Question

To ask the Secretary of State for Business, Innovation and Skills, what assessment he has made of the effect of large companies' use of lengthy payment terms for suppliers on suppliers' ability to trade.

The Government is absolutely clear that large companies should lead by example and aim to pay their suppliers in 30 days. It is not acceptable for large companies in the UK to be using unduly long payment terms which squeeze suppliers.

We are acutely aware of the negative impact late payment and unduly long payment terms can have on small companies’ cash flow, which in turn can impact on their ability to trade.

The Government is taking forward a comprehensive package of measure to bring an end to these practices once and for all, including: introducing a new reporting requirement on all large businesses; and strengthening the Prompt Payment Code.

Through the Small Business, Employment and Enterprise Bill we will require the UK’s largest companies to report on their payment practices – through a tough, new reporting requirement which will shine a light on those companies using lengthy payment terms.

We have also sought views on proposals for business representative bodies to have wider powers to challenge payment terms and practices which are grossly unfair – which will build on existing protections for small businesses.

I also recently announced changes to the Prompt Payment Code to strengthen its impact. The Code will now promote 30 days payment terms as the norm and a maximum payment terms on 60 days.