Caroline Flint
Main Page: Caroline Flint (Labour - Don Valley)Enterprise Bill [ Lords ] (First sitting)
Caroline Flint Excerpts(8 years, 9 months ago)
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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.
Caroline Flint (Don Valley) (Lab)
My hon. Friend mentions the role of local authorities and health trusts as regards the supply chain in local communities. In my area of Doncaster, I would add the Prison Service. I have three prison establishments in my constituency, and there is another prison within Doncaster town, and we can add to that the fire service and policing. A huge number of our more provincial towns and communities do not necessarily have the big corporate companies but are the supply chain for the public service in all its diversity and in meeting the needs of local people. It would be short-sighted not to look at how we can ensure within our communities that those public services pay our small businesses in good time.
Bill Esterson
My right hon. Friend makes a very good point. The public sector is an incredibly important part of the economy in many parts of the country. We have a collective responsibility, whether in Parliament or elsewhere, to get this right and ensure that the public sector is doing its bit. That is really important.
Anna Soubry
Again, I shall keep my comments specifically to the amendments. The small business commissioner’s main role will be to address the problem of late payments, and the biggest problem that small businesses face with late payments is bigger businesses not paying them in the way that they want. However, there is also a problem with the public sector. Our consultation made it clear that people did not want a duplication of existing ways and means by which small businesses can ensure that public bodies pay on time. If we expanded the small business commissioner’s remit to include public bodies, we would duplicate pre-existing ways of raising a complaint and dealing with the problem.
Anna Soubry
I am going to continue. I will take some interventions, but not yet.
This Government are on the side of small businesses and, in the Public Contracts Regulations 2015, we now have strict rules obliging central Government to ensure that 80% of undisputed invoices are paid within five days. As a result, I am pleased to say that my Department paid 98.6% within five days and 99.5% within 30 days. The first quarter statistics for 2015-16 show that, on average, central Government Departments paid 89% of undisputed invoices in five days. We have set clear rules for how we expect all public authorities to deal with small businesses in particular.
However, notwithstanding the regulations that we introduced, the strong messages that we are sending out and the way in which we are putting into practice what we preach, there is evidence that that does not necessarily go all the way through the supply chain. I think that was the point that the hon. Member for Wakefield was making, and no doubt the concern of the hon. Member for Doncaster—
Anna Soubry
I thought I had read out the figures that show a huge change; I am happy to read them out again. I am resisting all temptation to say that it is rather strange that the Labour party seems to have done diddly squat during the 13 years when they could have solved all these problems. This Government have made a significant change. For the purposes of Hansard, I repeat that BIS paid 96.8% of those undisputed invoices within five days and 99.5% within 30 days. I am happy for us to get all the statistics, if they exist, that show the real strides we are taking.
Anna Soubry
I will give way in a moment. I know that it is difficult for Labour Members—they can dish it out, but they can’t take it. There is real evidence that we are seeing this trickling all the way down. However, as I have conceded—I am being as fair as I hope to be—I am concerned that it is not going all the way down through the supply chain. I have conceded that the name of the mystery shopper service may be a little not brilliant, but what is important is whether it delivers. There is absolute evidence that it does.
I think my noble Friend Baroness Neville-Rolfe would take exception to the rather cheap dig made about her, because she is absolutely on the side of small businesses. I know that she has been involved with a number of small businesses. For the record, she was not on the board of Tesco when it behaved in that unacceptable way. Thank goodness that a Conservative-led Government introduced the Groceries Code Adjudicator to bring Tesco to book—but we are going off the point. She gave a good example from the Ministry of Defence of exactly how the mystery shopper service is working. The more we advertise it, the better.
Caroline Flint
Of course, as head of public affairs, Baroness Neville-Rolfe spent a lot of time defending how Tesco treated farmers and everyone else. The problem is not going to go away, whatever the outcome of these proceedings.
Can the Minister, to help the Committee, provide us with full details in writing of the record of every Department, and maybe also some other parts of the public sector, on payments? The issue is not just about payment from a Department to one supplier; often other, smaller suppliers are subcontracted as well. It goes way beyond that. It is a missed opportunity, particularly for the number of areas of the country, including my own, in which small and medium-sized businesses depend on the public sector in all its variety, not to include them in the Bill.
Anna Soubry
If those figures exist, of course I am more than happy to share them. However, as I have said, the first quarter statistics for 2015-16 show that on average, central Government Departments paid 89%—we have exceeded our own target—of undisputed invoices within five days. However, I absolutely agree with the point that the right hon. Lady was trying to make, which is—
Anna Soubry
At least let me finish my point. My point is that the problem may well exist within the supply chain. We know that regulations from central Government are hugely important in driving the change required. We also know three things. First, there are ombudsmen who can absolutely assist in curing such mischief. That is the first place where many small businesses can go. Secondly, there is the mystery shopper service, which, as I have said, is already providing evidence that it is curing the problem.
The third way in which we ensure that cultural change occurs—we must be honest about this—is when a small business comes to us as constituency MPs: we are in a unique position to go to our local authorities. We usually do so rather quietly; it does not have to involve bells and singing and dancing. We speak to the leadership of our local authorities, both officers and councillors—often of our own persuasion, although that matters not—to say, “I have an example of a small business. I won’t give you their name, but I have evidence, and I am concerned. Let’s change the culture within our local authority and do something about it.”
For example, somebody has approached me with a problem relating to a construction project of which I am aware. As the Minister, I am taking that up directly with the chief executive of the hospital trust involved to ensure that the trickle-down of cultural change goes all the way through the supply chain.
Caroline Flint
The Minister makes an interesting point about the role of MPs. One could say the same about MPs going to businesses in communities and making the point there, but the Bill offers support for the small business commissioner to deal with the private sector.
On the point that the Minister made about the percentage of undisputed bills that are sorted, does she not agree that the extent of business that goes on varies enormously across Government? I gently suggest that it might be interesting to compare the transactions between the Department for Business, Innovation and Skills and SMEs with the volume and size in monetary terms of the contracts between the Department of Health, for instance, and the small business community. I would say they are very different. I hope she will write to the Committee to provide more detail about volume and monetary value, because 89% in BIS may be very different from, say, 70% in the Department of Health or elsewhere.