Commercial Payments Bill [HL]

Debate between Lord Leigh of Hurley and Lord Holmes of Richmond

Committee stage
Tuesday 21st July 2026 Lords Chamber

[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.

--- Later in debate ---

[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.