Business: Advice Services

Debate between Lord Cotter and Baroness Neville-Rolfe

Tuesday 8th December 2015 Lords Chamber

[Baroness Neville-Rolfe]

I was not aware of that report but it sounds a very valuable one. Having operated internationally, I am a huge fan of languages, both in the curriculum and being really useful when you are trying to export; getting my own children to speak foreign languages has been a problem.

[Lord Cotter (LD)]

My Lords, the Minister has raised the issue of late payment. There is a tremendous problem within the construction industry, as she may know, and a lot of people are getting together to put the facts forward. Will she address this issue in the new year? Retention of payments, payments after 120 days when they should be within 30 days—these are very live issues, which I and others will be addressing in the new year, and I hope she will start to address them now.

[Baroness Neville-Rolfe]

Indeed, retentions are an issue in the construction industry. That is why we have set up a review, partly as a result of discussion on the Enterprise Bill, to bring the question of late payment in construction into the piece, which is already tackling business generally and insurance.

Small Businesses: Late Payments

Debate between Lord Cotter and Baroness Neville-Rolfe

Wednesday 28th October 2015 Lords Chamber

[Lord Cotter (LD)]

As has already been mentioned, there are special problems when it comes to the construction industry. In particular, SMEs in the construction industry have lost £30 million through cash retention so far in 2015. Will the Minister make a strong commitment to look at this issue, which is vital for the survival and growth of small businesses?

[Baroness Neville-Rolfe]

My Lords, I am happy to look at this issue. We will be discussing it in Committee this afternoon. The Government acknowledge that there are issues here. We have taken steps to improve the situation, but it is not yet right.

Small Business, Enterprise and Employment Bill

Debate between Lord Cotter and Baroness Neville-Rolfe

Wednesday 14th January 2015 Grand Committee

[Lord Cotter (LD)]

My Lords, I strongly support the amendment. As the noble Lord, Lord Mendelsohn, said, implementation is vital to put steel into this requirement. We know from our many contacts in the construction industry that many areas of business have a real concern to ensure that people given contracts are monitored. I hope that the Minister will at least take this away to consider it and respond promptly in due course. In particular, I have in my mind a lot of evidence that has come forward from the construction industry to say that people implementing the main contract do not always—frequently do not—pay the small business sector promptly.

I will say no more, because the noble Lord has made these points, but—to be brief and to the point— we must ensure implementation. I hope that the Minister will take this away and assure us that this implementation point will be considered, because I have heard this issue raised time and again over the years, as have many colleagues, particularly giving a contract to a main contractor and finding that suppliers to that main contractor do not get payment. Those suppliers are often small businesses, so I welcome the amendment.

[Baroness Neville-Rolfe]

I thank the noble Lord for this amendment. As we discussed on previous days in Committee, prompt payment is an extremely important agenda and we wish to encourage both contracting authorities and businesses to pay their suppliers on time, so I shall say a little more, as noble Lords requested, about what we are planning to do in this area.

The Government are committed to leading by example on prompt payment. When we consulted on proposals to tackle prompt payment in autumn 2013, there was widespread support across industry and with procurers. This resulted, rightly, in a commitment to legislate. The new public contract regulations, which the Government plan to bring into force shortly, will place a duty on contracting authorities to pay their immediate suppliers in 30 days, and include terms in their contracts to pass these 30-day payment terms all the way down the public sector supply chain.

The regulations were consulted on last autumn and we intend to bring these into force early this year. That should provide reassurance to smaller businesses further down the supply chain that they will be paid expeditiously, and will address some of the findings of the National Audit Office report published last week, to which the noble Lord referred. I was about to cite the same figure that he cited: in a third of cases, public sector clients have taken more than 30 days to settle payment. That is completely unacceptable and that report helps to make the case for these regulations, which I hope will attract cross-party support. Our determination in this area cannot be doubted.

As part of these same public contract regulations, contracting authorities would also be required to publish the number of invoices paid late to their first-tier suppliers on an annual basis to show how they have performed in this area. The Government are committed to developing guidance to ensure that the reporting on late payment is understood and aids transparency.

Our mystery shopper service is strangely named, but it enables SMEs and other suppliers to raise concerns about public sector procurement with the Government and have it investigated. It is a Cabinet Office service and assists in ensuring that the contracting authorities comply with these new measures and will name and shame poor payers through the fortnightly publication of mystery shopper cases on GOV.UK. In future, the service will be able to ensure proactively that the 30-day payment policy is being embedded by carrying out spot checks on contracting authorities.

The noble Lord, Lord Mendelsohn, asked whether the Minister could commit to write to the main suppliers to ensure prompt payment. Yes, we would be happy for the Government to arrange for an appropriate Minister to write to the strategic suppliers about this before the end of the Parliament. We are talking about 100 or so suppliers. Those are the strategic suppliers to whom the noble Lord referred.

On monitoring and implementation, in view of the time I agree to write to the noble Lord to set out the arrangements. However, we believe that these reforms are the right way to address the prompt payment of suppliers in the public sector supply chain. I know that the position is a little curious—we have met the same issue in other legislation that the noble Lord, Lord Stevenson, and I have debated—to have one set of regulations coming in under EU powers and then a domestic Act, but I am afraid that sometimes that has to be the way that we bring things forward, not least to make them happen in time. I hope that, if the noble Lord takes the two together, he will feel that we are approaching this in a sensible way and feel able to withdraw this amendment.