Industry bodies await 'unfair' payment power

Representative bodies will be able to challenge on behalf of their members those companies that impose payment terms that are “unfair”, the government has promised.

In his first major speech as business secretary, Sajid Javid said a consultation would be launched to “widen the powers” of representative bodies so they can make such a challenge.

It represents the government’s latest move against late payers, who already face reporting their payment practice (if a big firm), and 30-day clauses on public and private contracts.

A conciliation service to help one-man bands and other small suppliers when payment “problems” with large companies do emerge will also be introduced, said a fired-up Mr Javid.

“It’s a subject that’s exercised me for some time,” he told an audience in Bristol. “[A] larger customer changing payment terms or charging them [a small firm] to remain a supplier.

“And in some cases even deducting that charge on the spot against payment owed. This pattern of behaviour is an outrage. It’s bullying – pure and simple.”

Also speaking in his home town, where the minister grew up above his father’s shop, Mr Javid said that the average sum paid late to a small firm was enough to make it insolvent.

Although invariably true (the average amount owed to a small business is over £30,000), the issue of insolvency has actually been delegated to Anna Soubry, not Mr Javid.

As small business minister, her brief includes insolvency for enterprise, deregulation and better regulation, access to finance, advanced manufacturing and regional growth.

Despite seeming to lack direct business experience (she used to work on ITV’s This Morning programme), Ms Soubry will help the Tories in their quest to foster blue collar Conservatism.

In fact, like her colleague Mr Javid, she is not part of the public school or Oxbridge set, having attended a local comprehensive and then Birmingham University, where she studied law.