Danny McCance 13 Mar 2018 10:35am

Spring Statement: tackle SME late payment crisis

Phillip Hammond should use the Spring Statement to end £2.5bn annual cost to UK economy

The chairman of the Federation of Small Businesses (FSB) is calling on the chancellor to tackle the late payment crisis that last year caused the closure of an estimated 50,000 small businesses.

Ahead of the Spring Statement, research from the FSB found that 84% of small businesses have reported being paid late, while 33% say one in four payments are paid later than agreed.

A similar amount of small business (37%) reported that the time taken to retrieve these payments is also lengthening.

“Improving the nation’s productivity forecasts starts by speaking out on late payments today,” FSB chairman Mike Cherry said.

“In doing so, the chancellor will send a clear message to British boardrooms.

“The late payment crisis will only end when we see a fundamental cultural shift in the boardroom, with those at the top collectively addressing the issue, and directors held accountable for supply chain support,” he added.

The Labour party have echoed the FSB’s call in the build up to the statement, in which chancellor Philip Hammond is expected to set out the UKs long-term post-Brexit tax strategy.

“The chancellor must stop dithering and finally take action in the Spring Statement to tackle the late payment crisis,” said Rebecca Long Bailey MP, Labour’s shadow business secretary.

Labour claimed that it would take tough action and develop a system to mirror the Australian method “of binding arbitration and fines for persistent late-payers”.

Cherry also addressed another stress for small business, the VAT administration burden, which he says takes small businesses on average a full working week to complete.

"Any new consultation on VAT should not take lowering the £85,000 registration threshold as its starting point. That would be expanding a bad tax rather than reforming it,” Cherry said.

Hammond will reveal his Spring Statement at 12.30pm today.