There’s some unexpected attention now on all parties within the UK political spectrum following this week’s call for a snap general election by prime minister Theresa May.
Labour and Jeremy Corbyn have been making some initial right noises from a contractor’s perspective when it comes late pay – the cause of much chagrin within the contractor community. Many contractors may have faced this during their careers and late payments are a headache all would be keen to avoid.
In a speech to the Federation of Small Businesses (FSB), Corbyn outlined a plan to make large firms who consistently pay late should be excluded from being able to bid for public contracts. This would seemingly discourage such tardiness when it comes to paying the people who work for their company on a contract basis.
He added a series of prompt payment requirements should be introduced to companies funded by the taxpayer.
The current government has recently made some moves in this area, introducing a requirement for large companies to declare what percentage of their payments to smaller suppliers are settled within an acceptable 30 days.
Companies must also disclose what proportion remain unpaid after 60 days or more – widely acknowledged as an unacceptable period of time across numerous industries for payment.
The proposals have been very much welcomed by the FSB, and were they to come to fruition, many contractors and personal service companies would be better placed to receive their owed monies in a more timely and convenient manner.
“Jeremy Corbyn’s proposals today are important, as we build a cross-party consensus for further action,” said Mike Cherry, chairman of the FSB. “Government’s transparency reforms are vital, but not sufficient. We believe it must set an example, with prompt payment practice disseminated throughout the supply chain of the £230bn public procurement programme. Larger firms should be helping their smaller counterparts, not paying them late. To eradicate this will require culture change across the economy which must be championed from the very top.”
Corbyn also outlined plans to make smaller firms, including PSCs, exempt from quarterly tax returns and remaining at the current annual scenario.
“FSB research shows the potential burden these reforms will have on those least able to deal with it, with time and support costing more than £2,000 for an average small business,” Cherry said. “We agree there is a strong case to exempt firms below the VAT threshold of £83,000, as those above are already making quarterly returns and so are better able to cope. The Government’s one-year delay for these businesses should be made permanent.”