Small and medium sized businesses in the North East are expected to wait up to six months for larger firms to pay for goods and services, putting them at considerable risk, and Stockton North’s Labour Member of Parliament has stepped up his work to make sure they are treated fairly and given opportunities to thrive.
Alex Cunningham has previously challenged Business Secretary Vince Cable over the continued failure to stimulate business growth across the Tees Valley and the wider North East region.
And during questions on the floor of the House of Commons to the Department for Business, Innovation and Skills, Alex again pressed the Government on the matter, this time raising the case for businesses to have rights that are more aligned to those of consumers when buying goods and services.
After recently meeting with the North East Federation of Small Businesses in his constituency, Alex raised the problems SMEs are facing in getting larger organisations to pay for goods and services, citing the example of Procter & Gamble who, he was told, now have payment terms of 180 days.
With the prompt payment code lacking the bite to enforce payment time frames, and companies demonstrating a tendency to simply extend their terms in order to comply, Alex asked:
“Is it not time for the Government to intervene to put an end to these disgraceful delays and give small organisations a better chance of survival?”
In response, the Department gave details of a short consultation that ran until January 2014 on building a responsible payment culture and sought views on what unfair payment terms look like and legislative or non-legislative measures to tackle them.
“While it is positive that the Government is at last recognising the serious obstacles SMEs are facing in securing timely payments from large companies, action needs to be taken quickly to ensure that smaller businesses are not left footing the bill. It cannot be right that local businesses are being left in the lurch for as long as six months, and I have serious concerns that these unfavourable terms and conditions are unfairly jeopardising the ability of local companies to trade sustainably.
“I look forward to hearing the Government’s response to the consultation, and would hope to see meaningful actions to correct this indefensible imbalance of power to ensure that SMEs – the real wealth creators within our economy – no longer face an uphill struggle to a fair and level playing field.”