Commercial Payments Bill [HL]

Lord Bourne of Aberystwyth Excerpts

2nd reading
Tuesday 9th June 2026 Lords Chamber

[Lord Bourne of Aberystwyth (Con)]

My Lords, it is a great pleasure to participate in this debate and to follow the noble Baroness, Lady Goudie, who made some excellent points, as always, particularly on the backbone of the economy that is represented by small businesses and on the role of women. Those were very important points. I declare my interest as chair of a charity, International Students House. Like many other institutions, it is potentially impacted by late payments and is affected by the law on retention in construction contracts, as we acquire purpose-built residences for our students.

I thank the Minister for setting out the background to the legislation typically clearly and for the analysis of the provisions contained in it. He has considerable experience of business and of the problems caused by late payment. I also thank him for graciously acknowledging the role played by Conservative Governments.

Like other noble Lords, I am very much in favour of this legislation, which has received a general welcome from many relevant organisations such as the CBI, the Federation of Small Businesses, the Institute of Directors and the Institute of Chartered Accountants. Small businesses constitute the backbone of our economy, as has been said. The fact that some 14,000 businesses per year close because of late payments is a flashing light that has been ignored for too long. I welcome that the unscrupulous and unfair exercise of superior bargaining power by some large businesses is to be outlawed by this legislation.

This legislation seeks to combat the unfair and unscrupulous practice of delayed payment by rendering late payments—essentially those over 60 days for private businesses—illegal, and by imposing mandatory interest provisions where there is late payment of 8% above the Bank of England base rate. Previous legislation, no doubt well-intentioned, has been ineffective, as it has been easy to circumvent. It was pretty much optional—more of a signpost of desirable conduct than a requirement of that good conduct.

However, I have several questions for the Minister. The first relates to the 60-day period permitted before the legislation bites in the private sector. An extensive consultation was engaged, in which many people and small businesses participated. I wonder why the 60-day period was alighted on. Like many others, I wonder why a period of 30 or 45 days would not have been more appropriate, as raised by my noble friends Lord Lansley and Lord Risby, and the noble Baronesses, Lady Thornton and Lady Bennett of Manor Castle. Why 60 days? It seems to me that that is quite a long period. The point made by the noble Baroness, Lady Bennett, about the practice in the Ministry of Defence, is illustrative of the fact that we could bring it down considerably.

I have a question relating to retention practices. I recognise that retention practices can be used unfairly and harshly against small businesses, and often that is the case. The sort of scenario demonstrated by the Carillion collapse and the consequent damage done to so many small businesses is illustrative. However, does not an outright ban on retention after the transition period merely shift the danger? Purchasers will require performance bonds, cash escrows or some other security which would require an outlay of cash at the outset rather than a retention, which may may be more damaging to small businesses. I am not necessarily against the provision, but I am not convinced that it is the total answer. Retention can be useful and used by some businesses quite reasonably. It is abusive retention that we should be focusing on, and I would welcome the Minister’s thoughts on that. My concern is that there is a danger of shifting the problem for small businesses; I am unconvinced that every retention is wrong or abusive.

I welcome the extended role of the Small Business Commissioner and the power to find late payers—though the commissioner does not cover construction contracts, a point made by the noble Baroness, Lady Alexander. I too wonder whether it would not be better if we were to put construction contracts within the competence of the Small Business Commissioner. I would welcome the Minister’s thoughts on that point as well.

Finally, I have a point on the devolved nations. I appreciate that the law in this area is a reserved matter for the Westminster Parliament, but clearly the Bill is largely a UK Bill, and there are impacts for the devolved Administrations. With a change of Administration in Wales, I wonder what discussions have been ongoing and what engagement there has been. Some of the provisions certainly impact on the devolved Administrations —for example, Clause 26 expressly does—so I wonder what is happening in that regard.

On the whole, as has been clear during the debate, this legislation is, remarkably, uniting all sections and corners of the House and all parties. I am sure it will be given a fair wind and that any amendments we make will be to tighten it up and make it more effective. With that, I give it a very warm welcome and look forward to the Minister’s response.