Speaking about late payment at Demos think-tank event

Fringe - demos - self employment 4I was a panellist in a Demos’ think-tank event ‘Going it alone: Is self-employment the future of work?’ speaking up for the self-employed and small businesses who struggle with the effects of late payments.

The panel discussion, at the recent Labour Party Conference in Manchester, followed on from the current Demos and IPSE project – Going it Alone which investigates the social, economic and political implications of the growth of self-employment.

The Demos’ ‘Going it Alone’ project is important as there are now 4.6 million people who are self-employed, a 40-year high. Of the 1.1million new jobs since 2008, 732,000 are in self-employment.

Being self-employed can have many personal benefits and flexibilities, but analysis of national data indicates that this increase is down to fewer people leaving self-employment because there are fewer jobs for them to move into.

Although there are positives to being self-employed there is also a downside. The hours can be very long until you have an established client-base, average incomes are down £2000 pa since 2008 and earnings are approximately half of average employee incomes. The self-employed are being particularly affected by the cost of living crisis.

One of the main problems for small businesses including the self-employed, as many constituents have told me in Oldham and Saddleworth, is the issue of late payment and how this can slow the growth of, and even destroy, a business.

One of the points I made in the Demos session was that the UK is different from Europe and the US in that it is socially acceptable to pay sub-contractors late here.

If we are going to change this we have to show that paying late or finding ways to pay late, such as extending pre-agreed payment terms, is as unacceptable as tax evasion.

Late payment reflects the culture of a company and, ultimately, this is down to the company’s leadership.

The government’s Small Business, Enterprise and Employment Bill does not address the cultural issue that underpins and drives late payment and we need to make sure that it does. I will be tabling amendments to address this and other issues as the Bill proceeds through the House.

I also talked about the need to harmonise taxation rules for the self-employed, for business rates to recognise the self-employed and for an infra-structure which supports self-employed start- ups.

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