Asked by
To ask Her Majesty’s Government what plans they have to extend
the powers of the Small Business Commissioner to deal with late
payments for small businesses and freelancers by (1) allowing the
Commissioner to deal with complaints against companies with fewer
than 50 employees, and (2) requiring the chief executive officers
and chairs of offending companies to respond to the
Commissioner.
The Parliamentary Under-Secretary of State, Department for
Business, Energy and Industrial Strategy () (Con)
My Lords, we have consulted on extending the scope and powers of
the Small Business Commissioner, including extending their scope
to deal with complaints against a small business by a small
business, and the power for the commissioner to compel
information from a business in relation to a complaint. We are
working through the impact of any changes with the new
commissioner to better understand the resourcing implications of
each option and the likely impact on businesses.
(CB)
My Lords, three-quarters of self-employed people suffer from late
payments; many of them do not get paid at all and the situation
is getting worse. It adversely affects their business and a lot
of their valuable time is taken up with chasing unpaid invoices.
Why, on such an urgent issue, when the consultation finished last
December, have the Government still not come forward with
proposals? When will proposals be forthcoming?
(Con)
The noble Lord makes a good point, and I very much sympathise
with his concern. However, we received a lot of replies to the
consultation and are currently working through the options. He
will be aware that any proposals in this area will require
primary legislation and have resourcing implications for the
Small Business Commissioner, so we are currently working through
all the options.
(Con)
My Lords, the tidying up of late payment problems without hurting
trade still needs to be addressed by both larger and smaller
companies. What does the noble Viscount envisage the Small
Business Commissioner needing to help to deal with the problem of
requiring senior company officers to explain their position to
them? How does he envisage that those arrangements will improve
the situation?
(Con)
I apologise to my noble friend, but I did not quite catch all of
his question. This is a serious problem. The Small Business
Commissioner is newly appointed, and she is still getting to
grips with her role. To be fair to the previous commissioner,
since December 2017, the commissioner has recovered more than
£7.8 million owed to small businesses. A lot is happening in this
area, but I totally accept that we need to do more.
of Childs Hill (LD)
My Lords, will the Minister please say whether, in the trade
agreements on which the Government are embarked, there will be
some provision so that overseas companies pay their UK customers
promptly?
(Con)
These things are all extremely important. I do not know whether
there are any specific provisions in trade agreements on prompt
payment, but I shall certainly have a look and write to the noble
Lord about it.
The (CB)
My Lords, does the Minister agree that the key problem for many
freelancers, including creative professionals, is that they are
caught between what sometimes feels like an ingrained culture of
late payment and not being able to challenge for fear of losing
work? Ultimately, we need a system that automatically penalises
late payers without the aggrieved party having to raise its
hand.
(Con)
The noble Earl makes a good point. I remind him that UK
legislation already establishes a 60-day maximum payment term for
contracts for the supply of goods and services between
businesses, although those terms can be varied if they are not
grossly unfair to the supplier. We also have the prompt payment
code. We have received more than 50,000 reports from businesses
that they are abiding by the prompt payment code, but there is
always more to do on this.
(Lab)
My Lords, I have been in Parliament for a long time—perhaps
people would say for too long. For all that time, late payment
has been a problem under Governments of both major parties and
the coalition Government. Why is it such an elusive problem? Why
is it so difficult to find a solution to what is damaging to
small and medium-sized businesses?
(Con)
I would never say that the noble Lord has been in Parliament too
long. We need more representatives from the north-east in
Parliament, for as long as possible—says he in a
self-congratulatory way. The noble Lord is right. It is a
difficult and complicated problem which Governments of all
persuasions have grappled with. It is different in different
industries, with different suppliers for small businesses and
large businesses, but there was a commitment in the Conservative
manifesto to crack down on late payment. That is why we launched
the consultation. We are currently working through the responses.
We will need primary legislation to implement it. The noble Lord
will know, from his time in government, how tricky it is to work
through those problems.
(Con)
Can my noble friend ask his department to look at what happens in
other countries, to see which countries do better than we do and
what lessons we can learn?
(Con)
That is a very good suggestion. I certainly will do that.
(CB)
My Lords, the Small Business Commissioner’s role is limited in
relation to construction companies. For example, she can deal
with complaints from small construction firms about payment
disputes only with larger firms which are signatories to the
prompt payment code. Why then can she not deal with the same
complaints when the bigger firm is not a code signatory? Will the
Minister look at extending the commissioner’s role to provide
full support to small construction businesses?
(Con)
I have had this discussion with the noble Lord before. The
construction industry is different; there are adjudication
processes already set up for it and we are also looking at the
issue of payment retention, as the noble Lord knows well. It is a
complicated issue. The legislation already precludes the
application to the construction industry, because there is an
adjudication code process already there.
(Lab)
My Lords, I appreciate the Minister’s candour in this but remind
him that, earlier in the year, he said:
“Late payments damage the cashflow of small businesses, which can
hold back investment or job creation and, in the worst cases,
lead to job losses and business closures. Action to stop the
damaging practice of late payments remains a key priority for
Government.”
But is it, given that it has taken the Government over a year to
consider the consultation and we are yet to see any response?
Will the Government now commit to providing SMEs with greater
protections from insolvencies, including by giving statutory
powers to the Small Business Commissioner to chase late payments?
This is a very urgent issue.
(Con)
This is a priority for the Government —there are lots of
priorities for the Government at the moment. The new powers that
we consulted on include compelling the disclosure of information,
including in relation to payment terms and practices, and
imposing financial penalties or binding payment terms on
businesses. These are important issues that need to be considered
properly. We need to go through the consultation responses
properly, and we will respond as soon as we can.
(LD)
My Lords, there is a danger that the Minister’s response might be
interpreted as kicking the can down the road and waiting some
time for legislation to possibly come in the future. In the
meantime, small businesses of the type described by your
Lordships are suffering. Will the Minister recognise that the
current situation is not as it should be and use current powers
and levers to improve it?
(Con)
We have a newly appointed Small Business Commissioner who is
cracking on with the job. She is currently in discussion with my
department about the resourcing that she requires. As I said, so
far almost £8 million-worth of debts have been recovered for
small businesses, so there is a lot of good work going on, but I
totally accept that we need to do more.
(Con)
My Lords, it is two years since the election manifesto, and a
year since the review. Can we not inject some urgency into this?
Can my noble friend perhaps define his own interpretation of the
word “urgency”?
(Con)
My noble friend is tempting me to get into dictionary definitions
and semantics. As he well knows, I cannot give a precise
timescale for the processes of government, but we are working on
the issues and we will respond as soon as we can.
(Lab)
My Lords, it seems that, if the Government do not want to do
something, they set up a review body and then forget about it for
a year or two. Would it not be a good idea to set a timescale for
any review, so that we can have some accountability in this
House?
(Con)
We do not just set up a review body; we have a consultation, as
we are obliged to for all legislative proposals. It is important
to get responses from all concerned. I have had many debates in
this House where people have criticised us for lack of, or
inappropriate lengths of, consultation, so I make no apologies
for going through the consultation process. It is important to
gain a range of views on this subject. We need to take the time
to respond to it properly and correctly, and we will do so.
(Con)
Are the Government setting a fine example by settling their own
payments promptly?
(Con)
The answer is yes. We have already established a formal payment
period for contracts for public authorities.
of Hudnall (Lab)
My Lords, in an earlier response, the Minister suggested that the
Government had many priorities, and I am sure they do, but can he
say where he thinks this matter sits in the list of government
priorities?
(Con)
It is at the top of our broad range of priorities.
