The Government has set out proposals for a Small Business Commissioner to help tackle payment disputes and other unfair practices, and lead “a culture change” in how small businesses resolve disputes with larger firms.
The Small Business Commissioner – to be introduced as part of the Enterprise Bill – would handle contractual disputes over late payment and other negative practices affecting small businesses. This includes investigating when a firm feels it is being harmed by the other party’s unfair behaviour, and could even extend to public contracts.
The commissioner would serve as a first point of contact for small businesses to gain advice and support on how disputes can be avoided or resolved. It would also help small firms access mediation and conciliation services, and have the power to look into complaints and report on its findings.
Anna Soubry, minister for small business, said: “Small businesses are owed £26 billion in late payments and spend millions more chasing down money they have already earned through hard work. This is simply unacceptable – it limits their growth and productivity, and can put an otherwise successful business at risk.
“The Small Business Commissioner will tackle the imbalance of bargaining power between small suppliers and large customers, and encourage them to get round the table and sort out disputes at a fraction of the cost of going to court. It will also provide advice, investigate complaints and see where further action is needed to clamp down on unfair practices.”
The Government says this is one of a number of measures to tackle late payment, and shows action on the Conservatives’ manifesto pledge to protect smaller firms by addressing the issue. The Small Business, Enterprise and Employment Act 2015 has already introduced a reporting requirement for the UK’s largest companies to report on their payment policies and practices.
According to Anna Soubry, the Small Business Commissioner will be able to use this data to name and shame those behaving badly and “celebrate those leading the way by paying promptly.”
More than half of small businesses surveyed by the Federation of Small Businesses last year had been the victim of late payments within the previous 12 months.
The Department for Business, Innovation and Skills has launched a consultation on the role of the commissioner.