Labour has decried the scandal of late payments from large firms to small businesses, as the government pledges to take further action on the matter.
Small business minister Kelly Tolhurst announced changes which give powers to the small business commissioner to issue fines to firms who pay late, hoping to hold company boards accountable for supply chain payment practices.
Large businesses found to have unfair practices are also set to have binding payment plans imposed.
Speaking on the changes, Tolhurst said: “Small businesses are the backbone of our economy and through our modern industrial strategy we want to ensure the UK is the best place to start and grow a business. These measures will ensure that small businesses are given the support they need and ensure that they get paid quickly - ending the unacceptable culture of late payment.”
Responding to the announcement, Labour’s Shadow small business minister Bill Esterson told Yahoo Finance UK: “It is scandalous that some large firms use late payment to help their own cash flow at the expense of their smaller suppliers.
“Labour's plans for binding arbitration and fines for persistent late payment and payment in 30 days as a pre-condition for bidding for public contracts would give small businesses the support they need.
“The government's apparent conversion to the cause of tackling late payment is welcome but they will need to give the small business commissioner far greater power and resources if they are serious about taking the necessary action.”
Labour outlined their alternate pledge for late payments in their 2017 manifesto, and look set to keep the policy.
Meanwhile, the Association of Independent Professionals and the Self-Employed (IPSE) have cautiously welcomed the Government’s approach. IPSE’s deputy director of policy Andy Chamberlain commented: “The late payment culture that so many big businesses get away with needs to change. For the two thirds of self-employed people who experience it, late payment means no income, empty bank accounts, debt and possibly destitution. Today’s announcement is a welcome step in the right direction.”