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Labour launches biggest small business shake-up in a generation

The Labour government has unveiled its Small Business Plan, promising the most significant reforms in 25 years to tackle late payments and boost access to finance for small firms across the UK.

Late payments currently cost the economy £11 billion a year and are blamed for forcing 38 businesses to close every day. Under the new measures, large companies that repeatedly delay paying their suppliers will face stricter payment deadlines, fines, and greater public scrutiny of their practices.

The Prime Minister said: “It’s unfair, it’s exhausting, and it’s holding Britain back. So our message is clear: It’s time to pay up.”

£4 billion finance boost

The plan also introduces a £4 billion package of financial support to help small firms invest and grow. This includes:

  • £1 billion for 69,000 Start-Up Loans, alongside mentoring, to encourage a new generation of entrepreneurs.

  • £3 billion for the British Business Bank, raising its lending capacity to £5 billion to expand the ENABLE programme, which helps lenders offer more affordable loans to small and newer businesses.

The government says these measures will break down long-standing barriers that have made it harder for small firms to access funding, ensuring loans are more accessible, affordable and fair.

Wider reforms for small business

The Small Business Plan builds on recent government action designed to create the conditions for firms to thrive, including:

  • Cutting red tape for the hospitality and arts sector through new licensing reforms.

  • High Street Rental Auctions to bring vacant premises back into use.

  • A revamped Board of Trade to support SME exports.

  • The new Business Growth Service to give small firms direct access to advice and support.

  • A commitment to permanently lower business rates multipliers for retail, hospitality and leisure.

“Backing business to the hilt”

Ministers said the package represents the most comprehensive support for small business in a generation and will give firms the tools they need to grow.

From shopkeepers and tradespeople to family-run firms and start-ups, the government argues this plan will provide stability, confidence and the financial backing required to help Britain’s small businesses succeed.