Richard Page, the Department of Trade and Industry's small firms minister, yesterday used Michael Heseltine's admission that as a businessman he had deliberately delayed paying bills to back the Government's scepticism about prompt-payment legislation.
Mr Page, a businessman himself, said: "What the Deputy Prime Minister has been saying is a snapshot of the real world where companies operating on the knife-edge of survival do things to ensure their continued existence."
Calling Mr Heseltine's controversial admission "frank and candid" Mr Page said it showed that the Government was living in the "real world of day-to-day business rather than in some theoretical concept. It is this hands-on experience that is being turned to good effect to help small businessmen and women."
Mr Page said responses to a consultation exercise in 1993 on whether to legislate against late payment showed views deeply divided and no clear consensus for the legal right to interest that some small firms lobbies have demanded.
There was concern that legislation to force prompt payment would be used mainly against small businesses, and that larger firms would simply extend their credit terms, Mr Page said.
The Government has announced a series of voluntary measures to improve payment, in co-operation with industry, but has repeatedly made clear that it will legislate if these fail. Last month Mr Page started a review of the first two years of the voluntary measures, and he has asked for comments by the end of this month.
Tony Bonner, who today takes over as chairman of the CBI's small and medium firms council, said the employers continued to be against a statutory right to interest on late payments, because it formalised the financial arrears as a loan, increased the costs of the business and from the administrative point of view could be a nightmare.
He said he had seen businesses delay payment to creditors, which was "bad news because it creates bad will among suppliers and does not help companies grow."