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Lord Ezra: My Lords, I support the amendment so effectively moved by the noble Earl. As the noble Lord, Lord Clinton-Davis, will know from our private discussions, I believe that we should move faster than is proposed. While I accept that there is a strong case for the phasing to enable small companies to enter at a slower rate and not have claims made against them until some time has elapsed and they have been able to put their affairs in order, there seems to be no reason whatever why the public sector should not subject itself to claims being made under the terms of the Bill.

The local authorities are big users of private sector services, but as I know from experience, some delay in making payment sometimes on grounds which after careful investigation are not sustainable. That leads to a considerable delay in payment being made. I agree with the noble Earl that the Government ought to have the courage of their convictions. We support their convictions in the Bill and believe that the public sector should be included right at the beginning and that claims could be made against any part of it, whether at ministerial level or local authority level. The Government could then set a good example and give the desirable proposition a good momentum.

Lord Clinton-Davis: My Lords, I am grateful to both noble Lords who have spoken in the debate. They made representations to me and we had an interesting discussion in the office in my department. I know that they feel strongly about the matter.

I believe that, having regard to the consultations which we entered into on the proposals, we ought to wait and see. I remind the House that they received widespread support, with 87 per cent. of business respondents to the Green Paper expressing support for phasing and 85 per cent. supporting the proposed timetable. Those factors are rather compelling. Therefore, we do not intend to extend the initial commencement period of the Bill to include claims by large businesses against other large businesses or the public sector. But I believe that one ought to wait and see. We shall be very flexible about this, but we want to see how the Bill operates in practice. If it becomes clear that there is a demand for a change then the important thing is to respect the purposes of the Bill which I have outlined previously in our debate today. It is all about seeking to improve the payment culture. If we are not succeeding in attaining those objectives, then we shall have to look carefully at ways and means of dealing with the matter. But I am cautious about

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interfering with what we are seeking to do in the light of those consultations that were extremely profound and which received such substantial support in relation to our proposals.

I take the matter further to deal with local authorities. Local authorities are already required to pay all invoices promptly. The Audit Commission has set a performance indicator for the current year that local authorities in England and Wales must monitor and publish details of the percentage of their bills paid on time.

National payment performance data will be published by the Audit Commission in February of next year and we shall continue to work with the Department of the Environment, Transport and the Regions to encourage best practice within local authorities. I know also that my honourable friend Mrs. Barbara Roche, the Minister responsible for small firms, will be attending the Central Local Partnership meeting on 3rd March with the DETR and the Local Government Association, where prompt payment by local authorities figures substantially on the agenda.

We shall also be looking at and monitoring carefully the effect of the legislation, as I have indicated, not least through the Payment Observatory of the Credit Management Research Group at Bradford University, to which I referred in our earlier debates.

Therefore, I reiterate that if it seems sooner rather than later that there is a need to extend the right to large businesses so that they can claim against the public sector, if that appears to be a requirement in the light of experience, we can do so after consulting interested parties again, including the Better Payment Practice Group, under the power conferred by Clause 16(3). I hope that we can agree at present to give the Government's phasing proposals an opportunity to work before we undertake any consideration of changes to them.

It seems to me also that the publication point is met by what is happening. In fact, we had a striking illustration of how exposure could result in rather earlier payment. By opening the matter to public gaze, I understand that one of your Lordships was paid very promptly when there had been a question of late payment. I cannot remember the exact details. Therefore, on the face of it it seems that public exposure counts and that is what I have been talking about in terms of the Audit Commission's report which I hope will have a singularly beneficial effect.

In those circumstances, I cannot accept the amendment which has been moved and spoken to so eloquently. I hope that your Lordships will come to the conclusion that we should give the Bill an opportunity to work having regard to the caveat which I have already mentioned.

8.30 p.m.

The Earl of Home: My Lords, I regard that as a very unsatisfactory answer. I do not quite see how experience will make the situation any clearer. Are 1,000 companies going to write to the Minister to say, "We were going to sue next week but we are not going to because we are not allowed to"? If individual companies

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within the public sector publish their late payment results, we shall not know whether the companies concerned are small or large. I do not believe that experience will help at all in this regard.

The Government are saying, "Do as I say, not as I do". They are giving carte blanche to the more incompetent parts of the public sector to continue in their bad and slothful ways. The Government are letting down a great many medium-sized businesses which the Minister said on Second Reading were the companies which he wanted to help. I believe that part of industry will be sorely disappointed by the lack of leadership by example which the Government have shown by their reluctance to consider the amendment.

However, the Government still have time to reconsider their position. I beg the Minister to think again in the light of what I have said. As the noble and

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learned Lord, Lord Fraser of Carmyllie, said, discussions on this Bill have been cordial and, for the most part, very constructive. I echo everything he said in that regard. In the light of what has been said and in the hope that the Minister will reflect on the point with his colleagues, although I feel strongly on the matter, I shall not divide the House on the amendment, and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

In the Title:

Lord Haskel moved Amendment No. 19:

Line 3, at end insert ("; and for connected purposes").

On Question, amendment agreed to.

        House adjourned at twenty-five minutes before nine o'clock.

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