FSB in the North East welcomes Government reforms on payment practices

New rules will ensure 30 day payment terms filter down supply chain and that public bodies are held to account for late payment

FSB North East regional chairman Ted Salmon
FSB North East regional chairman Ted Salmon

The Federation of Small Businesses in the North East has welcomed Government reforms that will open up public contracts to more SMEs, while ensuring they are paid promptly for their work.

In the midst of The Journal’s Pay Fair campaign, Cabinet Office Minister Francis Maude has outlined a raft of measures designed to boost the cashflow of small and medium-sized companies working within the public sector.

The new legislation, which has now come into force, ensures:

* 30 day payment terms will be mandated down the supply chain to help both suppliers and sub-contractors;

* public bodies must publish an annual late payment report to sharpen accountability;

* the bidding process will be simplified across the public sector with complex forms abolished for low value contracts; and

* the procurement process for public sector contracts will be accelerated.

Ted Salmon, FSB North East regional chairman, said: “Our members will welcome the proposals announced today, which should help more win more business with the public sector.

“We know that increasing the spend with small businesses means that 60p in every pound stays in the local community which in turn creates jobs and boosts investment.

“It is therefore crucial that the public sector in the North East leads the way in implementing these reforms.”

Mr Salmon said that, for too many FSB members, the real challenge was not winning work but getting paid on time.

“We have seen the cost of late payment and the time taken to pay consistently increase,” he said.

“It is vital that the public sector and some of the larger suppliers pay small businesses promptly to help ease cashflow problems which holds back investment and job creation.

“We will continue to push for the public sector across the North East to help more small businesses win contracts. These reforms are an important step in the right direction.”

In 2013/14, central Government spent an unprecedented £11.4bn with SMEs - or 26.1% of overall Government spend, exceeding a long-term goal of 25% set in 2010.

Around 10.3% of the money was spent directly with the companies and 15.8% indirectly.

Mr Maude said: “As part of our long-term economic plan this Government is overhauling public procurement to open things up to businesses of all sizes.

“I am so pleased that our reforms have ensured that innovative SMEs benefited from £11.4bn of business last year alone.

“Over a quarter of central Government spend now goes to SMEs but we know there’s much more to do to support small businesses in the North East, and these new reforms show just how determined we are to finish the job.”

Through the Pay Fair campaign, The Journal is encouraging North East companies of all sizes to take a responsible and ethical approach to paying firms within their supply chain.

We are asking firms to sign the Business Ethics Pledge created by the North East Institute of Business Ethics, thereby agreeing to join with others to discuss the value of business ethics and to work with each other to transform their working environments for the better.

For more information, see http://www.nibe.org.uk/

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