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Parry_Mitchell.jpgParry Mitchell on supporting SMEs in the face of big businesses that abuse payment terms

You’ve read the headlines put about by the Tory-supporting press: ‘Labour is anti-business’, ‘Labour is against enterprise’, ‘Labour is hostile to business success’. And you’ve seen how this perception has rapidly taken hold. Well, it’s about time that these incorrect views were challenged.

Having been on our front bench for the Small Business, Enterprise and Employment Bill currently going through the Lords, I can say categorically that while we back this Bill generally it isn’t tough enough in support of small business. 

Labour understands all too well that the future economic growth of our country is dependent on the success of SMEs, and that the mastery of new technologies will propel us to the forefront. In a paper published by Labour Digital, Number One in Digital we do not hide our ambitions. We want the UK to lead the world in digital technology.

You cannot increase employment and generate wealth without growth, and you cannot increase the national tax take over time without the emergence of many successful new companies.

Because I am a serial entrepreneur, I know all too well that that the road for any small and dynamic business is bumpy and difficult. Success presents its own minefield to navigate and I believe it is the government’s job to create a landscape that makes life less hazardous for such ventures. In my experience, the greatest inhibitor to SME growth is cash flow, and the biggest component of problems with this is late payment. Far too many large companies pride themselves in deliberately squeezing small companies and delaying payments for as long as they can.

So why do big businesses engage in such commercial bullying? Simply because they can. While the government wants to change this, Labour wants to go further, giving the proposed legislation even more teeth.

It is estimated that payments delayed over and above contractual terms are in excess of £40bn. Diageo, owners of Guinness and Johnnie Walker, recently informed their suppliers that they would extend payment terms from 60 to 90 days. AB InBev, owners of Budweiser, Stella Artois and Boddingtons, have extended payment terms to 120 days. Heinz have doubled payment terms from 45 days to 97. And the list goes on – Monsoon, GlaxoSmithKline, Debenhams. These companies just change their payment policy on a unilateral basis and put the crunch on their suppliers, and of course on their suppliers own suppliers. It passes the problem down the chain and causes mayhem. Two thirds of members of the Institute of Directors with fewer than 250 employees have suffered from late payments.

We are proposing that any payment made after the terms of any contract will incur an automatic interest rate equal to Bank of England base rate plus 8%. That should focus attention and encourage big business to pay on time. We also want companies to produce a quarterly statement that lists all payments made over 30 days after the supplier’s agreed terms.

‘Pay to Stay’ is another odious example of big companies bullying their suppliers. Premier Brands, makers of Kipling Cakes and Hovis bread, told suppliers just before Christmas that they could lose their contracts unless they made cash payments. They rapidly backed down when faced by public criticism.

But the worst offenders are those big companies who make suppliers ‘sweat’ well beyond the contractual terms and then, when they have them over a barrel, offer to pay immediately providing the supplier is prepared to accept a hefty discount. Our amendments to the Bill seek to stop such thuggish behaviour, and stop big companies using every trick in the book to squeeze their suppliers.

Lord Parry Mitchell is a Labour Peer in the House of Lords and Chair of Labour Digital. He tweets @LordParry

Published 2nd March 2015

Freshly squeezed

Parry Mitchell on supporting SMEs in the face of big businesses that abuse payment terms

AngelaSmith.jpgAngela Smith on a commitment to the Arts connecting Jennie Lee to ‘The Production Exchange’ 

50 years ago this week, in February 1964, Jennie Lee, Labour MP and new Arts Minister in Harold Wilson’s Government, published the first ever White Paper on the Arts. Entitled ‘A Policy for the Arts – First Steps’, it was ground breaking and no doubt challenged some of the assumptions and traditional thinking about ‘the Arts’ at that time.

Lee’s lifetime belief in the value of education led her to the conclusion that culture should be embedded in education – and indeed in life. She had a broad understanding of what could be regarded as ‘Arts’ or ‘culture’. Our cultural life is an important part of who and what we are. In the same way as Tony Crosland would later write about socialism creating an attractive and enjoyable environment and lifestyle, Jennie Lee believed the Arts should be available to all, and that new ventures and talent should be supported as well as the more traditional cultural entertainment.

So often nowadays however, the Arts, especially fresh and innovative productions, find it harder to attract funding and feel under greater pressure. It can be more challenging to develop new talent. I also recall Billy Connolly’s story on speaking at the funeral of Jimmy Reid about those children who grew up never having had the opportunity to expand their horizons:

"I remember Jimmy saying that if you look at these housing estates and high-rise flats – look at all the windows… Behind every one of these windows is somebody who might be a horse-jumping champion, a formula one racing champion, a yachtsman of great degree, but he'll never know because he'll never step on a yacht or formula one car – he'll never get the chance."

You could equally say that of a writer, an actor or a dancer.

Last night in the House of Lords, I hosted the parliamentary launch of a new charity that I chair called ‘The Production Exchange’. We seek to bring together those with emerging talent at the start of their careers with those with experience, contacts and, crucially, access to funding.  We’ve already hosted a performance of the highly successful one woman play ‘Emily – the making of a militant suffragette’ at Parliament following its tour.  New talent James Swanton’s amazing readings of Dickens’ Sykes and Nancy gained reviews that even experienced actors would die for. We know there’s more out there that we can build partnerships to support.

Producer and Oscar Winner – and a Labour Lords colleague – David Puttnam supports our aims and recorded this wonderful short film exclusively for our launch, in which he observes how creativity is a muscle that needs developing to make people better at what they do.

Jennie Lee believed that ‘The Arts’ should be as valued and supported as any other industry. I suspect if she were to look around today she would be disappointed. Yet, I hope Jennie would also be encouraged by those of us who are still making the case. At The Production Exchange we will bring together those new partnerships to ensure we don’t waste talent, and play our part in seeking to deliver that legacy she wrote about 50 years ago today.

Baroness Angela Smith of Basildon is a member of Labour’s Shadow Team in the House of Lords, and Chair of The Production Exchange. She tweets @LadyBasildon

Published 26th February 2015

Talent spotting

Angela Smith on a commitment to the Arts connecting Jennie Lee to ‘The Production Exchange’ 

PhilHunt01.jpegPhil Hunt on getting more out of Health and Well Being Boards

By common consent, the 2012 Health and Social Care Act is one of the worst pieces of legislation passed in the history of the NHS. Disowned by Downing Street and described by the highly respected King‘s Fund as damaging and distracting, it was the last thing our health service needed when hit by growing pressures and an unprecedented funding squeeze.

Ironically however, the one piece of the legislation that did get general support – the creation of Health and Well Being (HWB) Boards – may lay the foundations for a much more integrated health and social care system contributing to the economic development of communities. Made up of representatives from councils and the NHS, the HWB Boards are tasked with assessing the health needs of their local population, promoting greater integration of services through joint commissioning and pooled budgets. They have made a steady rather than spectacular start.

Recent King’s Fund analysis describes the impact of the HWB Boards to date as variable and limited, with little sign that they provide the collective leadership needed to tackle pressing issues. This isn’t altogether surprising. The current health and social care system is almost designed to put obstacles in the way of effective local leadership and integration of services. A series of different agencies, funding streams and conflicting targets makes working together much harder. 

And yet, we know that this has to change. Twelve years ago, Derek Wanless’s health review warned that unless we took prevention seriously, the UK would be faced with sharp rises in the burden of avoidable illness. How right he was. That is why our proposals for whole person care are so important. They aim for real integration with joint ownership, budgetary alignment, and accountability through the HWB Board, alongside a much stronger emphasis on helping to improve people’s health.

By asking HWB Boards to lead local commissioning for the increasing number of people with complex and multiple needs, and by bringing together services to work around people, we will finally be able to link health policy with all the other local level policies that have a bearing on health. Most notably, housing, planning, education, employment, skills and leisure, which by combining forces could do so much more to build up more resilient individuals and communities.

An excellent series of essays launched today by The Smith Institute think-tank shows the potential. As Rose Gilroy and Mark Tewdwr-Jones of Newcastle University point out, there is a critical relationship between health and the economy. Indeed, the 2010 Marmot review identified both a strong case for reducing health inequalities and a compelling economic case. Health inequalities are estimated at more than £30bn a year in lost productivity and welfare/health costs.

One more positive outcome of the NHS and local government working more closely would be to recognise their massive potential as employers of over 10% of the workforce, including improving their health and well-being. Reaching out meanwhile, to local schools and colleges could encourage apprenticeships and support people onto the skills ladder.

The link between economic performance and the health of local communities is increasingly clear. But revitalised HWB Boards could be crucial in focussing on one of the biggest challenges we face.

Lord Phil Hunt of Kings Heath is Shadow Health Minister in the House of Lords. He tweets @LordPhilofBrum

Published 26th February 2015

Silver linings

Phil Hunt on getting more out of Health and Well Being Boards

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