Posted: Tue 5th May 2015
Toby Perkins is the Labour Parliamentary candidate for Chesterfield and Shadow Small Business Secretary. We ask him about his priorities and what he'd do in a first 100 days for small business.
What would you say your top 3 priorities are for small business?
In his first ever conference speech as Leader of the Labour Party, Ed Miliband expressed his determination to make Labour "the Party of Small Business." Five years on, I believe we have achieved this goal with a suite of active policies to help small businesses overcome what the British Chambers of Commerce has called the "cost of doing business crisis".
In particular I would highlight: business rates, late payment and access to finance.
What would you do for small business in your first 100 days in power?
We would take action on the three priorities I have already highlighted.
1. Business rates
A Labour government would cut business rates for 1.5million small businesses, and then freeze them the following year. The move will be worth an average Â£450 over two years to 1.5 million businesses, including shops, pubs and hi-tech start-ups. Some firms will benefit by Â£2,000.
The Tory-led government has cut corporation tax from 21% to 20% for 80,000 large firms. We would not proceed with this cut and spend the money on 1.5 million small firms instead. This is a fully costed pledge.
I also back the review into business rates that has been announced. There are problems in the system. For example, a factory investing in a new piece of equipment will find that their bill goes up the next year because the property is now worth more. This can be a disincentive to invest.
While we need a fundamental re-think of our corporate property tax system small business need urgent relief now. A cut and freeze, as we propose, will help.
2. Late payments
It cannot be right that that 1 in 5 business failures are simply down to bills being paid late rather than a failed business model.
So, to help ensure small businesses get money owed to them on time, a Labour government would introduce a tough new regime where large businesses would be forced to automatically pay interest on bills paid late to their small suppliers. This would remove large firm's incentive to use their suppliers as an unofficial credit line and would shift the burden away from disempowered small firms pursuing expensive legal challenges to their customers, once and for all.
We would also outlaw the pernicious practice of "pay and stay" where small companies are forced to pay fees just to remain on a list of suppliers a large company might buy from.
3. Access to finance
So far, the government's 'Business Bank' has had too little impact on helping small businesses get access to the finance they need - net lending to small and medium sized firms fell by Â£1bn in the last quarter.
We would properly resource the British Investment Bank by using planned fees for the mobile phone spectrum - estimated to be up to Â£1billion.
Alongside this we will look to emulate the best features of the German local banking model - which oversaw an increase in small business lending during the crash - with a network of regional banks.
German local banks, known as Sparkassen, are commercial banks, which are profit-making but not profit-maximising. They are confined to lend within a specified region and have a legal responsibility to promote regional growth.
When visiting Germany, I met local Sparkassen managers who were intimately attuned to their local economies and had the authority to lend significant sums to the entrepreneurs they felt would succeed in their community.
The key principles of this model - permanency through state backing; a core duty to support growth and innovation within a defined area; professionalism with banking experts who understand their local customers - can thrive in a British context, as seen by the success of institutions like the Bank of Salford.
What would you say to any small business owner considering their vote?
Even in opposition Labour has already demonstrated how an active approach can help to support British businesses. For example, Labour's Shadow Business Secretary, Chuka Umunna, bringing Small Business Saturday to Britain for the first time in 2013. On the most recent Small Business Saturday, held in December 2014, more than Â£500million extra was spent with small British firms.
In government we would be able to go further in tackling the key issues that small business - like the one I used to run before entering politics - are facing.
I'd also remind businesses large and small that only Labour offers businesses up and down the land certainty on relations with our largest trading partner; Europe. We are very clear that we believe the future of Britain, and in particular our small businesses, lies at the heart of the world's largest trading block. The EU is the world's largest exporter.
We see no compelling economic reason to have a referendum on our membership now and believe setting a timetable for a referendum would only create huge uncertainty for businesses and their customers and hamper any chances of a recovery.