§ 2.40 p.m.
§ Baroness SHARPLESMy 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 whether they are aware that large public companies are seeking to justify up to ninety days' extended credit from small suppliers in the electronics industry on the grounds of delays in payment to them by Government agencies.
§ The MINISTER of STATE, MINISTRY of DEFENCE (Lord Strathcona and Mount Royal)My Lords, Government departments are under standing instructions to settle bills promptly and we were not aware that large public companies were seeking to justify such extended credit.
§ Baroness SHARPLESMy Lords, while thanking the noble Lord for that reply, which is not entirely satisfactory, may I say that I have other information? Can he find out whether it is the largest and the richest companies which are the worst offenders?
§ Lord STRATHCONA and MOUNT ROYALMy Lords, if the noble Baroness has any evidence to support the suggestion that this is happening, naturally we should be very interested to have chapter and verse, and I can promise her that any such cases will be looked into carefully. I was not aware that it was the largest and richest companies that were acting in this way, as I said in my original Answer.
The Earl of HALSBURYMy Lords, is the noble Lord aware that for many years this has been standard practice? Whenever a credit squeeze has been 444 imposed by the Government bank credit dries up and industrial credit is created. If the noble Lord wants me to name a firm that was as bad as any in the business once upon a time, it was Rolls-Royce.
§ Lord STRATHCONA and MOUNT ROYALMy Lords, I can confirm what the noble Lord is saying from personal experience of some years ago, but that is a slightly different matter from the particular question to which my noble friend alluded, when she was suggesting, I thought, that the large companies were using non-payment by the Government as an excuse for not paying their subcontractors.
§ Lord GLENKINGLASMy Lords, will my noble friend, first, to give me pleasure, confirm to a leading Sunday newspaper that the penultimate letter of his name is "N" and not "M"? After doing that, will he bear in mind that in view of a great deal of experience the worst payer in the country is the Treasury, and the second worst and third worst, bracketed, are local authorities and Government Ministries? Since the Government are committed to trying to help small local businesses, will they do everything possible to see that credit is not extended for these very long periods? I agree with the noble Earl that in the old days Rolls-Royce were the worst.
§ Lord STRATHCONA and MOUNT ROYALMy Lords, I am not familiar with the letter in the leading newspaper to which my noble friend referred, but I will take the opportunity of doing a little research on the question. I can only tell my noble friend that the normal practice is that hills are paid by Government departments within 15 days, and that is an instruction from the Treasury. However, I accept that there are sometimes rather protracted procedures before bills become liable for payment.
§ Lord BYERSMy Lords, when the noble Lord says that Government departments are under instruction to settle bills promptly, will he please inquire as to what is the actual practice? Would it not be possible, in many cases, to settle for 70 per cent. or 75 per cent., and then to argue about the rest? The idea of holding up the whole of the payment, 445 because there is some argument, is absolutely ludicrous at times like this.
§ Lord STRATHCONA and MOUNT ROYALMy Lords, I have great sympathy with what the noble Lord has said, and I can well believe that there are cases where contractors feel that argument over the details of a bill is used as an excuse for not paying any part of it. I can only say that this is not done on instructions. It is not a Government policy. Again, if the noble Lord has examples of this I feel sure that it is something which we should take up.
§ Viscount HANWORTHMy Lords, would the noble Lord agree, first, that small companies are vital to our national economy and, secondly, that they have the greatest difficulty in getting adequate credit? Does he realise that in many cases when they have a bill prompt payment is demanded, whereas settlement—and I am not saying from whom—is very long delayed? This has a most unfortunate effect on our burgeoning small companies.
§ Lord STRATHCONA and MOUNT ROYALMy Lords, I can say to the noble Lord that I made my first speech to this House on the Bolton Report as long ago as, I think, 1971, before small companies became quite so much loved and admired as they now are. I have total sympathy with what he has said and I am quite sure that he is right.
§ Lord HYLTONMy Lords, is my noble friend aware that a geological branch of central Government regularly takes 90 days to settle its bills? Is he further aware that the Housing Executive in Northern Ireland takes approximately the same time, as I pointed out to his noble friend Lord Elton, with the result that small builders are not willing to tender for maintenance work in Northern Ireland?
§ Lord STRATHCONA and MOUNT ROYALMy Lords, I am interested to hear what the noble Lord has to say. I was not so aware; otherwise, I would not have given the answers that I gave earlier on this afternoon.
§ Baroness SEEARMy Lords, would the Minister seriously consider, if the Govern- 446 ment owe to someone for, say, over a month, that interest should be payable, as the Inland Revenue charges those of us who do not pay our tax? Why should it be all one way?
§ Lord STRATHCONA and MOUNT ROYALMy Lords, the Government are giving careful consideration to the report about the proposition that interest should be payable.
Lord BRUCE of DONINGTONMy Lords, has the noble Lord noticed the reports that have appeared in The Times and the Daily Telegraph over the past fortnight, which emphasise that not only do some very large companies hold up payment, but that also, because of the very high rates of interest, they put the money on deposit and get very large returns?
§ Lord STRATHCONA and MOUNT ROYALMy Lords, I have not noticed those reports. I regard that practice as regrettable, but not new.
Lord MORRISMy Lords, does my noble friend agree that in these days of stringent cuts in Government expenditure, it would make a great deal of economic sense for Her Majesty's Government and their agencies to take as much time as possible before paying, rather than for them to speed up their payments?
§ Lord STRATHCONA and MOUNT ROYALMy Lords, I am sure that I should applaud my noble friend's advice as to how to manage our financial affairs, but I should be sorry if we had to stoop to such improper measures.
§ Lord ENERGLYNMy Lords, may I ask the Minister whether he will look into the delays in National Health authorities' payments to pharmacists? These are very often excessive. Pharmacists have to carry complicated stores of drugs with a very limited shelf life, and many of them are in serious financial trouble, due to overdrafts with banks caused by delayed payments by National Health authorities.
§ Lord STRATHCONA and MOUNT ROYALMy Lords, I am interested to hear what the noble Lord has to say. Here, again, if any association or any noble Lord wishes to cite particular instances, I am sure that these will be followed up.