‘Labour has more to do for small businesses and self-employed’ – LabourList

In the run-up to the General Election Angela Rayner promised to deliver a shakeup of employment rights and also new rights for the self-employed.

We have had a big shake up on employments rights, delivering action on things such as unfair dismissals, day one rights and zero-hours contracts. Now the focus is on the self-employed and small business. Lots of groups in the Labour Movement engaged with this agenda, including Labour Business and Community Union.

There is a link between the two. We noted that while there was a need for employment rights, there was also a need for rights at work. This would be a key thing for the self-employed and small businesses.

The key one we noted was a right to be paid on time. We noted that in New York State there was a Freelancing Isn’t Free Act which gave people that right and the right to a written contract for work. Being paid and being paid on time is a fundamental right is a fantasy, but is something that can be made to happen, as the example showed.

If Peter doesn’t pay Paul then Paul can’t pay Mary

According to IPSE (the biggest trade association that represents self-employed workers) the average amount owed to freelancers in overdue invoices is £5230. It affects small business too (which arguably the self-employed are too). The 2025 Intuit QuickBooks Small Business Late Payments Report reveals UK small businesses with unpaid invoices are currently owed more than £21,000 each. Government noted in its own report that there is also a supply chain issue where the higher up are late paying and that then has a trickle down effect. If Peter doesn’t pay Paul then Paul can’t pay Mary.

It is noted too all the wasted time small firms spend chasing money owed rather than earning new money, or getting new business. Or in the worst cases the need for emergency borrowing to pay their bills because they haven’t been paid. Better for Britain to allow small firms to focus on growth, rather than survival. It is about cash flow.

Imagine if a local authority was a day late paying wages there would be uproar and features in the national news, but it is an everyday occurrence for the 4.5 million self-employed. Labour has talked about a definition of who are ‘working people’ and the self-employed population should surely be firmly in the middle of that definition.

Other organisations have lobbied around this area too. So, it was very pleasing to see Labour delivering on its promise when it recently announced the toughest crack down on late payments for a generation.

It includes the features of it include making 60 days the maximum payment term that firms should pay within. I agree this isn’t perfect and personally I’d like to see it fall, but it is a good starting point. (I’ve experienced late payments up to 90 days and it isn’t just annoying but stressful as you start wonder whether you will be paid or not). Often it isn’t from some small firm but from a large client against whom you feel powerless to complain, lest you get no more work.

The last Labour Government introduced the ability to charge interest on late payments, but this was optional, workers could reinvoice with the interest attached, but I’ve never been paid it.

Much to do still but this is a great start

Now, there is too to be the application of mandatory interest on invoices. It is something we have pushed for. As an IT person I would see this as a new compliance feature and expect it to be setup automatically in invoicing software, not a difficult feature to apply.

This is good start, the next step should be to reduce the days down and to add an automatic fine against firms who pay late, just as they do in New York. This is on the cards too.

There is a Small Business Commissioner and this role is also to be strengthen to allow her to intervene and apply fines when she sees patterns of bad payments from data, rather than waiting on a complaint. This again is shifting power to small businesses and the self-employed.

The goal is for the new rules to act as deterrent against late payments (which is the evidence from New York) as it will ensure that persistent late payers can be penalized financially as well as reputationally. It is about holding firms to account. It not easy and not risk free running a small business or being self-employed and while there is often talk of ’economic justice’ as principle, helping small firms, helping individuals who are self-employed, as this is doing is putting that into practice.

So, we should be pleased with these plans, we should note too the applause that this has received from the business community and bodies representing small firms and the self-employed. There is much to do still for our self-employed and small businesses but this is a great start from a pro-business Labour government.

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