Enterprise Bill [HL]

Viscount Eccles Excerpts

Monday 12th October 2015 Lords Chamber

[Viscount Eccles (Con)]

My Lords, at this stage in a Second Reading debate, it is tempting to throw one’s speech away and reflect a bit on what has been said. I confess that I find it very difficult to pull out of what has been said things that I am certain about. The debate has been very much about people’s behaviour towards each other, asking why people pay late, or about cultural change, asking why people go on behaving in a way that you would think they would want to change. In pursuing those things, we have been taken to Australia by both sides of the House and, indeed, I shall also concentrate most on the proposal to have a commissioner for small businesses.

We also had my noble friend Lord Flight quoting the Law Commissioner, from some time ago, in saying that,

“we expect businesses to take care of themselves”.

But I do not think that we in Parliament—or a lot of us—do not believe that businesses or people can take care of themselves; we think that they need a lot of assistance. When it comes to this Bill and business practices, as my noble friend Lord Cope most elegantly said, we have even and uneven numbers.

We have heard some very powerful technical speeches relating to either one or another parts of the Bill, but I shall try to concentrate on the first part and try to deal with the argument that some people have made that it does not do enough, while others have suggested that it will not work. The conclusion from the second argument might be that it might be better not to try to do it that way in the first place. However, we all agree that there is a very serious problem—that many large and small businesses pay late and get paid late. So there is no doubt at all that there is a big problem, but there always has been. Is the law deficient in providing guidance and remedies for late payment? I am not sure that it is. Contract law is pretty thorough. The question of retentions is of course a completely different subject—it is different from being paid late. If you agree that you will have a retention in your contract, you have one. In my youth, with large construction contracts, you could always go to the bank and swap a cash retention for a bank guarantee. So I am not so sure that the present situation, in terms of technical, legal memories, is so short of what we would need or want.

If we agree that there should be further state intervention, we have a duty to decide whether it will be effective. In the case of Part 1 and the Small Business Commissioner, whose duty is going to be giving advice and information and trying to deal with complaints, my first impression is that it will engage him in a huge variety of problems. It would not be possible to describe how wide that variety could be. I go back to when I was running what I think was a small business—although, until we get the scope regulations, we do not actually know what a small business is; it could be that it is much more widely defined than simply one that employs fewer than 50 people, or one that is close to a start-up, or, as my noble friend Lady Wheatcroft, said, one that is not prepared or interested in scaling up. In the variety of circumstances, it would not be sensible to turn the description “small business” into some sort of fetish.

Indeed, in the days when I was responsible for collecting debts, I got rung up and told that so and so had not paid and asked to go and do something about it, and what I did was to get into a Hillman Minx van, DXG 813, and went to see the buyer. When you went to see the buyer, they would probably say, “It’s that wretched accounts department—they never keep up with paying the bills on time”, or they would say, “The inward goods reception said that you’d sent eight, but I can only see six”. So I would say, “Let’s go out into the yard and see whether we can find the eight”—and we usually did. And the buyer would then say, “Well of course those people never could count”. So at that time I was on the side of those who thought that the best thing to do was to sort out your own problems.

Nobody thanks you for bringing in a third party if, in fact, you could and should be solving your own problems. Two is company and three is a crowd. So I wonder where the idea came from for a Small Business Commissioner who would help to solve this amazing variety of problems by providing advice and information and concentrating on the question of the cash flows. Why would anybody believe that it would really make a difference? It is probably a follow-up—as was indicated in some depth and detail by my noble friend Lord Patten—to the Groceries Code Adjudicator. At some point in the passage of that Bill, I was heard to say that I was the only member of Her Majesty’s Opposition, because I confess that I never thought that the Groceries Code Adjudicator would have an easy job. I always thought that it would be very difficult. I think that the adjudicator is a very good public servant. I read everything that she says and that she has done, and I believe that she is as workmanlike, sensible and sophisticated an operator on behalf of the state as one could wish to see. She has been going at it now for two and a half years; she has the power to investigate and is making an investigation into Tesco. I suppose that Tesco opened itself to the thought that she should investigate it. She has the power to fine and the power to name and shame, but she has proceeded very cautiously—and she has not been able or wanted to implement those provisions of the Bill.

So this time, while probably thinking that that was the situation, we are faced with a much less draconian approach in the case of the Small Business Commissioner. But I still wonder whether it will actually have any real effect. Will a cultural change take place? Will everybody start to pay their bills in a different way because of the Small Business Commissioner? My answer to that is that it is not likely. Either the cultural change will come from within business itself, or it will not come at all. I do not believe that in this case this form of state intervention has anything to offer us, and therefore I say in conclusion that I am very glad to see that the Secretary of State will be given the power to evaluate and then to abolish.