Commercial Payments Bill [HL]

Lord Holmes of Richmond Excerpts

Committee stage
Tuesday 21st July 2026 Lords Chamber

Moved by

[Lord Holmes of Richmond]

1: Clause 1, page 2, line 5, at end insert—
“(1A) The purchaser must advise the supplier how the supplier should submit notice as set out in subsection (1).(1B) Where the purchaser fails to advise the supplier on how to submit notice, the supplier may rely on the notice commencing by submitting a written document (for example, a delivery notice or invoice) to the person requesting the goods or services within the purchaser’s business. (1C) The purchaser must adopt internal systems that recognise that the serving of notice commences at the point the supplier complies with subsections (1A) and (1B).”Member's explanatory statement
This amendment seeks to require the purchaser to give instructions as to how notice should be given. Where the purchaser gives no advice on notice, the supplier may rely on notice having been given by providing a delivery notice or invoice to the person within the purchaser’s business who is requesting the goods or services.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to start this Committee on the Commercial Payments Bill. In doing so, I declare my relevant technology interests as adviser to the Crown Estate and Simmons & Simmons LLP, and as non-executive director of the Avalanche Foundation and Avalanche (BVI) Inc. The Bill is incredibly significant, particularly for a small business or microbusiness which has found itself for far too long on the wrong end of late payments.

In many ways, my Amendments 1 and 9 in this group go to the very essence of the Bill. There is much that is significant in the Bill but, largely, all of it is subsequent to that fundamental point around the 60-day and 30-day payment periods. Everything else in the Bill is largely supportive of that reality, so this first group of amendments addresses the fact that it is critically important that the Bill is absolutely precise as to when the clock starts and ends. As the Bill is currently drafted, it is not only entirely possible but an actuality for thousands of businesses that they will be told that they will receive 60-day payment terms, when in reality the payment may not arrive within 60 days, 80 days, 100 days or up to 120 days. That will still be possible if the Bill remains in its current form. There needs to be greater precision about the start point and end point of that clock.

Amendment 1 in my name addresses that start point and suggests that the purchaser has to give clarity to the supplier about how they are to give notice. This is critical because at the moment time can disappear, with an invoice or other notice being given by the supplier in good faith only for them to find themselves bounced around that often larger business—this is not necessarily because it is gaming, although sometimes that is certainly the case, but because of its multidepartmental and multipoint nature—until that 60-day clock starts. Amendment 1 addresses this and would sharpen up how that notice period has to begin. If clarity is not provided, the amendment would give clarity in that the notice can be deemed to have been given by the provider of the product by means of a recognised document that anybody in business would recognise—the obvious one being an invoice.

Similarly, Amendment 9 goes to the issue of verification. It would stop, as a consequence of the Bill, verification being used to expand or extend terms other than what the Bill seeks to achieve. Together, the amendments look at the start point of the clock and would give the precision required to stop days going by before day one is triggered. We will come to amendments in later groups about effective precision around ending the clock, but these amendments, particularly Amendment 1, would give the precision required for all involved to know that day one means day one. I look forward to the debate and the Minister’s response. I beg to move.

[Lord Fox (LD)]

My Lords, I will speak to Amendment 10 in my name. Before that, I commend the noble Lord, Lord Holmes, on Amendments 1 and 9. These seem to be eminently sensible suggestions. I wonder whether, if the Small Business Commissioner makes very clear their view on when the clock starts ticking, that would make it very clear should any dispute become necessary. At the very least, there needs to be clarity from the Small Business Commissioner if these amendments are not accepted.

I thank the noble Lords, Lord Sharpe, Lord Hunt and Lord Leigh, for their support of Amendment 10. The intention of the amendment is clear. Increasingly, economic activity is switching from familiar structures and supply chains to one where businesses market their goods and services via third-party marketplaces and intermediaries, and where the subsequent payment goes back through those intermediaries. The amendment would bring such marketplaces and intermediaries into the context of the Bill by providing that payment is not treated as made to a supplier until the supplier actually receives the money, by requiring any intermediary that collects on a supplier’s behalf to pay it within seven days, regardless of how the intermediary is legally categorised.

I think this is a fair change, though I am sure that there will be resistance from the sector. The focus may well be on the time needed by the intermediary to make the payment to the vendor. A distinction may have to be made between when an intermediary has control of the goods in a warehouse and when it is purely acting as an agent. I am happy to have a discussion and debate about this, and there may be ways in which this can be dealt with. However, it would be very remiss for the legislation to leave your Lordships’ House without any provision, either primary or secondary, for the Small Business Commissioner to have or take the power to bring intermediaries into the remit of the Bill.

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The difficulty with Amendment 9 is that it would impose a broad restriction on extending verification periods when contracts are updated or replaced, even where such an extension is fair, reasonable and commercially necessary. That could have unintended consequences. It would discourage purchasers from buying new, complex or innovative products if they cannot secure an adequate verification period. It would also create difficulties in sectors where product development, safety assurance and technical testing requirements evolve over time. The Government’s approach is therefore to protect suppliers from unreasonable delays without impeding the legitimate verification arrangements. The Bill already achieves that balance. I therefore ask that Amendment 1 be withdrawn.

[Lord Holmes of Richmond (Con)]

My Lords, I thank all noble Lords who have taken part in this debate and the Minister for his response. Amendment 1 is not seeking to be overly prescriptive but merely to be clear. While I understand the Minister’s points, there is still a gap in the middle with the provisions if Amendment 1 or Amendment 9 are not accepted, with possibly too much space where the purposes and provisions that the Bill seeks to achieve may not come to pass. However, for the time being, I beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

Moved by

[Lord Holmes of Richmond]

2: Clause 1, page 2, leave out lines 8 and 9 and insert “30 days”
Member's explanatory statement
This amendment seeks to make the maximum payment period 30 days, instead of 60 days, where the purchaser is not a public authority.

[Lord Holmes of Richmond (Con)]

My Lords, there is a wonderful structure to the groupings so far. Group 1 started with Amendment 1 and group 2 starts with Amendment 2—we are all following so far. In moving Amendment 2, in my name, I will speak to Amendment 7.

Amendment 2 is simply a probing amendment and seeks to suggest 30 days as the period—period. There would be no sense of different payment periods. It would be 30 days, be you a local authority or not. In no sense am I expecting this to be accepted into the Bill. My purpose in tabling the amendment is to test where the thinking is on bringing those positions closer together over time. Ultimately, as we will come to in later groups, the potential is that, through smart contracts and fintech solutions, it will be possible to have all the terms set out. Once they are satisfied, atomic settlement automatically occurs by virtue of that smart contract and payment is instant.

Now, we are not there. On that journey, accessibility and inclusion, not least digital inclusion, need to be at the fore, and alternative means always need to be in the mix. However, as that is entirely possible today, 60 days seems somewhat old-fashioned in the light of what is already possible. It is fair to try to get all to the 60-day point because, as noble Lords will know, and as smaller micro entities out there will know even more painfully, oftentimes it is double that, never mind 60 days, if not more. However, I am interested in the Government’s plans to bring 60 through 45 to 30 on a continuing route, and to keep reducing that, because 60 is still far too long. In most instances even today, it is not justifiable or necessary.

Amendment 7 goes to the point of stopping the clock to have some greater precision as to what the end point is of that 60 or 30 days. I have used “unencumbered” funds as a proxy for that. It is not suggesting that this is the best or only measure, but there is a need for a more precise measure and to put in practical terms what this means for the service provider. If 60 days is always extended at the outset and then potentially stretched at the end, so that the funds finally get telegraphed only on the final day, there are a number of days for those funds to be unencumbered in that business’s account. But that is not 60 days. I appreciate that there are difficulties in trying to then work out what is standard practice for various financial service institutions to clear their funds. However, there are industry standards which could be considered, if not included, in that 60-day period. I look forward to the debate and to the Minister’s response. I beg to move.

[The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)]

I advise the Committee that if this amendment is agreed to I will be unable to call Amendments 3 to 5 for reasons of pre-emption.

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[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions and amendments in this group. The Government share the objective of fair payment rules and are committed to ensuring that businesses, especially SMEs, are paid promptly. The 60-day period was set following extensive consultation with industry, with more than 850 responses across all sectors and business sizes. The Government consider the 60-day cap to be a balanced and proportionate approach.

As I mentioned at Second Reading, there is no reason why businesses cannot pay before 60 days and I think most do. I am sure that noble Lords here who have businesses pay much earlier than 30 days; the Department for Business and Trade—now called the Department for Business, Innovation, Science and Trade—pays 99% of its bills within 30 days. We are trying to encourage behavioural and cultural change, and 60 days is a maximum. I am sure that most businesses pay within that period.

[Lord Holmes of Richmond (Con)]

Does the Minister have an analysis of the various levels and sizes of the entities that responded to the consultation, married to the length of time that they sought? If he does not have it at his fingertips, he could write. In effect, does the research show an interesting picture about which size of entities were asking for which length of payment period?

[Lord Leong (Lab)]

I am sure we do; I will speak to officials and make sure I share that information with all noble Lords.

This represents a significant strengthening of existing law, where payment terms of more than 60 days are often imposed on suppliers. Some smaller businesses argue that 60 days remains too long, while some larger businesses express concerns about the impact of maximum payment terms on working capital and established commercial arrangements. The 60-day period therefore represents a carefully considered balance between those competing concerns.

Amendments 2 and 11 would reduce payment periods either by creating a statutory expectation that the maximum period will be tightened in future or by reducing the cap for non-public authority purchasers to 30 days. Reducing the maximum period to 45 or 30 days may not work effectively across all sectors, particularly those with complex supply chains. Amendments 3 and 5 would move in the opposite direction, extending the maximum period to 35 days for public authorities and 65 days for other purchasers. The Government cannot support these changes either. The Bill’s 30-day period for public authorities is aligned with wider public procurement rules; extending those periods would weaken the Bill’s ambition and delay payments to suppliers, including small businesses.

Amendment 7, in seeking to define payment more clearly by reference to funds being received, could result in purchasers that have done their best to pay on time being punished for issues that are out of their control—for example, when a payment instruction has been made on time by the purchaser but is subsequently delayed by banking processes outside the purchaser’s control. The Government believe that the Bill provides sufficient clarity and improvement of payment practices, taking into account the need for businesses’ flexibility on how payments are made.

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[Lord Leong (Lab)]

I am grateful to the noble Lord for bringing that specific example. I need to be very specific about this, because it refers to a particular organisation; I need to get my facts correct and will write to him.

[Lord Holmes of Richmond (Con)]

My Lords, I thank all noble Lords who participated in this debate and tabled amendments, and I thank the Minister for his response. It was already clear but is particularly so with that final exchange: the SAR provisions are particularly significant and could barely be more up to the minute, timely, and in need of serious consideration to ensure that they are got right. As my noble friend Lord Leigh pointed out, it is a very specific and very different situation to that of almost all creditors in those circumstances.

I also thank the noble Lord, Lord Fox, for his example of going to a hot country for 645 days; it is not clear whether the term was only 60 days when he went there but he liked it so much that an additional 585 days were added to the term. It is also fantastic to have the noble Baroness, Lady Bowles, on the bus for the Bill.

I think we will be coming back to some of these issues on Report, and between Committee and then— particularly those pertaining to SAR situations, to stress it again. For now, I beg leave to withdraw my Amendment 2.

Amendment 2 withdrawn.

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[Lord Sharpe of Epsom (Con)]

My Lords, it is a pleasure to introduce group 4, which primarily covers the important issue of the definitions of different sized businesses. Before I open that debate, I will touch on the other amendments in this group.

Amendment 18, which was signed by my noble friends Lord Hunt of Wirral and Lord Holmes of Richmond, probes the expected impact of exempting upward payments from the new payment terms. As a preliminary question, what economic impact do the Government specifically consider new Section 2E(2) will have? The Government’s argument is that the Bill will prevent the late payments that cost the United Kingdom £11 billion and cost small businesses almost eight days a year in chasing overdue invoices, yet they are exempting upward payments, including those from micro and sole undertakings, to small businesses. I understand that smaller businesses often appear more vulnerable and will often have tighter margins and a smaller cash flow, but that does not mean that the supplier, especially if it is also a small business, can necessarily take the hit of an indefinite or delayed payment term.

More broadly, the purchaser almost always has the power in a contractual agreement. They are the ones who hold the capital. Exempting upward payments merely because the purchaser is smaller will exempt contracts that really should fall under the scope of the Bill.

That brings me to the most long-standing issue this group addresses, which is the definition of businesses. There are currently at least six different definitions in law of business sizes. There are the Companies Act 2006, the Enterprise Act 2016, and the Small Business, Enterprise and Employment Act 2015. Standard settlers use the definition “less complex entities”, while this Bill uses the Procurement Act 2023, alongside giving the Secretary of State powers to make definitions.

We are not arguing that discretion is not needed in separate areas of policy, but it is widely thought that we have reached the point of confusion. At the very least, any new definition created under this Bill should not differ from any pre-established definition; that is the argument that Amendment 22 is attempting to make.

In a more ideal scenario, Amendments 20, 21, 23 and 101 attempt to offer a new standardised definition of business sizes that we believe more accurately represents the nature of today’s economy. Currently, the most used definitions in the Companies Act use a numerical number of employees as a factor in defining the size of a business. The amendments in my name, alongside those of my noble friends Lord Hunt of Wirral and Lord Holmes of Richmond, aim to replace this nominal headcount with a full-time equivalent number of employees.

I offer just one important example of the importance of this change. In doing so, I thank UKHospitality for its campaign on this issue. Members of the hospitality industry often hire more than the threshold 50 or 250 employees at their venues or events, but do so on shorter, low-hours contracts. While they may therefore have an employee count well over the threshold, it often does not reflect the amount of work that is being done by these employees. We believe that the Government should be able to offer a more nuanced system that more accurately reflects the amount of labour that a business employs.

Finally, exacerbating this amalgam of definitions is the lack of public information about which business falls where. Restricting the definitions of businesses is important, but I pre-empt that the Minister will argue that this Bill is not the vehicle for that discussion. In a sense, he is quite right. Under new subsection (7) in Clause 3, the Secretary of State could define small businesses as those with £100 million turnover. It would not matter if businesses did not know which partners fell under this definition. This is hyperbole, but it illustrates the point that, without some form of database through which businesses can see who falls under which payment term in this Bill, definitions have little meaning. At the very least, businesses will be forced to complete the administrative work themselves.

In speaking to industry representatives in preparation for this Bill, there has been general consensus that Companies House is not fulfilling this role. The Bill aims to create more symmetry between different-sized businesses, yet that cannot be achieved if there is obscure or asymmetrical information. Can the Minister confirm today that he will look into the efficacy of Companies House and, if need be, provide additional support for businesses so they do not have the burden of defining businesses themselves placed upon them? I beg to move.

[Lord Holmes of Richmond (Con)]

My Lords, I support my noble friend Lord Sharpe, having signed all the amendments in his name. There are two key principles at stake here, as he eloquently set out: first, not to introduce yet another definition and, secondly, to take the opportunity to bring some clarity, consistency and coherence of definition. This would not just be beneficial for this Bill but have benefits far beyond it. As he rightly set out, this Bill may not be the place for that second objective. It is obviously the place for the first but, if it is not the place for the second, it would certainly seem to provide the right level of focus and spotlight to enable the department to look at this and bring forward plans to have definitions and classifications that are clear and consistent but also provide what anybody in whatever size of business they are involved with needs. So those definitions are useful.

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Sharpe, brought up a number of important issues, but I do not think he brought up any viable solutions. He spoke at the beginning about the proliferation of definitions, then sought to add to that proliferation with some new definitions.

He is right that some level of consistency should be required. For the purposes of this Bill, that consistency has to come from the purchasing Act 2023, unless that is not available. However, the point made by the noble Lord, Lord Holmes, is that there should be a more concerted effort in another place to get meaningful definitions of business sizes. The noble Lord, Lord Sharpe, made a point on the ease of determining those definitions. As the noble Lord, Lord Leong, will know, I am always keen to have a look at Companies House and see how it is doing. It has an important role in a number of different areas; this is just one. A progress report on Companies House when we get back would not be amiss.

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[Lord Thomas of Cwmgiedd (CB)]

My Lords, I declare my interest as chairman of the board that advises the International Centre for Digital Trade and Innovation. I am grateful to the noble Lord, Lord Holmes, for his support in this, and for the time that the Minister and his officials afforded to discuss it.

I set out at Second Reading the background to this amendment and how it fits entirely with the implementation of the Electronic Trade Documents Act and our participation and lead in the international moves to move payments out of the 13th century, or modifications since then, into the 21st century. I am sure no one needs to be reminded how conservative—with a small “c”—processes in business are. They need something to move them, and what I propose would help to do so.

There can be no doubt that using electronic documents and payment systems is entirely consistent with the purpose of the Bill, in that it speeds up payment. If the system can be made to work for international trade, the Bill should not exclude international trade. We are at heart a nation of tradesmen and therefore we should be encouraging trade.

I spoke of the many advantages of the Bill, but there are only two that I need mention now. The first is that we are also, as the change in the name of the Minister’s department indicates, a nation intent on innovation. This is where I think, and I encourage people to see this, we are moving. The second is to mention that this is entirely consistent with the plans to move to e-invoicing on 1 April 2029. I mention that date because it is in the amendment.

I accept that we are not in a position today to make people pay within 30 or 60 days for international trade but there is no reason why we cannot do it in two years’ time, particularly with the new department. So the amendment is designed simply to leave the policy statement in the King’s Speech and the provision for making future regulations to exclude trade, as that is okay for now, but to set a withdrawal period. The Minister is bound to say, “You can trust us in the department. When things are ready, we’ll move there”, but unfortunately we all—businessmen particularly—need to be prodded. It took centuries for people to move away from using bills of lading in three sets rather than one, despite there being no earthly purpose to it. I therefore believe that we need something in the Bill to force the move to digitalisation. Now that the department has the word “innovation” in its name, let us hope that it can do that.

The Minister may not be terribly fired up by his officials to do this, and I will always welcome other suggestions, but we must have a policy for implementation. That is not my primary purpose but I hope that at least that could be offered as a consolation prize. I therefore beg to move.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my friend, the noble and learned Lord, Lord Thomas, and the excellent and eloquent way in which he introduced his amendment, which I was delighted to sign. As he rightly pointed out, this could be seen as the absolute premier DBIST amendment. It goes to the heart of what the department is. It has business and innovation at its very heart, and it would make complete sense for the department to pass it before Ministers have even changed the stationery in their various departmental boxes.

It was a pleasure to serve under the chairmanship of the noble and learned Lord as he chaired the Special Public Bill Committee on the then Electronic Trade Documents Bill. I variously described the Bill as

“the most important Bill that no one has ever heard of”.—[Official Report, 19/7/23; col. 2326.]

and the blockchain Bill that rightly never mentions blockchain. It was perfect in its two-page shortness—perfect, in that it never mentioned any specific technology. It merely set out criteria that any technology would have to meet to perfect an electronic trade document. When we talk about electronic trade documents, we are talking about economic, environmental and social benefits and, for the purposes of this Bill, payments efficiency and payments benefits.

The ability to combine everything in an electronic digital format is possible only because of the criteria that blockchain and distributed ledger technology allows to have a possessory document—that is, if you hold the document, you hold the goods. Only through those technologies is it possible to thus have those possessory documents in electronic form. This would be good for payment but it would also be good for UK trade. There is currently a huge trade finance deficit painfully suffered by many businesses already involved in trade but, perhaps even more significantly, by all those tens of thousands of businesses that currently do not trade internationally but could. The provisions in this amendment really highlight that opportunity.

As the amendment so clearly sets out, international trade should be within the purview of this Bill and, in many ways, this lays the groundwork for many of the technology amendments which we will come to later this evening. It makes the point about what is possible today without insisting that it has to be used and come into force on the date the statute comes into force. By being in the statute, with the time period as set out in the amendment, it states the case clearly. It provides the time for adoption but really speaks to the possibility and, largely, the economic opportunities for all those businesses, particularly small and micro-businesses, which could avail themselves of all the benefits of international trade.

[Lord Fox (LD)]

My Lords, very briefly, this would seem to be the perfect amendment for the Minister to accept. As pointed out, it signals an innovative forward direction for the new department, it utilises complex legislation that has already happened, it does not cost anything, and nothing will happen for two years—perfect.

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Moved by

[Lord Holmes of Richmond]

24: Clause 4, page 9, line 2, at end insert—
“(3) Statutory interest is to be remitted to the supplier within five working days of payment of the invoices.(4) “Remitted” in subsection (3) means the point at which the supplier has unequivocal and unencumbered use of cleared funds remitted by the buyer.(5) Where statutory interest is not paid in accordance with subsection (3) the non-payment of statutory interest incurred in accordance with the period for which statutory interest runs in CPILPA 1998 will constitute a qualifying debt in the sum of the statutory interest, and will thus incur statutory interest on the unpaid original statutory interest. (6) Where statutory interest is not paid in accordance with subsection (3) it will be deemed late and be subject to the provisions relating to compensation arising out of late payment.(7) Where statutory interest is to be paid in accordance with subsection (3) and it has not been paid, the directors must write to the Small Business Commissioner stating the reasons for non-payment.”Member’s explanatory statement
The amendment seeks to require the buyer to calculate and pay interest so as not to disrupt the buyer-supplier relationship.

[Lord Holmes of Richmond (Con)]

My Lords, I look forward to the debate on this group. Amendment 24 is incredibly straightforward. It requires that the purchaser calculates the interest and makes the payment in all circumstances because they have the means and the resources and are in the position to do such. In doing that, it does not just lead to an efficient process; crucially, it means that the relationship between the parties is maintained and not adversely affected as a consequence of these provisions. I beg to move.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lord Holmes of Richmond for this amendment. I am sorry that noble Lords have caught me eating a toffee, which was a terrible error.

The ability to charge statutory interest on late payments was established by the Late Payment of Commercial Debts (Interest) Act 1998. That Act, however, introduced that right only as a right to charge, which many businesses may choose not to exercise out of fear of damaging commercial relationships or losing out on contracts. With this Bill, statutory interest becomes an implied mandatory term of a commercial contract. Therefore, the interest will accrue automatically on overdue payments and the burden will not fall on the suppliers to claim that interest.

The amendment from my noble friend seeks to ensure that late payment interest is paid to a supplier within five working days. It further provides that where statutory interest is not paid within that timeframe, the unpaid interest will itself form a part of the qualifying debt and therefore be liable to a further charge of statutory interest. While we support this policy, we must ensure that businesses, particularly SMEs, are given adequate time to adapt to the new regulations.

The impact assessment recognises that small and medium-sized businesses will shoulder

“a higher proportion of net costs”

associated with this policy. It further states:

“The policy does not create specific mitigations for SMEs, rather information will be provided to all business, to support their understanding and complying with the new policy requirements, in line with previous guidance issued on statutory interest”.


Those words might not be particularly comforting for many small businesses that are already struggling. Might I suggest that the Government do a little more to explain precisely how they will support those businesses? What kinds of information will they provide?

I have tabled an amendment to the commencement clause of the Bill, to be debated later, which would prevent that clause being brought into force for one year. That is the kind of measure that will give businesses the time to adapt, understand the new guidance and prepare for the new regime. I hope that when we come to debate that amendment, the Minister will give it serious consideration.

[Lord Leong (Lab)]

My Lords, I thank the noble Lord, Lord Holmes, for this amendment. I understand the concern that statutory interest is not always claimed or paid in practice, and I agree that it is important to find ways to make the systems work better for suppliers. However, the Bill already strikes the right balance. It strengthens the existing framework by making the right to statutory interest universal, ensuring it cannot be contracted out of, and underpinning it with significantly stronger enforcement and transparency. This signifies a significant advancement, transitioning from a system where the right exists, but remains underutilised, to one where all suppliers are explicitly entitled to it and are supported in its enforcement.

This amendment would go further by introducing rigid and prescriptive requirements that risk undermining the balanced approach. A fixed five-day deadline for the payment of interest does not accurately reflect the practical realities of commercial and accounting practices and processes; it may pose a risk of technical breach to businesses that are otherwise compliant. The proposed definition of payment as an

“unequivocal and unencumbered use of cleared funds”

could lead to legal and operational uncertainties, diverting attention from timely payment to technical disagreements over banking procedures.

Additionally, classifying unpaid interest as new qualifying debt, which then accumulates more interest, risks creating disproportionately large and growing liabilities. The obligation for directors to report instances of non-payment to the Small Business Commissioner would also introduce supplementary administrative burdens, without a distinct enforcement advantage beyond the provisions already established in the Bill.

Taken together, these provisions risk creating complexity and uncertainty, rather than improving payment outcomes in practice. The Bill aims to enhance behaviour by establishing clear rights, enforceability and robust oversight, rather than specifying detailed operational rules in primary legislation. I therefore ask the noble Lord to withdraw his amendment.

[Lord Holmes of Richmond (Con)]

My Lords, I thank my noble friend Lord Sharpe and the Minister for their comments in this short debate. In spite of the Minister’s comments—I particularly appreciate his comments on the five-day period—there is a principle at the heart of this, which is worth exploring between Committee and Report. For now, I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

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There is a precedent for this. When we were discussing the economic crime Bill, the Minister in question set out the extra resources that Companies House would receive in order to meet the conditions of the new Bill. Therefore, it is absolutely the case that we should do the same here. I am happy to discuss this, but from our perspective on these Benches this is an absolutely central issue.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my friend, the noble Lord, Lord Fox, and to start with his Amendment 93, which I was delighted to co-sign. As he stated in finishing, it goes to the heart of this issue. A lot is being asked of an organisation that is currently small and obviously not set up to perform the tasks that are being asked of it by the Bill, as it is currently structured. To not have clarity as to what provisions are going to be put in place, while putting the obligations on the commissioner, does not seem to be the right way to get optimal results from this.

As the noble Lord, Lord Fox, said, there are a number of examples where regulators and other bodies have been given packages that sit alongside the obligations required of them from previous Bills that we have all worked on. So there is nothing extraordinary or unusual about this. It is critical to have sight of that before having a sense of the likelihood of success or, indeed, of what other route we may choose to take with amendments when we come to Report.

I support the principles behind all the amendments in the group. In many ways, they are all in pursuit of clarity and precision. We heard in earlier debates that certain phrases and sections of the Bill were need of precision. We see it again with some of the key phrases here. I support all these amendments. I look forward to the Minister’s response.

[Lord Leigh of Hurley (Con)]

My Lords, we now come, as my noble friend Lord Hunt of Wirral said, to the heart of the Bill, as far as I am concerned. For many, it is the most important part. I have tabled a number of amendments, starting with Amendment 62. As my noble friend said, it seems only sensible that if the Small Business Commissioner has decided not to adjudicate, she should set out in writing the reasons why. The particular emphasis on this is to understand whether that is because of a lack of resources within the commissioner’s office. If that is the case, we want to know, so that we can push harder for proper funding for the office. I hope the Minister regards the amendments in this group as being constructive. They reflect feedback from the world of business.

In respect of my Amendment 75, I think it is reasonable to push the Government to be more specific and explain what they mean by

“a sufficient number of occasions”.

It is, bluntly, fairly meaningless and extremely woolly as is, as my noble friend Lord Hunt of Wirral has indicated. There is no point giving us a number; it has to be a number in a certain period and perhaps quantified as well.

To be honest, I am not entirely happy with new Sections 2K and 2L, as amendments to Section 2 of the Enterprise Act 2016, as mentioned in Clause 19, headed “Publication directions” and “Enforcement directions and financial penalties for non-compliance”. The Bill does not specify all that might be required of a company. It gives examples in new Section 2L(2). Indeed, it actually rules out a larger business being required to publish information or make payments or comply with a decision given in legal proceedings, but I would like to see some greater powers here.

Therefore, I ask the Minister to have another look at new Sections 2K and 2L and perhaps, over the summer months, consider with us what might be included within “enforcement directions”. For example, I have in mind that a company that is in breach of late payments best practices should not be given government contracts. Has that been considered at all by the Government? It seems an obvious point that if there is a serious breach and a company is constantly paying late, why would the Government want to give it any contracts at all? That would bite and force companies to think again. It may be that the Government have this in mind but do not have it in legislation, and want to do it through regulation or something, but it would be helpful to hear from the Minister, now or later, his views on that.

In my view, a solution is that the guilty company should be given the cold shoulder by the Government and, indeed, the wider business community. To be given the cold shoulder is difficult to define, although it is used in the City, as the Minister knows, in the Takeover Code—it is very rarely applied, but with great effect. For example, I would be extremely disappointed to see the chairman of a company that consistently practises poor late payment policies be given any sort of honour or award. It may be difficult to put that into legislation, but the Minister might indicate to us his views on that, and there might be from the Dispatch Box, now or later, comfort given to us that the Government will not look kindly on such companies and will take such steps as are necessary to push them along.

We have quite a long time until Report, and indeed there will be, as I understand it, a new Minister in the other place. I hope that the Minister in this House, who I am confident and hopeful will be in his seat when we return, might invite participation and agree some further amendments to this part of the Bill.

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[Lord Leigh of Hurley (Con)]

My Lords, my Amendment 58 comes out of discussions I have had with SMEs which are supplying much larger companies. I raised this at Second Reading and have now tabled this amendment to reflect that discussion. It may not be the most important to some, but I feel strongly that this issue needs to be addressed. To the extent that it can be addressed in this Bill, through these amendments, that is great, but it is part of a wider issue which the Government should look at.

Many SMEs that I talk to—and they will not put their head above the parapet and say so publicly—are spending significant time and resources assisting larger companies to fulfil their ESG ambitions. Whether or not it is obligatory, they still find themselves having to do it. What does that mean in practice? It means that they have to go on courses and webinars and fill out forms, all of which are completely vanilla, bland and meaningless, but tick a box for a larger company to say that, yes, it has gone through its supply chain to ensure that it is performing to the same standards and way of doing business as they are. It is detrimental to so many small businesses. Can a company that employs only six people be expected to have a diversity policy that is meaningful? What if all six are women? Good luck to it, but should that company be punished? It might be encouraged, but if all six are male then there would be a sharp intake of breath and a cross on the ESG form.

It is the same for small businesses having to analyse their travel activities and the amount of water that they use in their enterprise. We are talking about businesses where staff sit in an office in a building where the only water that gets used is in the facilities and the roof, but they have to fill out the form telling someone how much water they use. It is a complete and utter waste and abuse of their time, but nobody is standing up for SMEs and saying, “Up with this we will not put”.

I hope that the Government take this siren warning and pick up this issue elsewhere. In the context of this Bill, my concern is that, at some point, larger companies might wish to withhold or defer payments to suppliers whom they regard as being unhelpful to them in their ESG drive. I have no evidence of this happening but want to prevent it happening and to raise the issue for a wider debate within what is now, I think, the BIST team. I am sure that the Government can see the point and hope that they will consider it.

Although I like very many of my noble friend Lord Holmes of Richmond’s amendments, as always I am nervous about legislation that requires more disclosure in companies’ accounts. The average FTSE 100 company annual report has—are you ready for this?—97,000 words. I hope that we do not legislate to make them put more words in those reports, partly because nobody reads them and they are huge documents when printed out. I challenge anybody to say that they have read the annual report of any FTSE 100 company in full. They are expensive to produce and are read increasingly infrequently. I beg to move.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my noble friend Lord Leigh of Hurley. My amendments in this group largely fit into support and assistance for the small businesses that need to be put in a position to avail themselves of these new provisions from the SBC.

We will come to it in the next group, but it is clear, as my noble friend somewhat alluded to, that this will produce potentially a lot of data which goes nowhere, is of no benefit and is not used to drive any change whatever. But given the nature of the requirements currently set out in the Bill, that data will be produced. Therefore, it seems helpful to look at the various categories of small business and the equalities issues there. Since that data will be part of the collection in any event, having that angle on it will show what targeted support could come from the SBC to support those businesses to better avail themselves of the services. A small business payments charter would be a good focal point for the provisions set out in this Bill, to ensure that those it is aimed at are aware of it and enabled and empowered to make use of it, as and when they need it.

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Moved by

[Lord Holmes of Richmond]

73: After Clause 18, insert the following new Clause—
“Digital access to SBC adjudication schemeAfter section 2G of the Enterprise Act 2016 (inserted by section 18), insert—“2H Digital access to SBC adjudication scheme(1) The Commissioner must, within 12 months of the day on which this section comes into force, provide a digital service to assist small businesses in accessing the SBC adjudication scheme.(2) The digital service provided under subsection (1) must include—(a) a plain-language eligibility checker enabling a small business to determine whether a relevant payment dispute may be referred to the scheme,(b) a statutory interest calculator enabling a small business to calculate the interest owed under the Commercial Payments and Interest on Late Payment Act 1998, and(c) guided assistance in completing a referral to the scheme, using natural language processing or equivalent technology where appropriate.(3 The Commissioner must ensure that the digital service—(a) meets the accessibility requirements set out in the Public Sector Bodies (Websites and Mobile Applications) Accessibility Regulations 2018 (S.I. 2018/952), and(b) is available in accessible formats including voice interface.(4) The Commissioner must maintain non-digital alternatives to each element of the service provided under subsection (1), to ensure that small businesses that are unable to use digital services are not disadvantaged in accessing the scheme.”” Member’s explanatory statement
This amendment requires the Commissioner to provide a plain-language digital pathway into the SBC adjudication scheme, including an eligibility checker, interest calculator, and guided referral process.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to open this group of amendments. It is time to talk technology. Before going into the specifics of the amendments, I will set out the overarching reasons for this group.

As we have heard, the SBC does extremely good work, but the resources that she currently has available are chronically insufficient for the task that is being asked of her. The Minister said in a previous response that discussions are already happening around staffing and resource. That is good, and we wait to see the outcome, but what is critical in those discussions is the question of the right mix of staffing and technologies. Even if the resource is put in, without the right mix of technologies and staffing the SBC will not have any chance whatever of optimising her task when it comes to what the Bill requires of her.

Another reason for these amendments is the Government’s current posture when it comes to artificial intelligence. This may be up for change, and I certainly hope it is; the announcement of an AI Minister to be in Cabinet can be only a positive thing. Currently, however, the Government’s stance on AI is not to bring forward cross-sector AI legislation. This is not a party-political point; the previous Government took the same position. What is said is that the Government will take a domain-specific approach when it comes to artificial intelligence. So here we are: we have a domain. It seems right, appropriate and beneficial to bring forward AI amendments specific to commercial payments.

Amendment 73 would introduce a digital access pathway into the services of the SBC. It should be seen with amendments in the previous group. It is critically important to have digital access, but this must be seen with accessibility of the digital tools themselves while providing non-digital alternatives. Equally, a digital access pathway would enable the commissioner to better perform her tasks, and would enable greater efficiency and effectiveness for small businesses to get involved with the processes as and when they need to do so.

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It is also important to note that additional transparency on retention practices is already being delivered through the Reporting on Payment Practices and Performance (Amendment) Regulations 2025, which require large companies within scope to publish information on their use of retention clauses in construction contracts. This will be strengthened further by the proposals in Clause 24 for the Small Business Commissioner to be given powers to impose fines where there are breaches in reporting requirements. The Government are already working closely with industry to explore digital payment solutions and have committed to broader work to improve quality, reduce defects and expand access to alternative forms of security. This includes identifying technologies that can support improved productivity and performance across the life cycle of construction projects. With that said, I respectfully ask the noble Lord to withdraw his amendment.

[Lord Holmes of Richmond (Con)]

My Lords, I thank all noble Lords who took part in this debate. In answer to the noble Lord, Lord Fox, not just on the specifics of Amendment 78, I am always 100% in agreement with the noble and learned Lord, Lord Thomas of Cwmgiedd. That is a good place to be. Despite the noble and learned Lord’s slight downer today on lawyers, I am happy to think that it is good to be alongside an ex-Lord Chief Justice. So I very much agree and would make the same point on Amendment 78.

I thank the Minister for his response. There are some principles that we can return to on Report but, for now, I beg leave to withdraw the amendment.

Amendment 73 withdrawn.