Andrew Griffiths
Main Page: Andrew Griffiths (Conservative - Burton)(13 years, 2 months ago)
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Andrew Griffiths (Burton) (Con)
It is a pleasure to serve under your chairmanship, Mr Hood. I congratulate the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this important debate. I have tried unsuccessfully on several occasions to secure a similar debate, so I must talk to you afterwards to find out how you were so successful, while I failed miserably.
Mr Jim Hood (in the Chair)
Order. The hon. Lady may have applied for such a debate, but I did not.
Andrew Griffiths
Thank you, Mr Hood.
The hon. Lady had all of us in the Chamber nodding in agreement and support. We all—from all the parties, and all the nations represented here—want to do more to support small and medium-sized businesses, but such businesses in my constituency, and, I am sure, in the hon. Lady’s, do not want us to engage in party politics. They want us to work together and not to make party points.
I know that time is short and others want to speak, but I want to focus on an issue that has been raised with me in my constituency several times. We all go and talk to people who run small businesses, who tell us that things are tough, but that they are surviving. They tell us about difficulties with finance and the banks, and they have faced difficulties with late payments for many years. My family had a small engineering business and had to endure the “cheque in the post” argument when we chased payment of invoices after waiting a long time. However, a new phenomenon has begun to hit businesses in my constituency, and elsewhere. Large companies are arbitrarily extending their supplier payment terms. In recent months some larger businesses have decided to extend their normal payment terms of 30 days to 60, 90 or, in some cases, 120 days. Small businesses, which are desperate for the contract and do not want to lose the potential for future business, must live with having to finance an extra two or three months while they wait for payment.
I pay tribute to the Federation of Small Businesses, which has done a great deal of work on the issue.
Fiona O'Donnell
Does the hon. Gentleman agree that in that competitive and hungry market many SMEs take the risk of doing business with companies that they know may not have the best record of invoice payment, because that is the reality in these tough economic times?
Andrew Griffiths
The hon. Lady makes a good point. It is a case of better jam tomorrow than no jam at all. Many businesses must make difficult decisions, and take risks to keep their work force ticking over and to sweat their assets.
I want to draw the Minister’s attention to a survey by Touch Financial. It surveyed 200 businesses and found that in the past year half of those had had their credit terms extended. The Forum of Private Businesses has a hall of shame of companies that have extended credit terms in that way. It includes well known businesses such as Dell, Argos, the Co-op and United Biscuits. Molson Coors in my constituency recently extended payment terms to suppliers there. That has a devastating effect, particularly when many of the businesses affected are being rung up by their banks, and told that their credit facility is being reduced—sometimes by up to half. It has a massive impact on cash flow, which as we know is the life blood of any small business. If we cut off that cash flow, those businesses will bleed to death.