small businesses and to scrap quarterly reporting for businesses with turnover of less than £83,000, calling it “a burden, a distraction, that will hold entrepreneurs back”.
He said large corporations were “privileged” by the government in their tax affairs over ordinary people or small businesses. He joked about his own tax return mishap, where he was fined for a late payment, calling it a “donation” to HMRC.
“No one likes paying tax. We don’t wake up in the morning thinking, ‘Oh, I really must pay some more tax today’. But most of us know that taxes are essential to a civilised society and a successful economy,” he said. “So most of us play by the rules. We do our tax returns, as you know, mine seems to attract more attention than most but that’s OK, transparency is important.”
Corbyn has been repeatedly criticised by Theresa May for Labour’s pledge to borrow £500bn for investments, including in regional investment banks.
The party has struggled to rebuild trust in its economic credibility, with the latest Observer/Opinium poll showing 44% trust May and her chancellor, Philip Hammond, to run the economy, while just 15% say Corbyn and the shadow chancellor, John McDonnell, are trustworthy.
Amanda Milling, a Conservative member of the Commons business, energy and industrial strategy select committee, said Labour’s pledge to borrow to invest £500bn would “crash the economy, just like they did last time”.
In remarks on Tuesday that anticipated some of the criticism, Corbyn said: “The prime minister frequently accuses me of wanting to bankrupt Britain by borrowing money to fund investment. But, as every business person knows, there is a world of difference between borrowing for capital spending and borrowing to fund the payroll and day to day trading or service delivery.
“The risk of bankruptcy comes not when you borrow to invest in projects that will deliver growth but when you give tax breaks to big companies and the wealthy when you don’t have enough money to run public services.”