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Supply chain bullying affects one in five small businesses

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John Allan: Small businesses are no longer prepared to put up with sharp practices.

John Allan: Small businesses are no longer prepared to put up with
sharp practices.

NEW RESEARCH by the Federation of Small Businesses (FSB) uncovers alarming levels of widespread unfair dealing. In a survey of 2,500 FSB members, almost one in five (17 percent) said they faced supply chain bullying in one form or another in the past two years. The results indicate a serious deterioration of payment practices much wider than ‘pay to stay’.

The FSB is calling for a toughening up of the Prompt Payment Code, as well as fresh measures to stamp out the most heinous examples of bad practice like retrospective discounting and ‘pay to stay’. The Prompt Payment Code should be a key tool in improving payment culture. The Government has promised to toughen up the code.

The FSB wants to see any company looking to supply the public sector to extend the Government’s standard 30 day prompt payment terms to their own suppliers. Small businesses want 60 day payment terms to be set as an absolute maximum for any business signed up to the Prompt Payment Code.

If a company will not agree to 60 days they should not be allowed to sign up. As part of the FSB research, businesses were asked to give examples of the most common poor payment practices they had to deal with including pay to stay. The FSB has used these examples to create a list of the five most resented payment practices in use across the UK today:

Flat fees – ‘pay to stay’ 

Also known as ‘supplier assessment charges’ or ‘supplier investment payments,’ these are flat charges which companies levy on suppliers either as a requirement to be on a supplier list, or packaged as an investment into hypothetical future business opportunities. It is often indicated that non-payment will result in de-listing. New research has indicated that more than a quarter of a million (260,000) businesses could be facing so called ‘pay to stay’ charges after five per cent of businesses surveyed said they had been asked to make a payment by a customer or face delisting.

Excessively long payment terms – ‘pay you later’ 

In 2011 the EU issued a directive requiring all businesses to pay their suppliers within 60 days, or face interest payments on money owed. However, the UK implementation of the directive allows businesses to agree longer terms “provided it is not unfair to the creditor.” This has led to many companies insisting on payment terms of 90 or even 120 days. In effect this becomes an interest free loan from firms in the supply chain to large companies with excessive payment terms.

Exceeding payment agreements – ‘late payment’ 

As well as insisting on long payment terms, many companies are routinely exceeding agreed terms, or changing terms retrospectively to allow them to miss agreed payment dates. Also thought to be common is the practice of extending payment dates if money is owed on, or close to, the end of a financial reporting date in order to smooth a big company’s balance sheet.

 Discounts for prompt payment – ‘one for you, one for us’ 

Prompt payment discounts are arbitrary discounts big firms give themselves for paying early or even just on time. For example, a firm that has agreed to pay 120 days following receipt of an invoice may also apply an automatic discount of 3% if they pay on or before the 120th day.

Retrospective discounting – ‘balance sheet bonuses’ 

Some firms seek to apply retrospective discounts to outstanding money owed to a supplier. This involves the company effectively changing the terms of the contract signed with the supplier after a contract has been agreed. Methods used to extract these vary, but include threats of de-listing, withholding payment, ‘marketing contributions’ and previously unagreed discounts applied to specific volumes of business. John Allan, National Chairman, Federation of Small Businesses, said: “When the public think of their favourite brands, they are unlikely to connect them with the sort of immoral payment practices which are becoming all too common across an increasing number of industries. “However, it is clear that whenever these examples come to light, the public shares the same sense of moral outrage as the small firms that have to put up with them on a daily basis. “The Government has indicated that they are prepared to do more to improve the culture of payment practices in the UK and they are right to do so. “The sense I get from talking to our members is that small businesses are fast approaching the breaking point. They are no longer prepared to put up with these sharp practices. Brands that think they can continue to squeeze their suppliers with impunity may get a nasty shock when what they are doing comes to the attention of their consumers.”

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Natural Resources Wales approves Ireland-UK interconnector licence

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GREENLINK INTERCONNECTOR LIMITED says it welcomes the decision by Natural Resources Wales (NRW) to approve its application for a Marine Licence for the Greenlink electricity interconnector project, which will link the power markets of Great Britain and Ireland.

An important project for Pembrokeshire, and the UK as a whole, NRW’s go-ahead is one of several consents required for the construction of the project and covers installation of the marine cable in UK waters.

The approval is a major milestone for Greenlink and joins the onshore planning consents granted unanimously in July last year by Pembrokeshire County Council and Pembrokeshire Coast National Park Authority.

Greenlink’s proposed 190km subsea and underground electricity cable will run beneath the Irish Sea to connect National Grid’s Pembroke Power Station in Wales and EirGrid’s Great Island substation in County Wexford, Ireland. It will have a nominal capacity of 500 MW.

The Wales-Ireland link is just one of four interconnectors being installed

Nigel Beresford, CEO for Greenlink Interconnector Limited, said: “We are delighted by Natural Resources Wales’s decision to grant this licence. This marks a significant milestone for Greenlink and another important step towards project construction, which we expect to commence later this year.

“The Greenlink team has worked constructively with Natural Resources Wales and Welsh marine stakeholders to find workable solutions to the many technical and environmental challenges facing a large infrastructure project like this, and this has been reflected in the quality of the final proposal.

“The thorough environmental and technical assessments we have undertaken, supported by the practical and value-adding feedback we have received from key marine stakeholders, have ensured that we move forward confident that we are delivering a well-designed project with the interests of the Welsh marine habitat at its core.”

The subsea section of the cable will be approximately 160km in length and uses high voltage direct current (HVDC) technology. The preferred route and installation methods were chosen following the conclusion of subsea surveys and consultation with key stakeholders.

In Ireland, a Foreshore Licence application was submitted to the Department of Housing, Planning and Local Government (Foreshore Unit) in 2019 and the onshore planning application was submitted to An Bord Pleanála in December 2020.

Greenlink is one of Europe’s most important energy infrastructure projects and brings benefits on both sides of the Irish Sea for energy security, regional investment, jobs and the cost-effective integration of low carbon energy. The project will offer important local supply chain opportunities and plans are being drawn up for ‘meet-the-buyer’ events in the local area prior to construction.

Once fully consented, Greenlink is expected to have a three-year construction programme, with commissioning planned by the end of 2023.

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Single port plan should be off the agenda for now says MS

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WELSH Labour Member of the Senedd for Mid and West Wales, Eluned Morgan, has welcomed a decision from Irish Ferries that underlines its commitment to the port of Pembroke.

The company has signed a 10 year deal with the Port of Milford Haven for the berth at Pembroke Dock which first came into operation under B&I Line in 1979. Since then, the port of Pembroke has seen multimillion pound investments to improve facilities and creating jobs and has become established as an important transport node with Europe.

In recent weeks, Westminster politicians have raised the suggestion that as a result of Brexit, Pembrokeshire could only support a single port linking the county of Pembrokeshire and the M4 corridor with the Irish Republic.

Eluned Morgan MS said: “I was frankly disappointed at the lack of ambition displayed by Pembrokeshire’s MPs over this issue. These continue to be worrying days for our ports which have played a pivotal role in defining the coastal communities of both Pembroke Dock and Fishguard over the years. We were told Brexit would bring benefits not the demise of our links with Europe. So I am pleased to hear that Irish Ferries has signed a 10 year deal with the Port of Milford Haven to maintain facilities at Pembroke Dock. I understand that Stena Line is committed to Fishguard also.

“In recent weeks, I have been in touch with Irish Ferries and Stena Line to understand their position as part of an ongoing conversation in light of Brexit and the subsequent shift in trade that has followed. We must all work together to ensure that Pembrokeshire is recognised as a gateway to Europe and seek out every opportunity to replace the trade lost in the years ahead.”

The Port of Milford Haven confirmed: “We are pleased to report that Irish Ferries reconfirmed its commitment to Pembroke Dock with the signing of a new 10-year deal.
This marks a huge statement of confidence in the Rosslare-Pembroke Dock crossing, which is the primary freight corridor carrying two thirds of the total freight units using the south Wales corridor, and supporting 325,000 passenger movements each year.”

Eluned Morgan is a Labour Member of the Senedd for Mid and West Wales and currently serves in the Welsh Government as Minister for Mental Health, Wellbeing and the Welsh Language.

She is also a member of the House of Lords.

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The Herald.Wales website launches this Friday, February 26

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A PEMBROKESHIRE based media company is launching a news website which will cover all of Wales this week, as it takes the leap from being a regional to a national news provider.

As part of the latest change to Wales’ evolving media landscape, ten jobs have been created and a further 20 secured, as Herald News UK Ltd launches its Herald.Wales service on Friday (Feb 26).

The company says it is investing a considerable sum over the next two years to provide news in both English and Welsh. As well as breaking news, coverage will include politics, entertainment, sport, and opinions from a number of contributors – including Welsh Media Awards (Best Columnist) Winner 2019, Matthew Paul.

Political Editor Jon Coles, said: “Launching a national news platform is something we’ve been thinking of for two years.

“The pandemic and lockdowns made us put the project on pause. Despite Covid-19, our print title, The Pembrokeshire Herald, has bucked the trend of shrinking circulation and that’s encouraged us to take this next step.”

Jon Coles continued: “We provisionally chalked in St David’s Day to launch; however, the late entrance of the US-owned and London-based Newsquest to the market with ‘The National’ came as a surprise.

“We had already set up and were trialling our website and tweaking it in the autumn.

“We were a founding patron of New Media Wales with whom we were looking forward to working with to provide independent news online.

“When New Media Wales partnered with Newsquest, I was surprised and disappointed. Our plans had to change and so we brought our launch date forward.”

When it comes to Herald.Wales’ stance on the big issues which affect Wales, Jon Coles said: “We will report every political view. Herald.Wales starts from the position that Wales should have the choice over whether to be an independent country.

“That doesn’t mean we’re an uncritical voice in support of independence. We’re realistic about the challenges it presents us as a nation. We will report each side of the debate so our readers can form their own opinions on Wales’ future. However, our sentiment will favour an independent Wales.”

South & West Wales Editor Tom Sinclair said: “We’ve built a network of contributors across Wales to provide news for every area.

“We will report on local news, news from Wales’ regions, and Welsh national news in Welsh and English. Video content will be important to us.

“Our introductory video has already gained plenty of views and our new Facebook page is getting more followers daily.

“We are confident there is space in the market for a genuinely independent online news source for Wales, to complement what is being offered by the bigger players such as the WalesOnline and BBC Wales websites.”

Advertising Sales Manager Brian Hancock, who has worked in news media advertising for twenty years, said that he thought that Herald.Wales would undoubtedly be a success.

He said: “Despite the slow down in revenues to all commercial news organisations due to the pandemic, we have secured commitments which will ensure the future of the new site.”

He added: “I would like to thank the nearly 5,000 Welsh businesses who have supported The Herald since we launched the eight years ago, and who are continuing to support our independent news with our weekly print publication, The Pembrokeshire Herald – and now Herald.Wales.”

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