House of Commons Hansard Debates for 2 Feb 1990

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Mr. Eggar : My hon. Friend has raised a technical point which is properly for my right hon. Friend the Chancellor of the Exchequer. There are several other reasons why small companies are reluctant or simply fail to submit bills. One reason is a less than perfect credit control system. One of the most interesting events that I attended recently was the launch of an open learning package which was devised, with financial help from my Department, by the Cranfield institute of technology and the Open university among others. It was a modular system specifically geared towards providing specialist training for small businesses and it was especially designed for small but growing businesses. A large element of that package was designed for accounting and credit control, which are recognised to be weaknesses of many small businesses.

Mr. Couchman : Does my hon. Friend agree that a problem with many building firms and building trades firms that find themselves in difficulties and eventually founder is that their accounting is dreadful? I frequently find myself having to push people into giving me invoices for work done on my business premises.

Mr. Eggar : I hear what my hon. Friend says. I remember having had some work done in my home and receiving effusive thanks from the builder who had done the work when I paid almost on receipt of the bill. I suspect that he was as surprised as I was naive. My hon. Friend's point is understandable. It is not only in the building industry that that problem arises. There are several other areas in which small companies are not geared up to a proper system for submitting bills, which surprises me. With the present relatively low price of computers and software packages that have an automatic follow-up system, there is less reason for not being up to date with credit control than there once was.

No hon. Member would deny that there is a real problem in late payment. However, the real question is how we deal with that problem, which goes to the heart of the issue. That is recognised not only in the House, but by the small firms' organisations, many of which, as my hon. Friend the Member for Hampshire, East mentioned, have severe misgivings about the Bill. My hon. Friend will recall that when he first came to me with the suggestion that he might introduce a Bill on late payment, I approached the proposal with a completely open mind. I had not formed a view on whether that would be the right way forward. His proposal prompted me to look into the matter carefully. I have given it much consideration and I have tried to examine whether my hon. Friend's detailed proposal would have an effect on late payment, and what effect that would be.

I have reached the same conclusion as my two predecessors, and I have talked to them about this. Each of them went into the issue in considerable detail and tried to weigh up the conflicting arguments. I have come to the conclusion that the Bill is not the way forward at this time. One factor that has weighed heavily with me is that we are a Government who are rightly committed to less regulation. We believe that the best way to achieve economic growth is to create the general framework within which businesses, large and small, are free to go out into the marketplace, and to create jobs and wealth in the way that they think best, subject always to a general framework in areas such as health and safety. I believe that I carry my hon. Friend with me when I say that if we are to introduce

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legislation in this area, there must be an overwhelming and clear-cut case for doing so. Small firms' organisations have said that they also attach importance to that.

Mr. Mates : My hon. Friend carries me all the way with him. First, in his analysis, he has acknowledged that there is a problem and that the problem is growing. Secondly, he has said that he approached the matter with an open mind and I accept that absolutely, as I remember our first conversation. Thirdly, I do not think that I am betraying a confidence in saying that he said that he would be very much influenced by the attitude of the representatives of small firms. I hope that my hon. Friend will comment on the fact that at that stage, there was only one such organisation in favour, but that now, after a relatively short time, there are five of six in favour. The mood is changing as quickly as those small firms are appreciating the difference between this Bill and the previous Bill. The one question that I hope that my hon. Friend will address is, as the Government said that something must be done, what are they going to do if they do not accept the Bill?

Mr. Eggar : I shall come to all the points that my hon. Friend has raised, and if he feels that I have not addressed any of his arguments as I proceed, I hope that he will intervene on me. I shall certainly be willing to give way.

I would not claim for one moment that the issue is clear cut ; indeed, it is not. As my hon. Friend said, the fact that a number of small firms organisations continue to oppose the Bill, whereas the Forum for Private Business has argued for it through thick and thin, is testimony to the balanced nature of the argument. When I was first appointed to my present job I spent a great deal of time meeting all the small firms organisations to give them an opportunity to raise issues of concern to them. The only organisation that chose to raise this issue, when it could have raised anything at all, was the Forum for Private Business. Other organisations raised different issues but not this one.

Mr. Leigh : I am sure that my hon. Friend the Minister will say that the Association of British Chambers of Commerce also opposes the Bill. That organisation said that companies could be inclined to stipulate in the contract a much later date for payment, and that is the main objection to the Bill. But will the Minister consider a suggestion that I made earlier in an intervention--that the Bill should apply solely to Government Departments? Would my hon. Friend then consider dropping his objection to the Bill?

Mr. Eggar : As I shall say later, we believe that much of the concern about late payment by Government Departments is not well founded. My hon. Friend the Member for Hampshire, East has said that he is open to persuasion over the contents and final form of the Bill, and I should have to consider what my attitude to a revised Bill should be. For the moment, however, I can comment only on the Bill that is before me.

Mr. Mates : Would not a Standing Committee be precisely the forum for the Government to make that decison?

Mr. Eggar : We are now discussing the Second Reading of the Bill.

Mr. Mates : The principle.

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Mr. Eggar : Absolutely, and I am trying to explain the Government's attitude to it. If the Bill goes into Committee we shall have the opportunity to discuss this and many other issues, such as the division between small and medium-sized firms and whether the Bill should cover all firms. It is, of course, for the House to decide whether the Bill should have a Committee stage.

Let me follow the lead given by my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) and point to a few of the Bill's drawbacks. Most importantly, I believe that the Bill will in practice make little difference to small firms' ability to obtain prompt payment of debts owed to them. As my hon. Friend implied, the problem stems from an imbalance of negotiating strength between small and large businesses. The Bill would have little impact on that fact of commercial life. There is an imbalance of power between contracting parties in many commercial contracts.

Mr. Gill : Does my hon. Friend accept that customers weigh up the cost of paying their suppliers against the cost of not paying them? The purpose of the Bill is to ensure that the cost will be equal. The cost of not paying will be as great as the cost of paying. There will be no decision to make and the incentive will be to settle promptly for the sake of good relations between customers and suppliers.

Mr. Eggar : I should be more persuaded by that argument if my hon. Friend had used it in the context of present contractual terms. At the moment, standard business practice is to request payment on 30 days, although sometimes the period is longer and sometimes it is shorter. Some firms pay regularly on 30 days ; some pay earlier and some later. I am not convinced that the fact that interest would be borne past the contracted date would make any substantive difference. It seems to me more likely that either the contract terms would be elongated beyond the present 30-day period, or price calculations would take account of statutory interest that may have to be paid if there is deliberate late payment. I think that the market would simply take account of the new legislation, which would not, therefore, make much difference.

Mr. Gill : Would my hon. Friend care to consider an analogy with Japanese industry? I understand that it is axiomatic that Japanese customers pay their suppliers promptly as a matter of honour. If they do not pay promptly, the manager will be hauled over the coals. Is it not significant that the small and medium-sized sector in the Japanese economy is far stronger than it is in the British economy? The longer we delay in acting on the proposals in the Bill, the more we shall prejudice the medium -sized company sector, and we shall do that to our great disadvantage.

Mr. Eggar : I completely agree with my hon. Friend's basic point, and I think that most British firms would do well to look at the practice that has been developed in Japan and the relationship between large companies and their small company suppliers, just as they would do well to observe the similar practice of a number of their British counterparts, most of which would accept they have adopted Japanese practice.

The importance of a long-term stable relationship between a large company and its supplying companies is vastly underrated. If that relationship simply depends on

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an annual or even more frequent contract price negotiation--I am talking mainly about the manufacturing sector-- there is at least a case for saying that the large company suffers as much as the small company from that uncertainty and lack of mutual loyalty. I join my hon. Friend in hoping that British industry will look at the lessons that can be learned from Japan. I recently had an interesting discussion with the managing diector of Unipart, a company which, I understand is benefiting very much from that kind of supplier-producer relationship with the Japanese motor company Nissan, in the north-east and is seeking to develop exactly the same kind of relationship with its own suppliers. Therefore, I join my hon. Friend in hoping that that trend will increase. However, we cannot legislate for that kind of relationship and I do not believe that the Bill would effect such a relationship.

Mr. Butterfill : Does my hon. Friend also agree that the history of what has happened in the construction industry is not very encouraging? A system of liquidating ascertained damages has built up and is now used to enhance disputes between companies. Does my hon. Friend agree that a Bill such as this would be inclined to lead people to dispute that a bill was due and payable, which might ultimately operate to the disadvantage of small firms, rather than to their advantage, as has already happened in the construction industry?

Mr. Eggar : I was about to come to a number of the key points that are now being raised. The short answer--I shall, of course, develop it--is- -

Mr. Deputy Speaker : Order. I apologise for interrupting the Minister, but he should not turn his back on the Chair so frequently.

Mr. Eggar : I apologise, Mr. Deputy Speaker.

There is a lot in what my hon. Friend has said. One of my concerns about the Bill is that people who do not want to pay will find other reasons for not paying. They will ask, "Were the goods actually delivered at the time that it is alleged that they were delivered? Were they properly packaged? Was a smaller number delivered than was shown on the documentation? If that happened, it would bear disproportionately on small businesses which lack large numbers of people to follow through such practical problems. Larger businesses probably employ people to do just that. I believe that the Bill would tend to increase the number of disputed contracts.

Mr. Arbuthnot : I have been following what my hon. Friend has been saying and entirely agree with him, so what I am about to say goes slightly against my own conclusions. My hon. Friend referred to Japan, but I believe that Japan is one of the very few countries--if not the only country--to have had some legislative success in this area. It introduced the Law for Prevention of Slow Payment to Small Sub-contracting Firms in 1956. I do not know whether that legislation has been part of Japan's build-up of success in creating good practices in its firms. Would my hon. Friend care to comment on that?

Mr. Eggar : I am about to come to this point, not only in relation to Japan but more particularly as it applies to the rest of the European Community. The Commission's conclusion is that the differences in payment practices within the Community have not been brought about by the

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different legislative position, but by different cultural attitudes towards payment and the relationships between different businesses. Existing provisions allow firms to sue for debts and for interest. As small firms do not tend to go to court at present to recover the principal debt owed to them, not least for fear of losing future business, they are even less likely to do so if the Bill becomes law, simply to obtain the interest element. In most cases, the interest owed would be a comparatively small sum in relation to the principal outstanding. Another reason for the reluctance of small firms to use the courts is that the process is inevitably costly, especially in time, which is a precious commodity for small firms. Debtors know that only too well. As they take advantage of it now, I suggest that they would continue to take such advantage if the Bill were on the statute book.

Mr. Mates : I am sorry to keep interrupting my hon. Friend, but those two arguments are strong arguments in favour of the Bill. If he makes it clear that the force of those arguments goes against his conviction, that is fine. Of course, no firm will go to court simply for the interest when the principal is owned in any case. Therefore, the situation would be no different from now. A small business man will not seek to go to court. He will show the same reluctance to go to court as now because of his contractual relationships. However, if he has to go to court, interest will be running from the date on which the debt was owing, so he will be that much better off.

Mr. Eggar : My point is that small firms do not go to court at the moment for commercial and time reasons, so why on earth do we think that they would go to court because they have a Bill that entitles them to the interest accruing on the principal? My objection--my difficulty with the Bill--is whether it will address the problem. I do not dispute that there is a problem, but I do not believe that the Bill will meet it.

My hon. Friend questioned whether the business atmosphere would be affected by the enactment of the Bill. Of course, I hope that the passing of the Bill--if it were to be passed--would have a marginal effect on the atmosphere. However, it is unlikely to have a major impact on the way in which the majority of firms operate in this country. We need a change in attitude and a recognition that there is a mutual relationship between small and large suppliers and, indeed, between small suppliers and small companies. Indeed, much has been made of the fact that small companies are excluded from the provisions, except in so far as they might benefit from them. In answer to an intervention, I said that, like a number of small business organisations, I feel that one of the effects of the Bill would be an inevitable lengthening of the credit terms that large customers would seek to extract from their smaller suppliers. Firms in a weaker market position--in other words, generally small firms--would have to agree to those longer credit terms if they wanted to retain that business. I have read that some of the Bill's supporters have conceded that argument and that although they believe that a longer credit period could result from the Bill, they feel that that would be a price worth paying for a gain in certainty. However, I wonder whether that is really in the interest of small firms as a whole. A longer

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credit period would apply to many small firms, but the certainty would probably benefit only a few small firms. I raise that question. It must be borne in mind.

Mr. Gill : I appreciate what a difficult task my hon. Friend has to persuade the House that his case is right. He should not make the assumption that there is any certainty in the terms that small companies enjoy with large customers at present. My hon. Friend the Member for Hampshire, East (Mr. Mates) has instanced one large public company, well know to us all, which agrees to pay its suppliers in 90 days but takes 150 days to pay. What certainty is that?

Mr. Eggar : My hon. Friend make a good point, but if there is a lack of certainty around 30 days now, would he rather that there was a lack of certainty over 90 days in future? We cannot be certain that the Bill will introduce the change in attitude that many of my hon. Friends seem to assume. All my hon. Friends, even my hon. Friend the Member for Hampshire, East, recognise that in practice few small firms will go to the courts in order to obtain the amount due to them with the accrued interest that would apply under the Bill.

Mr. Ian Taylor : I think that we are missing one major point. If a small companies wishes to have certainty above all else, it can factor the debts because large companies are good collateral. That is the way in which companies create certainty, not through legislation.

Mr. Eggar : With his financial expertise, my hon. Friend points out one way to proceed. That point was made to me by the Association of British Factors when it came to see me recently. I would not want to appear to support one particular commercial way of proceeding on debt collection.

Mr. Hind : As a director of a company that does a large amount of factoring, I know that it is an expensive way of dealing with the problem, though it provides one with certainty, providing that the proper credit checks are made on the company. Will my hon. Friend consider that there is a better way of dealing with the matter which, as a lawyer, I know is not followed by companies? That is simply to put in a statutory demand which would cause payment within 14 days. If it is not paid within 14 days, a wind-up petition automatically follows. In my experience, that is the best way to obtain one's money. Never mind the interest, a company is interested in being paid.

Mr. Eggar : I assume that my hon. Friend's businesses are extremely prosperous.

Mr. Hind : They have no customers!

Mr. Eggar : I am sure that they go from strength to strength. I listened with considerable interest to what he said. I look forward to hearing the reports of what my other hon. Friends have said about my hon. Friend's suggestions.

Mr. Hind : I make that point because I recognise that it is difficult to obtain money from large businesses with which one is doing business. I accept that, but the majority of cases of which I have had experience are companies where there are lengthy gaps and where the suppliers of services have decided that they will not do business with

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that company again. Those are the circumstances in which one would use a statutory demand. It is effective and it is not used enough. The ignorance about it is remarkable.

Mr. Eggar : I am grateful for that advice. I am sure that several commentators will take note of it when they read the Official Report.

I have already said that I am worried that a provision such as that in the Bill might cause an increased number of disputes over contracts. I have given examples of what I think might happen. If there were an increase in disputes as a result of the Bill, small companies would suffer most.

My hon. Friend the Member for Hampshire, East and several other of my hon. Friends have commented on the payment practices of several large companies. I am not aware of the precise details, but it worries me to hear about large companies that abuse their powers and deliberately delay payment to suppliers. That is not a reasonable way to behave and it is not the way in which I believe that the majority of responsible large companies behave. I hope that those large companies mentioned in the debate will examine their payment practices and consider whether in all conscience they act in a way that is not only fair to their suppliers, but is in their own interests. That was the point that I was developing in response to my hon. Friend the Member for Ludlow (Mr. Gill). I referred to the practices of business in Japan and to what is happening among a considerable number of British companies.

Mr. John Marshall (Hendon, South) : Does my hon. Friend agree that many large firms such as Marks and Spencer recognise that the prosperity of their suppliers is very much in their own interests? They play a major part in ensuring that their suppliers are prosperous and they help them as they expand.

Mr. Eggar : My hon. Friend refers to Marks and Spencer, as did my hon. Friend the Member for Hampshire, East. There are other similar examples. One must be realistic about the diversity of attitudes among large companies towards their small company suppliers. In general, large companies do not take account of their suppliers' position in the long term. It is not for me to make a judgment, it is for the management of the companies but they probably do themselves harm, as well as harming their small suppliers.

It should be remembered that small firms have a responsibility to their customers and to other small firms. I have already said that several studies have shown that there is a lack of management expertise in many small companies. One of the areas in which there is such a lack, as my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) said, is in the collection of bills and the system that each small company operates. I hope that small firms will examine their own systems and will use available methodology to the best effect in making their cash flow as good as it can be.

I have referred already to some interesting open learning programmes of which I hope small firms will take advantage. From time to time, they do not take action that is within their own control and occasionally they could do more to help themselves, rather than always seeing problems with large companies as the cause of their cash flow difficulties.

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My hon. Friend the Member for Hampshire, East pointed to the example of other European Community member states who have legislation on late payment. A recent report prepared for the Commission shows that there is no direct correlation between good payment practice and the existence of legislation. The experience of countries having late payment legislation ranges from that of Spain and Portugal, who still regard late payment as a problem, to West Germany, where there appears to be no problem at all.

Mr. Mates : Perhaps I should not make this point, for fear of increasing my hon. Friend's opposition, but in Germany late payment is a criminal offence--"Ve haf vays of making you pay."

Mr. Eggar : I am not sure that my hon. Friend's supporters would appreciate the implications of making late payment a crime. If his Bill goes to Committee and he moves an amendment to make late payment a criminal offence, I doubt whether many of our right hon. and hon. Friends will support him. The Commission's report appears to make the point that the existence or otherwise of late payment does not depend on legislation but on cultural and business practices. The report states :

"The effectiveness of specific legislation as an aid to small and medium sized enterprises in collecting payment must be questioned."

It states also :

"Our understanding is that there is a common frustration in member states where there is specific legislation covering late payment to small and medium sized enterprises that the process involved in pursuing the legislation is slow and sometimes costly. Small and medium sized enterprises are often reluctant to pursue major customers through the legal process as they believe, not unnaturally, that it may prejudice the business opportunities which they are pursuing."

The Commission's objective report points out that the late payments we experience in this country are exactly the same as those that continue to exist elsewhere in the Community in countries having late payment legislation, with the exception of West Germany.

My Department has launched initiatives and published the booklets "Payment on Time" and "Prompt Payment Please!", which give guidance to small firms on credit management and correct invoicing and to large firms on their responsibilities to suppliers, particularly small firms. Those booklets were prepared in conjunction with a number of organisations representing both small and large businesses. We have also written to all Government Departments, county and local councils, health authorities, banks, small firms organisations and accountancy bodies offering copies of both publications and making it clear that the Government believe that measures should be taken to improve Britain's record of payment on time.

I do not say for one moment that during the past three or four years we have succeeded in achieving a dramatic change in attitude, but we have got an improvement. There is more of an awareness from large companies, and certainly from Government, at both local and national level, of the need to pay promptly.

Mrs. Edwina Currie (Derbyshire, South) : My hon. Friend mentioned the increasing awareness of the Government. When I was at the Department of Health and health authorities were beginning to run up large debts towards the end of the financial year, the strong view was taken in my Department that that was inflationary and inimical to the public interest. It was thought that if the

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suppliers came to believe as a matter of practice that Government Departments were delaying payments they would tend to puts up their prices. We took a strong view on that and an allocation of money was made so that the health authorities could meet their debts and reduce their credit lines in that way.

Mr. Eggar : My hon. Friend is absolutely right. One of the major arguments for being a good and prompt payer is that one gets a keen price. There is no built-in effect making people think, "Well, they may not pay for 30 or 90 days and therefore we had better put in another margin." If my hon. Friend remains I shall assure her that the good work in which she was involved during her time at the Department of Health lives after her. I shall comment on the health authorities' present payment practices.

As time is pressing I shall turn to the Government's record as a major purchaser. Central Government are directly responsible for a purchasing sum of about £15 billion per year. As everyone knows, the proposed legislation would cover not just large companies, but Government Departments.

In preparing for the debate I checked with all the major Government Departments about their policy on payment. Without exception their clear and unequivocal response was that payments should be made promptly. That is how it should be. It is only fair and right that Governments should set a good example on payment practice. Therefore, I am worried when suggestions are made by my hon. Friend the Member for Hampshire, East and other hon. Friends that in some way Government Departments have a particularly bad payment record.

Mr. Leigh : If the Government have taken this issue on board, why do they object to the Bill applying to them?

Mr. Eggar : I shall come to that point in a moment.

Government Departments are an easy target at which to aim, but there is little firm evidence to suggest that they are bad payers. During the past 10 years departmental payment procedures have been enormously improved and streamlined. I stress that it is our firm policy that all payments are to be made on time.

My hon. Friend the Member for Hampshire, East referred to the Ministry of Defence. It spends more than £8 billion a year on equipment and its major bill-paying centre in Liverpool handles no less than 1.3 million bills a year. The Ministry is often quoted as being a later payer, but I shall explain how the payment procedure works because that is part of the reason for the confusion over the Ministry of Defence. Contractors are paid by a monthly billing system by which they submit bills at four-weekly intervals and are normally paid within five or six working days of those bills being submitted. Other miscellaneous bills are submitted randomly and payments are usually paid within two weeks of the receipt of authorisation. I know that anxiety has been expressed about Ministry of Defence sub- contractors--companies that have no direct contractual relationship with MOD but which rely on its main contractors. As a result of the concern voiced by these sub-contractors, the MOD has agreed a code of practice with the trade associations which provides that payment terms for sub- contractors should, in general, be as good as those enjoyed by the Ministry's main contractors. Of course, because the MOD is not in a

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contractual relationship with its contractors' sub-contractors it cannot enforce the code itself, but it has done everything that it is reasonable to expect it to do for sub- contractors.

Mr. Mates : When I said that the MOD was one of the worst offenders, I should have added that it is also one of the biggest spenders, so proportionately it is probably no better or worse than any other Government Department. I am happy to make that plain ; I have a great many dealings with the Department in another capacity.

My hon. Fried is in danger of arguing against himself. He is saying that the MOD has a code of practice, but nothing with which to enforce it. That is precisely the problem that I have outlined about the large companies that do not pay on time. But the MOD does have a way of enforcing the code : it can refuse to deal with main contractors who do not pass on the benefits of prompt payment to sub-contractors. If my hon. Friend will acknowledge that, it is yet another reason why the small man should be given a lever against the big man such as that which MOD has tried to produce.

Mr. Eggar : I am not sure of the point my hon. Friend is trying to make. Is he saying that any company, however direct or indirect its relationship with Government Departments, should benefit from what amounts to strict contractual terms of payment? Does he want to intervene in the commercial relationship between companies to the extent that his question implied? I thought that my hon. Friend's main argument for one of the changes in the Bill was that he wanted to leave it to the market to decide the contractual terms in the way that it thought best.

Mr. Mates : I am certainly not trying to say that, and I am happy to put my hon. Friend right. Let us take the example of GEC, a major defence contractor. My hon. Friend's argument that he cannot make GEC carry out the MOD's code of practice because that must be left to the market is the very reason why we must approach the problem from the other end. If the MOD can do nothing about one of the worst offenders to which it gives major contracts, why should not we help the little man?

Mr. Eggar : That is predicated on the assumption--if my hon. Friend's Bill became law--that a small company would automaticaly and suddenly find that GEC, to use my hon. Friend's example, would pay promptly which it has not done before.

Mr. Mates : Yes, because it would cost the company not to.

Mr. Eggar : Not necessarily. The only way in which that would happen would be if the small company took the large company to court.

Mr. Mates : No.

Mr. Eggar : The debt has to be collected. Small companies will face exactly the same decision as they face now--whether to imperil their relationship with their major customer by taking action to recover their debt.

Several hon. Members have referred to the "Today" programme this morning. My hon. Friend must accept that it was significant that the representatives of both the small companies interviewed had doubts about whether his Bill would have the impact that my hon. Friend thinks it will have. The first point that I made in the debate was

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about the contractual balance of power in the relationship between small and large companies. I do not think that the Bill will make enough of a difference to that balance to justify adding to the legislative burden in this area. As I also said earlier, the Government are committed to less regulation and intervention and, therefore, the onus is on those who support the Bill to show conclusively that it will have an impact on the late payment problem.

My hon. Friend the Member for Derbyshire, South (Mrs. Currie) spoke about payment delays in the National Health Service. That was drawn to her attention when she was a Minister in the Department of Health and it has also been mentioned in a recent report by the National Audit Office. As a result of that report and my hon. Friend's efforts, we have been tackling that problem. Regional health authorities have been instructed to reduce unacceptable delays and this will be followed up by performance reviews of those authorities. They will also discuss with districts how best to move towards the target of payment within a normal commercial time frame.

Hon. Members have spoken about local authorities. It may interest the House to know that in 1986 an Audit Commission report almost suggested that some local authorities were too good at paying their bills early and that they should consider adopting more commercial practices. Other local authorities are not good payers. We are doing everything that we can to get central Government's record right. We have identified the problem with health authorities and have taken action to deal with it. Local authorities have what could be described as a mixed record.

I was surprised by the way in which my hon. Friend the Member for Hampshire, East sought to cast doubts on the representative nature of the bodies that have put forward arguments against his Bill. I do not think that anybody has tried to enter into an argument about the representative nature or otherwise of the Forum of Private Business or to look in detail at the consultation the Institute of Directors has carried out with its members. The House accepts that representative bodies put forward their proposals in a way that they think best represents the interests of their members. That is the best way to conduct the debate.

I shall quote to the House the view of the Association of British Chambers of Commerce. It says :

"every effort must be made to reduce, and not to increase, the extent to which legislation interferes in the normal commercial relationship between businesses."

In reference to the Bill the association says :

"we fear that large businesses will adopt much longer payment terms, ensuring that they do not become liable for interest the Bill could lead to a worsening of the prompt payment situation." The association's views are supported by the Association of Scottish Chambers of Commerce.

Mr. Hind : Will my hon. Friend give way?

Mr. Eggar : I have given way to many hon. Members and it is not fair to the House for me to continue with my speech for longer than is necessary.

The National Federation of Self Employed and Small Businesses has said :

"We believe that legislation could be self-defeating Larger companies would alter their contract conditions to circumnavigate the measures ".

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The federation goes on to mention the need for small businesses to be trained in credit monitoring and collection, and adds : "Too often it is the businessman him/herself who is to blame." That is an interesting reflection. On the evidence of its smaller firms council, the CBI has also made clear its opposition to the Bill.

I have always believed that the Government should pay considerable attention to small firms' organisations and should be influenced by their attitudes, and I hear what my hon. Friend the Member for Hampshire, East says about some organisations changing their views. I had the impression from an IOD document that I read this morning that some had changed their minds because of the alterations that my hon. Friend had made in the Bill-- alterations about which my hon. Friends the Members for Stockport (Mr. Favell) and for Gillingham (Mr. Couchman), among others, expressed concern.

I suggest that the onus is on the Bill's sponsor to make an overwhelming case for putting it on the statute book. No one would deny for a moment that late payment of bills is a problem for many small businesses ; the question is whether my hon. Friend's Bill would alleviate that problem. The Government are not convinced that it is the right way forward and our doubts are shared by many small firms' organisations. I therefore cannot commend it to the House. 12.51 pm

Mr. Richard Page (Hertfordshire, South-West) : I join other hon. Members in congratulating my hon. Friend the Member for Hampshire, East (Mr. Mates) on his success in the ballot, and on having aired an important subject. I have been in the House for some 13 years, but have never come higher than 50th in the ballot. Let me use this opportunity to ask the Clerks to shuffle the applications about a bit in the next ballot, so that Mr. Speaker can make a sensible and logical choice from the top of the pile.

I am attracted to the idea of the Bill, but any law that is introduced must be practical. If it does not work, the subsequent chaos and confusion will make matters very much worse than they are now--and we have already heard about the problems facing the courts at present.

I feel rather like the wishbone on the traditional Christmas turkey. One half of me is being pulled towards the Bill because its spirit is right, while the other half is pulled in the opposite direction because of the practical difficulties that it involves. My hon. Friend the Minister--who spoke for over an hour, and generously answered interventions--said the same. He approves of the spirit of the measure, as he wants people to honour their debts, but he sees practical problems in the way, and I agree that those objections must be overcome before we can proceed further.

I would hate hon. Members to go away with the idea that my hon. Friend the Minister is against small businesses. The right hon. Member for Yeovil (Mr. Ashdown)--who was here for the first few minutes of the debate, but has now vanished into thin air--was entirely wrong to say that the Government must now back up their rhetoric on small businesses by supporting the Bill. The list of the Government's achievements for small businesses is exceedingly long, and the right hon. Gentleman should not try to extrapolate an objection to small businesses from the Government's objection to the Bill.

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