Enterprise Bill [HL]

Baroness Burt of Solihull Excerpts

Wednesday 25th November 2015 Lords Chamber

Moved by

[Baroness Burt of Solihull]

1: Clause 1, page 1, line 9, leave out from second “to” to end of line 11 and insert “matters in connection with the supply of goods and services to—
and make recommendations.”(i) larger businesses, and(ii) public authorities;and make recommendations.”

[Baroness Burt of Solihull (LD)]

In Amendment 1 and this group of amendments, we see the Small Business Commissioner as a body that champions small businesses and seeks to protect them against imbalances of size and power.

We appreciate the amendments tabled by the Minister to give this body greater independence and its own staff, which we will deal with in the next group. We see those amendments as a great step forward in response to debate in Committee and thank her for them. We accept what the Minister said in Committee—that the commissioner will initially have to concentrate on late payments as it gets started—but payments are crucially related to other stages of the supply relationship, whether that is commissioning or operational experience, and the commissioner will need to delve, where necessary, into those areas to be effective. The commissioner should have the remit to do that when it is considered necessary.

Amendment 1 returns to the issue of providing for the widening of the remit so that the commissioner can be more effective and address issues which are not simply associated with late payment but are related. Imbalances of power lead to problems of commissioning and operational experience which become directly associated with payment problems.

The amendment seeks to include public sector organisations, whether national or local, as they are bodies that small businesses should be encouraged to deal with, where similar problems of size and power relationships will arise. Wherever there is an imbalance of power, there is an opportunity for exploitation, and that crosses public and private sectors. The Minister gave us reassurances in Committee that there was no need to involve the public sector because it is already being put in the right place by a whole series of measures, which she named: the mandatory period of 30 days for paying bills by public bodies, with interest owed afterwards; the mystery shopper scheme; the Public Contracts Regulations 2015; and the public policy commitment for central government to pay undisputed bills within five days. She accepted that the Small Business Commissioner would act as an important signpost to help small businesses with complaints with public bodies, but it would simply refer cases on. In most cases, this might be fine, but where it encounters delays and repeated bad practice in the public sector, are we saying that it should have no power to help the small business complaining?

If everything is rosy in the public sector, there will not be any problems, but will small businesses not benefit from a one-stop-shop approach? All they are interested in is getting their bills paid on time, and we want to see imbalances of power corrected. Either the Small Business Commissioner is all-embracing, across both the public and private sectors, or the new role will confuse small businesses and its reputation for effectiveness will be damaged. For these reasons, we believe that the remit should be capable of being widened beyond simply late payments, and the public sector should be included.

Amendment 10 returns to the issue of involving the Competition and Markets Authority where this is appropriate. The Minister reassured us in Committee that there is nothing to stop the commissioner referring a report or relevant information to the authority, but we would like this to be formally recognised in the legislation to counter abuse of market power and give the commissioner added authority to do this. I beg to move.

[Lord Mendelsohn (Lab)]

My Lords, these amendments principally deal with the core issues of the office of the Small Business Commissioner: what it does and who it deals with. We accept the argument presented by the Government about making sure that the Small Businesses Commissioner has a focused remit. Our criticism is not about the principle of having a focus; it is about whether we are providing the means for that focus to be delivered and whether the focus is too slight to have an impact.

Little seems to have been learnt from the Australian experience over the last 13 years—gained through the establishment of the state Small Business Commissioners and the federal one—about the importance of providing a very sensible focus on improving the business environment for small businesses. In fact, one thing that could have been learnt from the Australian experience is that the one thing that the commissioner does not do very well, and should not be its focus, is late payments, and that legislation ensuring compulsion is a much better approach.

I will broadly set out the concerns that we had at the time of Second Reading. First, we accepted that, while there is a need to address the late-payment information due to arise from the Small Business, Enterprise and Employment Act 2015, defining the late-payments role as being for the Small Business Commissioner was probably the incorrect focus and would short-change small businesses, considering the support that they could have had if the brief were wider. Secondly, we said that its scale was far too narrow, as the Government anticipated that it would deal with only 500 cases a year. We thought this was too small to be able to make a big impact on what it was trying to achieve.

We also believed that, at its very core, the definition of the role and purpose of the Small Business Commissioner was far too limited, and that using the experience of others—including Mark Brennan, the very impressive and successful first Small Business Commissioner in the state of Victoria, and subsequently the Australian Small Business Commissioner—could improve the quality of the business environment by reference to the two enduring core responsibilities of government: namely, the provision of information and justice. Access to information is a key component of a competitive marketplace, and the enduring responsibility of government when intervening to regulate business is to provide an appropriate system of justice, manifested through policy to ensure fair competition and fair dealings between commercial entities and between themselves and consumers.

There is probably a consensus that the distinctive characteristics and functions of the Small Business Commissioner would cover: access to information and education; advocacy to government; investigation of small business complaints and business behaviour; facilitating the resolution of disputes, including and especially through mediation; influencing small business-conscious government and other key stakeholders, including regulators, media and the business community; and ensuring that such a commissioner would operate with an attitude of being concerned with substance rather than technicality and a dedication to resolving disputes by encouraging commercially realistic attitudes. It is also the case that an effective Small Business Commissioner improves the environment for all businesses and is not just there to operate solely for the interests of small businesses, to the detriment of others.

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This is an important subject and this has been an important debate. The Bill establishes a framework for the commissioner to address key issues. It gives the commissioner an appropriate role and a range of vital functions. I know from my own experience that focus is key. I hope the noble Baroness will agree to withdraw her amendment.

[Baroness Burt of Solihull]

My Lords, I am very grateful. I thank the noble Lord, Lord Mendelsohn, for his contribution on dispute resolution, which we support, and for his kind comments. I thank noble colleagues for their contributions throughout the House. I disagree with the noble Lord, Lord Cope, that widening the remit of the commissioner would make the job too hard. Small businesses have a hard time, and we should be supporting them on this.

I thank the noble Baroness, Lady Neville-Rolfe. I have listened very carefully to the points she made. However, the public sector is not innocent in this. If everything worked in a timely way and in accordance with the regulations that have been set out for it to meet, we would not need to extend the remit in this way. Small businesses are not less but possibly more in need of help from the commissioner. Therefore, we on this side feel strongly about involving the public sector and widening the remit of the commissioner, and I would be grateful if we could test the opinion of the House.