Small Business Commissioner

Lord Cope of Berkeley Excerpts

Monday 22nd January 2018 Lords Chamber

[Lord Cope of Berkeley (Con)]

My Lords, I was surprised when I saw that the noble Lord, Lord Mendelsohn, had tabled this Question for Short Debate.

Given that the Small Business Commissioner has been in place such a short time, I wondered whether the noble Lord was trying to help publicise his existence. That would be a worthwhile by-product of this debate. I did not believe that the noble Lord would try to undermine the commissioner given the tremendous welcome that he gave to the former’s appointment on 6 December, which he repeated this evening. Like the noble Lord, Lord Mendelsohn, I believe that he will make an excellent commissioner and look forward to that fact becoming obvious in the future. After all, he has been in post only a short number of weeks.

The commissioner published the website on 20 December, just a few weeks after we debated the regulations setting up the post of commissioner on 6 December. It is an excellent website in my opinion, full of advice for businesses struggling with payments. It offers good advice to not only small businesses but any business that finds itself in this position. It is refreshingly practical and comparatively free of government jargon and is to be found at www.small businesscommissioner.gov.uk. It offers straightforward advice on monitoring late payments, as the noble Lord has just mentioned, and on how to encourage improvements in the payment record of customers. I have no doubt that the Small Business Commissioner will improve the website in the light of comments from small businesses, but it is an excellent start.

It is important to make the point that the website will become progressively more valuable as the months go by because the reports on the payment practice of large firms, which are required under separate legislation and are to be signposted on the website, will soon be available and will come thick and fast. They will apply to large firms with financial years from 7 April last.

As the noble Lord, Lord Mendelsohn, indicated, the commissioner is concerned only with late payments in the private sector. It is important to make it clear that there are stiffer requirements for the public sector, policed by the Cabinet Office body called the Crown Commercial Service. Anybody who has a complaint about any public body—or, for that matter, about somebody operating under a contract as a subcontractor for the Government—can complain to the Crown Commercial Service if they are receiving late payments. I am glad that this is being handled by the Cabinet Office. It leaves the commissioner, Paul Uppal, to concentrate on his job without having his efforts spread too widely. After all, there would be no point in duplicating the services and advice.

This is all about changing the payment culture in this country, which, as the noble Lord, Lord Mendelsohn, set out in summary, has proved to be a very stubborn problem. Cultures change slowly, and the forces that lead to companies paying late are strong. A company of any size that finds itself stretched financially—and who does not at some stage, certainly in these times?—can improve its cash flow by slowing down payments, and Carillion was one obvious example. In a case such as that where there have been profit warnings and warnings of late payment, obviously some creditors and potential creditors will have reviewed their position and minimised their exposure to Carillion. However, others will not have been in a position to do that.

Small suppliers frequently tend to do worst when a company goes under. I am afraid that there is a certain inevitability about that. Some of the others—the employees and so on, and, for that matter, the Government in the form of the taxman—are preferred creditors and take precedence, but they may suffer in other ways. The employees in particular are liable to lose their jobs and their pensions will be affected, but the small suppliers are at the back of the queue. The banks and the other big lenders will no doubt have protected themselves with agreements.

Late payment is a stubborn problem and one which has been around for a long time. Not only the noble Lord, Lord Mendelsohn, but the rest of us will be watching the Small Business Commissioner with interest to see how he gets on with trying to alter this part of our commercial culture. The silver lining of this debate is that it will help—admittedly in a very small way—to publicise the existence of the commissioner and the fact that he has begun work in a vigorous and energetic manner.