Commercial Debt: Late Payments

Lord Harrison Excerpts

Tuesday 2nd February 2016 Lords Chamber

Asked by

[Lord Harrison]

To ask Her Majesty’s Government what action they plan to take, in the light of the report by the Groceries Code Adjudicator regarding Tesco’s supplier payment policy, to address the late payment of commercial debt.

[The Earl of Courtown (Con)]

My Lords, the Government are implementing a package of measures to help create a responsible payment culture, where larger companies recognise the benefits of having a sustainable and robust supply chain and smaller businesses feel able to challenge poor behaviour. A new reporting requirement on the UK’s largest companies this year will compel larger companies to report on payment practices and policies. Our proposed Small Business Commissioner will help small businesses resolve payment disputes with larger businesses.

--- Later in debate ---

[Lord Harrison (Lab)]

Given that the Groceries Code Adjudicator found in one case that a supplier was owed a multimillion pound payment for two years, and given that many smaller suppliers find the risible Prompt Payment Code entirely useless when it comes to getting their rights, will the Minister say what powers and resources both the adjudicator and the newly created commissioner will be given to help the 5.4 million small businesses, which have laboured for too many years under this imposition of slow and late payment of commercial debt?

[The Earl of Courtown]

My Lords, the noble Lord is quite right in what he says about late payment to SMEs. From my own experience in that area, having jointly run an SME, I know how difficult it is for a profitable and competitive SME if you get late payment from your customers and have to pay early to your suppliers. I should also make the noble Lord aware that the Government are taking significant steps to tackle late payment. In addition to the measures I have already outlined, we have strengthened the Prompt Payment Code to promote 30-day payment terms as a norm. The code will also enforce maximum 60-day payment terms for all signatories. At the moment, there are over 1,700 signatories to the Prompt Payment Code, many of which are some of our largest companies.