The government’s small business commissioner has told MPs commercial relationships between big and small companies are “diseased”.

Appearing before the business select committee this morning, Paul Uppal said there was a “general reluctance for businesses to complain” about bad payers.

“Late payment is a symptom of a much broader disease, and the disease is about the commercial relationship between large and small businesses,” he said.

“Small businesses take the view, ‘I would rather have a very, very bad commercial relationship than none at all’. And that’s a problem.”

The role of small business commissioner was created by the Enterprise Act in 2016, with former Conservative MP Mr Uppal taking up the post in October 2017.

The commissioner’s responsibilities include assessing complaints over payment between SMEs and larger customers, and Mr Uppal began accepting cases such as these last December.

So far 17 cases have been investigated by the commissioner, which he stated had helped speed up payment in two cases.

Payments had been processed through normal channels in the other 15 cases.

Mr Uppal told MPs that small businesses were reluctant to make claims.

“We have so many businesses who approach us but are terrified to put their heads above the parapet – this is a huge issue,” he said.

Mr Uppal also suggested small businesses were “rightly quite cynical” about the possibility of changes to existing practices.

“There’s almost an element of acceptance around this,” he said.

The select committee, which is led by MP Rachel Reeves who is also co-chairing the Carillion joint inquiry, asked Mr Uppal why big companies made smaller outfits wait for payment.

“My personal view is: because they can,” he said.

He highlighted Carillion and its ability to get paid by the government in 30 days but not pay suppliers for 120 days.

“It makes commercial sense from that perspective for some of them,” he said.

Mr Uppal said late payment was damaging productivity for small firms and was a “drag on the UK economy as a whole”.

He said that, while the commissioner role was still “taking baby steps”, his office would not be afraid to name and shame companies once it had built up evidence against bad payers.

The committee questioned the role’s ability to have an impact, given it is limited to presenting claims to companies and helping to “resolve disputes”.

Labour MP Peter Kyle said: “I don’t think any companies watching this will be at all worried.”

Mr Uppal said if his office was given the power to impose fines on late payers, it would “focus minds and bring credibility to the role”.

Mr Kyle also asked whether Mr Uppal supported Conservative MP Peter Aldous’s bill to introduce retention deposit schemes, which is due to receive a second reading in the House of Commons on Friday.

“I used to work in construction […] I’m very supportive of the bill. I think it’s a good idea,” he said.

Mr Uppal, who was Conservative MP for Wolverhampton South-west between 2010 and 2015, is the company secretary for property and construction business Pinehurst Securities.

Tell us your experience of payment practices

Loading…