Small Businesses: Late Payment

Lord Harrison Excerpts

Thursday 11th June 2015 Lords Chamber

Asked by

[Lord Harrison]

To ask Her Majesty’s Government what plans they have to deal with the late payment of debt to small businesses.

[The Parliamentary Under-Secretary of State, Departments for Business, Innovation and Skills and for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)]

My Lords, this is a serious problem in some areas and the Government are taking action. We have already legislated to require payment within 30 days through our public sector supply chains. We will be requiring the UK’s larger companies to report on their payment practices. This will be centrally collated so that performance can be compared. We are going further, too: through the enterprise Bill we will create a small business conciliation service to help small businesses resolve disputes.

--- Later in debate ---

[Lord Harrison (Lab)]

But does the Minister understand that the Prompt Payment Code is itself being abused by bigger firms, as the Federation of Small Businesses revealed? Some one in four of its members find that their payment periods are changed adversely and peremptorily, and one in three FSB members now experience cash-flow problems as a result of being paid late. Will the Government undertake not only to monitor but to enforce existing legislation to help hard-working families who run small businesses in this country? Will the Minister respond to the National Audit Office’s own report that government departments are still paying late?

[Baroness Neville-Rolfe]

My Lords, there are a lot of questions there. I have already outlined three important measures, but we have also strengthened the voluntary Prompt Payment Code to promote 30-day payment terms as the norm, and will enforce a maximum 60-day payment term for all its 16,000 signatories. We will also consult this summer on how to give representative bodies—such as the Federation of Small Businesses—wider powers to challenge grossly unfair payment practices. The recent changes to the code, led by my right honourable friend in the other place Matt Hancock, set new expectations on signatories to treat suppliers fairly and make payments in a reasonable amount of time. Alongside the other measures that we are taking, we are on the way to taking the first steps in changing the culture in this key area.