Thursday 26th April, 2018
According to new research from the Federation of Small Businesses (FSB) nine out of ten (89%) public sector suppliers have been paid late. This is true both for suppliers to central government (88%), local government (91%) and those supplying to public infrastructure projects (91%).
While FSB has welcome important steps announced by Government to widen access to public procurement, FSB is calling for urgent action to address late payments to those small businesses who have won government contracts.
FSB wants the Government to introduce penalties for departments, agencies and public bodies who fail to pay invoices on time. Additionally, departments, agencies and public bodies should be forced to automatically pay interest on any payments made later than contract terms.
FSB National Chairman Mike Cherry, said: “Our research highlights a shocking failure in the public sector – the government needs to get a grip if we are to have a chance of stamping out the poor payments culture running rampant in the UK economy.
“By improving public sector payment practices, the Government can bring some fairness to the public procurement process and help reduce the risk of public sector contracts for small businesses. Crucially, this would also prevent Carillon-type practices happening again. This is a win-win for everyone involved in the supply chain because when small businesses are used effectively, they are able to create jobs and growth.”
Earlier this month the government launched a package of tough new measures, including plans to exclude suppliers from major government procurements if they cannot demonstrate fair and effective payment practices with their subcontractors.