Labour's latest document on industrial policy, Going for Growth, was
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launched last month by industry spokesman Derek Fatchett MP. It details what Labour will do to help business if it wins power.
Business Development Bank
Top of the agenda is the establishment of a Business Development Bank for Small Business. It will be designed to remove small business's reliance on bank overdrafts which invariably demand property as security. Instead the new bank will seek out "private sector management to mobilise private finance for an investment fund" for the provision of medium and long-term capital. The bank will be profit making and will aim to force the clearing banks to introduce similar loan terms of their own.
The Labour booklet mentions continental examples of mutual guarantee schemes—which Labour plans to copy—where local businesses in a market sector collectively borrow from the banks, spreading the risk for banks and redressing the balance of power between banks and their customers.
Reforming the tax system
The tax system is another target for Labour, which believes the current system fails to encourage business owners to reinvest—they are currently taxed equally on profits whether they draw on them or retain the money for investment.
Rescuing the drowning
Insolvency and liquidation are problems for many businesses; it is well known that Customs and Excise and the Inland Revenue are prepared to pull the plug to recoup money they are owned. Labour wants to introduce a code of practice that will require these agencies to help keep businesses afloat. Labour notes that insolvency petitions sometimes serve to amplify the cost: outstanding tax is lost, there is bad debt relief to creditors as well as the cost of statutory redundancy payments to employees.
Another anti-insolvency provision would offer insolvent companies court protection similar to "Chapter 11" protection offered to businesses in the US. This seems similar to the Government's legislation earlier this year.
University for Industry
Employment and management skills will be targeted. Training and Education Centres (TECs) will be asked to offer courses in management skills which would be provided on-site and in manageable blocks of time. To encourage businesses to take advantage of TEC training, the new Business Development Bank would require firms to show that they are competent in management skills, or are committed to acquiring such knowledge. Labour also plans to undertake a national skills audit to find out which skills are over catered for— or are missing. Corrective measures would be taken through a new University for Industry, run along similar lines to the Open University.
Interest on bad debts
Labour would seek to tackle late payment of debts, which is estimated at over £50bn. Codes of conduct and registers of late payers would be compiled. Labour wants BS5750 to include acceptance of a code of practice on late payment; a Labour Government would also force the National Audit Office to report to the Public Accounts Committee on public agencies that do not pay in 30 days. Labour would introduce a statutory right to interest on late payment.
Other areas for Labour's attention include a greater use and review of the law allowing the banning of rogue directors; and more sport for exporters through n between TECs, and the DTI.