Lord Harrison
Main Page: Lord Harrison (Labour - Life peer)
Lord Harrison
To ask Her Majesty’s Government what steps they will take to amend the legislation on late payments to improve the cash flow of small businesses.
Lord Popat
My Lords, the Government take the issue of late payment very seriously. We recently transposed a European directive to combat late payment into UK law. The amended legislation came into effect on 16 March this year and builds on existing UK law. It further strengthens the legal obligation on payment terms, including a statutory obligation on public authorities to pay commercial creditors within 30 days.
Lord Harrison
My Lords, the prompt payment code has been a palpable and egregious failure. Only one in five of Britain’s limited companies and only two out of 42 police authorities have signed up to it, leaving most small businesses £45,000 short in their ability to invest. While it is welcome news that the Government are implementing the March 2013 late payment legislation, failure has occurred so far. Therefore, could the Government put teeth into the legislation prepared by the Labour Government? Secondly, will they consider encouraging credit capital markets to be available to small businesses in the same way as they are in America, to allow small businesses the ability to invest?
Lord Popat
My Lords, 75% of the FTSE 100 companies have signed up to the prompt payment code; something like 1,500 companies are now signing up to it. With regard to the public organisations, including police authorities, we are taking every action possible. My colleague, the Minister Michael Fallon, has written to them, giving them 90 days to ensure that they sign up to the prompt payment code. With regard to funding, the Government have a number of schemes to help SMEs finance their existing cash flow, including funding for lending.