Small Business, Enterprise and Employment Bill

Baroness Laing of Elderslie Excerpts

Tuesday 18th November 2014 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

New clause 3—Prompt Payment Code, duties of the Secretary of State—

‘(1) The Secretary of State shall—

(a) ensure that any business with payment terms of more than 60 days cannot sign up to the Prompt Payment Code, and that any existing signatory with payment terms of more than 60 days is removed from the list;

(b) at the end of each financial year, the Secretary of State shall write to all businesses in the FTSE 350 who are not signatories of the Prompt Payment Code asking them to become so;

(c) the Secretary of State shall publish a list of those businesses written to prominently on the Government’s website.”

New clause 4—Late payment review—

‘(1) The Secretary of State shall—

(a) conduct a review into how the Government can use the payment publishing regime to ensure that small businesses who are paid late by a larger supplier are automatically paid compensation, and into how the onus of reporting late payment can be shifted away from the smallest businesses who cannot afford to lose significant customers; and

(b) report back to both Houses of Parliament on the conclusions of the review.”

Amendment 6, in clause 3, page 4, line 33, at end insert—

“(g) about the circumstances and process for amending payment terms of the company.”

This is for companies to include details of the circumstances and processes (including who will be involved) by which payment terms would be amended, preventing unilateral and ad hoc changes.

Amendment 91, in clause 11, page 12, line 19, at end insert—

“(5) The Secretary of State may by order establish a Prohibited List of certain classes of exports that cannot receive UKEF/ECGD support.

(6) An order establishing , or thereafter amending a list for the purposes mentioned in subsection (5) shall be subject to the affirmative resolution procedure.”

This amendment would grant the Secretary of State the power to prohibit specified types of exports from receiving government support, thereby enabling UK export finance provision to reflect government policies and priorities, such as preventing arms sales to certain regimes. The content of, or changes to, any such list would need to be approved by Parliament.

Government new clause 5—Independent Complaints Commissioner: reporting duty.

Amendment 92, page 20, line 5, leave out clauses 20 to 26.

This amendment removes the obligation on future governments to set a deregulation “business impact” target for each Parliament.

Government amendments 27 and 28.

Amendment 7, in clause 37, page 35, line 9, at end insert—

“() duties to establish the past payment performance of potential parties to a contract, before contracts are entered into;

() duties to ensure contracts entered into include the contractor’s requirements for prompt payment of their suppliers.”

These are to ensure that the payment performance of potential contractors are known before contracts are entered into and that contracts entered into require contractors to pay their suppliers promptly.

Amendment 1, page 35, line 16 , at end insert—

“() duties relating to the provision of apprenticeships and training opportunities as a result of procurement;

() duties to publish reports about the amount of expenditure undertaken by the relevant procurement function in relation to—

(i) amount and proportion of expenditure undertaken by small and medium-sized enterprises,

(ii) amount and proportion of expenditure undertaken in the local area.”

Amendment 2, page 35, line 22, at end add—

‘(5A) A person making regulations under this section may also specify the reasons why firms may be excluded from entering into contracts.”

Amendment 3, page 35, line 28, at end add—

‘(8A) Regulations under this section are subject to the provisions of the Freedom of Information Act 2000”

Amendment 4, page 35, line 30, leave out subsection (10).

[Debbie Abrahams]

This group of amendments is seeking to address the very significant issue of businesses paying their suppliers late. Recent data show that the late payment debt burden for UK businesses is more than £46 billion, with SMEs shouldering most of this. They are owed nearly £40 billion in late payments and 60% of small businesses are affected, with the average small business owed over £38,000 in late payments.

It is getting worse: £36 billion was owed in 2012, so the increase over recent weeks and months can be seen. In other debates we have heard about the implications of late payments for these small businesses, from productivity to access to finance and credit terms—all these are affected. For these businesses, there is not just the inconvenience of spending an extra 158 million hours chasing payment: vital cash flow that is stemmed often affects their very survival, their jobs and their livelihoods. In 2012 it was estimated that 124,000 small businesses were put out of business directly as a result of late payments.

For me, it has been about the personal stories. My interest in late payments started when a constituent came to me and said that their business was going under directly as a result of this issue. This opened a can of worms, not just in my constituency but across the country. The issue of late payments is endemic. When someone describes how their life’s work has been destroyed by what can only be described as corporate bullying—large companies paying their bills late just because they can, because they have the power—it is clear that it is one of the most raw forms of injustice.

From the late payment inquiry held last year, it was clear to us that it is not just a micro-economic issue. With approximately half the work force and half the UK’s income in the private sector coming from small businesses—a massive £1,558 billion—it is inconceivable that late payment is not affecting the wider economy and, of course, a sustainable recovery. I am glad that the Government are tackling the issue; it has been a long time coming. I started my Be Fair—Pay On Time campaign in 2011 and now the Government are finally getting to grips with the issue, but I am afraid that the measures in the Bill do not go far enough. It is regrettable that in Committee the Government failed to support measures that would have seen small businesses automatically compensated for late payment by their suppliers. I hope that the Minister will reconsider and have a look at new clause 1 and the amendments.

New clause 1 seeks to address the issue of retention of moneys in the construction industry. You may be aware, Madam Deputy Speaker, that at any one time over £3 billion is outstanding in the construction industry by way of cash retentions. This is an aggregate sum of moneys provided for by small businesses in the event that they fail to remedy defects. I have several examples, including that of a company that wrote to me to say that £60,000 of retention moneys was withheld—5% of the overall contract—for eight months. There was nothing in the contract about that. They had to go through adjudication and it ended up with them losing £22,000. These are small businesses, and this is their livelihood.