Atradius comment on political parties’ key business-related pledges

Global business Atradius, headquartered in Cardiff provides trade credit insurance, surety and collections services worldwide with a strategic presence in more than 50 countries.

Ahead of next week’s election, the company has analysed the main political parties key business-related pledges.  Here’s what they found:

Tackling late payments

The Conservatives, Labour and Liberal Democrats have all made promises to tackle the late payments crisis harming businesses.

Labour says it would stamp out the late payment of invoices via new legislation to force large businesses to reveal their payment practices. The Conservatives would improve enforcement of the prompt payment code, a voluntary code of practice for businesses, designed to encourage supplier payment in 30 to 60 days. The Liberal Democrats would require all government agencies and contractors and companies with more than 250 employees to sign up to the prompt payment code, making it enforceable.

Ruby Hartery, senior underwriter and insolvency expert at Atradius UK, says:

“Nearly two-thirds of all B2B sales are transacted on credit in the UK, and Atradius data shows late payments currently affect 40% of B2B sales across all business sectors. The UK consumer durables industry is hardest hit, with payments being collected on average two weeks past the due date, causing cashflow imbalances.”

“The impact of late and long payments on companies can’t be overstated, contributing to an estimated 50,000 UK business closures each year. The anxiety they cause also takes a huge toll on business owners’ mental health.

“Naming and shaming late-paying businesses, as Labour has proposed, would put pressure on them to pay their invoices on time. We haven’t yet got details on how this would work, or whether it would be accompanied by strict enforcement and penalties for companies that don’t comply.

“Even with these proposed measures, which would be a step in the right direction, we wouldn’t expect an immediate end to the late payment’s crisis. So, we recommend firms of any size protect themselves with trade credit insurance, enabling them to trade with confidence.”

Reforming business rates

All three parties have made pledges on business rates. While the Conservatives say they will create more Business Rates Retention zones, Labour and the Liberal Democrats have both pledged to replace the system; Labour haven’t specified what will replace the current business rates system but said reforms would level the playing field for High Street firms against online rivals, while the Liberal Democrats would implement a “commercial landowner levy”.

Ruby Hartery, senior underwriter and insolvency expert at Atradius UK, says:

“The outdated and unfair business rates system has for too long burdened British businesses, both large and small, dampening confidence and stymying investment plans. The system hasn’t been brought into the digital age. So, reform is long overdue and could help make our town and city centres more vibrant again.

“This will, we hope, lead to a thawing of business investment plans, which have been kept on ice in the economic stagnation and amid high borrowing costs.

“At a time when economic growth remains stagnant, and – despite falling inflation – consumers still aren’t spending, true reform to rates would provide a much-needed boost for UK businesses.”

Construction and house building

Housing was a key chapter in the Liberal Democrats’ manifesto, with pledges to revitalise planning departments with better funding and purchasing power, as well as investing in construction skills, training, and tech to ensure successful delivery of more housing. The party would also increase building of new homes to 380,000 a year across the UK.

Labour has pledged to build 1.5 million new homes – an average of 300,000 per year – over the course of the next parliament. Under new “golden rules,” councils will be required to prioritise building on brownfield sites and poor-quality areas in the green belt, dubbed “grey belt”.

The Conservatives promised voters they would build 1.6 million homes over the next five years if they are re-elected, by speeding up planning approvals. The Conservatives would fast-track planning for housing on brownfield sites.

Ruby Hartery, senior underwriter and insolvency expert at Atradius UK, says:

“The construction sector has been through the mill in the last few years. In 2023, construction accounted for 18% of UK insolvencies with 4,276 reported in England and Wales, and our data showed payment defaults in the construction sector increased by 32%. High interest rates and the cost-of-living crisis have continued to weigh on the sector. So, companies are looking to the winner of the general election to provide such much-needed support.

“All of the main political parties have ambitious targets to build more houses. The winning party must prioritise and streamline the development process. This includes reforming planning regulations to reduce bureaucratic delays, increasing investment in affordable housing, and ensuring that infrastructure supports new developments.

“Addressing the skills shortage through vocational training and apprenticeships, coupled with incentives for sustainable and innovative building practices, will be crucial.

“Only with a comprehensive, forward-thinking strategy can we meet the growing demand for homes and contribute to a thriving, resilient housing market.”