Small Business, Enterprise and Employment Bill

John Howell Excerpts

Tuesday 24th March 2015 Commons Chamber

[Matthew Hancock]

With only a few days remaining in this Parliament, the Government continue to work tirelessly to make the UK the best place in the world to start and grow a business. We are proud of our record over this Parliament, including the 760,000 extra businesses, the 2.2 million extra jobs that business has created and the rising pay that has benefited millions. This has been possible only because of our unstinting and unambiguous support for businesses. Last week’s Budget built on this record with a fundamental review of business rates, and last week we set out our intentions for using the new prompt payment transparency powers. The Bill takes this commitment to support small business further. It is the first ever small business Bill and I hope will shortly become the first ever small business Act.

In the other place, the Bill was, as we would expect, subjected to careful and robust scrutiny, and I am grateful to Baroness Neville-Rolfe for ably steering it through the other place, where it was enhanced and improved. As part of that, several amendments were made, both substantive and technical. The Government supported all the successful amendments, and I hope that the House will agree them today. I shall go through each in turn, beginning with late payment. The Bill takes unprecedented steps to tackle late payment, so understandably the matter was debated in detail in this House and the other place. Late payment is a major issue for businesses large and small, and we are taking steps in the Bill and elsewhere to bring an end to the UK’s late payment culture once and for all.

Transparency has a pivotal role to play. Clause 3 introduces a tough new prompt payment reporting requirement for the UK’s largest companies. In the other place, this clause was further strengthened by amendments 1 to 3, which insert a reference to performance on the face of the Bill and make express reference to late payment interest as an example of the type of information that will be included in the report. Beyond the Bill, we have strengthened the prompt payment code with our announcement last month that 30-day payment terms will be the norm of acceptable behaviour, with 60 days as the maximum in all but exceptional circumstances.  The public sector will play its part, as 30-day terms are now legally required right down the public sector supply chain.

The transparency measures in the Bill will shine a light on poor payment practices and make a company’s payment terms a reputational boardroom issue. We will drive a culture change to redress the current economic imbalance of power between large companies and their suppliers. The amendments under consideration today will help to ensure suppliers are fairly compensated. We are determined to make 30-day terms the norm and 60 days the maximum acceptable payment terms. With this Bill, we will make unacceptable late payment a thing of the past.

[John Howell (Henley) (Con)]

I very much welcome what the Minister said and I welcome the clause. When I was running a small business of my own, late payments bedevilled the business, and it was always the larger companies that were responsible for it. I am very glad that this amendment is being made.

[Matthew Hancock]

I am grateful for that intervention. I, too, have personal experience of poor payment performance having a massive impact on the businesses I worked in. Frankly, the late payment culture is a problem with our contract law. Good contract law means good payment against a contract. I think these transparency measures will have a significant impact, changing prompt payment from being an issue for finance directors to being an issue for the board. Through these transparency measures, we will not allow it to be deemed reasonable to pay late. I think that 60 days as a maximum and 30 days as a norm is a perfectly reasonable place to settle.