The Small Business Bill: Key Points
The much heralded Small Business, Enterprise and Employment Bill (Small Business Bill) is currently being debated in parliament.
The proposed legislation contains some significant changes that will affect organisations from one-man bands through to global enterprises. Here are the key points of the Small Business Bill:
Access to finance
One of the most important issues to small business owners is access to finance. The Bill contains proposals to remove legal barriers to invoice finance, so that small businesses have another financing option on the table. For those who prefer loan finance, the Bill says it will “encourage greater competition in banking by improving the ability of challenger banks and alternative finance providers to conduct accurate risk assessments”.
Cheque imaging
In future all cheques will need to be electronically scanned when deposited at the bank. By switching to electronic images, banks will have to cut processing times from six days, to just two. This reduction in processing time will help to improve cashflow, particularly for smaller businesses by giving them access to their money more quickly.
Public sector procurement
The Small Business Bill contains proposals to improve access for small businesses to public sector contracts. It pledges to provide “a simple and consistent approach to procurement across all public sector authorities” to “remove barriers for small businesses”.
One of measures is to grant new powers to the Minister for the Cabinet Office or the Secretary of State, enabling him or her to investigate procurement processes and practices within UK Government departments and other contracting authorities, to ensure small businesses are being given a fair chance to compete for public sector contracts.
Changes to contracts and pay
To ensure that employees are treated fairly, the new Bill contains a number of tweaks to existing legislation. One of the headline changes is a proposed ban on exclusivity clauses in zero hour contracts, which have become increasingly popular amongst large companies. This particular clause may be challenged by employers concerned about privacy and confidentiality, but the expectation is that the change will pass unhindered.
The Government is also proposing to raise the statutory fine for employers found to be paying workers below the national minimum wage. Companies will be fined £20,000 per infringement where they are found to be underpaying their employees.
Late payment: not enough action?
Although the Bill has been praised overall by the Federation of Small Business (FSB) as a “landmark” … specifically designed to address the needs of small businesses”, there has been criticism from other organisations about its lack of action on late payment.
Business secretary Vince Cable has acknowledged the problem of small businesses being made to wait months for payment by large clients, yet the Bill does not go any further than to suggest that large companies should have to make public in their annual report how long they take to pay their suppliers. Whether this will be a sufficient incentive for large companies to speed up their payment cycles remains to be seen.
The Small Business, Enterprise and Employment Bill had its second reading in the House of Commons last month, but small business owners should expect further significant changes before it finally passes into Law.
