HC Deb 14 February 1996 vol 271 cc991-2
1. Ms Coffey

To ask the President of the Board of Trade what assessment he has made of the impact on British firms of late payment by Government Departments. [13502]

The Minister for Small Business, Industry and Energy (Mr. Richard Page)

The Government recognise the problems that the late payment of invoices can cause, particularly for small businesses. It is important that the public sector leads by example and settles its bills on time. My hon. Friend the Economic Secretary to the Treasury is responsible for Government Departments' payment policies and has instructed them to abide by the Confederation of British Industry prompt payers code and to publicise their payment policies. The average figure for Departments' payment performance in 1994–95 showed an improvement over 1993–94. The Department of Trade and Industry's payment performance has improved, rising to 93 per cent. in 1995–96.

Ms Coffey

Does the Minister agree with the Chancellor of the Exchequer that late payments can make the difference between survival and failure for many small businesses, or does he agree with the Deputy Prime Minister who has boasted of his own late payment policy? Does the Minister not regard the Government's £230 million of late paid bills in 1994–95 as a total disgrace?

Mr. Page

The Government should set a good example, and no hon. Member knows more than I the importance of prompt payment of bills to small businesses. A few years ago, the Government started to publicise their payment policies and the situation has improved, but it must get better. For example, last year the Department of Trade and Industry paid 93 per cent. of its bills in 30 days—that is, 13 of every 14 invoices were paid on time. A recent survey conducted by a reputable organisation found that the average payment time by medium and large companies is 48 days. The Government are setting a good example and leading the way.

Sir John Cope

Is my hon. Friend aware that there is a great deal of support for the actions that he and the Government have taken over late payment which have led, for example, to the CBI code and to the company law statutory instrument obliging public limited companies to report their policy? Should not plcs be obliged to disclose in their annual reports what they have done during the past 12 months, as is the case for Government Departments?

Mr. Page

I note the comment that my right hon. Friend made about that statutory instrument, and it is currently being considered. However, no magic bullet can be fired which will automatically make the small business man or woman receive their money on time. I emphasise that there is a responsibility on every small business man or woman to undertake proper credit control policies, rather than to hand out goods and services and hope that they will receive the money.

Mrs. Roche

How can the Minister be so complacent when the Government are threatening the very survival of many small businesses to which they owe millions of pounds? The Forum of Private Business found that one in five business owner-managers is prevented from expanding because of late payment. Does the Minister agree that this makes a complete mockery of the Government's hope to make Britain the enterprise centre of Europe?

Mr. Page

No one in Government is complacent about the present payment policies. When I was appointed to my present post a few months ago, the first thing that I did was to hold a series of bilateral discussions with every Minister responsible for small businesses in every Department. Having spoken to them about their payment policies, I know that my hon. Friend the Economic Secretary to the Treasury is working on a policy to improve standards so that the Government, who are already setting a good example, can make it even better.