Small Business Commissioner

Baroness Burt of Solihull Excerpts

Monday 22nd January 2018 Lords Chamber

[Baroness Burt of Solihull (LD)]

My Lords, we have had a good and knowledgeable debate. I, too, congratulate the noble Lord, Lord Mendelsohn, on securing the debate tonight.

Our Small Business Commissioner starts at a difficult time. This debate takes place on the day when Jaguar Land Rover has announced that it will reduce some of its production at Halewood, blaming, among other things, the increasing uncertainty we face with Brexit. A number of noble Lords talked about Carillion, to which the Government gave contracts despite its terrible reputation. I know that Paul Uppal, the ex-MP for Wolverhampton, would know Carillion well, because it operates in that area. Unfortunately, this fact bolstered confidence among small businesses to trade, and, sadly, they suffered arguably the most.

The noble Lord, Lord Cope, mentioned that Carillion eased its cash flow on the backs of small business, and the Federation of Small Businesses has reminded us that a third of payments to small businesses are late. According to the federation, this has been unchanged since 2011.

We see poor payment practices such as supply-chain bullying, retrospectively changing payment times without notice, querying payment on the very last day, so that the payer has another full period before they need to pay up, and long pay periods. Today I heard a new one: when a supplier queried non-payment, the company said, “It’s 90 working days, not calendar days”.

My noble friend Lady Maddock talked about the plight of small builders. I very much appreciated her constructive—if your Lordships will pardon the pun—suggestions, such as, for example, breaking contracts down, and other useful ideas. She also talked about the importance of small businesses being at the very heart of our communities. What would they be without small businesses?

The noble Lord, Lord Rock—or is it the noble Baroness, Lady Rock?

[Lord Taylor of Holbeach (Con)]

Lady Rock.

[Baroness Burt of Solihull]

I am so sorry. My sincere apologies—I am blushing. The noble Baroness talked about finance and other initiatives, and about female-led businesses. I would add the importance of diverse businesses generally, which look like the communities they serve. I totally agree with her on the importance of getting talent and the assiduous use of the visa system to ensure that where we do not have the talent to hand in this country, we do not cut off our noses to spite our faces by not importing it.

The noble Lord, Lord Popat, talked about the obstacles and how poorly our performance compares with other countries in the EU. He told us all about Africa and some of the opportunities that exist for us outside Brexit. He is absolutely right; we must get out there and use the talent that we have. The Government are clearly already employing diverse talent, in the form of the noble Lord himself, to go out there and talk to African companies. He also talked about regulation and the one-in, two-out mantra. Let me say to him: be careful what you wish for because one in, two out is more difficult than it looks. The vast majority of regulation is put there for a purpose and, very often, it is for the protection of business.

It is not all gloom and doom. I would like to mention the late payment Act, as another noble Lord did, and the ability to charge interest on late payments. However, so many small businesses are too reticent to do that because of the potential loss of good will and future business. The Prompt Payment Code was mentioned, which is very good as far as it goes, but because it is voluntary it tends to be only the more conscientious companies signing up to it. However, the new duty to report introduced in October 2017 on payment practices and performance will make a difference. One big construction company that I spoke to today said that it had caused that company to look carefully at its payment practices, a lot of which were down to systems and not to a deliberate desire to delay. The company is fundamentally changing the way it conducts its payment systems.

The noble Lord, Lord Cope, reminded us that this provision applies only to the private sector. Yes, I think the Small Business Commissioner probably has enough to cope with in the private sector, without having to try to take on what happens in the public sector, which aspires to have commendable payment periods but falls down in some departments.

I very much welcome Paul Uppal to the role of the Small Business Commissioner. I knew him when I was a Member of Parliament in the other place but he needs a great deal of support. One really good aspect is the fact that he will not divulge the name of a complainant, except with the specific permission of the complainer. That will very much strengthen his hand. In our debate last year the noble Lord, Lord Mendelsohn, talked about the commissioner’s operating costs being only £1.4 million. He queried how far that would go in terms of the commissioner’s ability and efficiency in the face of tackling a huge problem. Will the commissioner have enough leverage to make a difference?

The Small Business Commissioner’s job seems a little restricted, a point I think the noble Lord, Lord Mendelsohn, made. Yes, he is handling complaints but he is potentially in quite a powerful position. I hope he will use that position to promote changes and recommendations to government policy—and make a big noise, because small business in this country has never needed a Small Business Commissioner more than it does today.