Why did late payment cut through at the UK election?

Small business policy was largely overlooked during the recent General Election in the UK.

This may be because the major parties were broadly on the same page. Why devote space in their manifestoes to issues that did little to distinguish them in the eyes of voters. 

Those that did make the cut stood out all the more as a result.

One particular issue that featured in several party manifestos was ‘late payment’. For example, the Labour Party stated: “We will take action on late payment to ensure small businesses and the self-employed are paid on time."

Late payment is when customers - typically larger firms - either delay paying beyond the agreed terms or offer unfair extended payment terms.

Why do some small business issues attract more attention?

While some other areas of small business policy were included in the party manifestos – such as business rates, small firm exports, and access to finance – it intrigued me how late payment became so prominent.

Why did late payment catch the eye of policymakers manifesto writers when other areas were neglected? 

Although many factors are important in explaining how and why certain policy areas become prominent, how policies are ‘framed’ is critical.

The Canadian-born sociologist Erving Goffman argued that ‘frames’ enable people to ‘locate, identify and label’ events in their life.

Researchers have built on this by studying the way that social movements such as the Civil Rights Movement framed their messages. They identified three stages to this framing process.

1 Diagnostic framing – Identifying the problem

Many social movements identify the issue they are seeking to address in terms of injustice or perceived threats. This often involves portraying groups as ‘victims’.

We can see this playing out in the late payment issue. The small firms who suffer from late payment suffer an injustice.

It is not their fault payment is late, but they must deal with the negative consequences it brings. This includes increasing borrowing to cover the delay in cash or restricting the number of clients to ensure enough cash is available. Some businesses delay recruitment or investment due to late payment.

Often a social movement will identify a source of blame for the problem. This may also involve identifying the opposition. ‘Just Stop Oil’ have this off to a tee. The oil companies are the ‘bad guys’.

In the case of late payment, large powerful firms who can (and do) withhold payment are the clear ‘bad guys’ who are creating a completely unnecessary problem for small businesses.

2 Prognostic framing – Identifying the solution

The second stage is where things get more difficult. Within social movements, disputes about solutions are often evident.

Some solutions are shaped by the problem itself. In the example of late payment, the problem itself suggests a solution through informally shaming those who engage in the practice, as embedded in the Small Business Commissioner’s Prompt Payment Code, or a more formal approach using legislation.

In other cases, different stakeholders may propose contrasting solutions that reflect their own perspectives and advance their own interest. Identifying the preferred solution for one great of stakeholders, such as small business owners, may also include refuting solutions by those in opposition.

3 Motivational framing – Providing the impetus to act

The third stage, motivational framing, can be seen as a ‘call to arms’.

Motivational framing references factors such as the severity and urgency of the problem, propriety, and the efficacy of the solution. For example, climate activists emphasise the severity and urgency of the climate crisis and the ethical case for action.

Yet the severity and urgency can contradict the efficacy of the solution. If the problem is so severe, can the solution be effective?

The severity of the late payment problem is suggested by its extent - with over a quarter of small firms being affected.

How effectively are different business messages framed?

The table below ‘tests’ three policies from the Labour Party 2024 election manifesto: late payment, reforming business rates, and removing barriers to export, through the three framing processes.

Late payment passes all three of the ‘tests’. One-in-four small firms suffer injustice, with clearly identified ‘bad guys’.

The solution is represented by the problem and the motivation to act can be supported due to the numbers of firms affected. 

Similarly, business rates reform can be seen to pass the tests. Business rates are blamed for the decline of the high street and the solution is reform.

The visible decline of the high street provides the motivation (even though in practice the decline of the high street might reflect other factors such as changes in consumer behaviour).

Contrast these policy areas with removing barriers to exporting. There is no clearly identified injustice here. Instead of bad guys, there are only rather vague barriers.

The urgency, severity, or efficacy of the policy is not mentioned, even though increasing the proportion of small firms that export may have significant effects on the development of these firms, as well as a more limited impact on overall exporting.

Lessons for small SME advocates on how to frame messages

In conclusion, the insights on social movement framing underscore the strategic importance of effective framing in policy advocacy.

While some policy areas naturally align with framing processes and benefit from heightened political and public support, others face significant challenges.

Some of the prominent policies aimed at supporting small firms (such as tackling late payment) seem to conform to the three framing processes identified in research on social movements.

But there are also difficulties in framing policies for more complex, long-term problems affecting small and medium sized enterprises (SMEs) where it is harder to identify victims, injustices, and adversaries (such as barriers to exporting).

Understanding these dynamics can help policymakers and small business advocates develop more effective strategies for promoting policies that address the complex and long-term challenges small businesses face. This will ensure that the full range of issues receive the attention they deserve.

Further reading:

Why are ambitious female founders penalised by investors?

Growing pains: How to help small businesses scale

Why imitating innovation can be a successful strategy

How can an SME out-innovate bigger companies?

Kevin Mole is Associate Professor of Enterprise at Warwick Business School and the Enterprise Research Centre. He teaches Entrepreneurship and New Venture Creation on the Executive MBA and Global Online MBA.

Learn more about Entrepreneurship and Innovation with the four-day Executive Education course at WBS London at The Shard.

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