Stephen Metcalfe, MP for South Basildon and East Thurrock, opened a debate in the House of Commons on the issue of late payment to small and medium sized enterprises (SMEs).
Receiving wide cross party support, the debate examined how to use the Prompt Payment Code to end the late payment culture that has come to dominate both the public and private sector at the expense of SMEs up and down the country.
Mr Metcalfe spoke passionately, stating that better use of the Code would help to stimulate growth and end the tyranny of late payment. He also made a number of suggestions to the Minister from the Department for Business Innovation and Skills about how best to help SMEs flagging under the burden of late payment.
Mr Metcalfe commented: “Late payment is an endemic problem in both the public and private sector. As it stands, outstanding debts to this country’s SMEs have reached a record high of £35.3 billion. This is an increase of almost £2 billion from the last reported figure 6 months ago.”
“This has got to change - not only for the benefit of the SMEs in question, but for our economy as a whole.”
In response to the debate, The Rt Hon David Willets MP stated that all Government departments have included a clause in their contracts that requires main contractors to pay their suppliers within 30 days and he expressed the Government’s commitment to ensuring that the Prompt Payment Code is adopted by as many businesses as possible.
The Government has also made the decision to name all FTSE 250 companies who do not sign up to the Code.
Phillip King, Chief Executive of the Institute of Credit Management says that the Government could go further, making it compulsory for any firm tendering from public sector contracts to be a signatory of the Code.
He commented: “It is wholly right for the Business Minister to put his weight behind the Code, but this message would be even more convincing if he was to make signing the Code - and clearly demonstrating best practice in fair payment - a pre-requisite for any Government work. Public money should not be going to those firms whose payment practices stifle economic growth.”
Mr Metcalfe added: “This is not just a commercial problem. It is an ethical one. SMEs are the backbone of our economy and we must make it clear to big businesses and to public sector bodies that it is simply not acceptable to pay suppliers outside of the agreed terms. I welcome the Government’s commitment to tackle the issue but as I said in the debate, we must have a system in which the reality matches the rhetoric and I will work hard to promote this message.”
