MPs launch inquiry into late payment of SMEs

2 February 2018

A Parliamentary inquiry will look at whether government is doing enough to support the UK’s SMEs.

The Business, Energy and Industrial Strategy (BEIS) Committee will investigate whether government is doing enough to support SMEs struggling with late payments, including whether the creation of a small business commissioner has helped. 

Rachel Reeves, the Labour MP who chairs the committee, said: “The collapse of Carillion has… thrown light on the treatment of small companies by large firms and the difficulties caused by late payments.

“Deliberate supply chain bullying can be devastating for business owners and contributes to thousands of business deaths each year. We want to hear if the government could be doing more to stop this.”

The inquiry will also look at whether SMEs have sufficient access to management training and support when trying to scale up. 

The sudden collapse of Carillion last month left thousands of contractors and suppliers unsure if they would be paid for work done, with smaller firms expecting to be hardest hit. One estimate predicted many firms in the supply chain would only receive 1p out of every £1 they were owed.

Contractor trade bodies estimate up to £800m in retention payments – contracted payments withheld as security to ensure work is carried out and contractors return to fix defects – also sank with Carillion.

Reeves said UK SMEs were lagging behind overseas competition in innovation and productivity. SMEs were “the lifeblood of the UK economy”, making up more than 99% of businesses and accounting for more than half of turnover, she said.

“Small businesses, whether they are aware of it or not, have a vital role in helping to tackle the UK's wider productivity problem.”

A separate inquiry launched by the Treasury Committee is to look at whether SMEs have sufficient access to finance and are protected from exploitative banking practices. 

The BEIS committee is accepting written submissions until 8 March 2018.

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