My Lords, I thank the noble Lord, Lord Stoneham, for his explanation, and my noble friend Lord Cope for his helpful comments. Of course, we have already discussed the commissioner’s remit and functions, and the reasoning underpinning the policy ethos and architecture in the Bill.
I can see the intention behind Amendment 11 but it is not in the spirit of these measures to fine businesses for failing to implement the commissioner’s recommendations. Rather, the Government believe it is vital that the commissioner builds a position of trust and influence with all parts of the business community. We strongly believe that powers to fine would undermine rather than enable this approach. Fines would not help solve the dispute or encourage a change in payment culture. Faced with potential fines, large companies would inevitably start to employ expensive legal teams and feel compelled to withhold information on payment practices on the basis of legal advice. All this would make it more intimidating for small suppliers to complain,
especially if they want to maintain their commercial relationships. Our stakeholders, such as the Federation of Small Businesses, agree and are not calling for this approach.
The commissioner will have the discretion to report publicly on individual cases, providing the sunshine of transparency on payment issues, and to do so more often and in a more high-profile way than we have been able to do. I know from my own experience in several sectors that this will provide a strong incentive for businesses to engage constructively with the commissioner’s inquiries and seek to satisfy him or her. We have seen this approach work well in Australia and I am sure that it will work here, too.
The commissioner will make non-legally binding determinations, which may include recommendations about how the parties involved in a case could resolve the dispute or how to avoid such issues occurring in future. The commissioner will be considering whether an act or omission was fair and reasonable, in the given circumstances. To allow the commissioner to impose fines would effectively allow him or her to create rules on what is and is not good payment practice—quasi-legislating. This is not the role of the office.
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On Amendment 15, as I have already said, this Government are wholeheartedly committed to tackling poor payment practice. That is why we are establishing a Small Business Commissioner and will use the new powers in the Small Business, Enterprise and Employment Act to introduce a parallel reporting requirement to shine a light on such practices in the private sector from next year. I was delighted to be able to further demonstrate our commitment to creating this fair payment culture by announcing in Committee a review of retention payments in the construction industry. This is not the subject of an amendment but the terms of reference have been sent to interested Peers and placed in the House Library. The review will report within nine months of the Enterprise Act coming into force.
The particular practices that Amendment 15 seeks to ban are, on the whole, examples of poor practice that we are seeking to end through the measures which I have already outlined. Any such legislation could be easy to sidestep and substitute with other examples of bad practice. For example, while we could seek to prohibit payments to be on supplier lists, other recent examples in the retail sector show that this is but one of several different ways in which large companies seek to squeeze unreasonable commercial advantage from smaller suppliers. This means that any ban could be easy for companies to sidestep through adopting a different practice.
Such legislation would also be wide-ranging, as my noble friend Lord Cope said—the noble Lord, Lord Mendelsohn, agreed—and in our view disproportionate. Such rules could also inadvertently prevent mutually beneficial arrangements that would be bad practice in some situations but work well in others. The noble Lord, Lord Mendelsohn, made some interesting comments about how to interpret “late payments”. He referred to BACS, which is of course one source of late payment data. However, I think he will agree that
no one source is comprehensive. The new SBEE Act reporting requirement, which I have just mentioned, will help us to know which are the right figures to look at. I am very happy to discuss data issues further with the noble Lord. The implications are probably for the payment regulations and for guidance.
We are content with the approach that we have taken in the Bill, which is general. None of this is easy but, as we keep saying, we are striking a balance with an aim, agreed by us all, of achieving a long-lasting cultural change. I am really not convinced that additional detailed legislation of the kind proposed in Amendment 15 would be right.
I hope that noble Lords are reassured by the comprehensive nature of what we are doing. I know that it is not all in the same place, although I assure the House that we will seek to bring everything together in terms of communication from the Small Business Commissioner. We have the measures in the Bill, the measures in the SBEE Act and the regulations being made under it, and the huge initiatives being taken on public sector payment rates, which I think we all agree are important. We have insurance, which we will come on to discuss, and, as I have just explained, we have agreed to move ahead and do something much sooner than originally suggested on construction. We are committed to achieving a real change in culture on the ground. I welcome the House’s continued input to make this a reality but I hope that the noble Lord feels able this evening to withdraw his amendment.