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ÓÈ «‹æ MANN JITT Weekly
Vol: 14,
Issue 673
28th June to 4th July 2018
17
(continued from page 16) “We will name and shame offenders and we will highlight good practice as well,” he says. “I want to keep the spotlight on late payment because it’s the right thing to do, but there’s an economic win for the UK too.” He does not want to be seen to be lobbying for more ammunition, but he does not disagree with those who say the commissioner should be given teeth, including the ability to demand information from big businesses suspected of poor payment practices. The Australian Small Business and Family Enterprise Ombudsman, an organisation with similar but broader aims, was given legislative powers in 2015, including the ability to issue penalties. Mr Uppal calls the Australian approach “interesting” and wonders if his role will follow a similar trajectory. He notes that Britain’s groceries code adjudicator, which oversees supermarkets’ treatment of suppliers, has the power to fine. “That focuses people’s minds. It gives small businesses confidence.” Born in Smethwick, four miles outside Birmingham, he is a Sikh of east African descent. After working in construction and property, he served as MP for Wolverhampton South West between 2010 and 2015. During his time running his own company, he recalls an uncle reminding him of the importance of chasing
Paul Uppal, Britain's first small business commissioner, says that late payments from large customers is a "brake on growth and a big part of the productivity gap" ANDREW FOX FOR THE TIMES payment. “He’d say, ‘chase the money, son’. I was quite shy, I didn’t enjoy doing it but within 12 months I’d learnt to be firm. If you don’t get paid, it has a knock-on effect on your business. I remember being at the limit of our £25,000 overdraft one Friday. That afternoon I went and sat at [a customer’s] desk for an hour to get paid.” The keen Wolverhampton Wanderers fan says he talked about football for an hour. “Then he
said, ‘look Paul, I’m going to pay you to get rid of you’. He’d promised me [payment] on the phone a couple of times but I thought, I need to go and see him. I had expenses going out on Monday and it had kept me up for a couple of nights. I’ve had personal experience of the mental anguish that not being paid creates, I’ve felt that. It has a huge impact on mental health.”Mr Uppal says that since taking the
commissioner role he has discovered that the problem is worse than he suspected and extends far beyond big companies taking too long to pay their bills. “It is about big business pushing small businesses as far as they can go. That’s the real issue and it manifests itself in late payment. It is about contractual inequity. “Small businesses are given a contract, they don’t really read it but even if they do
query something, it is a case of take it or leave it because there will be a whole load of other people out there who will take the work. That is being said to me again and again and again.” He says he has been shocked by some of the treatment of suppliers he has been told about, such as details of contracts being changed by large customers halfway through jobs. “Some of the contractual stuff I’ve heard
Public contracts are key to making payment code work Until relatively recently, the so called prompt payment code sat at the heart of attempts by government and industry to tackle the late payment problem (James Hurley writes). The voluntary code says that contractual terms should be adhered to and invoices paid in 60 days other than in “exceptional circumstances”. Critics say that the code’s lack of effectiveness was highlighted by the fact that Carillion was a signatory. The construction giant, which collapsed in January, was notorious for
its poor treatment of suppliers.Paul Uppal, the small business commissioner, says the code should be overhauled. “I say let’s have a prompt payment code that’s properly policed, has teeth. Let’s start again.” He says that companies should have to sign up to the code in order to access public contracts. Mr Uppal says the construction industry, which he has worked in, is particularly prone to mistreating suppliers. The use of so-called retentions, under which a portion of a supplier’s bill is held back, ostensibly as
security in case the subcontractor does not return to rectify defects, is increasingly contentious. Industry groups say that retentions have been abused by main contractors to smooth their own cashflow issues, with small suppliers facing a battle to get their money back. Peter Aldous, a Conservative MP, is trying to bring in legislation that would protect retention cash owed to suppliers when a builder goes bust.“Some funds that are ringfenced to make sure the job is done correctly is fine,” says Mr Uppal. “What you do not want to see is people taking advantage of
Carillion was notorious for its treatment of its suppliers ALAMY
that for the most spurious of reasons. We know that is going on.” He adds: “It is a rough, rough trade. There’s actually an interest to put smaller guys out of business so you don’t have to pay them.“People are
frustrated because [late payment] is a longstanding cultural problem we have with business in the UK, it’s very short term and people are making a quick buck. We need long-term solutions.”
going on is worse than bullying, it’s abuse. For many small businesses, it’s a dream to get a deal to supply a large company. Often, it’s the start of a nightmare.” Lloyds has estimated that about £500 billion is tied up in working capital related to overdue bills. “Businesses are spending so much time chasing late payments and doing admin rather than running their businesses and looking to grow them. You think, do we really want to expand? Its a big brake on growth, and a big part of the productivity gap. If we can engender an atmosphere where cash is turning around, people will think, I can grow this business, I can take it forward.”Asked whether he will ever return to frontline politics, Mr Uppal says that it’s a case of “never say never” but he adds: “I’m really enjoying this, more than being a politician. Getting £20,000 back to a business makes me sleep well at night.”Besides, he’s got his work cut out for a while yet. “This is going to take longer than a year. This ship has been sailing in this direction for a long, long time.”