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Lord Clinton-Davis: I suspect--and this appears to be confirmed by what the noble Earl has just said--that this is another way of trying to secure his aim of reducing the power of the Secretary of State solely to set the interest rate. I think the noble Earl conceded that it will not always be possible to state on the face of the Bill the rate of statutory interest. It is our desire to link the rate to the official dealing rate of the Bank of England as announced by the Monetary Policy Committee. But, as the noble Earl rightly said, it may not be incumbent on the Bank to announce the rate in the future if the committee decides to use a macroeconomic tool other than interest rates to give effect to monetary policy.

For that reason the Bill provides a power exercisable by the Secretary of State to prescribe the rate of statutory interest instead of a particular formula. From what he said previously, I have a feeling that the noble Earl is sympathetic to that argument. But it is of course for him to determine whether he will want to push the amendment at a later stage.

The Earl of Home: I thank the Minister for that response. I remain rather concerned that sole powers could lie with one individual as I believe it is hard to explain to overseas purchasers in particular how a rate can be set by an individual who may have nothing to do with finance at all. In many countries around the world the opposite number to the Secretary of State is not at all a financial person. I shall further consider our position on this point. However, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Meston moved Amendment No. 14:

Page 3, line 19, leave out ("may") and insert ("shall").

The noble Lord said: Clause 5(2) provides:

(a) protecting suppliers whose financial position makes them particularly vulnerable if they are paid late;
(b) deterring the late payment of qualifying debts".

Surely those are the primary objectives of the Bill. If the Secretary of State does not have to have regard to those objectives, or if there is any doubt about his obligation to do so, it would seriously weaken the Bill. Accordingly, the amendment proposes that those be mandatory considerations for the Secretary of State when setting the statutory interest rate. I of course accept that those two objectives may not be the only considerations for the Secretary of State and would in that respect be happy to accept the modification suggested in Amendment No. 15 in the name of the noble Earl, Lord Home, or something like it, to make clear that the two matters referred to in the Bill are not the only relevant considerations to which the Secretary

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of State shall have regard. Nevertheless, I do suggest that this is an important amendment to reinforce the purposes of the Bill. I beg to move.

The Earl of Home: I have some sympathy for the amendment of the noble Lord, Lord Meston. It is certainly essential that the interests of the less powerful suppliers should be safeguarded. I also accept, however, that there may be occasions where other factors have to be taken into account as well. Nevertheless, I believe the noble Lord's point is well taken, and I agree with him that at all times the Secretary of State should take paragraphs (a) and (b) in the clause into account. My suggestion that the words "inter alia" be inserted will, I hope, meet the point.

4.45 p.m.

Lord Borrie: I have found this subsection a little difficult and will continue to do so, whether it has "may" or "shall" in it, for two reasons. First, I do not know whether primacy is given to paragraph (a) or (b), or is intended to be given to paragraph (a) or (b). I wonder what the Minister will have to say. Secondly, partially to repeat something I said at Second Reading, I am not sure whether the words,

    "deterring the late payment of qualifying debts",

suggest the possibility of a penal rate, which I thought the Government had set their face against in the course of the consultation paper of last year. In intervening in this debate I am not sure that I agree with the proposers of the amendment, but I would be obliged to my noble friend the Minister if he could clarify the purposes of Clause 5(2), either as it stands or as amended.

Lord Clinton-Davis: As to the point which has just been raised by my noble friend, I do not think a question of primacy arises. I shall certainly consider what he said, but I do not see the logic in that observation, although I have always respected my noble friend's logic, going back for some years. On the question of the penal rate, I do not think that what has been stated gives any reason to suggest that, and we do not intend it to have that effect.

On the amendment of the noble Lord, Lord Meston, I am very much aware of his concern regarding the need to protect the most vulnerable in the business community. The Bill is about protecting creditors and deterring late payment. I am sorry about the use of that word; I do not intend it to be misleading in any sense. The fact is that in dealing with those matters the Secretary of State should be obliged to have regard to them.

The noble Lord went on to argue that the aim of protection may better be achieved by replacing the word "may" with the word "shall". Our case is that it is important that we ensure in the legislation that the Secretary of State may have regard to the need to protect the vulnerable and to deter late payment. As the noble Lord said, they need not be the only considerations in determining what is to be the interest rate. Whether that is done by including the Treasury in the way that he has suggested is another matter, but they need not be the only considerations which have to be applied.

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Perhaps I may give an example of the steps the Government are taking to gather information as this may help the Committee to appreciate the way in which we go about this matter. In gathering information we take account of the existence of the Better Practice Payment Group. It is an integral part of the way in which we are working in partnership with the business community in order to try and promote the whole culture among British business. This group sponsors the work of the University of Bradford's Payment Observatory, to which I paid attention in the speech I made on Second Reading, and I sense that the House at that stage accorded that proposal some sympathy. Part of the remit of the group will be to review the findings of the University of Bradford's Payment Observatory, which, among other things, will monitor and report on payment trends. Work of the Better Payment Practice Group in examining the results of the University of Bradford's Payment Observatory will give the Secretary of State important information to aid informed decision-making concerning interest rates and the efficacy of legislation and other measures generally. I suspect noble Lords would not wish me to prolong the matter by doing so, but I am prepared to set out the membership of the Better Payment Group, or I could write to anyone interested about that.

The Secretary of State, under the Bill as it is drafted, may consider the position of vulnerable suppliers and the need to deter late payment. These need not be her only considerations. The noble Earl, Lord Home, has sought to interpose the words inter alia. They are deeply offensive, I understand, to British parliamentary draftsmen; they are foreign words. Having used them in my legal practice on innumerable occasions I did not find them very offensive and I am sure the same would be true of the noble and learned Lord, Lord Fraser, and the galaxy of other Silks at this Committee stage. I am told it might perhaps be less offensive to use the time honoured English phrase "among other things". I rather prefer inter alia but, if it is deeply offensive to the government draftsmen, I will of course withdraw that remark instantly and I hope it will not go further.

Having said that, I will look at the way in which that particular phrase, as I have suggested it might be amended, could be incorporated. I give no undertaking about that at this stage on this deeply serious issue, but we may be able to come back to it. I hope that reassures the noble Earl.

Lord Meston: I am grateful to the Minister for forcing himself to lapse into the English language when he would much rather discuss this matter in Latin.

The position, more seriously, is that I accept that the two matters in Clause 5(2) need not be the only considerations for the Secretary of State. However, as drafted, the Bill actually allows the Secretary of State to disregard those two matters entirely or to give them negligible weight. This is a Bill which does not have a purpose clause, but surely, if one is looking to define the purpose of the Bill, it is to achieve the two things referred to in Clause 5(2). It detracts from the purpose, in my submission, to have the word "may" instead of

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"shall". Accordingly, this is a matter to which I would wish to reserve the right to return, albeit with improved wording, at Report stage.

Let me briefly mention the difficulty raised by the noble Lord, Lord Borrie. It seems to me, as a matter of construction, that where one has a statute which lists a number of considerations, normally no one of those considerations is to be given any particular priority over the other, unless the Bill or the statute so provides.

So far as the reference to deterring is concerned, there is a distinction between the word "deterrent" and the word "penal" which was referred to in debate at Second Reading. I have always understood that the word "penal" has a peculiar meaning of arbitrariness in English Law and that the use of the word "deterring" in the Bill does not leave the Bill vulnerable to the suggestion that a penal rate is being imposed.

There may be a further complication in that regard when we have to consider the provisions of the European directive, as and when we have them or a draft of them to consider. For the moment, however, I do not share the difficulty which the noble Lord, Lord Borrie, has with the word "deterring". To return to the substance of the amendment, this is a matter which I certainly feel needs further thought, and for the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 15 not moved.]

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