Draft Companies (Directors' Report) (Payment Reporting) Regulations 2025
(1 day, 23 hours ago)
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The Parliamentary Under-Secretary of State for Business and Trade (Blair McDougall)
I beg to move,
That the Committee has considered the draft Companies (Directors’ Report) (Payment Reporting) Regulations 2025.
It is a pleasure to see you in the Chair, Ms Vaz. It is also a pleasure, as the new Minister for small business, that this is the first statutory instrument that I am speaking on, as someone who ran a small business and suffered from late payments at times.
Small businesses are the backbone of our economy, employing millions of people and enriching our lives, yet we know that the scourge of late payments has been holding them back. Late payments are estimated to cost the economy almost £11 billion per year and to lead to 14,000 businesses closures annually. That is an average of 38 businesses every single day. This cannot go on.
That is why this Government has already taken action to improve payment practices. In December 2024 we launched a new Fair Payment Code and introduced secondary legislation requiring construction businesses to publish reports on their retention payment practices. In July we launched a public consultation considering additional legislative measures to hold businesses to account on payment performance.
The consultation considers measures that go even further than today’s statutory instrument, and will be the most significant legislation to tackle late payments in over 25 years. It will give the UK the strongest legal framework on late payments in the G7. These measures will include removing flexibility around maximum payment times, which disproportionately impact small businesses, and introducing mandatory interest on late business- to-business payments. Our consultation closes on 23 October—Thursday this week—and we intend to take forward primary legislation as soon as parliamentary time allows.
Today we are making a down payment on those wider legislative reforms. We are going to build upon the existing payment transparency regulations for large companies by introducing payment data headlines into directors’ reports. Large companies are already under a duty to report biannually on their payment practices and performance. These draft regulations will require large companies to disclose payment reporting data within directors’ reports required under the Companies Act 2006, further increasing the transparency of payment performance to their boards, stakeholders and auditors.
Businesses that are already adhering to current payment regulations will not be significantly affected, as it is data large firms are already required to collect and publish through Gov.uk. The Government want to shift the focus from small businesses wasting hours of their time chasing late payments, and instead put the onus on the boards and stakeholders of large businesses to ensure they are paying their suppliers fairly.
I will now outline the key elements of this statutory instrument. These regulations amend schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and introduce the requirement for large businesses to report information about their payment practices within their directors’ reports. The payment data headlines will include statements on payment practices, average time to pay, and the percentage and sum of payments made before 30 days, between 31 and 60 days, and after 60 days. They will also include the sum and proportion of payments that were not paid within the agreed payment period.
This data will publicly illustrate a company’s approach to payment. It is only a small ask for large businesses, but will help with continuous improvement of payment times. The Government are committed to ensuring that this legislation continues to work and this instrument will be subject to a review within five years. I hope hon. Members on the Committee will see the benefits that these draft regulations provide and agree with the introduction of this affirmative statutory instrument.
Gareth Davies (Grantham and Bourne) (Con)
It is always a pleasure to see you in the Chair, Ms Vaz. I welcome the Minister to his place; it is a great appointment, and it is good to know that he comes to the position with a good deal of experience, which I know will be valuable to both officials and the House more broadly.
I also welcome this opportunity, on behalf of His Majesty’s official Opposition, to address this issue. No matter where we represent, MPs across the House all know, from our meetings with constituents and businesses, that late payments are a scourge on small and medium-sized businesses. At the very least, we must appreciate that late payments cause a tremendous amount of short-term cash-flow problems that prohibit investment and, in turn, economic growth—and at worst, they cause existential liquidity problems for the market as a whole. British small businesses are owed an average of almost £21,500 in late payments, and an almost unbelievable 62% of small businesses report being impacted by them.
I therefore completely appreciate that the aim of these regulations is to boost the transparency around how large companies pay their suppliers, so that suppliers will be able to make a more informed choice about who they partner with, while also imposing accountability and positive incentives for large companies. As the Minister will know, this measure builds on a lot of the regulatory work the previous Government in particular did in support of small businesses, which he kindly alluded to; he will also know that the Reporting on Payment Practices and Performance Regulations 2017 already require companies to release much of the same data required under the proposed regulations before us today, via a web portal.
The 2017 regulations were extended beyond their initial sunset date for a further seven years, following a consultation led by the small business Minister at the time, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). With that in mind, having companies report annually on their payment practices and performance should not in theory have an unfair or overbearing impact on companies over and above the existing requirements. That was a view shared by many companies that fed into our 2023 consultation, which the Minister will be aware of, which said that this measure would be a step in the right direction.
It will not be a surprise to you, Ms Vaz, that the Opposition will not be opposing the regulations today, but I want to ask a couple of questions of the new Minister. First, given that companies are already required to report this information as part of the Government portal under the 2017 regulations, can he share the Government’s assessment of how effective this additional regulation will be in further reducing late payments? We both agree that they are an issue, but I did not quite hear him outlining the Government’s intentions, plans and ambition for how effective these measures will be, or over what time period.
Secondly, the regulations do not appear to require companies to include the same amount of information in the annual reports or directors’ reports as they do in the twice-yearly Government portal findings. There is a slight inconsistency there, which I hope the Minister can address and clarify for us. How will he ensure the consistency of the information provided both to directors’ reports and through the web portal?
Daisy Cooper (St Albans) (LD)
I welcome the Minister to his place.
When it comes to the treatment of small businesses, there are two things that get right up people’s noses. The first is the big David and Goliath fights that sometimes happen between big companies and their small suppliers; the other is regulators that are tasked with tackling those problems, but can do nothing about them, because they do not have the teeth. Fundamentally, we are a country that believes in fairness, and late payments are a problem that is deeply unfair and unjust, and can be existential for some small businesses.
The Liberal Democrats welcome this extra transparency on payment practices and performance; it will really help. We support this measure, and we hope very much that the Government will power ahead with introducing additional powers for the Small Business Commissioner so that they can launch proactive investigations, rather than passively receiving complaints. Would the Minister like to say a word or two on that?
If I may test your patience for a second more, Ms Vaz, it is Small Business Saturday in just under seven weeks’ time, on 6 December—just a few days after the Budget. We know that transparency and improved regulation matter to small businesses, but the tax burden matters too. I urge the Government to ensure that, by the time Small Business Saturday arrives, there is some more good news for small businesses to be happy about.
Blair McDougall
I am grateful for the support across the House on these regulations. It is clear from hon. Members’ constructive comments that we all agree that this is a serious problem that we need to tackle.
To respond to some of the specific questions, the hon. Member for Grantham and Bourne made a powerful case with his statistics about the impact of late payments on the economy. In terms of the burden on business, we think it will be a very small one, in return for potentially a bigger prize—I think it is 133 million hours spent across the economy chasing late payments. To his point on consistency, there is some overlap between the data that people already have to report and the data that we are suggesting be put into the annual reports through these regulations.
On the question about the powers of the Small Business Commissioner, part of the consultation we are currently running is on proposals to give the commissioner more powers to investigate and resolve late payment cases. With these regulations as part of the wider package of measures, we will be delivering the biggest reform to late payment regulations in 25 years; as I say, this measure is very much a down payment on what is coming. I urge hon. Members present to look at the proposals and to take part in the late payments consultation over the next couple of days.
These regulations are just the first step, but they are potentially the start of making a huge difference to what is a huge problem for small businesses. I commend the regulations to the Committee.
Question put and agreed to.
Draft Protection of Freedoms Act 2012 (Definition of Relevant Land) (Amendment) Order 2025
(1 day, 23 hours ago)
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The Parliamentary Under-Secretary of State for Transport (Keir Mather)
I beg to move,
That the Committee has considered the draft Protection of Freedoms Act 2012 (Definition of Relevant Land) (Amendment) Order 2025.
It is a pleasure to serve under your chairmanship, Sir Jeremy. The draft order was laid before the House on Monday 8 September. Railway operators currently use a combination of enforcement regimes to recover unpaid parking charges at railway station car parks, resulting in inconsistency and complexity for both operators and passengers. Some rely on criminal enforcement set out in the railway byelaws, while others work with agents who rely on contractual arrangements with motorists. With the introduction of Great British Railways, my Department expects a consistent level of service to be offered across the network. Therefore, this order will bring car parks that are located on railway land within England and Wales into the scope of the same civil enforcement regime that applies to all other car parks on private land.
Previously, railway station car parks were excluded from the Protection of Freedoms Act 2012, which I shall now refer to as POFA, because they were subject to the railway byelaws, which meant that unpaid parking charges could be enforced only under those byelaws. Schedule 4 to POFA facilitates the recovery of unpaid car parking charges from the keeper or hirer of a vehicle parked in private car parks. It sets out detailed requirements regarding the provision of notices and the appeals processes. However, railway station car parks are currently excluded from that regime.
This change will ensure a consistent, civil enforcement regime for all railway station car parks across the Great British Railways network. It will ensure that passengers have the same protection that they would have when parking in other car parks on private land, including access to an independent appeals service. An industry consultation showed support for amending the railway byelaws to remove criminal liability for parking breaches and instead using the civil enforcement regime set out under POFA.
These changes will standardise the approach to the recovery of unpaid car parking charges from the keeper of a vehicle parked in railway station car parks. To support this order, changes to the railway byelaws will be made at the same time to remove the criminal enforcement regime that is currently in place and allow this legislation to take effect. This shift from the criminal enforcement regime to the civil regime provides passengers with an independent appeals service and allows the same framework that applies to all other private car parks to apply to railway station car parks.
The order will ensure that unpaid car parking charges on railway land are recovered in a way that is clearer and consistent for both operators and passengers. With POFA now applying to railway car parks, this will also provide passengers with an independent appeals service that will be used by all train operating companies in England and Wales. I commend the order to the Committee.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Sir Jeremy. His Majesty’s official Opposition recognise the importance of ensuring that genuine parking violations are fairly and consistently enforced. Effective enforcement maintains order and encourages compliance, but it should never become a source of excessive revenue or allow over-zealous practices to flourish. Unfortunately, motorists’ experience with some private parking operators has too often been poor. We have heard of cases involving unclear signage, punitive charges and threatening correspondence from debt collectors. That background means the Government must take care before extending their powers any further.
The draft order extends existing keeper liability provisions under the Protection of Freedoms Act 2012 to railway property—land that has until now been subject to railway byelaws rather than civil enforcement. On paper it may look like a technical change, but in practice it could give private parking firms greater ability to pursue motorists for payment on railway land. Before agreeing to such an extension, we should be confident that the wider regulatory framework is robust, transparent and fair.
That is why the timing of this proposal is somewhat problematic. The Government’s consultation on the private parking code of practice closed only on 26 September. Those responses from motorists, consumer groups and the parking industry itself have not yet been published or analysed. It is therefore premature to legislate before that evidence has been properly considered. The responsible approach would be to review the consultation findings first, finalise the new code to ensure that it genuinely curbs poor practice, and only then revisit any question of expanding enforcement powers.
Our concern is not about legitimate enforcement. Where parking rules are clear and proportionate, they help to keep stations accessible and traffic flowing, but enforcement must always be fair, transparent and accountable to the travelling public. At present, key safeguards are clearly missing. The Government have not released a Treasury estimate of the potential enforcement revenue, so the financial impact on motorists is equally unknown. Nor have we seen confirmation that the forthcoming code will provide effective oversight and meaningful appeal rights. Without that assurance, it would be wrong to widen private operators’ powers on railway land.
Although we will not divide the Committee this afternoon, I would like the Minister to reflect on those points, pause, and hear our call for proper process and proportionate changes. Motorists deserve confidence that parking rules are enforced in the public interest, not driven by other motives. The Government should publish the consultation outcomes, set clear limits on private enforcement practices, and demonstrate that passenger and driver interests come first. Once that framework is in place, any further legislative changes can be judged on their merits and with full transparency.
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairship, Sir Jeremy. In principle, we in the Liberal Democrats welcome this change, which from a technical perspective is logical and makes sense. It is also welcome that the Government chose to undertake a consultation even though they were not compelled to do so. That is always welcome, as long as the consultation is timely and does not drag on for years, which in this case, happily, it has not.
I do, however, very much agree with the remarks made by the hon. Member for Mid Buckinghamshire. Our support needs to be caveated with the fact that all Members will have had a great deal of casework from constituents, driven insane at times by car parking operators and providers that lack transparency, are unaccountable, and can sometimes be unreasonable. The focus in this delegated legislation on making sure that signage is fit for purpose is welcome, but I would also welcome some remarks from the Minister on what else the Government are doing to make sure that the regulatory framework is such that private car parking providers are fit for purpose, are accountable, and provide a forum for appeal where they have got things wrong.
Keir Mather
I thank the official Opposition spokesperson and the hon. Member for Didcot and Wantage for their contributions. I will take each of their points in turn.
I recognise and agree that we are seeking to avoid excessive revenue and the unfortunate conduct that is perpetrated by some private providers of car parking spaces. Motorists should not have to operate in a climate of fear and uncertainty when they park their car, as they try to go about their daily lives, get to work, see their families and use our transport network. That is exactly what we seek to remedy through today’s changes.
The official Opposition spokesperson pointed to the need for proper process and proportionality. I will come to that in regard to the reviews to which he referred and the parking code of practice. The Ministry of Housing, Communities and Local Government is consulting on a parking code of practice for the operation and management of private parking facilities. To the point made by the hon. Member for Didcot and Wantage, this will set an industry standard that will cover enforcement and signage requirements, and will encourage consistency across the industry. We have aligned the laying of this statutory instrument with that consultation, which will avoid train operating companies having to change their parking signs twice in regard to any regulations that we may pass.
A consultation was also held in 2020 relating to this specific provision with the devolved Governments, train operators, passenger rights groups and industry stakeholders. The feedback from that consultation indicated overall support for the proposed changes, and a working group was established with stakeholders to address specific concerns that were raised. Those have directly informed the provisions in this statutory instrument.
I echo and agree with the sentiments expressed by the Opposition spokespersons around the need to avoid excessive overreach in this space, to ensure proportionality, and to have clear and understandable codes of practice. This is something that we want motorists parking at railway car parks across the United Kingdom to benefit from. I think those aims are reflected in this statutory instrument, which is why I commend it to the Committee.
Question put and agreed to.