[Mr Jim Hood in the Chair] — Late Payments (SMEs)

Part of the debate – in Westminster Hall at 9:59 am on 14th September 2011.

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Photo of Anne Marie Morris Anne Marie Morris Conservative, Newton Abbot 9:59 am, 14th September 2011

Indeed. Things can be done that are not simply voluntary, and I will expand on those. As for the supermarkets, I think that the plan is to have a supermarket ombudsman at some point to consider just this issue.

I hope that my second suggestion will give the hon. Gentleman some comfort. The Government could consider introducing Government-backed credit insurance for micro-businesses. Clearly, that would be unaffordable for the whole of the sector, but it could be done for the smallest businesses—those with fewer than five employees and a turnover of less than £250,000. That could be edged up to just under 10 employees and turnover of £500,000, but either way we are talking about a relatively small part of the economy. I am pleased that the Government have already introduced export credit insurance for the first time in 20 years. I say “Well done” to them for that, but we could do more.

I come now to my third suggestion. There is something that we could do to make large companies change their behaviour—change the accounting standards. I believe that in the annual report and accounts, there should be a report on the debtor days with regard to SMEs that are suppliers to a company. Clearly, it would be inappropriate for a report of debtor days to be too extensive, although any good company will keep such records. However, it would be helpful if it applied to any supplier providing more than, say, £100,000 of goods and if the number of debtor days was limited to 30, because that would ensure that it was included in the auditor’s report.

In the 1997 debates on this issue, it was suggested that the policy adopted by companies should go into the director’s report, and the proposal was subsequently implemented. However, it was decided not to include any information about debtor days in the auditor’s report. If such information were included, it would be in the accounts filed at Companies House, and the Federation of Small Businesses, the Forum of Private

Business and other groups could easily look through the reports and accounts for the top 250 companies. They could then begin looking at how to campaign and raise the issue of the bad boys in the press. That might be a cheaper and more viable approach than simply dealing with Companies House filing requirements, laudable though that is.

Finally, small trade groups must begin to take ownership of, and responsibility for, the problem. We can sit here and say there is too much of a power imbalance, and it is easy for a small SME to say, “We can’t rock the boat, because X, Y and Z Ltd down the road will simply get the contract instead,” but power comes from acting together. Clearly, companies will not do that in every case, but it will be worth standing up together against some individuals and large corporates.