Debt (Late Payment) (Hansard, 20 January 1993)

§ 12. Ms. Lynne
To ask the President of the Board of Trade what further plans he has to tackle the problem of late payment of debt.

§ Mr. Leigh
The Government are already addressing the problem of late payment with a range of measures, including pilots with trade associations and new Government contracting terms.

§ Ms. Lynne
Does the Minister agree that late settlement of debt has caused many small businesses to go to the wall, not only in Rochdale but throughout the country, that this has led to increased unemployment and that the trend will continue in the foreseeable future? Does he agree that Government measures to date have not ended late settlement of debt? Is it not time we had a statutory requirement that interest be paid on overdue debts?

§ Mr. Leigh
The hon. Lady is, of course, correct in saying that this is a very serious problem for small businesses. We keep these matters constantly under review, and we have an open mind about the question of a statutory requirement that interest be paid on overdue debts. The problem—a difficult and serious one—is that it would simply result in larger companies' imposing longer credit terms on their contractors. Other countries in the European Community have such provisions. France and Italy are examples, but their late payment problem is worse than ours. Denmark and Germany, too, have such provisions, but the fact that they do not have the same problem is probably due as much to cultural factors as to statutory controls. Most small business organisations—such as the Federation of Small Businesses, the Confederation of British Industry and the Association of British Commerce—support our present stand.

§ Mr. Tracey
Is my hon. Friend aware that many Conservative Members have campaigned for many years for improvement in respect of the question of late payment, which is so very debilitating to small businesses, especially at this time? Does my hon. Friend know that small businesses say that some of the biggest companies in this country are among the worst payers?

§ Mr. Leigh
I pay tribute to the campaign waged by a number of hon. Members with regard to the late payment problem. As well as keeping an open mind about the need for legislation in the future, it is vital that the Government should set an example—indeed, there is a requirement that Government Departments pay promptly, within 30 days —and to ensure that prompt payment goes down the line to subcontractors. The campaign waged by hon. Members has had an effect on Government action, and I am delighted to say that the Association of District Councils 371 has taken up the campaign with regard to the need for prompt payment by local authorities and that trade associations, too, are following the problem through.