Last week I convened a cross party inquiry to investigate the issue of late payments from the point of view of business organisations, academics, FTSE companies and, perhaps most importantly, SMEs themselves.
The standard of the testimony from our witnesses at the inquiry was excellent and really gave our cross-party panel of MPs a clear, and sometimes emotional, picture of the scale of the late payments problem.
Unfortunately the evidence only seemed to confirm for me that rather than viewing fair payment terms as part of their corporate social responsibility (CSR) many large companies are deliberately paying late or extending their pre-agreed payment terms simply because they have the power to do so.
Having said that both HSBC and Barclays did present the inquiry with robust verbal testimony that they take the welfare of SMEs very seriously and said they would look again at the how they monitor payments right the way down their supply chain.
I would also like to pay tribute to the SME owners who were brave enough to talk publically about the problems they have encountered. Although all business sectors are affected by this issue they really did paint a very stark picture of the practices that seem common place in the construction industry.
We owe it to our SMEs and entrepreneurs to treat them fairly. We can’t, on the one hand, say it’s them who’ll get us out of this recession but then, on the other hand, stand by and do nothing to protect them from larger, more powerful companies who misuse their power.
Click here to see some of the media coverage of the inquiry and if you want to support the campaign please click the ‘like’ button too: https://www.facebook.com/pages/Be-Fair-Pay-on-Time/184627438258581#!/pages/Be-Fair-Pay-on-Time/184627438258581
During the inquiry the panel was shocked to hear from one construction industry expert that many sub-contractors are so starved of cash that they are cutting corners in their work creating a legacy of ‘sick buildings’ that will result in ‘deaths’.
Another SME contributor told us how main contractors had withheld payments totalling £1.2m sending his company, which he had built up over 25 years, into administration. In an emotional presentation he compared the practice of late payment as ‘organised crime’ saying he was ‘hung out to dry’.
The Inquiry aims to consider the issues associated with late payments to small businesses, including the macroeconomic effects, the current tools being used to address late payments and additional measures that could be introduced. Recommendations to address the issues identified will be published in the summer.
The contributors were:
Business and economic informants:
Ann Pettifor (Director of Policy Research in Macroeconomics)
Barry Ashmore (Founder of StreetwiseSubbie.com)
Philippa Foster Back (Director, The Institute of Business Ethics)
Michael Cherry ( National Policy Chairman, FSB)
Alex Jackman (Head of Policy, FPB)
Steve Sutherland (Chairman, Dortech)
Steve Paul (Managing Director, SDP Floor Screeds Ltd)
John Hackett (Chief Operating Officer, HSBC UK)
Paul Delaney (Group Treasurer, WPP)
Kevin Craven (Managing Director, Services Division, Balfour Beatty)
Sue Heyes (Managing Director, Business Banking, Barclays)