Draft Reporting on Payment Practices and Performance (Amendment) (No. 2) Regulations 2024

Harriett Baldwin Excerpts

Wednesday 15th January 2025 General Committees

[Dame Harriett Baldwin (West Worcestershire) (Con)]

It is a very great pleasure to serve under your chairmanship this morning, Ms McVey. I just note that the Minister highlighted the fact that, in fact, this initiative had been started under the previous Government, and so you would not expect me to be objecting to its passage today. But I do have, in the interest of scrutiny, a few questions for the Minister.

The explanatory memorandum accompanying the statutory instrument highlights the improvements that have occurred in the time that it takes to pay invoices since these measures were brought in in 2018. There was strong support in the consultation for extending the reporting requirements to these retention payments. Could the Minister summarise for the record what the objections were in the consultation and from whom they came—the people who did not support moving forward with these measures?

The Department will generally, it says in the explanatory memorandum, seek to encourage businesses to comply with the regulation by encouraging them, getting in touch with them rather than prosecuting them for non-compliance. Could the Minister highlight if there have actually been any prosecutions at all under the previous payment regulations, and, if so, who the holdouts or the big contractors that have resisted these measures have been?

Most companies say that this regulation will be an ongoing cost to their business. It is estimated to be a small amount of £10 million per year. Can the Minister outline for the committee any measures that he is planning that will reduce costs for businesses? Businesses are telling me that the extra cost of national insurance and the Employment Rights Bill are adding costs to their businesses that can be seen from space. The last Government introduced new requirements for firms bidding for large Government contracts to make sure that they pay small businesses on time, and those bidding for Government contracts over £5 million will have to demonstrate that they pay their own invoices within an average of 55 days, tightening to 45 days and then to 30 days in the coming years. Can the Minister confirm that he is planning to continue with that approach?

The last Government overhauled the voluntary prompt payment code, halving the time signatories have to pay small businesses to 30 days. Is the Minister planning to update us on the progress he has made on this matter in the last six months, and has the number of signatories gone up or down—it was 2,800 voluntary signatories. I look forward to the Minister’s answers and we support the measures today.