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Small Businesses

Volume 229: debated on Thursday 22 July 1993

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To ask the President of the Board of Trade what help the Government are giving to small firms to recover debts due to them; and if he will make a statement.

The Government are actively addressing the problem of late payment to small firms. We have initiated a wide range of measures including:

  • (a) providing financial support for three trade associations to operate pilot prompt payment initiatives;
  • (b) new Government contracting terms have been introduced requiring companies awarded Government contracts to pay their subcontractors promptly, normally within 30 days;
  • (c) Government Departments are monitoring the percentage of their bills which are paid within the agreed contract period and we will publish performance;
  • (d) promoting improvements to court procedures for debt recovery;
  • (e) in his spring Budget, the Chancellor of the Exchequer, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), announced a reduction in the waiting time for VAT bad debt relief; an increase in the threshold for VAT cash accounting and changes to the VAT penalties and surcharge regime;
  • (f) consulting on proposals to require large companies to state in their reports and accounts how quickly they pay;
  • (g) distributing the DTI publication: "Making the Cash Flow" which contains advice for small firms on credit management.
  • Furthermore, my noble Friend the Under-Secretary of State for Consumer Affairs and Small Firms has given her personal commitment to take up on their behalf complaints small firms have of experiencing late payment by large companies or public bodies.

    To ask the President of the Board of Trade what study his Department has made of the principle of statutory right to interest on debts due to small firms; and if he will make a statement.

    The Government are very aware of the difficulties faced by small firms who suffer from late payments and has initiated a wide range of measures to help with the problem. My Department has examined information from other countries on the operation of legislation designed to effect prompt payment and keeps in close touch with the view of representative organisations in this country. We remain to be convinced that legislation to introduce a statutory right to interest would be effective in combatting late payment.We continue to be interested in views on how an effective legislative framework might operate while through action and example working to impress the message of prompt payment to businesses of all sizes.