Local Democracy, Economic Development and Construction Bill [HL]

There are only two amendments in this group. They have insolvency in common, but they are actually quite different. I am not complaining about the grouping, but I must deal with them separately. First, on Amendment 217A, SMEs are concerned—especially, I repeat, in difficult economic times like these—that perhaps considerable sums, or sums which mean a lot to them and that they are due, may be left owing to them if the payer goes into insolvency. In this new clause, firms would have a right to request adequate security for payment. Failure to provide such would give the payee the right to suspend performance of his contract. In other words, this would give a pre-emptive strike to, let us say, a subcontractor who, for some reason, is anxious to ensure that he will be paid for the work done and is seeking security to that end. Amendment 206A deals with an entirely different problem of insolvency. Generally, the 1996 Act outlawed any arrangements by which the paying party, usually the main contractor, makes payment conditional on receipt of payment from somebody else—some other player upstream. Unfortunately, the 1996 Act continues to allow a contractor to refuse payment to his supply chain if money was not forthcoming because of a client’s insolvency. Amendment 206A would end that. My view is simple. I ask the Minister whether he agrees or disagrees with the statement that a contractor should not be allowed to refuse payment for work that has been properly done just because there is insolvency up the line and the contractor will not be paid by the client. Most respondents to the Government’s consultation on this in 2005 favoured what I propose in Amendment 206A. I beg to move.