Commercial Payments Bill [HL]

Lord Leong Excerpts

Report stage
Tuesday 15th September 2026 Lords Chamber

[Lord Fox (LD)]

My Lords, I feel a great wave of consensus flowing over me. I will speak to Amendment 8 in my name. As we discussed before the Recess, much of the consultation process proposed a 45-day limit, yet the Bill offers no easy route from the 60 days it proposes to a shorter timeframe. My amendment would require the Secretary of State, within five years, either to lay draft legislation reducing the maximum payment period for private purchasers from 60 to 45 days, or to explain to Parliament why not.

The Minister’s reaction and response to this issue have been typical of the very strong consensus that we have been able to build. I echo the words of the noble Lord, Lord Sharpe, that both the Minister and his team have been extremely helpful in this. That is why I am delighted to note that government Amendment 15 and the various consequentials lock in very much what I was looking for, including—as the noble Lord, Lord Sharpe, mentioned—the need for consultation within five years, with a view to shortening the payment period. This government amendment is an excellent response to my Amendment 8, thereby making my amendment unneeded.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, prior to introducing the government amendments, I wish to express my personal thanks for the positive engagement across the House, and particularly to the noble Lords, Lord Hunt and Lord Sharpe, on the Opposition Front Bench, and the noble Lord, Lord Fox, and the Liberal Democrats for their very thoughtful scrutiny of the Bill.

The Bill builds upon the important reforms that were enacted by the previous Conservative Government. The provisions in the Bill have been drafted following extensive consultation with businesses, with more than 850 responses to our consultation, which was undertaken between 31 July and 23 October 2025. We have brought forward a Bill that reflects that consultation.

Our decision to impose stricter maximum payment terms of 60 days received support from 66% of consultation respondents. This is a significant strengthening of current law. No longer will large businesses be able to impose payment terms of over 60 days upon their suppliers. The question remains whether 60 days should be the end of that journey. We have heard loud and clear from smaller businesses that the Government should consider reducing maximum payment terms to 45 days or even 30 days. I have listened carefully to all noble Lords across the House encouraging us to go further on this. I am pleased to say that the Government have tabled amendments to provide a power that may be used in future to reduce the maximum payment terms.

These amendments allow the Government to consult on whether payment periods should be reduced, ensuring that any future decisions are informed by evidence and experience of how the new measures are operating in practice. Furthermore, the Government will not use this power to reduce maximum payment terms for at least five years. I hope noble Lords will agree that this is a sensible change and a balanced approach, maintaining the payment periods consulted on and included in the Bill, providing stability and certainty while businesses adapt to the new reality of 60-day maximum payment terms, and ensuring that there is a clear route to go further in future if the evidence supports it.

I turn to the amendments tabled by other noble Lords. In response to Amendment 2, increasing the maximum payment term for public authorities beyond 30 days would undermine the Procurement Act 2023 and delay payment to suppliers. In response to Amendment 4, increasing the maximum period for non-public authority purchasers beyond 60 days would delay payments to suppliers and move away from the position consulted upon with strong levels of support.

Regarding Amendments 3 and 6, national ownership does not by itself determine the applicable payment regime. Under the Bill, a nationalised body that meets the definition of a “public authority” will be subject to a 30-day maximum payment period. A nationalised body that does not meet that definition will be subject to the 60-day maximum payment period that applies to other purchasers. I recognise the intention and ambition of the noble Lord, Lord Fox, in Amendment 8 to reduce maximum payment terms.

On Amendment 19, the Bill takes important steps by introducing clarity and consistency around payment terms, building on the reforms introduced by the previous Conservative Administration. We are not aware of public holidays being raised as a concern by any businesses or stakeholders during last year’s extensive public consultation.

Amendment 1 is already covered by the Bill. We are setting out clearly the trigger points that can be agreed to start the clock on payment and the implied term if payment is not explicitly made.

Regarding Amendment 5, the Government believe that the Bill is clear. For the purposes of whether a payment has been made on time and when interest on late payment will start, payment will be considered made at the point that funds have been received by the supplier. On both Amendments 1 and 5, the Small Business Commissioner will provide advice and information on compliance with legal obligations on these points. On Amendment 10, I outlined in Committee how the removal of this exemption would place UK businesses at a competitive disadvantage.

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[Lord Hunt of Wirral (Con)]

My Lords, this amendment touches on very much the same point as my noble friend Lord Holmes of Richmond’s Amendment 6 in the first group. The principle that payments should be considered as such only when received by the supplier underpins several of the amendments that we on this side of the House have brought back from Committee. As such, His Majesty’s loyal Opposition support this amendment, as we did in Committee. I do not think that a payment should fall under a different regime from direct payments simply because it is made online and happens to travel through an intermediary. Similarly, ensuring the prompt forwarding of payments by intermediaries is an integral part of promoting good payment practices. This amendment aims to do that, and I warmly commend the speech of the noble Lord, Lord Fox. I join him in hoping that the Minister can confirm that these issues have been considered and addressed.

[Lord Leong (Lab)]

My Lords, I am grateful to the noble Lord, Lord Fox, for Amendment 7 and thank him for it. I recognise that it was tabled in a constructive spirit, and I thank him once again for the engagement we have had on this matter, both in person and by correspondence. The Government share his aims of ensuring that suppliers are paid promptly, payment processes are clear and purchasers cannot use contractual mechanisms to delay payment unjustly. I entirely agree that, when a small business sells through a platform or marketplace, the money due to that business should not be held unnecessarily.

I want to be absolutely clear that the use of intermediaries does not affect a supplier’s right to be paid within 60 days. Chapter 1 of Part 1 ensures that, for business-to-business contracts for the supply of goods or services, the maximum payment time is 60 days. If payment is more than 60 days overdue, the purchaser is in breach of contract and liable to pay interest. The use of an intermediary does not alter this position.

I reassure all noble Lords that persistent attempts to circumvent the maximum payment terms through intermediaries constitute poor payment practice. Under Clause 19, this constitutes grounds for the Small Business Commissioner to investigate and potentially levy a financial penalty on larger businesses that persistently engage in this practice. Under Clause 18, the commissioner will also be able to adjudicate payment disputes where a larger business owes money to a small business, including where the debt arises from the use of an intermediary.

The Bill addresses late business-to-business payments. It is not intended to regulate broader business relationships such as those between retailers using agents to sell goods to consumers or between a platform or marketplace and others when the platform or marketplace is holding, processing or transmitting funds between them. Those are subject to separate regulation. The contracts through which the majority of small businesses trade on online marketplaces are either business-to-consumer or consumer-to-consumer contracts and are subject to consumer legislation. These contracts were outside the scope of our impact assessment and our public consultation.

As tabled, the amendment would therefore not address the issue raised by the noble Lord, Lord Fox. Tackling the issue of late payments outside a business-to-business context would move the Bill into a completely different area of regulation and would require the establishment of a new statutory regime for online marketplaces and payment intermediaries. This would cut across existing legislation, rather than maintaining the Bill’s core focus on commercial payment practices between suppliers and purchasers.

The amendment would also interfere with existing commercial models that operate in the interests of the relevant parties and serve legitimate purpose. For example, where most intermediaries operate a system in which payments are pooled in a small business account and are drawn down by the small business on a regular basis, the amendment would mean that each individual sale, however small, would have to be remitted directly to the small business, significantly increasing transaction numbers and costs and reducing the flexibility of the operating model. Another example is payment providers holding funds for more than seven days to allow for fraud checks or other compliance requirements. The amendment would increase small businesses’ exposure to fraud and undermine the regulatory and legal framework governing payment providers.

However, I understand and share the noble Lord’s concerns about withholding funds from small businesses. I am therefore happy to ask the Small Business Commissioner to review this issue with a view to developing guidance for small businesses so that they understand how the Bill applies to trading activity on online marketplaces. This can build on the guidance that the commissioner produced last year to help small businesses understand why their accounts may be frozen or funds withheld and how they can take action to avoid this. This included a 10-point pledge to online marketplaces and payment providers which was signed and promoted by several major companies. As the Minister for Small Business, I commit to examining how the Government can further support small businesses in addressing this issue faced by those who use online platforms, including engaging with other government departments and regulators where they have responsibility.

For those reasons, and given the commitments that I have made, I respectfully ask the noble Lord, Lord Fox, to withdraw Amendment 7.

[Lord Fox (LD)]

I thank the noble Lord, Lord Hunt, for his support for this amendment. One point of consternation or otherwise is that I would suggest that the supplier-marketplace relationship is a B2B relationship, not a B2C one. I am not sure where the argument that I am somehow pushing this to a different sort of relationship came from, but I will set that to one side and mull on it later.

I thank the Minister for the latter part of his speech and his undertakings to focus the SBC on this issue and to ensure that his department looks at ways of making sure that small businesses understand their rights. That is really the point. The way in which the first part of his speech was set out made it clear that there are all sorts of rights for small businesses in this, but I am not sure that small businesses are necessarily aware of those rights or how they can go about exercising them and being sure that it is not a time-consuming, overwhelming process. It would be useful to hear from the Minister—and perhaps the Small Business Commissioner, as time goes by—how small businesses will be engaged to make sure that they are fighting on an even footing with the marketplaces, many of which are, let us face it, absolutely huge and very difficult organisations to take on. It can be difficult even to find the right person to speak to in them to start with.

I thank the Minister for the work that he will do in future, and I beg leave to withdraw Amendment 7.

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[Lord Fox (LD)]

My Lords, the noble Lords, Lord Hunt and Lord Sharpe, were right to raise the issue of definitions in Committee. Rather than simply echo them, I decided to add something to the debate through Amendment 35, which sets out something of the Tower of Babel that exists around definitions. Subsection (2) of the new clause proposed in Amendment 35 gives examples of the many phrases and words that are used in a variety of different contexts. Proposed new subsection (3) identifies seven Acts—not the six that the noble Lord, Lord Sharpe, came up with; we managed to find another one—where these phrases are prevalent but not necessarily synonymous. Proposed new subsection (4) really sets out what we are looking for the Minister to do, which is work out to what extent the definitions in proposed new subsection (2) differ from those in subsection (3).

There is a compliance cost to businesses in these differing definitions, because they have to make different decisions for different legislative frameworks. The extent to which this gives rise to uncertainty and undermines the law, and the effect it will have on the functions of the Small Business Commissioner, are just some of the things that should be taken on board by the Government to bring a state of order to what has been an organic process of legislation following legislation and definition following definition. To help the Minister’s new constituency of small businesses in particular, now is the time to bring these things under control and bring definitions into order.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords for Amendments 11, 12, 13, 14, 35 and 46. I recognise the concerns raised by the noble Lords, Lord Sharpe and Lord Fox, in Committee regarding the number of existing definitions of company sizes on the statute book and their desire for clear and consistent definitions to avoid confusion for businesses. I would like to reassure noble Lords that our intention is to use the company size thresholds set out in the Companies Act 2006 and the Enterprise Act 2016 as the basis for defining company size in the Bill.

However, it is important that we consult with businesses and industry experts to ensure that these definitions are appropriate for the purposes of this Bill. That consultation may indicate that, for the purposes of the Bill, company-size definitions should be revised or simplified. Any modifications to existing definitions will be made only when necessary.

For example, we may choose to simplify definitions to make it easier for businesses to use exemptions, while still using existing definitions as the basis. We may find through consultation that different parts of the legislation require different definitions to ensure precision and effectiveness. For example, we might be required to simplify the size definitions for the purposes of the Small Business Commissioner’s powers, so that they are based solely on headcount. We should not constrain ourselves by introducing rigid definitions now, as this could make the powers and protections afforded by the Bill more difficult for businesses to understand and administer than is necessary.

I also do not consider it necessary to delay the Bill’s commencement pending a further statutory review of definitions used across a range of legislation. The Government are already committed to consulting on any regulations made under these powers and to taking into account relevant existing definitions when developing them. The delegated power in Section 2E will be subject to consultation and parliamentary approval under the affirmative procedure, giving your Lordships’ House the opportunity to vote on the regulations before they are introduced.

In conclusion, the definition of business sizes will be set out in secondary legislation. These regulations will be informed by consultation to ensure that they are appropriate. The Government intend to use the existing definitions as the basis for this Bill and will keep definitions as simple and effective as possible.

I also commit that, before making any regulations in this area, the Government will have regard to the definitions in the Companies Act 2006, the Small Business, Enterprise and Employment Act 2015 and the Enterprise Act 2016. I also commit to meeting up with the noble Lord, Lord Sharpe, to look into these definitions going forward. For these reasons, I respectfully ask that Amendment 11 be withdrawn and that noble Lords do not move the remaining amendments in the group.

[Lord Sharpe of Epsom (Con)]

My Lords, again I am grateful to the Minister for his very comprehensive response. I am also grateful to the noble Lord, Lord Fox, for explaining his Amendment 35 and for digging out yet another example of an Act that governs the definitions of small business. Might I suggest to the Minister that, during this consultation, they include a question on how the nature of small business has evolved in the last 10 years? Obviously, there has been a spectacular explosion in e-commerce and other things, which will have a material impact on the types of definition we are talking about.

As I outlined in my opening speech, the current landscape of definition is unnecessarily convoluted—expensively so, as the noble Lord, Lord Fox, pointed out. However, I recognise that this Bill is not necessarily the best vehicle for driving through that reform. I appreciate the Minister’s response on this issue. I will absolutely take him up on his offer of further talks on how we might improve a bit of a messy picture. I think I also heard him say that he is quite keen to find another legislative vehicle where we can address this in the future—if I am making that up, I am sure that he will correct the record.

I beg leave to withdraw my amendment.

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Moved by

[Lord Leong]

15: After Clause 3, insert the following new Clause—
“Powers to shorten payment termsAfter section 2E of the CPILPA 1998 (inserted by section 3), insert—“2F Powers to shorten payment terms(1) The Secretary of State may by regulations substitute the number of days for the time being specified in sections 2B(2)(a) and 2D(3)(a).(2) Regulations under subsection (1)— (a) may not specify a number of days higher than 30;(b) must specify the same number of days in sections 2B(2)(a) and 2D(3)(a).(3) The Secretary of State may by regulations substitute the number of days for the time being specified in sections 2B(2)(b) and 2D(3)(b).(4) Regulations under subsection (3)—(a) may not specify a number of days higher than 60;(b) must specify the same number of days in sections 2B(2)(b) and 2D(3)(b).(5) The Secretary of State may by regulations substitute the number of days for the time being specified in section 2B(5), but the regulations may not specify a number of days higher than 30.(6) The Secretary of State may by regulations substitute the number of days for the time being specified in section 2C(3), but the regulations may not specify a number of days higher than 30.(7) The Secretary of State must, within the required period, consult such persons as the Secretary of State considers appropriate about whether to make regulations under subsections (1), (3), (5) and (6) and the number of days that might be specified in such regulations.(8) In subsection (7) “the required period” means the period of five years beginning with the day on which sections 2B and 2D come into force (or, if they come into force on different days, the later of those days).””Member’s explanatory statement
This new clause enables the Secretary of State to make regulations to shorten the payment periods set out in various provisions of the Bill.

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Moved by

[Lord Leong]

16: Clause 4, page 9, line 4, leave out “2E” and insert “2F”
Member’s explanatory statement
This amendment is consequential on my proposed new clause.

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[Lord Hunt of Wirral (Con)]

My Lords, Amendments 20, 21 and 33 in my name and those of my noble friends Lord Sharpe of Epsom and Lord Leigh of Hurley have been brought back from Committee to address our concerns about special administration regimes and payment practices.

I begin by acknowledging that the Minister did reassure us that the terms of this Bill will apply to companies that are required to continue supplying SARs following their being placed into administration, as Amendment 20 probes. Similarly, I acknowledge that the report on the interaction between insolvency moratoria and payment practices that Amendment 33 seeks to mandate may be unnecessary given this fact. We have, however, retabled these amendments as they lend themselves to my arguments surrounding Amendment 21. When this amendment was discussed in Committee, the Minister stated that it would

“cut across the established insolvency framework. Providing preferential treatment to one group of suppliers would disadvantage other creditors and undermine the purpose of the existing insolvency regime”.—[Official Report, 21/7/26; col. 1070.]

We do not agree with this argument. The very acceptance of Amendment 20 that suppliers to SARs will fall under this Bill implies a recognition that there is something unique about this set of businesses. Indeed, the entire reason we are having this debate is that Section 233 of the Insolvency Act 1986 makes it illegal to withhold supplies to an SAR on the condition of the payment of arrears. It would not be preferential treatment to offer to them what the Bill offers to every other business—the ability to recoup funds owed but not paid. That would place those firms on an equal footing with other creditors, given that they currently have less ability to ensure payment of arrears.

Amendment 21 is proportional in that a cap could be set by the Secretary of State and the payment could not be of sums subject to genuine disputes. This Bill is designed to ensure fair and timely payment practices. This amendment seeks to ensure just that for a set of firms that currently have no means of recouping owed sums. I look forward to the Minister’s response and, in the meantime, I beg to move.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Hunt of Wirral and Lord Sharpe of Epsom, and the noble Lord, Lord Leigh of Hurley, who is not in his place today, for Amendments 20, 21 and 23. I am really grateful to both noble Lords for our recent meeting covering these points, and I hope that the follow-up information which my officials provided has been helpful. I am also grateful to the Insolvency Service for its expertise in supporting our position.

The Bill does not seek to alter the existing statutory framework on insolvency. Regarding Amendment 20, I would first like to clarify the position of suppliers providing goods or services after a company enters a special administration regime. Clause 1 inserts new Section 2B into the Commercial Payments and Interest on Late Payment Act 1998, applying maximum payment terms to relevant payments under contracts within the scope of the legislation. The Bill does not exclude supplies made to companies in special administration. There is an important distinction between pre-appointment and post-appointment debts. Post-appointment supplies remain subject to the Bill where they are otherwise within scope. Payment obligations and statutory interest may continue to apply or accrue. Recovery and enforcement remain subject to any relevant insolvency moratorium and the wider insolvency rules.

By contrast, debts relating to supplies made before the appointment are in a different position. They remain pre-insolvency claims and are dealt with under the established insolvency framework. The Bill is not intended retrospectively to alter their status or priority.

The Government do not consider that entry into a special administration regime should of itself result in a purchaser being treated as a public authority for payment term purposes. Companies in special administration remain commercial entities operating within statutory rules. Special administrators are independent court-appointed officeholders, with statutory duties to manage the businesses within those rules. Applying public authority payment requirements solely because a company has entered special administration could have operational repercussions—for example, by exacerbating cash-flow pressures. Nor do we consider that the Bill should determine whether liabilities are to be treated as expenses of a special administration. Amendment 20 would make qualifying post-appointment sums, including statutory interest, expenses of the special administration. Amendment 21 would similarly elevate certified pre-appointment sums. These would be substantive changes to the treatment and priority of liabilities, potentially affecting other creditors. Such questions are matters for the insolvency framework.

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[Lord Fox (LD)]

My Lords, there are no amendments in my name in this group, but I will speak very briefly on Amendment 24, which, as we heard, seeks to remove the ban on retention, with the very worthy aim of helping ensure that resident-owned or resident-run blocks of homes can police work done on the grounds of safety. On the face of it, that sounds like a worthy idea. I am concerned that it opens a can of worms, and my instinct is that there has to be a better way of ensuring that the work is done properly. Perhaps it is the noble Lord’s idea of escrow, which I believe could, if mutually agreed, be possible.

There is a danger of watering down the retention ban if we were to accept the noble Lord’s ideas. The definition of “safety defect remediation work” could be broad, or it could be very narrow. I have had briefings from a number of different organisations which have been contradictory to each other, so I am passing the buck to the Minister to explain how he is going to solve the very worthy issue that the noble Lord, Lord Sharpe, has identified, which is resident-run or resident-owned properties, while not prising open the lid of the can of worms.

[Lord Leong (Lab)]

My Lords, first, I thank the noble Lords, Lord Sharpe and Lord Hunt, for the amendments in this group.

I will take Amendment 22 first. I reassure the noble Lords that the Bill does not prevent parties in any sector, including construction firms, making use of payment arrangements through a bank or an escrow provider to facilitate the transfer of funds. The important distinction is between a third party facilitating payment of money that is due and a third party holding back that money as security for the supplier’s performance. The former remains permitted, the latter could amount to a retention and would therefore fall within the prohibition. Therefore, Amendment 22 is unnecessary.

The Government’s view, shared by many in the industry, is that construction should move away from cash retentions and towards modern, more secure and equitable forms of surety. We know that there are alternative forms of surety, including performance and retention bonds, already available in the UK which can mitigate risks for clients and firms. There are also alternatives used in other countries, such as warranty bonds, which are very common in Europe and are available in the UK. We will be working with surety providers to ensure that a range of alternatives is available when the ban comes into force.

In relation to Amendment 23, I reassure noble Lords that the Bill does not prescribe when stages or milestones must occur or prevent parties from agreeing interim valuations and payments. It regulates the period within which an amount must be paid once that payment becomes due. Genuine staged and interim payment arrangements will therefore remain entirely permissible. However, describing a withholding of money for work already completed and where payment is due as a staged payment would not prevent it falling within the prohibition on retention if, in substance, the money was being retained as security for the performance of contractual obligations.

The right for firms to be paid in staged payments on projects lasting more than 45 days is already enshrined in Section 107(2) of the Housing Grants, Construction and Regeneration Act 1996. The Bill does not amend, qualify or undermine that right. Therefore, this amendment is unnecessary. In implementing the provisions of the Bill, the Government will engage directly and closely with construction industry clients, specialist providers and representatives of smaller firms to provide guidance that legitimate payment arrangements can continue while preventing contractual devices being used to recreate cash retentions under another name.

On Amendment 24, we recognise the understandable intention that resident-led and resident-owned companies should have assurance that building work is completed properly and of high quality, and that defects are remedied without additional costs falling on leaseholders. We do not believe that retentions ensure this. To agree to this amendment would create a broad exemption for construction contracts entered into by resident management and right-to-manage companies. That would leave firms working on those buildings exposed to the risks associated with cash retentions. It could also create uncertainty where different ownership and management structures exist within the same building or development.

In addition, the process required by the Building Safety Act 2022 for delivering work on high-risk building places an emphasis on safety and quality. It includes numerous gateways, information requirements and independent reviews of the building. If clients and firms in their supply chain are meeting the requirements of the Act, there should be no need to deduct retentions. As Dame Judith Hackitt has noted, retentions are ineffective and undermine the effectiveness of the supply chain, which is why alternatives are required. For this legislation to be effective, it must incentivise the industry and its clients to end the practice of cash retentions and to adopt alternative forms of surety, together with improved quality management.

Finally, I address the request made by a number of noble Lords in Committee for further information about the work to develop alternatives to retention. The Construction Leadership Council has now appointed a new industry lead for this area, and we will be increasing our engagement with stakeholders across the industry in relation to alternative forms of surety and quality improvement from September. This will give us plenty of time to address those issues in advance of the introduction of the proposed ban.

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[Lord Hunt of Wirral (Con)]

My Lords, we are all very grateful to the noble Lord, Lord Fox, for moving his amendment. Before I speak to this group, I once again thank the Minister for his engagement. We entered this part of the Bill with some apprehensions, not least regarding the funding of the Small Business Commissioner’s office. It is perhaps too soon to say that all those concerns have been quelled, but I appreciate the time that the Minister, the Small Business Commissioner herself and her team have taken to try to address the questions that we have all put forward.

I begin by addressing the amendments to which I and my noble friend Lord Sharpe of Epsom have added our names, namely those in the name of my noble friend Lord Leigh of Hurley. Amendments 28 and 29 aim to bring some transparency to the Office of the Small Business Commissioner by requiring written reasons for declining to adjudicate a dispute, and by requiring the definition of a sufficient number of occasions to trigger an investigation into payment practices.

On the latter point, I accept the Government’s reasoning that a numerical definition does not sufficiently account for the scale of different poor payment practices. However, I hope that the Minister can therefore confirm that there will be some framework on which these decisions to investigate will be based.

I hope that the Minister will be able to outline the Government’s position on the former point—written reasons for declining to adjudicate a dispute. I understand that discretion and disclosure are considerations, so perhaps a middle ground that requires the informing of decisions to decline, without necessarily including the reasons for doing so, would be acceptable.

My concerns remain about putting a time limit on resolving disputes, as Amendment 27 would do. Although disputes should of course be addressed in a timely manner, the fact is that different disputes will require different resources and be of vastly different scales. An arbitrary time period risks rushing the commissioner’s office or forcing it to prioritise, or perhaps even to accept trade-offs. We do not believe that the benefits of a 60-day limit off-set those risks.

Finally, I am grateful to the Minister for providing us with a briefing beforehand on some of the previous funding of the Small Business Commissioner’s office and the Government’s plans for the future. We are satisfied that these have been modelled on the best predictions possible. I am sure your Lordships’ House would be grateful if the Minister could outline some of that data when he comes to reply to this debate—certainly at the Dispatch Box at some stage. I finish by asking whether there is a way to scrutinise the commissioner’s funding in the future. As I have said, we are satisfied with the predictions, but they are still only predictions. I am sure that there will be an internal review process into the effectiveness of these reforms, but this House deserves the opportunity to have some input into that process, so I look forward to hearing the Minister’s response.

[Lord Leong (Lab)]

My Lords, once again, I thank the noble Lord, Lord Fox, for Amendments 27 and 34, and the noble Lord, Lord Leigh, who is not in this place, and the noble Lords, Lord Hunt and Lord Sharpe, for Amendments 28 and 29. First, I recognise the constructive spirit in which these amendments have been tabled and the shared objective of ensuring that the Small Business Commissioner’s new functions are timely, transparent and effective.

I agree that payment disputes should be resolved as quickly and efficiently as possible. In line with the construction adjudication scheme, we are considering whether a 28-day limit for the adjudicator to reach a decision, extendable where necessary, would be appropriate. I believe that noble Lords would agree that this time is sensible and reasonable. We will consult on this to ensure the final approach is informed by evidence and stakeholder views. Time limits will be set out in regulations subject to Parliament’s approval. This approach will give businesses confidence that payment disputes will be resolved quickly and efficiently, while maintaining flexibility to refine time limits in the light of feedback and operational experience.

The Government recognise the importance of transparency, and I appreciate the sentiment behind Amendment 28. As a matter of principle, a small business should understand why the commissioner has declined to adjudicate a dispute. However, there may be occasions when disclosing the details of a referral to a larger business could harm commercial relationships or be otherwise inappropriate. As such, we believe such obligation should be subject to further consultation and addressed through regulations.

Regarding Amendment 29, I understand the desire for clarity on how the commissioner will assess repeated poor payment practice, but this is precisely the kind of judgment that should be informed by real experience and evidence and guided by statutory criteria that the commissioner must consider on a case-by-case basis. If we try to prescribe an arbitrary number for vastly different practices, we risk creating an inflexible model that fails in practice and undermines the commissioner’s ability to act.

On resourcing, I hear the concerns raised by noble Lords. I wholeheartedly agree that the provisions in this Bill will be effective only if properly enforced and that the resources available to the Small Business Commissioner are crucial to this aim. I reassure all noble Lords that the Office of the Small Business Commissioner is already being resourced for implementation, that I am the Minister responsible for the Small Business Commissioner and that I will ensure that it has the proper resources. I have recently facilitated a meeting between the commissioner and noble Lords to discuss preparation for the legislation coming into force. I can confirm that the commissioner’s budget has already received an initial 30% boost this financial year and that recruitment is under way for six new members of staff, bringing the existing team to 20. This has already allowed the office to begin building its capability ahead of the new enforcement powers in the Bill.

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[Lord Sharpe of Epsom (Con)]

My Lords, as we come to the end of Report, I once again place on record my thanks to noble Lords on all sides of the House for their engagement with the passage of this Bill. Up to this point, we have had a very chummy time with a lot of cosy consensus, so noble Lords will be very pleased to know that I intend to introduce a note of disagreement on this amendment.

I begin by stating that I do not disagree with the premise of Amendment 30, in the names of the noble Lord, Lord Fox, and the Minister. Companies should ensure that they have good payment practices and that these are reported, and should be incentivised where necessary. I equally understand the reasoning behind giving the Small Business Commissioner the powers to both oversee and enforce the reporting of payment practices and performances. The office will have a closer knowledge of small business payment practices than regular departmental officials, so it makes sense that it is given this responsibility. The issue is therefore not one of principle but one of proportion.

Two other arms of the Government have the power to fine businesses based on global turnover rather than domestic turnover. They are the Competition and Markets Authority and the Information Commissioner’s Office. These bodies deal with some of the most important and wide-reaching areas of our economy: the former with the upkeep of fair and competitive markets, the latter with the protection of the public’s private information.

Those issues are far greater in scale and gravity than what Clause 24 and the new Section 3A will give the SBC—the Small Business Commissioner—powers over. These powers are not even dealing with payment practices; they are dealing with the reporting of payment practices. Yet the office will be able to fine companies 1%, without even the discretion to fine less than 1%, of global turnover. To His Majesty’s loyal Opposition, this seems disproportionate, to say the very least. We do not believe that this is the right vehicle to address the subject of the profit shifting that the noble Lord Fox mentioned.

One of the key concerns that we have heard from stakeholders during the passage of this Bill is that, while they support maximum payment terms, there will be a transition period to implement the technology and payment systems. This is particularly the case with large multinational corporations. These companies have incredibly complex systems that organise payments across borders, time zones and legal frameworks. It is not outside the realm of possibility that a business such as Amazon, for example, has some teething problems and fails to accurately report payment practices and performance within the UK.

The result would be that the commissioner, based on a failure to report practices within the United Kingdom, would have the power to fine Amazon based on its global turnover. That would equate to more than £700 million for a potential technological error or delay. I do not think that power reflects the duty that we are dealing with.

Lastly, there is the question of incentives. The Office of the Small Business Commissioner justifiably prides itself on saving more money for small businesses than it costs the taxpayer. If value for money is the justification for the office’s existence, its incentive is to use its powers to raise money in order to continue its operation. I am not accusing the SBC of this; I am simply reflecting on the perverse incentives that occur when an arm of government relies on action to justify its continued existence. I do not think, given these natural incentives exist, that we should give any arm of the state the power to tax multinational businesses based on their global turnover for actions within the United Kingdom. We should especially reflect on this when we are not even discussing payment practices; we are discussing the reporting of payment practices.

Given that this amendment has the support of the majority of the House, we will not oppose it, but I would like to place on record my, and indeed His Majesty’s loyal Opposition’s, concern about this measure. It would go some way to allaying my worries if the Minister could outline how many times a fine has been given under the existing Section 3, but I am still concerned that this is a disproportionate step that places far too much power in the hands of an ultimately unaccountable body. I look forward to the Minister’s response.

[Lord Leong (Lab)]

My Lords, I thank the noble Lord, Lord Fox, for his amendment regarding turnover and financial penalties. These amendments raise an important question about how turnover should be calculated for financial penalties under the payment reporting regime following an investigation by the SBC. I thank the noble Lord for the constructive discussions that we have had on this issue.

The Government agree that this issue merits proper debate. We want penalties to be meaningful and capable of driving compliance while ensuring that the approach is proportionate, relevant and workable for businesses in scope. The Government support the aim of the amendment, at this stage, to open up the debate on the appropriate basis for calculating turnover. However, I want to be clear that the Government have not reached a final view on the most appropriate approach. The Government will want to engage with businesses, business representatives and other interested parties before determining how turnover should be calculated for these purposes, including—given that the Bill addresses UK payment practices—whether it should be limited to UK turnover or extended more widely.

Further detail on how turnover is calculated will be provided in secondary legislation. That secondary legislation will be informed by a process of consultation to determine how turnover should be calculated. Additionally, that secondary legislation, which will be debated in Parliament, will allow the final position to be properly tested. This approach will ensure that the regime retains the flexibility required to operate effectively and proportionately.

On that basis, I once again thank the noble Lord, Lord Fox, for raising this important issue and for engaging positively with the Government. The Government support Amendments 30 to 32 and 43 to 45, to which I have added my name. Before I sit down, I once again thank all noble Lords, especially those from the Opposition Benches—the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, as well as the noble Lord, Lord Fox—for their thoughtful and constructive engagement throughout the passage of the Bill. It just shows that we can get things done if we work collaboratively.

Amendment 30 agreed

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Moved by

[Lord Leong]

36: Clause 28, page 40, line 19, after “Act” insert “or regulations made under this Act”
Member’s explanatory statement
This amendment ensures that if the powers proposed by my new clause were exercised to change a payment period, the necessary consequential changes could be made to other statutory provisions.

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Moved by

[Lord Leong]

37: Schedule 1, page 43, line 20, leave out “2F” and insert “2G”
Member’s explanatory statement
This amendment is consequential on my proposed new clause.

UK Automotive and Components Sector

Lord Leong Excerpts

Wednesday 9th September 2026 Lords Chamber

[Lord Spellar]

To ask His Majesty’s Government, in light of Jaguar Land Rover’s decision to cut 4,000 jobs over the next two years, what steps they are taking to support the UK’s automotive and components sector and its workforce.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation, Science and Trade (Lord Leong) (Lab)]

My Lords, we understand the anxiety that this announcement causes among workers, families and communities in the area where JLR is based. We are determined that Britain will remain a world-leading automotive nation. Our industrial strategy reduces electricity costs, commits £4 billion to DRIVE35 to advance manufacturing and research, and allocates £2 billion to boost electric vehicle demand. We are strengthening supplies through the DRIVE35 transformation programme and securing better access to markets in the EU and the United States, thereby protecting investment and jobs.

[Lord Spellar (Lab)]

I thank my noble friend the Minister for that Answer. He obviously recognises the importance of our auto components industry, which underpins our car assembly plants and is also a significant part of our exports and regional economies. He and the House will be aware of the significant impact of the hack at Jaguar Land Rover last year, which led to an overall drop in GDP but also had a much more significant effect on the West Midlands economy. So, with those current problems at JLR, which the Minister has identified, what are the Government doing to support the supply chains and the British car plants, and would not one measure be for public bodies to prioritise buying British vehicles built by British workers?

[Lord Leong (Lab)]

My Lords, my noble friend rightly reminds us that cyber attacks affect companies of all sizes, and this is a stark reminder that JLR is not only the manufacturer but also the anchor of the supply chain. We are working with JLR, lenders, local partners and suppliers to safeguard viable businesses, improve access to finance and strengthen cyber resilience. On procurement, we will use government purchasing power strategically to ensure that British manufacturers can compete fairly and that social value, resilient supply chains and UK capability are recognised in purchasing decisions.

[Lord Evans of Rainow (Con)]

My Lords, the Minister will be aware that the Chinese Government and their motor manufacturers are eyeing up the European car market, flooding it with millions of good-quality cars which are undercutting our own domestic market—an issue the noble Lord, Lord Spellar, addressed in his excellent Question. What assessment has the Minister made of the Chinese Government’s strategy of flooding the European car market, and is he aware that Volkswagen has closed down its state-of-the-art plant in Dresden?

--- Later in debate ---

[Lord Leong (Lab)]

My Lords, we are closely monitoring the growing presence of Chinese electric and hybrid vehicles and are engaging directly with UK manufacturers. My loyalty lies with Range Rover: mine is almost five years old now, so I am waiting for the electric version to come on to the market. We have strengthened our trade remedies to respond more swiftly to evidence of harm, and the Trade Remedies Authority can investigate when industry brings forward credible evidence of what these Chinese cars are doing to the sector.

[Lord Stoneham of Droxford (LD)]

My Lords, the best support the Government could give to the car industry is to end the uncertainty in the European car market, which is hindering investment and could decimate our industry in the near future. Should we not be rejoining the single market and the customs union to provide a strong, countervailing force, with Canada, against Trump tariffs and unfair Chinese competition?

[Lord Leong (Lab)]

My Lords, our position is very clear: we are where we are and we are not joining the customs union. The Government will defend the interests of British manufacturers and our deeply integrated UK-EU automotive supply chains. Where the proposed IAA “Made in Europe” risks disadvantaging them, the Secretary of State and Trade Minister have raised our concerns directly with EU member states, their commissioners and MEPs. The proposal is not final, and we continue to work with the industry to assess its impact. Now is the time for like-minded partners to strengthen growth, resilience and economic stability.

[Lord Woodley (Lab)]

My Lords, Jaguar partly blames the ZEV mandate for these job cuts, a situation that I am glad to say the Government acknowledge with their current consultation aimed at reducing this mandate to protect up to 200,000 automotive jobs. However, do the Government regret the recent announcement that Jaguar is going to build the new Freelander—originally built in Halewood—in China, where Chery, whose sister company, Jaecoo, the top-selling Chinese brand in Britain, is making and selling Range Rover lookalikes for less than a third of the Range Rover price? Stealing the family silver is one thing; giving it away is another. How is that good for British jobs?

[Lord Leong (Lab)]

My Lords, the Government have no intention of intervening in individual business decisions. What Jaguar Land Rover decides and who its partners are is entirely the responsibility of Jaguar Land Rover. Having said that, we work very closely with JLR, the trade unions and local partners to ensure that no affected worker is left without support. We will continue working with unions, community leaders and the company itself to ensure that all workers will be treated fairly when the consultation happens, and that no worker will be left without support.

[Lord Hunt of Wirral (Con)]

My Lords, these job losses at Jaguar Land Rover are deeply concerning, and our thoughts are with the employees affected and their families. We on these Benches have repeatedly been warning the Government over the past two years that higher energy costs, damaging steel tariffs, the increase in employers’ national insurance contributions, and the Employment Rights Act are making it harder and more expensive to do business in Britain. With one of our most important manufacturers now cutting thousands of jobs, will our new Prime Minister start to overcome the damaging policies of his predecessor and restore Britain’s competitiveness? Otherwise, we will have more jobs and investment being driven overseas.

[Lord Leong (Lab)]

My Lords, with due respect to the noble Lord, I think that is a really simplistic point. The scale and speed of global transformation in this sector is being faced by every automotive manufacturer, not only in this country but elsewhere in the world. Manufacturers everywhere, and I mean everywhere globally, are responding to fierce competition now that new technologies and changing international trading conditions are in place. That is precisely why this Government have committed £2.5 billion to DRIVE35, providing long-term support for research, development, manufacturing and the transition to zero-emission vehicles. Our objective is to secure investment and high-value production here in Britain. I point out for the benefit of noble Lords that JLR has said it will seek voluntary departures wherever possible and still plans to invest £15 billion to £18 billion in this country. It has faith in this country, and I hope noble Lords across the aisle will also have faith in this country.

[Lord Birt (CB)]

My Lords, we would all wish Jaguar Land Rover to succeed, but does the Minister recognise that more than that of any other country in the G7, the UK economy is now overwhelmingly focused on high-value services, which give the economy nine times what the manufacturing sector currently does?

[Lord Leong (Lab)]

My Lords, the United Kingdom is a trading nation—we trade with every country across the world. We are doing free trade deals right across the globe, the recent one, obviously, being with India and with the Gulf countries. We are a trading nation, and we have to support our manufacturers and companies to trade seamlessly and easily throughout the world.

[Lord Beamish (Lab)]

My Lords, I begin by declaring an interest in that, like the Minister, I own a Jaguar Land Rover car. The Minister said that government procurement should be competitive, but in France or Germany, for example, no government Minister would get in a foreign-made car. What more can the Government do centrally on procurement, but also in insisting, for example, that local authorities and police forces buy British?

[Lord Leong (Lab)]

I assure my noble friend that in the Department for Business, Innovation, Science and Trade, all our ministerial cars are manufactured in the United Kingdom. I am sure that I speak for other departments as well.

Category 4 Steel Imports: Tariff-free Quotas

Lord Leong Excerpts

Wednesday 22nd July 2026 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, before I respond to the noble Lord’s Question, I first want to say that in the last couple of weeks, we have been seeing each other across the Dispatch Box quite regularly, and it is arousing some suspicion from my wife.

I welcome the opportunity to respond to the noble Lord’s question. On 1 July 2026, the steel trade measure came into force, and I presented the details to this House on 30 June. The measure limits tariff-free steel imports, including for category 4, and reduces overall quota volumes by 51%, compared to the expired steel safeguard, to 3.2 million tonnes. Any imports above these levels will face a 50% tariff. The details of this measure have not changed since my Statement on 30 June.

[Lord Hunt of Wirral (Con)]

My Lords, we should not have had to read in the Financial Times earlier this week that the Government had made specific changes to the steel tariff regime for a particular country, India, following negotiations over one of the United Kingdom’s most important trade agreements. I welcome the opening words of the Minister, and I always enjoy exchanges with him in this Chamber. But Parliament should surely not be learning from the media that the Government have made specific changes to the steel tariff regime for any particular country following negotiations over one of the United Kingdom’s most important trade agreements.

The Ministerial Code is clear that major policy announcements should be made first to Parliament when Parliament is in session. Will the Minister explain why Parliament was not told the full details of any further India-related changes before the tariff regime came into force on 1 July, and will the Government now commit to making a Statement while your Lordships’ House is in session, setting out what changed, why it changed, and what assessment was made of the impact of these changes on domestic steel producers, downstream sectors, exporters, supply chains, investment and jobs?

[Lord Leong (Lab)]

My Lords, I will just say to the noble Lord that it was a pretty good try. First, there has been no change to India’s category 4 quota compared to the provisional quota published in April 2026. We did not negotiate quotas with any countries apart from our agreed outcome with the EU. We have been engaging with India on steel, as we have all our trading partners. Overall, quotas reflect the need to balance stronger protection for UK producers with continued access to critical inputs for downstream sectors and critical national infrastructure.

[Lord Mohammed of Tinsley (LD)]

My Lords, nearly 40,000 people are involved in steel production in this country. However, 400,000 people are involved in manufacturing as a byproduct from steel. It is really important that both sides of that industry are protected. My fear is that these tariffs may actually affect badly the manufacturing side of the industry; I seek reassurance from the Minister that this will not happen.

[Lord Leong (Lab)]

My Lords, first, employment impacts form part of the Government’s wider assessment when determining any future steel trade measures. Our objective is to protect jobs throughout the steel supply chain, both in primary steel production and among downstream manufacturers. We continue to engage closely with producers, manufacturers and trade bodies to monitor market conditions. Where evidence suggests unintended consequences, we will continue to review the operation of the regime to ensure it remains proportionate and effective.

[Lord Lamont of Lerwick (Con)]

My Lords, while there is a case for protection for speciality steels for sectors like the nuclear industry, surely the Government’s wider policy on quotas and tariffs is harmful to British industry as a whole. The awkward reality is that the domestic steel industry cannot supply the total demand in this country. Imports have to happen and account for 60% of production in this country. If we do not allow those imports into this country, free of tariffs and quotas, it penalises those who are making finished products, who have to compete with imports which are finished and do not bear this taxation at the border. This is deeply harmful to British industry.

[Lord Leong (Lab)]

I thank the noble Lord for the questions. I think I responded to the noble Lord on Monday on a particular Urgent Question on steel and addressed the tariff issue. However, I will address his point about imports. We have carried out a programme of extensive engagement with industry, as well as negotiations with the EU ahead of its own steel measure coming into effect. Some 74% of all imports by volume fall outside the scope of this measure and will not be subject to any tariffs. For other products, tariffs will only be due once quotas have been exhausted. We will continue to hear from businesses and closely monitor the impact of this measure. We will also review it after 12 months to ensure it remains effective and that the balance is right for both producers and downstream users.

[Lord Alton of Liverpool (CB)]

My Lords, I welcome what the Government did in protecting the steel industry in this country, but do we not need to do a lot more to develop our resilience and reduce our dependence? Was the danger here not of Chinese domination of the industry? The Government were right to act. In that context, will the Minister say what compensation has been paid to the Chinese regime? On the point made by the noble Lord, Lord Hunt, about learning things from the media, was the Times accurate when it reported that China had offered debt relief in return for a green light for its proposed mega-embassy in London?

[Lord Leong (Lab)]

I will first address the issue on British Steel, which I am sure is what the noble Lord is referring to. We took British Steel into public ownership immediately after we passed the Steel Industry (Nationalisation) Act. As it stands, under the Act, we will appoint an independent valuer to assess the compensation, if any, that is due. As far as we know, it is zero compensation and that is where it stands. As for his question on the Chinese embassy, I am not aware of that, but I will find out and write to him.

[Lord Wigley (PC)]

My Lords, the Minister will be aware, from our earlier discussion on the steel legislation that went through this House, of my concern relating to the availability of steel for defence purposes. Can he give an assurance that in considering these changes the Government have given full attention to the reliability and dependability of supplies for defence purposes, particularly in circumstances where the defence pressures may be different from our current peacetime ones?

[Lord Leong (Lab)]

I remember our exchanges across the Dispatch Box. As I said then, I will say now that we are mindful of the specialised steel used in any of the industries that require a speciality type of steel. We will monitor the usage but, as it stands, any steel that is not manufactured in this country—which is imported—is outside the scope of the tariff.

[Lord Hannan of Kingsclere (Non-Afl)]

My Lords, I am grateful to the Minister for his answers. He is always informative, courteous and diligent at that Dispatch Box. If it is true that we have, as reported, widened the quota for India, we have presumably done so on two very sensible grounds. The first is good relations with India. This is a really important trade deal, and we can hardly renege on it when the ink is barely dry. The second is that we want to boost our domestic economy and, as the noble Lord, Lord Lamont, says, we do not want to place British manufacturers at a relative disadvantage vis-à-vis the rest of the world by forcing up their input costs. Why does that apply only to India? Should we not take the same approach to our trading partners in the Trans-Pacific Partnership, the GCC, the European Union and elsewhere? Of course, the real answer is to cut energy costs but, until we get there, it does seem crazy that we are going down this Trumpian route of having these immensely high tariffs, which always serve to the detriment of the industries they are supposed to protect.

[Lord Leong (Lab)]

I thank the noble Lord for those kind words. We do not import steel only from India. In fact, the largest import of steel is actually from the EU, followed very closely by Vietnam, then India, and not forgetting South Korea. Those are the principal importers of steel into this country. As I said earlier, we have not changed the quotas as far as India is concerned. We continue to engage regularly with India and with Tata, which is owned by an Indian company, on the usage of steel in this country.

[The Earl of Effingham (Con)]

My Lords, following on from the noble Lord, Lord Hannan, why does the Minister think that the overwhelming majority of economists say that tariffs harm the economy?

[Lord Leong (Lab)]

I refer the noble Earl to other countries such as Canada and the USA, and to the EU. We are not the only country that has import tariffs. When a particular sector is impacted and it impacts on our domestic supply, it is right to have tariffs in place to protect the domestic sector, which in turn protects jobs and, I would hope, creates growth.

[Baroness O'Grady of Upper Holloway (Lab)]

My Lords, government action on this in the workforce is extremely welcome, because for many years our domestic steel industry was threatened by the dumping of cheap Chinese steel. This action was motivated by trying to give our steel industry a chance to grow, to win and to provide the security and sovereignty this country deserves. Can my noble friend the Minister reassure us that he will keep under review the tariff regime and that he will maintain a strong engagement with trade unions, whose members have an interest across industries and jobs and want to see this policy work?

[Lord Leong (Lab)]

My noble friend is absolutely right. We currently review tariffs, and, as it stands, we are committed to reviewing them again at the end of the 12-month period. I state again that the quotas in place were informed by evidence and analysis of market conditions. Where steels products are not produced in sufficient quantities in the United Kingdom, mechanisms remain available to ensure that businesses can continue to access essential imports, while maintaining appropriate safeguards for the domestic industry.

[Baroness Lawlor (Con)]

I thank the Minister very much for answering questions on the Statement so fully. My understanding is that, under this round, imports of galvanised steel to the UK will triple. Some of the concerns have been about the impact on production here. As my noble friend Lord Lamont said, we need to fill the gaps in our industry. Does the Minister have any idea what impact this will have on our own steel industry and our capacity to grow it?

[Lord Leong (Lab)]

My Lords, as it stands, the Government fully recognise the importance of ensuring that businesses can obtain the materials they require. That is the principal objective for this category of steel. For noble Lords who do not know what category 4 galvanised steel is, it is the steel that is mainly used for generic purposes such as steel automotives. The revised quota system seeks to balance the needs of downstream users with the need to protect the UK steel industry from unfair trading practices. We have to bear in mind that there is an oversupply of steel in the market, but we have to protect it in order to protect our local manufacturers and downstream users.

[Lord Hunt of Wirral (Con)]

I am very grateful to the Minister. He is in effect saying that there were no changes. Therefore, can he share with the House, in a full statement before we rise, exactly what tariff-free quota changes were made for category 4 galvanised steel products? That should include the quota granted to India, the basis on which it was calculated, any consequential changes for other countries and the assessment made of the impact on domestic steel production. I think we are entitled to that statement, if he could make it in due course.

[Lord Leong (Lab)]

I will try to provide—I hope—a more robust and comprehensive response to the noble Lord. As I said earlier, there is no change to the quota on steel imported from India, as far as I am aware. On the assessment, we have laid two pieces of legislation setting out how this measure will impact different types of businesses. Bearing in mind that these measures just came in on 1 July—it has been only 21 days—we should give it some time before we see how it will impact the sector and industry. As I said, we constantly monitor the situation, and my ministerial colleagues have regular conversations with steel manufacturers and downstream users. I am really pleased that my colleague Chris McDonald has been reappointed as Minister of State—I congratulate him on that—and he has regular contact with the steel sector. We work very closely with the sector, and if there are any changes, we will address them accordingly.

Trade Unions (Permissible Means of Voting) and Employment Rights (Unfair Dismissal) (Amendment) Order 2026

Lord Leong Excerpts

Wednesday 22nd July 2026 Lords Chamber

Moved by

[Lord Leong]

That the draft Order laid before the House on 22 June be approved.

Relevant document: 8th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, I shall also speak to the accompanying Code of Practice on Electronic and Workplace Ballots for Statutory Trade Union Ballots. I also note the regret amendment tabled by the noble Lord, Lord Sharpe of Epsom, and I am glad of the opportunity to debate these important reforms. I will address the concerns raised by the noble Lord during my remarks.

This statutory instrument and the accompanying code of practice were laid before Parliament on 22 June 2026. This instrument has a clear and straightforward purpose. It modernises the statutory framework governing certain trade union ballots by allowing secure electronic voting and workplace ballots, while preserving the integrity, secrecy and independence that are fundamental to every statutory union ballot. Alongside these reforms, it makes a minor consequential amendment to Section 105 of the Employment Rights Act 1996 to ensure that the legislation remains consistent following the changes made by the Employment Rights Act 2025.

These are measured and practical reforms that update how statutory ballots may be conducted. They do not alter the legal framework governing industrial action or trade union democracy. The legislation governing statutory trade union ballots was developed in an era when postal voting presented the most practical way to conduct nationwide ballots. That is no longer the world in which we live. Today, people routinely undertake secure and sensitive transactions online. Yet, under the current law almost all statutory trade union ballots must still be conducted solely by post. That approach has not kept pace with the way people live or work; it can be slower, more expensive and more administratively burdensome than modern alternatives.

The Government made a clear commitment in their Make Work Pay manifesto to modernise statutory trade union ballots by allowing secure electronic voting and workplace ballots. This instrument delivers that commitment. It introduces three additional methods of voting for statutory trade union ballots, with the exception of statutory recognition and derecognition ballots, which will be addressed separately in 2027. First, it permits electronic voting, allowing eligible members to cast their votes securely online using personal authentication credentials. Electronic voting will be available only when a union member has provided a personal email address or telephone number to the union. This ensures that voting materials are issued through personal channels and remain outside employer-controlled or union-controlled workplace communication systems.

Secondly, the instrument permits hybrid voting. Under this model, members will receive their voting materials by post but may choose whether to return their vote electronically or by post. No one will be required to vote electronically if they prefer not to do so.

Thirdly, the instrument allows workplace voting for industrial action ballots. This option is available only when both the employer and trade union agree, and the ballot is conducted under the supervision of an independent scrutineer in a suitable secure workplace location. Workplace voting reflects the fact that industrial action ballots concern workplace issues, while maintaining the same statutory safeguards that apply to every other lawful ballot. None of these new methods is mandatory. Postal voting remains available. Trade unions will decide which lawful voting method best suits their membership. The purpose of these reforms is to extend choice, not remove it.

Alongside this instrument, the Government have laid a draft code of practice on electronic and workplace ballots. The code provides detailed practical guidance on how these new voting methods should operate in practice. It complements the legislation by setting clear expectations on accessibility, administration, security and transparency.

I now turn directly the amendment tabled by the noble Lord, Lord Sharpe. The amendment raises concerns about ballot integrity, cyber security, verification, auditability, resilience and the operation of workplace ballots. I want to be clear that this instrument does not make industrial action easier to authorise without safeguards. It does not weaken ballot integrity, or ignore cyber security, verification, auditability or resilience, and it does not ignore the position of employers on consent, operational disruption, cost, privacy or security. The use of independent scrutineers remains mandatory. Cyber security certification for electronic methods, secure voter authentication and ballot secrecy are mandatory. Far from weakening confidence, these reforms strengthen participation while preserving the safeguards that Parliament has long regarded as essential.

This instrument brings statutory trade union ballots into the 21st century. It modernises the methods of voting without changing the fundamental principles of trade union democracy. It preserves the integrity, independence and secrecy that are essential in every statutory ballot. These are balanced, proportionate and carefully designed reforms. They make participation more accessible while maintaining confidence in the legitimacy of statutory ballots. I therefore hope that noble Lords will support both the instrument and the accompanying code of practice. I beg to move.

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[Lord Leong (Lab)]

My Lords, I am very grateful for the support across the House, especially from the noble Lords, Lord Balfe and Lord Fox, for the Trade Unions (Permissible Means of Voting) and Employment Rights (Unfair Dismissal) (Amendment) Order 2026 and the Code of Practice on Electronic and Workplace Ballots for Statutory Trade Union Ballots. Today’s scrutiny and debate have been constructive and light-hearted, at some points. Noble Lords have raised interesting points on dispute resolution, workplace ballots and the next phases of delivery for the measure. They have also raised points on the 50% threshold, intimidation and dispute resolution, as I mentioned earlier. I will address these points briefly.

First, I will respond to the point raised by my noble friend Lady Jones of Whitchurch on dispute resolution. Industrial action should always be the last resort. It is costly for workers, employers and the wider public. That is why the Government are committed to a new era of partnership. We want employers, unions and government to work together, through co-operation, negotiation and meaningful engagement at workplace level. We intend to develop a new overarching industrial relations framework, working with stakeholders, such as employers and unions, to promote partnership, reduce conflict and support productivity and growth. That is a noble ambition.

I will now respond to the points raised by my noble friend Lady O’Grady. My noble friend and the noble Lord, Lord Sharpe, asked about the 50% threshold for industrial action ballots. To be clear, the order does not repeal that threshold, and the noble Lord, Lord Fox, also mentioned that. To commence Section 68 of the Employment Rights Act 2025, the Secretary of State must first lay a Statement before Parliament. This must set out how he has had regard to the impact of electronic and other non-postal voting methods on participation in industrial action ballots. The instrument delivers on our commitment to permit electronic and workplace balloting. The review of their impact on participation will then follow and inform the repeal of the 50% threshold.

My noble friend also asked about the use of workplace email addresses. Following implementation of the instrument, we plan to establish a senior oversight board, comprised of key stakeholders, to help assess how the new voting methods are working in practice and consider future enhancements, including the secure use of workplace email addresses. As it stands, we are not doing that now.

My noble friend also raised recognition and derecognition ballots. We are committed to extending electronic and hybrid voting to the Central Arbitration Committee-run recognition and derecognition ballots as part of phase 2 of delivery. We will deliver this as soon as practicable in the second half of 2027.

I will now turn to the various points raised by the noble Lord, Lord Sharpe. On workplace balloting, employers will not be forced to allow workplace voting. It can take place only where an employer agrees. Employers remain free to consider operational disruption, privacy, security and practical arrangements before giving that agreement. The union will continue to bear the cost of running the ballot itself, with no cost to the employer.

On the role of the responsible person, in practice this will be the trade union. That is because the union is best placed to understand its membership and communication methods when deciding the appropriate voting method or methods. It would not make sense to outsource this role to a third party, who will not have the information to make this determination.

I want to assure the noble Lord, Lord Sharpe, that this decision is not unfettered. The instrument sets out clear factors and criteria that must be applied before a voting method can be chosen. On cyber security, responsibility rests with the independent scrutineer. Scrutineers conducting electronic ballots must hold a valid Cyber Essentials Plus certificate for the networks and systems they use, and I have personal knowledge of how laborious it is to apply for the Cyber Essentials Plus certificate. It is something that one has to go through, and it is quite rigorous in its application. They are also responsible for operating the platform securely and ensuring that the legislative requirements are met. There will be extensive audit logging and monitoring throughout the ballot, and any security incident must be recorded. If the legislative requirements are not met, the union will not be able to rely on that ballot, and it must be rerun. I hope that provides reassurance to the noble Lord.

I want to be clear about what the order does: it steps away from the current bureaucratic and expensive requirements that all statutory union ballots must be held by post. It will bring the voting system for trade union ballots into the 21st century, and it delivers this change in a manner that ensures secure, secret and safe balloting. It will not, as we have heard today, weaken the safeguards relating to industrial action ballots. It will not weaken ballot integrity, and it will not leave questions of cyber security, verification, auditability, employer consent and costs unanswered.

Lastly, as I have already made clear, workplace voting can take place only where the employers agree. Employers remain able to consider operational disruptions, privacy, security and practical arrangements before giving that agreement. This is an overdue reform.

Before I conclude, I will touch on a couple of points raised by noble Lords. The noble Lord, Lord Sharpe, asked about organising a pilot. It is not necessary to pilot workplace balloting for statutory union ballots. The instrument is informed by detailed engagement with key stakeholders, including businesses, cyber security experts, unions and independent scrutineers, as well as public consultation on the draft code of practice on electronic and workplace ballots.

The noble Lord also asked about cost, and I did mention that there is no cost to the employer. The Government expect that individual unions will determine which voting arrangements best meet the operational needs and will bear the cost themselves.

The noble Lord also touched on the doctors’ strike. The Government will continue to engage closely with the BMA, ensuring that the NHS remains a place where doctors can develop rewarding and long-term careers. The Government are committed to building on the good progress that has already been made, cutting waiting lists and continuing to improve conditions for the staff who make their NHS work, in partnership with them.

The noble Lord, Lord Frost, made a point about pressure and intimidation. The Government fully recognise the importance of protecting members from any undue influence. That is why the statutory safeguards governing ballot conduct remain in place, regardless of the voting method. The company code of practice provides guidance on maintaining ballot secrecy and integrity, and independent scrutiny remains an important safeguard throughout the process. This legislation sets out clear safeguards and technical standards, ensuring the integrity and confidence of the ballot process while making it meaningfully easier and more convenient for working people to take part in the decisions that affect them.

I conclude by wishing all noble Lords who will not be here tomorrow a fantastic, restful Summer Recess.

Code of Practice on Electronic and Workplace Ballots for Statutory Trade Union Ballots

Lord Leong Excerpts

Wednesday 22nd July 2026 Lords Chamber

Moved by

[Lord Leong]

That the draft Code of Practice laid before the House on 22 June be approved.

Relevant document: 8th Report from the Secondary Legislation Scrutiny Committee

Motion agreed.

Commercial Payments Bill [HL]

Lord Leong Excerpts

Committee stage
Tuesday 21st July 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lord Holmes of Richmond for introducing this debate. I welcome all noble Lords back for what will, I am sure, be a productive Committee stage.

I shall begin with Amendment 1. I understand the principle behind my noble friend’s approach. The Bill performs a balancing act, relatively successfully, between good payment practice and regulation. In achieving the former, we have to be careful not to overstep into the latter. It is my interpretation that new Section 2B, to be inserted by Clause 1, already succeeds in ensuring that both parties to a contract are made aware of the payment terms in the four cases that are accounted for. For that reason, I am hesitant to support requiring the purchaser to give instruction on how a payment notice should be given. However, like the noble Lord, Lord Fox, I ask the Minister first to outline what the Government regard as best practice for issuing notices under the Bill, which may very well include the Small Business Commissioner making it extremely clear what they think are the right best practice terms for issuing these notices.

I am much more supportive of my noble friend’s Amendment 9, which would prohibit the increasing of a verification period after the day on which the Bill is passed. The Bill is about increasing payment efficiency; ensuring that the verification of a payment does not take longer than was previously necessary is obviously a core part of achieving that.

Alongside my noble friends Lord Hunt of Wirral and Lord Leigh of Hurley, I have added my name to Amendment 10 in the name of the noble Lord, Lord Fox. It is eminently sensible that an intermediary should not be used to delay or circumvent payment terms; in other words, an intermediary should be used as an intermediary. Ensuring that payments go through third parties swiftly and efficiently, and that the payment is not treated as complete until it reaches its final destination, is surely the key to improving payment practice. I hope that the Minister will agree in his response.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, first, I thank all noble Lords for their contributions to this short debate; I thank in particular the noble Lords, Lord Holmes and Lord Fox, for their Amendments 1, 9 and 10. I pay tribute to the noble Lord, Lord Holmes, for all his work in the area of AI and digital technology, which we welcome. I recognise that these amendments were tabled in a constructive spirit, seeking to ensure that suppliers are paid promptly, with which we do not disagree; to ensure that payment processes are clear; and to ensure that purchasers cannot use contractual mechanisms to delay payment unjustly. Those are their aims, which the Government share.

Amendment 10 would create a new legal requirement for intermediaries, including online marketplaces, to send payments to a supplier within certain time limits. I understand the concern underlying the amendment. Where a small business sells through a platform or marketplace, it is important that the money due to that business is not held unnecessarily. However, that is neither the purpose nor the structure of the Bill. The Bill focuses on late payments under commercial contracts for the supply of goods and services. It strengthens the consequences that arise where qualifying commercial debt has been created and where payment is overdue. It sets clear limits on payment terms between suppliers and purchasers, and strengthens the framework for interest enforcement and accountability. Those protections already apply where there is a relevant commercial contract between a supplier and a purchaser, including where the supplier is ultimately paid via an intermediary.

However, where a platform or marketplace is merely holding, processing or transmitting funds between others, the Bill is not intended to regulate the wider intermediary relationship. Accepting this amendment would, therefore, move the Bill into a different area of regulation. It would establish a new statutory regime for online marketplaces and payment intermediaries, rather than maintaining the Bill’s clear focus on commercial payment practices between suppliers and purchasers. As such, although I respect the intention behind Amendment 10, I do not believe that this Bill is the appropriate legislative vehicle for it.

Amendment 1, tabled by the noble Lord, Lord Holmes, seeks to ensure that purchasers provide suppliers with greater clarity on how notices under the new Section 2B are to be served. I understand the practical purpose of the amendment. Suppliers need to know when they have properly notified a purchaser of the amount that is due. Purchasers also need clarity so that payment processes are efficient and unnecessary disputes are avoided. However, I hope to reassure noble Lords that the Bill is already sufficiently clear on this point.

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[Lord Fox (LD)]

Your Lordships have shown a degree of creativity on this group. We have talked about end-of-month processing, public holidays and the effect on privatisation, nationalisation or special administration, and we have just heard about crypto payments. Of those four, I ask that the Minister focuses first on the special administration point made by the noble Lords, Lord Leigh and Lord Sharpe. I think we will be moving into that very quickly, so I urge some action. The two issues that we have talked about more are the maximum time and stage payments.

When I was in my first proper job, I was sent to the national oil company of a very hot foreign country to try to get paid. At that time, the days receivable was 645—and I failed. In that context, a 60-day maximum looks like a step forward. But, on the point that my noble friend Lady Bowles made, if it actually sticks to 60 days, small companies would really be subsidising the free cash or cash flow of their customers. That is why Amendment 52 seeks to put on statute a way of materially helping small businesses where cash flow is an existential concern. My noble friend set that out with her usual precision, and we look forward to the Minister’s response.

On the 60-day limit, I thank the noble Lord, Lord Sharpe, for his encouragement of my Amendment 11. What I have tried to do with that is to square the circle. As the noble Lord set out, businesses are set up for a 60-day limit at the moment; however, much of the consultation process proposed a 45-day limit, which goes much further than 60 days. We have heard various arguments in either direction. My Amendment 11 is a way of pointing to a direction of travel and putting down a marker. I am very happy to discuss different ways of doing that. It would require the Secretary of State, within five years, either to lay draft legislation reducing the maximum period from 60 to 45 days or to explain to Parliament why it is not 45 days. That would make it very clear to business and all sides of the supply chain where this is headed. Some of the technology about which the noble Lord, Lord Holmes, talked very eloquently will then be in place, and rapid payments will be available. So I think there are some important bones for the Minister to pick through in this group.

[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 Leigh of Hurley (Con)]

Before the Minister sits down, may I push him a bit on a point he made? He said that Amendment 43 could not be accepted because it would cut across all insolvency legislation by not treating all suppliers or creditors equally. Does he recognise the special situation of certain suppliers under the LPCDIA 1998 whereby those suppliers are obliged to carry on doing business with the company SAR, which is Thames Water in this case? They are not the same as any other creditor, and it would therefore be possible and appropriate to treat them differently.

[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.

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Moved by

[Lord Leong]

6: Clause 1, page 3, line 2, leave out “(implied payment terms in certain public contracts)”
Member’s explanatory statement
This minor amendment omits a description of sections of the Procurement Act 2023 which was not wholly accurate.

[Lord Leong (Lab)]

My Lords, I will now introduce government amendments in my name. Turning first to the amendments to the Procurement Act 2023, I hope noble Lords across the Chamber will agree that the Government and the wider public sector must set a good standard for good payment practice. If we expect businesses to pay promptly and fairly, public authorities must lead by example. The Government’s clear policy is that, in contracts where a public authority is a purchaser, payment terms should not exceed 30 days. That is already reflected in Cabinet Office guidance, but the current wording of the Procurement Act 2023 could allow an invoice to provide for a later date for payment. This could enable contracting authorities to agree a due date that results in a payment term longer than the 30 days intended by the Bill. While we do not believe that this is happening in practice, these amendments bring the Procurement Act 2023 more into line with the Bill and require payments made by public authorities to be made within 30 days of the receipt of an invoice by them. These amendments also ensure that all those subcontracting within public procurement supply chains, including regulated below-threshold contracts and related subcontracts, are subject to the same 30-day payment terms. The amendments also make minor consequential changes to other provisions of the Bill for the purposes of consistency and clarity.

These amendments also provide specific provisions within the Procurement Act 2023 for public construction contracts. As noble Lords are aware, the Bill already aligns late payment policy, including maximum payment terms, with the construction industry’s established statutory payment regime and specific terminology under Part 2 of the Housing Grants, Construction and Regeneration Act 1996, which I shall now refer to as the construction Act. It is therefore appropriate to also align public construction contracts to ensure consistency between the legislative regimes of the construction Act, the Procurement Act and the Bill. Corresponding amendments are also made to the Construction Contracts (Northern Ireland) Order 1997.

Construction contracts subject to the Procurement Act payment terms have an implied maximum payment term of 30 days. However, currently, there is no explicit reference to the payment notice system or payment triggers for construction contracts under the construction Act within this legislation. It is therefore currently unclear on the trigger points for the maximum payment terms and on how implied payment terms from the Procurement Act interact with the scheme for construction contracts. The intended amendments will set this maximum payment term at 30 days from the due date to the final date for payment. In the rare occurrence that the payment term is not provided or a contract term allows for a payment later than the permitted period, the maximum implied period of 30 days would apply. This will provide clarity for construction contracting parties in relation to payment terms within construction contracts or subcontracts that are subject to the Procurement Act and ensure maximum payment terms of 30 days for construction contracts where a public authority is the client.

Finally, I turn to the five amendments concerning provisions relating to the Small Business Commissioner. All five are minor and technical amendments that clarify drafting and ensure consistency of approach. The amendments support the legislation’s overall objective, which is to provide a clear, practical and enforceable regime that strengthens payment discipline, improves suppliers’ confidence and ensures that smaller businesses are not left to bear the cost of poor payment practices.

Taken together, these government amendments do three things: they reinforce the 30-day standard for public contracts, provide clarity for public construction contracts, and ensure that the Small Business Commissioner provisions work as intended. They are therefore targeted, practical and consistent with the central purpose of the Bill. I beg to move.

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Leong, for his clear exposition of his collection of amendments. This might seem like a lot of government amendments to those who are not veterans of the previous Parliament, but I remember when the noble Lord, Lord True, brought 250 amendments on the first day in Committee on the Procurement Bill, so this rather pales into insignificance. However, it begs the question: at what point did it dawn on the Government that they needed to align across the legislative process? That strikes me as something that should have been in the original document. I am glad that we have caught it, but it seems to be a problem that we did not get it in there earlier. It all seems sensible, as far as I can see. I had to go back over the horrors of the Procurement Bill and reread bits of it, so reliving those moments all over again, but from our perspective, this seems to be okay.

On Amendment 77, I offer my support for the legislative back-up for the Small Business Commissioner to exercise the right to recover costs. I would have hoped that this was there anyway, but it is good to have the legislative back-up. Similarly, Amendment 82 will enable the Government to leverage the practical experience of the Small Business Commissioner. I would have hoped that the Government would have been leveraging the experience of the SBC, but again, this dots an “i” and crosses a “t”. From these Benches, we are happy to accept the Government’s amendments.

[Lord Sharpe of Epsom (Con)]

My Lords, I am also grateful to the Minister for his comprehensive explanation. I am pleased that this tidying-up exercise, if you will, around existing legislation is happening, because that forms the basis of all the amendments in the group that we are about to debate, which are all mine, which I am now very confident the Minister will accept.

I have two brief questions. New Section 68B, to be inserted by Amendment 41, provides for an appropriate authority to make regulations altering the maximum payment term. It would be useful to know why the Government believe that power to be necessary and in which circumstances they might use that power.

I have further questions about Amendment 102, which permits the Chancellor of the Duchy of Lancaster to make consequential amendments by regulations, as well as the Secretary of State. For what purpose have the Government made that amendment? Why does the Cabinet Office need to be able to make such amendments? Is it not sufficient for the Secretary of State at the department for business and whatever else it is called these days to make such regulations? I will be grateful to the Minister for answers.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Fox and Lord Sharpe, for their contribution on these amendments in my name. It is best that we get any legislation right in the first place, and I appreciate the support given to the Government on these amendments. There is a lot of tidying up and, as the noble Lord, Lord Sharpe, said, it is best that we address it now, which we are doing.

The noble Lord made a point about the Chancellor of the Duchy of Lancaster. Procurement falls within the Cabinet Office, so the responsibility lies with the Cabinet Office. I will need to get back to him on his earlier question about the public authority.

The amendments reinforce the principle that the public sector should lead by example in prompt payments, provide much needed clarity on construction contracts within the scope of the Procurement Act and make a number of minor but important improvements to the Small Business Commissioner provisions. Taken together, they enhance the effectiveness of the Bill, improve consistency across related legislative frameworks and provide greater certainty for businesses and public authorities alike.

[Lord Lansley (Con)]

The Minister is changing the Procurement Act with this Bill. The power to reduce the payment term to below 30 days was in the Procurement Act. It is being renewed here and extended to construction contracts. In the Procurement Act provision, the period was 30 days or later if the invoice had a due date that was later. I think that is being removed. I am not entirely sure why, if public authorities receive an invoice from a supplier that has a due date later than 30 days, they would not be able to extend it beyond 30 days.

[Lord Leong (Lab)]

My Lords, that would be inconsistent with the Bill, because the Bill sticks at 30 days for public authorities. We are trying to tidy this up. Any provisions that provide an extension for more than 30 days for public authorities will not happen. That is why we are sticking to 30 days for public authorities.

[Lord Fox (LD)]

I ask the Minister to go back and have another look at the point made by the noble Lord, Lord Lansley, because there are vague stirrings in the back of my mind that there is a point there. It might be worth finding out why it was put in in the first place.

[Lord Leong (Lab)]

I will do that.

Amendment 6 agreed.

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Moved by

[Lord Leong]

12: Clause 2, page 5, line 12, leave out “68 or 88” and insert “68A or 88A”
Member’s explanatory statement
This amendment is consequential on my amendment inserting sections 68A and 88A into the Procurement Act 2023. It excludes payments under public construction contracts from inserted section 2D of the Commercial Payments and Interest on Late Payment Act 1998.

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[Lord Leong (Lab)]

My Lords, I thank all noble Lords, and thank the noble Lords, Lord Sharpe and Lord Hunt, for tabling these amendments.

Amendment 18 concerns specific exemptions from 60-day maximum payment terms. The Bill will allow contracts to be exempt where the purchaser is a smaller party. It is also the Government’s intention, subject to consultation, to exempt contracts to import or export goods or services from maximum payment terms. These exemptions will support businesses in the UK. The exemption for smaller purchasers, where the larger supplier agrees, will support supply chains where goods are slow moving or niche and where market power sits with the supplier, such as independent booksellers. During the late payment consultation, retail businesses told us that, without this exemption, smaller businesses would struggle to stock their stores appropriately. Where the purchaser is a smaller party, the power dynamic will not lead to unfair payment terms being imposed on suppliers. The exemption is a proportionate mechanism to support smaller businesses.

Amendments 20 and 23 focus on the definitions of business sizes, which are important for the size-based exemption set out in the Bill. The definition of business sizes will be clearly defined in secondary legislation following consultation. The Government want to ensure that thresholds are appropriate and avoid unintended consequences. We recognise the intention to provide consistency across the statute book, and noble Lords and I have had many conversations on this. However, these amendments would unduly constrain the flexibility needed to ensure that this regime operates as intended. These amendments would require the Secretary of State to adopt an existing definition of size of undertaking designed for different purposes, or to introduce a single definition across different pieces of legislation. This is not the approach taken in this Bill. New Section 2E will provide the necessary delegated power to define micro, small, medium and large undertakings for the purpose of exempting certain contracts from new Sections 2B and 2D. These will be subject to consultation and parliamentary approval.

In relation to the Small Business Commissioner, Amendment 101 would

“amend the definition of a small business in the Enterprise Act 2016”

by setting fixed statutory thresholds based on employee numbers and turnover or balance sheet total in primary legislation. The Enterprise Act 2016 already includes the definition of a small business and the Secretary of State has an existing delegated power to make further provisions about the definition in regulations, subject to parliamentary approval. We believe that the regulations are the appropriate place for that detail rather than the Bill.

We do not propose changing the definitions of small or larger businesses to refer to full-time equivalent instead of headcount. These definitions have been in place since the establishment of the Small Business Commissioner and are consistent with the definitions in the wider Bill, which the commissioner is to enforce. Changing this would result in further compliance costs for businesses and be complex to administer. I understand the concerns raised by particular industries, such as hospitality, and would be happy to ensure that the commissioner works with these groups to support businesses to understand how the new measures will impact them. The Government’s view is that the level of detail proposed is better suited to secondary legislation. Furthermore, it would remove the Government’s flexibility to adjust thresholds in future.

Different aspects of payment legislation, where it is related to exemptions from maximum payment terms or the Small Business Commissioner’s power, require definitions that reflect commercial realities and changing payment behaviours. Rigid definitions developed for other purposes risk undermining the Bill’s objective. The Government intend to draw on existing frameworks and keep definitions simple and effective. However, we must retain the ability to depart from them where necessary so that the regime operates fairly and definitions can evolve alongside policy objectives. A one-size-fits-all approach risks unintended consequences.

Finally, Amendment 99 would require the Government to establish and continually update a database of businesses affected by the Act. This would create a significant administrative burden and be difficult to maintain as business circumstances change. We do not consider a statutory register to be a proportionate means of supporting compliance.

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[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the noble and learned Lord, Lord Thomas of Cwmgiedd, for introducing his amendment. I cannot really improve on what has already been said, except to say that this issue has been raised with His Majesty’s Opposition in the run-up to this Committee stage. It is right that, should technology permit it, import and export trade contracts should be treated the same as domestic documents. That may not be feasible now, but the noble and learned Lord’s amendment provides what seems to me a reasonable timeline to get to that point.

[Lord Leong (Lab)]

My Lords, I thank the noble and learned Lord, Lord Thomas, for tabling Amendment 19, and acknowledge his advocacy in relation to e-invoicing and electronic trade documents. However, the intention to exempt imports and exports from maximum payment terms through secondary legislation is crucial to supporting UK businesses. Whether helping British manufacturers import materials and parts or allowing British exporters to compete in overseas markets where longer payment terms are common, we do not want to undermine the ability of UK businesses to trade competitively by limiting this potential exemption through Amendment 19.

The delegated power in new Section 2E(4) allows Ministers to make exemptions where payment practices vary across sectors and to respond to changing market conditions. It will be used sparingly in a targeted and evidence-based way and ensures that the regime can adapt, while still improving payment practices and protecting smaller suppliers. Removing or unduly constraining the flexibility would risk unintended consequences for businesses, particularly in sectors with more complex supply chains or commercial arrangements where longer payment terms can be mutually beneficial. Retaining this power ensures that the regime can be adapted where necessary while still delivering the Bill’s core objective of improving payment practices and protecting smaller suppliers.

The Government want to tackle and end scenarios where businesses unfairly use their larger size and power to impose unfair payment terms on smaller businesses. In the limited circumstances covered by the exemption, we do not consider that such imbalance leads to unfair outcomes, and an exemption from maximum payment terms could benefit the purchaser and the supplier.

I remember the days when I worked in my dad’s import and export business, the days when you used trust receipts and bills of lading—I am sure noble Lords will remember those—and let us not forget telex machines either. We have come a long way. I remember also the days when you had to write up or type up your invoices and send them to your suppliers by post. These days we have platforms that do a lot of invoicing electronically. One has also to appreciate that businesses come in all shapes and sizes and while bigger companies have more sophisticated systems in place, smaller businesses may not. We need to be respectful of some businesses that may not have sophisticated systems.

As noble Lords will know, the Government are moving towards e-invoicing and, I hope, over time more and more business will be conducted electronically and we will not really need the noble and learned Lord’s amendment. For this reason, I ask him to withdraw Amendment 19.

[Lord Lansley (Con)]

Before the noble and learned Lord, Lord Thomas of Cwmgiedd, responds, can I just ask the Minister something? It seems to me that he is accepting the proposition, with which I entirely agree, that the nature of e-invoicing and the use of electronic trade documents will make it possible for the imposition of a limit on payment terms in relation to trade documents in the future. It is possible to do it. But the Minister seems to be saying that there are two parts to this amendment—one about people here selling goods or services abroad and the other about people abroad selling goods and services into the United Kingdom. On the first one, I kind of go with the Minister. I can understand the point he is making: that we do not want to disadvantage our companies in other markets where the payment terms may be different and longer. But for those who are selling into this country, surely the whole point is that they should be operating on the same payment terms. Is there not an argument for the Minister to look at the second limb of what Amendment 19 is proposing?

[Lord Leong (Lab)]

I appreciate what the noble Lord has just said, but it is important that the scope of the Bill is targeted at UK businesses and small businesses. A commercial arrangement between a company based in the UK or a business based elsewhere is probably outside the scope of this Bill in that regard.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I thank everyone who has spoken in this short, slightly esoteric argument and on these interests. I simply say that I do not think that this issue will go away. First, the payment terms in the Bill are 60 days and in modern international trade that is a long time. I do not buy this argument that we would somehow lose competitiveness by having this here, certainly as regards imports. Secondly, it is important to stress that we are not tradesmen who trade with each other—say, between Wales and England and Scotland. We trade internationally and need to do everything to encourage us to trade. Thirdly, if we are to innovate, and this is an era of innovation, setting a good example will be a good thing.

I hear what the Minister says. I look forward to what the department will do to encourage it. If it will not do this, I might, if circumstances look providential, bring it back on Report to see whether the Minister can come up with some alternative in innovating because it is fair to say that it has been the department of innovation for only a day. I beg leave to withdraw the amendment.

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[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.

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Moved by

[Lord Leong]

26: Clause 5, page 9, line 37, leave out from second “to” to end of line 5 on page 10 and insert “—
(a) the day that has effect under provision agreed by the parties to the contract as the last day for payment to be made, or(b) the day that has effect, in accordance with the implied term described in (as the case may be) section 68(2) or 88(2) of the Procurement Act 2023, as the last day for payment to be made.”Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 amending the Procurement Act 2023. The changes result from the implied terms in sections 68 and 88 of that Act being brought into closer alignment with the payment terms that will be implied into other commercial contracts by the Bill.

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Moved by

[Lord Leong]

35: Clause 8, page 14, line 19, leave out “110(3)” and insert “110(4)”
Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 2, which means that the reference to section 110(3) of the Housing Grants, Construction and Regeneration Act 1996 should be a reference to section 110(4).

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[Lord Leong (Lab)]

My Lords, I thank the noble Lord, Lord Fox, for his Amendment 37, and I thank the Publishers Association for meeting with me. I can be very clear and confirm that the Bill does not substantially alter the contracts in scope of the Late Payment of Commercial Debts (Interest) Act 1998. Where this is the case, the protections offered by that Act will apply to a contract, and where they do not, they will not. The Bill does not alter the effect of existing case law in scope of the Late Payment of Commercial Debts (Interest) Act 1998 where it is found that the mere licence of copyright was not within scope.

Performers, authors, musicians and other creators are often freelancers or very small businesses. They may have limited bargaining power and may depend on timely payment for work created, delivered or licensed. During the Government’s consultation, we heard from authors and musicians who were waiting for many months to be paid. That is precisely the kind of poor payment practice that the Bill is designed to address. Where relevant contracts entered into by small businesses, freelancers or individual creators are for the supply of goods and services, the Bill will ensure that payment is made within the statutory maximum period of 60 days from the agreed trigger point.

However, there may be agreements involving intellectual property rights that are not properly characterised as contracts for the supply of goods or services. Some arrangements may concern the assignment, licensing or exploitation of intellectual property in ways that fall outside the late payment framework. The Government’s position is therefore clear: creators and freelancers should be paid on time where their contracts fall within the commercial payments regime.

Amendment 37 risks blurring established distinctions in contract and intellectual property law and would create uncertainty about which agreements are covered. For that reason, while I understand and sympathise with the intention behind this amendment, I do not consider it necessary or appropriate. Consequently, I ask the noble Lord to withdraw Amendment 37.

[Lord Hunt of Wirral (Con)]

Before the Minister sits down, can he address the two questions I raised? Are there other industries that might similarly be affected? If so, how do the Government intend to reach an end conclusion?

[Lord Leong (Lab)]

As far as the Bill is concerned, we are not providing any particular exemption to any particular sector. As far as intellectual property law is concerned, there were concerns from the various trade organisations that the Bill may also include the licensing of copyright. That is not the case, because that has been decided by case law under the earlier legislation I mentioned. If a contract says that someone has been contracted to write a particular book, novel or whatever, then that falls within scope of the Bill, but copyright contracts do not.

[Lord Fox (LD)]

My Lords, I should have said that my wife is a published author, so I have some family interest in this. Following the Minister’s last statement, I am still not clear on this. As the Minister knows, a classic book contract often involves an advance followed by royalties. The advance is sometimes an actual payment, or it is an advance against royalties. It is not clear which of those three conditions fit into the Bill and which do not. I do not know whether it is in order for the Minister to answer that question now, or whether he will have to come back.

[Lord Leong (Lab)]

I will quickly answer that. If the contract is for a book, and, as part of the contract, the creator is advanced a sum of money with an additional royalty arrangement, then the contract for that sum of money is covered within the scope of the Bill. The payment of copyright is outside the scope of the Bill.

[Lord Fox (LD)]

That is clearer. I will climb through the words we have exchanged as a result of this debate and see whether any comeback is required on Report. Pending that, I beg leave to withdraw the amendment.

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Moved by

[Lord Leong]

38: Clause 9, page 14, line 35, leave out “in connection with provision” and insert “in consequence of the amendments of the CPILPA 1998”
Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 amending the Procurement Act 2023.

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Moved by

[Lord Leong]

40: Schedule 1, page 46, leave out lines 25 to 36 and insert—
“(a) a reference to a contract to which section 68 or 88 of the Procurement Act 2023 applies includes a contract into which the terms in section 68(2) to (5) or section 88(2) to (5) of that Act are (to any extent) implied as a result of section 68A, 73, 88A or 88C of that Act (sub-contracts etc);(b) a reference to a term in subsection (2) or (3) of section 68 or 88 of that Act includes a reference to the term—(i) as implied into a contract by any of the sections mentioned in paragraph (a);(ii) as modified by section 73 or 88C of that Act;(c) a reference to a contract to which section 68A or 88A of that Act applies includes a public construction sub-contract within the meaning of section 73 of that Act and a regulated below-threshold construction sub-contract within the meaning of section 88C of that Act;(d) a reference to the term in section 68A(3) or 88A(3) of that Act includes a reference to the term as implied into a contract by section 73 or 88C of that Act.”Member’s explanatory statement
This amendment is consequential on my amendment to Schedule 1 amending the Procurement Act 2023. It ensures that references in the Commercial Payments and Interest on Late Payment Act 1998 to relevant sections of the Procurement Act 2023 cover related sub-contracts etc where appropriate.

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[Lord Fox (LD)]

My Lords, the Minister has said in the past that there may be other means to ensure the necessary delivery of projects without retention, and this group is designed to probe those other means. I am grateful to the noble Lord, Lord Sharpe, who set out the reasons why we too support the need for change, and to the noble Lord, Lord Lansley, who points out the need for ensuring quality of delivery. It is a difficult conundrum that faces the Minister.

Amendment 46, from the noble Lords, Lord Hunt, Lord Sharpe and Lord Holmes, sets out the possibility of escrow and whether that remains legal. I would add bonds and insurance solutions, which may be solutions to a similar delivery problem, or the nature of certification, which is the point that the noble Lord, Lord Lansley, made. Either way, there is an issue around staging payments, which we see in Amendment 49 and discussed in a different vein in Amendment 52 from my noble friend. There comes a point when we have to ask: when is a staging payment a retention and when is it not? We start to have this grey area.

The Minister has a difficult job, but it is an important part of the Bill to get that right. Like other noble Lords, we are available to have those discussions, but, when we get to Report, there needs to be a way of squaring the issue of the abuse of retention with the need for delivery.

[Lord Leong (Lab)]

My Lords, I thank the three noble Lords for their amendments in this group and for their contributions.

Taking Amendment 46 first, I reassure the noble Lords, Lord Sharpe and Lord Hunt, that the Bill does not prevent parties in any sector, including construction, making use of payment arrangements through third-party providers. A business may use a bank, payment agent or escrow account or provider to facilitate the transfer of funds from one party to another. Such arrangements can, in some circumstances, support better cash flow management, provide greater transparency and give parties additional confidence in how funds are handled. Nothing in the Bill is intended to prevent the use of those legitimate payment mechanisms. Therefore, Amendment 46 is unnecessary, but I shall make a further point, if I may.

As drafted, this amendment risks unintentionally undermining the policy intent behind the proposed ban on retentions. Its practical effect could be to preserve the option of still using retention clauses, provided that the retained sums are held by third parties. That would run counter to the Bill’s purpose. Retentions have been used in the construction sector for well over a century, but the evidence from consultation, research and engagement with businesses is clear: retentions are neither an effective way to prevent defects or to remedy poor-quality work. In practice, retentions often reduce cash flow for contractors and subcontractors, increase financial risks across the supply chain, and leave businesses exposed to late and non-payment or to the loss of retained sums through insolvency. The Government’s view is that the industry must now move beyond reliance on retentions. Therefore, we are not proposing any exceptions to the ban, nor do we want to permit retention practices to continue in another form.

I recognise the intent behind Amendment 47. The public sector is a major construction client and there is a strong case for it to lead by example. Phasing out retentions in public construction contracts will send a powerful signal, help establish new standards and support a fairer payment environment for smaller businesses. The Government recognise that the public sector has an important leadership role, but we must also recognise the practical realities that construction clients face, whether public or private.

The Bill reflects typical project durations, existing contractual arrangements and the time required for businesses to adjust their commercial models. During the transition period, the Government will work with industry through the Construction Leadership Council and with clients across the public and private sectors, the financial services sector and the supply chain. The purpose of that work will be to improve quality, reduce the level of defects, and help the market to develop alternative forms of surety for clients and the supply chain, whether it is performance bonds or other forms of financial instruments. That is the right way to achieve lasting reform. It gives the sector a clear end point and a realistic path to get there.

I thank the noble Lord, Lord Lansley, for Amendments 44, 45 and 48, and for his constructive engagement with the Bill. I fully understand the concern underlying these amendments. Everyone in your Lordships’ House wants construction work delivered to a high standard. Everyone agrees that defects should be remedied by the party responsible for them. The question is not whether quality matters—it clearly does—but whether cash retentions are the appropriate way to secure that outcome. The Government’s answer is clear: they are not. These amendments would create wide-ranging exemptions from the Bill’s retention provisions. Their practical effect would be to remove or significantly reduce the protection that the Bill is intended to provide for many businesses in the construction supply chain. That would be a serious step backwards. It is designed to protect cash flow, reduce exposure to insolvency risks and end the long-standing practice of withholding money already earned.

If these exemptions are accepted, many of the risks that the Bill aims to address would remain. Businesses would still experience reduced cash flow, retained sums would still be vulnerable to late release, non-payment and loss through insolvency, and clients would still have to incentivise to preserve mechanisms that reduce payments to suppliers rather than adopt better ways of managing quality and defects. That would undermine one of the Bill’s central purposes. If we create broad exemptions now, we risk preserving the very practices that have held us back for so long.

It is important to recall the evidence from the 2018 consultation conducted by the previous Government. Contractors reported significant difficulties in obtaining the release of the second half of the retention at the end of the defects period. The final retention payment was often used as leverage in negotiations over the final amount. That experience demonstrates why seemingly limited retention arrangements can become a source of real commercial pressure. There is also the possibility that if exemptions are introduced, clients might try to extend defects periods beyond the usual 12 to 24 months seen in construction contracts, which could extend the timeframe for withholding funds.

The Government fully accept that quality and defects must be addressed. However, the answer is not to continue withholding cash from supply chains but to improve quality, reduce the incidence of defects, and develop fairer and more effective alternatives to retentions. That is the work we intend to take forward with industry throughout the transition period. The Government’s approach therefore strikes the right balance. It offers a clear incentive for essential reforms, it protects smaller businesses from the cash flow and insolvency risks linked to retentions, and it gives the industry time to adapt to a significant and necessary change.

In relation to Amendment 49, I reassure noble Lords that no provision in the Bill will change the ability of construction clients and firms to agree either staged or interim payments under construction contracts. Therefore, this amendment is unnecessary.

We understand the intention behind Amendment 50, that resident-owned firms undertaking essential remediation work can ensure that the work done is of high quality, but we do not believe that retention ensures this. As Dame Judith Hackitt has noted, the practice is ineffective and undermines the effectiveness of the supply chain, which is why alternatives are required.

Let me respond to the question from the noble Lord, Lord Lansley, on the new homes ombudsman scheme and the code of practice. The Government have already stated their intention to bring forward a statutory new homes ombudsman scheme. Requirements are being developed and the Ministry of Housing, Communities and Local Government may undertake market engagement to assist in further developing this. This would be done transparently via government portals.

With that, I ask that the amendment be withdrawn.

[Lord Sharpe of Epsom (Con)]

I totally understand where the noble Lord is coming from, of course, and I think we have indicated already that we are broadly supportive of the direction of travel. What he is in effect saying is that the suppliers have to behave better, reduce defects and do all sorts of other good stuff, all of which is admirable and worthy, but what are the incentives to ensure that they do? I am sure the noble Lord is familiar with the famous saying of Charlie Munger, who was Warren Buffett’s partner: “If you show me the incentives, I’ll tell you the outcomes”. At the moment there are no incentives, so the outcomes will not be good.

[Lord Leong (Lab)]

I think the mere incentive of getting the money earlier will ensure that the service and the quality of work will be done to specification. Otherwise, the claim for compensation will come in, so the whole incentive is to get the work done properly in the first place.

[Lord Lansley (Con)]

I am most grateful to noble Lords for this short but really rather—forgive the pun—constructive debate. I think we were trying to probe quite how the Government are thinking about the implementation of a ban on retention payments. The Minister was very clear about what the Government are trying to achieve. If we follow down that path, I hope that, when we come together to consider this on Report, we might in the meantime have looked at the question of stage payments and what the Minister has said about nothing being ruled out where stage payments are concerned, so that there is no inadvertent limitation on the ability to stage payments during the course of a construction contract.

I would like to come back in the intervening period between now and Report to test the Minister, and through him the Ministry of Housing, Communities and Local Government, because they can be getting on with this. It is about not simply pre-market engagement but issuing an invitation to tender and making the regulations necessary to bring the provisions of the Building Safety Act into force, so that we can get on with this. That is part of the package that I think the Minister was alluding to, of trying to ensure that we have means other than retention payments to try to ensure the quality of new build. I hope we can continue to discuss those issues. That said, I beg leave to withdraw Amendment 44.

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Moved by

[Lord Leong]

53: Schedule 2, page 48, line 6, at end insert—
“1A In section 110 (dates for payment)—(a) in subsection (3), for “subsection (1)” substitute “subsection (1)(a)”;(b) after subsection (3) insert—“(4) If or to the extent that a contract does not contain such provision as is mentioned in subsection (1)(b), the relevant provisions of the Scheme for Construction Contracts apply.(5) But subsection (4) does not apply to a contract into which the term in section 68A(3) or 88A(3) of the Procurement Act 2023 is implied (implied final date for payment).””Member’s explanatory statement
This amendment concerns what the rule is where a construction contract does not specify a final date for payment in relation to a sum that is due—clarifying that in the case of public construction contracts covered by the Procurement Act 2023, the implied term in that Act applies.

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[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.

[Lord Leong (Lab)]

First, I thank all noble Lords who have contributed to the group of amendments, and I acknowledge the work done by the previous Government in establishing the Small Business Commissioner. We are building on the work done by the previous Government to give the SBC more powers to do the work under the Bill. I listened to the very innovative suggestions from the noble Lord, Lord Leigh. I will definitely bear some of the suggestions in mind when I speak to my officials. I will not guarantee or promise him anything, but I will bring it up.

I recognise the shared objective behind Amendments 59, 66 to 68, 71 and 79. Payment disputes should be resolved quickly, fairly and with proper safeguards. That is what the Bill is designed to achieve. This group of amendments is huge, and I will try to address as many of the questions as I can. If I do not, I promise to go through Hansard and write to noble Lords.

The Bill enables regulations to set time limits for each stage of adjudication, including the adjudicator’s decision, and to make further provisions about investigation. It allows the detail of procedural rules to be informed by consultation and approved by Parliament, and, where appropriate, with the consent of the devolved Governments, it gives the scheme the flexibility to be adjusted, including to set a shorter timeframe than 60 days for an adjudicator to determine a payment dispute, if appropriate. I understand the desire to put firm deadlines and procedural requirements in the Bill, but doing so would risk making the scheme less effective. In particular, requiring both parties to agree to extensions could allow one party to frustrate the process and jeopardise a fair outcome.

Similarly, removing the adjudicator’s ability to give directions or take steps to secure fair adjudication of a dispute would make the scheme more rigid and could prevent adjudicators detailing properly, with complex or incomplete evidence. The Bill already contains important safeguards. Adjudicators must act fairly and impartially, give parties a reasonable opportunity to present their case, and operate within a framework that is set out in regulations and subject to scrutiny.

With regard to Amendments 55 to 57, 62, 64 and 65, the Government’s approach is deliberately targeted. The scheme is intended to address the power imbalance that can arise when a larger business owes money to a small business, including sole traders and the self-employed. It is not designed to duplicate existing consumer protections or create a general commercial dispute resolution service. Extending the scheme more widely would risk increasing complexity and case volumes and weaken the ability to provide a swift, low-cost route for small businesses—the group most affected by poor payment practices. The Bill sets out exclusions and grounds on which the commissioner may decline to adjudicate. The regulation-making powers will simply allow technical and proportionate refinements, informed by operational experience, so that the scheme remains effective.

On Amendment 62, I recognise the importance of transparency where adjudication is declined. The commissioner will usually give reasons to the smaller businesses, while retaining discretion where disclosure would harm commercial relationships or otherwise be inappropriate. For those reasons, the Government believe that the Bill strikes the right balance between clarity, safeguards and the flexibility needed to keep the scheme focused and workable.

On Amendments 69, 74 and 93, the Government are clear that these powers must be matched by the capacity to use them effectively. My department is already working closely with the commissioner to assess the staffing and funding needed ahead of commencement. The Bill also provides a practical mechanism for cost recovery in relation to adjudication so that the burden does not fall solely on taxpayers and larger businesses have a further incentive to resolve disputes promptly and pay suppliers properly. Those arrangements will be set out in regulations, subject to consultation and parliamentary scrutiny. The commissioner’s annual report will continue to provide transparency on staffing, funding and audited accounts.

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[Lord Fox (LD)]

Before the Minister sits down, I found his answer on Amendment 91 a bit disappointing, given that we went through the debate on the Digital Markets, Competition and Consumers Act and came to a different conclusion. It is not clear to me why, in this circumstance, the Government go one way when, with that Act, we went the other way. A conversation needs to be had about that.

[Lord Leong (Lab)]

I would be happy to follow that up in a further conversation with the noble Lord. I take his point, but we also need to be mindful that there are so many different structures in which a company can operate—a subsidiary here, a domain for UK purposes and so on. Nevertheless, I agree that we need to be very clear about what constitutes a UK trading company and what revenue should be taken into account. I welcome additional engagement with him.

[Lord Fox (LD)]

I am sorry to labour the point, but that use of structures is exactly what my amendment seeks to avoid, because it is through those structures that clever companies with very good corporate lawyers can remove profit that has been generated in this country and attribute it to other subsidiaries that are not in this country and would therefore not be subject to the calculation for fines. That is why we made that decision for the digital markets Act and why I propose that we should do the same in this one.

[Lord Leong (Lab)]

As I said earlier, we need to have further conversations on that, which I would welcome.

[Lord Hunt of Wirral (Con)]

My Lords, I thank all noble Lords for taking part in what has been a very important debate. I am grateful to the Minister for his response. I warmly applaud what the noble Lord, Lord Fox, said about the critical need for clarity—as my noble friend Lord Holmes of Richmond emphasised, not just clarity but precision. We believe that these elements are essential, particularly on resources. It is all well and good passing legislation—ground-breaking legislation, to some extent—but, if there are no resources behind that change in legislative structures, the ultimate objective will not be achieved.

Speaking on behalf of all those who have spoken, I believe that it is the intention of all of us that the expanded Small Business Commissioner’s office should work as the Government intend it to work. The amendments in this group simply represent different views on how best to achieve this. I warmly applaud my noble friend Lord Leigh of Hurley, who always gives us the correct feedback from the world of business. He did so again just a few moments ago. His remarks about giving the cold shoulder have been proved with the effectiveness of the takeover code. We have to isolate—perhaps we have not had enough discussion about this—those companies that have poor payment practices and get through to them that, across all parties, we condemn such action, in particular when it has such a dramatic impact on small and medium-sized enterprises.

I understand that the amendments in the name of the noble Lord, Lord Fox, would include overseas turnover when calculating a company’s turnover. We need to discuss that further. We need to get UK tax law right.

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[Lord Fox (LD)]

A lawyer steps up.

[Lord Leong (Lab)]

Declare yourself.

[Lord Hunt of Wirral (Con)]

As the Minister has just suggested, I should declare my interest as a practising solicitor in the City of London. I acknowledge the words of the former Lord Chief Justice, the noble and learned Lord, Lord Thomas of Cwmgiedd. We do need access to justice; I just happen to believe that it is best achieved by using lawyers. But I recognise the validity of what he just said and we need to reflect on that, just as we need to reflect on what was said by my noble friend Lord Holmes of Richmond on using plain English that people can understand.

In trying to create another dispute resolution system, as we discovered with the Financial Ombudsman Service—the noble Baroness, Lady Kramer, will know this from sitting in on the debates on the Financial Services and Markets Bill—allowing the Financial Ombudsman to decide what is fair and reasonable in all the circumstances, and not to have to rely on the common law, creates a difficult adjudicatory system. At the end of the day, we want right to succeed, and it can do so only if everyone understands what the law is and it is not left to the discretion of some intermediary.

Having now pleaded the case for the lawyers, I thank my noble friend Lord Leigh of Hurley for introducing what has been a very important debate. I acknowledge the fight of the noble Baroness, Lady Kramer, for the Cabinet Office to take a role in any whistleblowing regime. I hope she will understand that I am nervous about establishing another office within the Office of the Small Business Commissioner, but we look forward to hearing what the Minister says about that.

Amendments 86 and 87 are in my name and those of my noble friends Lord Sharpe of Epsom and Lord Holmes of Richmond. The Bill represents a shift in the Government’s policy, in that it favours small and medium-sized businesses. Payment terms and retention contracts will do much to prevent exploitative counterparts, while increasing the powers of the Small Business Commissioner will introduce another layer of protection.

However, I call it a “shift” because it is antithetical to the road that the Government have pursued until now, which has placed businesses, both small and large, under ever more regulatory and financial burdens. I am of course referring to the Employment Rights Act of last year. It seems unfair that businesses should be expected to comply with new payment practices that reduce cash-flow flexibility while the Government are simultaneously doing the same with their policies. The worst provisions of that Act have not even been implemented yet but are expected to cost an additional £1,000 million at a minimum. This will undoubtedly have an impact on the ability of businesses, especially smaller businesses with tighter margins, to pay back the debt that they owe within the allotted time.

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Similarly, new Section 2G(2)(d) within Clause 18 allows for the restriction of onward disclosure of information in relation to an adjudication. This seems to me to account for whistleblowing and the protection of those who come forward. Again, we look forward to hearing from the Minister whether he can confirm that this is the case in his response.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who have contributed on this group of amendments. Let me turn to Amendments 80, 83 and 85. The Government agree that the protections in the Bill must be accessible and effective for all small businesses. We know disparities exist for businesses led by women, ethnic-minority and disabled entrepreneurs. That is why the regulations for the adjudication and investigation scheme will be consulted on carefully.

The regime will be designed and implemented to support all small businesses, including those hardest to reach. The commissioner already provides a wide range of simple, small business-friendly guides to help small businesses understand and use its services, including their legal rights relating to payments. The commissioner also works with a diverse range of business groups, representative organisations and partners to promote its services and improve awareness among small firms. Furthermore, through the SBC’s annual report, the commissioner will report on these activities, including steps taken to ensure services are accessible to all groups. More broadly, the Government are already supporting underrepresented entrepreneurs through wider DBT-backed work. The commissioner will continue to reflect best practice in promoting fair access to its services. For those reasons, we believe these matters are better addressed through implementation, guidance and engagement so the schemes remain practical, proportionate, up to date and responsive.

Amendments 58, 97 and 98 would introduce additional statutory structures and requirements. The combined effect of these proposals would be to place significant new reporting and compliance burdens on businesses, including in areas where data may not be readily available or verifiable, particularly across different supply chains. We must be careful not to impose unnecessary burdens on businesses, especially those already demonstrating good payment practices, when our focus should be on tackling poor performance. We are already introducing new powers in the Bill to enable the Small Business Commissioner to investigate businesses with poor payment practices.

I agree that transparency and data are important. Payment practice reporting data is already published and accessible on GOV.UK. Organisations already use that data to analyse payment performance. The commissioner is also looking at how improved data analytics and AI tools can support its work. On ESG, I agree that payment practices are an important aspect of responsible business behaviour. The Small Business Commissioner is already working to promote cultural change through initiatives such as the Fair Payment Code. However, ESG frameworks are already well developed and continue to evolve, often on an internationally aligned basis. Mandating a specific framework in legislation risks duplication and inflexibility that is best allowed to develop dynamically.

Specifically on Amendment 58, although I understand the intention to prevent payment being withheld because of informal or extra-contractual ESG requirements, the Bill already ensures that payment obligations are clear. This amendment risks causing confusion and making the payment provisions of the Bill less clear.

I thank the noble Lords, Lord Hunt and Lord Sharpe, for raising through Amendments 86 and 87 the interaction between payment practices and the Employment Rights Act. I will resist the temptation to reopen debates that the House has already had in detail on that legislation, including on impact assessments, which have been debated at length. The purpose of the Bill is clear: it is about tackling late payments and addressing the harm they cause to small businesses’ cash flow, resilience and growth. The Small Business Commissioner plays a focused role within that agenda by supporting small firms, resolving payment disputes, and driving improvements in payment practices through adjudication, investigation and enforcement. These amendments would expand that role into reviewing wider employment policy, risking diluting the commissioner’s focus and effectiveness. For those reasons, although I understand the intention of the amendments, I do not consider them necessary or appropriate to this Bill.

On Amendment 81, tabled by the noble Baroness, Lady Kramer, I recognise the importance of the issue she raises. The Bill already provides a framework under which the Small Business Commissioner can receive and act on information from small businesses and third parties, including whistleblowers. Individuals can provide evidence to support the commissioner’s investigations and wider functions. Crucially, the Bill includes strong confidentiality protections. These prohibit the commissioner from disclosing information where doing so could potentially identify the individual who has provided that information, except in limited circumstances, such as where consent is given. In that context, establishing a dedicated office of the whistleblower risks duplicating protections that already exist without clearly addressing a gap in the current framework.

It is important to consider the broader whistleblowing framework that is already in place. Protections for individuals making disclosures in the public interest are set out in the Employment Rights Act 1996. The Government have recently updated that order and are actively considering whether it would be appropriate to include the Small Business Commissioner as a prescribed person. I hope that gives some consolation to the noble Baroness. This is a more proportionate and coherent route to strengthening their protections.

The amendments in this group are well intentioned and I share their ambitions, but the Bill already provides a strong and proportionate framework. Our approach is to deliver improvements in a way that is flexible, targeted and proportionate, avoiding unnecessary burdens on businesses rather than prescribing detailed mechanisms in the Bill. For those reasons, I ask the noble Lord to withdraw his amendment.

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Moved by

[Lord Leong]

60: Clause 18, page 23, line 6, leave out from “Wales,” to end of line 7 and insert “as if it were payable under an order of the county court;”
Member’s explanatory statement
This amendment, along with my other amendment to clause 18, ensures consistency in how an adjudication decision can be enforced across the three jurisdictions.

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[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions on this group of amendments. I thank in particular the noble Lord, Lord Holmes, for bringing them forward. I want to be clear: the Government agree that these are matters of importance. It is essential that the commissioner’s work is accessible to all users and that appropriate safeguards are in place where technology, including digital tools or AI, is used in delivering services.

The Small Business Commissioner already operates within well-established cross-government frameworks for accessibility, cyber security and data protection. For example, the commissioner’s website is already fully compliant with the web content accessibility guidelines—WCAG 2.2 level AA—ensuring that its services and publications are accessible to the widest possible audience. The commissioner is subject to strict legal obligations in relation to data protection and cyber security. These frameworks have robust safeguards around confidentiality, access controls and the secure handling of sensitive information.

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Moved by

[Lord Leong]

76: Clause 19, page 32, line 20, leave out from “business” to “where” in line 21
Member’s explanatory statement
The words omitted by this amendment appear instead in words inserted by my other amendment to clause 19 so this amendment makes no substantive change.

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Moved by

[Lord Leong]

82: Schedule 3, page 52, line 12, at end insert—
“(3) Before making regulations under sub-paragraph (1), the Secretary of State must consult the Commissioner and such other persons as the Secretary of State considers appropriate.”Member’s explanatory statement
This amendment requires the Secretary of State to consult the Small Business Commissioner and such other persons as the Secretary of State considers appropriate before making regulations about financial penalties which the Commissioner may impose in connection with investigations that the Commissioner may carry out under new powers in the Bill.

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Moved by

[Lord Leong]

102: Clause 28, page 40, line 11, after “State” insert “or the Chancellor of the Duchy of Lancaster”
Member’s explanatory statement
This amendment enables the Chancellor of the Duchy of Lancaster to make regulations consequential on the Bill (as well as the Secretary of State).

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[Lord Hunt of Wirral (Con)]

My Lords, Amendment 103 would delay commencement of the statutory interest provisions by one year to allow businesses time to prepare. As we are on the final group of the day, I will seek to keep my remarks brief.

My noble friend Lord Holmes of Richmond made the point with Amendment 24 that statutory interest should be calculated and remitted promptly, within five days, which is a sentiment that we agree with, but that amendment also highlights that businesses will need to take on new administrative burdens to carry out this new duty. Obviously, we want to encourage people to pay on time, but businesses who have previously had payment terms of 90 or 120 days will need time to adapt. That is why Amendment 103, in the names also of my noble friends Lord Sharpe of Epsom and Lord Holmes of Richmond, would delay the commencement of statutory interest by a year. It acknowledges that underpinning technology will likely be necessary, especially for large multinationals with immensely complex payment systems. I hope that the Minister will be able to agree. I beg to move.

[Lord Leong (Lab)]

First, I thank the noble Lords, Lord Hunt and Lord Sharpe, for this amendment and the noble Lord, Lord Hunt, for his contribution. The Bill will strengthen an existing right that suppliers who are paid interest late enjoy, through Clauses 5 and 6. These clauses will simplify the law on when statutory interest runs and remove the ability for contracts to use an alternative remedy to statutory interest. Clause 4, which this amendment relates to, preserves the effect of Section 1 of the existing Commercial Payments and Interest on Late Payment Act 1998 and implies statutory interest into all contracts to which the Act applies. The amendment brought forward by the noble Lord to require Clause 4 to be commenced within 12 months would not delay the right to statutory interest, as it is already in legislation. I can reassure him that we have considered the impact that strengthening of interest rights will have, as set out in Clauses 5 and 6, and that there will be sufficient time for businesses to adapt their processes before these provisions are commenced. I hope I have reassured the noble Lord and that he will withdraw his amendment.

Supply of Machinery (Safety) (Amendment etc.) and the EU Machinery Regulation (Enforcement etc. in Northern Ireland) Regulations 2026

Lord Leong Excerpts

Monday 20th July 2026 Lords Chamber

Moved by

[Lord Leong]

That the draft Regulations laid before the House on 1 June be approved.

Relevant document: 5th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, this instrument concerns machinery used every day across our economy and in our daily lives. It covers a wide range of products: from cranes and excavators used on construction sites to lawnmowers, leaf blowers and many other workplace and consumer products. The current machinery safety framework is based on legislation introduced in 2006 and 2008, which implemented the then EU machinery directive and was subsequently assimilated into UK law following our departure from the European Union.

As noble Lords will know and appreciate, machinery has evolved markedly over the past two decades. Digital technologies, automation, connected systems and software now play an increasingly important role in machinery design and operation. It is therefore right that our regulatory framework evolves alongside those technological developments to ensure it remains effective, proportionate and fit for purpose. This instrument has two distinct and complementary purposes. First, it introduces the domestic enforcement framework necessary to ensure the effective enforcement of the EU machinery regulation which applies in Northern Ireland from 20 January 2027 under the Windsor Framework. Secondly, it amends domestic legislation to ensure that machinery meeting the updated EU requirements can continue to be placed on the market in Great Britain under the CE marking. In doing so, it provides businesses with continuity and certainty while avoiding unnecessary duplication of conformity assessment procedures.

Turning first to Northern Ireland, these regulations establish a comprehensive enforcement framework to ensure that safe and compliant machinery can continue to be placed on the Northern Ireland market. They designate the existing enforcement authorities, which are the Health and Safety Executive for Northern Ireland and the district councils, and grant them appropriate investigatory and enforcement powers. They also create offences and penalties for serious non-compliance, including fines and, where appropriate, custodial sentences. I can reassure the House that these penalties are fully consistent with the wider product safety framework and proportionate to the seriousness of the offences. The Northern Ireland Department of Justice has confirmed that these provisions will not have a detrimental impact on the criminal justice system.

Importantly, enforcement is intended to be proportionate. In the overwhelming majority of cases, we expect compliance to be achieved through advice, engagement and support for businesses, rather than through criminal sanctions. Criminal penalties are rightly reserved for the most serious instances of non-compliance. The regulations also preserve the important role of UK-approved conformity assessment bodies for machinery placed on the Northern Ireland market by continuing to use the UKNI marking alongside the CE marking where required. It is equally important to emphasise that the UKNI marking is not mandatory in every case: where the relevant conditions are met, machinery bearing the CE marking alone may continue to be placed on the Northern Ireland market.

Turning to Great Britain, the regulations continue the Government’s policy of recognising machinery that complies with the specific requirements of the updated EU machinery regulation. This means manufacturers can continue placing compliant products on the GB market under the CE marking, avoiding costly duplicate conformity assessments while maintaining high standards of product safety. The regulations also ensure that qualifying goods in free circulation in Northern Ireland continue to enjoy unfettered access to the Great Britain market. The updated EU machinery regulation also reflects the considerable technological advances since the previous regime was introduced. It clarifies responsibilities across the supply chain, strengthens the obligations of importers and distributors, facilitates greater use of digital documentation, and mandates third-party conformity assessment for certain categories of higher-risk machinery.

Having carefully considered these changes and following extensive engagement with industry, the Government believe that they are sensible and proportionate and reflect the reality of a modern machinery sector. Indeed, the engagement has been extensive. My officials undertook a call for evidence, held a series of round table discussions with more than 200 stakeholders across the United Kingdom and internationally, and engaged directly with businesses in Northern Ireland, including through dedicated events in Belfast. The message from industry was consistent and clear. Stakeholders supported modernising machinery safety requirements and strongly backed the continued recognition of CE in Great Britain as a means of reducing costs, facilitating trade and maintaining competitiveness. Businesses in Northern Ireland also emphasised the need to maintain a coherent regulatory approach across the United Kingdom and to ensure that goods continue to move smoothly between Northern Ireland and Great Britain. The Government have listened carefully to those views. This instrument reflects that engagement. It supports competitiveness, particularly for small and medium-sized enterprises, while maintaining robust protections for workers and consumers.

Manufacturers already certify their machinery to EU requirements because they operate across multiple international markets. Consequently, officials have not identified any significant adverse impacts arising from these regulations, and we anticipate no material disruption to trade between Great Britain and Northern Ireland as a result of this instrument. The Government will continue to support businesses with clear guidance and practical assistance, including the recently announced £16.6 million UK internal market package for Northern Ireland businesses adapting to regulatory change.

I shall now briefly turn to the amendment tabled by the noble Baroness, Lady Hoey, which raises concerns about both the functioning of the United Kingdom internal market and the Government’s approach to updating machinery regulation. Northern Ireland is, of course, an integral part of our United Kingdom. While the legal framework applicable in Northern Ireland and in Great Britain will temporarily differ in some respects, the practical consequences for most businesses trading across the United Kingdom will be limited. Manufacturers have already designed and certified their products to meet EU requirements because they serve multiple international markets. The continued recognition of compliant machinery in Great Britain and the continued unfettered access enjoyed by qualifying Northern Ireland goods will enable businesses to trade across the United Kingdom with minimal disruption.

The noble Baroness also suggests that these measures merely follow the European Union’s regulatory approach. I respectfully disagree. The Government carefully considered a range of policy options and engaged extensively with manufacturers, trade associations and other stakeholders. We concluded that this approach best supports UK businesses, reduces unnecessary duplication, facilitates trade, maintains our high standards for machinery safety and provides the certainty businesses have consistently asked for. This is therefore a policy choice made in the interests of businesses, workers and consumers throughout the United Kingdom. Ultimately, these regulations aim to modernise an ageing regulatory framework, maintain high standards of product safety, support innovation, reduce unnecessary burdens where possible and provide businesses with the certainty they need to invest and grow. For these reasons, I beg to move that these regulations be approved.

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[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their contributions to this short debate. I will address briefly the concerns and questions raised by the noble Baroness, Lady Hoey, and other noble Lords. This is a time-limited debate, so I will answer as many questions as I can and, if necessary, will write to noble Lords.

I recognise, as does the House, that noble Lords have consistently raised concerns about the operation of the Windsor Framework and its application for Northern Ireland. These are legitimate matters for parliamentary scrutiny and debate, which we welcome. However, the question before the House this evening is much narrower and more practical, as was mentioned by the noble Baroness, Lady Suttie: namely, whether businesses, regulators and consumers should have a clear, modern and enforceable machinery safety framework before the new arrangements take effect on 20 January 2027.

In reaching their conclusions, the Government did not merely make assumptions; we asked those who will be directly affected by them. As I said in opening, my officials have conducted a comprehensive programme of engagement, comprising a national call for evidence, 10 round-table meetings attended by over 200 stakeholders from across the United Kingdom and internationally, and targeted engagement with businesses in Belfast and throughout Northern Ireland. We listened to manufacturers, importers, conformity assessment bodies and representative organisations before deciding on this approach. The consistent message that we received was that businesses sought certainty. They wanted a modern regulatory framework that reflected technological developments. They wanted to avoid unnecessary duplication of conformity assessment. They sought ongoing acknowledgement of CE-marked machinery within Great Britain, as it diminishes costs, bolsters competitiveness, and facilitates more straightforward trade for businesses across the United Kingdom and within the European Union.

Numerous enterprises that we interacted with in Northern Ireland informed us that retaining CE recognition within GB would facilitate trade, as manufacturers already certified their products to these standards to access international markets. They regarded certainty and continuity as essential to investment and future growth. The evidence gathered by government shows that businesses are most concerned not with ongoing uncertainty but with having clear regulations, practical trade arrangements and a solid framework that helps them succeed in the UK and on the global stage.

Noble Lords may continue to hold differing views on the Windsor Framework, but this instrument neither creates nor alters those constitutional arrangements. Its purpose is more limited and practical, and ensures that businesses have certainty. It ensures that regulators have the powers necessary to fulfil their statutory responsibilities and it upholds high standards of machinery safety. It supports innovation and competitiveness, and it enables responsible businesses to continue trading with confidence.

Various noble Lords asked about costs. The measures applying in Northern Ireland are out of scope of formal impact assessment. Nevertheless, the Government have engaged directly with businesses in Northern Ireland, and the feedback from these stakeholders has been broadly supportive of the measures. As a result, we do not expect the measures to impose additional costs or burdens on businesses in Northern Ireland relative to those elsewhere in the United Kingdom. We anticipate that most businesses operating in Great Britain will choose to meet the EU requirements. In practical terms, this means that machinery manufacturers across the United Kingdom will be subject to the same requirements. In addition, the Government have set out their intention to introduce similar reforms in Great Britain. For those reasons, we expect the requirements applying in Northern Ireland to create minimal, if any, competitive disadvantage. As I said, we recently announced £16.6 million to support Northern Ireland businesses adapting to regulatory change.

There were questions asked about whether businesses were unprepared. Through extensive stakeholder engagement, businesses are aware of these forthcoming changes. Guidance for businesses is available at GOV.UK, and this guidance will be updated to reflect the changes implemented by this SI.

The noble Baroness, Lady Hoey, asked what businesses in Great Britain need to do. This instrument does not alter the existing Windsor Framework arrangement. Machinery placed on the market in Northern Ireland must comply with the applicable Northern Ireland requirements. Machinery in Great Britain may be placed on the Northern Ireland market with the CE marking where it is either self-assessed to the EU requirements or assessed by an EU-recognised body. Where the UK-approved body carries out the conformity assessment, both the CE and the UKNI markings are required. Manufacturers may therefore continue to place machinery on the Northern Ireland market, regardless of where it is manufactured, provided it meets applicable requirements.

The noble Baroness, Lady Suttie, asked whether we will be introducing similar measures in Great Britain. My officials have already started actively developing further SIs to modernise the machinery requirements in Great Britain. This will ensure that the UK framework remains proportionate and aligned with technological developments. The announcement for implementing these similar measures has already taken place to provide businesses with certainty.

I think the noble Lord, Lord McCrea, asked a question about whether businesses are in favour. I say again that my officials have consulted with industry stakeholders across the UK and internationally in the call for evidence. The majority of businesses in Northern Ireland supported introducing the requirements under the machinery regulation, and many businesses stressed the importance of introducing similar measures in the rest of the UK as soon as possible.

I think a question was also asked about current products. Products that are placed on the market before 20 January 2027 can continue to circulate freely until the end of their lives without further requirements, including UK(NI) marking.

My time is running out, so I will conclude. Ultimately, I respectfully suggest that this House should evaluate these regulations based on the evidence presented before us, the tangible benefits they offer and the certainty they afford to businesses throughout the United Kingdom. For these reasons, I respectfully invite the House to reject the regret amendment and approve these regulations.

British Steel

Lord Leong Excerpts

Monday 20th July 2026 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, the Government’s record on steel over the past two years has, I am afraid, been disastrous. Due to their tax, energy and regulatory policies, they have failed to secure a viable private sector future for British Steel, and taxpayers are now on the hook through nationalisation. British Steel itself has warned that the shortfall between its emissions and its free UK emissions trading scheme allowances is an ongoing liability that threatens the viability of domestic steel-making. Yet, from 2027, the Government intend progressively to withdraw those free allowances as the carbon border adjustment mechanism is introduced. Does the Minister accept that imposing ever-higher carbon costs on one of the last primary steel-makers is incompatible with reindustrialising Britain? Will the new Prime Minister therefore abolish the UK emissions trading scheme and scrap the carbon border adjustment mechanism so that Britain can reindustrialise at pace?

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, I am sure the noble Lord remembers that we discussed this at length during the passage of the Bill; I am sure he would not want me to reopen the debate. We are where we are with British Steel. I totally understand the need for transparency on costs, including carbon costs. As it stands, we will abide by our international obligations on CBAM; that stands as our policy and the noble Lord knows full well that that is the Government’s position. Having said that, any financial assistance to British Steel will be reported in the ordinary way. The Government will publish quarterly Written Ministerial Statements for at least the first year, giving contemporary information on the support provided. Ministers must also comply with Managing Public Money, Treasury controls and accounting officer duties. We will protect taxpayers while ensuring that British Steel has the stability needed to continue operating.

[Lord Fox (LD)]

My Lords, the Minister talked about transparency and I am pleased that we were able to insert those quarterly reports into the legislation. The Minister in the Commons, in answer to my colleague’s Urgent Question, spoke about the key step of appointing the chair and board of the new enterprise and their role in taking that business forward. When will those appointments be made? Until that happens, who will be accountable for corporate governance?

[Lord Leong (Lab)]

My Lords, British Steel is now a government-owned company with the Secretary of State as its sole shareholder.

[Lord Fox (LD)]

Who is the Secretary of State?

[Lord Leong (Lab)]

All will be revealed in due course. The noble Lord will know that we took control of British Steel on Thursday. As anyone will know, in any acquisition process there will be a nominal director who will be registered with Companies House until such time as a board of directors has been appointed. The Government are putting a new board in place that has commercial and industrial experience, which is very important: we need people with expertise running this. The priorities will be stabilising the operation, improving performance, protecting health and safety, developing a sustainable business plan, exploring private investment and ensuring that workers’ voices are central to the company’s future, including worker representation on the board.

[Lord Lamont of Lerwick (Con)]

My Lords, is not the decision by the Government to try to protect British Steel by imposing tariffs of up to 50% and reducing quotas down by 60% on imported steel a profound mistake? It harms steel processers and steel users. Let us not forget that steel users are much more numerous than are primary steel producers, and the steel processers and users of steel have to compete with foreign imported finished products. Is not what the Government have done a profound own goal?

[Lord Leong (Lab)]

No, it is not. Let us not forget that overcapacity and artificially cheap steel are why our steel industry is under such threat. Allowing cheap steel imports to enter the UK unchecked would only jeopardise domestic supply and the security of our UK supply chains for our critical infrastructure and defence. The measures put in place have been designed so that we will increase our domestic capacity, which is what the Government are trying to do.

[Lord Sikka (Lab)]

My Lords, I welcome the Government’s decision to nationalise British Steel, but I seek some clarification from the Minister on potential compensation to be paid to British Steel’s owners. Can he assure the House that the following factors will be taken into account: first, British Steel was insolvent, so the price is virtually knocked down; secondly, it received a vast amount of public subsidy, which will be recovered; and thirdly, its operations have done environmental damage, so the cost of that will be deducted from any compensation? I asked the Minister that question during the steel debate. I know he had lots of questions to answer, but I hope he has an answer now.

[Lord Leong (Lab)]

My Lords, the Government’s current view is that, given British Steel’s history of loss-making and its poor financial position, the commercial value of the business today is nil. However, compensation will not be decided by ministerial assertion. Regulations will be laid in the autumn to appoint an independent third-party valuer. That valuer will assess what compensation, if any, is owed and the Government will abide by that process.

[Lord Redwood (Con)]

On nationalisation, have the Government also taken responsibility for the historical debts and borrowings, pre-spring 2025, that the company incurred under Chinese owners? That is a very large historical debt that we should not have to share.

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[Lord Leong (Lab)]

The noble Lord should probably reflect on the answer I gave to the previous question. We will appoint an independent valuer to take into consideration all aspects related to British Steel. Obviously, we have advanced British Steel £555 million for its running costs. That will also be taken into consideration by the independent valuer and we will abide by its final decision.

[Lord Razzall (LD)]

My Lords, today is a very significant day, as everybody knows. Will the Minister confirm whether this is a throwback to the previous Administration, or is this the first example of what the new Prime Minister calls governing as Labour? If so, does the Minister believe that this is the first of many such nationalisations?

[Lord Leong (Lab)]

My Lords, the answer to that is no. This is not an ideological nationalisation. It is a targeted, exceptional intervention to protect a strategically important company and capability that the country cannot afford to lose. The Government would have preferred a commercial solution, but that was not available on terms representing value for the taxpayer. The objective now is to stabilise British Steel, restore commercial and environmental responsibility and sustainability, and explore future private sector investment where that supports the national interest.

[Baroness Alexander of Cleveden (Lab)]

My Lords, I welcome that last answer. It is, of course, just a few minutes ago that we were discussing a Private Notice Question on the events in the Strait of Hormuz and the need for British naval support to try to keep it open. Given that our naval ships, submarines and planes all rely on steel, does my noble friend the Minister agree that, in what is self-evidently an increasingly unstable and uncertain world, acting to ensure the continuation of steel-making here at home is a vital part of our national security?

[Lord Leong (Lab)]

My Lords, the Government recognise that some specialist grades of steel used in precision engineering, aerospace, defence and advanced manufacturing are not currently produced in the UK, or are not produced in the required quantity or to the required specification. The steel strategy aims to increase the proportion of UK demand met domestically, including for specialist needs, as my noble friend mentioned. British Steel’s new board will need to consider how the company supports a wider industrial strategy and the needs of downstream manufacturers.

[Lord Redwood (Con)]

Can I confirm that the Minister said yes when I asked whether the state is taking responsibility for all the historical debts and borrowings?

[Lord Leong (Lab)]

My Lords, I said in my previous answer that we will abide by the independent valuer’s final valuation.

[Lord Fox (LD)]

My Lords, the important part of my question was: when does the Minister think that this board will be appointed? Can he give us a window for when that will happen?

[Lord Leong (Lab)]

It will be when the new Secretary of State is appointed.

Steel Industry (Nationalisation) Bill

Lord Leong Excerpts

3rd reading
Monday 13th July 2026 Lords Chamber

Moved by

[Lord Leong]

That the Bill be now read a third time.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, I begin by making a short statement on legislative consent. The Government engaged with all three devolved Governments as soon as possible following the introduction of the Bill. A full devolution analysis was sent to all three devolved Governments on 18 May. Since then, my ministerial colleagues and officials have engaged at pace to address the issues that have been raised.

I am pleased that the Scottish Parliament granted legislative consent to the Bill on 23 June. I thank UK Government and Scottish Government Ministers and officials for working constructively and at pace to reach that outcome before the Scottish Parliament rose for recess. In Wales, a legislative consent memorandum was laid on 1 July and a legislative consent Motion has been tabled for debate in the Senedd tomorrow. I am happy to report that the Government have been able to address the concerns raised by Welsh Ministers regarding the Bill.

If the Government did decide to exercise the powers in the Bill, we would of course want to consider the appropriate governance. If a steel undertaking which had its principal place of business in Scotland, Wales or Northern Ireland were to be nationalised using the powers in the Bill, the Government would seek appropriate involvement for the relevant devolved Government to ensure that their views were considered in discussions where appropriate. This reflects the Government’s commitment to consulting the devolved Governments where decisions impact devolved policy areas, while acknowledging that the specifics of company governance would need to reflect the specific circumstances of an undertaking.

The responsibility for the management of the company would always rest with the board, which alone would possess voting rights and the right to make decisions. This would ensure that a devolved Government could be involved in shaping how a future asset is governed, while respecting the board’s responsibility for the management of the companies. Importantly, the arrangement also recognises the Secretary of State’s ultimate accountability to Parliament for the spending of UK government funds and the running of a nationalised undertaking. As a result of this commitment, my understanding is that Welsh Ministers will be recommending that legislative consent be granted to the Bill when the consent Motion is debated tomorrow.

In Northern Ireland, the Department for the Economy laid a memorandum on 26 June indicating that consent was not currently being sought by the Executive from the Assembly. The Government regret that it has not been possible to secure legislative consent from the Northern Ireland Assembly before Third Reading. We also recognise that the pace of the Bill has made the consent process more challenging. The Government sincerely regret that we were not able to engage with the devolved Governments before the Bill was introduced. However, by its nature the Bill contains commercial and market sensitivities. Those sensitivities limited the extent to which the Government could discuss a proposed approach in advance. Since its introduction, we have sought to engage openly and constructively. In addition to official-level discussions, Minister McDonald met Minister Archibald on 17 June and offered further engagement to address any concerns and to support the legislative consent process.

Steel is a vital industry for the whole United Kingdom. This Government are determined to secure the future of UK steel-making capability. For that reason, it remains important that the Bill extends to all parts of the United Kingdom, notwithstanding the present position on legislative consent in Northern Ireland. I beg to move.

Bill read a third time.

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Moved by

[Lord Leong]

That the Bill do now pass.

[Lord Leong (Lab)]

My Lords, steel has shaped our nation’s history. It has built railways, bridges, factories, ships, homes, energy infrastructure and defence capability. It remains essential to our future—to growth, resilience, national security and the critical infrastructure on which our country depends. This legislation is one part of the Government’s wider commitment to the steel sector. It gives us the tools to act decisively if strategic steel-making capability is at risk. It supports our objective of restoring confidence, protecting jobs, strengthening domestic capability and securing a sustainable future for UK steel.

I express my sincere gratitude to noble Lords from across the House who have contributed to the scrutiny of the Bill. In particular, I thank the noble Lords, Lord Sharpe of Epsom, Lord Hunt of Wirral and Lord Fox, for the constructive, professional and friendly way in which they have engaged throughout. I am genuinely grateful. I also thank other noble Lords who have spoken with deep knowledge of industry, constitutional practice, devolution, public finance, workers’ interests and the wider economy; their contribution has helped ensure that this House has done its job properly. Finally, I thank the Bill team, my private office, officials from across government, the devolved Government officials who have engaged with us, parliamentary counsel and the House authorities for their work in supporting the passage of this legislation at pace and under considerable pressure.

This House has sent a clear message. The United Kingdom must be able to act when a strategic industry is at risk. We must protect steel-making capability, support workers and communities, and safeguard the critical supply chains on which our national resilience depends. I beg to move.

[Lord Hunt of Wirral (Con)]

My Lords, I thank my noble friends Lord Sharpe of Epsom and Lord Redwood, and the noble Lord, Lord Fox, for their considerable contributions and the expertise they have demonstrated throughout our consideration of the Bill. I also pay tribute to the two committees of this House that have contributed so much to our understanding of this urgent matter in their excellent reports—the Constitution Committee and the Delegated Powers and Regulatory Reform Committee.

I also extend my thanks to the noble Lord, Lord Leong, the Minister, who has taken a very close interest throughout not only in the case for the Government taking the action that they have but in understanding our concern on a number of aspects. I thank his officials and the Bill team for all their hard work. Although significant differences remain between us, the Minister has always engaged constructively with concerns raised on all sides of the House, and I believe that the Bill has been improved as a result of that engagement.

Working together, we have secured a more credible sunset mechanism: any extension of the principal transfer powers will be limited to two years and will require the affirmative approval of both Houses. We have secured provisions requiring the Secretary of State to consider the likely costs before exercising the share transfer power or the property transfer power. We have also ensured that the relevant environmental, pension, and health and safety liabilities must be properly reflected in the independent valuation process.

We particularly welcome the greater parliamentary controls secured in Clauses 39 and 45: regulations under Clause 39 concerning the consideration and terms attached to continuity obligations will be subject to the affirmative or “made affirmative” procedure; regulations under Clause 45 concerning the enforcement of obligations arising from share or property transfers will be subject to the “made affirmative” procedure rather than the negative procedure originally proposed.

The Minister’s commitment to debates in both Houses on the steel strategy and the impact of this legislation is also very welcome, as are his assurances that any exercise of transfer powers will require an impact assessment and that quarterly Written Ministerial Statements will be provided for at least the first year in which a steel undertaking remains in public ownership. Those Statements will give Parliament the information that it needs to scrutinise operational performance, public expenditure and the consequences for workers, communities and the wider steel industry.

Nevertheless, a great deal of work remains to be done. Nationalisation may provide the Government with an emergency power, but it is not an industrial strategy. It cannot substitute for commercially viable businesses; for competent, market-aware management; and, above all, for sustained private sector investment. I came into the House 50 years ago, and we had experience of state ownership in the 1970s. I must tell the House that that provides no grounds for confidence or complacency. We must not allow what is intended to be temporary public ownership to default into an expensive and permanent arrangement. The long-term future of British steel depends on the United Kingdom once again becoming an attractive and affordable place in which to invest, to produce and to employ people. That requires us to confront the fundamental barriers facing steel and other energy-intensive industries.

Ministers have to address our internationally uncompetitive industrial electricity prices. They must examine the cumulative burden of the emissions trading scheme and the carbon border adjustment mechanism. They must consider the costs imposed by their employment policies as well as the ever-expanding burden of regulation, reporting and compliance. Unless those underlying problems are addressed, nationalisation will merely transfer the consequences of an uncompetitive business environment from private shareholders to the taxpayer; it will not resolve them.

Our objectives must therefore be clear: to secure the private investment that the steel industry desperately needs to preserve strategic domestic steel-making capacity and skilled employment, but also to minimise the exposure to the taxpayer. We welcome the improvements made to the Bill and the assurances placed on the record by the Minister. However, we will continue to scrutinise closely the use of these exceptional powers, the costs that arise from them and the Government’s progress in returning any nationalised undertaking to an investable, competitive and commercially viable future.

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[Lord Sentamu (CB)]

My Lords, I apologise to the noble Lords, Lord Fox, Lord Hunt and Lord Sharpe. Their amendments were to this Bill and not to the trains Bill. Nevertheless, the point stands. The attendance was no greater than when it was debated in Grand Committee. I apologise and sincerely hope that they realise that I was so involved with both Bills that, in my enthusiasm, I erred. I am sorry.

[Lord Leong (Lab)]

My Lords, I just want to say a huge thank you to the noble Lords, Lord Hunt and Lord Fox, for their kind words and co-operation during the passage of the Bill.

Unpaid Carers

Lord Leong Excerpts

Wednesday 8th July 2026 Lords Chamber

[Baroness Pitkeathley (Lab)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I declare an interest as vice-president of Carers UK.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, I pay tribute to the millions of unpaid carers across the UK whose compassion, sacrifice and dedication support loved ones every day and make an immeasurable contribution to our society and economy. The Government recognise the immense contribution made by unpaid carers and the pressures highlighted in the Carers UK report. We take its findings seriously. Supporting carers to remain in work is good for individuals, employers and the wider economy. That is why we have launched a public consultation reviewing employment rights for unpaid carers, including where further workplace support is needed, while ensuring that any future changes remain fair, proportionate and workable for employers.

[Baroness Pitkeathley (Lab)]

My Lords, I thank my noble friend for that reply. The public consultation that has been launched is very welcome. As my noble friend knows, carers want to combine paid work with caring if they can because it provides income, independence and social interaction. There is never a problem making the moral case for carers—everyone knows they are unsung heroes and heroines—but does my noble friend agree that there is a strong economic case, too? The DWP estimates that carers leaving work results in about £37 billion a year in lost productivity and increased welfare expenditure, so there are economic benefits to supporting them in any way possible, such as paid carer’s leave—as I have said, the consultation is most welcome—access to reliable social care and better support from both employers and healthcare services.

[Lord Leong (Lab)]

My Lords, I totally agree with my noble friend that supporting unpaid carers is both a moral and economic imperative. When experienced people are forced to leave work, we lose their skills, productivity and contribution to our economy. That is why we are reviewing employment rights for unpaid carers, including paid leave and wider workplace support. But this goes beyond employment rights. We must also consider how healthcare, social care and employers can better support carers to remain in work.

[Lord Sharpe of Epsom (Con)]

My Lords, the Minister is quite right that this goes beyond employment rights. The chief executive of Care England, Professor Martin Green, warned that the Government’s changes to employer national insurance contributions would leave many care organisations

“on the brink of bankruptcy”.

During the passage of the national insurance contributions Bill, His Majesty’s Official Opposition pressed the Government to exempt adult social care from these damaging provisions, but the Government rejected that exemption for no good reason. Will they now think again and exempt adult social care providers from these employer national insurance changes before more essential care provision—provision on which so many vulnerable people so desperately depend—is lost?

[Lord Leong (Lab)]

I hear what the noble Lord says about national insurance, but let me say this. There is a moral imperative on employers to play their part in supporting unpaid carers. There are fantastic employers up and down this country that are doing fantastic things to support carers. I shall give an example: Centrica estimates savings of £1.5 million last year in reduced absence costs alone, achieved through support measures for unpaid carers, with further savings on retention. So these measures result in improved retention, better productivity and reduced absence from work.

[Lord Fox (LD)]

My Lords, when I was piloting the Carer’s Leave Bill 2023 through your Lordships’ House, Centrica was one of the companies I spoke to. Centrica and other companies were already doing phenomenal work, but we all agreed that the Bill was the first step for unpaid carers. The Act has now been in force for just over two years, and data on take-up is sketchy. At best, the Minister’s department puts take-up at 29% of those eligible, but other data says just 10%. We do not have to wait for a consultation. The barriers have been researched by the Minister’s department. The first barrier is that it is unpaid by nature: that is what we hope to change. But the second is awareness, or lack of awareness, by people who might benefit. The third barrier is fear from employers. Can the Minister tell your Lordships’ House what the Government are doing in order to take away those two important barriers—for people getting what little benefit they have already—before his consultation finishes its work?

--- Later in debate ---

[Lord Leong (Lab)]

My Lords, let me be absolutely clear. There is active cross-governmental engagement on how we better support unpaid carers, because we recognise that employment cannot be considered in isolation from health and social care. My department is working with colleagues across government, including the DWP and the Department of Health and Social Care, as we consider the evidence and responses to our current consultation. We must take our time to ensure that we get this right. Our shared objective must be to help those carers who want to work to remain in employment, while ensuring that they can access the wider support that they and those they care for need.

[Baroness Finlay of Llandaff (CB)]

My Lords, some employers are now adhering to the principles of Hugh’s law when there is a seriously or critically ill child and those unpaid carers are particularly severely affected. Will the consultation cover the issue of children who are very seriously ill? Will the Government also consider —and I declare my interest in Cardiff University—monitoring the family-reported outcome measures of different interventions? These are put in place to support families where there are unpaid carers, and would enable us to get a better idea of what is effective and what is less so.

[Lord Leong (Lab)]

As the noble Baroness has said, the Casey commission is considering the long-term future of adult social care. We must let the review take its course. Alongside that, we are already reviewing employment rights for unpaid carers through a separate consultation. We are not waiting to gather any evidence, but we will consider carefully what more can be done to help carers remain in employment.

[Lord Dubs (Lab)]

My Lords, does my noble friend agree that there is a particular difficulty for those who have given up full-time work—indeed given up work altogether—in order to be full-time carers? They are then left in a position where they have virtually no pension and no security. When their loved one dies, they are left entirely on their own without much support.

[Lord Leong (Lab)]

I totally agree with my noble friend. That is why we are conducting a review and various consultations to ensure that we better support our carers up and down the country to have unpaid leave as is necessary, and also to get the care that they need to support their loved ones.

[Baroness Dacres of Lewisham (Lab)]

My Lords, my noble friend will know that many young carers take on significant caring responsibilities at an early age. What further action are the Government taking to identify and support young carers, so that their caring responsibilities do not limit their ability to reach their full potential in education, well-being and future opportunities?

[Lord Leong (Lab)]

My Lords, my noble friend is absolutely right: young carers often face unique challenges in balancing education, work and caring responsibilities. Although the consultation before us focuses principally on employment rights for unpaid carers, we recognise the importance of ensuring that younger carers receive appropriate support and opportunities to fulfil their potential.

[Baroness Monckton of Dallington Forest (Con)]

My Lords, does the Minister agree that parents who look after children with 24-hour needs, and who cannot get to work, need as much support as everyone else?

[Lord Leong (Lab)]

Absolutely. We recognise that carer’s allowance has not kept pace with the way that many carers now combine work and caring. The current earnings cliff edge can create uncertainty and unfair outcomes. That is why the Government have launched a call for evidence to modernise the benefit, including on whether payments should gradually taper as earnings rise. We have also increased the weekly earnings limit to £204. We want a system that supports carers to work, rather than one that penalises them for doing so.

[Lord Mohammed of Tinsley (LD)]

My Lords, given that the issue of NEETs has been looked at by His Majesty’s Government, and that they will report back on Milburn’s recommendations, will the Government please look at the possibility of providing a free bus pass for young carers, particularly given that they have sometimes had to sacrifice their education to look after their loved ones? This support from the Government might be a step up for them in seeking work, training or education.

[Lord Leong (Lab)]

The noble Lord makes a very interesting suggestion. I will take it back to the officials in my department and other departments too.