Small Business Commissioner (Scope and Scheme) Regulations 2017

Lord Jones Excerpts

Wednesday 6th December 2017 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the purpose of the statutory instrument before us today is to establish further detail about the Small Business Commissioner’s complaints scheme, as well as which small businesses qualify to use the complaints service.

Late payment remains a significant issue in the United Kingdom. According to data on business population estimates published by my department in October 2016, 99.3% of the 5.5 million private sector businesses were small businesses and 99.9% were small or medium-sized businesses.

Latest BACS Direct Credit figures report that the overall level of late-payment debt owed to small and medium-sized businesses stands at £14.2 billion. This is completely unacceptable for the small and medium business sector in the UK, which we all rely on for jobs, goods and services. There is no place for this sort of unfair payment culture in a well-functioning economy.

Provisions in the Enterprise Act 2016 established the Small Business Commissioner. I take this opportunity to welcome Mr Paul Uppal into the role as the United Kingdom’s first Small Business Commissioner, following the announcement of his appointment by my right honourable friend in another place the Secretary of State, Greg Clark, on 2 October this year.

Mr Uppal’s role will be crucial in supporting small businesses to resolve payment disputes with larger businesses and will help drive a culture change in payment practices and how businesses deal with each other. The commissioner will provide general advice and information to small businesses, delivered through the commissioner’s website, signposting businesses to existing support and dispute resolution services.

The website has been specifically developed so it is fit for purpose. My department has received positive feedback that it meets an information and service need currently not met. I can report that development work on the website was completed yesterday and the website will be launched alongside the rest of the Small Business Commissioner’s service before the end of this calendar year, subject to the proceedings before us today. Since the debate in another place on 21 November, the Small Business Commissioner and his team have also begun their programme of stakeholder engagement and have begun recruiting additional staff who will provide support on complaints casework.

The commissioner will be able to consider complaints from small business suppliers about payment issues with their larger business clients and make relevant recommendations. We are aware that small businesses may refrain from making a payment-issue complaint about a larger business for fear of it being detrimental to their relationship—for example, resulting in a threat to terminate their contract or similar bully-boy tactics. The regulations therefore ensure that the commissioner is not required to name the complainant to the respondent. They also allow the commissioner to disapply the condition that the small business making the complaint must talk to the larger business about the complaint before coming to the commissioner, where the commissioner considers that to do so would have a significant detrimental effect on the commercial interests of the small business making the complaint. The Act makes it clear that, in any report on complaints, the commissioner cannot name the complainant unless the complainant agrees to being named.

The commissioner can accept and consider complaints that relate to matters which occurred in the period between 6 April 2017 and the formal launch of the complaints service, as well as those relating to matters occurring after the launch date. This broadens access to the complaints service and will help the Small Business Commissioner gain impetus as soon as the office is officially open for business. The complaints service will launch as soon as possible following Parliament’s approval of these regulations, as has already happened in another place.

The Enterprise Act 2016 sets out the broad framework for the Small Business Commissioner. These measures apply to the whole United Kingdom. These regulations provide further detail about what a small business is for the purposes of qualifying for the commissioner’s services, including the complaints service. The regulations also provide further detail about the complaints scheme itself.

The regulations set out that a business must have a headcount of fewer than 50 staff on one of the assessment dates or during one of the assessment periods to qualify to use the commissioner’s services. They also set out the requirements that must be met before presenting a complaint; the requirements as to the form and content of the complaint; and the time limit for presenting a complaint, and the power of the commissioner to fix and extend time limits and to dismiss complaints. They also set out the matters that the commissioner must take into consideration when determining whether an act or an omission complained about was fair and reasonable, and the factors to be taken into account when deciding whether to identify a respondent in any report of any complaint.

My department consulted on how the Small Business Commissioner would handle complaints between 13 October 2016 and 7 December 2016, and published draft regulations in February this year. We understand that the key message from respondents to the consultation was that the regulations should be simple so that the Small Business Commissioner’s services are as efficient and effective as possible.

The regulations before us will enable the Small Business Commissioner to accept complaints on payment matters from small business suppliers about their larger clients. This is an important part of the Small Business Commissioner’s role in supporting small business. I commend these regulations to the Committee and I beg to move.

[Lord Jones (Lab)]

My Lords, I thank the Minister for his pithy introduction. The regulations surely have to be welcomed. It must be good news to many thousands of SMEs. I refer to the register of interests: I am president of Flintshire Business Week and Deeside Business Forum, which sits across the England/Wales border and has some 9,000 jobs. It is based at Deeside Industrial Park, which has 260 companies at least, most of which are SMEs. There is considerable interest from companies such as these in the regulations. Do we yet have a commissioner’s name in mind? Who shall choose? Shall it be salaried? What salary might it be?

[Baroness Neville-Rolfe (Con)]

I refer to my entry in the register of interests, including my chairmanship of Red Tractor, which helps British branding, including some small businesses, to have their food assured and to sell it into the market.

There was a flurry in the Printed Paper Office this afternoon as some of us sought papers on the Small Business Commissioner. Eventually, we discovered papers entitled “Enterprise”. Of course, small business and enterprise go hand-in-hand. I share a passion for both, as noble Lords may know. It was fantastic to be involved in the passing of the parent legislation for these regulations. I welcome Mr Paul Uppal to his job—I believe he is the new Small Business Commissioner. Perhaps the Minister could kindly tell us a bit about him and why the Secretary of State has appointed him to this vital job for small business. I commend the role of the Federation of Small Businesses in ensuring that the Small Business Commissioner not only is now on the statute book but will be up and running once these regulations have been passed.

While regretting the length of the regulations—although obviously I support them strongly, brevity and simplicity are the most important features of law-making—I am sure that the Minister will keep the regulations and the rules and operation of this important new office under review so that we can ensure that it delivers better payment terms for small businesses in the way we all hope it will.