Commercial Payments Bill [HL]

Baroness Bennett of Manor Castle Excerpts

2nd reading
Tuesday 9th June 2026 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, we have an economy that is heavily dominated by giant—usually multinational—companies. There is nothing inevitable about that: it is a result of political and policy decisions made over decades by multiple Governments. It can and must be different. The Green Party sees the Bill as a modest step in the right direction of levelling the playing field between very large, powerful companies and those who are often their suppliers and who are inevitably in a supplicatory position towards them.

Like many other speakers in this debate, I bring family stories. I am a builder’s daughter; my father was a manager for a subcontractor in Australia. I learnt early on, as soon as I was old enough to understand, that one reason my father was angry or stressed was that he was often concerned about his firm going broke because it was not getting paid or the payment was being delayed. Sometimes, that payment would arrive eventually; other times, it would never arrive. That does damage to a great many small and medium enterprises.

An illustrative case study is that of Carillion, which went down in 2008, taking with it many SMEs. This shows the link between the two problems of late payment and financial collapse. I draw on the excellent—as always—Library briefing to quote the economist Orcun Kaya, who notes that, unlike the 30-day terms that some offer,

“Carillion imposed payment terms of up to 120 days on its smaller suppliers and contractors”.

That meant that there was three months’ work—with debts incurred—for which people were not paid. We can clearly see that when a company starts to delay payments and stretch out its terms, it is often a sign of financial stress within the company. It should be regarded as a red flag. I cannot see anything in the Bill on that. I wonder whether there is any way to use the Bill to introduce a red flag system. There is word of mouth in various industries—people start to talk to each other and explain the problem—but word of mouth is not a legal or formal framework.

This case study also needs to be used to raise a broader point: we have huge structural problems in many sectors of the UK economy, which the Bill on its own tackles only at small scale. There is the disaster of the outsourcing of public services to the lowest possible bid, and the disaster of business approaches and business culture. In that respect I cross-reference today’s debate with yesterday’s Second Reading of the Financial Services and Markets Bill. The parliamentary inquiry into the collapse of Carillion said that it was

“a story of recklessness, hubris and greed. Its business model was a relentless dash for cash”.

Three directors were later fined by the FCA for financial misreporting. These issues are all interlinked and all relate to the nature of our business culture, which holds back so many SMEs in our society.

We often refer to the construction sector, and that is one of the issues that I will come back to the Minister on. Thinking about the great state of disarray in the construction sector, one awful symptom I have to raise is that the latest report on mental health in the sector from the CIOB—formerly the Institute of Builders—shows that male construction workers are three times more likely to die by suicide compared with those in other industries, and that 28% of respondents have experienced suicidal thoughts at least once over the past year.

We must acknowledge that we have a real problem in the structure of the industry. Late payments are part of this story, but they are only a small part. There are also the issues of subcontracting and fake subcontracting, where, in effect, individual workers are forced to become their own small business. They, of course, can encounter all the problems that the Bill attempts to cover. But how will a quite low-paid worker forced to firm their own business be able to hold late payments against a giant construction firm? That will help us to frame the shape of the Bill. On that point, I draw on a very useful and detailed briefing from the ECA and Actuate UK, seeking clarity on the Small Business Commissioner’s role in terms of construction. Perhaps the Minister could address that in wrapping up or, if he prefers, he could write to me about that.

Another quite technical point—I am again drawing on the briefing—is the issue of retention in new Section 113A. Retention is of course what the Bill seeks to prevent happening, and it mentions related agreements. Perhaps there is the thought that the judiciary will interpret attempts to recreate retention clauses by calling them something else and will interpret the ban very widely in terminology. It is important to address how we will make sure that retention bans are not just called something else but are still in effect retention bans.

The briefing also raises important issues about the transition period and last-day retention. There will potentially be a cliff edge at the end of year three, where all transition-retained sums could become due simultaneously, and that could create a state of real chaos. Again, that might be something the Minister will want to write about. The briefing raises some very serious issues.

Also on the detail of the Bill, there is the penalty for unlawful retention. That will potentially be very useful as a penalty, but it will become a reality only if SMEs can afford to enforce it. I do not see in the Bill any resources provided to help SMEs with enforcement, so what will happen with that?

We have had discussions about 60 days, 45 days or 30 days. It is important to note and demonstrate what might be possible. In the UK defence sector, the Ministry of Defence direct contracts specify that 90% of undisputed SME invoices must be paid within five working days. It is interesting to note that when we think about what is actually possible.

It is also useful to think about comparative terms here. Presumably, this does not cover the supermarket, food and farming sectors. We have the Groceries Code Adjudicator there. How does the Bill interact with the Groceries Code Adjudicator? What is the interaction?

Finally, I turn to an issue that has already been raised by the noble Lord, Lord Lansley. Like him, I draw on the briefing from the National Housing Federation, which delivers a cry of concern from the heart about the Section 106 provision. We are talking a lot about inequality of arms and an inequality of power between suppliers and purchasers; here, we have to note that a major construction company versus a housing association in some ways turns that balance of power around. If there is a problem with, say, a block of flats that has been constructed and purchased for social housing, housing associations may not have the capacity to carry out repairs themselves. They may also find it extraordinarily difficult to bring legal action against a major developer. This is an issue that the Minister is going to have to address as the Bill progresses, if not today, because the National Housing Federation has identified an issue. I do not know what the solution is, but we certainly need to address it.