§ 2.39 p.m.
Lord BRUCE of DONINGTONMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government what steps they propose to take to 821 redress the growing injustice experienced by thousands of small businesses who now have to wait, on average, some 70–80 days to be paid for business debts owing by large companies and corporations, local authorities, state industries and Government departments; and who are now forced to pay high interest rates for loans to preserve their cash flows, and who are increasingly threatened by bankruptcy.
§ The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard)My Lords, the Government have every sympathy for small businesses when payment for their goods and services is unreasonably delayed. For the Government, I can repeat what my noble friend the Minister of State for Defence said in the House on 24th March: Government departments are under standing instructions to settle all bills as promptly as possible. As regards state industries, sponsoring departments are reminding those industries of the need to settle bills promptly.
In the private sector the CBI are pursuing a similar campaign with their larger members and we strongly endorse their action. Indeed, I would take this opportunity to impress again on all large organisations, be they public or private, the need to have special regard for the position of small firms when making payment for goods and services.
Lord BRUCE of DONINGTONMy Lords, is the noble Lord aware that his Answer will bring little satisfaction to small businesses in the country which are suffering from this trouble at the present time? Will he draw to the attention of his right honourable friend the Minister of Transport the situation regarding contractors and sub-contractors working on the M.11 whose bills in many cases have been delayed for over three years? Will he consider as a possibility the step of drawing to the attention of his honourable friend in another place the code of fair trade in regard to practices of this kind? Will he finally bear in mind that, owing to the attitude of the Government, the situation is rapidly being created whereby large firms, although they apparently cannot afford to pay their bills to small businesses, nevertheless make offers for their acquisition?
§ Viscount TRENCHARDMy Lords, I do not think that I can add to what I have said in my first Answer. If the noble Lord will give me details of his allegations in relation to the M.11, I will make sure they are considered by my right honourable friend the Minister of Transport. Fair trading provisions exist in law and in codes of practice. The Institute of Purchasing and Supplies has, I believe, recently also issued one. The CBI, as I have mentioned, is working on it. As to whether this practice is as widespread as noble Lords believe, I find this a little perplexing from my industrial background. It is well known in business circles that long credit is not the biggest advantage of small firms and therefore it is in the interests of all larger buyers to pay as promptly as possible and certainly within the terms laid down.
§ Lord DERWENTMy Lords, would my noble friend say what is the normal practice of Government departments when they find that one of their contractors or sub-contractors is not paying as punctually as it might?
§ Viscount TRENCHARDMy Lords, I think it must depend on the circumstances. If noble Lords will provide those circumstances, certainly sponsoring departments will be ready to discuss the matter with the parties concerned.
§ Baroness SHARPLESMy Lords, is my noble friend aware that I have received a considerable amount of correspondence—well over 100 letters—from small businesses? A great number of these employ perhaps only 35 people each and they have a black list. The very large companies who do not pay within the recognised time—perhaps 90 days is in the contract and sometimes they do not pay for as long as 120 days—remain on the black list until they pay their bills within the time prescribed.
§ Viscount TRENCHARDMy Lords, again, if my noble friend would like to give me details it will certainly help us when we come to consider the recommendation of the Law Commission on the possibility of automatic interest after a certain date. If she will give me the 823 details she has spoken of, it will help the Government to consider that report.
§ Lord LEE of NEWTONMy Lords, is the noble Lord aware that a Select Committee of this House has received evidence that Government departments are delaying payment of their debts to small firms? Is this because of the high interest rates that they can gain out of them?
§ Viscount TRENCHARDNo, my Lords, it is not in relation to high interest rates, and if there is evidence of the wilful delaying of payments, then I should very much like to hear it. Like many other large organisations today, I am aware that some Government departments, because of difficulties concerning either computers or staff, have got behind on payments at certain times; but there is no policy of wilful delay on the official terms. We did actually defer the payment of regional grants, which went through Parliament, by four months.
§ Lord KILMARNOCKMy Lords, may I ask the noble Lord whether he is aware that in the public evidence given by one of the joint stock banks to your Lordships' Select Committee on Unemployment this problem was particularly stressed by a main high street bank in relation to small business? In view of that, will not the Government perhaps consider taking special powers as regards this malpractice?
§ Viscount TRENCHARDMy Lords, not other than in the context I have mentioned, when we come to consider the Law Commission's Report.
Lord BRUCE of DONINGTONMy Lords, is the noble Lord aware that the replies he has so far given in this House are thoroughly unsatisfactory and do not indicate any real interest in, or desire to alleviate, the plight in which small firms find themselves? Will he take note and investigate further a practice, to which reference has already been made in the Financial Weekly, of large firms placing on deposit at the current high rates of interest monies they would otherwise have to pay to their small contractors or 824 sub-contractors who themselves have to pay extortionate rates of interest under Her Majesty's present Administration in order to keep their working capital intact?
§ Viscount TRENCHARDMy Lords, I think that when the noble Lord comes to read the report in Hansard he will not be able to substantiate the accusation he has made. We are certainly extremely concerned about this subject, as my reply made very clear. We are seeking to ascertain how widespread the matter is, which was the substance of all my supplementary answers, and the noble Lord will no doubt take note of the degree to which Government can indeed control transactions between suppliers and the degree to which individual suppliers—even small suppliers, with good products to offer to large organisations—are not already in a position, if this happens to them once unnecessarily, to prevent it from happening again. But there is the one area in which we have positively undertaken to look at the recommendation of the Law Commission.