Enterprise Bill [Lords]

Amanda Solloway Excerpts

Tuesday 2nd February 2016 Commons Chamber

[Amanda Solloway (Derby North) (Con)]

It is an honour to follow my fellow member of the Business, Innovation and Skills Committee, the hon. Member for Edinburgh West (Michelle Thomson).

The Bill will contribute to the UK continuing to be a leading nation in supporting businesses that show the initiative and courage to start up on their own. I want to touch on three provisions—those relating to late payments, late insurance payments and the capping of exit payments —all of which not only highlight the positive changes being made to business culture, but support the Government’s offer to businesses.

I have always believed that to ensure that the economy continues from strength to strength, we must start by repaying the contributions made to it by the smaller businesses in the UK. They employ more than 15 million people across the UK; that is 48% of our private sector employment. The provisions in the Bill aimed at making the UK a better place for them to go into business should create an encouraging environment in which they can carry out their day-to-day work and thrive at business.

The proposed small business commissioner will address many of the issues that smaller firms face when dealing with larger firms. Late payments are a problem that most small firms have to deal with regularly, and securing those payments can prove to be a costly and long-drawn-out process. I was shocked to read the numbers: SMEs in the UK collectively spend more than £10 billion a year on trying to recover late payments. That figure is simply unacceptable. I have first-hand knowledge of how late payments by larger businesses, which often have a late payment policy, can cripple small businesses.

In the current system, too often, payment disputes cannot be resolved without cases going to court. That process is limiting for small businesses, and the costs can spiral out of control, which makes it a barely viable option for SMEs. A recent study found that one in five businesses in the Derby region is the victim of late payments. Those late payments are a primary factor in a fifth of corporate insolvencies. That element of business culture must change. We must show smaller businesses that other options are available to them, that advice and support are on offer, and that we will not directly hit their business cash flow. Of course, large firms can, if they choose to, fund such procedures, but the expectation that SMEs will do so is unreasonable.

[Andrew Griffiths]

My hon. Friend is making an effective and strong case in support of small businesses, and in describing the problems that they face with late payments. Does she also find that small businesses are struggling with deferred payments, over longer terms? The fact that they are not being paid by bigger firms within 90 days, or even 180 days in some cases, is severely affecting their ability to survive.

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[Amanda Solloway]

Absolutely, and the insolvency record proves that that is the case. We need to stop that awful practice.

It is important to maintain the ability of any business, large or small, to trade. Incidents sometimes unfold that are out of the control of the business owner, and they often necessitate insurance claims. The pay-out is often vital to the survival of the business but, as things stand, there is no legal obligation to pay valid insurance claims within a reasonable time. With no timeframe, businesses are often left in limbo about when they can realistically expect to start trading again, and the knock-on effects can be disastrous. I welcome the Government’s commitment to combating unreasonably late payments.

Finally, I want to mention the six-figure exit payments to public sector workers. Such payments are required for a variety of reasons, such as voluntary or compulsory redundancies, and although I acknowledge that it is important that those payments be fair, we need to make sure that they are not disproportionate to the modern place of work. I reference Derby City Council, where a couple of redundancies led to payments of £140,000 and £180,000 respectively. It does not seem right to me that the taxpayer has to fund extortionate pay-offs for public sector workers.

I have no doubt that the Bill will contribute to a much more transparent, friendly and desirable business culture in the UK. It will create an environment that encourages more people to start a business here, and it will cement the UK’s position as one of the world’s leading nations in supporting business and enterprise.