§ 1. Mr. FlynnTo ask the Chancellor of the Exchequer what new proposals he has to assist the prompt repayment of debts to subcontractors from contractors employed by Government Departments.
§ The Chief Secretary to the Treasury (Mr. Michael Portillo)All contractors to a Government Department are required to commit themselves by contract to their subcontractors to pay promptly, ordinarily within 30 days.
§ Mr. FlynnDoes the Chief Secretary realise that many prime contractors do not consider paying their debts until writs have been issued and that that adds greatly to the climate of fear that is paralysing much of British industry? 976 Will he assure us that the 30-day limit will be rigidly applied? At the moment, there are many exemptions. Will the Chief Secretary consider introducing the right to claim interest on all debts that are not paid within 30 days?
§ Mr. PortilloThe hon. Gentleman has pursued that matter assiduously with me in correspondence and parliamentary questions. It is a requirement that there should be a commitment within the contract to pay within 30 days. That has been with us since April and the Government take it very seriously. I should be happy to take up on the hon. Gentleman's behalf any case that has arisen. It is possible, as he said, for a company to pursue the matter through the courts. It is also possible for the Government to take account of poor performance when awarding future contracts. Those are the best remedies, rather than imposing interest payments, but the hon. Gentleman may wish to pursue a particular case with me.
§ Mr. James HillIs my right hon. Friend aware that that system is not working, particularly in the private sector? If a subcontractor objects to the main contractor about non-payment within 30 days, he will probably never be given another contract. It is impossible to legislate for such an event. This must be part of the moral factor of a contract that the Government should emphasise in both the public sector and the private sector.
§ Mr. PortilloI agree with my hon. Friend that it is easier to see this as part of a culture than as a matter where legislation would be effective, although I do not rule that out entirely for all time. The Government have made efforts to improve the small claims court procedure, which requires large companies to report on their performance in their report and accounts. As I said to the hon. Member for Newport, West (Mr. Flynn), we have taken steps with our own contractors regarding the way in which they deal with subcontractors.
§ Mr BeggsDoes the right hon. Gentleman accept that it is desirable that subcontractors are protected? A serious problem, which must be addressed, is that after a main contractor has taken over a contract, the subcontractor having been approved by a Government Department, the main contractor could go into liquidation, with no protection for the subcontractor. Will the right hon. Gentleman undertake to look into that problem and endeavour to protect subcontractors?
§ Mr. PortilloThe hon. Gentleman raises an interesting and difficult problem. I am not sure to what extent Government protection can be extended in these cases. It might help me, however, if the hon. Gentleman were to refer to me the case that he has in mind and we could see whether any general lessons could be drawn from it.