Late Payment Bill to go before Parliament this week

Watch this space tomorrow (15 Jan). Labour MP and strong advocate of the late payment campaign, Debbie Abrahams, has secured time in parliament for legislation guaranteeing prompt payment to small businesses.

Using a technique called “a ten minute rule bill”, if successful, the Public Sector Supply Chains (Project Bank Accounts) Bill will require all payments on government and public authority contracts  – from the lead contractor down – to be made through a ‘project bank account’ system.

This will mean small businesses would be paid promptly, while being protected against losses, such as happened when construction firm Carillion collapsed.

Chancellor, Phillip Hammond, has said that it’s “an interesting idea and that the Cabinet Office commercial secretariat is looking at her proposals”.

Ms Abraham’s bill follows comments by the Small Business Commissioner, Paul Uppal, who wants to set up a traffic lights warning system as part of a “name and shame” policy of encouraging large firms to pay suppliers promptly.

The accountancy profession is also putting its weight behind the lobby for change. The Association of Accounting Technicians (AAT) wants the Prompt Payment Code to be made compulsory for companies employing more than 250 employees and the maximum payment terms halved from 60 to 30 days. Moreover, it wants the presently toothless Prompt Payment Code supported by a  financial penalty regime for persistent late payers.

A survey by the AAT has indicated that a majority of MPs support the call for reform.

Ms Abrahams said in a statement “When payments take a long time working their way along a supply chain from the contracting authority there is a risk that the cash could be cut-off at any time because of payer insolvency. We witnessed the catastrophic effect this has with the collapse of Carillion, nearly a year ago, with £2bn of unpaid invoices to their smaller suppliers”.

Debbie Abrahams has previous form in this area having created the Be Fair – Pay on Time campaign in 2012.

We applaud her efforts and wish her luck.

January 14, 2019 by Makoto Fukuhara Categories: Accountants and bookkeepers