My Lords, in moving Amendment 1, I wish to speak also to the other amendments in this group in my name and those of the noble Lords, Lord Stevenson and Lord Stoneham.
Today is a very important day. I was in the Chamber earlier and felt that many other noble Lords considered it significant—as is this first day in Grand Committee on this Bill. Indeed, I felt a sense of trepidation throughout the House. Perhaps I was slightly wrong with regard to noble Lords’ interest in the subject matter, but I still think that we can muster great interest in the subject we are discussing. For me this is a very important day because I will seek to be at my absolute charming best in trying to convince the Minister to take on board the issues that we are raising. We have much common cause with the Government on these issues—for example, trying to do more for small businesses and addressing late payment. Over the next
few years, we hope to continue on that path. We were unsuccessful with many of the measures that we proposed to the small business Bill and I do not wish to rehash all of those but there are some common themes here.
We have done quite a bit more work since then and been exceptionally constructive. I hope that the Government will be open to charm and persuasion and the sheer power of the argument presented by noble Lords on this side of the Committee—and, indeed, by noble Lords on all sides of the Committee. There will be no threats. On this auspicious occasion we see the familiar faces of many noble friends, noble Lords and officials and others who take a keen interest in these matters.
Today is also an important day as I will agree with the noble Lord, Lord Hodgson, on many more issues than I thought possible. So I think that we have a fair degree of consensus in this Room, all of it motivated by our strong desire to make progress. We attach importance to a number of measures proposed in these amendments and believe that they are worthy. Some later amendments on retentions in the construction industry and contingent liabilities are very thoughtful and well considered and we hope that the Minister will address them in detail.
I wish to make two important preliminary points. First, I do not wish to sound churlish in my comments, as I recognise that the Government deserve huge credit for starting the process of focusing on small businesses and doing a range of things to support the dilemmas and circumstances facing small businesses as they conduct their activities. Secondly, the Minister has been very helpful and has personally played an important role. She and her officials are trying to do a great deal.
This is a difficult Bill with an eclectic array of items, many of which bear the imprints of a strong press release and some of which, it has been suggested, bear the imprint of policies that could have been negotiated away had there been a coalition. Given these potential situations, the Government have done something to bring this all forward. However, there are many ways in which the proposals for a Small Business Commissioner can be improved. The Government have proposed a Small Business Commissioner with a general advice mission, a mission to signpost and a form of complaints procedure. These early initiatives are useful but limited. There is nothing like a good Small Business Commissioner, but this is nothing like a good Small Business Commissioner. There is a lot more it can do to develop the role. The UK variant of the model is subscale and unlikely to achieve its task. Even as a first step, we suspect that there are other mini-steps which the Minister may be willing to consider that will give this a lot more capability in the future.
Our contention on late payments is that, although there is a great deal of desire to do something on it, the inexorable economic logic allows an incentive for late payments to fester and poor payment practices to continue until there are concrete disincentives. Reputational disincentives are not the same as being able to ensure that businesses have a culture of enforcing their own rules about this. As a consequence of time, I can only note the connection of some companies with the Prompt Payment Code and who is really responsible
for it in the business. Many times it is dealt with as external presentation, rather than being a finance department priority. We can deal with many of these issues and it is probably more important to make sure that it becomes a core part of their practice. We understand that the commissioner has been established to deal with late payment issues but we are concerned that it falls between being a late payment ombudsman and—especially with its direct connection to the Minister—becoming the small business baseball bat, trying to berate companies which might generate some media coverage at the time.
Small business commissioners work at their best when they show the skilled capacity to move the business environment and are able to work for all sections of business—not just small business—to make that work, and they are able to address some of the issues that affect relationships between small businesses. Some of those relate to the inability of small businesses to get access to credit and, somewhere along the line, there are larger businesses which are a problem in and of themselves.
Amendment 1 seeks to increase and enhance the level of independence of the Small Business Commissioner. We have adapted this from the Information Commissioner’s Office and the Parliamentary Commissioner for Administration—who is appointed by the Crown on the advice of both Houses of Parliament. Amendment 3 amends the schedule, removing the paragraph stating that the commissioner is to be appointed by the Secretary of State. Amendment 4 removes the power of the Secretary of State to appoint staff for the office of the commissioner, which is clear in both the Explanatory Notes and the impact assessment. Amendment 5 specifies that:
“The Small Business Commissioner has the authority to appoint and recruit his or her own team”.
Amendment 37 removes the provision which states that the Small Business Commissioner must lay an annual report before the Secretary of State and instead requires that:
“The Commissioner must lay a copy of the Report before both Houses of Parliament”.
Amendment 38 removes the clause which empowers the Secretary of State to abolish the office of the Small Business Commissioner at the stroke of an administrative pen, meaning that instead, anything should be brought before Parliament. There are very good reasons for this. If the role of Small Business Commissioner is to work, it needs to maintain the confidence of all stakeholders and all the people in the process, not just be an instrument of government but be able to work collaboratively and collectively with government, small businesses, the media, academics and other stakeholders in the economic cycle. Moreover, it is very important that the Small Business Commissioner, to maintain confidence, is able to be a learning institution.
The changes that take place in the business environment as well as the pressures that exist require it to take a sensible, sound and broad view. Our desire is that the Small Business Commissioner learns how best to apply the levers that it has and to call in other
allies and bodies that are receptive to its views. If you look at the origins of the best parts of the Small Business Administration in America and how they have worked, you see that they have involved a learning experience as regards how you apply, generate and change powers.
To look at the example from Australia of the 2003 establishment of the Victoria Small Business Commissioner, over the entire period in which all the other states have adopted a small business commissioner, as well as a federal one, you can see that there is a process by which an effective commissioner has been able to marshal the arguments and evidence and capacity of a body established by government to be able to be most effective and build the confidence of business. We want to see that model and we are concerned that the structure as defined in the Bill and the Explanatory Notes suggest that this is no more than a rebadged office of the department itself. If this is to work and to be of valuable long-term strength to the small business environment, it needs to be fully independent. We need an effective Small Business Commissioner, and one of the most important things that will make that person effective is their ability to appoint their staff. If we wish to be serious about late payments, we need someone who can work, not on the basis of the press release or the exhortations of Members of whichever of these Houses, but constructively, to be able to work with businesses, learn the right lessons and create the right solutions to do that.
Our amendments do not support only the obvious organisations that work in this area. It is important to note that the Institute of Directors has been very forthright in its support for Amendments 1 and 5. I will quote what it said at length, because it is relevant. Of course, one must remember that the IoD is probably the organisation that represents the largest number of directors, owners and operators of small businesses. It is important to understand that it has a great deal of expertise in this and is a very effective team and leadership. However, on Amendment 1 and the removal of Clause 11, it said:
“Together, these amendments would give the Small Business Commissioner a stronger footing from which to be a champion for small business. We fear that the possibility of abolition by the Secretary of State could potentially negatively impact the ability of the Small Business Commissioner to challenge that same Secretary of State. We hope for and anticipate a positive working relationship between the Commissioner and the Secretary of State”.
On Amendment 5, it says:
“This amendment would allow the Commissioner to appoint and recruit their own team which, again, would increase the independence of the Commissioner. We do not want to see the SBC run as an insurgency within the Business Department, but it is important that the Commissioner has access to expertise outside the existing civil service when appointing his team”.
All I can say is: I am more than happy to read out those lines and I concur with the motivation behind them. That is an important message about what we have been trying to do and how effective the Small Business Commissioner could become if it was given the right relative independence and the right environment in which it could flourish itself. I beg to move.
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