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Late Payment

Volume 612: debated on Tuesday 28 June 2016

I am implementing a package of measures to support a cultural change to tackle late payment, including the small business commissioner, the duty for large businesses to report on payment practices, and support for the voluntary prompt payment code.

I thank the Secretary of State for his answer and welcome his work in this area. In addition to late payment, there is the issue of lengthy-term payment. For example, an SME in my constituency is negotiating with a multinational company, which presents an excellent opportunity. However, the terms and conditions of the proposed payment schedule would mean a 98-day wait for payment on a £3 million project, which is something of a disincentive and, indeed, a risk. I recognise and welcome the fact that the market is opening up to SMEs, but does my right hon. Friend agree that we need to keep working to inspire a more level playing field across all aspects of business practice if SMEs are truly to compete?

I absolutely agree with my hon. Friend. The reporting requirements that I mentioned will give small businesses the information that they need to make more informed decisions, to negotiate fairer terms and to encourage other companies to improve payment practices. We take this very seriously in the Department and we are determined to change this kind of bad practice.

But one of the worst performers regarding late payments to small and medium-sized enterprises is the public sector. What is the Secretary of State doing to ensure that Government Departments, agencies and local government promptly pay the small businesses that they use?

The hon. Gentleman will be pleased to hear that while that was the case back in 2010, when payment practices throughout the public sector were appalling, there has been a significant improvement throughout central Government and beyond since then. At my Department, for example, we take great pride in paying almost all invoices within seven days.

As the Secretary of State knows, we welcome the move to set up a small business commissioner to help with late payment, but the proposals are modest. Will he assure the many small businesses that will be dramatically affected by any downturn resulting from Brexit that he will put additional support for them in the supply chain to deal with the consequences of any of their customers delaying payment to deal with the problems of Brexit?

I assure the hon. Gentleman that the proposals are not modest. The small business commissioner will have significant powers and the ability to help, including by providing general advice and direct services for the smallest of businesses. The commissioner will also be able to consider complaints and to take super-complaints from trade bodies.