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Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I hope that this will be the widest point of the hon. and learned Gentleman's remarks. He must remember that we are debating the Magistrates' Courts (Procedure) Bill.
Mr. Garnier: I would describe this as a needle point which goes to the very heart of the policy of the Department. It explains why I welcome the Bill, which represents the high point of the Department's work this year. As I have suggested, the way in which the Department has handled this and other business this year has been breathtaking, and the Minister ought to be congratulated on that. I do not wish to carp because the Minister has had enough trouble this year. May I extend the congratulations of the official Opposition on his safe conduct of the Bill? I trust that it will receive its Royal Assent at the earlier opportunity.
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Mr. John Burnett (Torridge and West Devon): The Liberal Democrats also support the Bill. In response to points I made in Committee, the Minister has said that the consequences for defendants of not responding to summonses should be clearly and vigorously set out in the documentation, and that is very important. We are still concerned that, in an increasingly mobile and cosmopolitan age, adequate steps should be taken to ensure that, for example, members of the armed forces--who can often be away for months on end--are not unfairly convicted. I hope that the Minister will address that point, but, as I have said, we very much support the Bill.
Question put and agreed to.
Bill read the Third time, and passed, with amendments.
Order for Second Reading read.
The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche):
I beg to move, That the Bill be now read a Second time.
I am delighted to bring the Bill to the House today. The Government have made it clear that the Department of Trade and Industry is the Department for all businesses and that everything possible will be done to promote enterprise and assist smaller firms. A healthy, vibrant small business sector creates wealth and employment, generates new ideas and products and is the bedrock of a successful enterprise economy.
The sector is crucial to UK competitiveness. Small firms lie at the heart of the Government's economic strategy. The Government will do all that we can to deliver the right conditions in which small businesses can thrive and grow. That is why our small firms manifesto, "Growing and Prospering", committed the Government to deliver a right to claim interest on the late payment of commercial debt.
The Gracious Speech of 16 May 1997 announced that legislation to provide that right would be brought forward in this Session. We have kept that promise. Our commitment to this measure is a mark of our commitment to the small firms sector. Our Green Paper, "Improving the Payment Culture: A Statutory Right to Claim Interest on Late Payment of Commercial Debt", published on 28 July 1997, set out our proposals.
The Bill is a vital element of a package of measures that will change the payment culture. The Bill will provide businesses with the additional statutory tool many have been asking for to combat the abuse of their trade credit.
I must note the crusading work of Stan Mendham of the Forum of Private Business. He has championed the need for a statutory right to interest for many years. The last Government may have been indifferent to the needs of the small businesses represented by organisations such as the Forum of Private Business, but I can assure the House that this Government are not.
Mrs. Cheryl Gillan (Chesham and Amersham):
I also would like to pay tribute to the Forum of Private Business, which has advised me on the matter. However, could the Minister name all the other business organisations--particularly those representing small businesses--which are completely in favour of the Bill?
Mrs. Roche:
I thank the hon. Lady for her tribute to the forum; I am sure that it will be greatly appreciated. I note her long-standing commitment to the principle of a statutory right to interest: on 22 March 1994, when she was a Back Bencher, she contributed to an early-day motion calling for a statutory right to interest, although, unfortunately, the previous Government, of which she became a member, refused to implement that. Therefore, I am grateful that she is on the Opposition Front Bench today to congratulate us on our action.
In response to the hon. Lady's question, I can tell her that we consulted all the small business organisations in connection with the Bill. She will know that, in doing so,
we have established the better payment practice group, to which all those organisations belong. The small business community and its organisations realise that the Bill is an important part of a package of measures designed to bring an end to late payment. She will also know that all the surveys show overwhelming support among small businesses for a statutory right to interest. That right will be automatic, but the exercise of the right will be voluntary.
Mrs. Gillan:
What the Minister does not realise is that when legislation on statutory interest on debt was examined, many business organisations said that it would not help in respect of the late-payment culture. She will know that the previous Government made great efforts to tackle that culture, many of which were extremely successful. Do the Federation of Small Businesses and the Small Business Bureau fully support all of the proposals contained in the Bill?
Mrs. Roche:
The hon. Lady will know, from past consultation, that there have been some shifts in the attitude of small business organisations: at times, some have supported a statutory right to interest while others have not. We have been successful this time in having consulted small business organisations every inch of the way during the passage of the Bill. We are grateful for the support that those organisations have given.
I have to take issue with the hon. Lady's remarks about the previous Administration. She will know of the boast of the former Deputy Prime Minister, the right hon. Member for Henley (Mr. Heseltine), of having strung along his creditors and his saying that that was the secret of his business success. I am sure that she would dissociate herself from that comment.
Mr. Richard Page (South-West Hertfordshire):
Will the Minister give way?
Mrs. Roche:
Of course I shall give way to my predecessor.
Mr. Page:
The Minister is being unfair to my right hon. Friend the former Deputy Prime Minister, who is a person who built up his business. He was explaining what happens when a company gets into a position, not of being unwilling to pay, but of being unable to pay. He was describing the sort of thing that a company will do in order to survive; he was not describing callously stringing the customer along, but stating his understanding of the difficulties facing small businesses. I wish that the hon. Lady, along with her ministerial colleagues, would not misrepresent my right hon. Friend's remarks.
Mrs. Roche:
The hon. Gentleman, with his customary generosity, does a good job defending his right hon. Friend, but those comments did a great deal of harm, set entirely the wrong tone and went down very badly with the small business community.
In setting out the legal context to the Bill, I should note that the issue of interest is not new. In 1893, Lord Herschell, in the London, Chatham and Dover Railways case, expressed strong sympathy with a claim for interest. However, despite his sympathy for the plaintiff, he found that interest could not be claimed under the existing Civil Procedure Act 1833. Forty-one years later, the legislature
passed the Law Reform (Miscellaneous Provisions) Act 1934, which provided a power to include, in any judgment on any debt or damages, interest at a rate thought fit from the time when the cause of action arose to the date of the judgment.
In 1974, the Lord Chancellor, Lord Elwyn-Jones, asked the Law Commission:
It is 165 years since the Civil Procedure Act 1833 began the development of formal law on the provision of interest on late-paid debts. The Bill returns to the recommendations of the Law Commission in 1978 and finally gives all suppliers, regardless of when they are paid, the right to claim interest on late-paid commercial debts. The evolution of legislative measures to combat late payment shows us that the right we are proposing is a fundamental necessity and long overdue. The Government believe that late payment is wrong, both economically and ethically, and that the time to act and provide the right contained in the Bill is now.
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"To consider the law and practice relating to interest on debt (where interest has not been provided for by contract) and on damages, and to make recommendations".
On 7 April 1978, the Law Commission made its report to the then Lord Chancellor, including a draft Bill which, had it been adopted as a whole, would have provided a right to claim interest where a debt is paid late, but before or during any proceedings, up to the point when a money judgment is given. In 1982, the then Government saw fit only to give effect to part of that draft Bill. The Administration of Justice Act 1982 amended the Supreme Court Act 1981 to provide the courts with the discretion to award interest where a debt was paid late after proceedings had begun, regardless of whether or not the proceedings concluded in a judgment on the principal debt. Of course, that still left suppliers who were paid late, but before proceedings were issued, unrecompensed for being kept from their money.
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