Commercial Payments Bill [HL]

Lord Thomas of Cwmgiedd Excerpts

2nd reading
Tuesday 9th June 2026 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

I too welcome the powerful, lucid and passionate way in which the noble Lord the Minister introduced, based on his own experience, the need for this Bill and the principal purposes behind it. It is also a great pleasure to follow the noble Lord, Lord Hunt, and his exposition of some of the problems that he has encountered from his long experience as a senior and distinguished lawyer, because at the heart of so many legal disputes is the desire to delay payment.

I want to raise a point that has not been raised, which comes from much more recent experience, primarily in this House. The notes to the King’s Speech say:

“The measures apply only to UK-to-UK business transactions and do not affect global supply chains or international trade”.


The Late Payment of Commercial Debts (Interest) Act 1998, which this Act seeks to amend, applied to all business-to-business contracts governed by English law—or, I should hastily add, laws of other parts of the United Kingdom, provided that there was a connection in the contract with the United Kingdom. My understanding is that it is intended that effect will be given to what is said in the King’s Speech under regulations made under new Section 2E, which is to be inserted by Clause 3 of this Bill, and that it is intended thereby to exclude all non-UK business-to-business contracts and thus achieve the result of excluding international trade from the scope of the Bill.

The point I wish to raise is to question whether that is a sensible and desirable policy, given the changes in technology, recent legislation, and the current emphasis on the need to strengthen the participation of SMEs in exporting and importing. I hope that His Majesty’s Government would wish to take a position to promote a modern policy in tune with their ambition to be leaders in the digital age: I would hope we would not be seen as laggards. I therefore suggest that we might need to look at and should consider an amendment to the Bill to remove the exclusion from the regulatory powers of the Bill of international trade—imports and exports—or at least to provide a sunset for that provision.

Now, can I explain the experience that has led me to this view and declare my interest through it? My experience is derived from my chairmanship of the Special Public Bill Committee on the Bill that became the Electronic Trade Documents Act. Since that time, I have taken an interest in trying to encourage the head start that the Act gave the United Kingdom in revolutionising documentation and payments in international trade, in particular financing trade and the speed of payment, that being particularly important. One of the avenues through which I have tried to do this is by assisting in the implementation of the Act as chairman of the advisory volunteer board of the International Centre for Digital Trade and Innovation.

The Electronic Trades Document Act was a Law Commission Bill, the purpose of which was to legislate in the United Kingdom to bring about a legal regime absolutely consistent with the UNCITRAL Model Law on Electronic Transferable Records 2017, but in a way that retained the historic flexibility of English law and was consistent with the law of Scotland. It is a very short Act: it is seven clauses over three operative pages. It is a pleasure to see that two members of that committee will follow me in speaking in this debate: the noble Lords, Lord Lansley and Lord Holmes of Richmond.

The regime under the model law replaces the centuries-old traditional way in which we traded. Paper bills of lading, paper bills of exchange and paper certificates have been used for trade since the 13th century. It is a long tradition, and it takes a long time for people to get used to losing long traditions, but we must get used to this, and the Bill is an important opportunity to see how we can bring about a new system.

The new system replaces the old one with electronic documents, making the process entirely electronic. It provides better and easier access to finance. It ensures vastly speedier payment. It provides greater security than traditional paper-based documents and reduces the cost. If one wants to see a snapshot of the way in which the system works and the advantage that it brings, it is set out in a short and easily digestible recent report of the Teesside University Digital Trade Testbed on a project undertaken with the Centre for Digital Trade and Innovation, the ICC, and His Britannic Majesty’s embassy and other stakeholders in Japan.

The regime to which the Act made the UK a party is already in force in many leading countries with which we trade—the United States, Japan, France, Germany, Singapore and much of the Gulf. Its implementation is before legislatures in many other countries, including India, Australia, Canada, Mexico, Spain, China and Turkey.

As the UK was one of the first to get going, we have an undoubted leadership. It was indeed a pleasure, as I am sure members of the committee will recall, when the French came over to see how we would be implementing the Bill. Huge work is being done by the Centre for Digital Trade and Innovation and others to promote the use of digital documentation, but the UK needs more support in this. It was being done by the then Department for Digital, Culture, Media and Sport, but it now needs support from the new department.

It is important to realise that dealing with this matter in the Bill would bring huge advantages. First, it would encourage SMEs to engage more in import and export, as payment terms would be the same as for domestic trade. One does not want to see a differentiation. Secondly, it would encourage the move to electronic trade documents in the UK, with the great advantage that it brings. Thirdly, it would promote the leadership that we already have in electronic trade documents. Fourthly, it would bring His Majesty’s Government visibly behind the move to electronic trade documents. Fifthly, it would tie in with the move to e-invoicing that HM Treasury is insisting on. This is to be compulsory under the VAT regime. Sixthly, it would help achieve part of the Government’s trade strategy where it is stated, in reference to the use of digital documentation:

“The London School of Economics estimates that global adoption of digital trading systems could boost the UK’s GDP by up to 0.9%—and that even partial adoption could significantly impact the UK economy”.


I am extremely grateful to the Minister for his engagement on this point. I look forward to further discussions, before and in Committee, on how we can bring trade into the Bill, or at least prevent it excluding trade. That is so important not only to the way that we should be encouraging import and export business but to our leadership in the electronic age. I therefore look forward to hearing the views of other noble Lords on this subject and to engaging further in bringing the modern age into the Bill, in comparison to the scourges that the two preceding speeches addressed.