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Late payment issues for SMEs highlighted by Parliament enquiry

Debbie Abrahams, MP for Oldham East and Saddleworth, has published recommendations to tackle the issue of late payment to small and medium-sized businesses.

The 11 recommendations are the result of a cross-party parliamentary enquiry, which was convened and chaired by Ms Abrahams.

“A recurring theme in the evidence our panel was given is that, ultimately, the issue is one of leadership.

“Until top CEOs, and their executive board members, make a decision to act ethically in business, and treat our small and medium sized businesses fairly, this problem will persist.”

Dortech Architectural Systems chairman Steve Sutherland, said: “The last 12 months have been the worst in my 45 working years.

“I have watched in disbelief as a tough market has driven major companies’ boards of directors to turn a blind eye to malpractice within their businesses and the resultant destruction of essential supply chain support, skills and entrepreneurialism on which the UK depends.

“This excellent broad based, balanced research, and investigation now provides the basis and opportunity to bring about the critical first steps of change, if Government and the directors of companies have the courage to embrace and implement the recommendations.

“The recommendations and the spirit of the recommendations could be implemented with minimal cost and legislation and reflect a sensible first step to bringing some ethical common sense back to the market.

“I shudder to think what will happen to the UK construction industry and build quality if the proposals in this report are not implemented in the undiluted form presented in this report.”

FSB national policy chairman Mike Cherry, said: “This research clearly highlights the ongoing problems faced by small firms when they are paid late. The Be Fair, Pay on Time campaign has done a good job in getting big businesses to sign up to the prompt payment code but there is still more to be done.

“We have said for some time that the Government and local authorities should include terms in contracts for prompt payment to be passed down the supply chain.

“This report provides a good starting point to open up the discussion on what can be done to make sure small firms are paid promptly for the work they have done.”

Forum of Private Business chief executive officer Phil Orford MBE, said: “The government needs to give serious consideration to refusing any public sector contract to big businesses who don’t pay suppliers in an acceptable time frame. Or indeed only work with those companies who’ve signed the Prompt Payment Code.

“With more than £300b of capital spending announced in the recent spending review, this would have maximum effect at no cost to the government, but really help in the battle against poor payment practices so widespread in the UK economy these days.”

The enquiry panel members were: Mike Crockart, Liberal Democrat MP for Edinburgh West; Alex Cunningham Labour MP for Stockton North; Caroline Dineage, Conservative MP for Gosport; Rt Hon Michael Meacher Labour MP for Oldham West and Royton; Toby Perkins Labour MP for Chesterfield; and Robin Walker Conservative MP for Worcester.