Enterprise Bill [ Lords ] (Eighth sitting)
Debate between Bill Esterson and Mary Creagh(8 years, 9 months ago)
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Bill Esterson
And my hon. Friend makes the point brilliantly. It is a very serious point. Of course, the Government would say that what might be called trivial points about local decision making—I do not think that they are at all trivial—mean nothing because, at the end of the day, consumers want change and shop workers want the opportunity to work more hours and earn more money. In fact, the Minister did say that.
Again, the Government are ignoring the facts. In September, research from Populus showed overwhelming support for the existing Sunday trading compromise, with two thirds of the public supporting the existing measures. The majority—61%—agree that Sunday is different from the rest of the week as it enables shared time with family and friends. Only one in eight people thinks that there is not enough time to shop under the current Sunday trading hours. One in eight. We are changing the law to ignore the views of seven in eight. That is remarkable.
Sunday trading laws work for the country. They are an important part of the fabric of our society. Sunday is a communal day of rest when people of faith or no faith can spend time with their family and friends and recharge their batteries for the rest of the week. The same is true for shop workers, the most important stakeholders in this debate whose views are completely ignored by the Government.
Some 91% of shop workers do not want a change in Sunday trading laws. They support the current compromise that allows them to spend a couple of hours a week with their families. Let us not underestimate how important that is for shop workers who already work more weekend hours. Some 63% of people employed in retail are already working overtime, compared with an average of 57% across all sectors. Barely half the people who work in retail report being satisfied with the amount of leisure time they have, suggesting that many experience a squeeze on the time they have available to spend with their partners and children.
Shop workers already face significant pressure to work on Sundays. They currently have the right to opt out of Sunday working if they give written notice to their employer with a notice period of three months. As the Minister told us, the Government have proposed to enhance the opt-out for shop workers in larger stores by reducing the notice period to one month. Staff will be able to opt out of working hours that are additional to their normal Sunday hours, which are averaged over a 12-week period. There is simply no evidence that the existing opt-out rules help to protect Sundays for shop workers, so it is clearly questionable for the Government to suggest that extending the opt-out rules will alleviate pressure on staff in the sector, if and when the legislation is passed and implemented.
The fact is that many shop workers are unable to use the Sunday working opt-out because of pressure from management. To ensure that they can cover all shifts whenever necessary, retail managers request seven-day flexibility from staff. Those who apply for a job invariably have to complete an availability schedule as part of their application. If they do not include availability on Sundays, they are not offered an interview. Employment contracts in retail then stipulate that staff have to give availability across the days and times that they have indicated. If staff ask to opt out of Sunday working, they can be told that they are not fulfilling their contract.
One USDAW member described it as follows:
“Sundays used to be a day of rest. Now my contract says 5 over 7”—
that is, they have to work for any five days in a week. Another said:
“My employer now only takes on part-timers willing to work every weekend.”
In fact, an independent survey in September 2015 of more than 10,000 USDAW members working in large stores found that 58% are already under pressure to work on Sundays when they do not want to. One member responding to the survey said:
“I’ve been told I’d be letting the team down if I don’t work extra on a Sunday. If we refuse a request to work extra then they are extremely unlikely to honour a request for an appointment or for time off”.
Mary Creagh (Wakefield) (Lab)
It is a pleasure to serve under your chairmanship this afternoon, Sir David. I am not sure how many members of the Committee have done shop work, but I certainly remember my two years as a Saturday girl in British Home Stores. That was 30 years ago. Those were the days when there was no Sunday opening, but in the run-up to Christmas there were four Sundays. As a young woman living in recession-hit Coventry in the early ’80s, I certainly relished the chance to work on a Sunday—but that was also because I was getting double pay on a Sunday. On the rare occasions when I worked on a bank holiday, I was getting treble pay.
I think it is a real shame that over the past 30 years the retail industry has gradually eroded workers’ rights and pay and conditions, and is relying ever more on a temporary and part-time workforce, partly so as not to pay the employers’ national insurance contributions. Employers would find that people would be more likely to volunteer to work on Sundays if the pay and incentives were correct.
Bill Esterson
I am grateful to my hon. Friend for making that point and reminding us that there was a time when workers received overtime payments for unsocial hours. Bank holidays were triple time. I have similar experience, so long ago that I cannot quite remember, but I know that overtime payments were as my hon. Friend described, and there has been a fundamental change. I think that my hon. Friend the Member for Cardiff West will deal with some of those points a bit later.
Enterprise Bill [ Lords ] (Third sitting)
Debate between Bill Esterson and Mary Creagh(8 years, 9 months ago)
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Bill Esterson
The Regulatory Policy Committee seems to be pointing at something slightly different. For some reason, the 10 increases in the overall cost of regulation that the Committee found were not reflected in Government statements on regulatory savings. Why that happened is an interesting question.
It also emerged that many Government regulations—just under half—were considered to be out of scope by the Government. Therefore, when the Minister no doubt gives the figure of £10 billion in a few minutes’ time, one must wonder what the true figure might be. The regulations increased the costs to business, but they are important for Government and I agree that they should be important. However, they were not reflected in the Government’s in-scope or out-of-scope scenarios. Many regulations come from the European Union, the mention of which will cause Government Members to start to—
Bill Esterson
I could not possibly repeat what my hon. Friend just said, but their ears will prick up and they will become interested. One or two of them will no doubt want to jump up and say something about the European Union.
The Government have an interest—[Interruption.] Government Members are being very well behaved today, which is remarkable. The Government have an interest in ensuring that they are seen to be reducing the regulatory burden, but when that is not the case, the Government cannot simply stop reporting it—for just under half the regulations—or shift the goalposts to make the situation look better than it is.
The Lords had a full debate on the matter and when those points were made there really was no response to say that that was not what had happened. When the Government report, they should be up front with businesses about who is responsible for the regulations. The reality is that business is interested in the overall impact of regulations, not where they come from. Ultimately, the issue is about the overall cost, not the cost of some regulations and not others, that really affects the business environment and businesses’ ability to operate as effectively as possible.
Amendment 61 would require the Government’s business impact target to cover the impact of EU regulations or regulatory provisions made by statutory instruments subject to the affirmative procedure. The Regulatory Policy Committee reported that
“nearly half of the approximately 1,000 laws enacted during the previous parliament were outside the scope of the Government’s… One-in, Two-out rules. Nearly 70% of these were of EU origin.”
If regulations have an impact on small businesses, it is important that they are considered within the scope of the business impact target. Otherwise, businesses will not be able to trust what it is being told, which is the point that I was making a moment ago.
It seems a false distinction to rule such regulations out. The origin of the regulations is different and the route when trying to make them work better for the business community or seeking to remove them would be different, but does the perspective of small businesses differ when a regulation comes from the EU? I do not think so. As Lord Stevenson said in Grand Committee,
“I do not honestly think that businessmen and women would care whether the regulations they have to work to come from this place or across the channel. However, they have an impact on their work and therefore I think that we should fess up and try to get a measure into play in the way that we think about all regulation that impacts on business.”—[Official Report, House of Lords, 28 October 2015; Vol. 765, c. GC229.]
I have heard the argument before that the point of the assessment is to focus on what we can control and change. That is important, but it is not a reason not to include such regulations because it gives a false impression of the cost of regulation and entirely misses the point. After all, the same EU regulations are applied differently in different EU member states. Perhaps there is an opportunity to learn from how other EU states apply regulations, if they are able to do so in a way that has a lower cost to business and a smaller impact on business than we currently find.
Enterprise Bill [ Lords ] (Fourth sitting)
Debate between Bill Esterson and Mary Creagh(8 years, 9 months ago)
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Mary Creagh (Wakefield) (Lab)
Congratulations to the Doorkeepers and engineers on shutting our window; I am sure we will all be peeling off our outer layers in due course.
I want to continue my remarks on the amendments to these regulatory clauses and the benefits of good regulation in creating green jobs and growth. In fact, in case we needed any further examples of that, there is a Waste and Resources Action Programme exhibition outside this very Committee Room, which has the strapline, “Less Waste More Jobs”. That beautifully illustrates what I was saying before lunch.
I want to take a little bit of time to look at the potential impact of the clauses on both the natural environment and the Office of Rail and Road. Let me begin with Natural England. Its statutory purpose is to
“ensure that the natural environment is conserved, enhanced, and managed for the benefit of present and future generations, thereby contributing to sustainable development.”
Its statutory purpose is to protect the natural environment, while the contribution to sustainable development, which includes economic considerations, is an outcome arising from that protection.
The clearest manifestation yet of the potential of the growth duty to have an overriding or undermining influence on the proper exercise of Natural England’s regulatory functions is its recent adoption of a new outcomes approach to the protection and management of our most important wildlife sites and precious places. That new approach was first introduced in a letter from Natural England’s chief executive, James Cross, to a number of key stakeholders in October 2015, with an amended version subsequently published online.
The stated aim is for Natural England to move
“away from being seen as regulators and more towards enablers”
through
“closer working with business to help them achieve their goals while also helping the environment”.
That will apparently involve
“radically reducing the need for regulation”,
and helping businesses to
“achieve their aims in a way that benefits the environment, but takes account of their circumstances”
by seeking
“the best outcomes for everybody, at the right pace”.
While it is right to seek to minimise conflict and to achieve win-win outcomes via the agreement of “common and shared objectives” when possible, there will often be situations where the objectives of businesses will conflict with the proper exercise of Natural England’s regulatory functions and its statutory purpose.
I cite that example in relation to the natural environment, but there are, of course, potential issues around the built environment because local authorities are also listed in clauses 15 and 16. As a former local councillor for seven years, I know that in these straitened times, councils will often err on the side of caution and will be fearful, particularly when making planning decisions. We can see a clear moment when officers will be advising on granting planning permission for something so that the growth duty or reporting requirements that will be placed on them are not subsequently challenged by businesses.
The final area I wish to talk about is the protection of the public interest in its most naked form: the health and safety of workers and the travelling public. Clause 17 applies this reporting duty to the Office of Rail and Road, Ofcom, Ofwat and Ofgem, which is the first time that has happened. In my time as shadow Secretary of State for Transport, I had a great deal to do with the ORR—the Rail Regulator, as it was then. Its statutory duty is to protect the health and safety of workers and the travelling public, to manage demand and supply for rail paths between freight operators and passenger operators and to protect the needs of disabled travellers and ensure they have access to the railway.
With this new duty, I can see clearly that the demands of growth could lead to conflicts of interest. For example, passenger rail travel has doubled over the past 20 years, and there is enormous pressure on those rail slots. It is the difficult duty of the rail regulator to decide which towns and cities get new train services and when the track operators will have access to freight paths to undertake the upkeep and engineering works that keep the railways going. Those decisions are made versus the interests of the commercial operators who run those passenger services. It is in the interests of the rail regulator to ensure that those paths are not too close together and do not run too quickly so as to maintain a safe distance between trains. It must also ensure that there is a requisite number of safety operatives to oversee workers carrying out minor engineering works on the track to avoid tragedies, which sadly occur far too often.
I am concerned that extending the duty to report performance to the Office of Rail and Road, in particular, could end up putting pressure on the regulator to make decisions in the interests of growth that are inimical to the public interest, the protection of public safety, the protection of the health and safety of the workers on the railway, and of course the protection of disabled travellers, whose additional needs in terms of boarding and getting off trains may hold up the smooth operation of the service for a couple of minutes. I have heard anecdotal evidence from my constituents in Wakefield of people being told, “You are holding up the train. We are going to miss our slot. You are going to make us late, and we will lose money as result.” Those pressures already exist, and adding a financial and growth pressure to the regulator could lead to perverse outcomes.
A similar argument could be made about Ofwat, which is responsible for making sure that water companies clean up the beaches, protect the rivers and maintain the reservoirs. The water companies might make more money if they invested less in the asset base but that would not necessarily be good if a reservoir failed and took out a town or village below it. When regulations fail, the consequences in terms of protection of the public are huge. When the Minister replies, I hope that she addresses in particular the issue of road and rail regulation.
Bill Esterson (Sefton Central) (Lab)
Welcome back, Ms Buck. This is the first time that my hon. Friend the Member for Wakefield has spoken in the Committee since her success yesterday and I add my congratulations on her appointment as the new Chair of the Select Committee on Environmental Audit.
As my hon. Friend has said, the Labour party is pro-business, but we are not pro-business as usual and it is important that we challenge unacceptable business practice and exploitative practice. We support good regulation but at the same time we must ensure that unhelpful or damaging regulations are addressed. My hon. Friend cited excellent examples of good regulations that show how such reporting should be done. She also explained that we must take a longer-term view when we consider the environment or other aspects of life. The short-term, balance-sheet effects of regulation are not enough. Whether a regulation, an action or a change in the rules has an effect on a business or an economy in a matter of weeks, months or a year or so is very different from its longer-term impact, whether on the economy or, indeed, the environment. We should be trying to achieve the level playing field that has been a central theme of our deliberations on the Bill so far, and that level playing field should apply to business, consumers and the wider public. The costs of regulation to business can be apparently significant, but savings can be made elsewhere. My hon. Friend the Member for Wakefield has given many examples of exactly that, but I will give a few others as well.
When the minimum wage legislation came in during the early part of the Labour Government, there was criticism that the regulations would produce a big cost to business and to the economy; that they would cost jobs. That turned out to be scaremongering and untrue. There was in fact a benefit, not just to the workers who saw big increases in pay and protection of their terms and conditions, but to the wider economy. People were in a position to spend more money in the economy, which had benefits for business and the wider economy. There was also a benefit in the protections that were given to those businesses that had always been good employers and paid decent wages.
The same, of course, is true today when we debate the challenge of the exploitative use of zero-hours contracts. Sports Direct is an employer that is often cited. There is grave concern at the way zero-hours contracts are used in that business for people whose only or main employment is with that business. That does not just make life very difficult and precarious for the individual; the competitors of Sports Direct or similar businesses where the zero-hours culture is a concern face pressures that are unacceptable, unfair and damaging both to business and to the wider economy.
There are many examples of how regulation can be a force for good. It can be a way of improving the wider environment and economy. It can help business, even though at first glance it may appear not to do so. As we seek to create a fairer society and a fairer and more successful economy, these matters are very important and we rightly have the opportunity to debate them. My hon. Friend was right to table the amendments. They do the job of highlighting the concern and the challenge. She has highlighted the long-term environmental and economic benefits of ensuring that we measure and evaluate regulation—the immediate impact and apparent negative effects, but also the longer-term, beneficial effects. In many cases, what may appear to have a financial cost in the short term has a much greater financial and environmental benefit in the long term. I am therefore pleased that my hon. Friend has tabled the amendments and I am happy to support them.
Mary Creagh
The Minister said that there was nothing to prevent regulators from consulting with other bodies and people of interest, but that is to misunderstand the behavioural nature of large organisations that are set out in the statutory code, which tend to do what they are prescribed to do in statute. The clauses introduce a statutory requirement to consult with business and to report annually on the impact of businesses. By giving the regulator a duty to consult solely with the private interests of businesses while not consulting with the public interests that they are there to protect—of consumers, citizens, stakeholders and civil society organisations—she is putting the private interests above the public interests that the regulator exists to protect. I have made my point. She said that this would be done through secondary legislation. The House will have a chance to discuss the matter in the future and, no doubt, the debate will continue to rumble along. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Bill Esterson
I beg to move amendment 65, in clause 15, page 13, line 16, at end insert—
“(iii) of the measures adopted by the relevant regulator to make regulations which have an impact on small businesses more comprehensible, and
(ii) of the measures taken to promote awareness of regulations which affect small businesses;”
This amendment would create a new obligation on Regulators to provide an assessment on how they are simplifying their regulations and ensuring that they report on their efforts to extend awareness of regulations.
Enterprise Bill [ Lords ] (First sitting)
Debate between Bill Esterson and Mary Creagh(8 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Bill Esterson
My hon. Friend makes a very good comparison. There are many examples where the closeness of the relationship means there is the potential for a conflict of interest. There are other examples, which I will come to, where there is an arm’s length relationship: our amendment attempts to forestall this potential conflict.
We certainly do not want the Secretary of State to have undue influence and the commissioner to feel constrained in his or her ability to act. After all, if we want small businesses to be as successful as possible, we want them to have independent support from the small business commissioner. People will rightly look to the commissioner to give a lead and give support, advice and encouragement to small businesses, which are, as I said at the start of my remarks, the backbone of our economy.
The Government do not intend the small business commissioner to have a role when it comes to disputes between small businesses and the public sector. As that is a source of much concern among small businesses, it seems certain that many complaints will go to the commissioner about the public sector. Even in relation to complaints against larger public sector businesses, if the Government do not like the way the commissioner is operating—this is at the heart of my hon. Friend’s intervention—the Secretary of State may decide to intervene and that implied threat could cause the commissioner to be less effective, through a reluctance to act.
Mary Creagh (Wakefield) (Lab)
I apologise to colleagues on the Committee, Mr Amess; I was cycling through and dropping my daughter at school.
The definition of what constitutes the public sector for the purposes of the Bill is an interesting one. We have all been up and down the Embankment and seen Transport for London’s cycle super-highway, but the definition of the contractors working on it, two or three steps removed from a Government body, is interesting. Perhaps Ministers might like to explore that further in their response to my hon. Friend’s comments.
Bill Esterson
I thank my hon. Friend for her intervention. The whole area of the supply chain and whether the Government have thought through some of the implications of exactly that example are among the challenges that we have tried to deal with not just through this group of amendments but elsewhere by giving the small business commissioner the opportunity to be as effective as possible. One of the problems of the commissioner only dealing with larger businesses is that they miss an opportunity and may be constrained in many ways, an example of which my hon. Friend has just given.
This group of amendments seeks to remove a potential obstacle to the small business commissioner’s being as effective as possible. Other amendments attempt to do the same thing with other elements of the way in which the Government have structured the office.
Bill Esterson
We are debating the first set of amendments, which are about appointment and dismissal. We will come to public bodies later. However, it is relevant to speak about them both; I have done so because the independence of the commissioner enables small businesses to have confidence that they can deal with the commissioner and that the commissioner will not be constrained by their relationship with Government, either in relation to other businesses or the public sector.
Mary Creagh
It is, of course, a pleasure to serve under your chairmanship, Sir David—my apologies for failing to pay that courtesy earlier.
Is there not a wider point about public appointments and open competition? The Groceries Code Adjudicator was appointed after open competition. The great merit of putting out an advertisement and seeing who wants the job is that all sorts of people apply who may not be on the cocktails and canapés circuit frequented, perhaps, by the Secretary of State for Business, Innovation and Skills. Is there not also a gender equality point, which is that people sometimes appoint in their own image and we end up, sadly, with an establishment group of figures who all—dare I say it— tend to look like many of the MPs in this place? We end up with a self-perpetuating group of people who may not be acting in the interests of the entrepreneurs. Many of the new entrepreneurs who have started will be young, tech savvy people. To see one of the usual suspects appointed to this position might risk alienating some of the people who might have need for his or her services.
Bill Esterson
I thank my hon. Friend for reminding us about the difference in how the Groceries Code Adjudicator has been set up. We will talk about the Groceries Code Adjudicator at a number of points during our deliberations. Indeed, we will be discussing an amendment later on the need to review the performance of that office so far.
Mary Creagh
I might be anticipating the Minster unfairly, but I remember from my days as a councillor and from working with small businesses that cash is king. That is not necessarily understood by civil servants working for local authorities. Does my hon. Friend remember the days of local authorities being able to get interest rates as high as 9% with certain Icelandic banks? I am thinking of several of the ones that collapsed in 2007-08.
When interest rates are high, there is an incentive for treasury managers in public authorities, such as councils and generally central Government, to take that money and use it. When interest rates are 9%, if an authority has £10 million, that is a significant amount of money that could be earned while, unintentionally I am sure, it starves small local businesses of the cash they need to survive.
Bill Esterson
My hon. Friend is right. I was a councillor at the time as well and remember the investments in certain Icelandic banks. More than a few local authorities were caught badly as a result. Her point is well made.
On the benefits to larger firms—and we will deal with this when we discuss cash retentions in the construction sector—there is evidence of the use of moneys due, particularly to smaller firms, to help the cash flow of the larger firm. That is potentially true in the public sector, as my hon. Friend said. Dealing with that is one reason to explore bringing the public sector within the remit of the small business commissioner.
The last Federation of Small Businesses members’ survey assessing late payments by the public versus the private sector was conducted in 2012. It consisted of responses from nearly 9,000 FSB members and confirmed that although larger companies are the worst offenders with late payments, late payment in the public sector is still a big issue. According to the survey, 27% of Government agencies paid SMEs late and 29% of SME invoices from the UK central Government were paid late, so central Government were slightly worse than local. A more up-to-date assessment of late payment by central Government is found in the National Audit Office’s paper “Paying Government suppliers on time” from January 2015. The study covered all central Government Departments but looked in detail at the payment practice of the Ministry of Defence, the Home Office, the Department for Business, Innovation and Skills and the Cabinet Office.
Central Government spend £40 billion a year on goods and services, of which about £4.5 billion is spent directly with SMEs. An additional £4 billion is spent with SMEs indirectly where SMEs are subcontractors to Government contracts. The wider public sector—for example, local authorities and NHS trusts—spends £147 billion a year on goods and services.
Government Departments have a target to pay 80% of undisputed invoices within five working days and report good performance against those targets, but the NAO study calls into question the idea that Departments are paying their suppliers promptly.
Bill Esterson
Yes, and those figures are higher than in the 2012 Federation of Small Businesses survey. The figures demonstrate that, as I touched on earlier, the smallest firms that lack the ability to pursue cases are the most vulnerable to the problem of late payment, wherever it comes from. Certainly in the case of the public sector, we have a duty and a responsibility to ensure that payment is on time and to look after the smallest firms in particular and business in general. That is an important part of what the Government should be doing to encourage and generate our enterprise culture—this is the Enterprise Bill—and to ensure that the economy is successful through the support that the public sector can give to business.
I was talking about the four Departments that the National Audit Office looked at in detail: the Ministry of Defence, the Home Office, the Department for Business, Innovation and Skills and the Cabinet Office. The National Audit Office shows that those Departments’ apparently good payment record is skewed by a high volume of low-value e-transactions with a few large suppliers. Those payments are dominated by large companies, such as the ones the Departments use to book train tickets and order office supplies. Basically, Departments can get close to hitting their payment performance targets just by using their procurement cards and by paying their e-invoices from a few large companies straightaway.
If we dig past the misleading top line and look past the e-invoices from large companies, we see a different picture. None of the four Departments that the NAO looked at measures its performance in paying SMEs, which typically use paper invoices. Looking at the average payment time for paper invoices shows that the time taken by the four Departments to hit the 80% payment target jumps from five days to between three and seven weeks—a very different picture.
The Asset Based Finance Association conducted research in 2014 that showed that the average wait for payment is still in excess of 40 days for some local authorities, and that the average wait for payment from local authorities is virtually unchanged over the past six years, from 17.7 days then to 17.3 days more recently. EU directive 2011/7 makes make it mandatory for all public authorities to settle invoices in a maximum of 30 days from receipt. It is aimed at making pursuing payment a simpler process across the European Union and making payment on time the norm. One point that occurs to me from my experience of invoicing is that sometimes the date on which an invoice is received is a matter of great debate, because accounting departments may say that they have not received an invoice for many days, if not weeks. It will be interesting to see how that is to be defined; there are ways around the problem using electronic invoicing or recorded postal delivery, or suchlike, but most SME invoicing does not happen in those ways.
Under the directive, the failure of public authorities to pay within 30 days leads to interest of 8% being added from day one of late payment, subject to agreement on when the late payment is recognised. There is an admin fee of £40, £70 or £100, depending on whether the invoice is under £1,000, under £10,000 or over £10,000. That is a step in the right direction. However, the Local Government Association released a paper in 2014 saying that there is no evidence of any public authorities automatically adding the penalties when invoices are paid late. The Institute of Credit Management has said it is not aware that interest is automatically being paid. The House of Commons Library has also confirmed that it has not seen evidence of public authorities automatically adding the penalties—so the question is, how is this going to happen unless there is automatic addition of interest and penalties?
Although the user guide is clear, the automatic nature of the obligation is less clear when we review the specific statements in both the EU directive on late payment and the Late Payment of Commercial Debts Regulations 2013. Essentially, without automatic penalties, the interest and admin fees imposed for late payments still require SMEs to stick their head above the parapet and challenge their public sector customers. As I am sure all hon. Members are aware, that is a real problem. Once businesses start to challenge their own customers, they risk losing their custom later on, which is a real dilemma. It is the same dilemma that small businesses face with large suppliers, and it happens in the public sector as well. It is about businesses being asked to sour relations with their own customers.
I have an example from my own constituency. One start-up company had a contract with a public authority. The company was paid 30 days after the five-day terms laid out in the invoice. It had paid up front for the supplies needed to carry out the work, so it was left in a precarious financial position within six months of starting up. It could have made use of the rights available to it within existing legislation—a £70 administration fee and interest on the contract value. However, when the debtor did not automatically add the interest and fee, the company chose not to pursue it. It told me:
“As a start-up, repeat business with the public sector is no different to repeat business with the private sector: we rely on both to get by, and we know that they have more options than we do about who to do business with. Of course we don’t have to keep quiet, avoiding admin fees and interest on invoices—just like they don’t have to use us again. It’s a bad situation when you’re lurching from one loan to the next because you aren’t getting the money you’re owed. But whether it’s the public or private sector it’s the same point—you don’t bite the hand that feeds you.”
The Bill sets up the small business commissioner only to address complaints or disputes against large businesses. It currently excludes complaints against public sector organisations. Many small businesses find trading with the public sector very difficult, and we have seen some of the reasons why.
Mary Creagh
My hon. Friend has made an excellent point about the psychology of start-up businesses in particular—the David and Goliath psychology between the very small supplier and the very large purchaser. Does he agree that making the commissioner work with public authorities as well would force better financial management practice on those authorities? If the law states that they should pay within five days and they do not, but instead pay within 30, 60 or 90 days, the financial managers in the public sector who are doing that should be held to account. Levying fines and interest payments is a poor use of public sector money in these straitened times. At the end of the day, this is all taxpayers’ money, and it should not matter to the financial managers whether it is sitting in their Treasury account or going to the small businesses who are in the community and creating jobs.
Bill Esterson
Yes, that is right. We are trying to create an opportunity for the small business commissioner to make sure that payment practices are carried out correctly in the public sector. As my hon. Friend says, there is a massive opportunity here to make sure that all public authorities are doing their bit to support the economy. The money could be out in the economy, going through small businesses that will then reuse it elsewhere. We get the benefits and the economic growth that comes from that.
Mary Creagh
It also occurs to me that if we end up with a two-tier system with the small business commissioner, we could end up in a paradoxical situation where small businesses would choose to supply the private sector rather than deal with public sector purchasers, and the public sector would miss out.