SMALL business owners are “sick to death” of being called “the backbone of the economy” and the government’s late payment crackdown won’t work, they warn.
This comes as the Small Business Protections Bill will today be introduced to Parliament to give stronger new powers for the Small Business Commissioner to investigate, adjudicate disputes and fine persistent late payers with potential penalties worth tens of millions.
There will also be a new 60-day cap on payment terms for large firms, mandatory interest on late payments, and action to ban the practice of retentions in construction.
Prime Minister Keir Starmer, while announcing the crackdown, triggered small business owners with the phrase he used.
He said: “Small businesses are the backbone of our economy – run by people who take risks, create jobs and keep communities going. This government is firmly on their side. Too many small business owners are spending hours chasing money they are owed and when payments don’t come through, the cost is personal.
“It’s about whether you can pay your staff, keep the lights on, or invest in your future. Today we’re changing that with the toughest action on late payments in a generation, so small businesses get paid on time and get the backing they need to grow, create jobs and serve their communities.”
Politicians trash us by starving cash-flow
Oli Garnett, Co-Founder at Bristol-based Something Familiar, said small businesses are all struggling.
He added: “‘Small businesses are the backbone of the economy’ is one of those phrases politicians wheel out right before making life even harder for them. At this point the backbone’s slipped a disc. Most small business owners I know are carrying rising costs, late payments, tax hikes, and the financial hangover of generations before them who could buy a house for the price of a Freddo.
“Millennials are trying to run companies while simultaneously inheriting broken pensions, impossible property markets and parents asking how to reset the Wi-Fi. Calling us the ‘backbone’ is lovely, but it would be even nicer if the economy stopped treating that backbone like it’s in a demolition derby.”
He continued: “Small businesses hearing promises about ‘cracking down on late payments’ is a bit like watching a burglar announce he’s launching a neighbourhood watch scheme. We’ve all heard this before. Half the UK economy runs on giant companies treating 30-day invoices like vague creative writing prompts.
“Meanwhile small business owners are sat refreshing banking apps like day traders, wondering if they can pay freelancers before EDF repossesses the office kettle. The bill sounds promising, but forgive us for not popping champagne until we see an actual corporate finance team panic for once. Right now ‘net 60’ usually means ‘we’ll pay you whenever Mercury exits retrograde’.”
Adam Stiles, Managing Director at London-based Helix Financial Partners, said the government is anti-business.
He added: “It’s weird being referred to as ‘the backbone of the economy’ when the government (aka Business Prevention Unit) is taking the tax equivalent of a cricket bat to it. I have never known any government more anti-business in my lifetime.”
He continued: “The people taking risks and creating jobs are being taxed to death. A plethora of industries in decline. No incentive for anyone to work hard or take said risks. The Prime Minister could well be talking about HMRC than non-payers.”
The government is taking the tax equivalent of a cricket bat to the economy
Paul Denley, CEO at London-based Oakham Wealth Management, said the UK is “developing chronic back pain”.
He added: “The phrase ‘backbone of the economy’ is becoming politically dangerous precisely because it is true. Small businesses account for 99.9% of UK businesses, employ around 60% of the private sector workforce and generate roughly half of private sector turnover. They genuinely are the backbone of the economy.
“The problem is that Britain increasingly seems to be developing chronic back pain: overloading small businesses with tax, regulation, rising costs and administrative burdens while placing the weight of economic growth disproportionately on their shoulders.
“The frustration is not the phrase itself, but the gap between rhetoric and reality. If governments genuinely want to address Britain’s productivity and growth challenge, SMEs need radical structural advantages, not just sympathetic slogans: tax simplification, investment incentives, late payment reform and easier access to growth capital.
“Economic growth follows when you create conditions where smaller, ambitious businesses can scale faster, hire more and take risks with confidence. Britain does not lack entrepreneurial talent. Too often it lacks an environment that rewards it.”
Tony Robinson OBE, at Be More Happipreneur, said politicians use the phrase without helping small businesses.
He added: “I’m not only sick to death of the ‘backbone’ phrase, but I’ve spent over 30 years campaigning against the lying politicians who use it.
“Politicians trash us by starving cash-flow, allowing unfair payment terms, killing indie high street businesses, through crazy-high, unavoidable business and employment costs, and costs including lost time from regulatory compliance. There have been 22 years of consistent government discrimination against startups, self-employed people, and micro-business owners.”
He continued: “There has never been a desire by the Government to stop 45-120 days unfair payment terms, even during Covid. This is the major cause of the horrendous cash-flow logjam, which forces us to accept ‘pay when paid’ from our clients and customers. Most self-employed people and micro-business owners want to pay other indie businesses within 14 days.
“We were never in favour of legislation as the biggest and most exploitative companies always find loopholes or choose to settle when caught, for example in data protection, taxation, employment law, labelling, privacy, and environmental law. We asked for 30 years for the government to influence a pay in 30 days or less culture by not working with any company of any size which does not.”
At this point the backbone’s slipped a disc
Sam Kirk, Managing Director at Retford-based J-Flex Rubber Products, said politicians do not understand the meaning of the phrase.
He added: “If small businesses are the backbone of the economy, it’s because small business owners take the risks nobody else will. We sign the guarantees. We carry the stress. We lie awake at 3am worrying about cash flow, wages, survival etc.
“The phrase itself is used far too casually in Westminster by people who have never experienced the reality of running a business, and frankly, I’m fed up of hearing it.”
Scott Gallacher, Director at Leicester-based Rowley Turton, said small business owners are struggling so much that they cannot even hire staff.
He added: “It’s not really the phrase itself I take issue with, it’s the increasing pressure many small businesses are under. Rising regulation, higher taxes and increasing employment costs all make it harder for smaller firms to invest, recruit and grow, despite the important role they play in the economy and local communities.
“Many owners feel there is plenty of rhetoric about supporting small businesses, but less focus on creating a stable long-term environment that genuinely encourages entrepreneurship and investment. Ultimately, most small business owners simply want the confidence to keep employing people, serving clients and planning for the future.”
That backbone is carrying an ever increasing burden
Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers, criticised Keir Starmer.
He added: “A man without a backbone, complimenting ours. Small businesses are the backbone of the country, but that backbone is carrying an ever increasing burden. It baffles me that the Prime Minister can praise small businesses, whilst doing absolutely nothing to help and support them.
“Unemployment figures are up today and job vacancies are lower than ever. This government is stifling small businesses and making employing people expensive and unattractive.”
Kate Allen, Owner at Kingsbridge-based Finest Stays, asked for more support from the government.
She added: “Perhaps we need a refresh. Maybe small businesses are the nervous system of the economy because they react quickly and feel every shock first.
“Running a small business can be pretty nerve-wracking at the best of times, and many owners would say even more so in the current political and economic climate, where every announcement seems to arrive with a fresh opportunity to test our blood pressure.”
Photo by Tim Mossholder on Unsplash.
