Large companies will have to report on their payment practices every year in the first step of a crackdown to end small businesses being paid late, the Chancellor has announced as part of the Government’s spring statement.
Philip Hammond said the Government will require companies to review their payment practices through their audit committees, with a non-executive director responsible for the supply chain, and report back on them in annual accounts.. He said it was a “first step” in efforts to end the “the scourge of late payments for our small businesses.”
Business Secretary Greg Clark will unveil more details in due course, while the Government will also publish its full response to last year’s call for evidence on the issue shortly.
Responding to the publication of the Chancellor’s Written Ministerial Statement on the Spring Statement, Mike Cherry said from The Federation of Small Businesses (FSB( is pleased the government is to act against late payments. Cherry said “At a time of great uncertainty, the Chancellor has shown today that there is still plenty of scope to support the UK’s small businesses. Poor payment practices by big businesses towards their smaller suppliers are rife and pernicious, leading to the closure of 50,000 small firms a year. Four out of five small businesses have been paid late, and we told the Chancellor that today was the moment to act, to tackle this scourge once and for all.”
“Small business confidence has suffered an unprecedented slump in recent months as firms are unable to plan, invest and hire for the future. In the coming weeks, business owners will have Making Tax Digital (MTD), higher auto-enrolment contributions and fresh business rates hikes to contend with.”
“It’s good to see the Government offering a reprieve on this front, going further in its commitment to light touch enforcement of Making Tax Digital, following our warnings about the costs of rule changes. This commitment must be honoured. It should also be extended if unexpected issues with the new system arise.
“Equally, extending the freeze on further roll-out of MTD from 2020 to 2021 is a welcome move. The Government should now rule out extension of MTD to firms below the VAT threshold until the end of this parliament at the earliest, in 2022. A full review of the roll-out will be needed in the months ahead.
“The Chancellor’s statement lays bare the impact that a chaotic no deal Brexit on 29 March would have on public spending, economic growth and tariffs. Flooding the UK market with cheap imports at a moment when firms are trying to manage a sudden withdrawal from the EU would threaten the futures of many.
“FSB fought hard for a lowering of the co-investment level for small firms taking on apprentices. A lot of small firms will be cheering the Chancellor’s decision to bring forward that reduction to next month.”
Markus Kuger, Lead Economist at Dun & Bradstreet said “In today’s spring announcement, the Chancellor of the Exchequer presented new economic forecasts to the public. Worryingly, despite unexpected robust real GDP growth in January, the economy is now forecasted to expand at a slower pace in 2019 than initially thought. While this is not a UK specific development (Germany and France recently lowered their forecasts too), it highlights the risks the British economy is facing in 2019, caused by a European downturn but mainly because of the unclear Brexit situation.”
“Today’s announcements did not change Dun & Bradstreet’s assessment of the UK’s country risk rating. While some indicators such as public borrowing and labour market conditions continue to produce good news, others like confidence indicators paint a relatively bleak picture. Because of the unresolved Brexit question and latest proprietary figures showing a significant increase in the number of business failures in Q4 2018, we are maintaining a ‘deteriorating’ risk outlook for the UK and are prepared to revise the country risk rating downwards should the country head for a no-deal Brexit after tonight’s crucial parliamentary vote.”