§ 5. Mr. Henry Bellingham (North-West Norfolk) (Con)When she next expects to meet representatives of rural businesses to discuss the prompt payment of bills. [146372]
The Minister for Rural Affairs and Local Environmental Quality (Alun Michael)sMy colleagues and I frequently meet representatives of rural businesses and we discuss a range of issues. Any request to discuss the prompt payment of bills would be considered on its merits.
§ Mr. BellinghamIs the Minister aware that according to the Forum of Private Business, 350 contractors who helped solve the foot and mouth crisis are still owed over £100 million? That is a staggering figure, and includes firms such as R. W. Pugh of Montgomeryshire, which is owed £500,000, and Luke Furse Earthmoving Ltd. of Devon, which did a superb job and is owed £1.2 million. Luke Furse is a family owned business that has spent £100,000 on legal fees and is being driven to despair. When will the Minister play fair? When will he try and rebuild his credibility with the rural community? When will he follow his own rules and guidelines on the payment of bills?
§ Alun MichaelThat is a slightly hysterical way of asking the question. Opposition Members would be very critical of the Government were we to pay bills in relation to which there were serious questions. It is right for the Government to have all claims carefully examined. It is a big job, but according to the estimates that I have been given, the process has saved the public purse—it is not the Government's money; it is the public's money, at the end of the day—about £800 million. It is right that the figures should be scrutinised.
§ Mr. David Drew (Stroud) (Lab/Co-op)When my right hon. Friend meets rural businesses, will he take up with them the question of how banks impact on rural areas? We were pleased that banks were so positive in relation to farming businesses during the foot and mouth outbreak, but they do not seem to be quite as helpful in dealing with rural manufacturers.
§ Alun MichaelManufacturing in rural areas is extremely important. More people are employed, per head, in manufacturing in rural areas than in urban areas, so issues relating to the services that they receive are important. As my hon. Friend suggests, we found a ready response from the banks to the problems facing organisations outside the farming industry as well as inside it, as a result of the impact of foot and mouth disease. If my hon. Friend has specific issues in mind, I shall be glad to discuss them with him.
§ Andrew George (St. Ives) (LD)The Under-Secretary of State for Trade and Industry, the hon. Member for 392 Edinburgh, South (Nigel Griffiths), confirmed to me on 6 November in the Chamber that over £50 million was being withheld in respect of claims for foot and mouth compensation pending a potential fraud investigation. Following the acquittal this week of Mr. Pedrick of Sheepwash in Devon in respect of a claim for £17,000, which I am told has cost the Department for Environment, Food and Rural Affairs a six-figure sum to pursue legally, can the Minister say how many more cases have yet to be resolved, whether the £20 million estimate for legal bills will be exceeded, and to what extent and when farmers with a legitimate claim will have those claims properly resolved?
§ Alun MichaelWhere we know that a claim is legitimate, it is paid. Legal and other costs incurred as a result of queries on claims have to be set against the large sums of money that I am talking about. As we are talking about possible savings of about £800 million, I am sure that the hon. Gentleman will agree that we are right to scrutinise claims carefully where they appear not to be substantiated, where they are not submitted in a timely manner or where there is a lack of invoices. It obviously would not be right for me to comment on an individual case such as that referred to, but ensuring that money is paid out in a timely way only where that is justified is surely the right approach.
§ David Taylor (North-West Leicestershire) (Lab/Co-op)Pre-1997 life as a freelance accountant for small businesses in the rural east midlands now seems rather distant, but what would have been true then is true now—that cash is king for many small businesses and lack of cash flow can tip them over the edge. Will the Minister acknowledge that, despite the huge achievements—50 days down to 40 days in average payment time is great—there remain other things that our Government can do? Will he approach, with the Secretary of State for Trade and Industry, the chief executive of Companies House and get her to use existing Companies Act powers to require the publication of average invoice turnround times in annual reports? That would buttress Federation of Small Business league tables and help a great deal.
§ Alun MichaelI am not sure about my hon. Friend's specific proposal, but I am happy to consider that. The Department's payment terms are the payment of valid invoices for goods, services and works within 30 days of receipt and agreement. In the last three years, which includes the year in which foot and mouth had an immense impact, we have met that requirement in respect of more than 90 per cent. of invoices. Anything that can be done to assist small businesses is important and we shall be happy to consider that.
§ Mr. James Gray (North Wiltshire) (Con)The Minister says that in the last three years over 90 per cent. of payments have been made within 30 days. How then does he account for the letter, admittedly dated a year ago, from his noble Friend Lord Whitty, in which he says:
The Department's target is to pay contractors within 30 days of receipt of invoice."—393 One might think that that is very fair, but he goes on:Unfortunately, given the large number of suppliers of goods and services which the Department has contracted … this target has proved difficult to meet in the case of 9 out of … 12 invoices".DEFRA is not meeting its target on three quarters of those invoices. How does the Minister account for that? How does he account for the fact that the £55 million worth of debts that are owed by the Department to contractors as a result of the foot and mouth crisis are not the result of disputed claims? Those that are disputed form only a small fraction—12 cases, I think, out of 2,000 outstanding against DEFRA. Here is what The Western Morning News headline had to say about the case raised by the hon. Member for St. Ives (Andrew George) a moment ago:DEFRA put me through hell".That is what happens to the farmers to whom the Government are trying to cover up their indebtedness.
§ Alun MichaelThe hon. Gentleman should distinguish between claims that are genuine, clear and not in dispute, for which I have given the figures for compliance with payment requirements, and those where there are questions. It is not surprising if companies that have put in a claim, and say that they have not been paid, do not refer to any disputes or disagreements with regard to the scrutiny that is necessary and that it is appropriate that we should undertake. As I have said, scrutiny of these claims has led to savings of the order of some £800 million. That is not a small sum.