§ Mrs. GillanTo ask the President of the Board of Trade (1) what proportion of late payment of debt she estimates is attributable to small businesses failing to pay other such businesses on time; and what research on this subject her Department have(a) commissioned and (b) evaluated; [13524]
(2) what research her Department has (a) commissioned and (b) evaluated to quantify the effect on small businesses of late payment of debt. [13523]
§ Mrs. Roche[holding answer 30 October 1997]: Recent research undertaken by NOP showed that late payment causes serious problems for all businesses in the UK. As a direct result of late payment, 72 per cent. of those businesses surveyed have cash flow difficulties, 62 per cent. are less profitable, 45 per cent. are unable to grow and 41 per cent. say that their very survival is threatened.
The findings of a recent report undertaken by Trade Indemnity also showed that small businesses continue to suffer more from late payment than larger ones. Small businesses with a turnover of less than £1 million were found to have 29 per cent. of invoices outstanding compared to only 9 per cent. for businesses with turnover of £50 million.
In addition surveys by Grant Thornton, Lloyds Bank, The British Chambers of Commerce, Experian and Dun and Bradstreet have all shown that large firms are the worst payers with Experian identifying that large companies were two and a half times more likely to pay their bills late than small companies.
The Government is determined to promote a better payment culture in the UK. That is why we have responded to the calls from small businesses and announced a new package of measures to tackle late payment, including the introduction of legislation to provide a statutory right to claim interest on late payment of commercial debt.