Tag: late payment

Short-term funding cycles are creating financial instability for Scotland’s charities, says Holyrood Committee

SCVO: Fair Funding needed now more than ever

  • Calls come as Holyrood Committee publishes report on public funding to voluntary organisations

Short-term funding cycles are creating financial instability and diverting time and resources away from charities’ delivery of services, according to a pre-Budget report by the Scottish Parliament’s Social Justice and Social Security Committee.

At the outset of the Committee’s inquiry the Scottish Council for Voluntary Organisations painted a stark picture of the challenges faced by charities in Scotland, identifying a 2.1% real terms decrease in Scottish Government funding in the previous budget, against a backdrop of increased inflation and high demand for services.

In recognition of the critical role charities play in supporting Scottish society, the Committee’s report calls on the Scottish Government to look at options to prioritise three-year-funding and include provisions for inflation-based adjustments.

During the inquiry, witnesses raised concerns about inconsistency, complexity and a lack of transparency in the application process for funding. In response, the Committee’s report recommends that the Government, and its partner grant awarding-bodies, streamline and standardise application processes and improve the transparency of the grant-making decision process.

The Committee also heard about the challenges some charities have faced because of delays to funding decisions and payments, issues the Committee wants the Scottish Government to resolve.

Bob Doris MSP, Deputy Convener of the Social Justice and Social Security Committee, said: “The Scottish Government has a commitment to provide fair funding for the essential work done by Scotland’s charity sector.

“We make it clear in our report that this commitment should be recognised in the upcoming budget, so that the sector’s vital work can be safeguarded. We call on the Government to prioritise strengthening its approach to multi-year funding and improving its processes.

“Whilst we acknowledge the Scottish Government’s ability to agree to multi-year funding when it does not know what funding it will receive from the UK Government for subsequent years, our committee has made practical suggestions to overcome these challenges.

“We believe that implementing the straightforward measures outlined in our report, including multi-year funding, could positively impact the effectiveness of a sector that does so much to help so many.”

Responding to the report, Scottish Council for Voluntary Organisations (SCVO) Chief Executive Anna Fowlie said: “I welcome today’s report, and the committee’s recommendations. Throughout their inquiry, the Committee heard from witness after witness of how the practice and culture around public  funding for voluntary organisations is broken.

“Too often and for too long voluntary organisations providing vital services to people and communities across Scotland contend with budget cuts, short-term funding cycles, late payment, incoherent decision-making, poor communication, inadequate grant management and more. That must end. 

“The voluntary sector needs a funding landscape that is fair, flexible, sustainable, and accessible – as long-advocated by SCVO and recommended by the committee today. 

“At a time when many voluntary organisations are facing extreme financial difficulties, these long-standing calls are more essential than ever. 

“The prize is a sustainable sector, strong public services, and resilient communities – one the Scottish Government must grasp with both hands.”

The Committee report:

sp-third-sector-funding-principlesDownload

Business Secretary launches review to prevent small firms from being ripped off by larger companies

Comprehensive review into tackling late payments for small businesses announced by Business Secretary

  • Business Secretary Grant Shapps announces in-depth review into payment practices to prevent small firms from being ripped off by larger companies
  • aimed at ensuring small businesses across the UK receive the payments they deserve, with £23.4 billion currently owed in outstanding invoices
  • comes as the Small Business Saturday Campaign marks its 10th anniversary

Business Secretary Grant Shapps has today – Small Business Saturday – announced a comprehensive review into tackling late payments for small businesses, while urging large companies to pay their smaller suppliers promptly.

Small businesses routinely spend significant time and resources chasing late payments from businesses they supply which can lead to cash flow problems, putting their firms at risk and preventing them from growing. The majority of small businesses do not have large balance sheets and cannot accommodate long payment terms or delays to receiving payment within their cash flow cycle.

The Payment and Cash Flow review will scrutinise existing payment practices and the measures in place to make sure small firms are not ripped off by their larger clients – with over £23.4 billion currently owed in outstanding invoices to UK businesses.

The review will consider the progress made in specific sectors of the economy in combatting late payment and will also include an in-depth examination of current payment reporting regulations and the Prompt Payment Code.

In addition, the statutory review of the Small Business Commissioner will help to ensure that the UK has the right arrangements in place to best support small businesses.

Business Secretary Grant Shapps said: “The UK’s 5.5 million small businesses are an integral part not just of our economy, but of our communities too, and this government is firmly on their side.

“That many small firms are routinely paid late is intolerable and presents a real barrier to productivity, the creation of high-skilled jobs and ultimately economic growth.

“This review will allow us to build on the success we have had so far in curbing late payment, unshackling small businesses from this exploitative practice and creating a system that is fit for the future.

“While we crack on with this work, I also want to remind big businesses of their duty to ensure their smaller suppliers are paid promptly.”

The government is already demonstrating its own commitment to prompt payment through the Procurement Bill, which is currently being debated in Parliament. The legislation sets out the requirement for 30 day payment terms to apply in public sector supply chains which will help level the playing field for SMEs and encourage more businesses with smaller budgets to bid for public sector contracts

The announcement comes alongside the government’s support for Small Business Saturday – which celebrates small business successes and encourages consumers to support smaller firms in their area – with the Business Secretary out on a visit to his local high street in his Welwyn Hatfield constituency.

Also within the scope of the review is the role of technology-enabled accountancy platforms in tackling late payments and promoting a better understanding of prompt payment measures within the small business community.

The role of finance, particularly how major banks and innovative lenders can help small businesses manage their cashflow and identifying barriers to accessing finance will also be part of the review’s remit. The review will include a consultation on the payment reporting regulations, setting out specific proposals on renewal and improvement of these duties. 

The review of the Small Business Commissioner will consider both its role and effectiveness, drawing on the consultation on the Commissioner’s powers that was conducted in 2020.

The government is committed to supporting small businesses across the United Kingdom through a series of measures including the recently expanded Start Up Loans scheme which saw an additional 33,000 new loans made available to SMEs.

Small businesses have also benefited from the Energy Bill Relief Scheme which provides non-domestic customers with a discount on their gas and electricity bills in light of the rise in global energy prices.

As part of the Autumn Statement, the Chancellor announced a £13.6 billion package of support for business rate payers, including the £500 million Supporting Small Business scheme.