Enterprise Bill [ Lords ] (First sitting)

Debate between Bill Esterson and Caroline Flint

Tuesday 9th February 2016 Public Bill Committees

[Bill Esterson]

My hon. Friend is right. I was a councillor at the time as well and remember the investments in certain Icelandic banks. More than a few local authorities were caught badly as a result. Her point is well made.

On the benefits to larger firms—and we will deal with this when we discuss cash retentions in the construction sector—there is evidence of the use of moneys due, particularly to smaller firms, to help the cash flow of the larger firm. That is potentially true in the public sector, as my hon. Friend said. Dealing with that is one reason to explore bringing the public sector within the remit of the small business commissioner.

The last Federation of Small Businesses members’ survey assessing late payments by the public versus the private sector was conducted in 2012. It consisted of responses from nearly 9,000 FSB members and confirmed that although larger companies are the worst offenders with late payments, late payment in the public sector is still a big issue. According to the survey, 27% of Government agencies paid SMEs late and 29% of SME invoices from the UK central Government were paid late, so central Government were slightly worse than local. A more up-to-date assessment of late payment by central Government is found in the National Audit Office’s paper “Paying Government suppliers on time” from January 2015. The study covered all central Government Departments but looked in detail at the payment practice of the Ministry of Defence, the Home Office, the Department for Business, Innovation and Skills and the Cabinet Office.

Central Government spend £40 billion a year on goods and services, of which about £4.5 billion is spent directly with SMEs. An additional £4 billion is spent with SMEs indirectly where SMEs are subcontractors to Government contracts. The wider public sector—for example, local authorities and NHS trusts—spends £147 billion a year on goods and services.

Government Departments have a target to pay 80% of undisputed invoices within five working days and report good performance against those targets, but the NAO study calls into question the idea that Departments are paying their suppliers promptly.

[Caroline Flint (Don Valley) (Lab)]

My hon. Friend mentions the role of local authorities and health trusts as regards the supply chain in local communities. In my area of Doncaster, I would add the Prison Service. I have three prison establishments in my constituency, and there is another prison within Doncaster town, and we can add to that the fire service and policing. A huge number of our more provincial towns and communities do not necessarily have the big corporate companies but are the supply chain for the public service in all its diversity and in meeting the needs of local people. It would be short-sighted not to look at how we can ensure within our communities that those public services pay our small businesses in good time.

[Bill Esterson]

My right hon. Friend makes a very good point. The public sector is an incredibly important part of the economy in many parts of the country. We have a collective responsibility, whether in Parliament or elsewhere, to get this right and ensure that the public sector is doing its bit. That is really important.