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FPB investigates public sector payment habits

The Forum of Private Business has submitted freedom of information (FOI) requests to local councils in England asking how long they take to pay their suppliers.

In 2009, almost a year after the government urged councils to follow the example of central departments and commit to paying their suppliers within ten days, FOI research carried out by the Forum revealed a ‘postcode lottery' for council supplier payments.

Overall, the average time local authorities took to pay invoices was almost double the ten-day target, at 19 days. The UK average for the payment of bills within ten days was 42 per cent, but stark regional variations meant that this figure was as high as 52 per cent in some areas and as low as 11 per cent in others.

FPB senior policy adviser Phil McCabe says, 'The real public sector late payment problem is where local authorities are concerned, where a great many contracts for small firms originate.

'According to our previous freedom of information research there has been a real postcode lottery when it comes to suppliers being paid on time – it will be interesting to see if anything has improved or, given that we are again in recession and overall levels of late payment appear to be increasing, become worse.'

McCabe adds that while the government's commitment to paying promptly centrally is welcome it is important that councils set the standard for private companies to follow.

The Forum believes that, with public contracts worth some £70 billion, the public procurement process could be used to promote better payment practices, for example by including pre-qualification questionnaires on payment in the tendering process.

More recently, research carried out by the Forum and credit agency Graydon UK found that late payment is most widespread in the private sector, as reported by 81 per cent of small businesses, almost one in five respondents (18 per cent) identified public sector organisations as poor payers.