My Lords, first, I welcome the noble Baroness, Lady Burt of Solihull, to the Front Bench and commend her for her brevity and clarity. I hope the House will not mind if I take a little time to highlight some of the issues arising in this important group of amendments. I shall begin, as one must, by reiterating the importance of tackling late payment and our commitment to doing so. The measures in this Bill establish a Small Business Commissioner, delivering on and developing our manifesto commitment.
I, too, pay tribute to my noble friend Lord Wolfson for his good payment practice at Next. We should try to encourage good practice as it helps with the cultural change we are seeking. Our aim is to build on the measures taken during the previous Parliament to drive down late payment. Some of these measures are still in the pipeline, notably the new requirement on the UK’s largest companies to publish performance data on payment which will bring the sunshine of transparency to the problem.
I am extremely grateful to noble Lords for their diligent scrutiny of the Small Business Commissioner measures in Committee. After careful consideration of the arguments, we have put forward concessionary amendments, as noble Lords opposite were kind enough to acknowledge. I hope they will bear them in mind in considering what to do today.
We all know how vital the UK’s small businesses are to our economic growth. This is something we must all reflect on as we approach Small Business Saturday. In Anna Soubry, we have a Small Business Minister who champions the cause. I am a former chairman of a Scottish SME, Dobbies, and as well as understanding the practices of much bigger companies
I really believe in the need for reform. On late payment, with a good strong Small Business Commissioner becoming a vital part of the support system and with the support of this House and the other place, we can make things happen. Our assault on late payment must continue.
We are committed to making Britain the very best place to start and grow a business. The Government will play their part in assisting business where it needs it most by cutting red tape and opening up markets at home and abroad to new and innovative businesses. I should say briefly that today the Chancellor confirmed that we will extend small business rates relief for another year, and 600,000 businesses will benefit. We are funding new or extended enterprise zones, including, I was delighted to see, in Carlisle, Dorset and Ipswich. We will be providing £24 million for local growth hubs to continue to join up business support on the ground in each LEP area.
The Small Business Commissioner will build the confidence and capabilities of small businesses to assert themselves in contractual disputes with larger firms and to avoid them in the first place. He or she will work to encourage a culture change in how businesses deal with each other to promote a fair operating environment. The commissioner will handle complaints by small business suppliers about payment-related issues with larger businesses. He or she will also act as a hub of user-friendly information. He or she will provide general advice and information to assist small business with their supply relationships, which will be sensibly integrated with other sources of business advice. My officials will involve small business users in the design phase to ensure that the commissioner’s services are easy to use and navigate.
We arrived at this policy architecture following careful consideration of the issues and the evidence, including responses to our summer consultation and further evidence including data on late payment. Our aim has been to put forward a targeted and effective response to the most pertinent issues facing small business and to focus the commissioner on late payment so that rapid progress is made. That is the point that my noble friend Lady Wheatcroft made so well.
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Amendments 1, 8 and 9 would allow the commissioner to handle a complaint from a small business against another small business, a medium-sized business or public authorities, and would widen the complaints-handing function to cover all matters relating to the supply of goods and services. We have carefully considered these issues and the arguments put forward by noble Lords today and in Committee, but I must hold firm on my position that focus is needed in the complaints-handling function. We have been very clear about our policy intention to help small firms where they suffer because of an imbalance in bargaining power when dealing with larger businesses. I reassure noble Lords that larger businesses are defined in the Bill to include medium-sized businesses. We have intentionally targeted the commissioner’s services at those businesses most in need of support. We recognise that individual firms’ circumstances will vary, and acknowledge that there is evidence to show that problems exist between firms of
all sizes, but we consider that small businesses should be less likely to need external support when dealing with firms of a similar size.
We have designed the commissioner to complement, not duplicate, the work of other bodies. The Bill provides for him or her to address small business issues with public authorities by signposting them, as has been said, precisely because appropriate services exist. The mystery shopper service was mentioned. It is a government service providing small business with an easy route to raise concerns about procurement, including payment issues. We consider that these issues are best addressed by this existing service, and by the commissioner signposting small businesses to it. If the public sector is dragging its feet, then complain to the curiously named mystery shopper—that is what it is there for.
We are trying to drive a parallel revolution in public procurement, with a particular focus on actions that support small business. The Government have a commitment to pay 80% of undisputed and valid invoices in five days, with the remainder paid in 30 days. Departments are required to publish performance against these targets quarterly.
We know that the UK’s small businesses have significant and long-standing concerns about payment issues, particularly late payment. These issues cause great concern and difficulty and it is essential for the commissioner’s complaints-handling function to be focused on them. The commissioner will be required to report annually on the most significant matters raised, and this may include recommendations to address those matters. So, if substantial evidence of other issues comes to the commissioner’s attention, the Bill will enable the commissioner to report on them. We therefore have no evidence of a need for the extension of the remit in the ways proposed today.
Amendment 10 would permit the commissioner to send copies of his or her published reports to the CMA. I am happy to reassure noble Lords that the commissioner does not need a power to send the CMA published reports. We expect the commissioner’s reports to be useful to, and accessed by, many regulators. I am sure the CMA will subscribe to them, as I certainly will. The commissioner, who is independent, may also choose to bring his reports to the attention of any regulator.
I thank noble Lords for their careful consideration of the ways in which the commissioner could assist small business, as set out in Amendment 16. My noble friend Lord Cope made some germane comments, as did my noble friend Lady Wheatcroft. I have explained that the commissioner’s complaints-handling function has a deliberately targeted focus on payment issues. They are vital to the culture change that we need. That is why our proposals for a commissioner to sit alongside other measures on payments that were started under the coalition Government are important.
I reassure noble Lords that the Bill already allows for the commissioner to play an important role in building an understanding of issues, which of course may change over time. As I have said, the Bill requires the commissioner to produce annual reports, which may include recommendations to government in relation to the key emerging issues.
We recognise that it will be vital for the commissioner to work with both small and larger businesses and relevant organisations to promote a culture of fair business practice. The Bill enables the commissioner to make recommendations to government and to work with other organisations on their information provision about small businesses’ supply relationships. We will review the work of the commissioner’s office at least every three years to ensure that its actions benefit small business and that he or she becomes an effective champion.
The noble Lord, Lord Mendelsohn, rightly talked about alternative dispute resolution. Our stakeholders, including the FSB, have told us that the role of government here is not to provide alternative dispute resolution but to assist them in navigating the system. I can assure noble Lords that we will provide a pathway to dispute resolution—I think the noble Lord, Lord Mendelsohn, used the word “mediation”.
The noble Lord also referred to the Australian model, where failure to mediate may sometimes have cost consequences. I simply add that, within existing court rules, the courts can consider a refusal to participate in ADR to be unreasonable, which may be taken into account in court costs.
This is an important subject and this has been an important debate. The Bill establishes a framework for the commissioner to address key issues. It gives the commissioner an appropriate role and a range of vital functions. I know from my own experience that focus is key. I hope the noble Baroness will agree to withdraw her amendment.