Late payers let off, for now

THE Government has backtracked on a proposal to bring forward legislation which punishes companies who fail to settle their bills on time.

Oldham East and Saddleworth MP Debbie Abrahams led a Commons debate last month urging action over large businesses not paying smaller businesses what they owned after being contacted by businesses in the constituency.

Business Minister Ed Davey said that the Government would bring forward from March, 2013, to mid 2012, the new late payment EU Directive which introduces a minimum fixed amount of compensation for late payment and tightens the time period for payment.

But in a letter to the Labour MP, Mr Davey said: “In a debate on Late Payments I commended on the revised Late Payments Directive that we will undertake a second consultation in the winter of 2011-12 and then transpose the legislation into UK law in the first half of 2012, which is earlier than we are required to do.

I need to clarify this statement, as while we will undertake a second consultation in the winter of 2011/12, the deadline is March 16, 2013.”

During the debate Mrs Abrahams highlighted the plight of her constituents Ann and Harry Long whose plumbing and heating business, built from scratch 35 years ago, went bust due to the effect of late payments by larger contractors.

Mrs Abrahams said: “This letter was a bitter blow as many businesses have already gone under and for others struggling this was a small hope that late payments would be dealt with earlier than expected.

It is another U-turn by this Government. I believed it could have helped businesses if the directive was brought forward.”

Earlier this year Mrs Abrahams launched a campaign “Be Fair, Pay On Time” after being contacted by a constituent who was a haulier and his business was threatened by late payments.

Despite that fact that his his contractual terms involved payment in 30 days, businesses took up to 90 days to settle their account.

Latest figures for the first quarter of 2011 show 213 businesses across Greater Manchester wound up in the three month period, down 14 per cent on January to March last year.