§ Mr. William PowellTo ask the President of the Board of Trade if he will announce the outcome of the review of the case for a statutory right to interest on overdue commercial debt that was announced on 11 January,Official Report, column 293. [33148]
§ Mr. PageI announced to the House that the Government were meeting the commitment made in the 1994 competitiveness White Paper to review again the case for legislation for a statutory right to interest. That review has been informed by updated submissions from representative bodies which responded to the public consultation on this subject in 1994, the regional "Your Business Matters" conferences and commercial and academic research.
Following the review, I can confirm that the Government will not be introducing legislation to enact a right to interest on overdue commercial debt.
It is right that the Government listen to and act upon the views of the business community and it is clear that there has been a significant shift in opinion, particularly by the small firms representative organisations, against 262W legislation. Eight of the nine main small firms organisations have stated that they are against legislation because of the detrimental impact they fear it would have on small businesses. Even a number of organisation which responded to the review in favour of legislation had serious reservations about its effectiveness. Additionally the regional "Your Business Matters" conferences concluded against legislation.
The Government introduced a significant package of measures to tackle late payment in 1994. Good progress has been made in their implementation, although it is too early to gauge their effectiveness. That is something we shall continue to review and evaluate. In addition, the Prime Minister announced on 11 March this year a package of additional measures including consultation on whether public companies should be required to publish their payment performance.
Recent research by the university of Bradford has identified that effective credit management procedures can significantly reduce the incidence and impact of late payment experienced by small businesses. The Government will therefore continue to work with all sectors of the business community to help small firms improve their credit management procedures. Business links in England, business connect in Wales, local enterprise companies in Scotland and the Local Enterprise Development Unit in Northern Ireland will be able to provide advice and guidance in this area.