HC Deb 30 January 1985 vol 72 cc269-71
8. Mrs. Peacock

asked the Secretary of State for Trade and Industry if he has any plans to provide assistance to smaller firms to help them to cope with the problems caused by late payments of bills by large firms.

Mr. Trippier

I share the concern about the serious difficulties which that practice can cause for small firms. I have recently invited organisations representing industry to join me in examining possible initiatives.

Mrs. Peacock

I thank my hon. Friend for his reply. Will he consider withholding DTI grants from those firms which do not settle their accounts, or delay settling their accounts, with smaller firms?

Mr. Trippier

My hon. Friend advocates a course of action that has been suggested to me on a number of occasions. My immediate reaction to the suggestion is that that approach would be a recipe for bureaucratic complexity.

Mr. Ashdown

Will the Minister recognise that, as well as large firms, among those most guilty of this practice are local government organisations, many of them Conservative-controlled? Will he also recognise that in a period such as the present, with ruinously high interest rates, the late payment of bills can mean the death of small firms? If legislation is not appropriate in this matter, will he give consideration to the Government backing a code of practice, which can then be operative in the field?

Mr. Trippier

The hon. Gentleman obviously recognises the problem that I identified in my answer to the substantive question. It is important that we should stop short of legislation, as he seems to be suggesting, because a problem may arise where small firms may not be paying the bills of other small firms on time and where small firms may not be paying the bills of large firms on time. I should prefer to see some code of practice initiated by industry rather than by the Government.

Mr. Dickens

I congratulate my hon. Friend on all the measures that he has introduced to help small businesses in Britain, for which they are deeply grateful, but is he aware that many of the small companies in Britain are having inflicted upon them the large companies, who are dining out on the overdrafts of those small companies, and that many of those large companies are enjoying massive Government contracts? Is it at all possible that one or two of those companies could be exposed as late payers to help the small businesses?

Mr. Trippier

I doubt whether there would have been anything wrong if my hon. Friend had chosen to expose one or two of those companies in his question to me. If there is evidence that a number of large companies are delaying the payment of bills, I shall be grateful to receive it so that we can look at it more carefully.

Mr. O'Brien

I have noted the reply to the question from the hon. Member for Batley and Spen (Mrs. Peacock). Will the Minister also have regard to the problems facing small industry and the help and protection that it needs because of water charges? Will he have a word with his colleagues—

Mr. Speaker

Order. The question is about the late payment of bills.

Mr. O'Brien

This is a problem, because the water authorities demand payment immediately and the increase in water charges is causing a problem for small firms. Will the Minister have a word with his colleagues to try to get some easement for small firms?

Mr. Trippier

Certainly I am prepared to discuss the matter with my colleagues in the Department of the Environment.

Mr. Williams

Will the Minister recognise that, disastrous enough in itself as the 4 per cent. increase in interest rates has been for small firms, that increase worsens the problems outlined in the initial question? Will he further recognise that not only does it make it massively more expensive for small firms to finance the cash gap caused by this practice by large firms, but the higher rate of interest encourages large firms to delay payments even more?

Mr. Trippier

As my right hon. Friend the Prime Minister said yesterday at Question Time, it is a disappointment to see interest rates at this level. We all hope that the present level of interest rates is only temporary. As my right hon. Friend said yesterday, the effect could be worse if inflation were to rip as it did under the Labour Administration. I must take the opportunity to point out to the right hon. Gentleman that I welcome his new interest in small firms. We were appalled when in a debate on small firms on 18 January the official Opposition—

Mr. Speaker

Order. I think that that is also a bit wide of the subject of late payment of bills.