View from City Road: Labour's perverse policy ideas

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It wasn't just the bits about clamping down on dividends and takeovers, nor even the bizarre notion of Robin Cook finding himself toasted in BT's boardroom which made the jumbled assortment of half-baked ideas revealed yesterday by Labour's trade spokesman so depressing.

It was the way the party seems so perversely determined to lose the City friends it has wooed - with some success - in recent years.

It is hard to imagine that the Financial Times will repeat its last exhortation to its readers to vote Labour if the tired and failed policies contained in this manifesto form part of its platform. Mr Cook is absolutely right about one thing, however - though for that matter, so too is Paddy Ashdown. As both he and the Liberal Democrat leader concur, the arguments in favour of making interest on overdue debts compulsory are overwhelming.

Late payment is one of the biggest and most intractable problems for small and medium-sized companies. At any one time the average company is owed more than pounds 145,000. The Government's response - a 'British Standard' with any legislation postponed for at least two years to see if things improve - is self-serving weakness in the face of powerful interest groups.

The Department of Trade and Industry argues legislation would lead to bureaucracy and wasteful litigation. But merely the threat of having to pay interest would probably be enough to make big companies clean up their act.

Its stance is also myopic. Big UK corporations compare favourably with competitors on the Continent. But the small- and medium-sized company sector, essential for future growth, is much weaker than in countries such as Germany. The best tonic the Government could give it would be action on this issue.