My Lords, I am delighted to support this big Bill for small businesses. Throughout my political life, I have worked to try to improve a lot of small businesses. I share a considerable amount of the analysis expressed by the noble Lord who just spoke, but I am not quite sure exactly what measures he was proposing. Perhaps they will come in Committee in the form of amendments. Personally, I like the title of the Bill, with its emphasis on the link between small business, enterprise and employment. After all, as has been said, enterprise creates employment. Perhaps the noble Lord, Lord Bilimoria, would prefer to say that “entrepreneurship creates employment”, but it comes to much the same thing.
Many small businesses will always remain small. They are craftsmen or professional businesses that provide services or goods and depend on the skills of the individuals who run them. They will always remain small, but they deserve our support and help in these increasingly complex times, and I am glad to say that in some respects they get that through the Bill. Other small businesses, of course, can and do grow and become large businesses, and that is when enterprise creates employment.
One cannot this afternoon refer to every aspect of the very disparate set of measures in the Bill, but I want to comment, first, on late payment, which in Clause 3. This is a potentially important move in the struggle against large companies which are slow payers. It enables the Secretary of State to require large companies to set out their practices and policies with regard to payment. I hope that the word “practices” includes a report on performance, because that, after all, is what matters. Late payment has been a consistent complaint of small businesses for many decades. When I was a lad, learning on the job to be an accountant in Leicester, it was general business practice to offer a discount for prompt payment, and it happened a great deal. I remember one of our clients, an old boy who had a good business in decorating supplies, whose boast was, “Thirty years in business and never missed a discount”. The result of that was that he was trusted—for that and for other reasons—and had a flourishing business.
Another problem today is large businesses—and, indeed, sometimes government departments and agencies—that use their enormous buying power to pay their small suppliers late. There is also, of course, a knock-on effect. If you are paid late by the people to whom you are selling, you cannot easily pay your own suppliers promptly. There is a knock-on effect right through the whole of business. Governments have tried different tactics in the past to improve this situation but it remains a big problem. Basically it is, I think, a problem of culture. The idea in the Bill is that disclosure will help to shame large businesses into doing better. However, the disclosure will work only if the press—prompted, I am sure, by the small business organisations—shines a light on big businesses that do not pay. I cannot imagine that their shareholders will take much notice. Indeed, they may welcome the fact that the directors of the large companies are relieving the strain on their finances at the expense of other people. But they should not, and I hope that this measure will be successful.
Like others, I welcome the provisions in Part 1 which are designed to make it easier for SMEs to get the necessary finance. As has been said, a high proportion of small business finance comes from the large clearing banks, but other sources are being used more and they certainly should be. Your Lordships’ Select Committee on Small and Medium Sized Enterprises, of which I had the honour to be the chairman, reported on exports in March last year. We recommended that businesses shop around for finance. We felt that too few businesses looked in more than one place for where their finance might come from. Well established sources such as invoice financing and that sort of thing have been around for a long time, and now there are newer sources, such as crowdfunding and the challenger banks. There are, in fact, far more banks available to help, particularly with export finance, than just the well known clearers. As we know, the Government themselves have an involvement, although not quite as vigorous as we would wish, but that is being improved. We urge the Government to help to stimulate the use of these new sources of finance. I therefore welcome Clauses 4 and 5, which open up information for such other sources of finance and will encourage people to use them.
Of course, privacy and transparency often conflict. We all want our banks to keep our secrets. The Bill ensures that information will be given to credit reference agencies or finance platforms only when the customer agrees.
Pubs are another aspect that has been mentioned. The problem of tied pubs and beer orders is another long saga, as the noble Lord on the Liberal Democrat Benches just made clear. When you look back, it is astonishing how the beer market has changed since I first started going to pubs. After all, there were fewer and larger businesses all the time at that stage, and Red Barrel was everywhere; there was practically nothing else, in places. But the credit for changing all this is due to one of the most effective campaigning organisations of recent decades, the Campaign for Real Ale, which my noble friend the Minister mentioned. Now, of course, there are microbreweries everywhere. The provisions in this Bill, particularly as amended in the Commons, are another tribute to that campaigning organisation. The Government were wise to accept the decisions taken in another place and inserted as amendments into the Bill. Titivate the drafting by all means, but I am glad that the policy of a market rent-only option will remain in the Bill.
I was somewhat startled by Clause 13, which relates to cheques. I did not realise that they could be presented for clearance only physically, not by electronic means.
It is astonishingly Victorian, is it not? I do not wish to cast aspersions on Victorian methods; in many cases, they were very efficient. When there were four deliveries of mail a day and people’s businesses did not extend over such widespread parts of the country, they worked extremely well. However, things have changed, and the number of days it takes to clear a cheque has increased immensely over time. But cheques still have their uses, and it is very good that we are making this change to the law.
Clearly, we will discuss insolvency in Committee, as we already have a little. It is a very complex, specialist area, with the interests of creditors, employees and others all having to be balanced in seeing what is to be done with a business. As the noble Lord, Lord Bilimoria, remarked, we have no real equivalent of Chapter 11 in the United States to try to freeze the position and save a business, so I foresee Committee debates in that regard.
The last matter that I want to mention briefly is company registration. The clauses and the schedule dealing with that matter in the Bill are highly complicated, but they are designed to simplify the procedure, which is a very good idea. This contradiction is not a new phenomenon; we are used to complicated things being proposed in an attempt at simplification. I welcome the clauses, provided they will actually simplify the procedures, which are unnecessarily elaborate and, I suppose, Victorian in their origins.
Overall, it is a welcome Bill, which takes opportunities to help small and medium-sized enterprises. It is a Christmas tree of a Bill, but that is appropriate for the time of year.