Red face for Major as CBI exposes the tardy payers

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The Independent Online
The Government's campaign to encourage companies to pay bills on time will receive a setback today with the publication of a survey by the Confederation of British Industry showing that small businesses are taking even longer to get paid than two years ago.

Its findings are likely to cause embarrassment to John Major, the Prime Minister, who recently pledged to shame late payers by forcing them to publish full details of their performance in settling bills.

The CBI survey found that late payment remains a problem for almost half of small and medium-sized businesses.

Although firms are improving credit control procedures and are writing off fewer debts than before, the average number of days taken for small companies to receive payment has risen marginally to just over 53 days, the report says.

And while fewer firms regard the issue of late payment as life-threatening, a quarter are having to wait for up to 90 days before being paid, up from 23 per cent in 1994.

The issue of late payment shot to the top of the political agenda earlier this year following remarks made by Michael Hesletine, Deputy Prime Minister, that as a small businessman himself he had been "quite skilful at stringing along the creditors". Late payment, he said, was part of the culture of British business.

His comments exposed sharp differences of opinion within the Cabinet and provoked a furious response from small business leaders. In March, Mr Heseltine's defence of late payments to small businesses was rejected by Ian Lang, President of the Board of Trade.

Mr Lang's position was backed by the Prime Minister, who announced a package of measures to encourage firms to pay bills on time.

Ministers, Mr Major said, would take the lead in clamping down on government departments and local authorities that delay settling bills which should normally be paid within a month.

League tables of departmental payment performance will be published each year and councils will be pressed to follow suit.

However, Mr Major stopped short of promising new laws to force companies to pay interest on delayed payment of bills.

Although business leaders complain that up to 5,000 small firms close down because of late payments, Mr Major and the CBI think there is a danger of creating more problems by introducing more legislation.