Businesses: Contracts and Payments

Lord McFall of Alcluith Excerpts

Wednesday 3rd November 2010 Lords Chamber

[Baroness Wilcox]

My Lords, the question was whether the Government will create a blacklist of firms which consistently act in an inappropriate manner. I do not think the previous Government did that and I do not think we will. The Government are working with the UK’s main business organisations and UK business to promote and encourage good practice. If the noble Lord knows of a practice that has been brought to his attention which is not being sorted, I hope that he will contact me to see whether my department can help in any way.

[Lord McFall of Alcluith]

My Lords, the situation is not working just now. Last year, NatWest research showed that three out of four small and medium-sized enterprises are suffering with a £63 billion mountain of unpaid bills. It is very important that we recognise that large firms, as Serco indicated, are working on the back of small firms to improve their cash flows. I think it is time for a level playing field between the public and private sectors. Can the Minister look at the prompt payment code that was introduced in 2008 and build on it so that we have well defined time periods for the private and the public sectors in order to get rid of the bullying that we saw the other day with Serco?

[Baroness Wilcox]

My Lords, the noble Lord raises two points. He is talking about the private sector and the public sector, which are not necessarily exactly the same. He will know about the work we have been doing in the public sector on speedy payments. The public sector is paying faster than ever before. Central government departments aim to pay 80 per cent of invoices within 10 days. There is now a contractual requirement for main contractors to pay their own suppliers within 30 days. With regard to the private sector, the law stands. We also have very big organisations, such as the CBI and the Institute of Directors, with which we work all the time, as did the previous Administration, to see whether encouragement can be given—not to intervene in that sector, as that would not be correct. I have been a small supplier to a large company. I would say that there needs to be more training and education and more pressure on small companies to ensure that, when they get wonderful contracts with big companies, they do not get overexcited and that they reward the salesman but do not reward the invoice clerk in the back office who gets the invoices wrong 30 per cent of the time.