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Mr. Boswell: I see that the Minister agrees. It is not clear what defect is to be remedied which would not otherwise be remedied. If there is a problem in enforcement, it is probably a problem of relative size or of market influence, rather than one that would be brokered by some magic change in the law as proposed by the Minister.
A question that worries me is whether the defects culture will come into the consideration of debts. It would be easy for a firm to say that it did not like what it had received or that the building was unsatisfactory, and that it would not pay until the matter was settled. That may well shift the burden towards yet more litigation on whether or not contracts have been adequately discharged. The Committee must consider whether that chimes in with the statutory right of interest, or whether these matters can be held in the same legislation.
The question of contracts not expressed in sterling bothers me. There is reference in the Bill to overseas contracts under foreign law, but I noted that, yesterday,
the President of the Board of Trade was effectively writing virtually a blank cheque for the introduction of the euro as a secondary, supplementary or parallel currency in the UK. I presume that contracts made under English law and expressed in euros between two consenting parties will be testable in the English courts.
If that is so--if there is a single interest rate which is characteristic of the euro and the new European central bank throughout euroland, and those countries that use the euro as a subsidiary currency--it is likely that that single interest rate will diverge from the rate generally applicable on sterling debt. If that is the case, there is a possibility that there may need to be a second rate for the euro. If so, I wonder how that would be expressed, and whether parties might wish to convert from one to the other at various times. Those matters should be considered by the House, particularly given the DTI's enthusiasm for Europe.
If one asks small businesses whether they would like interest on late payment of debts, they are likely to say that they would. As so often with what this Government propose, it looks like a good idea at the time, it is easy to say, it sounds good and it is a simple political trick. However, the devil--and the problems for other businesses--will be in the detail. It is right that the detail should be tested thoroughly in Committee.
Mrs. Roche:
With the leave of the House, Mr. Deputy Speaker, I shall reply. This has been an interesting debate on an issue of importance to British business--particularly small business. I have listened carefully to the debate, in which a number of issues have been aired; I have agreed with some and disagreed with others, but I can assure the House that I will reflect on the debate when we go to Committee.
First, I wish to deal with the speech by the hon. Member for Chesham and Amersham (Mrs. Gillan), who referred to burdens on business. The Bill is hardly a burden. It provides a right, not a regulation. We received no response to the Green Paper saying that the Bill would be a burden on business. The only burden is that of late payment itself, which the Bill seeks to address.
The hon. Lady referred to taxation and the Budget. The last Budget was excellent for small businesses and has been welcomed by small firms' organisations. She asked how much has been spent on the best payment practice group. The Government measure success by what is done and we are pursuing a package of measures. It is sad that the Opposition cannot bring themselves to recognise that. Money is available to bring our objectives to fruition and that is being provided from existing budgets. The hon. Lady mentioned EU comparisons, and I referred to that in my speech.
The hon. Member for South-West Hertfordshire (Mr. Page) made the valuable point that we face a problem of culture. He is right, and that, in part, is what the Bill seeks to address. We are seeking to reinforce a culture change--a point made by the hon. Member for Lichfield (Mr. Fabricant), who has some experience of this matter. I was interested to hear his remarks about the sunrise industries, which are so important to the economic future of this country. The hon. Member for Weston-super-Mare (Mr. Cotter), who comes from a small business background, also referred to the payment culture. The Bill can succeed only in parallel with our other measures, which I have outlined.
Reference was made to the Lord Chancellor's review, which is up and running. It is a vast task, and measures to expedite judgments are expected to be in place by spring next year. I know that the Lord Chancellor will also review enforcement procedures over a longer time scale. That is excellent news for small businesses and is another measure aimed to improve the payment culture.
The hon. Member for Chesham and Amersham and I had a discussion about late payment by Government Departments. She will be interested to recall that when she was Under-Secretary of State at the Department of Education and Employment in 1995, only 75 per cent. of bills were paid on time. I am sure that she would want to reflect on that.
Mrs. Gillan:
The Minister will be aware that over the time I was a junior Minister at the Department of Education and Employment--as is clear from Hansard--that payment record improved dramatically to more than 92 per cent.
Mrs. Roche:
I am afraid that it had a long way to go. I gave the hon. Lady the opportunity to apologise to small businesses, but she failed to do so. I want to be fair to the hon. Lady, although I was slightly puzzled by her speech. She started by saying that the Bill was almost the road to hell, but then said that she would not divide the House on it. I want to be fair to her. I know the problems that she has. It is reported that she told a freelance reporter who told the Federation of Small Businesses which toldThe Sunday Times that the last Government had lost the small business vote, and that we would be seeing no new policies in this area from her. Clearly, that was her attitude today.
We heard an interesting speech from the hon. Member for South-West Hertfordshire, whom I thank for his kind remarks about the part that we both played in Government Departments. I know that the figure has increased for the DTI. It is not the figure that the hon. Gentleman quoted; from memory, I think that it is about 97.5 per cent. I recognise the contribution that he made in that respect. He raised the important matter of net monthly accounting as an example of the legislation in practice. The Bill will allow that to continue instead of having the default period of 30 days, where it exists in the normal course of dealings between the parties. I refer the hon. Gentleman to clause 16(2). It is always better to agree a date for payment expressly within the contract. The point that the hon. Gentleman made about small businesses is not one with which I necessarily agree. It is important that all businesses pay on time. We want to give small businesses time to develop the necessary systems for timely payment, which is why we propose phasing in that case.
The comments by my hon. Friend the Member for Putney (Mr. Colman) reflected his years of business experience, mainly in dealing with big business. He rightly referred to the importance of good supply chains. Where businesses have succeeded, they have invested enormous time and effort in their supply chains, not only because it is the right and ethical thing to do, but out of enlightened self-interest--it is in their own interest to have good suppliers. My hon. Friend also referred to phasing and the default period, on which we have been holding discussions.
The hon. Member for Weston-super-Mare talked about the definition of a small business, and I understand his point, but it is difficult exactly to define a small business. There are several definitions, for example, in company law and according to the European Union. We have tried to pick on a definition that is workable and is readily understood within the business world.
The hon. Gentleman mentioned phasing: we consulted on the phasing proposals, and 80 per cent. of respondents supported phasing, with about 85 per cent. of those supporting our proposals. It is important that we give the proposals time to bed in, but we shall keep an open mind on the question of the timetable and be responsive to representations from business. He also mentioned the recently published EU directive, which has not yet been discussed by member states, although I understand that it will probably be on the agenda of the Industry Council this week. We have been in discussion with the Commission as it has formulated its proposals.
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