House of Commons Hansard Debates for 1 Jun 1998 (pt 40)

11.32 pm

Mr. Cotter: I welcome the Bill and congratulate the Government on introducing it. Unlike my Opposition colleagues, I believe that, in the round, the uncertainty of late debt should be reversed following the Bill and that the culprits of the crippling problem of debt will find the boot on the other foot; so I congratulate the Government and, at the same time, hope that they have taken on board various points that have been made by me and colleagues nearby.

The American writer Dorothy Parker once said that the two most beautiful words in the English language were "cheque enclosed". We hope that that will be heard much more in future. The statement will have a powerful and, I hope, true meaning when the Bill is implemented. Many businesses will have the right to break free from the late payment millstone which has hung around their necks and, in many cases, ruined their businesses. Small businesses in particular depend on tight budgeting to realise investment and to advance their projects. The Bill will help to create a better payment culture, providing a stick as well as a carrot.

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Over the next few years, it will be exciting to see how the Bill progresses. In that connection, I welcome the Minister's commitment to monitoring and to accepting the need for the Government to produce annual reports on their record.

I am concerned about some local authorities. Many of them have clear guidelines and procedures for payment. Bradford council has a computer system that is programmed as a matter of policy to pay bills on time automatically. I hope that others will follow that example.

Concerns have been expressed by the Forum of Private Business. Discussions have been held in the past few days on the problem of parties sidestepping or avoiding paying interest as a result of subsequent actions. I understand that that has been considered carefully and that the Minister is satisfied that the issue will be covered. I hope so.

I should not like to conclude without referring to the hon. Member for Chesham and Amersham (Mrs. Gillan), who has taken a strident part in the debate. I wish her much success in her new role. There was a worrying moment in Committee when she referred to fish being used for payment. I had an awful vision of fish being overdue and being dead and rather smelly. I was concerned about what state the fish would be in when it came to the two fish required to provide the interest.

Mrs. Gillan: Tinned fish.

Mr. Cotter: Tinned fish may be more acceptable. The hon. Lady threw fresh light on the expression COD--cash on delivery. I wish her well in the future. I also thank the Minister for ably conducting these proceedings and for courageously pushing ahead with the Bill, which I warmly welcome on behalf of the Liberal Democrats. I believe that it will provide a solution for small businesses, which has been long overdue.

11.36 pm

Mr. Forth: I am almost as worried about legislation by survey as I am about legislation by referendum. As my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said, it depends on the question that is asked. If people are asked, "Do you want a better life? Would you like life to be more pleasant? Would you like the Government or legislation to relieve you of your problems?" the odds are that they will say yes. According to the Minister, many bodies that claim to be representative have tended to say yes to these simplistic questions. I doubt whether their response would be the same if they were asked, "If penal rates of interest were to be introduced for late payments, would you like dominant purchasers to renegotiate their contract with you such that the payments would be even later than they already are?"

As ever, the answer depends on the question. Whether we are dealing with legislation by referendum or legislation as a result of a survey, the danger is that we may mislead innocent people into believing that a legislative wand can be waved over their problem to make it disappear. By asking the wrong question, we are likely to get the wrong answer and to legislate in the wrong way, resulting in disillusionment.

We have tried over and again to persuade the Minister of this danger, but she has not yet been persuaded. I suspect that we are unlikely to do so at this stage of the

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legislative process. I have this dream that she will rise at the end of Third Reading and seek to withdraw the Bill, but that is unlikely. The Government should take much more care, because they are increasingly resorting to the seductive technique of survey or referendum. They ask simplistic questions and receive, unsurprisingly, positive answers. They then cite that as proof positive that the legislation has widespread support and will therefore succeed.

I will not try to emulate the analysis offered by my hon. Friend the Member for South-West Hertfordshire of how this impractical legislation is supposed to take effect. We have already heard this evening undertakings to the effect that public bodies will make payments of invoices within 30 days. I doubt whether anyone, public or private, has the mechanisms to guarantee that. How many organisations of any size, public or private, have in place the procedures to enable them to pay at that speed? The danger, then, is that--without a renegotiation of terms of trade--nearly everyone will become liable to the penalties specified in the Bill.

Herein lies the danger: we are threatening to penalise people for acting in a perfectly normal and respectable way. That means running the risk that a number of businesses will seek to renegotiate their terms with their suppliers to avoid the penalties introduced by the Bill. That, in turn, will mean even later payments than are the norm now. I sincerely hope that that backlash will not follow enactment of the Bill; I fear that it may, however.

Mr. Page: My right hon. Friend is powerfully putting the point that no company can run a monthly credit system for each individual article purchased during the month. To do so would wipe out the whole purpose of a monthly account.

Mr. Forth: I agree, of course: my hon. Friend understands how business works. Regrettably, all too few of those involved in drawing up the Bill share his understanding. It is impossible to imagine businesses completing each and every invoice as an individual item, with no cut-off point, standard procedure, or mechanism of the kind that any efficient business must have.

My hon. Friend and I both know--it would seem that no one in the Government does--that the assumptions underlying the Bill are quite impractical and will ultimately lead to the destruction of its aims.

For reasons not yet satisfactorily explained--very little about the Bill has been--we are asked to accept that Government Departments will be treated much more leniently than the private sector; there is also an arbitrary cut-off point for numbers of employees. That, too, will lead to anomalies in the implementation of the legislation. We have made that point time and again and received but scant explanation in reply.

There has been little understanding--uncharacteristically--by the Minister. We are left at this late stage of the Bill's progress with a large number of unanswered questions which are germane to the purposes and effects of the measure. Because those questions have not been answered, doubts must have been sown in the minds of those involved in business--large or small, representative or practising--who must by now be extremely concerned lest the Bill prove to be counter- productive.

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Far from protecting the interests of small businesses, this legislation could harm businesses in general, and possibly small businesses more than most. It would be tragic if that were to be the outcome of the Bill's passing into law.

I give these warnings not with a sense of joy but with a sense of foreboding. I hope that I am proved wrong, but I fear that if the Government persist in basing legislation on answers to fatuous questions asked in superficial surveys, this is the kind of legislation that will result. If, during the legislation's passage through this House and the other place, we do not receive satisfactory answers from Ministers, perhaps it is because we are failing in our purpose--perhaps we have not kept the Minister here long enough, grilling and questioning her, or perhaps wehave not tabled sufficient amendments, probing and substantive. If that is the case, we may have learnt our lesson this time, and perhaps next time we shall be much more rigorous in our approach. In any event, there are lessons to be learned by all of us.

I hope that, even at this late stage, we may have got the Minister to think rather more carefully about the approach that she and her Department will take to legislation, and that the lessons learned from this Bill are not borne by the very businesses that it was designed to help.

11.45 pm

Mrs. Gillan: We have certainly had an interesting Third Reading debate, and I have no intention of repeating the excellent points made by right hon. and hon. Friends.

I make it clear at the outset that there is no difference between Conservatives and the Government in so far as we do not support the late payment of debt. However, the Minister has not justified the legislation or even thought it through sufficiently. I think that she latched on to what she thought was a good idea to validate her new business-friendly credentials and pursued legislation that she herself has admitted was not supported by 60 per cent. of the organisations representing small businesses. Indeed, just before the Government came to power, I believe that the current Prime Minister received a letter from the Confederation of British Industry, the Institute of Directors, the Association of British Chambers of Commerce and the Federation of Small Businesses outlining their opposition to the measure.

During the Bill's passage, the Minister has failed even to refer to the remedies introduced by the previous Government in an attempt to change the culture of late payment. Instead, she has sought to gain notoriety from legislating, rather than putting in a sustained effort. In short, she has manoeuvred the legislation to provide excess protection for her friends in other Departments.

I do not know whether you, Mr. Deputy Speaker, or the Minister are familiar with the Anglo-Irish poet Jonathan Swift who, in 1709, wrote:

"Laws are like cobwebs, which may catch small flies,

but let wasps and hornets break through."

However, during the Bill's passage, the Minister has certainly taken Swift to heart by allowing the Government, or the hornets and wasps, to remain a protected contractor for four years, while condemning the

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small flies--businesses with 50 or more employees--to the wilderness, without the protection of this legislation to fall back on when they deal with the public sector.

It was a Conservative Government who started the publication of Government Departments' payment records. Although the Minister tried to make cheap points in Committee, it was under a Conservative Government that improvements in the timeliness of payment by the Government were evidenced. Just as the minimum wage was not set during the passage of the National Minimum Wage Bill, thus hampering discussion on that Bill, the results of payment records under the present Government were not made available to the House to enable us to judge the progress that they have made. How much better it would have been if those records had been available and if the Minister could have persuaded her colleagues to guarantee timely payment to all suppliers, thus leading by example.

It does not surprise me that the records were not made available. The responsibility of the Government is to govern and, in those terms, we do not seem to have a Government at all. When they are not delegating to others--for example, decisions on interest rates or the level of the minimum wage--they are pretending to be sympathetic to everyone and saying that they will carry out a review. Many of those reviews have been outstanding for more than 12 months.

In this case, however, the Government decided to govern. They promised to establish interest on late payments. What do we find? They have tabled amendments to their own Bill at every stage. We have to be sceptical about the effects of this convoluted legislation, which is hardly likely to be understood by the small companies that are to benefit. So much was admitted by the Minister, who will be sending out explanatory leaflets, but we did not expect the Government to have second, third and fourth thoughts about their own measure.

We are not confident that the Bill will produce the benefits that the Minister claims, but of course we hope that it does not cause the damage that we have outlined and for which there is so much potential. The House will appreciate that if one payment period is extended, the Minister will have failed.