Beaumont, Chief of External Affairs at the Federation of Small Businesses, asserts that economic recovery rests on tackling late payments...

had got worse in the last quarter. Unsurprisingly, firms in the B2B sector are hit far harder than those in B2C. The problem is most prevalent in the manufacturing and construction industries; more than 70 per cent of smaller businesses in the construction sector and 66 per cent in manufacturing now experience late payments The problem here is endemic, affecting whole swathes of the economy. The UK has become unique in being a country where it became acceptable to pay people late.

Having sufficient cash assets in a business is vital to survival, and withholding it is pushing many smaller businesses to the brink – or worse. This is a sector that contributes a staggering £2.1 trillion to the UK’s economy and employs 16.4 million people – that’s the majority of private sector turnover, and employment.

And yet with minimal cash reserves in small businesses, it is at significant risk. We have already lost 500,000 small businesses in the two years of COVID and lockdowns, and more will follow if large businesses continue to use small businesses as free credit.

Small businesses and selfemployed contractors cannot just wait to be paid, frequently chasing for payment for high-quality work, delivered on time and on budget – but long ago. Big businesses simply must become better corporate citizens with their supply chains, including when it comes to stamping out poor payment practices.

Disturbingly, this behaviour isn’t just confined to the private sector. Late payment is widespread within UK Government supply chains. One of the worst late payers to small businesses are major suppliers to the

Ministry of Defence. Taxpayer money, often paid out quickly to public procurers in as few as five days, should not be hoarded and only given to small suppliers 90 days later.

For the first time since 2019, there is finally a window where we think that progress can be made. The Prompt Payment Code has been toughened, so those signing up now have to pay 95 per cent of small business invoices within 30 days –and the Code must be signed by the chief executive or finance director to ensure buy-in at the highest level of big business. The Government’s rule that big suppliers to the public sector must meet these terms should now be implemented.

FSB is campaigning for Audit Committees of large firms to be given oversight of payment practices, a policy which has just been adopted by Shadow Chancellor Rachel Reeves and so will be in Labour’s manifesto for Government at next year’s election.

The Department for Business, Energy and Industrial Strategy (BEIS) last year launched a consultation, which means no actions adopted until it reports in the summer – however despite it being the eighth and ninth consultation in a decade, it’s possible this could lead to progress even though we’ve only had silence from BEIS for the last four years.

At FSB, we know not to wait for government departments to get with the programme. So we are now pushing in Parliament to improve the current Procurement Bill, including a new requirement that public bodies pay their small suppliers within 30 days and an official debarment for chronic late-payers, to make them unable to bid for public contracts and taxpayers’ money. We also set up a debt recovery service for our members to help with solicitor’s letters, which by the end of last year meant that over £1.2 million in unpaid debt had been recovered for members using the service.

It is worth noting international experience. The UK is almost unique in being a place where it is acceptable to pay small businesses late, and that’s not a record to be proud of. The EU is set to revise its Late Payment Directive with

President Von Der Leyen saying in September: “it is simply not fair that one in four bankruptcies are due to invoices not being paid on time”. This was the directive that the UK weakened before bringing it into domestic law; after Brexit, it’s now time to make this work for the UK’s small business community.

Last year, the Netherlands went further –reducing the legal payment term for large companies to pay their SME suppliers to 30 days (from 60 days). Belgium updated its rules in 2021 to set a default payment term at 30 days. In France, the standard payment term is 30 days if no contractual payment term has been agreed between the parties.

It is clear that small businesses across the world will be paid sooner – and the UK should be leading the way rather than trying to catch up.

New Zealand will be adopting some of the early tools the UK pioneered in the last decade, such as the Duty To Report, but building on and improving them. FSB is working with the New Zealand Government to learn the UK’s lessons, such as having a small business-focused website for people to check payment practices for a large client before they sign a contract. Audit committees of large firms can also use the Duty To Report data to assess how their company is doing, and explore proposed measures to improve their results – and then report back in the firm’s annual report.

With small businesses and the self-employed facing so many cashflow challenges, and with the Government’s finances at full stretch - the time for action on late payments is now. Helping small businesses that make up 99 per cent of the UK’s business community to recover and grow, at zero cost to the Exchequer, would be a win-win.

And with a general election next year, this would be a way to try to attract 5.5 million votes, too

Further Information

The Federation of Small Businesses (FSB) is the UK’s largest membership organisation for small businesses and the self-employed. It offers its members a wide range of vital business services, including advice and financial expertise as well as a powerful voice heard in governments.

More information is available at www.fsb.org.uk

Tom McBarnet, Chief Executive of Forces in Mind Trust, asks: what will the world look like in 2030 and how will this impact veterans?

For over a decade Forces in Mind Trust has established a reputation for funding credible research into the obstacles and challenges faced by those transitioning to civilian life following employment in the Armed Forces.

Supporting the Service leaver and their family on this journey, the Trust’s work has sought to positively influence policy and support provision in order to enable a successful and sustainable transition. So, it was with a sound knowledge of the current issues faced by this community and also recognising the need to plan for the challenges ahead, that in 2019 we decided to commission a forwardlooking study to identify future economic, social and political trends likely to impact the UK, and the impact, in turn, of these trends upon the Armed Forces and those leaving the Services.

While most of our work is focused on generating the evidence base to influence the work of policy authors and service deliverers, we recognize that real change only happens with buy-in from stakeholders and those who can materially change the landscape of transition for Service leavers. So, engagement with, and support from, our many partners and collaborators in Government, public services and the charity sector was vital in the conduct of this project, taking account of their expertise and perspectives as entities already invested in supporting the Armed Forces Community. And how relevant and timely to look toward the potential impact and consequences of future trends as the whole country found itself working through the unanticipated, and unplanned for, consequences of Covid-19.

Working with an excellent team at Future Agenda to set an horizon of 2030 and beyond, in 2021 we published a set of three reports: Lifting Our Sights Beyond 2030 which focuses on the impact of future trends on the transition of our Armed Forces Community from military to civilian life, alongside The Transition Journey that provides detailed accounts from 30 ex-Service personnel, and the Stakeholder Toolkit which has been written with specific stakeholders in mind and includes a toolkit for the private sector, together with others for the charity and public sectors and the media.

The main report sets out 32 future trends identified through Future Agenda’s work with leaders and subject matter experts from the public, private and charity sectors, academia and think tanks. The final 32 foresights were selected because a consensus emerged which showed that they are the issues most likely to impact on transition from the Armed Forces to civilian life during and beyond the 2020s.

The full report is fascinating, accessible and highly applicable to the world of work and business. Whether the perspective is of seeking to engage ex-Service personnel in business, or from personal experience of having to address transition challenges, the character and nature of the identified trends and their assessed impact demands consideration and closer engagement. Some of the key trends are selected below which I hope encourages deeper exploration into Lifting Our Sights’ materials or, if you prefer the medium of film, you can watch two short films here and here.

Changing characteristics of conflict –Though the nature of war remains immutable, the characteristics of conflict in a world of cyber-attacks, biowarfare and misinformation, means that military forces are used to addressing challenges in both the digital and physical world. The demand for technical skills alongside physical ability will attract different applicants to the Armed Forces with different capabilities and this presents new opportunities for employers as well as Service leavers seeking civilian employment.

Data and automation – Armed Forces careers and military operations are increasingly data driven and so familiarity already with working in tech-enabled environments will help some with postService career opportunities. In civil society too, better data will also provide opportunities for an improved and deeper understanding of veterans’ needs and targeted support requirements.

Reskilling, upskilling and the skills gap –The changing nature of work and increasing retirement ages will demand reskilling and upskilling through life to become the norm. Service leavers will find use for their transferrable skills, but will continue to need to ensure they can effectively communicate their skills to the jobs market, translating their military experience for the civilian.

The blurring of work – As we have seen during the pandemic, the civilian world of work is changing. There is less formality and structure, less of a focus on 9-5 in a central office, and more flexibility. The gig economy is growing, with more people choosing to work when and how they want to. This can be a positive development for many, but creates an imperative for those who have experienced a more structured, formal and supportive work life in the Armed Forces to be able to adapt to the civilian jobs market, and make the most of this flexibility. It may be that the Armed Forces must adapt too towards a more flexible workforce, which could help enable a smoother transition.

Accelerating to Zero Carbon – For the Armed Forces, developing a response climate change will mean adjustment to new threats and how existing tasks are approached. There will be a growing need for those skilled in building climate resilience across all sectors, which could provide opportunities for transitioning personnel, many of whom will have practical experience of risk mitigation in this area.

What does this mean in practice?

The implications of the research are widereaching, and apply to many different organisations and communities. In the report, we identified the action which must be taken now to ensure we can continue to support those leaving the military in 2030 and beyond. Our priority action areas include:

• Empowering the system to ensure that both military and civilian systems in which veterans interact understand the challenges of the transition journey

• Empowering the civilian by equipping veterans to lead successful and fulfilled lives by helping them to take more responsibility for their future careers, finances and life choices in the military and beyond, so they are ready for life after transition.

• Personalising the transition process by tailoring support services to the circumstances of individuals and their families, to provide them with the support they need.

• Building accurate perceptions and improving public understanding of the role of the Armed Forces and skills of Service personnel. One of our key recommendations is to better communicate the transferrable skills offered by ex-Service personnel to businesses. We know the brilliant assets veterans can be to any business, but we need to ensure that businesses are aware of these as understanding of the Armed Forces and their role and skills changes.

The report identifies many changes forecast over the coming years, which represent both challenges and opportunities. We are encouraging anyone who works with veterans, or who wants to tap into their skills and experience for the first time, to take some time to look ahead, and consider how these changes may affect them. We believe this will allow us to work more closely together and really prepare for meeting the Government’s target of making the UK the best place in the world to be a veteran; at the same time tapping into the business benefits that can be achieved by doing so – not just in 2023, but in 2030 and beyond

The vast majority of Service personnel leave the Armed Forces, their lives enriched by their time in Service, and have a successful transition to civilian life and we don’t foresee this changing. But our mission is to make sure that every Service leaver and their family is able to thrive in civilian life and that means staying one step ahead, identifying and creating opportunities for Service leavers of the future, and providing the right support for those who need it. That really is lifting our sights to what can be achieved and looking to the future now.