Small Businesses (Interest on Debt)

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 31st July 1997.

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Photo of Richard Spring Richard Spring Conservative, West Suffolk 12:00 am, 31st July 1997

To ask the President of the Board of Trade what representations she has received from small business organisations in favour of a statutory right to interest on outstanding debts. [10034]

Photo of Mrs Barbara Roche Mrs Barbara Roche Parliamentary Under-Secretary (Small Firms, Trade and Industry), Department of Trade and Industry

I have met a range of business organisations representing all sizes and types of business and I have received many letters in support of the proposed legislation.

Photo of Richard Spring Richard Spring Conservative, West Suffolk

Is the hon. Lady aware that small business organisations—eight out of nine—strongly oppose statutory interest? The consultation process shows that small businesses are most anxious not about statutory interest, which the hon. Lady highlights, but about the return to local control of business rates, which in the 1980s under Labour local authorities drove many small businesses into bankruptcy.

Photo of Mrs Barbara Roche Mrs Barbara Roche Parliamentary Under-Secretary (Small Firms, Trade and Industry), Department of Trade and Industry

I am astounded by the second part of the hon. Gentleman's reply. [Interruption.] It was his reply to my response. Opposition Members should listen more carefully. The previous Administration's system of business rates was widely loathed by the business community. That was said during its own consultation process. The statutory right to interest is supported by 80 per cent. of businesses and by some Conservative Members, including the hon. Member for Macclesfield (Mr. Winterton). I am delighted to announce that all small business organisations support our proposals to tackle late payment.

Photo of Bill Olner Bill Olner Labour, Nuneaton

Small businesses in my constituency are very pleased that the Government are at last taking action to ensure that other companies pay them their moneys. The previous Administration walked away from the problem and did not look at it at all—because, I assume, the then Deputy Prime Minister made his money by advocating that those firms did not pay money to smaller firms. We welcome the measure, and I urge the Minister to press forward with it as soon as possible.

Photo of Mrs Barbara Roche Mrs Barbara Roche Parliamentary Under-Secretary (Small Firms, Trade and Industry), Department of Trade and Industry

I am grateful to my hon. Friend. As I said in answer to the previous question, all the small business organisations have joined us in a year-long campaign to deal with the problems of late payment. One of the measures that the Government will be introducing is the statutory right to interest. We are consulting on the best way forward and looking forward to the responses. Unlike the previous Government, we know that we need to do something about the problem.

Photo of Michael Fallon Michael Fallon Shadow Spokesperson (Trade and Industry)

Does the Minister not realise that, this autumn, businesses already face a wave of new legislation, including that on the minimum wage, paternity leave, union recognition and works councils, and that the last thing that small businesses want is to be encouraged to sue their customers? If legitimising late payment in this way is such a good idea, why does she think that, on Tuesday, The Independent described her plan as smelling of legislation for legislation's sake"?

Photo of Mrs Barbara Roche Mrs Barbara Roche Parliamentary Under-Secretary (Small Firms, Trade and Industry), Department of Trade and Industry

Clearly, the hon. Gentleman has not read all the responses to the proposal. Nor does it appear that he has at all read the Green Paper, which is surprising considering that it came out on Monday, but let me put him out of his misery and tell him that, rather than imposing any burden on small businesses, it gives them a choice. I thought that that was what the previous Administration were all about.

Photo of Colin Breed Colin Breed Liberal Democrat, South East Cornwall

Will the Minister accept that, although the statutory right to interest on late payment is one way of tackling this endemic problem, consideration should also be given to requiring companies, particularly public companies, to publish in their accounts the degree of their late payment—through 30, 60, and 90 days—in an effort to expose those larger companies that continue to ensure that they do not pay their bills on time?

Photo of Mrs Barbara Roche Mrs Barbara Roche Parliamentary Under-Secretary (Small Firms, Trade and Industry), Department of Trade and Industry

I agree with the hon. Gentleman, and that is one of the matters that we are discussing with the small business organisations that have come together with us. I am delighted to announce that we shall consider publication with the private sector of such league tables, and we have discussed the matter with the Federation of Small Businesses.