Speaking in the House of Commons chamber last week, Bexhill and Battle MP, Huw Merriman, raised the issue of large firms failing to pay smaller companies and putting them at risk of going out of business.
Appealing to the Minister of State from the Department of Business, Innovation and Skills to take action, Huw said “According to the Federation of Small Businesses, half of firms were paid late in the last year.”
Huw added further “What progress has the Minister made to ensure large firms to not take advantage of small businesses in their supply chains and risk their livelihoods by continuing to pay them late?” Responding to Huw’s appeal, the Minister, the Rt Hon Anna Soubry responded “I take a firm view that it is absolutely scandalous when people do not honour the terms and conditions of their contract and pay late. That is not acceptable, particularly in the modern world. I hear terrible stories about supermarkets; one can only imagine what would happen if someone went shopping on a Saturday and then said at the checkout, “I think I’ll settle my bill in about 120 days.” Obviously they would be told that it was not acceptable, and it is not acceptable for large businesses to treat smaller businesses in that way. That is why we take the problem so seriously.”
Speaking after the debate, Huw said “Our constituency has so many small firms and it cannot be right that larger companies in the supply chain expect to be paid or delivered on time whereas small firms are increasingly delayed in payment and may not have the cash-flow to withstand the delay. I wanted to highlight this issue in Parliament and I am delighted that the Government have pledged to tackle this issue and I look forward to continuing to work with our local Federation of Small Business to monitor improvements for our local firms.”
Speaking locally, Doug Thorogood, Chairman of the local FSB 1066 Country branch, which has around 1,000 business members, said:
“In a national survey of our members, 1 in 3 (33%) said the new Government should tackle the scandal of late payments to small firms. It is very difficult for a small firm to ‘whistleblow’ on poor practice as this may jeopardise the firm’s future – small business needs Government help to see fair play. Including a prompt payment code in contracts should be a legal imperative and large companies and public bodies should also be under legal obligation to monitor and report upon their payment performance against the standard. Small business productivity grew by 1.4% year-on-year in Q4 2014, at a time when the increase across the UK was 0.3%, so Government measures must back small business to keep on track with economic recovery”.