TONY BLAIR will seek to develop Labour's business-friendly image by including a measure to increase protection for small firms in tomorrow's Queen's Speech.
Under the proposed legislation, large businesses will be forced to pay interest if they delay settling invoices sent by small organisations.
They will also be required to declare in their annual report how many times they have paid other firms late. The Government will then be able to draw up a "black list" of the worst offenders.
The Fair Payment of Commercial Debt Bill, one of 22 measures in the Queen's Speech, fulfils a commitment in Labour's manifesto. Its inclusion in the first legislative programme shows that Mr Blair intends to put his relationship with Britain's 3.5 million small businesses at the top of his agenda.
A Downing Street spokesman said: "Mr Blair has taken a personal interest in this particular debate because he has been made aware of the problem caused by late payment. He is determined to act straight away."
Late payment is estimated to cost firms at least £2 billion a year. There is about £20 billion owed at any time. In a Confederation of British Industry survey last year, 19 per cent of firms said that their livelihood had been threatened by late payment.
Dave Harrop, a spokesman for the Forum of Private Business, said late payment was devastating to small firms. Their overdrafts could be wiped out if large firms paid on time, he added.
"There is a lot less apprehension among business now than five years ago. [Labour] understands a lot better the contribution of small business," he added.
Lauren Read, a senior policy adviser at the CBI, was cautious. "When we took these arguments to our small business membership they were against legislation . . . It would not necessarily help the companies it is meant to be helping. Small businesses get squeezed between customers and suppliers."
