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Mrs. Gillan: I thank the hon. Lady for giving way once again. It is obvious that many of those measures, especially the last one mentioned, were introduced under a Conservative Government. I notice that, since the present Government came to power, there has been no publication of the league tables for payment performance, other than for the year that covered the previous Conservative Government. When will the next table be published, covering the Labour Government's first year in office?
Mrs. Roche: I shall answer the hon. Lady's first point straight away. I am a little perplexed by her comments.
The group to which I referred was established by this Administration and all its meetings have taken place under this Administration. I am rather sorry that the previous Government did not think of establishing it. I am also sorry that they did not support the federation's work in publishing league tables in the private sector. The hon. Lady also asked about league tables, and I am delighted to tell her that I shall publish them before the summer recess.
Government Departments have adopted the British standard for achieving good payment performance in commercial transactions and the CBI prompt payment code. As I have said, we shall publish tables of the payment performance of central and local government before the summer recess. The Government are fully aware of the link between this Bill and the issue of access to justice. The Department has worked in close consultation with officials of the Lord Chancellor's Department. The Lord Chancellor announced in October that he was pressing ahead with reforms to the civil justice system aimed at reducing cost, delay and complexity.
We consulted widely on our proposals, and I am grateful to all those who responded. Their comments have been invaluable in improving what is, after all, a Bill dealing with a technical area of law. I am happy to say that all of our proposals have received widespread support. I am particularly pleased that our phasing proposals were so well supported. For example, when the Institute of Directors sought to respond to the Green Paper, it received 1,700 responses to a survey of its members, 69 of which favoured a right to interest.
I am pleased to say that, when concerns have been raised, we have tried to be as flexible as possible. I believe that we have demonstrated a willingness to reflect and to make changes where they are merited. That has been the case both during consultation and since the introduction of the Bill in another place.
Mr. Eric Forth (Bromley and Chislehurst):
I seek clarification from the Minister. I think that she just said that, out of 1,700 responses to the Institute of Directors survey, just 69 favoured a statutory interest on late payment. Is that figure correct?
Mrs. Roche:
I meant 69 per cent.
Mr. Forth:
I am grateful. Perhaps the Minister could clarify the survey's results for the record.
Mrs. Roche:
Yes, I am happy to do so. The figure is 69 per cent. I also understand that that is one of the largest responses that the Institute of Directors has received to a survey of its members.
The Bill was introduced with two changes to the original proposals that appeared in our Green Paper. The definition of a small business was, for the sake of simplicity and in order to avoid enforcement difficulties, reduced from the two out of three Companies Act 1985 definition to the simple criterion of 50 or fewer employees. The second change was to the rate of interest. The Green Paper originally proposed a rate of base rate plus 4 per cent. Having noted the concerns voiced during consultation and after taking further advice, we recognised that the interest rate should be sufficient to recompense all businesses for the cost of late payment.
Therefore, the legislation proposes a rate of base rate plus 8 per cent., which is the rate at which the weakest businesses are charged for term lending.
Mrs. Cheryl Gillan (Chesham and Amersham):
I congratulate the Minister for Small Firms, Trade and Industry on bringing the Bill to the House--not least because, as she said, it has enabled her to keep one of her promises to the electorate. It is a pity that the Secretary of State for Health could not keep his promise to the electorate and that waiting lists have increased by 100,000. Perhaps other Departments could look to the example set by this Minister and improve their records.
It is sad that the Minister is supported today by a lone Back Bencher. None of her colleagues in the Department of Trade and Industry considers the matter to be important enough to sit alongside her and see her flagship move forward. At least I have good support from my colleagues on Conservative Benches. Unlike the Labour party, the Conservative party has traditionally been the friend of business,
Mr. Colin Breed (South-East Cornwall):
Traditionally.
Mrs. Gillan:
We shall maintain that tradition.
The road to hell is paved with good intentions, and the Bill before the House epitomises that expression. All hon. Members agree that late payment could be agony for both large and small business. Yet today's Financial Times reveals part of the vision of hell that accompanies the good intentions in the Bill. The article is headed, "Businesses 'not ready' for tough law on debts". It states that a survey has found that fewer than 2 per cent. of company finance directors fully understand the Late Payment of Commercial Debts (Interest) Bill. The article goes on to say that the Bill could force companies in the United Kingdom to pay more than £180,000 a day. Yet again, a burden is placed on business--another piece of red tape--that has no obvious benefits for some who view the legislation.
Mrs. Roche:
I am shocked by the hon. Lady's remarks. Do I take it that she now withdraws the support that she gave in 1994 to a statutory right to interest? I expected congratulations on the legislation, not carping.
Mrs. Gillan:
The Minister has already heard my answer. Upon examination, it was found that other mechanisms would help more. No one supports the late payment of debts, but perhaps there is another way, apart from legislation. I hope that the hon. Lady will be open-minded and listen to some other suggestions.
If we look to our European neighbours, we can see that the lesson is not clear. As I said by way of intervention, Spain has problems. Companies in Spain and Portugal--which also has legislation in this area--have some of the worst records in Europe. Overall payment performance in the United Kingdom is better than the European Union
average by some five days. Moreover, the Bill seeks to phase in the legislation, allowing small businesses to pursue other small businesses only in the final stage in several years. However, 70 per cent. of small businesses trade with other businesses of a similar size.
The Minister has tried to give the impression that her measures are universally welcome, but that is not strictly true. Her proposals have had a lukewarm reception in some areas, which perhaps explains why the arrival of the legislation in the Chamber was delayed for more than a year. Before the election, the Minister and her colleagues expended phenomenal efforts on trying to woo the business community. The prawn cocktail offensive became an embarrassingly familiar item in journalists' columns. We have seen the outcome of those cocktail parties, with chosen business men from organisations that could afford to donate £1 million to the Labour party getting what appears to be special treatment.
The spin doctors formulated the message in a desperate attempt to appear business friendly, and the policy was pursued ruthlessly. Labour callously tried to lull business into a false sense of security--and I am afraid that the Bill is part of that charade. Like so much in this Government, it is a thin facade: it is a fig leaf to cover the Government's modesty while they remain as rapacious as ever in their intentions towards business. They attacked business in both Budgets, and I give them notice that the businesses that I talk to are beginning to see through their warm words and their warm champagne and to realise that they are gradually eroding many businesses' competitive edge.
The raid of £5.4 billion on pensions makes Maxwell look like an amateur. The burdens are piling on, from the windfall tax, which has grabbed £5.2 billion and the road fuel tax, which has grabbed £440 million, to the car registration tax, which takes £60 million and the corporation tax changes, which take £630 million. The strength of the pound is destroying our exporters' business, and on top of that come the social chapter, the national minimum wage and union recognition, which will add to the burdens on business.
At Question Time today, we heard that the Department of the Environment, Transport and the Regions is considering taxing car parking spaces for shops, factories and offices. Business should not face such burdens. It also faces two other inescapable burdens: the additional costs of the euro and of the millennium computer problem, which will run into billions of pounds and impose financial burdens on businesses that have to maintain their competitive position in an increasingly competitive world. The debacle over the euro this weekend represents not only a national lottery, but an international lottery of giant proportions. It was a rollover weekend, but the people who were rolled over were European and British citizens.
The measures fall on the negative side of the equation, but the Government hope that the Bill will register on the positive side. In many ways, I hope that it will, but instead of supporting it overwhelmingly, many businesses and organisations representing business do not think that it is necessary. The Federation of Small Businesses said:
"We shall try to convince the small firms Minister that other issues should be looked at first".
5 May 1998 : Column 600
The British Chambers of Commerce said:
The Confederation of British Industry said:
"It is an ill-conceived, very short term solution and will hurt businessmen's interests".
"It will not work and according to our members, will make matters worse. It would be very unfortunate if they went ahead with something that most small businesses do not want".
The small and medium enterprises council of the CBI said that the Bill would not substantially increase the likelihood of small firms being paid on time.
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