Select Committee on Delegated Powers and Deregulation Tenth Report


LATE PAYMENT OF COMMERCIAL DEBTS (INTEREST) BILL [HL]

Introduction

  25.    This bill gives effect to the Government's proposal to make interest payable on late payments of debts due from one business to another.

Powers

  26.    Clause 2 defines the contracts to which the bill applies. Subsection (4) allows the Secretary of State to exclude by order particular descriptions of contract. Subsection (5)(b) applies negative procedure.

  27.    Clause 3 defines the debts to which interest is attracted by the bill. Subsection (5) allows the Secretary of State to exclude by order particular descriptions of debts. Subsection (6)(b) applies negative procedure.

  28.    Clause 5(1) provides for the rate of interest applicable to late payments to be prescribed by the Secretary of State. Orders are not subject to Parliamentary control but have to be laid before Parliament after being made. Clause 5(2) gives the Secretary of State power to set the rate of statutory interest at a level which would deter late payment. The explanatory memorandum (paragraph 16) states that it is intended to set the rate by reference to a formula, which may be "base rate plus a factor which is likely to be in the region of 7 to 8 per cent, initially". This is an important power, for which the Committee considers that negative procedure would be appropriate. There is a further consideration, which was raised during the second reading debate on this bill,[2] that there is uncertainty as to whether the provisions of clause 5(2) would be consistent with the proposed EU directive on late payment. This uncertainty further strengthens the case for amending the bill to provide for negative procedure.

  29.    There is a commencement power in clause 15(2) which can be supplemented by transitional, supplementary or incidental provision made by regulations under clause 15(3). Neither power is subject to Parliamentary control.

Recommendation

  30.    The House will wish to consider the importance of the powers in clauses 2, 3 and 5 in relation to the level of Parliamentary control proposed. In particular, although clause 5 is limited to fixing the rate of interest which Parliament will have made payable by passing the bill, the House may consider that the bill should be amended to provide for negative procedure here. There is nothing else in the bill to which the House's attention need be drawn.


2   See HL Deb., 12 January 1998, especially cols. 861 and 883. Back


 
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