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CBI welcomes government response to responsible payment evidence call

Tim Miller Senior Policy Advisor, Construction

CBI member views are well-represented in the government response to Responsible Payment Culture in the UK.

17 Jun 2019, 2 min read

The CBI has chalked up a number of wins following the government’s response to the BEIS call for evidence on Creating a Responsible Payment Culture, published on 12 June.

In the CBI’s submission in November 2018, we consulted widely with members on a series of recommendations. The CBI recommended that government should use payment reporting processes to look at the arrangements large firms have in place for paying SME suppliers separately from ‘all’ payments, to provide a more detailed picture on the landscape for SMEs. Government has acknowledged this by announcing it will explore “a facility ... to enable businesses to report voluntarily on inter-company transfers and payments to SMEs.” Since late payments to SMEs delay further investment and growth - with large companies such as Holland & Barrett being found to frequent pay late - this is a good step forward to improving economic growth.

The CBI also highlighted the gap in availability and use of technology and software to speed up payments and reduce processing errors, particularly among SMEs. We were therefore pleased to see government announce £1m in the Business Basics Fund to back a competition that will drive adoption of existing technology by small firms to improve administration-heavy payment processes.

In June 2018, the CBI suggested that existing measures at government’s disposal to drive payment performance improvements could be more effectively promoted and managed.

The government response included a proposal to do exactly that:

“Responsibility of the voluntary Prompt Payment Code is to move to the Commissioner and be reformed: this will unify prompt payment measures with the Commissioner and address weaknesses within the current Code’s operation.”

The CBI welcomes the proposal as a way to make existing measures more effective, and we will work with our members to further assist with such reforms.

The government’s response also stated that it would not seek to set a maximum legal length for business to business payment terms. The CBI has long stated that it does not believe this is a good idea for business across many sectors, and welcomes this clear steer from government on the issue.

The government’s full response is available here.