Chuka Umunna MP

Ministers have cast doubt on when a new EU directive on late payments will be implemented into UK law in a letter to Shadow Business Minister Chuka Umunna MP.

During a House of Commons debate on late payments earlier this month, BIS Minister Ed Davey MP announced that the government would transpose the EU directive on late payments into UK law in the “first half of 2012, which is earlier than we are required to do. I hope that addresses some of the concerns that colleagues have expressed during the debate”.

However, Mr Umunna, who earlier this year called on the government to implement the directive early to help small businesses, has now received a letter from Mr Davey going back on the promise he made in Parliament.

Seeking to “clarify” the statement made during the debate, his letter says: “the deadline for transposition is 16 March 2013 and the outcome of the consultation will determine the final timetable for the transposition process”.

Statistics released in July by the Federation of Small Businesses show that 73% have been paid late in the past year and for a large majority (77%) this was by other businesses. According to payment industry body Bacs £24 billion is now owed to SMEs across Britain in late payments, with each business being owed on average £27,000 and waiting 39 days longer than stipulated by payment terms.

Increasingly, large businesses are extending payment terms beyond what could be reasonably expected by small and medium sized businesses which often rely on steady cash flow for survival.

The EU directive on late payments will introduce new curbs on commercial contracts setting payment terms longer than 60 days. Under its terms, payment terms beyond 60 days will only be valid if expressly agreed beforehand and in most cases, payment terms beyond 60 days will be deemed ‘grossly unfair’ and hence unlawful. The directive also establishes minimum levels of compensation for late payment.

Commenting, Shadow Minister for Small Business and Enterprise Chuka Umunna MP said:

“We have been calling for the government to bring forward implementation of the EU directive on late payment into UK law, which would help small businesses by clamping down on unfair payment terms.

“Ministers must act to end the chaos and confusion surrounding the late payment directive and give small businesses the certainty they need on this issue.”

Speech at Rochman Landau LLP by Chuka Umunna MP, Shadow Minister for Small Business & Enterprise, Tuesday 20th September 2011

Let me start by saying how great it is to be speaking here at my old firm. As many of you know, this is where I practiced for a number of years and it is a real pleasure to be back again.

Above all, it is good to be here talking to you all today for another more profound reason.

We face an extremely uncertain and volatile economic climate:

• there is the ongoing crisis in the Eurozone which inevitably will have a major impact on our economy: half of our trade is with other countries in the European Union; our banks have lent billions of pounds to Eurozone countries facing big problems;
• our economy has flatlined with 0.2% GDP growth over the last 3 quarters to June 2011;
• confidence has nose dived following the Chancellor’s comprehensive spending review which has, in turn, hit domestic demand hard;
• last week we learnt that unemployment has surged above 2.5 million.

So it is a difficult economic environment for you to operate your businesses.

We disagree with the government’s economic strategy. It is implementing one of the biggest fiscal consolidations embarked upon by any government in the Western world at this stage in a country’s recovery in the name of deficit reduction. It is a very big gamble.

Reducing the deficit is essential but the Opposition’s view is that you have got to allow the recovery to settle in, otherwise you risk choking recovery off with the result that more people are claiming benefit, fewer people are paying income tax and fewer people are buying your goods.

However, where we do agree is in a belief that growth, which we hope will return, should be private sector driven. And here, you are obviously crucial – if you as businesses do not flourish and thrive, we as a country will not do so and growth is unlikely to return.

For this more profound reason, I very much welcome the opportunity to exchange views with you this evening because we must do all we can to help foster a sound business environment in which you can trade and do business. Regulation is of course part of the package.

I am going to talk about:

• the function of regulation;
• the principles underpinning our approach to regulation;
• what we did in government;
• what the Conservative led Coalition is doing and our response.

The function of regulation

I know the challenge regulation presents because, as an employment lawyer, providing advice to clients on how to deal with it was my bread and butter when I was here. Day in, day out, I received calls from businesses who wanted to do the right thing but didn’t know how – every fee earner in this firm still receives those calls every single working day.

Before I continue, let me be clear what I’m mean when I say “regulation”. I’m talking about the plethora of laws, rules and procedures you are required to follow when you go about doing your business activities, be they relating to health and safety, licensing or employment. It is a long list collectively referred to as “Red Tape”.

In every major election you will hear politicians of different parties promising to cut Red Tape. But I think business people are fed up of politicians whispering sweet nothings in their ears about their determination to cut Red Tape, when your practical experience often suggests otherwise. The debate over regulation is, in any event, far too crude in my view – it is more complicated than that and we should be honest, up front and say so.

Whilst some regulations may be viewed as obstructive, many are welcomed by business because good regulation underpins fair markets. For example, here at Rochman Landau many clients are small and medium sized enterprises with up to 250 employees or have a turnover of up to £25m – those clients will appreciate the benefits of a competition regime which, in part, exists to ensure that larger businesses cannot squeeze them out as a new entrant to whichever market they are seeking to break into.

People appreciate that regulation can actually create markets too, spurring economic growth and innovation. In government Labour decided that from 2016 new homes would have to be carbon-neutral. This simple measure created entire new markets in architecture, building technology, skills training, renewable energy generation, and building management. The innovation it stimulated has made UK firms in these areas world leaders.

And though regulations to safeguard workers’ rights can often be difficult to circumnavigate, doing away with them is no substitute for a properly thought out growth strategy. The Prime Minister’s director of strategy, Steve Hilton, has reportedly been floating ideas that include abolishing maternity leave – I don’t believe this is something anyone in this room would want for women in their families nor am I convinced that it will promote growth.

Despite all this I do know – after more than half a decade spent dealing with the country’s Employment Tribunals – that regulation does not always meet its purpose. Employment Tribunals were supposed to be more informal than the rest of the Civil Court system and to encourage parties to settle but my experience in practice was that this was not always the case – the way they operate seemed to lead to an inordinate amount of time spent obsessing with procedure as opposed to addressing the substantial issues of a case.

I also know that:
• government can rush to regulate without considering other ways of achieving behavourial change;
• consideration of enforcement after implantation is frequently just an afterthought; and,
• regulation often overlaps creating further complexity.

So of course we should look to reduce the regulatory burden where we can, but our priority should be to move towards smarter regulation – this goes further than simply looking at the quantity of regulation – it looks at its quality too and how it might be used more intelligently to shape markets.

Approach to smart regulation

So what underpins our approach to smart regulation?

First, we should view regulation as a last resort which we seek to implement to correct market failure, address a social inequality or safeguard people’s personal safety and security.

To illustrate this point, consider mobile telephone roaming charges whilst travelling abroad. According to some reports, mobile network operators are making profits of 200% on calls made in Europe and a staggering 400% on calls received whilst roaming.

Consequently from July this year the EU introduced regulations setting the maximum permitted charge at 32p per minute, excluding VAT, for calls made while abroad and no more than 10p per minute for calls received while roaming in EU countries. Clearly the market was not functioning correctly and we, the consumers, were being ripped off – everyone will have welcomed the EU’s intervention in this instance.

Secondly, regulation should be outcome focused and guard against unintended consequences.

In October 2004 we, in government, introduced the work place statutory dispute resolution procedures. We introduced them with the intention of reducing the number of disputes that ended up in the Employment Tribunals. The opposite in fact turned out to be the affect – both parties, the employer and employee, found themselves confronted with a very prescriptive procedure for resolving workplace disputes with heavy sanctions for failure to comply. The procedures of course evolved through case law as they were subject to interpretation, which created more uncertainty and complexity for all involved. They did not achieve what we wanted them to which was why they were repealed and replaced with a more flexible regime in April 2009.

Thirdly, regulation should be as easy to understand as possible and should do what it says on the tin. This will add to business certainty and improve perceptions of regulation which sometimes do not marry with the reality of the affect of a rule.

Part of the solution lies in drawing regulation up with the small guy in mind – the small business owner or firm that does not have the resource to employ an army of compliance and risk consultants to work out how to comply and do the right thing.

Finally, we must always ask whether the regulation is proportionate, consistent, transparent and targeted.

There is a feeling out in the country that those who want to do the right thing and ensure they comply are burdened more heavily than those who don’t care and are determined not to.

This is why it is crucial policy makers like me talk to you as we develop and scrutinise regulation, to ensure we get it right.

Labour in Government

What did we do in government? I don’t pretend we got everything right when we were in power. However, according to the World Bank, when we were gently eased out of office by the British people our economy topped Europe for ‘ease of doing business’ and the OECD found that barriers to entrepreneurship were lower here than in any other member country. This helped foster an environment from 1997 to 2010 in which 1.1 million new enterprises were created and the turnover of small and medium enterprises grew by over a third.

In our quest to put in place a better regulatory regime, in 2005 we set up the Better Regulation Executive. This was set up primarily to implement the recommendations of the Hampton Review into regulation. The BRE’s remit was to work with departments and regulators to:

• improve the design of new regulations and how they are communicated;
• simplify and modernise existing regulations; and,
• change attitudes and approaches to regulation to become more risk-based.

It had some considerable success, helping to deliver well over £3 billion a year of savings for business due to the simplifications made to regulations which followed. The Coalition has retained the BRE and now describes it as being instrumental in putting their strategy in place on reducing regulation.

We set up the Regulatory Policy Committee. We tasked the RPC with providing, for the first time in the UK, independent scrutiny of proposed regulatory measures put forward by Government. Its purpose is to challenge where proposals are not supported by robust evidence and analysis. Put simply, it produces opinions on the quality of the impact assessments produced to support regulatory proposals, covering issues from nuclear energy, equality legislation and migration limits, to the 2012 Olympic Games.

The RPC too has been continued by the Coalition and put at the centre of the new regulatory regime they are seeking to put in place.

In addition to this we introduced the Primary Authority Scheme to simplify the rules faced by businesses acting across a number of local authority areas. The scheme allows a business to agree its approach to compliance with one local authority and be assured that the advice they receive will be respected by the other local authority areas they operate in. There has been significant take up of this scheme and the government is now looking to expand it.

Finally, we set up a Cabinet sub-committee on Better Regulation which brought together ministers to scrutinise the impact on business of planned and proposed regulations. This focused the attention of government ministers on the issue. Again, the Coalition has taken this forward through the establishment of their Reducing Regulation Committee of Cabinet.

So we laid good, solid foundations upon which the new government has sought to build. Rest assured: getting regulation right was a serious concern of ours in power – that has not changed. We may not be in government but we have an important function as Her Majesty’s Official Opposition in holding the government to account and ensuring they get it right whilst their hands are on the levers.

The Conservative-led Government

I have already mentioned some of the things they are doing but what’s new? There are two flagship policies that have been introduced to great fanfare.

One In One Out
One is the introduction of the One-in, One-out rule. This means that no new primary or secondary legislation that imposes a cost on business or civil society organisations, can be brought in without the identification of existing regulations with an equivalent value that can be removed. It is part of the government’s Red Tape Challenge.

The motivation behind the policy is understandable but I fear the government risks overpromising and under delivering for a number of reasons.

First, the Government estimates that around 50% of UK legislation with a significant economic impact originates from EU legislation. Yet, regulation that is required to implement EU obligations does not fall within the scope of the One-in, One-out framework.

Second, it is quite easy for Government departments to get around the framework by massaging the figures – attributing a higher cost, say, to regulation disposed of, and a lower cost to new ones introduced. Presumably any judgement they make in assessing cost and benefit will be based on departmental impact assessments – the RPC currently tells us that 31% of central government impact assessments are not fit for purpose.

And third, the framework fails to take account of the particular circumstances of individual departments – it is applied to every department and applies over the course on a year. But take the Department for Energy & Climate Change – much of its work will surely involve a cost to business, certainly in the short term. How is a department like DeCC going to be able to operate within this framework?

We support the intention which lies behind the One In One Out framework but the government should not make promises it cannot deliver – as it is currently configured, there is a real risk that is what they are doing here.

Moratorium for micro firms
The other flagship policy, announced in the long delayed Plan for Growth published in March, was the commitment to introduce a moratorium on all new regulation of domestic origin for firms with fewer than 10 employees from 1 April 2011.

I have already mentioned just how much legislation the government estimates finds its origins in Europe – this moratorium, like the One In One Out framework, only applies to domestic law.

Business lobby groups have expressed dismay that none of the regulations that came into force last April were subject to the moratorium. In particular they have said to me that they take exception to the fact that some significant regulations for business were implemented after 1 April 2011 – additional paternity leave and pay and the abolition of the default retirement age for exmple. It is right to say that we support the these measures but, then again, we have not committed to put in place this moratorium; the government has.

There is of course the risk too that this moratorium will disincentivise businesses to grow at a time when we need businesses to expand and create jobs.

Again, over promising and under delivering calls into question your credibility. That is why I will not do it as the Shadow Business Minister with responsibility for regulation on the Opposition front bench.

Next steps
There are a number of policy developments likely this autumn.

The government has just finished consulting on reforming the way regulation is enforced. They have set out some principles but we await the detail. The consultation closed last Friday and a White Paper is due. Likewise, in tandem with this the government has been consulting on extending the benefits of the primary authority scheme I mentioned and on the future of the local better regulation office, the delivery vehicle for that scheme. The consultation on this closed last Friday too and I would expect any proposals to feature in the same White Paper.

It may be that the Government is planning to incorporate the proposals that flow from these consultations in the second instalment of their Plan for Growth expected this November.

Meanwhile, we in the Labour Party are in the process of carrying out the biggest overhaul of our policies since Tony Blair became leader in 1994 and we would welcome your input. As part of this, we are undertaking a fundamental fresh look at the role and purpose of regulation.

We must think creatively in doing so and be open minded. I think we should give serious consideration to exploring whether it would be possible to, as far as we can, put in place one Common Commencement Date for new regulation in either April or October instead of the two dates we currently have in April and October. This would potentially create more certainty and less disruption for business.

Conclusion

Let me finish by referring to what the Leader of the Labour Party Ed Miliband has described as the 3 principal challenges facing our country and the role you have to play.

We face a cost of living crisis. Since 2003 middle and lower income earners in this country have faced a squeeze in their living standards as their wages have stagnated and costs have risen. The causes of this are complex and are, in part, attributable to an economy that produces high-skill, high productivity sectors at one end and low-skill and low paid jobs at the other. Simultaneously, economic migration and greater labour market flexibility have increased the pressure faced by them.

At the same time we have seen the erosion of what we call the “British Promise” – the hope and belief people have that the next generation will do better than the last. Less than one in ten people now think life will be easier for their children than it was for them, and seven out of ten think it will be harder.

Moreover, there is this sense too that in different ways, including changing workplaces and working lives, our communities and the strong social institutions and common bonds that hold us together are being eroded.

To meet these challenges our economy and the way it is structured will need to change. We cannot hope to achieve this without you. You have a massive role to play:

• in helping us rebalance our economy;
• in transforming it so it creates the better quality and better paid jobs we need; and,
• above all, in ensuring we pay our way in the world and compete internationally.

You are key pillars of our communities too.

Working with you I know we can meet this challenge. Thank you for all that you do and for listening. Now I am very keen to hear what you have to say.

A Bank of England survey report published today spells out the ongoing difficulties which small and medium sized businesses (SMEs) face in accessing finance, while separate figures from the Bank show that business lending has contracted in ten of the last twelve months.

The Bank of England’s monthly Agents’ Summary of Business Conditions report for September, released today, notes that “small businesses and start-ups still found it difficult to gain access to credit, and where loans were available, fees remained elevated and the applications process was often drawn out.”

According to the Bank of England’s August statistics on lending to UK businesses, the net monthly flow of lending was negative in ten months of the past year – including each of the last three months.

The government’s Project Merlin agreement with the banks to boost lending to businesses has been criticised for setting up gross rather than net targets, which cover facilities made available to businesses rather than actual lending.

Additionally, Merlin does not address the cost of credit and its affordability to businesses. According to a survey of more than 150 SMEs across the country carried out by Labour this summer, almost a third of businesses had experienced an increase in the cost of borrowing, and of these businesses 45% had seen a rise of 3%.

Shadow Minister for Small Business & Enterprise Chuka Umunna MP is writing to Business Minister Mark Prisk to ask whether the government has begun negotiating a new deal with banks for lending in 2012 to replace Project Merlin, and if so, whether it will address the widely-publicised shortcomings of the Merlin deal.

Chancellor George Osborne praised the Project Merlin agreement in answer to a question by My Umunna last week in the House of Commons, saying: “I talk to UKFI all the time, and one of the things I talk about is ensuring that the banks in which we have a public ownership of shares are meeting their Merlin lending targets. I congratulate Lloyds, which has changed its operations and advertising campaigns and has tried to encourage small business lending.

Today’s Agents’ Summary also highlights the lack of confidence in the economy as a factor holding back growth, with “increased nervousness” leading “some firms to scale back investment plans”.

Commenting, Shadow Minister for Small Business & Enterprise Chuka Umunna MP said:

“The statistics today show that on the ground, small and medium sized enterprises are still struggling to access finance to grow their businesses. With the economy flatlining and unemployment high, businesses who are trying to grow are hindered at every turn.

“If the government seeks to replace Project Merlin, the Tory-led Government need to get tough – it is crucial they and the banks learn from the shortcomings of Merlin and provide real support for our SMEs.”

Chuka Umunna MP has written to Foreign Secretary William Hague after reports of attacks against African migrant workers in Libya by forces allied to the country’s ruling National Transitional Council.

According to a recent BBC report, Black migrant workers from other African nations, including Nigeria, have been the victims of violence, abuse and intimidation and have been wrongly targeted by forces within Libya as ‘mercenaries’.

In his letter to the Foreign Secretary, Mr Umunna asks the Foreign Secretary to outline what the UK government’s assessment of the allegations and what action Britain will be taking.

He writes: “The National Transitional Council sought to remove Colonel Gadaffi to pave the way for a free, fair and democratic Libya. Given the support provided to rebel fighters in Libya by British and NATO forces was given with these values in mind, it is imperative that this matter is investigated fully and that within Libya the perpetrators are brought to justice.”

Chuka Umunna currently serves as Vice Chair of the All-Party Parliamentary Group on Nigeria and was among. Following his election in 2010, he became one of the first MPs of Nigerian descent to serve in the House of Commons

Commenting, Mr Umunna said:

“UK and NATO forces were deployed to protect civilians in Libya, and I am deeply concerned about the reports of violence towards minority groups within the country. That is why I have written to the Foreign Secretary this week to demand answers and ensure the UK government does all it can to address and remedy this urgent situation.”

Local unemployment has risen amid a bleak outlook for job seekers, with more than 25 people chasing each vacancy and a large increase in young people without work according to new statistics.

According to analysis of last week’s unemployment statistics by the House of Commons Library, the number of Jobseekers’ Allowance (JSA) claimants per Jobcentre plus vacancy in the Streatham Parliamentary constituency, which includes parts of Brixton, Clapham and Tulse Hill, is 25.7. This is the 18th worst ratio of jobless to jobs of the 632 constituencies across England, Wales and Scotland.

Locally, the number of JSA claimants rose by 403 between August 2010 and August 2011, a 10.3% increase. Additionally, there are now 895 people living in the constituency who have been claiming JSA for more than a year.

Unemployment among those aged 24 and under and aged 50 and over locally has risen disproportionately over the last year, by 13.7% and 17.1% respectively, according to the analysis.

Nationally, the number of people aged 18 or over claiming Jobseekers Allowance increased by 20,300 between July and August 2011 to 1.58 million people. The wider ILO measure of unemployment, which takes into account those looking for work but not claiming JSA, was 2.51 million in May-July 2011, a rise of 80,000 from the last quarter, the largest increase since summer 2009.

Commenting, Mr Umunna said:

“These latest local unemployment figures make for particularly depressing reading. It is worrying that joblessness is rising so sharply and that so few jobs are being created. We should never underestimate the impact on the lives of those affected by unemployment and their families.

“The government’s austerity programme is hitting families hard, denting businesses’ confidence in the economy and hampering job creation. These figures underline the urgent need to get the economy growing again.”

This weekend, Chuka attended Brixton Windmill Festival, organised by Friends of Windmill Gardens.

Earlier this year, Chuka cut the ribbon alongside the Mayor of Lambeth and a descendent of the mill’s original owner as the mill was reopened to the public after its restoration.

Some pictures from the Festival and the Brixton Garden Party, held on Fairmount Road nearby to mark the opening of a new community garden, are below:

Streatham MP Chuka Umunna has spoken out following Boris Johnson’s announcement that bus, tube, train and tram fares will rise above inflation in January 2012.

The Mayor has raised fares repeatedly since 2008 which has led to Lambeth residents paying hundreds of pounds a year more to use public transport.

Boris Johnson’s decision to raise fares means:
• A single bus ticket is up 56% and a weekly bus and tram pass is up 47%
• The price of a weekly zone 1-2 travelcard is up 23%, costing £291 a year more
• The price of a weekly zone 1-6 travelcard is up 22%, costing £509 a year more

Conservative mayor Boris Johnson this week described the fare increases as “fair and reasonable”.

Commenting, Chuka Umunna MP said:

“The rising cost of living is a huge issue for local residents and the last thing they need at a time when family budgets are being stretched are these unnecessary fare rises.

“It is staggering that the price of tickets and travelcards has risen so steeply above inflation over the past three years because of the decisions taken by Boris Johnson.”
This week’s announcement by Boris Johnson means:

Single bus ticket up 56%
• was 90p in 2008
• will be ￡1.40 in 2012
Costing Londoners ￡260 a year more

Weekly bus and tram pass up 47%
• was ￡13.00 in 2008
• will be ￡19.10 in 2012
Costing Londoners ￡317 a year more

Weekly zone 1-2 travelcard up 23%
• Was ￡24.20 in 2008
• Will be ￡29.80 in 2012
Costing Londoners ￡291 a year more

Weekly zone 1-4 travelcard up 23%
• was ￡34.60 in 2008
• will be ￡42.60 in 2012
Costing Londoners ￡416 a year more

Weekly zone 1-6 travelcard up 22%
• was ￡44.60 in 2008
• will be ￡54.40 in 2012
Costing Londoners ￡509 a year more

Streatham MP Chuka Umunna has pressed Home Secretary Theresa May for answers on the role of gangs in last month’s public disorder in Brixton and Streatham and on how much new funding allocated to tackling gang problems will benefit Lambeth.

Addressing the Home Secretary directly in the House of Commons this week, Mr Umunna asked what evidence Ministers had examined on the role of gangs in last month’s unrest and how much of a new £18 million fund, announced earlier this year to help areas affected by gang violence, will benefit Lambeth

In response, the Home Secretary promised to write to Mr Umunna to provide clarification on the points he raised.

Responding to Mr Umunna, she said: “If I may, I will write to him with the specific information he has requested about Lambeth. London as a whole is one of the three areas, along with Greater Manchester and the west midlands, that are particularly benefiting from the funding that has been made available, as they are areas where the gang problem is a particular issue.

“The honourable Gentleman is right that, notwithstanding whatever role gangs played in the riots and unrest of early August, we must deal with gang culture, because, sadly, it is a problem that blights too many of our communities.”

Mr Umunna asked the question following his recent discussions with local police, and said to the Home Secretary: “I have been told by my local police that gangs were not necessarily co-ordinating all the activity in our area, although gang culture is a big ongoing issue for us.”

Commenting afterwards, Chuka Umunna MP said:

“It is crucial that we are able to gain a full understanding of the role of gangs in last month’s unrest in our area and beyond so that policies can address the situation.

“Long before last month’s unrest occurred, gang violence has been a significant issue locally. It is welcome that the government has made available additional funds to tackle gangs and address gang culture, but it is crucial that Lambeth benefits from this. That is why I asked the Home Secretary to clarify how the funds are being allocated.”

Below is an update on the Streatham Hub project which has been distributed to local residents by developers Vinci Construction:

Commencement of Construction Works

Steve Diggines
Project Director
VINCI Construction UK Ltd

Shadow Minister for Small Business and Enterprise Chuka Umunna MP is demanding that the government helps small and medium sized businesses up and down the county by taking firm action on late payments, speaking in a Parliamentary debate on the issue today.

Late payment is causing significant cash flow problems for many businesses, in particular small and medium sized enterprises (SMEs). Statistics released in July by the Federation of Small Businesses show that 73% have been paid late in the past year and for a large majority (77%) this was by other businesses.

According to payment industry body Bacs £24 billion is now owed to SMEs across Britain in late payments, with each business being owed on average £27,000 and waiting 39 days longer than stipulated by payment terms.

As well as large firms, government departments are also guilty of paying suppliers late which can have a knock-on effect down the supply chain. Seven key government departments left £3.7bn worth of invoices unpaid within the five-day target between May 2010 and May 2011, while £370m was not paid within 30 days.

Labour is urging the government to improve its performance by paying invoices quicker and to take action to ensure its corporate contractors pay firms further down the supply chain on time.

In government, Labour introduced legislation allowing firms to charge interest and obtain compensation on overdue payments and launched the Prompt Payment Code in conjunction with business organisations and the Institute of Credit Management, stipulating that suppliers should be paid on time with many FTSE 100 firms signing up.

In the March 2010 Budget, Labour set government departments the target of paying 80% of undisputed invoices within five days with a requirement that invoices should be paid within 10 days.

The adjournment debate on late payments was secured by Oldham East and Saddleworth MP Debbie Abrahams to highlight how the issue is crippling local businesses in her constituency. Among those watching the debate in Westminster will be her constituent Ann Long whose small family business, which she and husband Harry had set up from scratch 35 years ago, went under due to the effect of late payment by larger contractors.

Commenting, Labour’s Shadow Minister for Small Business & Enterprise Chuka Umunna MP, said:

“Too many firms have gone under due to late payment and this is a growing concern for small businesses up and down the country.

“It is welcome that the government has continued measures initiated under Labour such as the Prompt Payment Code, however ministers need to ensure Whitehall departments pay on time and that all companies which supply the public sector sign up to the Code, enforcing it at all levels of the supply chain.”

Commenting, former small business owner Ann Long said:

“When the recession hit, our regular clients’ work began to dry up and the only companies who seemed to have work were the larger companies, so we had to try and win work with them.

“The government should be doing more to ensure that these large companies pay on time. Sub-contractors are being crippled by this and we hear nearly every week of another SME we know that has gone under. We don’t have legal departments and in most cases can’t even put up a fight.”