HC Deb 05 March 1998 vol 307 cc1177-8
1. Barbara Follett

What assessment she has made of the damage caused to small businesses by the late payment of commercial debt. [31125]

11. Mr. Lock

What representations she has received from small businesses on the damage caused to them by the late payment of commercial debt. [31137]

The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche)

It is clear that late payment continues to be a major concern to small businesses, with a number of surveys showing that British businesses are less profitable and less competitive as a direct result of late payment. In some cases, their very survival is threatened. That is why we have responded to calls from the small business community and announced a new package of measures to tackle late payment. The Late Payment of Commercial Debts (Interest) Bill is an integral part of the measures and is supported by the majority of small firms.

Barbara Follett

May I congratulate my hon. Friend on the legislation? Does she agree that small businesses, working in partnership, can help to promote a better payment culture?

Mrs. Roche

I agree entirely with my hon. Friend. If we are to improve the payment culture, there needs to be proper partnership between Government and business organisations. That is why we are working jointly with the Forum of Private Business, the Federation of Small Businesses, the Institute of Directors, the Confederation of British Industry, the British Chambers of Commerce, the National Farmers Union and the Union of Independent Companies through the better payment practice group to promote a better payment culture. The group has met regularly and already produced a substantial body of work.

Mr. Lock

May I also congratulate my hon. Friend on the measure, which will be welcomed by industry? I notice that the Bill refers to late payment among small and medium firms. Will she inform the House what percentage of firms will be able immediately to reap the benefit of the measure? Does she agree that the problem of late payment disproportionately affects small and medium enterprises?

Mrs. Roche

I absolutely agree with my hon. Friend that the problem disproportionately affects small businesses. That is why, under the phasing arrangements that we propose, small firms will be able to take advantage of the proposals.

We fully support the decision of the Federation of Small Businesses to publish league tables of average payment times of big companies and their large private subsidiaries. The league tables will open to public scrutiny the payment record of Britain's larger companies and provide small suppliers with useful information on how quickly they can expect to be paid when dealing with a large customer. I congratulate the federation on that project and wish it every success.

Mr. Lansley

Will the hon. Lady heed warnings from bodies such as the CBI and the British Chambers of Commerce that statutory interest payments may lead to longer contract payment terms between companies and their suppliers? Consequently, will she amend the legislation?

Mrs. Roche

The hon. Gentleman is quite right to hint that we have listened and consulted widely. Indeed, we are very grateful for the contribution of the British Chambers of Commerce. We have consulted it all along. If the hon. Gentleman has an opportunity to look at the legislation, he will see that it is not possible to opt out of it. We propose to give a reserve power to courts to deem that excessively long payment periods are a de facto opting out. I am sure that he and his Conservative colleagues will appreciate that.

Mr. Cotter

I am sure that the Minister knows that I and my colleagues agree with and very much welcome the Bill. Does she agree that, often, both local and national Government are very bad at paying? I hope that she shares my view that the Government should give a lead in that direction.

Mrs. Roche

I absolutely agree. I was a critic of the previous Government, who had an appalling payment record. The House will recall that the former Deputy Prime Minister, the right hon. Member for Henley (Mr. Heseltine), boasted of stringing creditors along. When the hon. Member for Chesham and Amersham (Mrs. Gillan)—who speaks on small firms on behalf of the official Opposition—was an Education Minister, almost a quarter of the Department's bills were paid late. That is why I intend to provide in the summer a league table of Government Departments, and I have taken the opportunity this week to remind local authorities of their obligations as well.