Late payments hits businesses

Most people work in small and medium-sized enterprises (SMEs), which are the backbone of the economy.

Yet one of the main drag anchors for SMEs is late payment of their bills not least by state bodies.

After a meeting with the Federation of Small Businesses in North Tyneside, I secured a Commons debate last week to highlight this problem.

Last year, councils spent £57bn on buying goods and services from such concerns. The problem of late payments is big and growing.

From £18bn in 2008 they have now soared to £46bn. Nearly two-thirds of SMEs face late payments and one quarter fear that this could bankrupt them if the debt exceeds £50,000.

But the average debt is already £38,000.

The Commons Select Committee, of which I am a member, recognises that councils have prompt payment policies but this doesn’t trickle down to sub-contractors who need to be pushed into paying up.

We need SMEs to focus on surviving and growing not chasing payments from bodies that should cough up more quickly so businesses and the community can prosper.

The minister acknowledged the importance of the issue. He said that some councils, including North Tyneside, have introduced policies that streamline the process and cut late payments.

I hope that my Commons debate will help improve the position of small businesses.