Friday 2 December 2016
Business, Energy and Industrial Strategy
Payment Practices and Policies
Successful businesses create jobs, and are essential to economic growth. Late payment harms business cash-flow, hampers investment and in extreme cases can risk businesses’ solvency. This puts a strain on any organisation, but is especially difficult for small businesses. As of June 2015, the overall level of late payment owed to small and medium sized businesses was reported as £26.8 billion. This is why it is crucial for Government to take action to create a more responsible payment culture, which enables all businesses to thrive and develop.
Today, Government will publish its response to the Duty to Report on Payment Practices and Policies consultation, and draft regulations to implement section 3 of the Small Business, Enterprise and Employment Act 2015 for large companies and large limited liability partnerships to report on their payment practices and performance.
The duty to report on payment practices and performance
Following consideration of views received from stakeholders, large companies and large limited liability partnerships (LLPs) will be required to publish information about their payment practices and performance twice per financial year on a Government web service. They will be required to report on the following:
Narrative descriptions of:
the organisation’s payment terms. Including— standard contractual length of time for payment of invoices, maximum contractual payment period and any changes to standard payment terms and whether suppliers have been notified or consulted on these changes;
the organisation’s process for dispute resolution related to payment Statistics on;
the average time taken to pay invoices from the date of receipt of invoice;
the percentage of invoices paid within the reporting period which were paid in 30 days or fewer, between 31 and 60 days, and over 60 days;
the proportion of invoices due within the reporting period which were not paid within agreed terms.
Statements (i.e. a tick box) about:
whether an organisation offers e-invoicing;
whether an organisation offers supply chain finance;
whether the organisation’s practices and policies cover deducting sums from payments as a charge for remaining on a supplier’s list, and whether they have done this in the reporting period;
whether the organisation is a member of a payment code, and the name of the code if a company fails to publish a report as required, or publishes false information this will be a criminal offence, punishable by a fine on summary conviction.
I would like to draw Parliament’s attention to two matters:
Interest owed and paid
The regulations do not include a requirement to report on the amount of interest owed and paid, which the previous Government committed to include. Businesses have suggested that this metric could be difficult to understand and implement. The Government will keep this metric under review, taking into account any lessons that the introduction of similar metrics to public sector reporting can teach us.
Pay to Stay and Supplier Lists
During the passage of the Small Business, Enterprise and Employment Act through Parliament the previous Government committed that these regulations would tackle so-called ‘pay to stay’ practices. These practices include instances where businesses require payments either for joining or for remaining on a supplier list.
The Small Business, Enterprise and Employment Act allows the Government to require reporting on practices relating to payment of suppliers. As such, the draft regulations require businesses in scope to report on whether they deduct sums from payments to suppliers as a charge to remain on their list of suppliers. This does not cover all payments required from suppliers for joining or remaining on a supplier list. The Government will keep reporting on ‘pay to stay’ under review. The Small Business Commissioner, who will be in post from next year, will be able to tackle such unfair payment practices.
This new reporting requirement for the UK’s largest companies and limited liability partnerships (LLPs) will shine a light on payment practices. It will increase transparency and make payment behaviour a reputational boardroom issue. The large businesses already treating suppliers fairly and paying on time can use the data to highlight their track-record. Poor payment practices and performance will be exposed, alerting organisations to issues and encouraging them to improve.
Government Grant Standards
Today I am publishing new standards which will ensure the effectiveness of grant management across Government. These standards will be adopted by all Departments to make sure that taxpayers’ money, awarded through Government grants, is properly agreed and spent.
The grants improvement programme aims to improve the efficiency and effectiveness of grant making across Government. The programme includes incorporating recommendations from the Public Accounts Committee and Public Administration and Constitutional Affairs Committee inquiries into Kids Company as well as reviewing grant programmes already underway.
The standards are a transparent, robust, and proportionate solution to manage risks in the Government grants process.
We need to make sure the UK taxpayer is getting value for money and grants are awarded with sufficient scrutiny and more accountability. The detailed work we have undertaken since February with Government Departments, research organisations and the voluntary sector has enabled us to develop these standards through a constructive and collaborative process. They will protect taxpayers’ money, while at the same time delivering key policy outcomes through our many partners.
The Government have engaged with a broad range of key partners, including those in the academic and research community, to understand the effect these standards will have on all sectors and to avoid any unintended consequences. Standards will also include a requirement for Departments to ensure that grant agreements provide a clear outline of what the funding is to be spent on and how this would be monitored. They would put an end to grant money being wasted on activities not specified in the grant agreement, such as political lobbying.
Government grants are an important part of the funding mix for many charities. These new grants standards will protect the role of charities to speak out on behalf of the communities and people they benefit, while ensuring public funds are used as intended. They will help create new opportunities for the sector to work in partnership with Government, increasing their social impact.
Copies of the associated documents will be placed in the Library of the House and published on the website: www.gov.uk, as well as any future updates to the guidance.
Communities and Local Government
London Borough of Tower Hamlets
On the 17 December 2014, my predecessor the then Secretary of State for Communities and Local Government confirmed that, having considered the report of the inspection by PriceWaterhouseCoopers LLP, the London Borough of Tower Hamlets was failing to comply with its best value duty. He therefore concluded that it was both necessary and expedient for him to exercise his intervention powers. A team of commissioners were appointed to exercise functions of the authority in relation to the making of grants, and the appointment of persons to and the removal of persons from the statutory offices of electoral registration officer and returning officer for local elections. The commissioners were also tasked with overseeing an improvement plan of the council covering steps to strengthen the council’s core governance arrangements, publicity, contracting, property disposals to third parties and organisational cultural change.
Almost two years on, a number of challenges remain but there have been areas of significant progress. Following receipt of the council’s 36-monthly update against its best value action plan on 20 September and a report from the commissioners on 11 October, I am today proposing, on the recommendation of the commissioner team, my intention to return certain functions to the London Borough of Tower Hamlets.
After careful consideration of the commissioners’ report, I am satisfied that the council is now able to exercise some of functions identified by the commissioners in compliance with the best value duty, and that the local residents of Tower Hamlets can have confidence that this will be the case. I am therefore considering exercising my powers under section 15 of the Local Government Act 1999 to return to the council functions in relation to grant making, although I consider it necessary for the commissioners to retain an oversight role over how this function is exercised for the remainder of the direction period. Establishing new oversight arrangements in relation to grants will enable the commissioners to advise and scrutinise the council without clouding where ultimate responsibility lies. Finally, I am considering exercising my powers under section 15 of the 1999 Act to end the role the commissioners have held in overseeing the council’s processes and practices for entering into contracts. Returning these functions represents a clear milestone on Tower Hamlets Council’s road to recovery.
The commissioners will provide oversight of the returned functions to ensure that they are exercised in accordance with the best value duty. In addition they will continue to oversee the council’s rigorous programme of improvement in relation to strengthening its core governance arrangements, publicity, property disposals to third parties, organisational cultural change and grants. I am inviting the council to make representations on the proposals, which will be considered as part of my final decision.
I am placing a copy of the documents associated with these announcements in the Library of the House and on my Department’s website: https://www.gov.uk/government/publications/tower-hamlets-intervention-proposed-return-of-grants-function.
This Government remain committed to protecting the independent press from unfair competition. A healthy local democracy requires the accountability that comes from scrutiny of councils by the press and the public.
The Government have sought to take action against the practice, by a small number of local authorities, of publishing local authority newspapers, which given the frequency of their publication, can push out and undermine that independent press. A small number of councils continue to breach the recommendations of the code of recommended practice on local authority publicity about the frequency of publication for council newspapers.
Further to the written statement of 10 March 2015, Official Report, Column 8WS we have warned a small number of local authorities about their continued failure to comply with the provisions of the publicity code.
Today I am announcing the conclusions to date of the review into the actions of three of those authorities: the London Borough of Hackney, the London Borough of Newham and the London Borough of Waltham Forest.
In each case my right hon. Friend the Secretary of State is minded to exercise his powers under the Local Government Act 1986 to direct the local authorities to comply by no later than 31 January 2017, with the provision in the March 2011 code of recommended practice on local authority publicity that:
“Where local authorities do commission or publish newsletters, news sheets or similar communications, they should not issue them more frequently than quarterly”.
Accordingly, the Secretary of State is today issuing to each of the three authorities a written notice of the direction he proposes to issue in each case.
In deciding to take this action, the Secretary of State has carefully considered the representations each of these local authorities has made in response to a notice given to it on 10 March 2015 of a proposed direction relating to frequency of publication of council newsletters, news sheets or similar publications. He has also considered other information available to him about each of the three council’s publicity, and had regard to an equality statement about enforcing the 2011 code of recommended practice on local authority publicity.
Each authority now has 14 days to make written representations to the Secretary of State about the proposed direction. Following this, the Secretary of State will take his final decision in each case about whether or not to issue the local authority with a direction. Each decision will be taken on its own merits.
I will be placing copies of the documents associated with these announcements in the Library of the House.
Culture, Media and Sport
The Telecommunications Council will take place in Brussels on 2 December 2016.1 will represent the UK at this Council. Below are the agenda items and the positions I intend to adopt.
The first item is a policy debate on the two legislative instruments and two communications that form the just published EU Commission’s Connectivity package— the European electronic communications code (First reading—EM 12252/16) and body of European regulators for electronic communications (First reading—EM 12257/16) and “5G for Europe: An action plan” (EM 12279/16) and “connectivity for a competitive digital single market— towards a European gigabit society” (EM 12364/16). my intervention will confirm that the UK supports the plan for a gigabit society and emphasise the importance of the connectivity package in stimulating investment by the private sector in fibre-based networks and 5G. I will also set out the UK’s other priorities for the electronic communications code, including respecting member states’ competence and retaining member states’ discretion over consumer protection and funding of the universal service obligation. The Council will then be invited to adopt a general approach on amending regulation (EU) No 531/2012 as regards rules for wholesale roaming markets (First reading—EM). We will agree to the adoption of this general approach. The Council will then be provided with an update from the Slovak presidency on the proposal for a regulation of the European Parliament and of the Council on cross-border parcel delivery services (First reading—EM 9706/16). We do not expect a debate on this item and I do not intend to intervene.
Finally, member states will be invited to adopt a partial general approach on the proposal for a regulation of the European Parliament and of the Council amending regulations as regards the promotion of internet connectivity in local communities (First reading—EM 12259/16). The UK intends to agree to the adoption of this partial approach. This will be followed by three items under AOB led by the Commission, the first being on fair use policy in the context of roaming services, followed by information on digital single market initiatives and finally under AOB, current internet governance issues. We do not currently intend to intervene on any of these items. Finally, the Maltese delegation will inform the Council of their priorities for their forthcoming presidency before Council adjourns until the next meeting in Q2 2017.
Rail Update - Southern
My Department has previously announced that ‘Delay Repay 15’ will be introduced first on the Govia Thameslink Railway (GTR) franchise, and this will be available to customers from 11 December 2016. Passengers will be entitled to claim compensation if their train is delayed by 15 minutes or more, rather than 30 minutes as is now the case. This is recognised as one of the most generous compensation schemes in Europe, and this change means an even better deal for passengers. ‘Delay Repay 15’ will be included in the specification for all new franchises in future.
Southern passengers have suffered from unprecedented and sustained disruption to their journeys during 2016 through a combination of factors, including RMT industrial action, track and signal failures, and operator poor performance. In recognition of this unprecedented disruption, passengers will be able to claim one payment against their 2016 season tickets from early next year. This one-off compensation scheme recognises that passengers have suffered, and demonstrates that the Government are on their side. This will be administered by GTR.
Passengers with a Brighton to London annual season ticket, for example, will get £371 back. Quarterly, regular monthly and weekly season ticket holders will also qualify for a one-off compensation payment.
Annual, quarterly, monthly and weekly season ticket holders using any Southern routes will be able to claim through the following process:
In early January 2017 Southern will contact all customers on its database it believes qualify for a refund to confirm the amount due and the method of payment.
Pre-identified customers will need to login to a web portal to provide bank details, credit card details or web account details.
Customers do not need to contact Southern directly at this stage.
After customers who have been pre-identified have been contacted a web portal will be made available allowing:
Pre-identified customers to confirm the method of payment they wish to use, and;
customers who believe they qualify to provide details for Southern to check and, if appropriate, make payment