Draft Reporting on Payment Practices and Performance Regulations 2017 Draft Limited Liability Partnerships (reporting on Payment Practices and Performance) Regulations 2017

Lord Vaizey of Didcot Excerpts

Thursday 9th March 2017 General Committees

[Mr Edward Vaizey (Wantage) (Con)]

It is a great pleasure to speak to these important regulations, and to follow the hon. Member for Sefton Central, who covered many issues during his trenchant analysis of the regulations. I will also pick up on some of the points made by the hon. Member for Kilmarnock and Loudoun. May I say what a pleasure it is to be here to support the Minister? I am sure many Members know that she ran a highly successful small business; if anyone is well-placed to know the impact of late payments on small businesses and the myriad issues that true entrepreneurs who start a small businesses from scratch have to face, it is her. I know she will take the regulations seriously, both in their passing and in their implementation.

I know that the Minister shares my reluctance to regulate in this area; as a party and a successful Government, we are reluctant to regulate small businesses. Of course, when we leave the European Union I am sure we will be able to reduce a great many of the regulations that burden our small businesses—at least, that is what the leave campaign promised and I know that the leave campaigners will see through on their promises. I know that the Minister only regulates with a heavy heart and where she sees it as essential. [Interruption.] I could not hear the hon. Member for Bristol West comment from a sedentary position, because I was talking so loudly, but I know it was pertinent.

I have a number of questions. I may have misheard, but I think the Minister said that the transition costs are £27 million and the ongoing annual costs are about £15 million, affecting about 15,000 businesses. Does she feel that might be an underestimate, because it works out at roughly £1,000 a business? It seems to me that reporting on payment practices across a large business on a six-monthly basis might cost slightly more than that. In any event, I was struck by her saying that her Department’s estimates had increased from something like £3 million to £15 million, which seems a very large increase. Will she shed light on that? Is she confident that that is what the cost will be to businesses?

Picking up on what the hon. Member for Kilmarnock and Loudoun said, and to use business terminology, what does success look like? What will the Minister think success is when we review the impact of the regulations in a year or two? Does she expect perhaps a 1% or 5% reduction in late payment? Will some of the 15,000 businesses subject to the regulations go on a journey that results in the improvement of their payment practices? It was a mantra of the last Government—I am sure that the same is true of this Government—that every time we imposed a regulation on business, we would seek to abolish one. In fact, I think we got to the position where we would abolish two. Will the Minister highlight which regulations will be abolished in order to make way for these very important regulations? Indeed, perhaps some are being consolidated.

We have discussed sanctions for late payers and whether fines should be imposed. I am surprised that it will be a criminal offence not to publish. I wonder whether the Government might pause to consider whether that could be held in reserve. It seems to me that this is part of the nudge agenda: we are trying to encourage good behaviour. The criminal statute book is replete with offences, so I wonder whether almost arbitrarily making failure to publish a criminal offence is the right approach.

In terms of stick and carrot, I hope that the people who rise to the challenge presented by the regulations—the big businesses that comply with them promptly and show improvement—will be lauded by the Government. Perhaps we can think of an award for the most prompt paying business as the regulations come into play.

I may not have listened as carefully as I should have to the Minister’s excellent introduction of the regulations, but I did not hear—mea culpa if she did mention this —whether the Government are a prompt payer and what our current record is. I said “our”; I probably still think I am a Minister—pathetic, really. I would like to know what the Government’s record is. I know that the Government have made a huge effort to allow small businesses to contract with them, and the Government are obviously hugely well placed to lead by example, so I assume that the Government are the promptest payer of all.

As I have said, we are all reluctant to introduce regulations, and I notice from the explanatory memorandum that in this context the Brits operate true to form: the average contract says that we will pay in 29 days, and we do pay in 29 days. Every other European country pays later than they contract for, showing that British businesses are truly businesses of their word. We are very high up the table for prompt payment. Obviously, the Germans beat us—they beat us at quite a lot of things—but we are very much prompt payers, apart from, also, the Scandinavian countries, which in my view are the most ideal countries on the planet, although that is another matter. We are doing very well, so although this measure will make a difference, I do not think we should beat ourselves up or beat up British businesses too much as outliers in terms of not supporting small businesses through prompt payments.

I look forward to the Minister answering some of the points I have raised, after she has dealt with the excellent points made by Opposition Members.