LATE PAYMENT OF COMMERCIAL DEBTS (INTEREST) BILL [HL]
25. This bill gives
effect to the Government's proposal to make interest payable on
late payments of debts due from one business to another.
26. Clause 2 defines
the contracts to which the bill applies. Subsection (4) allows
the Secretary of State to exclude by order particular descriptions
of contract. Subsection (5)(b) applies negative procedure.
27. Clause 3 defines
the debts to which interest is attracted by the bill. Subsection
(5) allows the Secretary of State to exclude by order particular
descriptions of debts. Subsection (6)(b) applies negative procedure.
28. Clause 5(1)
provides for the rate of interest applicable to late payments
to be prescribed by the Secretary of State. Orders are not subject
to Parliamentary control but have to be laid before Parliament
after being made. Clause 5(2) gives the Secretary of State power
to set the rate of statutory interest at a level which would deter
late payment. The explanatory memorandum (paragraph 16) states
that it is intended to set the rate by reference to a formula,
which may be "base rate plus a factor which is likely to
be in the region of 7 to 8 per cent, initially". This is
an important power, for which the Committee considers that negative
procedure would be appropriate. There is a further consideration,
which was raised during the second reading debate on this bill,
that there is uncertainty as to whether the provisions of clause
5(2) would be consistent with the proposed EU directive on late
payment. This uncertainty further strengthens the case for amending
the bill to provide for negative procedure.
29. There is a
commencement power in clause 15(2) which can be supplemented by
transitional, supplementary or incidental provision made by regulations
under clause 15(3). Neither power is subject to Parliamentary
30. The House
will wish to consider the importance of the powers in clauses
2, 3 and 5 in relation to the level of Parliamentary control proposed.
In particular, although clause 5 is limited to fixing the rate
of interest which Parliament will have made payable by passing
the bill, the House may consider that the bill should be amended
to provide for negative procedure here. There is nothing else
in the bill to which the House's attention need be drawn.
2 See HL Deb., 12 January 1998, especially cols. 861 and 883. Back