Her Majesty Queen Elizabeth II delivered the annual Queen’s Speech Wednesday (May 27) making the launch of a new session for the UK Parliament. MPs gathered Wednesday morning at the House of Lords to hear the reading of the government’s upcoming agenda for the coming months. This year, the speech introduced 21 new bills, including a crucial piece of legislation that addresses B2B disputes.
The Enterprise Bill has been a long time coming for Prime Minister David Cameron’s Conservative government as businesses struggle to manage their cash flow, access working capital and get paid on-time by their large corporate suppliers.
The Queen’s Speech uttered just one phrase on the legislation: “Measures will also be introduced to reduce regulation on small businesses so they can create jobs.” It may not have gotten the most attention of Parliament’s upcoming efforts, but the Enterprise Bill has massive implications for the way small businesses operate in the UK.
Cutting The Red Tape
According to an official outline of the legislation introduced by the Queen, the Enterprise Bill aims to “cement the UK’s position as the best place in Europe to start and grow a business, by cutting red tape and making it easier for small businesses to resolve disputes quickly and easily.”
This cutting of the red tape will reportedly save SMEs at least £10 billion (about $15.3 million), a move that sees the establishment of the Extension of the Primary Authority scheme, which will streamline regulation and act as a mechanism for local regulators to provide advice on compliance to local businesses. Authorities will also be forced to increase their transparency to assure that their efforts are designed to address businesses’ needs.
This aspect of the bill complements the existing Deregulation Act 2015 but, according to reports, marks the first time that independent authorities will be required to contribute to these goals. According to the director general of the British Chamber of Commerce John Longworth, while the Enterprise Bill could make a “real difference” in this area, he argued that cutting the red tape for businesses may not be so straightforward.
“As much of the costly regulator burdens are created by the EU, cutting red tape will be a challenge,” Longworth told Business Zone.
Getting Out Of Court
One of the most impactful aspects of the bill is a plan to encourage B2B companies to settle any business disputes they have out of court – especially issues involving late payments. According to officials, this will be achieved through the launch of the Small Business Coalition Service that will work to settle disputes between SMEs.
The effort will coexist with the existing Small Business, Enterprise and Employment Act 2015, as well as the much older Late Payments of Commercial Debts Act, which similarly explore a crackdown on late payments.
But even with this range of legislation, some experts say Parliament has not done enough to support the finances of small businesses, nor sufficiently clarified how this aspect of the legislation will work.
“The problem is always going to be awareness,” said Steven Renwick, who heads SME invoice automation software company Satago. “A large portion of small businesses aren’t even aware of the Late Payment of Commercial Debts Act, so how are they going to know this service is actually operated?”
Renwick added that he believes SME owners will likely be discouraged to report their large corporate buyers paying their invoices late, though said in an interview with BusinessZone that the Enterprise Act is a “decent attempt” at combating the issue.
Longworth, however, argued that the problem must be taken on by both authorities and the SMEs. “The government has a role to play in helping to alleviate both the cause and effect of late payment,” he said. “But to truly change the culture of late payment, we need to see a concerted effort from businesses themselves.”