Business groups in the North East have welcomed commitments from new business minister Sajid Javid on tackling unfair payment practices and so-called ‘supply chain bullying’.
During a visit to an enterprise hub run by the University of Bristol, Mr Javid set out his priorities for supporting Britain’s small businesses, saying that late payment cost British business £19bn in 2008 but that figure was set to grow to more than £40bn this year.
The Journal has been raising the problems caused by late payments through our Pay Fair campaign, run in association with the North East Institute of Business Ethics.
Mr Javid said: “During the last Parliament, we introduced legislation requiring the UK’s largest companies to report on their payment practices.
“That’s going to shine a light on poor performance when it comes into effect next April. Recent U-turns show that public scrutiny can make big firms mend their ways.”
The Government had also strengthened the Prompt Payment Code to introduce a maximum of 60=day payment terms while promoting 30 days as the norm - an area in which it was leading by example - and was now going to widen the powers for representative bodies to act on behalf of their members to challenge unfair payment terms.
It would also fulfil the manifesto pledge to set up a Small Business Conciliation Service to help SMEs settle their problems with large corporations.
“There’s a situation familiar to small business owners up and down the country,” Mr Javid said.
“A letter turns up from a larger customer changing payment terms or charging them to remain a supplier and in some cases even deducting that charge on the spot against payment owed.
“This pattern of behaviour is an outrage. It’s bullying – pure and simple.”
Through the Pay Fair campaign, The Journal is encouraging North East companies to sign the Business Ethics Pledge created by the North East Institute of Business Ethics at http://www.nibe.org.uk/
NIBE co-founder the Reverend Glyn Evans said: “It’s great to see Sajid Javid listening to concerns of business about paying fairly and on time.
“The North East through the Journal and NIBE has led a hugely successful campaign to get businesses to Pay Fair.
“We have spoken to Government about this over the past year.
“This is about a culture we want to see in the North East which makes us stand out as a great place to do business.
“We want to see a change in attitude and agree that more regulation is not always the answer. It has been fantastic that together in our region we have influenced central government to take notice of concerns over this issue.”
The Federation of Master Builders (FMB) also gave a cautious welcome to the speech, with chief executive Brian Berry commenting: “Late payment has plagued the construction industry for far too long and I am therefore pleased that the new Business Secretary will be bringing forward legislation to tackle the problem in next week’s Queen’s Speech.
“Late payment by larger firms is a major barrier to small and micro firms forming part of the supply chain for public sector contracts – if we can solve the problem of late payment, we will also open up public sector construction to thousands of construction SMEs.”