One of my biggest bug-bears is the excessive time large companies are taking to pay small companies. Their long payment practices make it very difficult for small companies to compete and can have a devastating effect on their cashflow
So I’ve been digging into the detail of the full speech to see what they’ve got in store for small businesses this parliament and what if anything they’re going to do about it.
But first, some quick stats on the economy:
Growth rate
The UK was the fastest growing major economy last year with growth of 2.8%. This is the fastest growth since 2006, and this year they’re forecasting 2.5%.
Employment and productivity
Our employment rate is at a record high, which I know a lot of companies are experiencing as a real skills shortage. Wages are finally rising above inflation at 1.9% which is good news for individuals but not so good for business. The long standing issue of poor UK productivity is one of the government’s main challenges for the next 5 years –simply put, we could be getting more output with the workforce we have, and that’s the major factor holding back the economy. A significant part of this plan is the City Devolution Bill that’s being introduced to give more local control to cities with elected mayors.
Onto the Enterprise Bill
They say the main point of this bill is to “cement the UK’s position as the best place in Europe to start and grow a business and create jobs, by cutting red tape and making it quicker and easier to resolve disputes”
What this means is:
- Continuing to cut the red tape that holds small companies back. Has anyone seen any evidence of this in the last year?
- They’re creating a “Small Business Conciliation Service” to help resolve business-to-business disputes, especially regarding late payment. This will help small businesses take action without having to go to court.
- Improving the business rates system ahead of the 2017 revaluation and modernising the appeals system. Don’t know about you but I can’t see the immediate benefit – can you? And I’m pretty sure they were promising to reduce rates for very small businesses, particularly retailers, but I don’t see any mention of this.
- “Other measures” to strengthen UK competitiveness and back businesses to create jobs. Hmmm,that’s good and specific!Tax Bill
I’m sure you’ll remember during the election all the talk about a commitment to not raise taxes in the next 5 years. Well they’re planning to bring in legislation that will make sure there are no rises in income tax, VAT or national insurance
I have to say I’m disappointed there’s not more about the late payment issue. I get that they can’t force companies to pay earlier, but we do need a culture change, where large companies understand their social responsibility in just how they’re affecting the majority business population. And to realise the damage they can inflict on a small company who are already jumping through hoops for the privilege of doing business with them.
Sajiv Javid, the Secretary of State for Business, Innovation & Skills has been vocal lately about wanting to help small companies and particularly with this issue of late payment so I remain hopeful he’ll find ways to chip away at this problem.
Obviously I’ll keep you posted on when they launch the conciliation service and we know how it’s working. I’m trying to keep my inner cynic in check, but I imagine it will ironically be a red tape exercise and take far too long!
If you fancy reading the whole speech to see what other bills are proposed (not just the ones that hit the headlines) it makes pretty fascinating reading – you can read the full speech here