Javid takes up the cause of late payment to small businesses
26th May 2015

The Government’s new Business Secretary Sajid Javid has stepped in to defend small businesses against the ‘outrageous bullying’ of late payment by powerful large companies.

His comments received a ‘cautious welcome’ from the Federation of Master builders after he pledged to bring forward legislation to tackle the problem in the Queen’s Speech at tomorrow’s opening of Parliament.

Speaking last week, Javid said the practice of late payment was an ‘outrage. He repeated his party’s manifesto promise to set up a Small Business Conciliation Service to help small firms to settle their problems with big corporations and continued: “Now, we are going to widen the powers of representative bodies to act on behalf of their members to challenge grossly unfair payment terms.”

He echoed the figure from the Federation of Small Businesses (The Glazine last week) that late payments are set to cost British businesses over £40billion this year, adding that the average amount owed to a small business is over £30,000:

“This pattern of behaviour is an outrage, it is bullying, pure and simple,” he went on, “It’s enough to force a company into insolvency.”

Brian Berry, Chief Executive of the FMB, said: "I am pleased that the new Business Secretary will be bringing forward legislation to tackle the problem.

“The last government made some small steps in the right direction in terms of late payment. However, there is much more to do. At the end of last year the FMB and NSCC published research which showed that more than 90% of small construction firms agree contractual payment terms with their clients of 45 days or fewer but only 57% of members actually receive payment within those terms.”

Berry concluded: “Javid has also touted the idea of widening the powers for representative bodies to act on behalf of their members to challenge grossly unfair payment terms. We eagerly await further details on this as it is often difficult for small firms to highlight poor payment terms directly without biting off the hand that feeds. This is partly why the problem has raged on for so many years.”

www.fmb.org.uk

Sajid Javid’s full speech: click here