Debate contribution: Public Sector: Late Payments

Debate contribution by Mr David Honeyford on 10 September 2024.

MLA

Mr David Honeyford

Party at the time

Alliance Party

Date

10 September 2024

Type

Debate contribution

Business

Private Members' Business

Heading

Public Sector: Late Payments

Assembly identifier

Official Report component 4517790

Read the official Assembly record

Text

Thank you, Mr Deputy Speaker. I declare an interest that I am a member of the Federation of Small Businesses, which is in the Register of Members' Interests. I do not often stand here and thank DUP Members for tabling a motion, but I thank Paul and Diane today. Paul said about people not engaging with the federation. It is a pity that they did not engage with it before tabling the motion, because we could have tightened it up to make it a little bit stronger. I have been working on a private Member's Bill (PMB) about this issue for small businesses for quite some time. The debate is perfectly timed, because I am meeting the Minister tomorrow, and it is great to have the view of the House. I thank her for being here to listen to those views. I want to quickly thank Neil from the Federation of Small Businesses for all the help and support that he has given me through his engagement and through bringing the evidence base to see what we can do in this place to get results. The federation has been brilliant about helping with that. Thank you. Paul said that he has a background as an electrician. I come from a small business background. I am passionate about creating jobs and opportunities for our economy to grow and supporting our business community by creating the conditions and opening up opportunities to enable them to scale up and grow further. I am passionate about the issue that we are debating. I started my first business when I was 20. Before I came to the Assembly, I loved the cut and thrust of small business, the people I met along the way and the thrill of working on a new contract, negotiating on price, whether or not you were winning or losing, and developing new ideas and products. The downside for every small business in Northern Ireland and elsewhere is cash flow and getting paid. I have been there, and I have lived it. Spending Monday morning checking the bank account to see what needs to be paid that week and what salaries have to go out that Friday is the routine of every small business in Northern Ireland. As your business grows, those numbers get greater, and so does the amount for which you have invoiced, the amount that you are waiting to get back and the amount of pressure on you. Quite often, people have signed indemnities on their houses and everything else to guarantee payments, and all that pressure mounts on people. Most small businesses here do not have accounts departments, so, when you spend time in your working week trying to chase money backwards for work that is completed rather than looking forwards at work that you need to do, it is time wasted and stress caused. When it is coming from the public sector, it is so not necessary. Your headspace should be focused on growing and developing the business, getting new business and increasing jobs in our society, not being distracted by the pressure of cash flow. Simply, the public sector should not be adding to that burden. When money is there, is allocated and is waiting to be paid, and when the job is completed, the public sector should be helping business with cash flow by paying it quickly. It is our role in the Assembly to set the scene, to create the pitch for others to play or to be the gardener who creates the conditions. A gardener does not actually grow the plants, but they remove the weeds, tend the soil and fertilise and water the plants. The better the conditions and the better the conditions that are created, the better the plants grow all by themselves. That analogy is what I want to use for what we should be doing for our economy here and with this issue of prompt payment. A self-employed small business owner will grow their own business all by themselves, but it is our role to create the very best conditions to help them, to give them the best opportunities and to give advantage to local companies and the people who work here. The Alliance Party will always prioritise growing our economy, creating new green jobs and creating skills and export opportunities and the benefits that flow from that. However, every business can be stretched with its cash flow. When payment of invoices is delayed or slow to come in, you struggle to pay out your own invoices and accounts to the other side. Again, the public sector should not be adding to that problem. We can help business by providing a positive cash flow position. The amendment is to strengthen and widen the motion to reflect what is actually happening and the problem that is out there. This has to include all the public sector. It has to include local government and the arm's-length bodies such as the Education Authority and the Housing Executive, to name just two. There are three areas that I am looking to cover in my PMB that aim to transform the situation. First, it is absolutely vital that all procurement contracts include in the terms and conditions down the supply chain not just the main supplier of the tender but its subcontractors. A company that wins a government contract should be paid quickly, but also the terms of awarding that contract should include in the procurement contract that the main contractor must pay its subcontractors within the same terms and conditions. That condition is legislated for in the UK Procurement Act 2023, but we are not seeing that borne out in practice. The days of the main contactor in government contracts getting paid within 30 days or less but taking 90 days or 120 days to pay the people who supply the work have to end. I will give an example. I spoke with this person this morning to follow up with them on what I was going to say here. Last summer, I dealt with a constituent of mine who owns a small business, working for the Housing Executive. He has six employees. The main contractor that held the Housing Executive contract was getting paid quickly, within the 30-day period, but my constituent was waiting 90 days to be paid. Basically, the main contractor was cash-flowing his business at the expense of the very people who were doing the work. When the main contractor went into administration, my constituent carried the can for four months of work that was not paid for. He is not alone in that, and that has been repeated, specifically with Housing Executive contracts, over a period of time. That brings job insecurity to local people who are getting up every morning and working hard, and it brings heartache and worry to small business owners. Ultimately, that guy lost his business. This has got to stop.

How many large contractors working on government contracts have done just that and taken the self-employed and the little guy out?

I will just note two other items in my PMB that I did not add to the amendment but want to reference. As I said, public-sector invoices are paid in a legal time frame of 30 calendar days, but, if public-sector invoices are not paid within the legal time frame of 30 calendar days and there is no dispute on the invoice raised, interest payments are automatically applied. The Late Payment of Commercial Debts (Interest) Act 1998 allows suppliers to add interest. In practice, that never happens. There is concern about losing further orders. Once you are in and you work for one month, then it is two months, and then it is three months, and you have paid your staff, your vehicle costs, your insurance and your suppliers. Small businesses become completely dependent on the main contractor, and they are completely trapped by what the main contractor does. That has to end. I want to look at swapping that around and making the interest payment compulsory for the public sector, so that it would automatically be paid with a late payment if the payment was delayed. That would stop it happening again. The invoice would be paid with interest if the delay was the fault of the public sector. The final point is for public sector prompt payment data to be properly recorded and published. If those three points were implemented, you would start to solve the issue, and payments would flow to our small businesses. I trust that everybody will support the motion and the amendment, which, I trust Members will agree, strengthens it.

1,445 words. Text as published by the Northern Ireland Assembly.

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