BANKS are to be forced to clear cheques faster under new legislation being announced next month.

Faster cheque clearance is expected to benefit small businesses in the south. They are more likely to suffer cash-flow pressure as a result of lower reserves and late payment by bigger companies.

Under the planned Payment Systems Bill, the time banks are allowed to process cheques is to be cut to under 48 hours.

The new legislation is expected to be announced in the Queen's Speech on November 26.

Stephen Alambritis, the Federation of Small Businesses' head of press and parliamentary affairs, told a Labour conference fringe meeting there was "no reason" for banks to take up to ten days to clear cheques given the technology now available.

Mr Alambritis highlighted the progress being made by the federation, which represents the interests of thousands of members in the south, in lobbying against soaring premiums for the mandatory employers' liability insurance.

"The Association of British Insurers now has a code of conduct that states that all insurers must give a minimum 21 days' notice before the renewal.

The association has also recognised that good health and safety policies held by small businesses are a move towards moderating their premiums."

The meeting at a Bournemouth hotel was organised by the FSB in conjunction with the All-Party Parliamen-tary Small business Group.

Its chairman, Kerry Pollard, said: "There's a case for the FSB and the Forum of Private Business joining forces.

""If there were one voice you would have the same power as Ruth Lea (Institute of Directors) or Digby Jones (Confederation of Small Businesses)," he added.