Prompt Payment Code

Debate between Alex Cunningham and Mark Tami

Thursday 8th November 2012 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

I, too, congratulate the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), and other colleagues, on securing this debate.

Listening to today’s debate, one cannot fail to be left with the impression that small and medium-sized businesses across the UK are suffering as a result of late payments. In the current economic crisis, that is totally unacceptable. Late payment can cause cash-flow problems, as smaller firms struggle to absorb the impact of late bills, and has the practical effect of making small firms bankroll larger ones. We are reliant on the SME sector thriving, but the current state of affairs threatens to hold back companies that could otherwise be creating jobs and helping our economy to recover.

[Mark Tami (Alyn and Deeside) (Lab)]

Does my hon. Friend agree that a particular problem for smaller companies is that the Inland Revenue does not allow them time to pay, even though they can demonstrate that they are owed sizable sums of money, before moving against them? Some companies are forced out of business by such action.

[Alex Cunningham]

That is very much the case: there are plenty of examples in the newspapers of companies going to the wall because they owe the taxman money. Even though somebody else might owe them 10 times as much, they still have to face up to that problem.

From my experience of owning a business before entering this place, I know how difficult it can be for small businesses when clients fail to pay up in reasonable time. Large organisations would have 30, 60 or even 90-day payment periods, and although most kept to their terms, that did not help my cash flow. The nature of my business required me to buy and pay for published materials, printed for my clients, who could then take months to pay me. Sometimes I could be owed as much as £5,000 by one client, or about 3% of my annual turnover. I seemed to spend countless hours chasing cash and monitoring my cash flow, when I should have been working for clients and trying to expand my business. Local businesses on Teesside tell me that they face the same challenges. They just cannot get people to pay up. It never ceases to amaze me that it is the bigger companies that take much longer to pay, with many doing so only after delaying tactics and countless promises that the elusive cheque is in the post.

The statistics are troubling: according to the latest BACS figures, more than 1 million SMEs are currently affected by late payment, and the average amount owed to each SME has reached £36,000. Debts to my former business never reached that level, but as much as £15,000 might be owed at any one time, much of it for up to two months. According to BACS, Britain’s small businesses spend 110 million hours a year chasing late payments, at a cost of £683 million. It is amazing to think of the other ways in which that money could be invested. The average small firm spends more than 13 working days a year chasing late payments. Research by the Federation of Small Businesses last year found that 73% of small firms reported being paid late. According to figures from the Department for Business, Innovation and Skills, 4,000 small businesses failed in 2008 as a direct result of late payment. The statistic that puts the issue into the sharpest possible light is that the outstanding funds now owed to small and medium-sized enterprises total £36.4 billion—or much more, as the hon. Member for South Basildon and East Thurrock said. I am sure that Members on both sides of the House appreciate that that is not a good state of affairs. A great deal more needs to be done.

I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on writing to the FTSE 100 companies about the prompt payment code. I can think of no defensible reason why companies of such size and magnitude should not sign up—60 of them either ignored her or refused to sign up—particularly given the leadership role they are supposed to play in our business community.

Foreign Affairs and International Development

Debate between Alex Cunningham and Mark Tami

Tuesday 15th May 2012 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

It is a great pleasure to follow so many powerful speeches tonight, particular several in a row from my hon. Friends. I would like to address two main issues this evening: the Government’s failure to give the ultimate commitment to help the poorest in our world and the total absence of anything in the Queen’s Speech on policy affecting Israel and the Palestinians. I declare my membership of Friends of Palestine. However, I welcome the mention of Congo in the speech by the hon. Member for Mid Derbyshire (Pauline Latham) and ask the Minister whether there are plans for a flight early next month to force Congolese nationals to return to that dangerous country. I hope that that is not the case.

To return to the aid budget, it says a lot about what the Government stand for when they are happy to give a tax break to millionaires yet cannot bring themselves to commit, through a statement enshrined in the law of the land, to helping some of the poorest people in the world in the longer term––people who live in the kind of abject poverty that we cannot even begin to understand. Indeed, the Prime Minister previously said that spending money on foreign aid in a time of austerity was a sign of “moral strength” and that Britain should be proud that

“we never turn our backs on the world’s poorest”.

But in the light of the Queen’s Speech last week, when the Government failed to enshrine in law the commitment to spend 0.7% of gross national income on development assistance, the Prime Minister’s words were just further proof that they are a Government of broken promises, following such gems as

“there will be no top-down reorganization of the NHS”,

“we are all in this together”,

and

“my promise to pensioners is that we are on your side.”

I am proud that Labour made a commitment to meet the UN’s target of spending 0.7% of GNI on aid and to legislate on it by 2013, and I was pleased when that was taken on by the Conservatives and Liberal Democrats and included in the coalition agreement. I thought that surely the Government would not revoke that policy, which would prove to the country that the Tories were no longer the nasty party and that they genuinely believed in the moral duty of rich countries to help the poorest parts of the world. As the International Development Secretary said this year,

“On the whole, politicians should do what they say they are going to do”.

However, the Government now claim that a Bill to enshrine such a commitment in law cannot be introduced due to lack of parliamentary time, given their focus on the economy and, of course, the all important matter affecting the other place. That is a ridiculous notion. The Queen’s Speech did nothing to stimulate growth in the economy, nothing for young people looking for work, nothing for families whose living standards are being squeezed and nothing for small businesses that cannot get money from the bank.

Rather than telling developing nations, “Sorry, but we are simply too busy tackling the pressure issue of House of Lords reform and the accession of Croatia to the EU to provide you with proper assistance to help your citizens climb out of poverty,” a Bill committing to spend 0.7% of gross national income on aid would not and should not detract from other parliamentary business. It is supported by all three parties, would do much to show the international community that there is a genuine commitment to standing up for global social justice, and would undoubtedly increase the pressure on other countries to do more.

Legislation would also ensure that aid is maintained at an affordable level. Just as the absolute aid level may fall when Britain’s income goes down, so too should it rise when the national income goes up. As the charity ActionAid stated, legislation matters because aid needs to be around long enough to do the job. Many countries such as Ghana are now moving towards an end to dependency on aid, but that can happen only if we support them until that point. Legislation would provide the certainty that is needed for aid to be most effective.

[Mark Tami (Alyn and Deeside) (Lab)]

Is my hon. Friend surprised that there is not enough time, bearing it in mind that we have spent weeks—no, months—without many votes at all? Surely there is time for such important legislation.