Monday 24 October 2016 3:32 pm

Theresa May's government is failing to treat small businesses as partners

Small businesses wait an average of 72 days to be paid, while a staggering £26 billion is owed in the private sector according to The Asset Based Finance Association and BACS respectively.

And with cash flow being the main cause of business failure, it makes perfect sense for the British government to get serious about late payment.

The government is consulting on the creation of the post of small business commissioner to address the problem of late payment in the private sector.

And it isn’t as if we don’t have good models to work from: small business commissioners in Australia with enforcement powers, which mean they can mandate large firms to attend alternative dispute resolution, and fine chronic late payers.

Read More: Here is how banks can better compete for, and profit from, SME business

A strong legislative framework has led to a fall in the level of late payment, less reliance on expensive court costs, and less danger of damage to commercial relationships when suppliers need to challenge their larger business customers.

So it is disappointing that the government rejected Labour proposals to apply the Australian system here.

The consultation suggests a system of advice and signposting but appears likely to fall short because of a lack of clout.

The government has also refused Labour calls to bring the public sector within the commissioner’s scope.

Read More: London SMEs have ranked as the second highest savers nationally

Labour wants to see a commissioner who would dramatically level the playing field for small business. We have only to look across the Atlantic to see how this might work in Britain.

So important is small business to the US government that the head of its Small Business Administration is a member of the president’s cabinet.

The Small Business Administration guarantees billions of dollars of low cost loans from private lenders, has the world’s largest voluntary mentor network of retired entrepreneurs and directs 23% of prime government contracts to small businesses.

Meanwhile, in the UK it’s under 11% according to the ONS.

Read More: SMEs have a gloomy view of the economy

The UK government’s modest proposals for a small business commissioner could be given a real boost if they would only draw on years of success in the US and Australia.

Small businesses should be treated as full partners by government and large businesses alike but all too often they are not.

It is time, not least with the uncertainty we face over Brexit, that we in Britain, had our own government agency designed to maximise the success of small firms.

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