Commercial Payments Bill [HL]

Lord Mendelsohn Excerpts

2nd reading
Tuesday 9th June 2026 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, I am grateful to take this opportunity to speak in the gap and to warmly welcome the Bill. I pay tribute to the Minister not just for his eloquence in introducing the Bill but for his experience and expertise, and the Bill certainly bears their imprint. He was gracious and correct to acknowledge the steps taken by the previous Government, but he should be proud of the extent and scope of what he has introduced to this House. It will undoubtedly be transformative, even if it may not be the end of the journey.

As someone who has drafted a previous Private Member’s Bill on this issue, I think the Bill is impressively drafted and there is a good impact assessment. I am sure that, with the issues that have been expertly raised during the course of this debate, we will have a good opportunity to see if we can improve or clarify some of the elements outstanding in the Bill during our discussions.

I will add a couple of points that I would be keen for the Minister to consider. Before that, I pay tribute to the fact that the Bill as drafted and the impact assessment are a recognition that this is not just about bad actors. The realities of the business environment are properly acknowledged, along with issues that concern businesses and the challenges they have with cash flow. It is good that it has been done in a proportionate and balanced way. I continue to be concerned that it is just about large businesses to small businesses, where there are indeed problems with supply chains, with large businesses not featuring in the bilateral relationship, but I hope that we are able to consider how that may be addressed.

Although I and many others have always thought 30 days to be the right standard—there can always be consideration of a phased approach—I bear the same concerns that others have that marking 60 days may reverse the massive progress that has taken place in reducing the overall number of days. While we are looking at timing, clarity is essential. The Bill does not currently include a clear statutory definition of when payment is legally deemed to have occurred. The point at which the clock starts must be equally clear and resistant to manipulation. I hope that it can be made clear that the proposed 60-day verification period should be incorporated within the 60-day maximum and not added on top of it, which would de facto create a 90-day limit.

On mandatory interest, I would welcome confirmation from the Minister that the large businesses will be required to apply interest automatically when settling a late invoice, rather than leaving the burden on suppliers to claim it—something which most would be unlikely to do.

It is time to consider late payments by public bodies and to merge those into the same regime. The last exercise that was done looked at FoI data. Public sector bodies identify the interest payments that they should be paying but none has ever been claimed. The last comprehensive exercise identified that £3 billion of interest payments should have been paid to small businesses. Some NHS trusts and local authorities pay over 80% of their SME suppliers late—over 30 days. It is time to consider joining up those regimes.

We must consider whether we are looking at predatory payment terms and other things in the right way. Most importantly, the journey that the Small Business Commissioner has gone through and where it has ended up in the Bill is encouraging. I urge the Minister to consider not just its resources but its scope, to make sure it retains the role, across all areas, to help advise the Government on further steps ahead. I welcome the Bill.