Commercial Payments Bill [HL]

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Tuesday 21st July 2026 Lords Chamber

Moved by

[Lord Thomas of Cwmgiedd]

19: Clause 3, page 7, line 23, at end insert “save that the Secretary of State must not specify in regulations which have or will continue to have effect after 1 April 2029 any contract of a description which relates to—
(a) the supply of any goods or services by a person in the United Kingdom to any person for use outside of the United Kingdom, or(b) the supply of any goods or services by a person outside the United Kingdom for use in the United Kingdom.”Member’s explanatory statement
This amendment would end the power under the regulations to exclude import and export trade contracts from the provisions of the Act, but do so only at a time which provides for ample familiarisation to make use of the Electronic Trade Documents Act 2023 and which coincides with the imposition of e-invoicing by HM Revenue and Customs.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I declare my interest as chairman of the board that advises the International Centre for Digital Trade and Innovation. I am grateful to the noble Lord, Lord Holmes, for his support in this, and for the time that the Minister and his officials afforded to discuss it.

I set out at Second Reading the background to this amendment and how it fits entirely with the implementation of the Electronic Trade Documents Act and our participation and lead in the international moves to move payments out of the 13th century, or modifications since then, into the 21st century. I am sure no one needs to be reminded how conservative—with a small “c”—processes in business are. They need something to move them, and what I propose would help to do so.

There can be no doubt that using electronic documents and payment systems is entirely consistent with the purpose of the Bill, in that it speeds up payment. If the system can be made to work for international trade, the Bill should not exclude international trade. We are at heart a nation of tradesmen and therefore we should be encouraging trade.

I spoke of the many advantages of the Bill, but there are only two that I need mention now. The first is that we are also, as the change in the name of the Minister’s department indicates, a nation intent on innovation. This is where I think, and I encourage people to see this, we are moving. The second is to mention that this is entirely consistent with the plans to move to e-invoicing on 1 April 2029. I mention that date because it is in the amendment.

I accept that we are not in a position today to make people pay within 30 or 60 days for international trade but there is no reason why we cannot do it in two years’ time, particularly with the new department. So the amendment is designed simply to leave the policy statement in the King’s Speech and the provision for making future regulations to exclude trade, as that is okay for now, but to set a withdrawal period. The Minister is bound to say, “You can trust us in the department. When things are ready, we’ll move there”, but unfortunately we all—businessmen particularly—need to be prodded. It took centuries for people to move away from using bills of lading in three sets rather than one, despite there being no earthly purpose to it. I therefore believe that we need something in the Bill to force the move to digitalisation. Now that the department has the word “innovation” in its name, let us hope that it can do that.

The Minister may not be terribly fired up by his officials to do this, and I will always welcome other suggestions, but we must have a policy for implementation. That is not my primary purpose but I hope that at least that could be offered as a consolation prize. I therefore beg to move.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my friend, the noble and learned Lord, Lord Thomas, and the excellent and eloquent way in which he introduced his amendment, which I was delighted to sign. As he rightly pointed out, this could be seen as the absolute premier DBIST amendment. It goes to the heart of what the department is. It has business and innovation at its very heart, and it would make complete sense for the department to pass it before Ministers have even changed the stationery in their various departmental boxes.

It was a pleasure to serve under the chairmanship of the noble and learned Lord as he chaired the Special Public Bill Committee on the then Electronic Trade Documents Bill. I variously described the Bill as

“the most important Bill that no one has ever heard of”.—[Official Report, 19/7/23; col. 2326.]

and the blockchain Bill that rightly never mentions blockchain. It was perfect in its two-page shortness—perfect, in that it never mentioned any specific technology. It merely set out criteria that any technology would have to meet to perfect an electronic trade document. When we talk about electronic trade documents, we are talking about economic, environmental and social benefits and, for the purposes of this Bill, payments efficiency and payments benefits.

The ability to combine everything in an electronic digital format is possible only because of the criteria that blockchain and distributed ledger technology allows to have a possessory document—that is, if you hold the document, you hold the goods. Only through those technologies is it possible to thus have those possessory documents in electronic form. This would be good for payment but it would also be good for UK trade. There is currently a huge trade finance deficit painfully suffered by many businesses already involved in trade but, perhaps even more significantly, by all those tens of thousands of businesses that currently do not trade internationally but could. The provisions in this amendment really highlight that opportunity.

As the amendment so clearly sets out, international trade should be within the purview of this Bill and, in many ways, this lays the groundwork for many of the technology amendments which we will come to later this evening. It makes the point about what is possible today without insisting that it has to be used and come into force on the date the statute comes into force. By being in the statute, with the time period as set out in the amendment, it states the case clearly. It provides the time for adoption but really speaks to the possibility and, largely, the economic opportunities for all those businesses, particularly small and micro-businesses, which could avail themselves of all the benefits of international trade.

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[Lord Leong (Lab)]

I appreciate what the noble Lord has just said, but it is important that the scope of the Bill is targeted at UK businesses and small businesses. A commercial arrangement between a company based in the UK or a business based elsewhere is probably outside the scope of this Bill in that regard.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I thank everyone who has spoken in this short, slightly esoteric argument and on these interests. I simply say that I do not think that this issue will go away. First, the payment terms in the Bill are 60 days and in modern international trade that is a long time. I do not buy this argument that we would somehow lose competitiveness by having this here, certainly as regards imports. Secondly, it is important to stress that we are not tradesmen who trade with each other—say, between Wales and England and Scotland. We trade internationally and need to do everything to encourage us to trade. Thirdly, if we are to innovate, and this is an era of innovation, setting a good example will be a good thing.

I hear what the Minister says. I look forward to what the department will do to encourage it. If it will not do this, I might, if circumstances look providential, bring it back on Report to see whether the Minister can come up with some alternative in innovating because it is fair to say that it has been the department of innovation for only a day. I beg leave to withdraw the amendment.

Amendment 19 withdrawn.

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[Baroness Kramer (LD)]

My Lords, my Amendment 81 in this group addresses a single issue. There is no possible way that the Small Business Commissioner can achieve his or her purpose without a strong whistleblowing framework incorporated into the office.

In this legislation, the commissioner is not even a prescribed person required to keep the disclosures of a whistleblower confidential. A complainant—someone raising an issue about wrong that they believe has been done to themselves—is very different from a whistleblower, who is identifying information which they believe demonstrates some form of bad practice, but they are not the victim of that practice and they are not bringing a complaint about themselves. That is one of the weaknesses in this legislation. Without those protections of being a prescribed person, even if the commissioner wants to keep an issue that she—later, it could be he—has discussed under wraps, all that will be subject to FOIs and subject access requests. Although there can be some redaction in those, it becomes extremely difficult when there is not a right of confidentiality.

Many suppliers who are paid late will be afraid to complain. That is simply a reality. They will be afraid to complain directly to the commissioner for fear of getting a reputation as troublemakers and losing future business. That is why the investigative powers of the commissioner are so important and such a significant part of the Bill. But in many cases, there is no way that the commissioner will be able to pursue an investigation without getting insider information. Insider information comes from whistleblowers, but very few will disclose the relevant information if it means the end of their careers and financial ruin.

The Bill presently offers no confidential route for a whistleblower and very little protection from detriment. An employee of a large company that is paying late, who speaks out to show that his or her employer is abusing payment rules and is consequently fired, can go to an employment tribunal. Some would say that is fine; that is the way to avoid retribution. He or she needs £40,000 to £50,000 to be able to get to a preliminary hearing. The case will not start for three years, because the tribunals are so backlogged. With appeals, even winning cases can take five to seven years. The word gets quickly around the industry, ensuring that the whistleblower cannot get another job. Some whistleblowers belong to trade unions. That trade union may well have an insurance agreement to pay for legal representation at the tribunal, but the terms of the insurance mean that the insurance company can withdraw if it decides the case is unlikely to succeed, or it can press for early settlement, which has the effect of silencing the content of the issue about which the whistleblowing was raised. Most insurance companies do one or the other; very rarely do they ever see a case through. For whistleblowers who are not employees—suppliers, associates, directors and competitors—there is not even the protection of the employment tribunal. There is absolutely nothing they can do to stop revenge and detriment.

The best investigators that we have in the finance and business sphere—HMRC, the SFO, the NCA and the CMA—all understand that whistleblowers are vital and have been strengthening their whistleblower framework, some of them very significantly, including with rewards. Most of their successful cases involve whistleblower-obtained evidence. The old trope that monitoring and supervision are sufficient has long been discredited. I would like to see an overarching office of the whistleblower sitting under the Cabinet Office, able to act as a hub with spokes going out to various people, including the Small Business Commissioner, but we are where we are and that does not exist.

I hope the Minister will look very seriously at the amendment I have put down and either accept it or come up with his own version. It provides for the Small Business Commissioner to have an office of the whistleblower within their purview. It provides a place for a whistleblower to make a disclosure that is protected and confidential, unless he or she gives permission for that disclosure to be made public—sometimes people will do that, particularly when taking a case to court. It provides for redress where the whistleblower suffers detriment. At the base of this, the commissioner would be a prescribed person and Parliament would receive annual reports. This is a missing element from the Bill and I hope that the Minister will address it, because, frankly, the effectiveness of the Bill will depend on there being an effective whistleblower route.

[Lord Thomas of Cwmgiedd (CB)]

I make one brief observation on Amendment 83. When one looks back at the last group of amendments and at this one, one sees that what is happening, in effect, is the creation of an entirely alternate system of dispute resolution—a new form of court or adjudication procedure. It is also apparent from the focus of the debate that this is not easy legislation to follow. I therefore think that, if one is to provide access to justice—that justice now being provided by the Small Business Commissioner—we must put the rights into ordinary language.

As experience showed in the 19th century, when the county courts were created—which had the same idea as all this—once you let lawyers in, you destroy them. It is imperative that lawyers do not become involved because it will destroy the system. It destroyed the county courts and it destroyed workmen’s compensation. Tribunals were created to get away from the lawyers. I will come back to this in a further amendment, but the key is to make procedure and law accessible without lawyers, or this system will not work.

[Lord Fox (LD)]

A lawyer steps up.

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Taken together, these amendments would bring the right level of technology: purpose focused—not technology for technology’s sake, not a silver bullet in search of something where it could potentially be of some use, but clearly focused technologies—for the benefit of the commissioner, and through that, the benefits not least to small and micro-businesses. I look forward to the debate, and I beg to move.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I have one or two brief observations in support of the amendments, particularly Amendments 73 and 78 tabled by the noble Lord, Lord Holmes. First, it is critical that people are given an easy understanding of digital access to the system, but that is said in the context of the more important Amendment 78. I may have been slightly tendentious in what I said about getting lawyers out of the system, but we are likely to see much more being done in the system by artificial intelligence. At the moment, there is not a lot of public confidence in decisions on adjudication, on what are likely to be relatively simple things, being done by machine. However, that is coming. Worldwide—and I really mean worldwide—the courts are very concerned to look at the use of AI in being able to make decisions on a lot of areas.

But it is no use going down that route if there is not the public confidence, and that is why I think Amendment 78 is very important. Unless you are prepared to explain to the public what you are doing and how this is reliable, you will not get there. But I have absolutely no doubt that we are going that way. From looking at what is happening, a little bit in this country but much more elsewhere, we are into the route of AI being used to put arguments to the adjudicator, to respond to them and to distil the arguments into decision-making. It may be that this will produce the return to 1846—that is, the County Courts Act, which was meant to do what this Bill is trying to do now.

[Lord Fox (LD)]

My Lords, these amendments are very much of the style that I had expected, knowing that the noble Lord, Lord Holmes, was involved in the Bill, and he certainly made his arguments. To some extent I think there is a mixed thing here, with some of it mandating tools that the SBC could or should use. I do not think we need primary legislation to mandate that at all. I think the point that the noble and learned Lord made on Amendment 78 was slightly different from the one that the noble Lord, Lord Holmes, made. I may have misunderstood. But it is very important to know where AI is being used for decision-making and resolution. I think that was the point that the noble and learned Lord was making, and there I have complete agreement.

The use of distributed ledger is probably a very good idea. Do we need primary legislation to make or advise the SBC to use it? I am not sure. There is a mixed bag here, but the important element is that technology will change how the commissioner will approach her job and she needs to be financially and technically resourced in order to be able to address those changes and, I hope, to be one step ahead of them.