A new study by the Specialist Engineering Contractors’ (SEC) Group suggests that councils aren’t doing enough to protect SME contractors. Since these contractors are part of the local business ecosystem, this could in turn hurt councils. This is especially pertinent in light of recent government schemes allowing councils to benefit from local economic growth. So how can councils do more to support local businesses?
Support in the supply chain
The SEC group study revealed clear opportunities for councils to protect local SMEs in their supply chain. A reported 62% of councils aren't ensuring that sub-contracts and sub-sub-contracts include 30 day payment clauses. Just 12% check that sub-contractors are paid on time. Redressing this alone could protect the cash flow of SMEs.
Cash retentions were also raised as an area for improvement. Only 1.5% of councils included in the study were certain their main contractors don't deduct retentions from the supply chain.
Business rate benefits
53% of small businesses say late payments affect their progress. 35% say they have struggled to pay business rates as a result. This suggests that supporting the supply chain and encouraging prompt, fair payment could benefit councils by reducing the risk of late or non-payment.
There's even a chance that councils could keep a greater proportion of those payments. The government is extending its pilot scheme to allow councils to retain their growth in business rates. The current phase, allowing retention of 50% of business rate growth, is estimated to yield £2.4 billion for participants. The next phase, allowing 75% retention, should provide even more, especially if authorities support the local economy.
There are many ways in which councils can support local businesses, even on a tight budget. For instance, councils could provide publicity for events like Small Business Saturday. FSB stats show that 63% of money spent at small businesses is re-spent in the local area, compared to just 40% at larger businesses. If councils can add extra support like business mentoring courses for entrepreneurs, they could make an even greater difference.
Once these benefits are in place, making sure that they are protected is of vital importance. That means enforcing any unpaid business rates in a sensible, sensitive manner that fits this new engagement strategy. To find out how Dukes can help achieve these goals, contact our centre manager today.